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several simplifying changes to the regulatory framework. for instance, the definition of capital now focuses on tangible common equity, the truest form of loss - absorbing capital. moreover, all components of the capital base and associated deductions such as goodwill or deferred tax assets must be disclosed in a fully comparable manner. by standardising and simplifying the measure of capital, basel iii makes the regulatory framework easier to understand, and will enable market discipline to work better. another important step has been the introduction of a non - risk based leverage ratio as a supplement to the risk - based requirement. this is a β belt and suspenders β approach to capital regulation. the leverage ratio will help contain the buildup of excessive leverage in the system, serving as a backstop to the risk - based regime and safeguarding against banks β attempts to β game β the risk - based requirements. equally critically, the risk - based framework helps ensure that banks do not game the leverage ratio. let β s not forget that simple measures like a leverage ratio have been in place in the past and did not alone prevent banking failures. bis central bankers β speeches risk - weighting is difficult but vitally important. therefore the basel committee is in the process of reviewing the risk - weighting regime of the capital framework to ensure that it is as simple and comparable as can be while still capturing the risk profile of banks β varied asset portfolios. complexity is a byproduct of the desire, among regulators and banks, for risk sensitivity. risk measurement will never be perfect. simplicity, however, can sometimes come at a cost. ignoring risk does not make it disappear. without measuring risk properly, we may allow it to build up undetected. operating only with a non - risk - based leverage ratio creates incentives to shed safe assets and to increase the riskiness of asset portfolios ; to forgo risk - reducing hedging strategies because they could result in higher capital requirements ; and to engage in off - balance sheet activities and other sophisticated structures that expose a bank to contingent risks. this is likely to increase the aggregate risk in the economy and thereby create global financial stability concerns. the lesson, therefore, is not to rely on either risk - based or non - risk - based measures alone, but to have each reinforcing the other. a combined approach, as basel iii introduces, is better than any single approach. i believe basel iii strikes a reasonable balance by strengthening overall bank - capital requirements | stefan ingves : basel iii is simpler and stronger op - ed by mr stefan ingves, governor of the sveriges riksbank and chairman of the basel committee on banking supervision, published in the wall street journal, 15 october 2012. * * * the economic cost of the global financial crisis during the past five years has been frighteningly large. one clear lesson from the crisis is that regulatory capital requirements for the banking system were too low. or in other words, leverage was too high. under the pre - crisis rules, banks were allowed to increase their leverage to unprecedented levels. this increased risk in the financial system and when the crisis hit, the implicit guarantees resulted in massive public bailouts around the globe. the basel committee β s capital reforms, known as basel iii, substantially raise capital requirements from pre - crisis levels to reduce the probability of bank failures and the associated risks to taxpayers and to financial stability. recently, much has been made of the perceived shortcomings of basel iii. some argue that basel iii, which comes into effect next year, is not enough. others argue that basel iii is too complex and should be replaced by a simple leverage ratio, calculated as tangible equity to non - risk weighted assets. in my view, the basel iii agreement fundamentally enhances national and global financial stability by both raising the level of capital required by banks, and by simplifying the regulatory framework. it is no small task to reach a global consensus on these often quite technical matters. part of the consensus is that basel iii should be seen as a set of minimum requirements. hence, countries are free to impose more stringent rules if they wish. but we should not underestimate how basel iii strengthens bank - capital adequacy rules. a fundamental feature of the new framework is the significant increase in required minimum capital levels. all banks must hold common - equity capital of at least 7 % of their risk - based assets, compared with only 2 % previously. in the event of a credit boom, banks under basel iii would potentially need to hold a further 2. 5 % in common equity, bringing the total to 9. 5 %. finally, the most systemically important banks must hold up to 2. 5 % in additional common equity. that is a total of 12 %, a sixfold increase from pre - crisis levels for these institutions. the basel committee supports a regulatory framework that is both prudent and as simple as possible. hence the basel iii agreement introduces | 1 |
β s scenarios ; rcp 8. 5 ( continued carbon emissions ) and rcp 4. 5 ( reduced emissions ). the right - hand figure shows the change in temperature, precipitation and sea level in sweden in the two ipcc scenarios. the numbers show the maximum, minimum and mean values. there are substantial regional differences in the effects on the sea level and the table shows the mean value for the regions for each respective scenario and percentile. sources : rcp database ( version 2. 0. 5 ), smhi scenario data and smhi klimatologi [ climatology ] report series, no. second, we know that climate change has economic consequences, but their magnitude is uncertain. climate change affects the economy via physical risks and transition risks. this is illustrated in figure 2. the physical risks include different types of extreme weather and gradual warming. storms, heatwaves and cloudbursts will probably become both more common and more serious in a warmer climate. the gradual warming will lead to smaller harvests, changes in ecosystems, melting glaciers and rising sea levels. such things affect both households and companies. we have already seen serious examples of how the economy can be affected in connection with the drought in sweden in 2018, the forest fires in california in 2019 and the bushfires in australia at the beginning of this year. transition risks are linked to the effects that arise when adapting the economic system to a less fossil - based economy. the effects may be gradual in that policy instruments, such as carbon taxes, lead to structural transformation when carbonintensive sectors lose competitiveness to greener sectors. the effects can also be more abrupt and create unexpectedly rapid movements in asset prices, such as in the value of coal and oil deposits. 3 to limit global warming to 2 degrees, the ipcc estimates that only around 20 β 35 per cent of the world β s known reserves of oil, gas and coal can be utilised. if this estimate is correct, it would mean that the majority of today β s reserves are unusable and thus have no economic value. the assets have, in other words, become β stranded β. oil and gas companies are major borrowers on international bond markets and a rapid transition may therefore create financial risks and instability. for banks, the value of collateral can fall and credit losses can rise, which could reduce their capital, impair liquidity and thus weaken the banking system. the insurance sector is related part of the economy that may | handle companies with high carbon emissions who are actively aiming to transition towards lower emissions. these are questions that have begun to be analysed and where the riksbank can contribute knowledge and analysis. the riksbank β s balance sheet the assets on the riksbank β s balance sheet are valued at around sek 900 billion. the two largest items on the asset side are the foreign exchange reserves, which total around sek 420 billion, and the policy portfolio, which contains swedish government bonds totalling almost sek 380 billion. 30 it is here, with regard to the balance sheet, where we have to ask the really difficult questions about the role of central banks in climate adaptation. should green bonds be included when the riksbank buys bonds for monetary policy purposes? how sustainable are the bonds in central bank fx reserves? can the riksbank consider climate - related risks in the collateral it requires from counterparties in monetary policy transactions? 31 sustainability perspective in management of the fx reserves since 1 january 2019, the riksbank has had a new financial risk and investment policy. the policy states, among other things, that consideration shall be given to sustainability in the choice of assets in the fx reserves, in addition to other requirements laid down in the riksbank β s mandate. the riksbank β s gold and fx reserves are managed so that there is preparedness to supply the financial system with liquidity in foreign currency and to intervene on the fx market for monetary and foreign exchange policy purposes. management of the gold and fx reserves shall also help to safeguard the riksbank β s financial independence, which means rates of return must be healthy. the riksbank has decided to consider how much the assets contribute to the fx reserves β overall climate footprint. 32 this follows the view of the ngfs on climate risks as a source of financial risk. in our most recent analysis of the fx reserves β composition, the greenhouse gas intensity of the assets was, for the first time, a factor in the calculations together with rates of return and risk. chart 3 shows how greenhouse gas emissions vary in different countries. the riksbank has elected to only invest in australian states and canadian provinces with the same or lower greenhouse gas intensities than the respective country as a whole. for this reason, bonds issued by certain australian states and canadian provinces were sold off in 2019, see chart 4. this is the market valuation as of 31 december 2019, see the riksbank ( 2020 ). | 1 |
success of the vaccination campaigns in europe, which have allowed a significant reopening of the economy. with the lifting of restrictions, the services sector is benefiting from people returning to shops and restaurants and from the rebound in travel and tourism. manufacturing is performing strongly, even though production continues to be held back by shortages of materials and equipment. the spread of the delta variant has so far not required lockdown measures to be reimposed. but it could slow the recovery in global trade and the full reopening of the economy. consumer spending is increasing, although consumers remain somewhat cautious in the light of the pandemic developments. the labour market is also improving rapidly, which holds out the prospect of higher incomes and greater spending. unemployment is declining and the number of people in job retention schemes has fallen by about 28 million from the peak last year. the 1 / 3 bis central bankers'speeches recovery in domestic and global demand is further boosting optimism among firms, which is supporting business investment. at the same time, there remains some way to go before the damage to the economy caused by the pandemic is overcome. there are still more than two million fewer people employed than before the pandemic, especially among the younger and lower skilled. the number of workers in job retention schemes also remains substantial. to support the recovery, ambitious, targeted and coordinated fiscal policy should continue to complement monetary policy. in particular, the next generation eu programme will help ensure a stronger and uniform recovery across euro area countries. it will also accelerate the green and digital transitions, support structural reforms and lift long - term growth. we expect the economy to rebound firmly over the medium term. our new staff projections foresee annual real gdp growth at 5. 0 per cent in 2021, 4. 6 per cent in 2022 and 2. 1 per cent in 2023. compared with our june staff projections, the outlook has improved for 2021 and is broadly unchanged for 2022 and 2023. inflation inflation increased to 3. 0 per cent in august. we expect inflation to rise further this autumn but to decline next year. this temporary upswing in inflation mainly reflects the strong increase in oil prices since around the middle of last year, the reversal of the temporary vat reduction in germany, delayed summer sales in 2020 and cost pressures that stem from temporary shortages of materials and equipment. in the course of 2022 these factors should ease or will fall out of the year - on - year inflation calculation. underlying | with a standard fluctuation band of Β±15 % around their central rates against the euro, while estonia and lithuania kept their currency boards as a unilateral commitment. in order to ensure a smooth participation in erm ii, countries have firmly committed to take the necessary measures to preserve macroeconomic and exchange rate stability. participation in erm ii has been smooth. the four currencies in the erm ii have traded continuously at or close to their central rates, while short - term interest rate differentials vis - a - vis the euro area have been small. beyond erm ii membership lies the adoption of the euro, the crowning achievement of the monetary integration process. in order to adopt the euro, non - participating eu member states have to achieve a high degree of sustainable economic and legal convergence. every country will be assessed on its own merits and its own particular situation, on the basis of a strict analysis of the performance relating to the maastricht convergence criteria. let me stress that there is no pre - set timetable for the enlargement of the euro area. economic challenges for the new member states how far are the new member states on this road towards the euro? the countries that joined the eu this year have shown impressive economic growth rates and have made great strides in reducing inflation. they belong to the most dynamic economies in the eu, having gone through profound structural changes. for example, they have taken thorough measures to reform their product and labour markets, and some new member states, in some respects, may be even more advanced than other, existing eu countries. they have become more integrated with the euro area, with the major part of their trade now occurring with the euro area and tight financial links : as a matter of fact, the share of the new 10 member states in the total external trade of the euro area stands around 11 %, compared with around 14 % for the us and 3 % for japan. in addition, the transition process has brought their economic structures closer to those of the euro area. at the same time, while remaining a diverse group in many respects, the new member states still display distinct economic characteristics that differ from the euro area. their income - per - capita and productivity levels are still low relative to the euro area, which may have an impact on their inflation rates. let me mention two particularly important economic challenges that the new member states are confronted with on the road to the euro : price stability and fiscal policy. price stability is an essential | 0.5 |
speech at the professor lamfalussy commemorative conference, budapest, https : / / www. ecb. europa. eu / press / key / date / 2016 / html / sp160201. en. html, february 2016. 7. cΕure, b. ( 2016 ) β from challenges to opportunities : rebooting the european financial sector β, suddeutsche zeitung, finance day, frankfurt, march 2016. 8. constancio, v. ( 2015 ) interview with borsen - zeitung, β we need more integration in europe β, https : / / www. ecb. europa. eu / press / inter / date / 2015 / html / sp151230. en. html, december 2015. 9. constancio v. ( 2016 ), international headwinds and the effectiveness of monetary policy, ecb vice - president speech at the 25th annual hyman p. minsky conference on the state of the u. s. and world economies at the levy economics institute of bard college, blithewood, annandale - on - hudson, new york, april 2016, http : / / www. ecb. europa. eu / press / key / date / 2016 / html / sp160413. en. html. 10. draghi, m. ( 2015 ) monetary policy and structural reforms in the euro area, prometeia40, bologna, https : / / www. ecb. europa. eu / press / key / date / 2015 / html / sp151214. en. html, december 2015. 11. draghi, m. ( 2016 ) introductory statement during the hearing at the european parliament β s economic and monetary affairs committee, brussels, http : / / www. ecb. europa. eu / press / key / date / 2016 / html / sp160215. en. html, february 2016. 12. draghi m. ( 2016 ), statement by the ecb president at the thirty - third meeting of the international monetary and financial committee, washington dc, april 2016, http : / / www. ecb. europa. eu / press / key / date / 2016 / html / sp160415. en. html. 13. eba ( 2015 ) risk assessment of european banking system, https : / / eba. europa. eu / documents / 10180 / 1315397 / eba + | companies established in individual eu countries ). the uk accounts for half of the region β s top vc deals, with last year β s total investment activity amounting to us $ 21 billion. throughout 2018, the uk government continued to build fintech bridges with other jurisdictions, so as to reduce regulatory barriers and support growth in a post - brexit world. ireland saw increasing interest from global fintech companies and financial institutions, spurred by brexit - related concerns. more precisely, 55 fintech or financial services companies opted for establishment in ireland last year, and their move is expected to bring more than 4, 500 new jobs to the country ( ida, ireland ). around 50 applications for authorization were submitted to the central bank of ireland by year - end covering almost the entire spectrum of financial services including banking, insurance, asset management and payments. multinational companies seem to be concerned about a no - deal brexit and these moves in 2018 suggest their efforts to mitigate its impact. chart 4 fintech sector development across european union sources : ernst and young, crunchbase, digital agenda scoreboard, and european central bank. this year, we are expecting more fintech consolidation driven both by fintech companies looking to buy in order to achieve greater scale and by conventional banks looking to buy fintech in order to drive their own strategic objectives. over the next few quarters, fintech activity is expected to rise in terms of open banking, regtech, the acquisition of fintech by banks, insurance tech, and the creation of start - ups, given that europe offers a start - up friendly regulatory environment that encourages young entrepreneurs to experiment with innovative fintech services. 4. fintech β s impact upon and interaction with the conventional financial system and monetary policy transmission mechanism but what is fintech β s estimated impact of and interaction with the conventional financial system? all the above developments of the financial technology infrastructure have non - negligible implications. therefore, it is interesting to briefly discuss the main effects of fintech revolutions on customers, competition among market players and, overall, the financial industry β s operation and structure. currently, five main drivers appear to be shaping and are expected to bring changes to the established financial sector : the first driver is reduction of information asymmetry. the ability of new technology to capture and process a high amount of data in real time is improving the price discovery mechanism in several areas of the financial system such as the credit gap between borrowers and lenders, to the extent | 0.5 |
the intended course for his ship. at that point in the process, monetary policy can seem like precision engineering. but just like at sea, in monetary policy, the view is not always perfectly clear. given what we β ve been through and continue to experience, our forecasts are not pinpoint numbers ; rather, they represent ranges of likely outcomes. likewise, our economic models are a better source of questions than answers. to make sure that such uncertainty is not just acknowledged but is actually embedded in our policy decisions, we have incorporated explicit β rule - of - thumb β ranges around the most critical variables for our projection. in doing so, we are reminding ourselves β and those who watch us β that, especially in the wake of the crisis, economic projections are subject to considerable uncertainty. bis central bankers β speeches indeed, while canada came through the global financial crisis and ensuing great recession better than our g - 7 peers, we are taking longer than expected β or desired β to get home. our economy still has not returned to full capacity, and inflation has been running persistently below our 2 per cent target. because of the unprecedented nature of the crisis and subsequent recession, the global recovery has been anything but smooth or normal. as we navigate these uncharted waters, we are especially vigilant in our lookout for risks that could push us off course. assessing risk through two lenses this lookout is an important element of our policy deliberations. we assess how risks could interact with each other. we gauge their potential impact. and we use judgment to determine the balance among them, both today and in prospect. in fact, monetary policy formulation these days is more a process of risk management than one of precision engineering. it is important to stress that risks are not part of our baseline forecast β they are not what the bank expects to see, but rather, they are the possible deviations from what we anticipate. we work to avoid or, at least, mitigate them. the bank of canada looks at risks through two lenses : ( i ) the possible impact on the outlook for real economic activity and inflation, and ( ii ) the possible impact on the stability of the financial system. these two sets of risks are related but, for the moment, let me discuss them separately. targeting inflation is necessarily a forward - looking activity. it is informed by the work of economic forecasters who crunch the data and use models to assess the most likely future path of inflation. as our inflation target | drift even further below target against the risks of exacerbating financial system imbalances. as central bankers, here in canada and globally, we are in new territory. it brings to mind the sailors of another era who were driven far off course by a nasty storm. when things calmed, they found themselves in the southern hemisphere. suddenly the navigational chart that they relied on β the night sky β was completely different. we have every reason to believe that, after the experience of the crisis is behind us, central banking will be defined very differently than it was just five years ago. we know now that economic and financial stability are intrinsically linked, and we are figuring out as we go how to better integrate the two in our analysis and research, and in our policy. on a technical level, we are actively building new models and adding new detail to our existing ones. we are spending more time talking to real people making real economic decisions, to understand better the forces we are facing. and, we are communicating differently, not just more, but with more transparency, with due regard to the uncertainty around us. i am confident that we β ve got it roughly right, given what we know and especially what we don β t. just like those sailors on the open seas, we will adapt and thrive β and find our way home. bis central bankers β speeches | 1 |
nazrul hisyam mohd noh : opening # idareyouchallenge2017 grand finale remarks - opening remarks by mr nazrul hisyam mohd noh, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the # idareyouchallenge2017 grand finale, kuala lumpur, 3 september 2018. * * * it is indeed an honour for me to be here today at the grand finale of # idareyouchallenge 2017. within the theme of today β s event, i would like to take this opportunity to pose three dares for everyone here today : 1. firstly, to the university undergraduates present here, i dare you to break the myth that the young generation are not financially savvy and do not plan financially for the future. 2. secondly, again to the millennials and post - millennial gen - z present today, i dare all of you to break the myth that you are the β me me me β generation, one that only cares about yourself, and to prove that all of you have a much wider and richer perspective, that you actually care about being financially protected for the sake of your future and your loved ones. 3. finally, i dare the chiefs and captains of the insurance industry seated here today : i dare the industry to break the myth that insurance is unexciting, but instead, to demonstrate through engagements with the emerging generation of today that insurance is filled with opportunities for meaningful and exciting careers. i cannot emphasize more, especially to the millennials and post - millennials present, that you have much ahead of you. in the journey to find purpose and passion in life, always be curious, take risks and differentiate yourselves from everyone around you. the fact that β change is the only constant β tells us that the world is ever evolving and all of us are constantly addressing curve balls and wildcards that life throws at us. the talk of job displacements, the rise of artificial intelligence, fintech, insurtech and the new industrial revolution will certainly change the world that we live in. in those, there are challenges, but there are opportunities as well. thus, no matter in what stage of life you are in β you need to stay relevant, always strive to be different by innovating yourself. above all, i must say, savour the experience and find personal meaning, purpose and enrichment along the way. while many of you | of you are winners. to the winners of today, congratulations for a well deserved victory to what must be an exhaustive yet creative venture. this experience could be life changing. to the others, the materials you have created and presented here will likely put our life insurance companies on notice, in terms of new ideas on what motivates and excites the generation, and as they respond to them over time, you are also winners of the future. closing in closing, i would like to repeat my 3 dares today. to our youth, dare to be financially prepared for the future and dare to be financially protected. to our industry, dare to be an exciting workplace for the future generations. i shall leave you with this thought from winston churchill, and i quote β β success is not final, failure is not fatal, it is the courage to continue that counts β. 2 / 3 bis central bankers'speeches 3 / 3 bis central bankers'speeches | 1 |
s policy rate β that has the ultimate impact on household consumption or firm investment decisions. increasing real interest rates thus indicated that further monetary easing was necessary despite the policy rates being close to the zero lower bound. [ slide 7 : eurosystem β s accommodative monetary policy ] in the june 2014 monetary policy meeting, the governing council eased the stance of monetary policy. as a part of the package, we cut the deposit rate to negative, extended the guarantee of banks β access to unlimited central bank finance ( given that they provide sufficient bis central bankers β speeches collateral ) by extending fixed rate full allotment policy, and we set up a series of additional long - term refinancing operations that provide the banks with finance on the condition that they increase the value of their loans to the real economy. the current cycle of monetary policy easing started in october 2014 when we introduced two private sector asset purchase programmes : the asset backed securities purchase programme and the third programme for covered bonds. in january 2015 the governing council judged that additional monetary policy easing was needed as the inflation outlook weakened further. the eurosystem extended its purchases to bonds issued by euro area governments, government agencies and european institutions. [ slide 8 : ii β key features of eapp ] let us now discuss the current, expanded asset purchase programme, in more detail. [ slide 9 : the eurosystem sets the liquidity of the euro area banking system ] the eurosystem is able to regulate the euro area banking system β s liquidity with two tools. firstly, the eurosystem organises regular refinancing operations : tenders. the interest rate applied to these operations is the main policy rate, which currently stands at 0. 05 %. with these refinancing operations the eurosystem steers short - term money market rates. the tender operations are demand driven : banks can decide whether or not to participate. in contrast, outright asset purchases are not demand driven. by asset purchases the central bank actively steers liquidity of the banking sector by bond purchases. participants of regular tender operations consist of monetary policy counterparties, mainly banks. outright purchases reach directly a much broader set of financial institutions, some of which are not even located within the euro area. as instruments bought by the eurosystem may have maturity of up to 30 years, with these purchases the eurosystem is able to steer longer term interest rates. [ slide 10 : eapp consists of two parts ] the euros | youth, education outside of the class room has been successful, so that the youth are continuously exposed to a work environment and accumulate experience. german style apprenticeship programs have been found to pave the way from education to working life. wages provide incentives wages provide incentives. the relative wages of different occupations should reflect demand and supply conditions and direct young workers to those sectors and occupations where work is available. bis central bankers β speeches is the β german labour market miracle β a textbook example of successful reforms? in germany both unemployment and youth unemployment have continued during the crisis, now the unemployment rate being at its lowest rate in two decades, at 6 % and youth unemployment at 8. 5 %. although this impressive evolution of unemployment and youth unemployment is in part due to better economic development than in other euro area countries, the german labor market institutions play a role. the target of the german labor market institutions and reforms has not been the youth only, but because the youth are at β the margin β, meaning that changes in unemployment affect them more than proportionately, the general labour market reforms have successfully also reduced youth unemployment. the key institutions and reforms in germany are the hartz reforms ( 2003 β 2005 ), wage moderation, the β kurzarbeit β short time working scheme, and the apprenticeship vocational training programme. all of these include elements that promote the fall in youth unemployment. hartz reforms aimed at both labour supply and demand the hartz reforms included a number of measures aiming at both labour supply and demand. by tightening the eligibility of and reducing the duration and level of unemployment benefits, as well as with different types of low - wage jobs and wage subsidies the german government aimed at activating unemployed workers. labor market regulations were reduced, by altering employment protection and the rules for temporary contracts. opening clauses to labour contracts were introduced, to bring flexibility in times of trouble. these concern flexibility of working time and wages. wages have grown moderately wages have grown moderately in recent years in germany, which has contributed to the fall in unemployment. the increase in low - wage jobs has in part supported the employment of low productivity workers, often the young. β kurzarbeit β has had a positive employment effect during the crisis beneficial especially for the employment of workers on permanent contracts, typically older workers whereas labour input adjustment has been made through the reduction of ( temporary ) workers in many countries, in germany the adjustment has been made largely in hours per worker with the so called β kurzarbeit β short time | 0.5 |
behalf of the public and the authorities, and the bank is required to wield the weapons in its arsenal whether people like it or not. the bank attempts to carry out that task as well as it possibly can. in the service of that task, the bank is granted more independence than are most government - owned institutions. one could ask why this is so. what makes it necessary? the explanation lies not least in the fact that the legislature β in iceland as elsewhere β has realised that the battle against the disease called inflation could be lengthy and uncomfortable. as time passes, the treatment of the disease could generate unpleasant side effects, and it might be tempting to do away with those side effects in the vain hope that the illness will somehow cure itself. indeed, we have heard this irresponsible notion expressed in various quarters recently. anyone who has come down with a persistent illness is familiar with the physician β s demand that the patient complete the course of treatment prescribed to him. if he does not, he runs the risk that the bacteria attacking him will become resistant to the medicine best suited to fight them, with the result that the medicine will work poorly or not at all the next time it is needed. the tactic of last resort under such circumstances is to prescribe a much stronger dose, which inevitably produces much more dire side effects. if a central bank, either the one located in this building or another one, should change its course in mid - stream because of escalating pressure stemming from painful side effects, it is hardly likely that such a bank would be taken seriously when it next attempted to mount a campaign against inflation. the independence of the central bank exists not least to guarantee that those wishing to take the line of least resistance, hoping that the illness will cure itself, cannot bring undue pressure to bear. the central bank β s independence also provides the government a buffer against such pressure. the fact is that the central bank neither can nor wants to ignore the figures that tell us that it is far from having achieved its goal of bringing inflation down to targeted levels. there are many explanations for this β or excuses, perhaps β but as has always been the case, many excuses are usually worse than one. and of course, the main explanation is that growth, and demand have been greater and more enduring than economic indicators β and therefore the bank β s forecasts β suggested. this has required lengthier and more invasive treatment than was previously intended. and while the central bank does not consider this | rate and interest rate over the forecast horizon. in december 2005 the same baseline forecast was used, but in the alternative scenarios, the policy rate path followed financial market analysts β forecasts and the exchange rate was extrapolated from uncovered interest rate parities. these approaches were developed further in 2006 and the baseline forecast in july and november was based on a policy rate path calculated from forward interest rates and analysts β expectations. the alternative scenarios assumed, respectively, an unchanged policy rate and a policy rate path that would bring inflation to target within the forecast horizon. earlier forecasts based on an unchanged policy rate across the horizon, in an environment where there was an obvious need for a sharp hike, produced a misleading picture. they presented developments that the bank had to explain would never materialise. the baseline forecast in monetary bulletin in november 2006 represented an enhancement insofar as it was based on market expectations about policy rate changes. the central bank incorporated these expectations into its baseline forecast, even though it considered them unrealistic. they assumed rapid cuts in the policy rate commencing early this year. the central bank considered neither assumption to be compatible with the inflation outlook. thus the forecast lacked credibility, in the bank β s own opinion. this prompts the question of what assumptions it is natural for the central bank to make about the policy rate in its baseline macroeconomic and inflation forecasts. iceland is not the only country whose central bank has faced such a challenge. several years ago, the reserve bank of new zealand responded by using its own policy rate forecast as an assumption. the bank of norway followed suit two years ago and now uses a future interest rate path forecast by its executive board for its baseline forecast. sweden β s riksbank recently announced that it will use its own forecast for the repo rate path as an assumption in its inflation forecast. these banks have followed a similar course to the central bank of iceland in developing the interest rate assumptions behind their forecasts. they have now opted to use the path that is forecast by those who actually determine the policy rate, partly because they did not consider market agents β forecasts and expectations sufficiently credible. at the same time, these central banks have firmly stated that their policy rate forecasts entail no commitment to hold their rates to that path. the policy rate must always be decided on the basis of the best available information at any given time. experience shows that paths change sharply from one forecast to the next and the central banks explain the assumptions behind such changes thoroughly | 0.5 |
mark carney : the implications of globalization for the economy and public policy remarks by mr mark carney, governor of the bank of canada, to the british columbia chamber of commerce and the business council of british columbia, vancouver, british columbia, 18 february 2008. * * * i am delighted to give my first public address as governor of the bank of canada in vancouver, not only because my roots are here in the west, but also because vancouver aptly symbolizes the subject of my remarks today β globalization. i chose to speak about globalization at the outset of my tenure because it will continue to be one of the forces shaping our economy and economic policy for years to come. steady advances in transportation, communication, and information technologies, underpinned by the more widespread adoption of free - market economic policies, are shrinking the globe and expanding the global economy. it is incontestable that the current wave of globalization has been, on balance, of great benefit. hundreds of millions of people have already been lifted out of poverty, with the real potential for hundreds of millions more to share their destiny. 1 globalization has also had numerous economic benefits for canada. the recent period of international integration has coincided with the second - longest expansion in our nation's history, characterized by rising real incomes, surging employment, and low, stable, and predictable inflation. however, these outcomes are not preordained ; to reap fully the benefits of globalization, policy - makers must weigh its implications and respond effectively to its challenges. in my time today, i will discuss these policy challenges, particularly those related to the conduct of monetary policy. first, i will talk about how the current wave of globalization differs from previous periods of economic integration, and then i will address some of the economic impacts of globalization. before concluding, i will also say a few words about the current outlook for the canadian economy, which, not surprisingly, is importantly influenced by global economic developments. what is different? in some respects, the current wave of globalization resembles earlier episodes. there have been occasional periods of intense economic integration over the centuries, most notably during the roman empire and in the latter half of the 19th century. these have shared several common features : for example, technological innovations that shrank economic distances ( e. g., standardized roads, the telegraph and, more recently, the internet ) and, very importantly, governments that pursued supportive economic policies. these governments recognized the long - term benefits of economic integration and were large | tiff macklem : $ 5 and $ 10 bank note issue remarks by mr tiff macklem, senior deputy governor of the bank of canada, presented to the vancouver train station, vancouver, british columbia, 7 november 2013. * * * good morning friends and colleagues and welcome to this event to launch the new $ 5 and $ 10 polymer notes. i am very pleased to be here in beautiful vancouver, representing the bank of canada. and like the governor, i am proud of these bank notes. they are making history : a first for canada and, indeed, the world. with these notes, canada breaks new ground. they are safer, cheaper, and greener. safer, because all the notes have the same state - of - the - art security features, using holography, transparency and other elements that make them very difficult to counterfeit but easy for everyone, especially those behind the counter, to verify. we are the first β and for now, the only country β to have a hologram within a transparent window on our bank notes. cheaper, because they last longer than paper notes. this means fewer notes will need to be printed and transported, making the series more economical. greener, because over the life of the series, fewer notes will be produced. and when they do wear out, they will be recycled. it β s possible that they β ll be recycled into new products β products, such as this flowerpot. those are some facts about the new notes. but let me put to rest a few urban myths that have been making the rounds about the polymer notes. my favourite myth is that the notes smell like maple syrup. they don β t. so if you get a new bank note and it doesn β t smell of maple syrup, don β t worry. that β s a good thing. and you can rest assured ; there is no chance these notes will melt if you put them on the dashboard of your car. trust me on this. there is a chance, however, that your car might be broken into, so i don β t recommend it. starting today, these safer, cheaper, greener, bank notes will be rolled out across canada ; and over time, they will make it into everyone β s hands. given the striking imagery on the $ 10 bank note, it is entirely appropriate that we are here on national railway day. this day marks the anniversary of the hammering of the last spike into the railbed in craigellachi | 0.5 |
one glimmer of hope, of course, is that the impediments to investment will gradually peter out over time. the adjustment and reform processes in the crisis countries are making headway, and financing conditions are looser again than they were when the crisis was raging. this means that two major burdens on investment have been removed. however, one major impediment lingers on β the outlook for growth β a hugely important factor for investment β has been revised downwards in recent years. the european commission projects that, in the absence of further growth - enhancing reforms, the medium - term growth outlook will be no better than 1 % per annum. it is this malaise, and not deficit - financed stimulus programmes, that needs to be addressed by economic policy. the same can be said for germany, where negative demographics look set to play a major role in depressing potential output growth. incidentally, grafin lambsdorff, the idea of making each country individually responsible for creating growth - friendly conditions was something which your late husband already expounded in his famous β lambsdorff paper β. that document back in 1982 spelled out his plan for boosting growth in germany and probably sounded the death knell for the spd / fdp coalition. pointing to the stubborn adjustment crisis that was stifling the global economy at that time, graf lambsdorff wrote : β it will only be possible to find a solution β at least a lasting one β to the worldwide problems if the individual countries themselves do away with what β s making it difficult for them to adjust. β the efforts needed to clear the debris after the financial and sovereign debt crisis sometimes addressed shortcomings of a very fundamental nature. greece, for instance, urgently needs a reliable and functioning administration and a more efficient public sector, not to mention measures to sustainably consolidate its public finances and further reform steps to make greece a more competitive economy. and italy, too, could place its economy on a much more bis central bankers β speeches rewarding growth path by streamlining its public administration and making its legal system more efficient. it is gratifying to note that the constitutional reforms on which prime minister matteo renzi has staked his political future are moving in the right direction. this initiative will enable parliament to adopt legislation more quickly. once the reform measures have been formally and fully approved by parliament, the final step in the process will be a public referendum, most likely in the autumn. in some | and not to fall into any habits. it's 6 : 30 a. m. john global wakes up. he enjoys the view from the window β the forest and lake. it is indeed different from the one he saw two days ago in hong kong β skyscrapers and smog blotting out the sun. he left warsaw for poznan 20 years ago, in 2006, when he realized that administrative issues are too timeconsuming and generate negative emotions. it was at that time β as early as in august 2006 β that poland's first fully electronic public service was launched in poznan. this service helps make transactions via the internet. this means that it is possible to download and fill in an electronic form, authorize it ( for instance with electronic signature ), make a payment ( including stamp duty ) and receive confirmation that a given service has been provided by the e - authority β and all this takes place via the internet. if a physical document is necessary ( extremely rarely though it happens in 2026 ), the relevant document is delivered to the indicated address by courier within 24 hours. when global was moving to poznan, he was hoping that e - government would grow fast here, and that it will be possible to set up a company via the internet within several minutes or to file a passport application from any photographer β s shop immediately after the photo has been taken, etc. he knew that things already looked like this in many places around the globe, but not yet in poland. he analyzed strategic documents of local authorities in poznan, took a closer look at their aims and methods to measure the results, and decided that poznan was very likely to meet his expectations. he knew that government bodies were frequently inefficient only because they did not know or employ modern yet already proven methods of administration. poznan, however, was different. here, everything was well thoughtout, consistent and done so as to fulfil a clear vision of e - government that was supposed to be citizenfriendly and to make their life easier. and global was not in the wrong. he is still satisfied with his choice. it is worth mentioning that he hesitated over the decision to move. the final straw was an argument at warsaw district office where global had gone to in order to obtain some certificate. the certificate was ready, but global β who had paid the stamp duty by an online transfer β had no proof of payment. without such confirmation the officer would not issue the certificate. the argument reached | 0 |
##est sovereign links. and only default remains. or, of course, a bail - out, i. e. shifting the debt burden from some countries to others. but, history seems to suggest quite clearly that without some form of debt reduction ( or default, if you wish ) it will be really hard to get sovereigns functioning normally again. are there any other alternatives? yes, either very fast growth or slow deleveraging. the first option is possible, but unlikely. the second option might mean not one, but two β japanese β lost decades. moreover, the second option might also endanger the strong economies. so, once again, without one form of debt reduction or another, it will be really hard to move forward. bis central bankers β speeches | mojmir hampl : states as debtors speech by mr mojmir hampl, vice governor of the czech national bank, to the alpbach financial market symposium, alpbach, austria, 2 september 2011. * * * i would like to thank the organizers for inviting me to this wonderful and amazing place. and that is not a platitude ; i really mean it. it is my first time here in alpbach, and i can only hope that it is not the last after i finish my presentation. concerning the sovereign debt crisis, we are describing it as something absolutely fatal. but from a bird β s eye view β as was said by several speakers yesterday β sovereign debt problems and overindebtedness of nation states are nothing new. europe as a continent has a rich experience with such problems. the czechs share a long part of their history with austria, so many might remember from their textbooks the sovereign instabilities and crises of the 19th and 20th centuries, for instance the well - known crash of state finances in 1811, in the middle of the wars against napoleon. that crash was followed by a drastic monetary reform, default of the austrian empire and a search for a better way. this time is different, however, at least in the following respects : 1. we forgot that this can happen, that sovereigns can become perfectly insolvent just like any other debtor, and states behaved accordingly. 2. this is the first time in 60 years or so that a sovereign crisis has hit the developed world, the rich world, not the developing one, the hardest. to demonstrate that : almost 80 % of all the imf β s rescue loans have gone to europe! over 40 % have gone to the eurozone itself, and the share is going to rise. the developed world is not accustomed to this. 3. this time the problem of sovereign debt has appeared at a time of peace and prosperity. 4. moreover, the eurozone β a monetary union without a state β is a completely new, unprecedented arrangement. typically, the solution to such a crisis used to be : inflation, default or monetary reform, very often accompanied by currency devaluation, or a combination of all these. please note that typically when the imf organizes a programme for a developing country, it requires a partial default or devaluation to disburse funds. nothing like that is possible within the eurozone β monetary solutions are unavailable for the weak | 1 |
to achieve price stability, the loss of monetary policy independence may not be very costly. in fact, for a small open economy, such as greece, it may actually provide net benefits. β’ second, it can be misleading to view the optimum - currency - area characteristics as preconditions for ensuring the success of a country β s participation in a monetary union. in particular, to view the characteristics as preconditions overlooks the fact that the characteristics, or criteria, can themselves be endogenous. i will argue that the creation of a monetary union can itself create conditions that are favourable to the well - functioning of the union. i. the loss of monetary policy independence to the ecb let me first turn to the matter of the loss of monetary independence. modern monetary theory emphasises the role of monetary policy in providing price stability. by so doing, monetary policy can best provide a stable environment, which is a prerequisite for growth. this view contrasts strongly with the view that monetary policy can be used for fine - tuning the economy. the intellectual underpinnings of the emphasis on price stability can be traced to milton friedman β s and ed phelps β critique of the phillips curve in the late 1960s. on a brief personal note, i was privileged to have been taught macroeconomics at lse by a w phillips. professor phillips was an excellent teacher who made contributions in many areas of macroeconomics. in fact, it is well known that milton friedman tried to recruit him to the university of chicago, but, fortunately for lse, he declined. the phillips curve expressed the idea of a trade - off between inflation and unemployment. the friedman - phelps insight, which helped earn those economists their respective nobel prizes, was that the trade - off was, at best, temporary. repeated attempts to reduce unemployment by allowing inflation to rise would result in ever - increasing inflation with unemployment returning to its natural rate. although the friedman - phelps hypothesis swept through academia in the 1970s, policy makers were slower to catch on. as a result, the 1970s, and in some cases the 1980s, provided a real - world laboratory for testing the friedman - phelps hypothesis. as we now know, central banks that kept trying to pin down the rate of unemployment wound up with both high inflation rates and high unemployment rates. this was a lesson that would not be lost on subsequent generations of central bankers. building on the friedman - phelps insight, finn kydland and ed prescott showed that a | supervision that constitutes the bulk of our ongoing engagement with the industry and through which our policy objectives are given effect. this division of labor is important for lawyers and policymakers to think about deeply because the processes of regulation and supervision are necessarily different in crucial respects. regulation establishes a binding public framework implementing relevant statutory imperatives. because a rule is designed to apply generally, rules must be based on general principles intended to achieve general aims, rather than reverse - engineered to generate specific effects for specific institutions. given their general applicability, there must be a general process for all those with an interest β industry, academics, citizens, congress β to have notice of, and opportunity to comment on all rules, ensuring that all potential effects and points of view are taken into account in the rule β s crafting. and given their general function, rules must be clear and public : those affected must know what to expect and what is expected. supervision, by contrast, implements the regulatory framework through close engagement with the particular facts about particular firms : their individual capital and liquidity positions, the diverse composition of their distinct portfolios of assets, their business strategies, the nature of their operations, the strengths and weaknesses of their management. much of the granular information used by supervisors is, accordingly, proprietary and confidential, and many of their judgments and decisions are closely tailored to specific circumstances. given the strong public interest in the safe, sound, and efficient operation of the financial industry 1 / 7 bis central bankers'speeches and the potential for hair - raising and widespread adverse social consequences of private misjudgment or misconduct in that industry, close and regular supervision of this sort can help us all sleep restfully. yet, the confidential and tailored nature of supervision sits uncomfortably with the responsibilities of government in a democracy. in the united states, we have a longstanding, well - articulated framework for ensuring that regulations conform with the principles of generality, predictability, publicity, and consultation described above. supervision β for good reason, in my view β is not subject to this formal framework. but it is currently not subject to any specific process constraint promoting publicity or universality. this leaves it open to the charge, and sometimes to the fact, of capriciousness, unaccountability, unequal application, and excessive burden. here, then, is a conundrum. we have a public interest in a confidential, tailored, rapid - acting and closely informed system of bank supervision. and we have a | 0 |
that 16 trillion yuan worth of assets of smes could not be accepted as loan collaterals. making account receivables and inventory eligible collateral is an important solution to the financing difficulties of smes. the law on real rights also identifies a dedicated agency for account receivables finance registration. the pbc β s account receivables finance registration and public display system and the financial leasing registration and public display system started to operate on october 1st, 2007 and july 20th, 2009 respectively. the registration of collateral puts collateral information on public display and holds third parties involved legally accountable, playing an important role in protecting legitimate rights and interests of financial institutions as the secured party. the system also registers factoring business, mitigating legal risks of commercial banks β factoring business with repurchase agreement attached. the enaction of the law on real rights has largely filled in the gap in china β s legislation on taking floating charge as collaterals. however, after the law on real rights was promulgated, commercial banks have explored taking a mixture of real right as collateral, and they are promoting innovation to include land use right and rural housing site as eligible collaterals. what β s more, the two registration systems still need improvements in terms of basis of registration, scope and effectiveness of the registration, underpinning the urgency of legal definition. these need to be clarified by legislations. this symposium aims to understand innovative practices concerning collaterals, discuss issues to be solved in the implementation of the law on real rights, so as to promote judicial interpretations of security interest to be released as soon as possible based on latest developments in collaterals and serve economic and financial development in a more effective manner. i wish the symposium a complete success. thank you. | are two major types of transactions in the international gold market : the traditional spot transactions taken place basically in the gold markets of london, zurich and hong kong ; and the futures transactions including gold options, forwards and swaps basically on chicago board of trade, new york mercantile exchange, the mid - america commodity exchange and tokyo commodity exchange. a fledged gold derivatives market can effectively function for market players to hedge against risks and carry out investment and financing. the current major form of gold transaction at shanghai gold exchange is firm order spot transaction. with the development of chinese gold market, we will phase in a variety of gold derivatives including forwards and futures. in february and august this year, shanghai gold exchange has put forward successively t + 5 and deferred delivery products in addition to spot transactions. the attempts help the enterprises to fix costs, further preserve value, and avoid the uncertainties in production costs caused by price fluctuations. currently, the deferred delivery is done on a trial basis by means of down payment. the transaction could be settled before, after or on the contracted date as negotiated by the buyer and seller. the price is decided on the day of transaction. this product avails gold producing and demanding enterprises to hedge against risks, diversifies tools for investment and enlarges the variety of transactions on the market. the pbc will conduct further research on gold forwards and futures provided that financial risks can be effectively contained. 3. to integrate chinese gold market into the international market. we all know that the present chinese gold market is a relatively closed one with membership accessible only to domestic gold producers, intermediate consumers and commercial banks ; exports and imports have not been liberalized ; and no round - the - clock synchronized transactions with the international market. therefore, we plan to open the market further in an effort to solve the above problems, fuse the chinese gold market into the global market and create conditions to forge our market into a global player. we see as central bankers, that developed gold market can help to compliment the monetary policy instruments and improve macro - economic management. this is because gold still apparently demonstrates its character as a currency in the modern financial system. even after the collapse of the bretton woods system, the price of gold is still an important index for central banks to evaluate inflation. also, all central banks still hold considerable amount of gold as government reserves. gold reserves, foreign exchange reserves and quota at the international monetary fund form a nation β s international reserves that can be used to weather risks. | 0.5 |
activity will depend on the structure of the economy and the value added weight of the tourism and leisure activities, which are affected the most ; the scope and effectiveness of policy measures ; the success in addressing the health crisis ; and the subsequent lifting of containment measures. these forecasts are subject to considerable downside risks and uncertainties. the greatest risk is associated with the possibility of a second wave of the pandemic, which will delay the recovery. moreover, it could lead to long - lasting effects, such as widespread corporate insolvencies, higher unemployment and a slower recovery, which, in turn, are expected to have a negative impact on banks β balance sheets. on the upside, the development of an effective treatment / vaccine for tackling the coronavirus would have positive effects on the world economy. moreover, the adoption of the european commission β s proposal on the β next generation eu β instrument will accelerate the recovery of the european economy. 2. policy action in the euro area european and national policymakers have acted quickly and decisively with an initial round of 1 / 6 bis central bankers'speeches measures that are sharply reducing the effects of the pandemic shock. the governing council of the european central bank ( ecb ) adopted in march, april and june 2020 an even more accommodative monetary policy stance. this aims primarily at preventing the disruption of the medium - term path to price stability, averting fragmentation and ensuring a smooth transmission of monetary policy in the euro area, while at the same time supporting households, businesses and banks to absorb the shocks caused by the pandemic. in particular, the interventions aimed at ( a ) ensuring favourable liquidity conditions for the banking system, ( b ) ensuring the smooth flow of financing to the real economy and ( c ) preventing a pro - cyclical tightening of financial conditions for all sectors of the euro area economy. moreover, the supervisory board provided banks with the necessary temporary flexibility regarding capital adequacy and liquidity. the governing council of the ecb has announced that it will continue to monitor and analyse the effects of the pandemic on economic developments, the medium - term outlook for inflation and monetary policy transmission. it finally stated that it stands ready to adjust its instruments as appropriate. in addition to monetary policy interventions, there have been immediate and far - reaching initiatives and measures by national governments and european institutions, both to tackle the pandemic and to protect the economic and social fabric, as well as to | operations are intended to safeguard financial stability and ensure, through the orderly functioning of the interbank money market, that the governing council β s interest rate decisions are transmitted to the financial markets and the real economy. the economic outlook and policy challenges the economic outlook for the euro area is surrounded by an unusual degree of uncertainty. the financial market turmoil is likely to last for some time and its impact on the real economy is difficult to assess at this time. much depends on how far banks might tighten their lending terms in response to losses and the unwelcome transfer onto the balance sheet of offbalance sheet items. for the time being, there is little evidence that the financial market turmoil has influenced the dynamics of credit aggregates in the euro area. 1 meanwhile, the cost of funding for firms and households appears to have edged upwards, albeit only slightly, in the euro area in recent months. the latest available information, therefore, suggests that the impact of the financial market turmoil on euro area economic activity is not likely to be sizable. the sound fundamentals of the euro area economy and the absence of major macroeconomic imbalances should help cushion the effects of the financial market tensions. nevertheless, caution is warranted. the impact on some banks β balance sheets has been considerable and a number of financial institutions may have to strengthen their capital positions and be more cautious in their lending policies. according to the march 2008 projections of the ecb staff, real gdp in the euro area will rise in a range of 1. 3 % to 2. 1 % in 2008, representing a deceleration from 2. 6 % in 2007. meanwhile, the short - term outlook for inflation is not satisfactory. inflation reached 3. 5 % in march, reflecting mainly the rapid rise in oil and other commodity prices, and is likely to remain at elevated levels above 2 % in the coming months and moderate toward 2 % very gradually. globally, the economic expansion is loosing speed in the face of the financial crisis. outside of the euro area, growth in the advanced economies of western europe is decelerating. the u. s. economy is likely to experience a more serious slowdown, with minimal β if not negative β growth in the first two quarters of 2008, followed by a gradual recovery thereafter. the emerging and developing economies, led by china and india, have so far been less affected by financial market developments, although activity is beginning to slow in some countries. in the light of the financial market turmoil, the balance | 0.5 |
feedback loops between the global and the domestic economy, on the one hand, and between the financial and real sectors, on the other, have bis central bankers β speeches become more complex. in this context, it has become difficult to make reasonable impact assessment of macro - policies. moreover, the capability of standard models in the armoury of central banks in predicting growth and inflation is being questioned. primary assumptions of basic dsge models have come under attack both from policymakers and academia. there is, therefore, a need to revisit the modelling strategy in the light of the increased uncertainty, leverage and global linkages. it is important to harness appropriate statistical tools to capture the underlying dynamics of economic - financial framework. ladies and gentlemen, we are fortunate to have amidst us luminaries who are not only accomplished statisticians but some of them are at the helm of statistical administration. i am confident that the deliberations today will not only guide us in setting our statistical agenda in the reserve bank but also will go a long way in strengthening the indian statistical system, for which prof. mahalonobis worked tirelessly. i once again extend a hearty welcome to all our speakers and all our invitees, and look forward to the intellectual fare ahead. thank you. bis central bankers β speeches | long - term base for good economic development. in addition, we will then be able to have real wage increases again. firms set their prices according to, for instance, the costs they incur, the behaviour of their competitors and expectations of future price and cost increases. when inflation is 4 / 10 bis - central bankers'speeches high and cost increases are large, firms are more eager to raise their prices often and to pass on the increased costs to customers. it is also easier to raise prices, as competitors do the same. we saw an example of this in the riksbank's business survey last autumn, where more than two out of three companies responded that they were now raising their sales prices more often than normal and that this is mainly because costs are rising all the time. in turn, the price increases affect other companies'input costs, raising expectations of future cost increases for which they want to compensate with higher prices β and so on. companies'labour costs are also affected if wage increases are pushed up by demands for compensation for the high inflation. another problem is that if inflation is high, it varies more over time than if it remains at a low level. this makes it more difficult for households and companies to plan and make financial decisions and it leads to a poorer functioning of the economy as a whole. in such an environment, it becomes more difficult, for example, to interpret the cause of price increases on individual goods and services. is the price increase a sign of a general price increase in the economy, or has the price of the product actually increased more than other similar goods? the risk is that consumers become hardened in the long run and accept all price increases as part of inflation, making it easier for companies to keep raising prices. it is therefore important to remain active and compare prices. a credible 2 per cent inflation target acts as an anchor thus, when inflation is high, there are self - reinforcing mechanisms that allow our expectations to adjust and this contributes to keeping inflation high. but an environment with low inflation can also become self - reinforcing in a similar way. firms are then more likely to let temporary price and cost increases reduce their margins rather than pass them on to customers. the effects on other firms'prices and costs will then be smaller. businesses and households recognise that inflation remains low and adjust their expectations accordingly. this means people do not need to worry or even think about inflation in their everyday financial decisions. an inflation target of 2 per cent creates | 0 |
mean that we should underplay the effects of the shock to food prices that we have experienced. we can look instead at the margin by which food price inflation has exceeded overall inflation as in chart 8. this is a measure of the relative price effect β of how much more food prices have risen relative to the prices of other goods and services. when we look at that measure, the recent period looks more severe in the context of the inflationary episodes of the 20th century. the prices of the essentials in life have gone up a lot, also relative to other goods and services. ga etween ons mer r e n lat on and ood and non al ohol and bank al everages n lat on lat ons and it is important to recognise that underlying the aggregate is a wide range of experiences at the household level. chart 9 shows the typical share of food in consumption for households across the distribution. for the 10 % of households that have the least to spend, expenditure on food makes up more than a quarter of consumption, just over twice the national average. at the other end of the spectrum, for the 10 % of households that spend the most, the expenditure weight on food is just 6 %, about half the national average. bank of england hare o ho sehold ex end t re on ood and bank al ex end t re de le lat ons when there is a shock to food prices, like the one we have seen recently, the consequences are not felt equally across society. the poorest are hit the hardest. the recent experience the covid pandemic was a major shock to the global economy. global agricultural commodity prices rose by around 20 % over 2021, which along with other rising cost pressures drove up food prices globally. 12 this affected food price inflation in the united kingdom too. in january 2022, annual food price inflation stood at 4. 3 %, compared to an average of just below 1Β½ % over the previous three years. poor weather was undoubtedly a factor. harvests had een oor n man o the world β s most important agricultural regions. and strained supply chains affected the distribution of agricultural commodities and food products as well as other goods. 13 in the united kingdom, a combination of heavy rainfall and droughts had caused the harvested production of wheat to drop to the lowest level in 40 years in 2020, before rebounding in 2021. 14 b t ss a β s war on ukra ne made | new investment opportunities in the us has attracted capital inflows to finance higher investment, which in turn has led to a strong dollar. if expectations about higher productivity growth prove well - founded, then us businesses and families will gradually repay the debts they have incurred, and the current account deficit will subside, with an adjustment of the dollar accordingly. although the imbalances will unwind, they will do so slowly, allowing the us economy to recover from its present slowdown. but if there were to be a reappraisal of the extent to which productivity growth had increased, then a more sudden downward adjustment to spending could result. in such circumstances, the imbalances would unwind more rapidly, leading to adjustments in asset prices, both in stock markets and exchange rates. that would imply a much bumpier ride for both the united states and the world economy in the months ahead. clearly, there have been some downward adjustments to stock prices in the us over the past year. but their scale has been limited, and there does, at least so far, appear to be no significant reappraisal of the impact of new technology on us productivity growth. although it is not easy to reconcile the recent sharp falls in confidence in the us and the relative stability of stock market prices, it would appear that investors generally have taken comfort from the federal reserve's ability and willingness to react to the latest data, and take appropriate action. the second cloud on the horizon is the risk to emerging market economies posed by the us slowdown and the unwinding of imbalances in the industrialised world. in some emerging markets, especially those in east asia exporting high technology products to the united states, the immediate outlook is for weaker economic growth. but for other countries, especially in latin america, the fall in us interest rates and in the dollar against the euro will mitigate the direct loss of export demand. but the major concern is to avoid another financial crisis, of which there have been too many in the past five years. from mexico in 1995, through the asian crisis in 1997 and brazil in 1999, and, more recently in argentina and turkey, sudden reversals of short - term capital flows have created financial crises. in many cases, these crises have proved devastating to the citizens of the countries affected. the existence of deep and liquid international capital markets offers opportunities for greater risk diversification by both borrowers and lenders. but it also increases the risk of contagion from | 0.5 |
to go " beyond banks and beyond lending " to close the sme funding gap. given the diversity of smes and their financing needs, we believe a more complete solution to the sme financing challenge must address efforts in three equal parts : 1 / 5 bis - central bankers'speeches first, enhancing the traditional role of banks and bank financing while recognising the limitations of bank financing, particularly at earlier stages of the life - cycle for new and innovative firms. second, developing and deepening alternative sources of financing to complement traditional bank financing. and third, strengthening firm - level factors to improve the ability of smes to gain affordable access to finance. important strides have been made to advance efforts on these fronts. access to traditional bank financing for smes continues to be enhanced through innovative modalities such as : itekad which blends philanthropic and commercial funds to provide seed capital and microfinancing to microentrepreneurs, alongside specific handholding and capacity building support. credit guarantee institutions such as cgc have introduced portfolio guarantees to provide credit enhancements at greater speed and scale for borrowers that lack collateral and track records. skim cakna, a liquidity scheme introduced in 2021, has also been successfully expanded to help smes manage their cashflows by leveraging on their contracts with the government. the imsme online referral platform, launched by the credit guarantee corporation malaysia ( cgc ), has helped reduce smes'search effort and costs for loans by matching their financing needs with relevant financing options from multiple providers β both banks and non - banks - thus addressing an important pain point faced by smes in sourcing suitable financing. this is complemented by the khidmat nasihat pembiayaan platform, or myknp, which provides advise to help unsuccessful financing applicants improve their eligibility for future financing. banks will continue to play an important role in the sme financing ecosystem, and there is still considerable room to further evolve their role β particularly in the area of enabling lending decisions based on alternative data and supporting larger ticket, longer - tenure and flexible financing solutions through risk - sharing arrangements that will not expose depositor funds to excessive risk. here, we are also making important inroads. the entry of digital banks and alternative fund raising platforms such as crowdfunding and p2p platforms that offer different business models and innovative approaches to credit assessments will contribute to the expansion and diversification of funding sources for smes | putting in place avenues for redress. recent initiatives include evolving a more effective financial mediation bureau ( fmb ) to ensure that consumers of all financial service providers under the purview of the central bank have recourse to an independent, fair and impartial dispute resolution mechanism. earlier this year a deposit insurance scheme was introduced to further strengthen incentives for financial institutions to adopt sound financial and business practices and enhance public confidence in the financial system by providing explicit protection on deposits. bank negara malaysia is also currently finalising the details for the establishment of a credit counselling and debt management agency to be introduced early next year, with the aim of providing individuals with credit counselling and assistance in restructuring of their debts. to promote financial education at an early age, bank negara malaysia embarked on an education programme in schools on basic financial knowledge in partnership with the education ministry since 1997. further, in collaboration with the financial industry's associations, bank negara malaysia launched a ten year consumer education programme ( cep ) for the banking and insurance sectors. we are now in the fifth year of this programme. extensive information is being disseminated via the spectrum of distribution channels including newspapers, radio, websites, branches of financial institutions and outreach programmes. the consumer education efforts are also complemented by initiatives to promote a higher level of disclosure and transparency so as to ensure that consumers have access to relevant, comparable and timely information on products and services. a significant focus has been on the insurance sector, given that a significant segment of the malaysian consumers do not have good understanding of insurance products. in particular, guidelines on medical and health insurance and the requirements for marketing of life insurance policies, have been strengthened while rules for independent financial advisers have been introduced. in meeting socio - economic objectives, there is also a need to ensure that the welfare and interests of all segments of society are protected and that no target group is excluded or marginalised. indeed, an important component of our consumer protection framework is to ensure that all consumers continue to have access to basic banking services at reasonable costs. in this connection, a more interventionist approach has been pursued to require banking institutions to offer a list of basic banking services to all malaysians and to set guiding principles for the imposition of fees and charges for these retail products and services for individuals and small and medium sized enterprises. efforts have also been taken by the central bank in collaboration with the financial services industry to enhance the integrity of the payments systems and instruments, aimed at promoting confidence | 0 |
s s mundra : priority sector lending - status, issues and future agenda inaugural address by mr s s mundra, deputy governor of the reserve bank of india, at the " conference on credit flow to priority sector - policy and implementation ", college of agricultural banking, reserve bank of india, pune, 27 june 2017. * * * 1. colleagues from college of agricultural banking ( cab ) ; in - charges of priority sector lending in various banks assembled here and my colleagues from various regional offices of rbi who have joined over video conference - a very good morning to all of you! i consider hosting of this conference on credit flow to priority sector by the cab, a very timely initiative indeed. such conferences are extremely important as they provide a platform for exchange of views and feedback that serves as inputs for policy formulation. i believe that policies framed in isolation will look good on paper but would not serve much purpose when implemented on ground. introduction 2. the overarching philosophy behind prescribing the priority sector target for banks is to enable sections of society, which though credit worthy, are unable to receive credit from the formal system, either in adequate measure or in a timely manner. there are economic reasons why some sectors / borrowers do not receive adequate finance. at any given point of time, the lendable resources at institutions are limited and there is always a trade - off between how much time and effort can be put in and what kind of topline and bottom line the new businesses would generate. given this sort of business dynamics, it is possible that the sectors which rightly deserve bank credit get excluded. this is precisely the motivation behind institution of priority sector lending norms. these guidelines are revised from time to time keeping in view the developments in the economy. priority sector lending ( psl ) : a business case 3. before i come to specifics, let me touch upon certain policy and strategy issues. the psl guidelines have been in existence for a long time now - there are targets, sub targets, but sadly most of the time, these norms are viewed more as a matter of compliance. the first and the most important message which i would like the psl chiefs of the banks present here to carry to your senior management and the board of directors is that lending to priority sector is good business for all the right and justifiable reasons. perhaps, it would be possible for you to put across your arguments more persuasively now than ever before. i say so because | are operational even without waiting for acquiring β scheduled β status. more than 15 % of trade happening under pslc is by sfbs, which is a healthy trend. from the current year itself, the sfbs have been allowed to participate in slbc meetings but there is no requirement for them in the annual credit plan until april 2018. for sfbs, payment banks as their bcs could emerge as a good combination as many payment banks have wide last - mile reach. conclusion 22. i would like to conclude here just by mentioning that all of you as in - charges of priority sector lending in your respective banks can make a difference in a large constituency, which is priority sector. each credit extended by banks to priority sector can be a life changing event and the priority sector credit as a whole can change the lives of a multitude of people of this country. you have to consider your role as that of a change agent. i urge all of you to schedule a discussion with your top management, convey to them the take - away from this conference and then take it to your board. i wish you all the best and thank cab for inviting me to address this gathering. 7 / 7 bis central bankers'speeches | 1 |
the third, on β contingency planning β treat specific aspects related to y2k. in a final summary panel we will try to find an answer to the question : β where do we go from here? β ( good question, indeed. ) a press conference will take place after the first panel at 10. 30 am. our joint year 2000 council chairman, mr roger w. ferguson jr, member of the board of directors, fed washington, and i are going to present the year 2000 problem and its implications for the global financial markets via all media to a - hopefully - broad public. around 12 : 30 you will be invited to lunch here at the hotel. mr edgar meister, member of the board of the deutsche bundesbank and chairman of the banking supervision committee of the european central bank, is going to give a luncheon address. scope and impact of the year 2000 problem although generally well known, it has to be repeated : the cause of the year 2000 computer problem is ridiculously simple. in the days when computer memory was scarce, programmers got into the frugal habit of using only two digits to write a date, so that 1998 was represented as 98. but, as 99 is a higher number than 00, millions of computers simply cannot place the year 2000. instead, they may read the first year of the new millennium as the first year of the century, or as a date that does not exist. even if they pass that test, they still may fail to notice that 2000, unlike most centennial years, is a leap year. thus, at the century - date change or even before - a large number of computer systems, software programs and embedded chip devices currently used will produce errors or will malfunction β unless the date or program logic is modified. with regard to embedded processors, any operation that functions using datasensitive technology may be affected, be it medical pacemakers, heating systems, electricity or transportation. for financial market participants, the year 2000 problem is especially acute. since financial institutions rely heavily on automation to manage information, it will be difficult or even impossible to conduct business if automated applications fail to work properly. given the number and complexity of the date - dependent computerprograms in use, the remediation effort will often have to be colossal. the interdependence of the world β s markets and economies makes the year 2000 risk a true global problem and perhaps the biggest challenge ever faced by the world β s financial | procedures are robust enough, should individual customer systems fail to operate in a year - 2000 - compatible manner. as you all know, the bundesbank is responsible for monetary policy in germany till the end of this year, but will also continue to form part of the banking supervision authority after the start of stage three of european monetary union. in his luncheon address, my colleague mr edgar meister, who is in charge of the bundesbankΒ΄s banking supervision department, and chairman of the ecb - committee on this subject, is going to outline the bank β s actions in that field in detail. co - ordination with other institutions β activities the bundesbank is not only a part of the financial sector, but also a fiscal agent for the government. at the administrative level, the bank isworking closely with other official institutions to ensure the year - 2000 - compatibility of public authorities. the activities of the public financial sector are managed by the ministry of finance. in june 1998, a β year 2000 forum β was called into being by the german banking and insurance supervisory authorities, the bundesbank and private banking associations as a platform for regulators and official and private credit institutions to exchange their views and experiences. the government activities relating to the y2k challenge as a whole are being coordinated by the ministry of economics. in this position, the ministry is also overseeing the preparatory activities of the industrial sector in germany. special attention is being given to the readiness of core infrastructure providers because of their major significance for economic activity in general. in particular, given the financial sector β s heavy dependence on telecommunications, water, energy and transportation, any failure to meet the year 2000 challenge in any of these sectors could lead to serious disruptions at the national and international levels. in addition to that, it would probably adversely affect all contingency plans of the entire economy. as you know, our latest joint year 2000 council bulletin also focuses on this matter, and i hope that we will have an opportunity to attract public attention in this respect at the forthcoming press conference. preparations at the european level at the european level, the bundesbank, being a member of the escb, is taking part in the activities of the ecb to ensure the year - 2000 - compliance of escb - wide systems and applications. the necessity for the ecb and the escb to give emu top priority poses an additional challenge to their activities in connection with y2k. however, all the new payment and accounting | 1 |
ben s bernanke : financial education speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the conversation with the chairman : a teacher town hall meeting, federal reserve board, washington dc, 7 august 2012. * * * good afternoon and welcome. i am delighted to have the opportunity to speak today with educators throughout the country on the topic of financial education. thank you for your participation and for the important work you do. as an educator myself, i understand the profound effect that good teachers and a quality education have on the lives of our young people. today i hope you will learn from each other and share ways to best promote learning and, in particular, to help students achieve greater financial literacy. financial education supports not only individual well - being, but also the economic health of our nation. as the recent financial crisis illustrates, consumers who can make informed decisions about financial products and services not only serve their own best interests, but, collectively, they also help promote broader economic stability. smart financial planning β such as budgeting, saving for emergencies, and preparing for retirement β can help households enjoy better lives while weathering financial shocks. financial education can play a key role in getting to these outcomes. research by federal reserve board staff members on the effectiveness of financial education for young military personnel, for instance, found that those who had taken a high school financial education course were more likely to save regularly. 1 effective financial education is not just about teaching students about financial products or performing financial calculations. it also involves teaching them the essential skills and concepts they will need to make major financial choices. high school students might not recall specific information from a lesson about loans a year later when they go to get their first car loan or student loan. however, if they understand and remember some basic ideas β for instance, that it β s important to shop around for a loan to get the lowest interest rate, to review the fees charged, and to know how to contact financial counselors and advisers β they will be more likely to make a good decision. a particularly valuable lesson we can teach students is how to apply an economic way of thinking to their decisions. for instance, the topic of student loan debt and whether students are prepared to service that debt upon graduation has received increased attention lately. students with some exposure to economic thinking will be more likely to conceptualize their spending on postsecondary education as an investment in their own human capital and choose their school, | and regulatory policies were either unavailable or had been shown to be ineffective. but, of course, we should all be working to improve our state of knowledge, so as to better understand economic and financial behavior and to further expand the range of policy tools that can be employed to enhance macroeconomic performance. that objective is one that governor brimmer has worked hard to promote. | 0.5 |
to give any credibility to a scenario that we consider unacceptable. however, there was full, total, and transparent disclosure of exposures to sovereigns for each in individual bank. everybody is free bis central bankers β speeches to make their own assumptions and calculations. with knowledge of the exposure, it does not take a rocket scientist to figure out some scenarios. it turns out that such calculations would produce very reassuring numbers. but, for some reasons, they never were publically made by most analysts. just as an illustration, the total exposure of french banks to sovereign debt in the southern part of europe is 38 % of total tier one ( 13 % without italy ). i β ll let you make your own conclusions. even in an apocalyptic scenario, only a small fraction of french banks tier one ratio would be compromised. the same results apply, with some variations, to other countries. conclusion let me know conclude. like all other major advanced economies, the euro area is facing big challenges in adjusting to the post - crisis environment. for all, those challenges relate to long term fiscal sustainability. they are neither bigger nor smaller for the euro area than for the us, uk or japan. they may be more complicated to solve because, by nature, our governance is more complex and we face specific collective action problems. it may take us longer to deal with difficulties as they appear, and we are paying a price for this relative inertia. but problems are being tackled, reforms are being implemented and i am convinced that, at the end, the euro area will emerge as a stronger and more robust entity than before the crisis. as for the european system of central banks, i can assure you that we stand ready to act as forcefully as necessary to ensure price stability and preserve the integrity of the euro, which is, today, our most precious common good. bis central bankers β speeches | christian noyer : lessons from the crisis. a central banker β s reflections on some accounting policy issues speech by mr christian noyer, governor of the bank of france, at the european meeting of the accounting profession, paris, 11 december 2008. * * * ladies and gentlemen, i am delighted to be taking part in this european meeting of the accounting profession. this discussion seems to me to be especially timely since the current crisis has raised a whole series of questions related more or less closely to accounting policy. it is no coincidence that the latest banque de france financial stability review is devoted to issues of valuation. i am convinced that the crisis will force us to carry out an in - depth assessment of the concepts and tools relating to valuation. i am not an accountant. the point of view i am putting forward today is that of a central banker who is responsible in particular for financial stability. with this perspective in mind, i propose that together we take a look at three topics. β’ an overview of the crisis from the point of view of valuation β’ the issue of the neutrality of accounting conventions β’ the consistency of rules and practices with regard to valuation financial crisis, a crisis of valuation in many respects, the current crisis is about valuation. to be sure, the factors underlying and accounting for the crisis are numerous. however, one of its significant features is that the uncertainty surrounding the β true β value of complex financial instruments has undermined the confidence of global markets, increased uncertainty about counterparty risk and led to contagion across asset classes, financial markets and economic regions. the crisis has highlighted the fact that the valuation of financial instruments is not only a question of accounting. it raises issues about risk measurement and management by financial institutions, prudential issues via the definition of capital requirements and, more widely, financial stability issues. however, valuation is also without any doubt an accounting issue. it is therefore hardly surprising that the debate about the application of accounting standards to financial instruments is a highly topical one. i think it interesting to note that the crisis has occurred in a financial system that has seen two far - reaching developments. i am referring first of all to the rapid growth in securitisation and products whose valuation is complex. i will not dwell on this aspect as it is not the subject of today β s meeting. the aspect i would like to focus on is the transition to the β fair value β accounting of financial instruments. the rationale behind this accounting development is understandable and can be | 0.5 |
of the central government also arises. in the german view, the status quo should be retained, that is to say, there should be no change to the present right to choose a supervisory authority for the risk weighting of land and local governments. the zero - weighting of loans to land and local governments would then still be possible. to my mind, it would not be fitting for every minor municipality to have a rating of its own, if only to have an appropriate risk appraisal in the future. v quite apart from the competition argument, in the light of the above - described β rating gap β between the united states and europe, there are a number of substantive criticisms that can be levelled at the prudential use of external ratings. for instance, external ratings may prompt a bank to exercise less care in granting credit. that would be contrary to the avowed aim of supervisors of setting the supervisory framework in such a way that the banks themselves have every interest in improving their own risk - management techniques. in addition, it might be objected that rating agencies are being given too much power in the context of regulating banks, because they determine by their rating how high the capital requirements for banks should be. moreover, it is feared that strong competition among the agencies might lead to a watering - down of the results, or that enterprises requiring a rating might engage in a kind of β rating shopping β. finally, the asian crisis is cited, in which, it is claimed, external ratings contributed to the herd instinct exhibited by the banks. i share the view which is occasionally expressed that the banks β function of assessing risk by means of an examination of creditworthiness is in essence not β outsourceable β, but that a risk examination of their own, and thus made on their own responsibility, prior to the granting of credit, is fundamentally indispensable. as a result of the amendments being prepared in basel and brussels, i expect that internal rating systems for the computation of capital will in future play the crucial role in the banking systems of europe. besides that, however, external ratings in the field of capital - market transactions, e. g. in the case of asset - backed securities constructs or corporate financing through debt securities and the like, will likewise increase in significance. vi the authorisation of internal bank ratings β like that of external ratings β will be linked to qualitative and quantitative minimum standards. a working party of the basle committee is currently engaged in el | that external ratings awarded by rating agencies pursue different objectives β namely, a more long - term orientation towards the entire credit cycle β from internal bank ratings. the topic of β completeness β is naturally also of great significance in the case of internal bank systems. i assume that β partial use β will also be possible here. to that extent, the rating would then be incomplete. ladies and gentlemen, the debate on a rapprochement of the prudential to the economic capital of banks by the deployment of management instruments of their own naturally involves uncertainties and risks. the β self - assessment β by the banks planned for a substantial part of the risks in the computation of the capital to be maintained in respect of the risks incurred therefore calls for a supervisory audit of the internal bank methods used. it is at this point that the two other pillars of the new accord come into play. in particular, banking supervisors will be obliged β as stipulated by the second pillar of the discussion paper ( the supervisory review process ) β to gain a clear idea at first hand of the instruments used in banks β risk controlling and risk management. that applies all the more since the market can hardly function as an external monitoring body for internal bank ratings. vii ladies and gentlemen, it is not only at the international level that a β level playing field β must be ensured. that is scarcely less important at the national level as well. as you know, the basle accord is primarily applicable to internationally operating banks. on the basis of the basel proposals, the same subjects are being addressed in brussels, too, so that ultimately the entire banking sector will be affected by the regulations. after the implementation of a corresponding eu directive, those provisions will be binding on all credit institutions within the eu. we advocate, firstly, that the final regulations should coincide in brussels and in basel, and should come into effect at the same time. by that means, a duplication of efforts should be avoided by those credit institutions which will have to apply both sets of regulations. secondly, it is our aim that, in principle, all institutions β regardless of their size β will be able to apply the new regulations. hence, we welcome the efforts being made by the banking associations to assist their member institutions in implementing internal rating systems. it would be conceivable, for instance, for certain demands of the rating process ( e. g. the collection and processing of data ) to be satisfied centrally by the associations. that naturally gives rise to questions | 1 |
know the security features and make the checking of money second nature. the security features on south african rands are only useful if people use them. it is every user β s responsibility to get to know the upgraded banknotes and check the security features. may we also take the opportunity to thank the team and their collaborators for their energy and effort in ensuring the success of the project as a whole and ensuring that the banknotes are distributed on time and for the efforts in ensuring public confidence in our banknotes. thank you for coming here today and for your participation in this process and we wish to encourage all of you to spread the message about these very important changes to our banknotes. thank you. | an annualised rate of β 2, 8 per cent ), far more than expected, and remains in recession ; the us economy grew at an annualised rate of 1, 5 per cent in the second quarter, about half its potential growth rate, and is in danger of falling over its selfinduced fiscal cliff ; german business confidence declined for the third successive month, far more than expected, to its lowest level in two years ; eurozone business declined to a three year low in july, while almost half of the members countries are experiencing negative growth ; unemployment in the eurozone reached new euro - era highs at 11, 1 per cent in may, with youth unemployment in excess of 22 per cent ; spreads on spanish and italian sovereign debt have reached new and unsustainable highs ; the global pmi is now indicating a global contraction ; and systemically important emerging markets, until recently the main ray of hope in a dismal world, are also slowing markedly, particularly china, india and brazil. the litany is almost endless. if you were hoping for some countervailing good news, it has been hard to find. perhaps we can point to remarks by the ecb chairman, mario draghi, that the ecb would β do what it takes β to safeguard the euro generated a relief rally in global financial markets late last week. but we would be fooling ourselves if we think that the problems are over. verbal intervention by central banks can have an impact, but the sustainability of these effects will be dependent bis central bankers β speeches on evidence that their words can be backed up with deeds. until the substance of such assurances materialise, we are likely to see continued volatility as markets react to good news, more in hope than anything else, only to be disappointed and to revise their assessment soon after. the ecb is a central part of the solution, but it cannot act unilaterally to extend its mandate, and getting agreement on these issues at a political level is far more complex. perhaps some other relatively good news is that the downward revisions in july by the international monetary fund ( imf ) to its global growth forecasts were relatively modest - by 0, 1 and 0, 2 for this year and next year respectively. but we can take cold comfort from the size of the revision. of concern is that the downside risks are seen to β loom large β, as the forecasts are predicated on a number of conditions, | 0.5 |
. the central bank β s vision of a well - managed and well - regulated financial services system that serves the needs of the economy and its customers over the long term. poor conduct outcomes are invariably associated with serious prudential issues and vice versa. moreover, macroprudential rules are designed to protect both lenders and borrowers alike against over - lending and over - borrowing. 1 / 6 bis central bankers'speeches therefore, the new structural arrangements are designed to enhance how we operate as one bank, recognising the interlinkages, dependencies and need to challenge each other across financial stability, prudential regulation and financial conduct. approach to prudential regulation delivery of this vision of financial services in ireland requires that regulated firms : 1. have sufficient financial resources, including under a plausible but severe stress ; 2. have capitally accretive business models ; 3. are well governed, with effective risk management and control arrangements in place, commensurate with their size, scale and complexity ; and 4. can recover if they get into difficulty, and if they cannot, are resolvable in an orderly manner without significant externalities or taxpayer costs. as one of my predecessors described, delivery of these outcomes requires β assertive, riskbased supervision underpinned by the credible threat of enforcement2. β the continued work and enhancement of prudential regulation is a continuum of the step changes made in supervision in ireland and internationally since the onset of the global financial crisis. to this end, my number one priority is to ensure that my teams deliver an effective, intrusive, analytical and outcomes - focused approach to supervision. in other words, that we do our job and that we do it well. our approach will continue to be risk - based and anchored by our prism3 supervisory methodology, and, yes, underpinned by the credible threat of enforcement. we will remember the lessons of the past, and the associated human and economic costs, as well as being forward - looking β seeking to anticipate and mitigate future risks β and continuously improving. the irish financial services sector the irish financial services sector operates in an international context, and within a european regulatory system. multiple factors contribute to its success. one factor is the strength and credibility of the regulatory framework. a robust and effective approach to supervision will underpin our aim of enhancing the standing and reputation of the central bank ( such that it is trusted by the pubic and respected by our peers | be worth much, if anything. this brings us to crypto - assets. to me, a crypto - asset is nothing more than a speculative asset, like a baseball card. if people believe others will buy it from them in the future at a positive price, then it will trade at a positive price today. if not, its price will go to zero. if people want to hold such an asset, then go for it. i wouldn't do it, but i don't collect baseball cards, either. however, if you buy crypto - assets and the price goes to zero at some point, please don't be surprised and don't expect taxpayers to socialize your losses. the upshot of this is that crypto - assets are risky and many of the firms dealing in them are in their infancy. that has come to bear in the past year as several prominent cryptorelated firms have filed for bankruptcy, including payment platforms, exchanges, crypto lenders, and hedge funds. the declines in crypto - asset values and associated business failures have led to many investors in the crypto industry getting hurt. as i mentioned in a speech last summer, surveys conducted indicated that somewhere between 12 and 20 percent of u. s. adults have owned, traded, or used crypto - assets. 3 as losses mount, the debate is turning to whether there should be better investor protections in place. but even institutional investors, with significant resources to conduct due diligence of investments, have felt the pain of the so - called crypto winter. for example, it has been reported that at least 15 public pension funds, which manage public employee retirement funds, had investments in the now - bankrupt crypto - asset exchange, ftx. 4 2 / 3 bis - central bankers'speeches while i don't care if people take on risky investments or engage in risky business ventures, banks and other financial intermediaries must engage in any activity they do in a safe and sound manner. i'm supportive of prudent innovation in the financial system, while at the same time concerned about banks engaging in activities that present a heightened risk of fraud and scams, legal uncertainties, and the prevalence of inaccurate and misleading financial disclosures. as with any customer in any industry, a bank engaging with crypto customers would have to be very clear about the customers'business models, risk - management systems, and corporate governance structures to ensure that the bank is not | 0 |
it is also a question of value judgements. moreover, the political system needs to be sufficiently robust to stand up to pressure when special interest groups and other lobbyists try to secure preferential treatment, not to mention outright corruption. another important matter is to ensure that market systems work properly as regards competition. there are certainly problems in all these respects, not least in developing countries but by no means only there. the problem of which decisions belong to the government sphere as opposed to markets is not confined to the nation state. at the international level there are also differences of opinion as to what should be left to individuals and nations to decide instead of being settled in joint political assemblies. the global level lacks overriding democratic structures that could help to establish common rules that are broadly supported. in the debate on the globalisation process there are also many who consider that the global market is not sufficiently β democratic β and that β the struggle is about securing the shared values that transcend economism β. another criticism is that the poor countries have too little say in the global markets. so what do we mean by β globalisation β? pope john paul has said that β globalisation is something that is present in every aspect of our lives β. others see globalisation as the emergence of a common global culture, perhaps at the expense of national and local cultures. one is inclined to agree with his holiness β globalisation is not a straightforward phenomenon that is easily explained. i would say that globalisation stands for the growing interdependence of individuals and countries that is resulting from the increasingly comprehensive exchange of everything from goods, services and capital to ideas and know - how. defined like that, globalisation is not something anyone would want to abolish but a fundamentally positive process that contributes to an increasingly prosperous world, as well as to the democratisation of a great many countries. that there are problems cannot, however, be denied. they have to do, for instance, with the prevailing conditions for world trade and how the resultant gains are to be distributed. another issue is the free movement of capital, which played an important part in the positive economic trend in the 1990s but has also contributed to a situation where economic unrest spreads more quickly from country to country and is sometimes a major ingredient of financial crises in developing countries. then there is the question of how the international financial organisations have functioned and the problem of debt in certain poor countries. these are some of the issues i shall now discuss. the globalisation | change management strategy and decisions. emerging trends the big bang β mobile banking revolution when it comes to revolution in mobile technology, i think of two types of revolutions. one is the mobile revolution as such and the other is mobile banking revolution. mobile revolution refers to rapid innovations in mobile devices with customers being overwhelmed with a slew of new handheld devices right from google β s android operating system, research in motion β s blackberry os and apple β s latest ios iphone platform, tablet computer etc. mobile banking revolution refers to a buffet of potential services that a banker can provide leveraging on mobile technology. in the usa for example, the value provided by banks with mobiles is the remote deposit capture i. e. where the customers increasingly use online mobile services to deposit paper checks. although it is a driver for mobile banking adoption, increasing efficiency in usage of checks is an important value addition particularly to be noted from the indian perspective. bis central bankers β speeches cloud computing β β pay only for what you use β it is becoming evident that cloud computing is getting cost effective in setting up it infrastructure. the big and medium enterprises are now migrating to hybrid cloud models. while non - financial industry has taken huge strides in this arena, the banking sector, at least in india, also seems to be moving in this direction. security is often quoted as a concern for the banks adopting cloud computing, but with robust and modern security devices and software available, the bankers β security concerns regarding protection of data can be addressed. the cloud concept is here to stay and therefore, the focus should be rather on how to use the technology in a secure manner. virtually automate branch? although the trend towards online banking through internet or mobiles is evident, in a country like india the core of the banking habit is personal banking, meaning visit to the bank branch. hence a parallel shift towards smarter, more efficient, friendlier and more automated brick and mortar experience is the need of the hour. integrating self service capabilities into bank branches would be a smart way. why not make the customers walk virtually into their β home branch β? why not think of using collaboration technology to have video chats with the valued customers? this leads me to the next line of thought. how about social media? we have been active in social networking among peer group through various social networking sites like facebook and twitter etc. the customers have been discussing about the services good and bad about their banks and sharing their banking experiences too. but have the banks thought of, | 0 |
2012 period and the preconditions for sustainable growth are now in place. indeed, the result of these adjustments may already be seen in the 2013 economic performance, which hopefully marks a turnaround in romania β s economic development : rapid economic growth ( judged by the current eu standards ), sizeable adjustment in the current account deficit, historically low inflation, while keeping the fiscal deficit well below 3 %. as a result, romania is now fulfilling three out of the four maastricht criteria, namely the sustainability of the fiscal position, convergence of long - term interest rates and exchange rate stability ( although we are not technically in erm ii ). meeting the price stability criterion is probably just a matter of months, until the recent low inflation numbers feed into the 12 - month average rate used as a reference. this is especially relevant now in the context of the recent political consensus that romania should aim at adopting the euro by 2019. however, the recent economic european developments have taught us that only the fulfilment of nominal convergence criteria is not enough. the key is to pull this off consistently. setting a target date for euro adoption should act as a catalyst for sound bis central bankers β speeches economic policies. romania has a five year period in which to check whether the abovementioned achievements are here to stay and to demonstrate significant progress in real convergence area, where we still have a lot of catching - up to do. another lesson of the recent crisis is that a monetary union cannot function properly in the absence of a fiscal counterpart. in today β s europe, it is hardly imaginable that a consensus on the latter is rapidly achievable. the closest substitute β which is supposed to break the vicious circle between sovereigns and banks β is the banking union. romania is a supporter of this initiative as adhering to the banking union will strengthen financial stability and further increase confidence in the national banking sector through the harmonisation of supervisory practices and deposit guarantee schemes and avoiding regulatory arbitrage. in the long run, banking union will foster sustainable lending and economic growth ( by reducing the fragmentation of the european financial markets ). in the particular case of romania, it makes even more sense to support the project given the share of foreign capital in our banking system. furthermore, it is always preferable to have a voice in the setup of a mechanism the existence of which will affect all eu member states, especially since β irrespective of their current choice β all will eventually end up as | albanian economy and society. the response of authorities in albania, like across the world, was fast and unprecedented. the bank of albania intervened through a package of monetary and financial measures. these measures were aimed at containing the short - term impact of the pandemic and safeguarding the production capacities and the economic and financial stability of albania. these are two indispensable preconditions for the rapid, solid and long - lasting growth of the country. in this context, the bank of albania : reduced the policy rate to a historical low of 0. 5 %, in march 2020, and established the needed operational conditions to supply with sufficient liquidity to banks ; provided the necessary regulatory relief and instructed banks to help enterprises and 1 / 4 bis central bankers'speeches households in difficulties, through the placement of a short - term moratorium on credit instalments as well as in the form of a targeted credit restructuring ; temporary forfeited the commissions applied by banks on the use of electronic payment platforms and the fees applied on the interbank transactions costs for the payment systems aips and aech operated by the boa ; last, we suspended the distribution of profit from commercial banks for 2020 to enable the maintaining of capital adequacy of the banking system. the stimulating measures undertaken by the bank of albania were coordinated with an augmented fiscal stimulus. fiscal stimuli were in the form of tax relief and direct transfers to households and enterprises, whose income were affected by the closure of the activity and in the form of sovereign guarantees on loans to enterprises, aimed at minimising the negative effect from income and preserving the liquid position in their balance sheets. the simulating macro - economic policies helped in containing the impact of the pandemic on the real and financial sectors of albania, and succeeded in safeguarding the macroeconomic stability uncompromised. the economic contraction, fall of employment and the damage in the financial balances of enterprises resulted lower than our initial projections. the banking sector continues to be well - capitalised, liquid and profitable. the risk premia and interest rates in the financial market remain at low levels, by underpinning lending to the economy, in response to its needs for working capital, consumption and investments. in particular, non - performing loans ratio remains at a low level, notwithstanding the worsened cyclical position of the economy, by showing the benefits of the banking sector β s consolidation process and the advantages of the continuous improvements in the regulatory and supervisory framework. the undertaken | 0 |
to maintain a safe, efficient and stable financial system in mauritius. both supervisory bodies will, under the terms of the mou, work in close collaboration to ensure the setting up of appropriate arrangements to respond to threats to financial stability, to coordinate information sharing and avoid duplication. financial stability remains a major concern to both the bank of mauritius and the financial services commission, given their statutory responsibilities to supervise and regulate the financial markets. achieving financial stability is not a destination but rather a journey. it is an on - going concern for both regulators given the continuous developments and challenge s in the economic environment. presently, our financial sector is under the regulatory and supervisory purview of these two bodies. currently, the asymmetry of information makes it difficult to evaluate the state of financial stability. as the final resting place of risk is hard to observe, as regulators, we can at least try, through this collaboration, to track its passage through the markets. there are, therefore, compelling reasons for both authorities to strengthen collaboration with a view to improving the sharing of information relevant to their respective responsibilities. the process of effective consolidated supervision involves qualitative as well as quantitative dimensions. supervisors must therefore be aware of the ownership structure, the overall organizational structure, the corporate governance and risk management systems and all material risks within a conglomerate. as regulators, we must have knowledge of the entire group to properly assess risks which may emanate either from the licensee β s core activities or from its affiliation with entities that may or may not be directly regulated. as conglomerates are showing increasing interest in banking business, we regulators have the duty to evaluate the risks that would spill over directly or indirectly from the non - bank or non - regulated entities of the groups. we must by all means avoid supervisory grey areas. enhancing information sharing between regulatory authorities right from the licensing stage helps to minimize the risks arising from supervisory gaps. as you are aware, mauritius had undergone two financial sector assessment programmes ( fsap ) by a joint imf - world bank mission in recent years. the launching of this joint coordination committee shows the commitment of the regulators to promote best international practices that meet the expectations of international organizations and of the basel committee on banking supervision which also advocates that banking groups should be supervised on a consolidated basis. i now have the pleasure of announcing to you the names of the representatives of the bank of mauritius on the joint committee. mr. h. o. jankee, chief economist, mrs n. sajadah | ##d and consider how this organization has grown in size and in the depth of its engagement on different issues, i would say that globalization is not going away. what i do expect, however, is there will be more thought and consideration among our leaders for how globalization affects the people we serve, with a more careful weighing of both the potential costs of closer integration and the potential benefits. as these decisions by governments are made, central bankers will need to be prepared to respond appropriately in setting monetary policy and promoting financial stability. another longer - term challenge involves demographic trends. what i mean here is the aging of populations in oecd countries, and, to some extent, everywhere else. - 8while this is mainly a problem for fiscal authorities, it does have some ramifications for central bankers in terms of long - run growth rates, productivity, and asset prices. in the united states, those between the ages of 16 and 54 were 72 percent of the population in 2003, 62. 7 percent in 2023, and are projected to be 61 percent in 2033. aging is happening even more quickly in some other oecd countries. this is a slowmoving development but, as populations age and move from working to retirement, employment and economic output fall. this by itself lowers per capita gdp, which can affect consumption, investment and inflation. as aging populations sell accumulated assets to support consumption, asset prices and interest rates will adjust as well, with the latter potentially affecting the central bank β s estimate of the neutral policy rate. there are mitigants to soften the effect of aging populations, such as an increase in retirement age, immigration and higher productivity growth for younger workers. again, these demographic factors are more important for fiscal policy, but there are spillovers to monetary policy. productivity growth is another issue facing central bankers and i know has been the subject of conversations at oecd gatherings this past year. according to one set of estimates, labor productivity growth is responsible for more than half of the cumulative gdp growth in the united states since the end of 2019, compared to much smaller shares in other countries. productivity growth is notoriously volatile and, even years later, it is hard to say exactly what technological and other factors caused it. 7 having some understanding of the trajectory of productivity growth is helpful for policymakers for a discussion of factors affecting productivity growth in the u. s. and whether they can contribute to sustained growth, see christopher j. waller ( 2024 ), β | 0 |
: / / www. federalreserve. gov / supervisionreg / reghcg. htm. - 7efforts are cra - eligible activities. 14 our community advisory council has urged more research on the effect of climate change on low - to moderate - income communities in order to help inform more effective responses. 15 working with local communities, the federal reserve staff have highlighted the ways in which lower - income households and underserved areas tend to be particularly vulnerable to natural disasters. 16 with low levels of liquid savings to meet emergency expenditures, these households tend to be less resilient to the temporary loss of income, property damage, and health outcomes they face from disasters. 17 in our community development work, we seek to encourage lenders and their local communities to rebuild in ways that will increase their resilience to future risks. advancing our understanding the staff across the federal reserve system are researching a wide range of topics related to climate risks, including how weather and natural disasters affect economic and financial outcomes and the economic implications of climate policies, including for the energy sector. 18 we currently assess the effects of severe weather kevin dancy ( 2018 ), β weathering the storm : a framework for meeting cra obligations, β federal reserve bank of dallas, community development publications ( dallas : frb dallas, august ), https : / / www. dallasfed. org / cd / pubs / storm. aspx. community advisory council and board of governors of the federal reserve system ( 2017 ), record of meeting ( washington : board of governors, may 26 ), https : / / www. federalreserve. gov / aboutthefed / files / cac - 20170526. pdf. jesse m. keenan and elizabeth mattiuzzi ( 2019 ), β climate adaptation investment and the community reinvestment act, β community development research brief 2019 - 5 ( san francisco : federal reserve bank of san francisco, june ), https : / / www. frbsf. org / community - development / publications / communitydevelopment - research - briefs / 2019 / june / climate - adaptation - investment - and - the - community - reinvestmentact. community advisory council and board of governors of the federal reserve system ( 2019 ), record of meeting ( washington : board of governors, november 1 ), https : / / www. federalreserve. gov / aboutthefed / files / cac - 20191101. | commission ( 2019 ), β cftc commissioner behnam announces the establishment of the market risk advisory committee β s climate - related market risk subcommittee and seeks nominations for membership, β press release, july 10, https : / / www. cftc. gov / pressroom / pressreleases / 7963 - 19. - 9we also benefit from working with international peers who are taking the lead on understanding the effects of climate - related risks on their financial systems. we are participating in climate - related discussions at the fsb and other standard - setting bodies, and we will continue to support the work of the fsb β s tcfd in order to improve standardization of financial disclosures related to climate change. along with other officials with financial stability responsibilities, i have been following the bank of england β s plans to assess climate risks to the financial system, including through their exploratory stress - test scenario. and we are in discussions about how we might participate in the central banks and supervisors network for greening the financial system in order to learn from our international colleagues β approaches to measuring and managing climate risks in the financial system. we also have a lot to learn from the broader research community about the economic and financial effects of climate change. as we have seen today, researchers are making progress on addressing questions regarding how climate change relates to labor markets, trade policy, and monetary policy. by participating more actively in climaterelated research and practice, the federal reserve can be more effective in supporting a strong economy and a stable financial system. | 1 |
john gieve : stability and change speech by sir john gieve, deputy governor of the bank of england, to the engineering employers β federation north west, warrington, 20 july 2006. * * * i am delighted to be here today. the bank of england has long connections with this region. we first set up offices in manchester and liverpool back in 1820s. that was a time when north west of england was a key hub in an emerging international economy, with the port of liverpool providing the gateway for industry in lancashire and cheshire to trade with the rest of the world, particularly textiles. the structure of the economy in the north west has of course changed markedly since those days and the region is now more associated with the aerospace, defence and pharmaceuticals industries than with textiles. here as elsewhere, recent years have been a time of rapid change in the structure of industry and the economy. we may have been talking about globalisation for years but that doesn β t mean it is complete ; in fact it is still gathering momentum. macroeconomic stability : a platform for change in the face of that rate of change, it may seem paradoxical that among central banks the last 10 years have been known as the β great stability β. the uk is an example of that. since 1992, when an explicit target for inflation was first introduced here, inflation has been stable and very close to its target. not only has inflation been low, but we have avoided the large swings in output and employment that have characterised previous periods in uk economic history. we have seen employment grow from around 56 % of the population at the trough in 1993 to over 60 % now and unemployment fall back to levels not seen since the mid - 1970s. gdp growth has been between 1 % and 4. 5 % per annum throughout. to someone like me who was in the treasury in the 70s and 80s when we experienced real booms and busts, the last 10 years have looked like a golden age ( chart 1 ). of course we hoped that the reform of economic policy would bring greater stability, but the speed and extent of that success has been unexpected. when the mpc was created in 1997 and given responsibility for meeting the inflation target, it was told that whenever inflation was more than one percentage point away from the target the governor would have to write a letter to the chancellor explaining why this had occurred. the bank β s current chief economist estimated that the governor would need to write a letter on average one month in every two. 1 even the | current governor thought that β given past experience of inflation volatility it is likely, even allowing for the change in policy regime, to restore the lost art of letter writing to british life β. 2 it is remarkable that not a single letter has needed to be written β yet. but stability at the macroeconomic level does not mean stability for individual firms or industries. indeed one of the virtues of macro stability is that it allows β indeed forces β firms to focus on the real long term business challenges and opportunities they face rather than how to survive or profit from the short - term cycle. it is not a paradox therefore that the great stability has also been a time of great change in industry in ownership, structure and technology. the engineering employers β federation has itself stated that β manufacturing prospers best in a stable macroeconomic environment with low inflation, low interest rates and stable exchange rates β. 3 that is not because they are a recipe for a quiet life but because they allow businesses to focus on what really matters β their products, their technology, their customers and their competition. in the last few years, macroeconomic stability has provided business with a platform for rapid changes in ownership, location and product mix, and for the transformation by it of all business processes in the factory, the warehouse and the office. bean, c ( 1998 ), β the new u. k. monetary arrangements : a view from the literature β, economic journal, november. β the inflation target five years on β, quarterly bulletin β manufacturing in the uk β, engineering employers federation, may 2005. globalisation and uk manufacturing looking wider than the uk, one of the most striking changes of the last few years has been the integration of china, india and countries from the former soviet union into world markets and the sharper competition that is bringing first into goods markets and, increasingly, into services also. the eef report, β where now for manufacturing? β, published at the end of 2004, highlighted the β huge increase in the importance of lower - cost countries as competitors β. just under half of companies surveyed by the eef saw china as the biggest competitive threat to their activities and nearly 60 % identified china as a major competitive threat over the next five years. that was sharply up on the equivalent figure of 18 % in 2001, illustrating that the change was occurring faster than companies then foresaw. one of the consequences of the globalisation of production is that a reduced proportion of output in the developed economies is in | 1 |
working, i always insist upon'closing the loop '. probably you, too, can develop a similar suitable system wherein your monitoring leads through necessary communication and to eventual closure of the problem at the appropriate level. i now come to the motivating part of the attributes. i mean'motivating'in a very specific sense. ldms need to lay special emphasis on furthering financial literacy. taking the baton ahead, you may also create awareness and direct or motivate towards greater adoption of digital financial inclusion. financial literacy is a cornerstone of holistic inclusion, empowering individuals to make informed decisions. members of public should be made aware of various financial products available to them, be it social security products such as insurance and pension schemes, which will cover the risks, or category specific loan products which will enable them to undertake productive economic activities. a special focus needs to be given to digital financial literacy for improving public confidence in undertaking digital transactions. in maharashtra alone, there are 118 centres for financial literacy ( cfls ) and 61 financial literacy centres ( flcs ) spreading awareness of financial products at the grassroots level. ldms must play a crucial role in ensuring that flcs perform their functions effectively, supporting cfls, participating in cfl camps, and facilitating the linkage of financial services while overseeing the proper conduct of these camps. harnessing technology not only expands our reach but also makes banking more accessible, efficient, and cost - effective. rbi's recent push for digital public infrastructure, including the unified payments interface ( upi ) and the pilot public tech platform for frictionless credit ( ptpfc ), now renamed the unified lending interface ( uli ), is in line with improving digital financial inclusion, which aims to simplify and broaden access to credit, especially in rural regions. 3 / 5 bis - central bankers'speeches you may also be aware that, under'expanding and deepening of digital payments ecosystem programme ( eddpe ) ', slbcs have taken a lead role in the objective of making every district in the country digitally enabled, which has steered the expansion of digital payments. i am happy to note that, as on date, 410 districts are digitally enabled across the country and 13 states, and six union territories have achieved 100 per cent coverage of districts under this initiative. i hope to see the state of maharashtra also in this list soon. for this, i request all the stakeholders including ldms for effective co - ordination for successful execution of the | and how you manage the risks determines your success in the banking business. efficient risk management may not be possible without efficient and skilled manpower. banking has been and will always be a " people business ". though pricing is important, there may be other valid reasons why people select and stay with a particular bank. banks must try to distinguish themselves by creating their own niches or images, especially in transparent situations with a high level of competitiveness. in coming times, the very survival of the banks would depend on customer satisfaction. those who do not meet the customer expectations will find survival difficult. banks must articulate and emphasize the core values to attract and retain certain customer segments. values such as " sound ", " reliable ", " innovative ", " international ", " close ", " socially responsible ", " indian ", etc. need to be emphasized through concrete actions on the ground and it would be the bank β s human resource that would deliver this. bis central bankers β speeches it is a common complaint among bank executives that skilled manpower is in short supply. no two arguments on this, hr resources are becoming scarce β both in quality and quantity. and, it is quite elementary that any resource that is in short supply needs to be properly managed for the benefit of society and, therefore, you need to pay attention to the entire human resource management process. what do i mean when i say this? you need to manage the people β and for this you need to discriminate between the people, i mean positive discrimination. the entire spectrum of hr practice requires revolutionary changes if the banks have to survive. managing the people is the key challenge. and, in my opinion, discrimination is the key word when dealing with people. you will notice that i will use this word very frequently during my discussion. how to manage human resources i would like to highlight the following key challenges faced in hr management in any organization and which is all the more relevant for public sector banks today : planning ( a ) acquiring the right people ( b ) retaining / developing the people ( c ) managing people separation / exit ( d ) ( a ) i would attempt at sharing my thoughts on each of the above areas : planning as the economy grows at a steady rate of around 7 β 8 %, incomes rise and demographic dividends start accruing, the banking industry is expected to take a quantum leap forward. but this growth will need a large number of people and considering that there are retirements in lakhs | 0.5 |
underway to distil the lessons that emerge from it. the basel committee ( bcbs ) has started to assess the impact of the ongoing pandemic on the banking system and published a report on 1 for example the exceptional levels of market volatility in q1 and q2 2020 led to an elevated level of so - called value - at - risk ( var ) back - testing exceptions across the industry. in order to mitigate the possibility of excessively pro - cyclical market risk capital requirements through the automatic application of a higher var multiplier, the pra allowed firms β on a temporary basis β to offset increases due to new exceptions through a commensurate reduction in risks - not - in - var ( rniv ) capital requirements. 2 broken down into direct budget support of $ 10 trillion ; and additional public sector loans and equity injections, guarantees, and other quasi - fiscal operations of $ 6 trillion. the aggregate cet1 capital ratio for major uk banks increased from 14. 8 % at end - 2019 to 15. 8 % at end - september 2020. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice preliminary lessons learned earlier this month. 4 also this month, the financial stability board submitted an interim report to the g20 on lessons learned for the financial system as a whole. 5 a major lesson that has emerged so far is that the banking system has remained resilient through the covid19 pandemic while continuing to provide credit to the real economy. this is, in part, due to the substantial increases in capital and liquidity held by banks as a result of the adoption of the post - global financial crisis reforms, and represents a major vindication of those reforms. if i can use the analogy of a fire, one did break out in the banking system following the onset of the pandemic, but because the locus was well fire - proofed β with capital and liquidity β and because both the monetary and fiscal firefighters were alert and acted quickly and decisively, the fire was put out before it could take hold. but it was not obvious that this would have been the case at the outset. in particular, it was by no means certain that the regulatory capital buffers built up ex ante by banks as a result of those reforms, and designed to allow them to lend to the real economy whilst absorbing losses, would actually be used | may be a tension between conserving capital to provide additional individual bank resilience, and supporting the economy β especially if there is uncertainty about the timeline for the restoration of buffer levels after a recovery β even though supporting the economy would provide a better outcome for banks as illustrated a moment ago. the policy question and the opportunity to explore it if a regulatory buffer is not practically usable in the sense that banks do not want to dip into it, then it has little value in helping firms to absorb shocks in ways that keep lending going in bad times. it ties up resources without providing the extra capacity in stress that regulators wanted them to provide, and had assumed they would when determining how to prepare the system to absorb shocks. if a regulatory buffer is instead perceived as similar to a minimum requirement and firms take actions to avoid dipping into it, these actions might be harmful to the real economy and, as last year β s bank analysis showed, to the banking system. thus it is essential to have a well - designed regulatory buffer framework which can make fresh resources available when they are most needed. the early covid stress gives us an opportunity to investigate how the current framework behaves and how practically usable regulatory buffers may be. given the effectiveness of the fire - fighting i mentioned at the outset, bank capital ratios did not approach their capital conservation buffers, so we cannot probe directly how banks would have behaved had capital ratios fallen inside that regulatory buffer. however, there are at least three approaches we can look at. approaches to analysing capital buffer usage approach 1 β what do banks and investors say about buffers? the first approach involves asking banks what constraints they face in practice in dipping into buffers and how they manage their capital positions. in broad terms, they told us that expectations of capital instrument and debt investors and concerns about the actions of credit ratings agencies are a major constraint. in order to avoid investor and ratings agency opprobrium, banks will consider a range of actions, including cutting lending, rather than go beyond their capital risk appetite β which is typically well above regulatory buffers. conversations with investors and rating agencies were largely consistent with this view. banks also face internal risk appetite constraints which may be higher than regulatory requirements and buffers, especially given that capital is often managed on a forward looking, rather than a β spot β, basis. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice | 1 |
gertrude tumpel - gugerell : sepa goes live speech by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at the launch event organised by the european commission, the european central bank and the european payments council, brussels, 28 january 2008. * * * the countdown is over! today, 28 january 2008, sepa goes live! i am pleased to welcome you all to the launch of sepa. first and foremost, i would like to take this opportunity to thank the european commission for hosting today β s event and for its cooperation over the last few years, the fruit of which can been seen today as sepa comes to life. those who have made sepa a reality, the banks and the service providers are here tonight and i would like to congratulate them all. let me also mention the work of the council and the european parliament that has contributed to making sepa a reality. nine years ago we introduced the single currency. today, we launch sepa β another important step in european integration. but let me assure you : today is only just the beginning! sepa is all about integration, harmonisation and modernisation. it is a natural consequence of the single currency and a major step in the creation of the single market. that is why the ecb has supported the project closely over the past six years. today β s launch is the first visible result. a single currency β with a single set of payment instruments β in a single euro payments area. with sepa, this becomes a reality. and we, as euro area citizens, will be able to make euro payments as cheaply, as easily and as safely as we do national payments. all euro payments will be β domestic β ; finally, there will be no difference between sending a payment from rome to dublin or from brussels to antwerp. we can now make payments not only with euro notes and coins, but harmonised electronic payments by european credit transfer, direct debit and payment card as well. an important milestone has been reached today with the launch of β sepa credit transfer β. we are now able to send euro payments quickly, and in the same way, to any beneficiary in europe. this will be followed by β sepa direct debit β before the end of 2009. as a result, we will be able to make direct debit payments across europe, as if no borders existed. with the β sepa | maintained more efficiently and output volatility reduced. although clear communication of the objectives, the policy strategy and of the decisions taken is necessary to anchor inflation expectations, it is not sufficient. a central bank must demonstrate its commitment and ability to achieve its objectives by the systematic implementation of its policies. markets and the general public need to be convinced by central bank communication and policy action that are both consistent and effective. this will ensure the predictability and credibility of monetary policy, which are vital for the effective management of expectations. moreover, a predictable and credible monetary policy, underpinned by high transparency and clear communication, will reduce uncertainty, thus facilitating decision - making and the efficient pricing of assets in a manner that contributes to the attainment of policy objectives. there is a growing body of empirical evidence that supports the validity of the previous arguments concerning the value of high transparency and good communication for policy effectiveness and market efficiency. 1 i will elaborate on this with regard to the ecb β s communication strategy. but before doing this, i would like to make one additional general remark about the extent of central bank transparency and the desirable features of policy communication. monetary policy transparency and communication are beneficial when they help the central bank to achieve its objectives by enhancing the understanding of the markets and the public of the policy aims, strategy and decisions, thereby offering clear guidance for the formation of expectations as well as reducing uncertainty. transparency means more than simply releasing information. the provision of more information does not necessarily lead to a better see, for example, levin, natalucci and piger ( 2004 ) ; castelnuovo, nicoletti - altimari, and rodriguez palenzuela ( 2003 ) ; gurkaynak, levin and swanson ( 2006 ) ; and lange, sack and whitesell ( 2003 ). understanding of monetary policy. what is needed is the provision of comprehensive and relevant information in a clear and timely manner. the challenge is to strike the right balance between the quantity and quality of information and to communicate the relevant messages with clarity so as to contribute to the understanding, predictability and credibility of monetary policy, and thus to its effectiveness. iii. the ecb β s concept and practice of transparency and communication iii. 1 communicating the monetary policy objective and strategy let me now turn to the ecb β s concept and practice of transparency and communication. the eu treaty and the ecb statute clearly state that the primary objective of monetary policy is to maintain price stability. but they do not define a | 0.5 |
development. β’ the advanced countries, being relatively free from periodic slumps, were trying to concentrate on raising the long - term rate of growth. β’ the socialist countries were determined to overtake the richer capitalist countries by fast economic expansion. despite significant development aid and assistance, however, the next and most marked instance of sustained growth occurred in the east asian countries of hong kong, singapore, taiwan and south korea between the early 1960s to the late 1990s when the miracle crashed, so to speak. in the light of these experiences it is possible to sift through the policies and circumstances of the countries cited above, and our own countries in the region to come to certain conclusions. these conclusions, while identifying where we supposedly went wrong, should not preclude us from accepting this and reverting to better policies or actions. certainly, for us at this juncture, it is not about looking backwards to convince ourselves of what we cannot do because we failed to do it before, but to objectively decide what we should do if we are to succeed. there are two issues we must therefore confront if we are to proceed apace namely, globalisation and regionalism. the first growth episode occurred in environments of open trading systems mixed with a consolidation of domestic markets brought about by the formation of larger states from small divided entities. this was the case of the united kingdom, particularly the union of scotland and england. similarly, with germany under bismarck and most notably the united states of america, which was created from thirteen former colonies. such was the case of italy under garibaldi. customs unions were formed by the new states to protect their embryonic manufacturing sectors while actively trying to compete in export markets. in the case of the east asian nics, they followed the japanese model, the so called flying geese and picked up industries which had become uncompetitive in japan. pre world war i was a significant period of globalisation with the free flow of commodities, capital and labour which facilitated development in the developed countries. the 1950s, 60s and 70s were periods of global growth which facilitated the east asia nics. where does the caribbean stand in all of this? certainly our economies, based on a plantation system of exploitation, was disfigured, but certainly in the early 1960s, when independence came to the region, the larger countries, jamaica, and trinidad and tobago were ahead of the east asian nics, and were in close proximity to the nics β largest market, the united states. | cent. there has, however, been a very focused approach to reconstruction, with the assistance of both the regional and international communities. this should bear fruit in the coming years. all in all, 2004 can be described as a year of moderate growth, despite the major set back in grenada. prospects for 2005 and beyond looking to 2005 and beyond, one has to make certain assumptions about the prospects and possibilities, given two alternative scenarios. in the first scenario, we can continue on our present path with the same policies and hope, that as in 2004, we will have favourable outcomes. the alternative scenario would be to pursue more active policies to lock in the gains from 2004, and to build on these to achieve some critical development objectives. using the first scenario, the prospects are that growth will continue to be positive, based on a favourable international economic environment, and continued growth in tourism and construction activity. the prospects for the tourism industry look very promising, with increased activity in both the stay - over and cruise sectors. there are also a number of projects in both the public and private sectors that are linked to the tourism sector directly, or are derived secondarily from activities in this industry. there is, however, an urgent need for the alternative scenario to be seriously considered, as the currency union is faced with major challenges from both external and domestic factors, which could threaten the continuation of growth. the external factors which could affect us would include : high oil prices, an increase in international interest rates, the impact of changes in trade regimes such as those connected with the wto, the ftaa, the european union, and the csme, and the performance of the us dollar against other international currencies. the domestic factors would be the fiscal and debt issues, and the need for increased productivity and competitiveness. the countries of the eccu need to revisit the five objectives set by the oecs authority in november 2002. these are β’ a growth rate of six per cent ; β’ a reduction in unemployment levels to at least six per cent ; β’ a reduction in poverty levels to at least six per cent ; β’ the maintenance and improvement of their human development indices ; and β’ the transformation of the economies into highly productive, adaptable and competitive entities. the authority identified a number of policy instruments which were available to facilitate the achievement of these objectives. they included β β’ monetary and fiscal policies ; β’ incomes and structural policies ; and β’ trade and international economic relations policies. the oecs | 0.5 |
households, reaching 33 percent of disposable income of an average family recipient and almost 40 percent in rural areas. the recipients of remittances are from all social groups, including middle income class ( 60 percent ) as well as the low income class ( 27 percent ). our estimates show that the level and severity of poverty are significantly reduced among those households receiving remittances, with greater influence on severity rather than the level of poverty. remittances are mostly used for imported consumer goods, services, and for the purchase or construction of houses. a small share is saved or invested in businesses, mainly in agricultural sector. therefore, the impact of remittances in creating new jobs has been limited. in this view, i do not want to downplay the importance of remittances, but to draw attention to additional structural reforms needed to enhance their impact in the economy. it is not a coincidence that after reaching the level of 14 percent of gdp, the growth rate of remittances has been as constant as that of foreign direct investments in albania. this shows that in the mid - term, there is no difference between the decision of foreign investors and remitters to invest in albania. of course, emigrants may have a better knowledge of domestic markets. they are more connected to their home - country and react faster than foreign investors. nevertheless, they demand guarantees for their investments as much as foreign investors do. therefore, both the volume of remittances and their effectiveness largely depend on improvements of albanian business environment. while efforts to speed up reforms aiming to improve business environment are underway, especially now with the most recent signing of the stabilization and association agreement, a question still remains : is there any other measure that may enhance the contribution of remittances in the development? the bank of albania in cooperation with other governmental and non - governmental institutions has been considering some concrete measures, which i have already highlighted in a conference organized by ebrd on these issues last september. i would like to briefly mention some of them here again, with some new insights. first, improving our knowledge about remittances remains critical for the assessment of policies, which directly impact the developing role of remittances in the economy. the improved information is needed not simply to assist policies on remittances but also financial infrastructure ( e. g. by reducing transaction costs ) and to understand the impact on poverty. the bank of albania has continuously emphasized | closer to banking products and services, including transfers. no matter the small size of remittance amounts. even those small shares left by recipient families in bank accounts could assist economic development as more funds will be available in banks to provide loan products to private sector. the same concern was initially expressed about public administration salaries. now, this service is provided by the banking system, and we see the power of pooling small amounts. for commercial banks, their ability to market additional value - added services, such as savings products, loans or other types of credit to remittance recipients, will require the achievement of a critical mass of customer acquisition, as well as a higher technology delivery mechanism, to bring down the average cost of the investment required to serve that client. micro credit programs and qualitative improvements of banking infrastructure, concerted with introduction of new financial instruments will also help to attract more remittances. promoting microfinance organizations as participants in remittances market, could offer certain advantages to the microfinance sector, to the government and to remittance recipients. the costs of this expansion would primarily fall to the regulatory and supervisory authorities. we already took an important step in bringing these institutions under the bank of albania supervision which we expect to improve their status in the market by enhancing the confidence of operating with them. microfinance institutions are already providing small amount loans to the low income class. their existing programs allow them to leverage their network and geographic reach to assist remittance senders and receivers in gaining access to low cost financial services, as well as access micro - saving and investment products. the third area of our efforts is to channel the workers β remittances toward country β s development needs. the formalization is a necessary step but does not ensure the role of remittances as a developing instrument. it is often claimed that emigrants are not the most preferred clients of banks, since this category is considered to have more unstable jobs and low level of income. first of all, this perception is not entirely correct and the results of the italian team support the fact that the pool of emigrant savings is becoming significant enough to be a profitable business. the latest italian bank entering the market in albania ( banca italiana di sviluppo ) is another witness of this reality. however, i would like to see the other banks operating in albania to be as aggressive as their italian counterparts in competing for this pool of savings sooner rather than later. there | 1 |
s responsibility for banking supervision would pass to a new institution - the financial services authority, or fsa - which would assume responsibility for the regulation and supervision of all financial institutions in the uk. this was widely seen as the price we had to pay for our enhanced monetary policy role. but at the same time the chancellor confirmed the bank β s continuing responsibility for the stability of the financial system as a whole, so that in fact what this has done - as in relation to monetary policy - is to distinguish and clarify the respective roles : of the bank, which now focuses upon systemic risk - and retains its lender of last resort role within parameters that are broadly defined by the legislation ; of the fsa which oversees both the prudential and business conduct of all individual financial institutions, including the banks, with the emphasis on consumer protection ; and the treasury, which has ultimate responsibility for both these dimensions. the new arrangements make a good deal of sense in the uk context where traditional distinctions between banks and other types of financial institution have progressively eroded and where there has been a general movement towards greater consumer protection across a much broader front. but at the same time as clarifying our respective responsibilities, and providing in each case for transparency and separate accountability for the way in which they are carried out, the new legislation recognises the vital importance of close coordination between them and establishes a framework for that. it is early days to assess the effectiveness of these arrangements, but my impression is that so far they are working well. governor jayawardena, there are many aspects of our new regime that i have not touched upon - including questions relating to our capital, our revenues, expenditure and allocation of profits and how they are reported and accounted for - which can also affect the degree of independence we enjoy. perhaps we might explore these together with the other issues in our discussion. but i hope i have said enough to draw a few conclusions. my starting point had been that central bank independence in the extreme sense of exemption from democratic control is unrealistic and inappropriate. yet wise governments in many countries around the world have recognised that they can gain advantage - in terms of public and market credibility from detached and unbiased advice in its field of competence from the central bank. the value that they put on the central bank β s role depends very much on the quality of that advice - the central bank β s objectivity and its technical expertise and professional competence. that is largely down to us. but the benefit a government derives from | ##en economic activity, thereby adding to the forces which had already depressed the outlook for the euro area before the escalation of tensions in the middle east. as a result, we should only expect a modest rate of economic growth for 2003. however, the evolution of economic growth for the rest of this year is particularly difficult to foresee at the moment, given the exceptional degree of uncertainty arising from the military conflict. our baseline scenario continues to be one of a moderate recovery associated with diminishing uncertainty, starting in the second half of 2003. however, we will need to review the economic implications of the war as soon as a clearer picture emerges. a number of scenarios, implying widely different outcomes for economic activity, are conceivable at present. yet it would be premature to assign specific probabilities to any such exercises, which are mainly of an illustrative nature. looking at price developments, annual hicp inflation is estimated by eurostat to have been 2. 4 % in march 2003, unchanged from february. the recent drop in oil prices is not likely to be reflected in the price statistics until april. as for the outlook for price stability over the medium term, it is particularly important to clearly distinguish between short - term volatility and more fundamental factors. while oil price developments may very much influence the pattern of inflation rates over the coming months, other factors should dominate beyond the short term. the lagged effects of the appreciation of the euro exchange rate since mid - 2002 will continue to dampen upward pressure on prices, as will the modest economic growth. if the recent significant reduction in oil prices is sustained, inflation rates will in all likelihood fall below 2 % in the course of 2003 and remain in line with price stability thereafter ; evidently, this presupposes that wage moderation prevails. overall, the present policy stance is consistent with the preservation of price stability over the medium term. it maintains a monetary environment that is in itself favourable to economic growth in a situation in which other factors are having an adverse effect on economic activity. exceptional circumstances are complicating the assessment of economic trends. we will therefore continue to monitor events carefully and evaluate them in the light of our mandate. regarding fiscal policies, the stability and growth pact provides a robust and flexible framework for addressing any strains on public finances without undermining the principle of budgetary discipline. while letting, where possible, automatic stabilisers operate in reaction to changing economic circumstances, there is no reason | 0 |
and services are agricultural extension services and research and development. the modernisation of agriculture requires comprehensive, country wide, agricultural extension services. such a service will have to be funded predominantly with public resources. in addition, budget resources are needed to ensure that the rural infrastructure, such as rural feeder roads, is adequate to support commercial agriculture throughout the country. scarce budget resources should not be misallocated to the provision and subsidy of marketable inputs, especially those which benefit mainly larger farmers. the second issue i want to highlight is how we can develop a feasible strategy for the transformation of smallholder farming. chapter 2. 2 of the yearbook presents some interesting bis central bankers β speeches findings on projects run by the one acre fund which aim to support smallholders in east africa ; findings which are consistent with those of similar projects and of research in the region. the support which smallholder farmers need to enable them to increase their yields and raise their incomes is holistic. it includes technical advice and training in the use of improved agricultural techniques, the provision of improved seeds and fertilisers together with credit to purchase these inputs, with repayment of the credit aligned with the sale of farm output, and training and support for post harvest handling and storage. with such a holistic support package, substantial increases in farm output and incomes can be realised. the provision of finance alone will do little to help smallholder farmers overcome the constraints that they face in raising farm yields and marketing more of their output. unfortunately, only a small minority of the country β s more than 3 million smallholder farm households currently receive the type of holistic support provided by the one acre fund and similar projects, which addresses all of the constraints that they face. to modernise agriculture, this approach must be applied much more widely, so that all smallholders can benefit. both the public sector and non government organisations can contribute to this objective, but it is self evident that substantial public resources will be required to fund it, which emphasises the importance of properly prioritising public spending on agriculture. modernising agriculture is one of the most difficult challenges facing uganda, but given that more than 60 percent of the labour force relies on agriculture as their primary source of income, it is a challenge which is central to socio - economic development and poverty reduction. despite the country β s abundant natural resources, uganda β s agricultural performance has been poor ; real output growth has failed to even match population growth rates over the last two decades and labour productivity in | the financial system as well as monetary policy. i will then go on to discuss the policy challenges for japan as well as the implications of japan β s experience for europe today. i. developments in japan β s economy during the lost decades as is well known, japan β s economy has been mired in stagnation since the 1990s. on the other hand, what is less well known, especially abroad, is that the challenges that japan β s economy has faced during this prolonged stagnation have differed over time. put simply, until the early 2000s, the main challenge consisted of dealing with the instability of the financial system and deleveraging in the banking sector brought about by the collapse of the asset bubble, and of resolving the so - called β three excesses β in the corporate sector, consisting of excess debt, excess capacity, and excess employment. however, these problems were essentially resolved by the early 2000s and a more serious challenge since the second half of the 2000s has been the decline in japan β s growth potential and inflation expectations. the decline in both since the 1990s has been brought to the fore by the large decline in aggregate demand as a result of the global financial crisis. these two major challenges appeared in succession and it is mainly for this reason that japan β s economic stagnation has been so prolonged. bis central bankers β speeches the collapse of the asset bubble, financial system instability, deleveraging, and the β three excesses β in the 1990s, japan β s banking sector was riddled with a mountain of nonperforming loans resulting from the collapse of the 1980s bubble in real estate and stock prices. at the same time, japan β s corporate sector was suffering from the β three excesses β just mentioned β excess debt, capacity, and employment β owing to the expansion of businesses driven by overly optimistic growth expectations. in 1997 through 1998, these problems led to the successive failure of major financial institutions, significantly impairing the functioning of financial intermediation and causing a sudden credit crunch ( chart 1 ). the economy contracted severely and the year - on - year rate of change in the consumer price index ( cpi ) fell into negative territory, marking the beginning of japan β s prolonged, though moderate, deflation ( chart 2 ). the bank of japan responded to this financial crisis in japan during the 1990s by acting extensively as lender of last resort. 1 moreover, since the safety net was underdeveloped at that time, the bank of japan | 0 |
that international banks can actually have access to foreign currency at more competitive rates. the special line of credit in foreign currency was offered to give a sense of direction to the industry. so if branches and subsidiaries of foreign banks are prepared to share these competitive rates with the final borrowers, we can but encourage them to go in that direction, so long as the debt conversion does happen and other borrowers can benefit from the line of credit made available by these international banks from their own sources. we are happy to note that there are already a few proposals at advanced stages of finalization. a final point on the special line of credit in foreign currency : had we had a deeper financial market in mauritius, we would not have spent two months to get this going. our capital market is very small and very illiquid. one of our targets as a central bank is to achieve a certain deepening of our financial market. together with our colleagues in the capital market, we are working towards developing the bond market, alongside our own attempts to develop a secondary market of government paper. this would hopefully result in the issuance of a corporate bond which would have been the ideal vehicle for us to refinance existing rupee bis central bankers β speeches debt, by underwriting corporate bonds in foreign currency. we hope to be able to make some progress on this front in the next six months. the other issue on which we have made some progress is the task force on unfair terms. the task force is well - engaged in the information - gathering stage and various initiatives have been taken to sensitize the general public on the importance to contribute to the exercise. we believe it is high time that we try to give the consumer a fairer deal than what he has been getting so far and for our banks to help the sectors that are hurting, a bit more than they have been doing. another project in the pipeline is work on basel iii. as you know we are one of the few countries in africa that have moved to basel ii, and basel iii is round the corner. basel iii is trying to remedy internationally the kinds of problems identified in the banking sector that have been responsible, amongst others, for the global economic crisis. soon we will be issuing a consultation paper to the industry indicating our own approach to basel iii. so we will be introducing basel iii in a phased manner and by the end of 2018 approximately, we should be there. our banks are already meeting by and large many requirements of basel iii e | , germany and france. bis central bankers β speeches therefore we can say, that public authorities β behaviour in the payments market can be in sharp contrast to what their public policy intentions and communication are. public authorities should start change with themselves. returning to hungarian fields we see vast opportunities in the reduction of cash usage in public sector. to the reasonably greatest extent all government outflows ( pensions, social benefits ) should be made to payment accounts. we consider the better involvement and wider electronisation of the network of the post offices in order to improve the access to payment services. the extension of the pos network might be supported. ensuring government control above the interchange fees is being further analysed. sharing the fees between payers and payees for the widely used postal instrument is also an option, but we might achieve it through a more transparent pricing of the underlying services, such as electricity, gas, water bills, insurance premia, etc. we would like to investigate the feasibility of the establishment of an ebpp scheme which covers the entire hungarian banking system and which is open to each service provider ( public utilities, insurance companies, etc. ) and any consumers. this is again an area which is closely linked to the european developments. integration i have asked my magic ball about the issue and it answered me that we still have a long way to go to achieve full integration and a single market but in case of lucky constellation of stars the process may accelerate. credit transfers and direct debits are far from constituting the full payments market. cards and e - products are the future and we have a responsibility not to allow fragmentation in those segments of the single market. cross - border integration is very important and is in the direct interest of payment service users, especially in a small open economy. in case of certain banks, cross - border optimalisation is the driving force behind the transformation process. this holds particularly true for hungary, as most of the hungarian banks are either subsidiaries or branches of multinational groups, and they aim at profitability at a group level. it goes without saying that cross - border optimalisation and the underlying economies of scale are more feasible when the same standards and the same currency are used across the region where the group is engaged in activities. the efficiency of cross - border transactions is of great importance for each open economy irrespectively of being a small or a big country, a euro area or a non euro area country. the importance of regional requirements is increasing steadily in | 0 |
by reminding players in the banking sector that as new products and services emerge, different or heightened levels of risk also emerge. the challenges that financial innovation poses for public policy and the regulatory framework in ensuring financial stability are enormous and cannot be over looked. in this regard, let me call upon the management of indo - zambia bank to not only look at the benefits, but more also on the risks that accompany financial innovation. from the bank of zambia β s point of view, the objective of financial stability remains key in all our activities. financial stability depends to a large extent on the existence of robust risk management systems of financial institutions. it is therefore, important that risk management systems should keep pace with financial innovation. i have no doubt that the banking sector will rise to this challenge. once again, thank you for the opportunity to witness this important event. | the promotion of data sharing by g20 economies, which includes an increase in β the sharing and accessibility of granular data, if needed by revisiting existing confidentiality constraints β. bis central bankers β speeches | 0 |
flow, especially for developing countries. in this regard, the regional swap arrangements already signed by a number of countries are a step in the right direction. by strengthening the credibility of central banks, such arrangements have the scope to impart positive impacts in terms of reduced volatility in regional financial markets. in light of the large pool of savings and international reserves the region currently has, there may be room for further initiatives on this front. in addition, there seems to be scope to better mobilize regional savings and improve intra - regional capital flows. in the past, the savings rates of countries in the asia - pacific regions have been very high. but most of these savings were channeled first to the united states and europe before eventually returning to asia. i believe that we should look into ways to better channel these regional savings so that they help to cushion our countries from excess volatility of capital flows. i am glad that yesterday mr. kuroda proposed the establishment of a co - operation on capital flows and the streamlining of foreign exchange policy among the asean plus three group. thailand welcomes this move which would not only help reduce excess volatility of capital flows for countries in the region, but also provide exchange rate stability to support intra regional trade, which constitutes about 50 % of our exports. we are willing to move forward with asean plus three in this direction. you may take this as an official response, as i have already discussed this issue with our minister of finance. conclusion ladies and gentlemen, before ending, i would like to emphasize again that thailand has gained significant ground since the aftermath of the 1997 crisis. macroeconomic stability has been restored, progress has been achieved in financial restructuring and strengthening bank supervision, and external vulnerability has been substantially reduced. at this juncture, however, there is no room for complacency. the key challenge facing the authorities is to maintain macroeconomic stability while accelerating the pace of reforms amidst the global slowdown and heightened market uncertainty. through careful management of domestic policies, greater regional cooperation, as well as consolidation of restructuring efforts, thailand and the surrounding region should weather the global slowdown and return to a sustainable growth path. i would like to thank you once again for the opportunity to address this distinguished forum and wish you all the best. thank you. | the power ( and even the responsibility ) to contribute to the low β carbon transition and a more sustainable economy ( within the scope of their mandates ), but they cannot solve these problems on their own either. that is the reason why the coordination and coherence of public policies matter, as well as new private β public partnerships. * ii. coherence and coordination if central banks are to safeguard financial stability in the age of climate change, they will need to coordinate their actions with measures to be implemented by other players such as finance ministries or specialised government agencies. the green swan explores three dimensions of this coordination : β firstly, the interactions between monetary and prudential policies with fiscal policies ; see for instance the call for action issued by nobel prize laureates and other experts : agre et al. ( 2021 ). our planet, our future : an urgent call for action. accessible at : https : / / www. nationalacademies. org / news / 2021 / 04 / nobel β prize β laureates β and β other β experts β issue β urgent β call β for β action β after β our β planet β our β future β summit β β secondly, how central banks can facilitate the international monetary and financial coordination needed on climate change ; and, lastly, how central banks can contribute to promoting values and behaviours that are particularly important for the low β carbon transition, such as long β termism. for example, climate change is now at the agenda of the g7 and the g20 finance tracks where representatives of finance ministries and central banks work together. new forms of cooperation between the public and the private sector have emerged as well, such as on the very important topic of disclosure : β the tcfd for climate β related disclosure ; tasked by the fsb ( finance ministries and cb ) but private led ; the work of the tcfd is now taken into account by public authorities and standard β setting bodies at the global level ( ifrs ) as well as in the eu ( eu commission / efrag ) β the tnfd, a private β led initiative that brings together industry, ngos, international organisations and public authorities, aiming to develop a nature β related disclosure. as mark carney stressed yesterday, disclosure should be a priority and his goal for the cop 26 is to make the tcfd framework mandatory. in the speech we have already quoted, mario draghi also insisted upon the need to foster the cooperation of public and private institutions and keep | 0 |
, making rules and technical standards and determining our general policy approach, as distinct from taking supervisory decisions regarding individual firms. 6 solvency ii review : unlocking the potential - speech by gareth truran 6 / 6 bis central bankers'speeches | . 5 trillion in infrastructure investment alone every year for decades. 3 all forms of finance : public, private and blended finance will play a part. public finance to support a fair and inclusive transition across our economies. development and blended finance to support adaptation and resilience. and mainstream private finance to help all companies realign their business models for net zero. the objective for the private finance work for cop 26 is simple : ensure that every financial decision takes climate change into account. 1 the full list of current tcfd supporters is available at : https : / / www. fsb - tcfd. org / tcfd - supporters /. see https : / / www. unpri. org / signatories, http : / / www. climateaction100. org / investors, https : / / www. unepfi. org / net - zero - alliance /. https : / / www. iea. org / news / deep - energy - transformation - needed - by - 2050 - to - limit - rise - in - global - temperature. all speeches are available online at www. bankofengland. co. uk / news / speeches to do so, we will work with you β the private sector β to put in place the frameworks so that you can do what you do best β allocate capital to manage risks and seize opportunities across the economy. determining who β s ready for the transition and who β s not requires : 1. disclosure of climate financial risk to become comprehensive ; 2. climate risk management to be transformed ; and 3. investing for a net - zero world to go mainstream. on the road to glasgow, we will focus on the three rs : reporting ; risk management ; and return - to help unlock the private financial flows that are vital to the transition. this will support a wider shift to paris alignment and be underpinned by public finance efforts to deliver $ 100bn. to succeed we will need your support and your action. we will publish the strategy and how you can get involved when i formally assume my new roles, but following sir david β s lead, i wanted to offer you an exclusive preview today. reporting : improving the quantity and quality of climate - related disclosures by implementing a common framework built on tcfd an old adage is that which is measured can be managed. for cop 26 we want you to help refine and implement tcfd disclosure ; and we will work with | 0.5 |
the existing macroeconomic conditions at any time, regardless of how frequently they may change. let me briefly review what may be considered the main challenges for this new paradigm of provisioning, rightly following the content of each of the conference panels. panel i of the conference will enlighten us with relevant background information to fully understand why and how the new provisioning model has changed, the potential pros and cons of alternative approaches, the differences between models and the reasons behind those differences. as briefly commented, modelling expected losses is a challenge. in panel 2, views from academia, practitioners and auditors will no doubt help us to broaden our perspective on issues such as the existing differences between the models needed to calculate the new provisions and those already in use for regulatory purposes, or for internal credit risk management. implementation issues, apart from the pure modeling challenges, such as compliance costs, reliable reporting under the new standards, comparability of financial statements across institutions, internal organisation, etc. are highly interesting aspects that will also be presented from the industry and supervisory viewpoint in panel 3. the time dimension of bank provisions, particularly potential pro - cyclicality and financial stability implications of the new approach, sets the stage for an exciting panel 4. admittedly, there is still little evidence gathered so far, given the short period of time over which the expected loss model has been in force, to arrive at definitive conclusions ; intuitively, moving from the incurred loss paradigm to the expected loss model should reduce the procyclicality of provisions in the future. i am sure that this issue will attract interest from academics, supervisors and practitioners not only during this conference but far beyond it as more evidence and data are gathered. whether provisions are pro - cyclical or not is a key matter for financial stability. finally, learning from the implications and interactions between the new provisioning standards and other types of regulations to which banks are subject β most notably financial market regulations and micro - and macro - prudential regulations β will prove a perfect topic 5 / 7 for the final panel of the conference. in this regard, the banco de espana experience2 with the setting - up of so - called dynamic provisioning3, which shares many characteristics of the current countercyclical capital buffer and is close to the concept of the expected loss model, serves as a good example of how closely linked provisioning standards, capital and macroprudential policies are. from a financial stability perspective, the fact that supervisors are | 18. 10. 2018 welcome address conference β the new bank provisioning standards : implementation challenges and financial stability implications β / banco de espana, fsi and cemfi pablo hernandez de cos governor of the banco de espana good morning to everyone. it is my pleasure to welcome you all to the conference : β the new bank provisioning standards : implementation challenges and financial stability implications β, hosted by the banco de espana and co - organised with the bis financial stability institute and cemfi. let me first thank these two institutions for their participation and active involvement in the conference. the invaluable work and expertise of the fsi and the ever - necessary academic rigour provided by cemfi combine perfectly with the banco de espana β s long - dated experience in banking supervision and create the sufficient conditions for this event to be a fruitful one. these three elements should be the ideal ingredients to ensure a promising and, hopefully, successful conference. furthermore, the presence of leading international figures from academia, the banking industry and supervisory, accounting and auditing organisations as chairs and panelists, are an effective guarantee that a lively and enlightening debate over the next two days will arise and retain the interest of the audience and ultimately meet the organisers β original aspirations for the conference. as a starting point, we should recall that credit risk is, by far, the most important type of risk universal banks face, as their customary activity is based on granting loans. as a result, the relevance of how credit institutions deal with this type of risk and how they identify and handle it is of paramount importance. in this regard, the precise calculation of provisions plays a crucial role in how banks manage appropriately their credit risk. an adequate level of provisions according to the risk profile of each bank is the basis for fairly dealing with the expected future losses that are intrinsic to the credit business. to put it bluntly, the recent crisis showed that the way banks traditionally measured their credit risk was far from suitable. in fact, the huge level of credit impairments and the low level of provisions accumulated led to a depletion of capital and created a significant need in many advanced economies for banks β recapitalisation plans. many of those plans were funded by taxpayers β money. looking back, we may remember that the new approach of recognition of credit losses and its materialisation in banks β provisions emerged as one of the responses to the financial crisis. in that respect, g20 leaders urged accounting standard - set | 1 |
stability unit which will make regular and systematic assessment of the stability of the indian financial system. 13. lord turner will be speaking to us today on β after the crises : assessing the costs and benefits of financial liberalization β, a topic of great obvious relevance. 14. a study of financial crises shows that almost every crisis is preceded by, if i may use what is by now a cliche, β irrational exuberance β of the financial sector with the growth of the financial sector outstripping the growth of the real sector engendering a belief, bordering on hubris, that real value can be created by sheer financial engineering. take this crisis for example. 15. in the world that existed before the crisis β a benign global environment of easy liquidity, stable growth and low inflation β profits kept coming, and everyone got lulled into a false sense of security in the firm belief that profits will keep rolling in forever. herb stein, an economist, pointed out the truism that, β if something cannot go on for ever, it will eventually stop. β but no one paid attention. the magic of the financial sector gave it such a larger than life profile that we began to believe that for every real life problem, no matter how complex, there is a financial sector solution. now, of course, we know better β for every real life problem, no matter how complex, there is a financial sector solution, which is wrong. 16. take the case of the united states. over the last 50 years, the share of value added from manufacturing in gdp shrank by more than half from 25 per cent to 11 per cent while the share of financial sector more than doubled from 3. 6 per cent to 7. 5 per cent. the job share of the manufacturing sector declined by more than half from 29 per cent to 11 per cent while the job share of the financial sector increased by over a third from 3. 5 per cent to 4. 6 per cent. the same trend is reflected in profits too. over the last 50 years, the share of manufacturing sector profits in total profits declined by more than half from 49 per cent to 21 per cent while the share of profits of the financial sector increased by more than half from 17 per cent to 27 per cent. clearly, the excessive risk - taking behaviour of the financial sector raised the value - added of the sector beyond a sustainable level making the melt down, in retrospect, inevitable. 17. forgotten in the eu | the subject area of this programme from the fed reserve experts. i thank the federal reserve system bis central bankers β speeches for their continuing support in training our officials on various supervisory areas. i am certain that the inputs received from this programme would assist in improving knowledge and understanding of the relevant subject areas both for the relatively new as well as experienced inspecting officials who have gathered here, which is of particular significance in the present context of moving to a risk based approach to supervision coupled with proposed migration of some of the banks to advanced approaches for computation of capital in the near future. i wish the programme a great success and wish the participants a fruitful learning experience. references bank for international settlements ( 2011 ), β revisions to the basel ii market risk framework β, february reserve bank of india ( 2012 ), β financial stability report β, december rbi guidelines on implementation of internal models approach ( ima ) for market risk philippe jorion ( 2009 ), β value at risk - the new benchmark for managing financial risk β, tata mcgraw hill education private ltd board of governors of federal reserve system ( 2013 ), consent order with jpmorgan chase and co, january fsa ( 2012 ), notice to ubs ag, november reserve bank of india β guidelines on implementation of basel iii capital regulations in india β nassim nicholas taleb ( 2010 ), β the black swan - the impact of the highly improbable β, penguin books bank for international settlements ( 2009 ), β findings on the interaction of market and credit risk β, working paper no 16, may rbi guidelines on advanced measurement approach ( ama ) for calculating operational risk capital charge bis central bankers β speeches | 0.5 |
that next year will be a crucial year for the development of offshore rmb business in hong kong. we have made very good progress this year. along this positive trend, and with the number of mainland enterprises eligible for the cross - border rmb trade settlement scheme increased substantially to 67, 000 recently and with the refinements that we are going to introduce, i am confident that the offshore rmb market in hong kong will continue to develop progressively in the coming year, both in terms of the depth and breadth of the market and product development. four hong kong banks have been approved to participate in the mainland β s interbank bond market, and the applications by a number of banks are being processed by the mainland authorities. this will provide a channel for the circulation and capital preservation for the rmb funds in hong kong. meanwhile, we have just been informed that hkma β s eligibility for investing in the mainland β s interbank bond market has been approved by the pboc. we are working closely with the pboc on the implementation arrangements. finally, to further promote the development of the rmb offshore business in hong kong, the hkma is making preparations for overseas roadshows with the financial industry, focusing on locations which have growing trade and investment flows with the mainland. we believe that with our joint efforts, hong kong will be able to play its role as an rmb offshore market to the fullest, thereby promoting and supporting the nation β s increasing cross - border trade and investment activities while enhancing and consolidating the status of hong kong as an international financial centre. | and there are still many challenges facing us. the hkma has therefore embarked on a review of our debt market development with a view to identifying measures which can be adopted to help market development. on the demand side, everybody knows that the mainland of china is enjoying a rapid economic growth and business opportunities are mushrooming. the recent announcement by the mainland authorities of measures to liberalise portfolio investment outflows has marked the emergence of such kind of opportunity for hong kong. under these new rules, each chinese citizen is allowed, among other things, to invest in fixed income securities overseas within certain limits. we expect that this will help boost the demand for fixed income securities although we do not know exactly how much such investment outflows will be approved by the mainland authorities in the initial years. given our experience and achievements in financial services and the fact that we are the only international financial centre of china, i am sure that hong kong is well positioned to grasp the opportunity. apart from the initiatives and developments i just mentioned, i believe that it would be useful to highlight a few fundamental factors which make hong kong an ideal place for the bond market. the first is our free capital mobility. the absence of capital controls means that there are no restrictions on foreign enterprises using our capital markets to raise funds. foreign investors can also freely invest in our markets and easily remit the proceeds back home. secondly, our well - developed financial markets, including derivative markets, would allow issuers and investors to manage any interest rate risk or exchange rate risk effectively. thirdly, hong kong has a critical mass of financial institutions which stand ready to support issuers to tap the capital markets. hong kong is also an asset management centre thus providing a large investor base for debt instruments. last but not least, the absence of capital gains tax and interest withholding tax would also favour bond market development. our exceptional geographical, cultural and language advantages also make hong kong an ideal place to link up the mainland of china with the rest of world. on our part, the hkma will continue to play a leading role in enhancing the development of the debt market in hong kong, by removing market frictions and unnecessary restrictions, and by keeping up with the best practices adopted in other well - developed markets. lastly, i would like to thank euromoney again for inviting me to speak. i look forward to the continued cooperation with our partners on the healthy development of the bond market in this region. thank you. | 0.5 |
dealers were not especially susceptible to runs by their creditors. primary dealers typically rely on short - term secured financing arrangements, and the collateralization of those borrowings was thought sufficient to maintain the confidence of investors. consequently, dealers'liquidity management policies and contingency plans were typically based on the assumption that they would not be faced with a sudden loss of financing. but these beliefs were predicated on the assumption that financial markets would always be reasonably liquid. as i have already noted, recent events have proven that assumption unwarranted, and the risk developed that liquidity pressures might force dealers to sell assets into already illiquid markets. this might have resulted in allen and gale's fire sale scenario that i mentioned earlier, in which a cascade of failures and liquidations sharply depresses asset prices, with adverse financial and economic implications. this heightened risk led the federal reserve to expand its ability to supply liquidity to primary dealers. in march, to ease strains that had developed in the agency mortgagebacked securities market, the federal reserve initiated as part of its open - market operations a series of single - tranche repurchase transactions with terms of roughly 28 days and cumulating to up to $ 100 billion. for the purposes of these transactions, primary dealers can deliver as collateral any securities eligible in conventional open market operations. additionally, the federal reserve introduced the term securities lending facility ( tslf ), which allows primary dealers to exchange less - liquid securities for treasury securities for terms of 28 days at an auction - determined fee. recently, the federal reserve expanded the list of securities eligible for such transactions to include all aaa / aaa - rated asset - backed securities. by mid - march, however, the pressures in short - term financing markets intensified, and market participants were speculating about the financial condition of bear stearns, a prominent investment bank. on march 13, bear advised the federal reserve and other government agencies that its liquidity position had significantly deteriorated, and that it would be forced to file for bankruptcy the next day unless alternative sources of funds became available. a bankruptcy filing would have forced bear's secured creditors and counterparties to liquidate the underlying collateral and, given the illiquidity of markets, those creditors and counterparties might well have sustained losses. if they responded to losses or the unexpected illiquidity of their holdings by pulling back from providing secured financing to other firms, a much broader liquidity crisis would have ensued. in such circumstances, the federal | " associated with the discount window, which if anything intensifies during periods of crisis, arises primarily from banks'concerns that market participants will draw adverse inferences about their financial condition if their borrowing from the federal reserve were to become known. the federal reserve has taken steps to make discount window borrowing through the regular primary credit program more attractive. most notably, we narrowed the spread of the primary credit rate over the target federal funds rate from 100 basis points in august to only 25 basis points today. in addition, to address the pressures in term funding markets, we now permit depositories to borrow for as long as 90 days, renewable at their discretion so long as they remain in sound financial condition. these actions have had some success in increasing depository institutions'willingness to borrow. moreover, the existence of the option to borrow through the discount window, even if not exercised, likely has improved confidence by assuring depository institutions that backstop liquidity will be available should they need it. still, the continuing disruptions in short - term funding markets over recent months suggested that new ways of providing liquidity were necessary. last december, the federal reserve introduced the term auction facility, or taf, through which predetermined amounts of discount window credit are auctioned every two weeks to eligible borrowers for terms of 28 days. in effect, taf auctions are very similar to open market operations, but conducted with depository institutions rather than primary dealers and against a much broader range of collateral than is accepted in standard open market operations. the taf, apparently because of its competitive auction format and the certainty that a large amount of credit would be made available, appears to have overcome the stigma problem to a significant degree. indeed, a large number of banks β ranging from 52 to more than 90 β have participated in each of the 11 auctions held thus far. the taf has also simplified the implementation of monetary policy by providing greater predictability of the level of borrowings by depository institutions and consequently of bank reserves. the size of individual taf auctions has been raised over time from $ 20 billion at the inception of the program to $ 75 billion in the auctions this month. we stand ready to increase the size of the auctions further if warranted by financial developments. the recent market turmoil has also affected the liquidity positions of financial institutions that do not ordinarily have access to the discount window. in particular, prior to the recent experience, it was believed that primary | 1 |
broadly balanced over the medium term. monetary and, in particular, credit dynamics remain subdued. the annual rate of change of loans to the private sector and, notably, to firms weakened further in july. weak loan dynamics continue to reflect the current stage of the business cycle but also heightened credit risk and the ongoing adjustments in the balance sheets of borrowers and lenders. the significant improvement in the funding situation of banks since the summer of 2012 has not yet fed through into higher credit provision. review of recent monetary policy decisions against this background, the governing council has pledged to maintain monetary policy accommodative for as long as necessary. in order to re - affirm and clarify this conditional bis central bankers β speeches pledge, in a context of volatile money market interest rates, the ecb has introduced forward guidance in july, stating that it expects the key ecb interest rates to remain at present or lower levels for an extended period of time. this expectation, which has been reconfirmed in august and september, is based on a subdued outlook for inflation extending into the medium term, given the broad - based weakness in the economy and subdued monetary dynamics. we will maintain the degree of monetary accommodation warranted by the outlook for price stability and aim at promoting stable money market conditions. to ensure an adequate transmission of monetary policy to the financing conditions in the broader economy, it is essential that effective measures be taken to further reduce fragmentation of euro area credit markets and to strengthen the resilience of banks where needed. monetary policy contributes to these objectives, but it can only address impairments in transmission insofar as they are not related to more structural barriers. by giving unlimited access to central bank refinancing against adequate collateral, our nonstandard measures have been pivotal in relieving bank funding stress. the collateral framework has been adjusted as necessary to ensure continued adequate risk protection for the ecb β s balance sheet, while at the same time promoting transparency, for example in markets for structured finance products. ensuring that solvent banks remain liquid has contributed to avoiding an abrupt deleveraging which would have deeply damaged the economy. the outright monetary transactions ( omts ) announced a year ago have prevented risks of destructive scenarios with potentially severe challenges for price stability in the euro area. omts serve as a fully effective backstop, within the ecb β s mandate, and under formal conditionality so as to preserve the appropriate incentives for governments to ensure fiscal solvency and adopt those structural policies that can put | mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, for the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 23 september 2013. * * * madam chair, honourable members of the committee on economic and monetary affairs, it is a pleasure for me to be back with your committee, shortly after the important vote of your assembly on the ssm regulation. this vote has been preceded by intense interaction on the interinstitutional agreement on accountability and transparency, and i would like to thank president schulz, your committee and the negotiating team for the commitment to a successful establishment of the ssm. our two institutions share a common interest in a swift and effective implementation of banking union. the draft inter - institutional agreement ensures high standards of transparency and accountability, while safeguarding the protection of confidential information. we will continue working with a similar constructive spirit in the months ahead and hope that this will allow a swift set - up of the supervisory board. today, i will first review recent economic and monetary developments in the euro area. i will then address the two topics that you have selected for our discussion : the impact of our nonstandard measures ; and the new tasks of the ecb in the reformed emu architecture. economic and monetary developments since our meeting in july we have received positive data for the euro area economy. following six quarters of negative output growth, euro area real gdp rose by 0. 3 %, quarter on quarter, in the second quarter of 2013. measures of confidence and surveys of production have given some support to the view that euro area economic activity should continue its slow recovery in the current quarter, despite weak production data for july. looking forward, economic activity should benefit from a gradual improvement in domestic demand, supported by the ecb β s accommodative monetary policy stance and strengthening external demand for euro area exports. however, unemployment in the euro area remains far too high, and the recovery will need to be firmly established. annual euro area inflation declined to 1. 3 % in august 2013, down from 1. 6 % in july. underlying price pressures are expected to remain subdued, reflecting the broad - based weakness in aggregate demand and the modest pace of the recovery. medium to long - term inflation expectations continue to be firmly anchored in line with price stability. the risks to the outlook for price developments are expected to be still | 1 |
increase gradually later in 2015 and in 2016. the governing council will continue to closely monitor the risks to the outlook for price developments over the medium term. in this context, we will focus in particular on geopolitical developments, exchange rate and energy price developments, and the passthrough of our monetary policy measures. bis central bankers β speeches turning to the monetary analysis, recent data indicate a pick - up in underlying growth in broad money ( m3 ), although it remains at low levels. the annual growth rate of m3 increased to 3. 1 % in november 2014, up from 2. 5 % in october and a trough of 0. 8 % in april 2014. annual growth in m3 continues to be supported by its most liquid components, with the narrow monetary aggregate m1 growing at an annual rate of 6. 9 % in november. the annual rate of change of loans to non - financial corporations ( adjusted for loan sales and securitisation ) remained weak at β 1. 3 % in november 2014, compared with β 1. 6 % in october, while continuing its gradual recovery from a trough of β 3. 2 % in february 2014. on average over recent months, net redemptions have moderated from the historically high levels recorded a year ago and net lending flows turned slightly positive in november. in this respect, the january 2015 bank lending survey indicates a further net easing of credit standards in the fourth quarter of 2014, with cross - country disparities decreasing in parallel with an increase in net demand for loans across all loan categories. banks expect that these dynamics will continue in early 2015. despite these improvements, lending to non - financial corporations remains weak and continues to reflect the lagged relationship with the business cycle, credit risk, credit supply factors and the ongoing adjustment of financial and nonfinancial sector balance sheets. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) was 0. 7 % in november, after 0. 6 % in october. our monetary policy measures should support a further improvement in credit flows. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need for further monetary policy accommodation. all our monetary policy measures should provide support to the euro area recovery and bring inflation rates closer to levels below, but close to, 2 %. monetary policy is focused on maintaining price stability over the medium term and its accommodative stance contributes to supporting economic | tltro is conducted, thereby removing the 10 basis point spread over the mro rate that applied to the first two tltros. third, in line with our forward guidance, we decided to keep the key ecb interest rates unchanged. as regards the additional asset purchases, the governing council retains control over all the design features of the programme and the ecb will coordinate the purchases, thereby safeguarding the singleness of the eurosystem β s monetary policy. the eurosystem will make use of decentralised implementation to mobilise its resources. with regard to the sharing of hypothetical losses, the governing council decided that purchases of securities of european institutions ( which will be 12 % of the additional asset purchases, and which will be purchased by ncbs ) will be subject to loss sharing. the rest of the ncbs β additional asset purchases will not be subject to loss sharing. the ecb will hold 8 % of the additional asset purchases. this implies that 20 % of the additional asset purchases will be subject to a regime of risk sharing. separate press releases with more detailed information on the expanded asset purchase programme and the pricing of the tltros will be published this afternoon at 3. 30 p. m. today β s monetary policy decision on additional asset purchases was taken to counter two unfavourable developments. first, inflation dynamics have continued to be weaker than bis central bankers β speeches expected. while the sharp fall in oil prices over recent months remains the dominant factor driving current headline inflation, the potential for second - round effects on wage and pricesetting has increased and could adversely affect medium - term price developments. this assessment is underpinned by a further fall in market - based measures of inflation expectations over all horizons and the fact that most indicators of actual or expected inflation stand at, or close to, their historical lows. at the same time, economic slack in the euro area remains sizeable and money and credit developments continue to be subdued. second, while the monetary policy measures adopted between june and september last year resulted in a material improvement in terms of financial market prices, this was not the case for the quantitative results. as a consequence, the prevailing degree of monetary accommodation was insufficient to adequately address heightened risks of too prolonged a period of low inflation. thus, today the adoption of further balance sheet measures has become warranted to achieve our price stability objective, given that the key ecb interest rates have reached their lower bound. looking ahead, today β s | 1 |
and ensure products and services offered remain relevant. that would entail understanding issues faced by society at large. some of the most critical issues confronting the economy and society all over the world include accessibility to affordable housing, quality of living standards, and better avenues to good healthcare and education. how could islamic finance and shariah scholars contribute towards solving some of the problems in the real world? how should islamic finance position itself to become the preferred solutions providers on issues faced by the real economy and society? third, start β walking the talk β. as scholars, you will have plenty of ideas about how to make the world a better place. i call on you to translate these ideas and proposed solutions into concrete actions. we have enough of polemics and preaching. you will likely need to work with others to make this happen. therein lie my earlier point that i alluded, that we need to create a culture of greater collaboration and respect between the world of academia, regulators and industry players. my hope is that applied research and the development islamic finance becomes mutually - reinforcing, a β virtuous circle β, where extensive research translates itself into great solutions which can then be used to propel islamic finance to a new level of excellence. but it will require us to strengthen the linkages in transforming research insights into practice. you can do your part in promoting this close association through active engagements with the industry or by being a member of working groups to look into specific areas with the regulatory authorities. conclusion i certainly hope you would find time to reflect on your past, and to think about what you could contribute for islamic finance and the ummah in the future. you were once isra scholarshipholders, but even as you enter a different phase of your career, you continue to remain life - long scholars. continue to pursue the love of knowledge, and use it to make the world a better place. let me conclude this remarks by quoting a hadith ; β he who introduced some good practice in islam which was followed after him ( by people ), he would be assured of reward like one who followed it β. ( narrated by sahih muslim ). 2 / 2 bis central bankers'speeches | of no significance. let β s practice and live the norms and the values that led to the glory days of many civilisations. you are a privileged group. as members of a highly diverse and global group of scholars, you are well positioned to make a difference to the world through islamic finance. since its inception in 2006, 86 recipients from 20 countries have been awarded the shariah scholarship award. right now, we have 40 recipients from 12 countries. given such diversity with global orientation, it is only fitting to label this programme as the isra global scholarship. our aspiration is that this programme will continue to grow and makes a difference. we aspire that isra global scholars are acknowledged as potential game changers for the industry and a product of a highly rigorous selection process. ideas to further contribute towards the industry β s transformation i would like to raise three issues for your consideration as alumni of the shariah scholarship 1 / 2 bis central bankers'speeches award. first, continuously push and expand the frontiers of knowledge in whatever role you are in. as scholars, we know intimately the importance of knowledge and research. research is where breakthrough thinking should originate, especially in the area of applied research that is solutiondriven and industry - related. but this will necessitate us to develop a greater understanding on the real issues facing the industry. it also necessitates us to learn other disciplines as well, just like the great scholars of yesteryears that venture into other areas of studies. they became very innovative because of the varied disciplines. only then, are we able to develop practical and costeffective solutions. for example, most islamic finance industries around the globe are still domestically oriented and a majority of them still engage in consumer credit and simple form of banking products. if islamic finance were to expand we need to go beyond these domains. scholars and researchers need to think through what it takes to internationalise the industry, how to enhance cross border transactions of islamic finance services or how products could be structured to meet the sophisticated needs of the economy. second, broaden your worldview to think about all issues surrounding the ummah, not just those directly within the realm of shariah and islamic finance today. we now see many traditional sectors ripe for disruption, with incumbents blindsided by new technologies and new business models. islamic finance will not be isolated from these rapid changes. the islamic finance community must be innovative and competitive to fulfil the needs of islamic finance users | 1 |
massive costs to the economy. financial safety nets serve two primary purposes, that is to avert risks to financial stability and to reduce the costs to the financial system and economy in the event of a crisis. they also serve an important social purpose of protecting savers and investors. the first component of the financial safety net is the existence of an effective regulatory and supervisory system to ensure the sound management of financial institutions and the ability to deal with problems affecting financial stability. this includes adequate powers and instruments to mitigate losses to the system in the event of a crisis, restore stability and ensure the continuity of the financial intermediation process. the second is the lender of last resort facility that is provided by central banks to address liquidity stresses faced by financial institutions. thirdly, is the deposit insurance scheme that provides a guarantee on deposits to protect the savings of small depositors and reduce the prospects for disruptions that could threaten the stability of the financial system. the effectiveness of the financial safety net depends on several factors. they include the capacity of central banks and supervisory authorities to assess risks, the effective coordination between the different components of the safety net, clear communication strategies and a strong and comprehensive legal framework that supports the operation of the safety net. in malaysia, the malaysia deposit insurance corporation act ( mdic act ) which establishes the malaysian deposit insurance corporation ( mdic ) provides comprehensive intervention powers for the protection of depositors. this is complemented by an extensive operating framework developed between the central bank and the mdic which clearly sets out the responsibilities and obligations of both agencies in promoting financial stability and in financial resolution. in the area of consumer protection, amendments to malaysia's financial services legislation are also being put in place to provide for the establishment, roles and functions of a financial ombudsman to deal expediently and efficiently with disputes concerning financial services between consumers and the financial institutions. let me now turn to the challenges arising from greater financial globalisation and the growing importance of international cooperation in ensuring sustainable economic and financial integration across national borders. in this environment regulators are confronted with the challenge of adapting regulatory and legal norms from a nation - centric system to norms that are more reflective of international business and finance. the issue is how to complement the domestic agenda and the international agenda. regulatory problems arise not only because of the need for domestic regulators β operating within diverse national regulatory norms and cultures β to cooperate and coordinate in the domestic environment but also across jurisdictions. operational and legal issues in cross - | ##surate capabilities to conduct monetary policy operations in order to maintain price stability. equally important is the mandate to provide oversight over the money and foreign exchange market to ensure the orderly development and functioning of the markets. these necessary powers are however, combined with a system of checks and balances to enable the bank to act decisively, but yet having in place safeguards so as to enhance transparency and accountability. more extensive powers to achieve financial stability in the area of financial stability, our new central bank act incorporates an explicit mandate of the central bank for financial stability. this mandate is articulated in terms of the risks to financial stability that includes risks that disrupts the financial intermediation process ( including the orderly functioning of the financial markets ), or which affects public confidence. the act also provides comprehensive provisions for heightened surveillance, pre - emptive actions and expanded resolution powers to facilitate the swift and orderly resolution of financial crises. the bank may also take appropriate intervention actions to avert risks that stem from unregulated entities. the act further acknowledges the importance of coordinated policy measures across different agencies whose actions can affect financial stability. accordingly, the new act provides for cooperation arrangements with other supervisory authorities and the ability of the central bank to make recommendations to such authorities on measures or safeguards for promoting financial stability. these new powers are complemented by strengthened institutional arrangements in the form of the establishment of a financial stability executive committee that will be formed to ensure the effective coordination of regulatory authorities in financial resolution. enhanced governance and accountability framework with these enhanced powers, the governance and accountability framework in the act has also been strengthened considerably. this relates to the enhanced role of the board of directors'in the oversight of the management of the bank. in providing enhanced powers to the central bank to address financial stability issues and the strengthening of the oversight function of the bank, correspondingly, focus has also been given to governance, internal controls and risk management by the bank. for this purpose, the central bank of malaysia act 2009 empowers the board to establish three specific committees, namely the board governance committee, board audit committee and board risk committee that are chaired by a non - executive director, to ensure the independence of the oversight on the functioning of the bank. a comprehensive financial system safety net let me now turn to the second key area confronting central banks, namely the need to have in place an effective financial safety net. the global experience in these recent two decades has shown that crises have continued to plague the world and have resulted in | 1 |
memorable one. thank you all, ladies and gentlemen. | y v reddy : central banking and academia talk by dr y v reddy, governor of the reserve bank of india, on the occasion of the conferment of the degree of doctor of civil law by the university of mauritius, port louis, 3 december 2007. * * * honourable chancellor, sir ramesh jewoolall, respected pro - chancellor professor jugessur, respected vice - chancellor, professor fagoonee, governor bheenick, distinguished academics, and friends, it is a great honour and privilege to accept, gratefully, the conferment of the degree of doctor of civil law, honoris causa from the university of mauritius. i deeply appreciate and thank the governor of the bank of mauritius and honorary professor rundheersingh bheenick for presenting me for the conferment. this event is of special significance because the university commands immense prestige and has collaborations with several globally renowned academic institutions across the continents. the well known indian institute of technology, kanpur, india, is an example. the university is held in high esteem in india as exemplified by the visit to the university by dr. a. p. j. abdul kalam, as president of the republic of india, for an interactive session. the session was held on 13th march 2006 in this auditorium in the university. the conferment of this degree, in my humble submission, signifies the recognition of historical, cultural and economic ties between mauritius and india. it also signals the shared desire to improve and reinforce our relations in the sectors that are critical in the rapidly developing world, such as knowledge based economy and services sector, especially financial sector and tourism. it is noteworthy that professor fagoonee has his current interests in information technology, management and environment. contextually, this event invites a focus on interaction between central banks and academia. it is well known that practice of central banking has been drawing very heavily from the academic contributions on the subject. apart from theoretical foundations, academia provides guidance in the conduct of policy, both in terms of research inputs in collaborative work and in terms of participation in decision making process. while academics are often on the boards or committees of central banks, it is not uncommon for the governors to be drawn from the academia β the current well known examples, to mention a few, are professors ben bernanke in usa ; mervin king in uk, axel weber in germany, stanley fischer in israel and, of course, professor bheenick in mauritius. no doubt, | 1 |
investment rate and, particularly, a negative contribution to growth of total factor productivity. as a response to this situation, the mexican authorities embarked since late 2012 on a farreaching structural reform effort, aimed at increasing the economy β s growth potential. the see world bank ( 2015 ) : β latin america treads a narrow path to growth : the slowdown and its macroeconomic challenges β, semiannual report of the office of the regional chief economist, april ; and organisation for economic co - operation and development ( 2016 ) : β economic policy reforms 2016 : going for growth interim report β, february. bis central bankers β speeches reform package encompassed a wide range of sectors, as well as a significant strengthening of the institutional setting. the structural reform measures are still under implementation, and the full gains from this transformation will take a long time to materialize. however, some results are readily visible. i would like to highlight in particular the evolution of inflation. as of the first half of may, the annual inflation rate in mexico stood at 2. 5 percent, below the 3 percent target. as a matter of fact, we have been observing figures consecutively under the target since may 2015, an unprecedented achievement. this is of course the result of many factors, the implementation of strong macroeconomic policies the most prominent among them. but structural reform has also played a major role in these developments. for instance, the competition brought about by reform in the telecommunications sector has resulted in significantly lower prices for these products, with beneficial effects on inflation. 10 this has also been supported by a reduction in electricity prices, partly the result of reform in the energy sector. the recent performance of economic growth in mexico is also worth noting. during the years before the eruption of the financial crisis ( 2000 to 2007 ), the mexican economy showed an average annual rate of growth of around 2. 7 percent. the figure for 2011 to 2015 is similar ( 2. 8 percent ), notwithstanding the fact that the rate of gdp growth of our main trading partner, the united states, fell by 0. 6 percentage points between these two periods, 11 and that the economy was hit by a number of other external shocks, including a sharp decline in oil prices. it is also worth noting that mexico is one of the few emes where a deceleration of growth is not observed during the two periods under consideration. although it would be very difficult to isolate the different determinants of this performance, there is clearly a possibility that the | of economic growth observed in this period. in view of the dynamism displayed by their economies, the authorities of many emerging market countries saw little need for economic reform. thus, notwithstanding the opportunity provided by a favorable external environment, they did not carry out the structural measures needed to increase productivity and the potential for growth. the global financial crisis may have even worsened the situation, as one of its side effects has been a reversal in the reform effort in a number of areas, with only a few countries announcing comprehensive reform plans, china, india and mexico among them. 9 naturally, this situation has to change if economic growth in emes is to continue at a reasonable pace. reform priorities vary from one country to another, and therefore it is not possible to recommend specific measures that may be applicable on a generalized basis. however, on the basis of the international experience, a few general principles can be underlined : β’ economic reforms that reduce barriers to the efficient functioning of markets, fuel competition, stimulate innovation and the adoption of new technologies, and encourage the accumulation of human and physical capital, including infrastructure, are associated with higher productivity growth. β’ policy reforms may have non - linear effects related to the quality of political and economic institutions. therefore, a broad range of institutional factors need to be taken into consideration in a process of reform. β’ reforms in different areas interact. these synergies must be taken into account to maximize the impact on productivity growth. β’ a proper transition to a greater influence of market forces, and therefore an adequate sequencing of reforms, is critical for the success of these efforts. β’ the drivers of productivity growth may vary along the development path. the β middle - income trap β hypothesis points to different policy requirements at different levels of development. β’ approval of long - ranging reforms may take a long time, among other reasons because of obstacles of a political nature. also, the impact of reforms on productivity will normally be slow. as a result, the payoff of an early move in this direction will be usually very high. to conclude, let me say a few words about the recent efforts of structural reform in mexico, as my country β s experience can provide some additional insight on the intricacies of this issue. during the period 1990 β 2011, mexico β s economy recorded an average annual rate of growth of around 2. 8 percent, too low for the country β s needs. in the presence of a demographic dividend, the main factors behind this performance were a relatively low | 1 |
policy will need to take heed of both internal and external stability. this balance of emphasis will provide thailand with some flexibility in dealing with the pressure that could stem from the external front. in essence, i see the need for monetary policy in the period ahead to be vigilant and give due safeguards to both internal and external stability. one question often asked is, β does the continued emphasis on stability mean that monetary policy is abandoning growth? β the current policy preference for now is clear β stability ahead of growth. and to qualify this, i would like to make three points. first, an important pre - condition for growth on a sustained basis is a stable macroeconomic environment. to this end, the best contribution that monetary policy can make to promote growth is to ensure continuity of macroeconomic and financial stability. i remarked earlier that macroeconomic and financial stability are the gains we have made in the last few years. they are the gains that we must continue to preserve. second, the increased emphasis of monetary policy towards external stability so far has not put undue pressure on key domestic interest rates. they remain broadly accommodating. this is because of the large liquidity overhang in the banking system. i believe interest rates at the current levels are appropriate and consistent with the need to support the recovery of domestic demand, provide incentives for corporate debt restructuring, and maintain the economy β s cost competitiveness. and third, in addressing the issues of growth with stability, we must look for a proper coordination of fiscal and monetary policies. at this time, fiscal policies will have a dominant role in reviving the weaknesses in domestic demand. the government has been cautious to balance fiscal stimulus measures within the context of longer - term fiscal sustainability. the role of monetary policy is to ensure the continuity of macroeconomic and financial stability. ladies and gentlemen, one of the key concerns over thailand β s long - term fiscal sustainability has been the issue of how the government will find solutions to the remaining cost of financial restructuring. the cost, which includes the remaining uncovered losses up to now plus the contingent losses for the next three years, is currently estimated at 774 billion baht or about 17. 2 billion us dollar. on this issue, yesterday, the thai authorities announced a plan which would constitute a comprehensive solution to this problem. the solution centres on a programme of government guaranteed bond issue that would provide for the full financing of the estimated cost. this programme of bond issuance will run for a maximum period of | is the return of inflation to the target at a shorter time. for that reason, we are engaged in a normalising cycle of the monetary policy stance, by increasing the policy rate to 2. 75 % from 0. 5 % during 2022. this normalisation aims at establishing a better supply - demand equilibrium for goods and services, by inducing the adequate stimuli for both the monetary and financial stability of albania. this stability - as we have continuously emphasised - remains the crucial precondition for the sustainable and long - term growth of the economy and for the social welfare and equality. forward looking, projections in our baseline scenario suggest inflation will reduce in the course of the next year, and return in our 3 % target in 2024. also, these forecasts show the albanian economy will continue to grow in the coming years. despite the growth will somewhat slow down the momentum in the short run, the stabilisation of monetary environment and the reduction of uncertainty will pave the way for a faster economic growth in both medium term and long term. last, but not least, our forecasts suggest that financial markets will continue to be calm, the foreign exchange rate relatively stable, and the soundness of financial intermediaries, including the banking sector, will not be jeopardised. allow me to highlight that this economic prognoses, first reflects the health of the private sector in the albanian economy. in recent years, this sector has marked a distinguished progress, in terms of finding new markets, strengthening operational efficiency, improving financial soundness, and enhancing its strategic vision. the rapid rebound of the albanian economy after the pandemic shock bests certifies this progress. i think that the qualities that helped private sector in that period : care for the employees ; collaboration among businesses, both in horizontal and vertical plans ; the right share of costs in all the production chain ; and the operational and financial flexibility will be important elements for tackling high inflation. in parallel, i believe that the banking sector will continue to financially support the businesses, by orienting funds towards profitable projects and most productive sectors. last, our prior task, as public decision makers, is to take the adequate measures to restrain the supply - side shock in causing long - term consequences in the soundness of the albanian economy. in this context, i assure you that the bank of albania will continue to be entirely devoted to guarantee the price stability and financial stability of albania. dear ladies and gentlemen, while, we have | 0 |
more favourable terms, and obtain faster decisions on their financing applications. this is because the bureau acts as a one - stop center for banks to obtain consolidated information on smes, which is currently scattered, and will take longer for banks to obtain and verify individually. we have already seen how this can work in the case of consumer financing, where real - time and comprehensive information on consumers β credit exposures and history that is available from ccris has significantly shortened loan - processing times. with greater availability of information on smes, the processing time for sme loans can be similarly shortened. thirdly, the bureau includes and takes into account both positive and negative information on smes. certain third party information that financial institutions use in the evaluation of credit applications only provides negative information on the business conducts. examples are information on bankruptcy and legal suits, which are sometimes not updated and may result in a biased assessment of creditworthiness. by collecting and disseminating both positive and negative information, the sme credit bureau will benefit sme loan applicants by providing a more balanced view of smes β credit standings. in an objective rating process, credit bureaus typically accord greater weight to the more recent credit information or behavior. negative records in the past can thus be mitigated by more current and consistent good track records. lastly and perhaps of most value to smes, is the insights that smes would gain from a better understanding of their financial deficiencies which lead to rejections of financing applications by financial institutions. this can be deduced from the analysis provided through the bureau ratings and reports. the credit reports would also serve as a convenient tool for smes to carry out a self - evaluation to identify areas that need improvement and initiate adequate remedial actions to increase their competitiveness. smes are thereby empowered to improve their own profile, with correspondingly enhanced prospects for the sme sector as a whole. as i mentioned earlier, it is also encouraging to see a considerable turnout by financial institutions at this seminar. this underscores the sustained and growing attention by financial institutions in the sme sector that is critical to provide the enabling environment for the sme sector to thrive. bank negara has seen a paradigm change in the way in which financial institutions approach the business of sme financing. banks have, and continue to invest significantly, in supporting sme financing niches, and the organisational changes that we have seen have been pervasive in many banks. these banks have acquired tremendous insights | the agriculture sector and the establishment of the small debt resolution scheme. the various measures have already yielded positive results. smes today have greater access to financing, with financial institutions being the main sme financing provider. in 2007, banking institutions approved rm55. 1 billion in new financing to more than 109, 000 sme accounts. sme financing continues to remain robust. for the first three months of 2008 alone, a total of rm12. 4 billion in new financing was approved to more than 34, 000 sme accounts. as at end - march 2008, sme financing outstanding by banking institutions amounted to rm118. 8 billion. indeed, an increasing number of banking institutions have announced strategic plans focusing specifically on the sme sector. this has seen the share of sme financing increase significantly from 30 % of total business financing of banking institutions in 1999 to 44 % at end - march 2008. within the overall sme financing landscape in malaysia, the cgc has been positioned to play a key role. established at the initiative of bank negara in 1972, cgc set out to address one of the main constraints of smes in accessing financing, which is the lack of collateral. since then, cgc with bank negara as its main shareholder and with shareholders funds amounting to rm2. 7 billion and guaranteed financing outstanding of rm10. 2 billion at end - march 2008, has evolved itself as an integral part of the financial landscape, with the financial capacity to deliver its mandate. in 2005, bank negara embarked on a strategy to transform cgc beyond that as a provider of credit guarantees to enhance the contribution of the fast - growing sme sector to the national economy. cgc is being now positioned to provide a wider range of credit enhancement products. more importantly, it is also being positioned to provide advisory services on financial and business development to smes. this represents a significant shift in cgc β s strategic orientation and is validated by studies of the experiences in other countries that have found such advisory support to be critical in enhancing the viability of smes. a number of recent initiatives under cgc β s transformation plan deserve mention. these include widening the scope of guarantees to also cover financing by islamic banks and development financial institutions, introducing a new guarantee scheme for start - up smes, participating in malaysia β s first synthetic securitisation of sme loans, introducing an equity financing arm, and introducing risk - based models for determining guarantee fees. the | 1 |
ipumbu shiimi : opening of the office of the payments association of namibia speech by mr ipumbu shiimi, governor of the bank of namibia, at the official opening of the office of the payments association of namibia, windhoek, 6 march 2012. * * * director of ceremonies mr. erastus hoveka, chairperson of the bankers association of namibia mr. paul hartmann, chairperson of payments association of namibia members of pan management council banking industry and payments service providers, present here members of the media distinguished invited guests, ladies and gentlemen, i am pleased to join you in witnessing and celebrating the official opening of the office of the payments association of namibia, pan. let me first use this opportunity to thank the entire banking industry for their respective contributions in the process of making the operation of this office a reality. without your input it would not have been possible to arrive at this very important milestone. at this occasion, i am also privileged to introduce the new chairperson of pan. please join me in welcoming mr. paul hartmann to the management council of pan. we are confident that given his background as a pioneer of payment system reform project and thus his in depth knowledge of payments systems will be of immense value, and that through his leadership pan will be able to make a great impact on the national payment system of namibia. in the same vein, i would also like to thank the former chairperson, mr. gift kavari for his contribution. your guidance and input has provided a significant foundation for pan. as financial systems have become increasingly complex, stricter control, oversight and coordination of payment systems are required. namibia is not an exception in this regard. pan was therefore born as an integral part of this process, having been established in 2005 by virtue of the payment system management act, 2003 ( act no. 18 of 2003 ). pan is a legal body, self - regulatory non - profit association, made up of banking institutions and non - bank payment service providers. but why was this association established and what is its mandate? ladies and gentlemen, the mandate of pan is, amongst others, the following : to provide a forum for the consideration of matters of policy and mutual interest of members relating to the national payment system of namibia ; to authorize and set standards for non - bank payment service providers related to payment instructions, clearing and settlement with the endorsement of the bank of namibia. current examples of authorized service providers authorized by pan are smartswitch, real pay and paym | ##8. this allows the bank of namibia to focus on its mandate to authorize payment instruments such as nampost smart card and electronic money instruments such as issued by mobipay. to assist the bank of namibia in carrying out the functions of oversight of the abovementioned service providers to ensure compliance with set standards. since its establishment, pan has developed in terms of both its structural arrangements and its stature. today, pan has a governing council, an executive office which is being launched today, and several payment clearing house ( pch ) working groups or committees. this has increased its operational efficiency and service delivery. bis central bankers β speeches pan has achieved many goals over the last several years. although i do not want to go into details of all the particular achievements, allow me to highlight a few major milestones at this occasion. pan facilitated the development of the national payment system vision 2015 which casts the roadmap for both bank and non - bank stakeholders to participate in a broader payment system which is efficient, cost - effective and secure. pan currently runs three pchs, each representing a retail payment stream being ; cheque, cards and electronic funds transfer ( eft ). this has increased the operational efficiency and effectiveness of the industry for the benefit of the national payment system in the provision of these services. ladies and gentlemen, with the commissioning of this office, pan will be better positioned to continue to be the co - ordinating body through which payment system stakeholders are able to voice their views, contribute to a mutually beneficial national payment system and through which payment system projects can be co - ordinated. any providers of payment services that are not authorised by pan are operating illegally and we therefore call on any payment service providers to please enquire at this office. it is with great pleasure therefore, that i commission the office of pan together with its new logo and website. please join me in congratulating pan on these achievements which pave the way towards an exciting and bright future for the national payment system of namibia. in conclusion, i have no doubt that pan will live up to its mission, β to maintain a world - class payment system that meets domestic, regional and international requirements β. thank you. bis central bankers β speeches | 1 |
cyclical deceleration. in the bank β s april 2015 outlook for economic activity and prices ( hereafter the outlook report ), the policy board members β forecasts of the real gdp growth rate were around 2 percent for fiscal 2015, around 1. 5 percent for fiscal 2016, and in the range of 0. 0 β 0. 5 percent for fiscal 2017 ( chart 5 ). ii. conduct of monetary policy and price developments in japan next, i would like to touch on the conduct of monetary policy and price developments in japan. a. change in policy regime the bank is pursuing policy measures that aim at converting people β s deflationary mindset, which has been formed firmly amid the prolonged period of deflation, to one that expects moderate inflation. that is, preparing a platform on which people can act on the assumption that prices continue to rise moderately. to begin with, in january 2013, the bank set the price stability target of 2 percent in terms of the year - on - year rate of change in the cpi ; in other words, the introduction of β inflation targeting. β with a view to achieving this price stability target, the bank has been implementing an aggressive monetary easing measure called quantitative and qualitative monetary easing ( qqe ) since april 2013, and expanded the measure in october 2014 ( chart 6 ). by implementing such bold policy measures, the bank has intended to clearly indicate to the public that the basic thinking behind its monetary policy β that is, the policy regime β has changed, and also to encourage them to change their behavior in view of such change. in other words, this is the bank β s declaration that β the rules of the game have been changed. β b. commitment to achieving the price stability target at the earliest possible time before the introduction of qqe, the bank had pursued various monetary easing measures that were considered unconventional, such as the introduction of the zero interest rate policy and quantitative easing, and this made the bank a forerunner in monetary policy history. although each of the measures on their own could have been a quite powerful policy tool, it turned out that they were not effective enough to overcome deflation. while a variety of analyses attempted to explain why the bank was not successful in overcoming deflation, a major reason, in my view, was that the bank β s faith that β deflation can be overcome through monetary policy β was not strong enough, and that its commitment to achieving this aim was insufficient ; in other words | over the policy effects in the united states can be explained in terms of the traditional transmission channels. on the other hand, some arguments remain to be specifically pointed out about transmission mechanisms in unconventional policy, even though the qualitative mechanism in traditional and unconventional policies is the same. the first is about the effect of stabilizing financial systems and financial markets. this is the effect of soothing anxiety about financial systems by supplying ample liquidity to financial institutions, or the effect of stabilizing financial markets by central bank interventions when the markets become excessively risk averse and the market mechanism deteriorates, resulting in a surge in risk premiums. by preventing financial anxiety and preventing the markets from plunging, adverse effects on economic activity can be prevented. bis central bankers β speeches the second is about the effect of international spillover. with expectations for a protracted zero interest rate, global investors will search for yield or become active in the carry trade and risk taking, and capital will flow into high - interest - rate and commodity - exporting countries. this will then expand economic activity and raise stock prices in overseas emerging economies. as a result, there will be an effect that spills over to domestic economic activity and prices through an increase in exports to the emerging economies and an improvement in profits of global firms. the third is about the effect through the expected rate of inflation. this is the effect that, in addition to the existing channel of influencing demand, by attaching an expectation that a central bank β s balance sheet will expand for a protracted period, the expected rate of inflation will rise and real interest rates will decline, thereby affecting economic activity and prices. while these transmission mechanisms of monetary policy effects can be considered, the side effects will be a source of concern if monetary easing becomes excessive. as for the first effect i mentioned, if a central bank excessively intervenes in the markets and suppresses risk premiums too much, this might ruin the intrinsic function of the markets of making prices according to risks. in addition, financial institutions β profits might be compressed. by encouraging excessive risk taking, the second effect could induce economic overheating or a credit bubble in the countries receiving the capital inflows and subsequently cause a serious economic downturn. as for the third effect, if excessive balance - sheet expansion continues, the expected rate of inflation might rise unexpectedly or the markets might realize that the balance - sheet expansion is an undisciplined monetary increase or the monetization of government | 0.5 |
ben s bernanke : financial education and the national jump $ tart coalition survey remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the jump $ tart coalition for personal financial literacy and federal reserve board joint news conference, washington, dc, 5 april 2006. * * * good morning. we are here today to learn about a report on a topic of vital importance to our economic future : the financial literacy of america β s young people. increasingly, personal financial security requires the ability to understand and navigate the financial marketplace. for example, buying a home, saving for retirement or for children β s education, or even effectively managing the family budget now requires more financial sophistication than ever before. financially literate consumers make the financial marketplace work better, and they are better - informed citizens as well. as a former educator and school board member, and as the parent of two young adults, i am personally convinced that improving education is vital to the future of our economy and that promoting financial literacy in particular must be a high priority. i know that those of you here today join me in this conviction. the jump $ tart coalition is a leader among organizations seeking to improve the personal financial literacy of students from kindergarten to the university level. in particular, through its biennial survey of high school seniors - - the results of which you will hear about in a few minutes - - jump $ tart has brought increased attention to the issue of financial literacy among youth in the united states. over the tenyear history of this survey, the data gathered have become some of the most useful measures of what young adults understand about finances. the federal reserve is strongly committed to jump $ tart β s mission to better educate america β s youth about personal finance. on the regional level, many federal reserve bank staff members work closely with the state coalitions to help achieve this mission. in fact, there is at least one specialist in economic education at each of the reserve banks and at most of the branches. many of these specialists offer training seminars to help educators teach economics and personal finance in their classrooms. the federal reserve also supports a variety of programs and initiatives to increase financial literacy. i want to take a moment to describe just two of these initiatives. the first is a student competition called the fed challenge, a program designed to teach students about monetary policy and the national economy. among other activities, students in this competition take the roles of federal reserve | general economic policies of the european community. question : in your meeting today, could you describe what the mood was of the meeting and whether there was much debate about your move and much debate about the level of the move and also, whether it was an unanimous vote in the end. duisenberg : the mood was good. we had a very long and, i must say, very interesting discussion today. there were a few who were not very inclined to do something about the rate - but here i talk about a very few - and a very large majority was inclined to do something and supported the proposal as we put it before the council. and so, we had a very good discussion. for the final decision, i am afraid i have to tell you that we did not take a vote. but we know all the different views and so, finally, i could conclude as follows : the governing council decides that the main refinancing rate will be lowered from 3 % to 2. 5 %. question : you said there were no monetary risks of inflation at the moment. can we infer from today β s decision that there were monetary risks of deflation or is it purely a growth - oriented decision that you have taken today? duisenberg : no, we also see no risks of deflation emerging. we see that inflation has now remained, on a euro area - wide basis, constant at a rate of 0. 8 % four months in a row up to now. we see some risks on the upside, i. e. mainly the impact of rising energy prices, but that is by definition, as it was when it was on the downside, a temporary factor. we see some risks deriving from some wage settlements here and there in europe, those are the upside risks. we see some downside risks from a rather subdued outlook for general economic development in the entire euro area. but as such, the main thing is that we do not see the situation of price stability in which we entered the euro area, and which prevails until this moment, would be in any way endangered in the future. that gave us the leeway to take the measure i have just announced. question ( translation ) : mr. president, would you say you have admitted today that you are pursuing a business cycle - oriented monetary policy, which would constitute a change in model, compared with the deutsche bundesbank, which has always maintained that it does not pursue a business cycleoriented | 0 |
anne le lorier : bailouts, bail - in and financial stability welcome address by ms anne le lorier, first deputy governor of the bank of france, at the conference β bailouts, bail - in and financial stability β, jointly organized by the bank of france and the toulouse school of economics, paris 28 november 2014. * * * it is a great pleasure to welcome you here today at the banque de france for this joint conference organized with the toulouse school of economics. it is the seventh conference jointly organized with tse since the beginning of our partnership on financial stability issues. in the previous events, we tackled β extreme events β in 2008, and then β liquidity β in 2009, β the future of financial regulation β in 2010, β debt crisis in the euro area β in 2011, β banking models and banking structures β in 2012, and β bank liquidity, transparency and regulation β last year. today β s topic is β bailouts, bail - in and financial stability. β in the follow up to the last financial crisis, almost all regulatory initiatives have been motivated by the objective of ensuring no future public bailouts of banks or, in the language of economists and banking regulators, ending the too - big - too - fail problem. this objective is to be reached for all systemically important financial institutions, be they banks, insurance companies, market infrastructures or entities belonging to the so called β shadow banking system β ( asset managers, hedge funds and so on ). due to their unique role and concentration of positions, non - banks such as global insurers, global central counterparties and large asset managing entities undoubtedly entail systemic risks that have to be carefully monitored and mitigated. this is already acknowledged by standard setters ( cpmi - iosco ) and by the financial stability board and would probably deserve a specific conference. what makes banks specific among systemic institutions is the presence of implicit subsidies and this feature is the main focus of today β s conference. allow me to elaborate a bit on the tbtf problem and the implicit subsidy to prevent the collapse of the global financial system, governments in major jurisdictions stepped in by bailing out some financial institutions or by providing public guarantee to unsecured bank - debt holders. this use of tax - payers money for preventing private losses entailed sizeable direct costs for governments, in terms of both political support and fiscal implications. a more indirect, but equally important concern is that these interventions β aimed at stab | when one considers each reform separately, since the objective is to eliminate / compensate the competitive advantage that these institutions derive from expectations of public support. however, the result of adding up all measures may be to turn a gross competitive advantage into a net competitive disadvantage. although one might see this as a welcomed outcome, i see at least two reasons that could mitigate this view : β’ first, this cumulative regulatory cost could lead banks to operate below the economically optimal scale and scope, and withdraw from the provision of activities important for international firms and globalized financial markets. i have no preference for big systemic banks. but i simply do not believe that these large financial institutions became large and complex simply to benefit from the implicit subsidy. β’ alternatively, this could lead to even more concentration among systemic institutions themselves, as some attempt to secure higher public support probabilities to compensate for the higher regulatory burden. unless public authorities suddenly find a way to credibly commit to no bailouts whatsoever, we may well end up at some point with a world with fewer but more systemically important systemic players. and i am not convinced that a world with five g - sibs instead of the current list of thirty would necessarily be more stable. the second remark is that removing anticipations of state support / bailouts is a process that may take time and which must be handled with extreme care. the unexpected imposition of losses on some type of creditors to resolve problems in some banks can lead to shifts in expectations of public guarantee for other institutions, and create contagion and funding stress at other banks. the case of cyprus was a perfect illustration of this. the difficulty is to guide the evolution in expectations over time, and avoid abrupt shifts that would increase financial instability and ultimately undermine the objective of the reforms. this β transition problem β is in my view critical, and has been overlooked in many discussions. this conference is organized so as to facilitate exchanges with the audience. therefore, i encourage you to be fully involved in the discussions and wish you fruitful debates. i now leave the floor to augustin landier from toulouse school of economics, one of the organizers of this conference with regis breton and laurent clerc from the banque de france financial stability directorate, who will chair the first session of the conference. bis central bankers β speeches | 1 |
greater investor receptivity, corporate bond issuance has been strong. many markets are functioning more normally, with increased liquidity and lower bidasked spreads. equity prices, which hit a low point in march, have recovered to roughly their levels at the end of last year, and banks have raised significant amounts of new capital. many of the improvements in financial conditions can be traced, in part, to policy actions taken by the federal reserve to encourage the flow of credit. for example, the decline in interbank lending rates and spreads was facilitated by the actions of the federal reserve and other central banks to ensure that financial institutions have adequate access to shortterm liquidity, which in turn has increased the stability of the banking system and the ability of banks to lend. interest rates and spreads on commercial paper dropped significantly as a result of the backstop liquidity facilities that the federal reserve introduced last fall for that market. our purchases of agency mortgage - backed securities and other longer - term assets have helped lower conforming fixed mortgage rates. and the term asset - backed securities loan facility ( talf ), which was implemented this year, has helped restart the securitization markets for various classes of consumer and small business credit. earlier this year, the federal reserve and other federal banking regulatory agencies undertook the supervisory capital assessment program ( scap ), popularly known as the stress test, to determine the capital needs of the largest financial institutions. the results of the scap were reported in may, and they appeared to increase investor confidence in the u. s. banking system. subsequently, the great majority of institutions that underwent the assessment have raised equity in public markets. and, on june 17, 10 of the largest u. s. bank holding companies β all but one of which participated in the scap β repaid a total of nearly $ 70 billion to the treasury. better conditions in financial markets have been accompanied by some improvement in economic prospects. consumer spending has been relatively stable so far this year, and the decline in housing activity appears to have moderated. businesses have continued to cut capital spending and liquidate inventories, but the likely slowdown in the pace of inventory liquidation in coming quarters represents another factor that may support a turnaround in activity. although the recession in the rest of the world led to a steep drop in the demand for u. s. exports, this drag on our economy also appears to be waning, as many of our trading partners are also seeing signs of stabilization | spectrum of plausible outcomes for the millennium rollover as i see them. as you will shortly hear, i believe the y2k alarmists have not fully recognized the attention that is being given to this challenge and to the significant progress that is being made towards meeting it. given what we know today, i am cautiously but increasingly optimistic that the millennium bug will not cause major economic disruptions when it bites. and i am quite confident that the financial system will be well prepared. why was it so difficult for so long for people to come to terms with the year 2000 problem? at the most basic level of any organization β be it public or private, large or small β the y2k problem was all too easy to ignore. it is a hidden threat, cloaked in the arcane language of computer programs and in embedded microchips. as such, it was difficult at first for senior management in both the private and public sectors to recognize the serious nature of the problem. this was compounded by the fact that the costs and benefits of the solution for an individual operation were neither very easily quantified nor very attractive. but after an initial period of denial, organization leaders in the united states have now recognized the problem and are taking aggressive action to correct it. nonetheless, given the pervasiveness of the problems involved, i suspect that even the most thoroughly prepared organizations are concerned that something significant might be missed. consequently, responsible and careful organizations are developing extensive contingency plans to work around any emerging problems as insurance against y2k disruptions. thus, insecurity about the comprehensiveness of y2k remediation efforts is affecting corporate investment and production plans now and will do so into next year. the second feature of the millennium bug that makes it so difficult to analyze is the interrelated character of many computer systems. an individual company may be satisfied that it has done all it can to fix its own systems, but it may still feel vulnerable to the actions taken by its suppliers and customers. for example, what good would it do you to be perfectly ready if your electricity is off? or if the train bringing in tomorrow β s production materials is delayed? in an environment where β just - intime β inventory systems and electronic data interchanges have linked economic activities very closely together, one firm β s failure has the potential to ripple through significant segments of the chain of production, services, and distribution. thus, coordination of y2k remediation activities would | 0.5 |
##ptive fate : why bother fighting if everything is going down the drain anyway? the other is to pull yourself together and ask : how can i get into the right kind of shape to face future challenges? there is certainly no doubt that action is preferable to resignation. even if i do not share the diagnosis of being the " sick man " of europe, it is a wake - up call. and it is launching a societal debate β including the one that's happening right here and right now. german industry and our society can adapt to a changing environment. this is something they have proven time and again. the staking out of clear and reliable political framework conditions can be supportive of this. i am sure that the current debate will help make our country stronger and fitter for the future. in my opinion, germany is healthy. but it faces challenges. footnote : 1. see deutsche bundesbank ( 2023 ), germany as a business location : selected aspects of current dependencies and medium - term challenges, monthly report, september, pp. 15 - 35. 3 / 3 bis - central bankers'speeches | axel a weber : 7th bundesbank lecture 2010 β introductory remarks introductory remarks by professor axel a weber, president of the deutsche bundesbank, at the 7th bundesbank lecture 2010, berlin, 14 september 2010. * 1. * * introduction ladies and gentlemen i am very pleased to welcome you to this year β s bundesbank lecture, which is being held at the old town hall in the very heart of berlin. the old town hall was built between 1902 and 1911 as an extension of the β red town hall β, which is just a stone β s throw from here. from 1949 to 1990, the old town hall was the seat of the council of ministers of the then gdr, and, in 1990, the unification treaty between the two german states was negotiated in this very building. today, it serves as the seat of the senator for the interior of the federal state of berlin. the room we are in is the β bear hall β, named after the statue of a bronze bear in the middle of the hall. this statue β the bear is berlin β s heraldic symbol β had been exiled to east berlin β s zoo for four decades before it returned in 2001. it is in these historic surroundings that we have gathered for the 7th bundesbank lecture. i am particularly grateful that mr mark carney, governor of the bank of canada, will be our speaker today. mark, my special welcome to you and thanks a lot for accepting our invitation. it is an honour to have you here. let me say a few brief words about both this event and our speaker for today. 2. on the event when we established the bundesbank lecture in 2004 we had two objectives in mind : the first objective was to raise the bundesbank β s profile further in the german capital. the second aim was to provide a high - level forum for public debate on economic and monetary policy issues. especially this second objective seems to have gained in importance given our turbulent times and the intellectual uncertainty they have provoked. consequently, we are happy to look back on a long line of very distinguished speakers β including, of course, mark carney, but also alan greenspan, jean - claude trichet, tommaso padoa - schioppa, ben bernanke, mario draghi and dominique strauss - kahn. 3. on the subject it is no surprise that the financial crisis has dominated this event during the recent past. we have just entered the fourth year of the crisis | 0.5 |
work on securitization and credit enhancement. given that at present, a number of bonds issued by asian entities are below investment grade, the use of securitization and credit guarantees to enhance the quality of these issues can act as a near - term solution to giving these issues a credit quality acceptable to investment managers, and give them the needed initial exposure to private investors. the introduction of these new instruments β which would attain a credit quality acceptable to investment managers by achieving a high rating from international rating agencies β would also benefit the international financial community by providing investors with a greater diversity of products and instruments for investment. more importantly, it would enable smaller corporate entities β who would otherwise be limited to financing themselves through short - term commercial bank lending β to access bond markets and find a source of funding more suitable to their needs. cross guarantees a means of helping economies with less developed local bond markets to issue debt in the regional market may be through the use of cross guarantees. as part of regional financial cooperation and a step towards greater regional financial integration, cross guarantees can reduce the cost of funding for smaller economies with lower credit rating through guarantees provided by more advanced nations. the use of cross guarantees will be similar in principle to the use of credit enhancements, resulting in improved credit risk of bond issuances as well as lower funding costs for bonds. but while credit enhancement can be offered by a third party, cross guarantees are made by countries within the region in an effort to collectively develop the region. a number of concerns may arise with the use of cross guarantees, namely the problems of moral hazard arising from any type of guarantee, the resultant price distortion, and the perceived free rider problem of the smaller economies. to lessen the risks that would arise from moral hazard, such a guarantee may only be partial. the problem of price distortion will be difficult to mitigate, given that bonds issued with cross guarantees by definition will not have their total risk reflected in price. however, this in turn will help benefit issuers in terms of lower cost of funding. with regards to the free rider problem, it is clear that a system of cross guarantees will benefit the lesser developed economies most, since they will not be in a position to guarantee any other issuers. however β with the spirit of regional financial cooperation for development of asia as a whole in mine β countries with more advanced financial systems may decide to offer these guarantees for a limited period of time. proposals for development and integration : enhancing market infrastructure currency arrangements | . monetary policy ladies and gentlemen, let me turn to my last subject, that of monetary policy. 8. the mpc β s ultimate mandate is to safeguard the macroeconomic and financial stability of the country. in the last few years, the bank of thailand has maintained an accommodative monetary policy stance. mindful of imminent downside risks to growth, the policy rate was cut three times in the mpc meetings of may and november 2013, and again in march 2014. in these three meetings, the mpc were of the view that the reductions of policy interest rate were necessary to ensure sufficient support to the domestic economy. the current real policy interest rate, which is now in a negative territory, aims to help alleviate the financial burden on households and corporations, allowing them to withstand short - term shocks. 9. however, as the current policy interest rate is already low, further easing would not be without concerns. in the last meeting in april 2014, the mpc decided to maintain the policy at 2. 00 percent. the rationales behind this decision were that the current monetary policy stance was accommodative enough to support the economy as the prolonged political uncertainties were the main cause for risk to growth, not the financial conditions. meanwhile, room for further policy accommodation was diminishing, and any possible side effects of keeping the interest rate low for a protracted period, needed to be taken into account. 10. i would like to end my remarks by thanking you all again for your contributions to the thai economy and let me assure you that the bank of thailand will continue our works to ensure a stable and resilient financial and economic environment, conducive to economic growth of the country. thank you very much. bis central bankers β speeches | 0.5 |
njuguna ndung β u : putting banking at the centre of the economy β s sustainable growth remarks by professor njuguna ndung β u, governor of the central bank of kenya, at the opening of the kba 3rd annual banking research conference, nairobi, 25 september 2014. * * * the chairman, kba governing council ; members of the kba governing council ; banks β chief executive officers ; distinguished participants ; ladies and gentlemen : it is my honour and pleasure to join you this morning at this very important conference that focuses on the role of the banking sector in the economy β s growth. it is therefore my singular pleasure to be invited to open the kba third annual banking research conference and to make some remarks at its commencement. first and foremost, i would like to commend the kba for its consistency in hosting the annual banking research conference. this is further evidence that the banking industry is keen on having its operations and strategic focus informed by analytical work. this being the third annual conference, the body of knowledge that the process has generated is without a doubt going to be beneficial to all stakeholders. research and its output is a β public good β. the broader benefits arising from knowledge cannot be restricted to those who have a direct interest in the research. research that improves the policy environment benefits all and indeed the economy at large. this year β s conference theme of β putting banking at the centre of the economy β s sustainable growth β is an example of this point. several papers focusing on finance and economic growth have confirmed the causal relationship. it is on that basis that i consider this conference β s theme on sustainability of this relationship to be inspiring, given that it provides an opportunity for deeper reflection taking us beyond the general finance β growth nexus. the kenyan economy has an ambitious real output growth target of at least 10 percent to enable the realization of the aspirations of vision 2030. the high and sustained growth targets will only be achieved through increased investment and increased productivity. the banking industry must intermediate and provide the funding required for the investment but even more important is long - term finance with attractive terms. ladies and gentlemen : the presentations lined up for this conference give me confidence that we are embarking on a conversation that will lead to the consolidation of the gains to the economy from the dynamism of the banking industry. let me make a quick reflection over the five areas around which the conference presentations focus ; β’ firstly, increasing support for agriculture is important and in the right | gertrude tumpel - gugerell : a case for rapid euro adoption introduction for panel discussion by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at the austrian national bank conference on european economic integration on β the euro β s contribution to economic stability in cesee β, vienna, 16 november 2009. * * * ladies and gentlemen, 1 it is a pleasure to be at this conference among such distinguished panellists to speak about the european economic integration and the adoption of the euro. for us at the ecb, the topic of the optimal timing of euro adoption for the eu countries in central and eastern europe ( cee ) that have not yet done so is very important. according to the maastricht treaty, all eu countries are called upon adopting the euro at some stage. so it β s not a question of if, but rather on when to join. however, to ensure that the monetary union is working smoothly, it is essential β and the maastricht treaty has foreseen this β that the countries joining the euro area have achieved a sufficient degree of sustainable convergence. this is first of all in the interest of the country concerned. moreover, sustainable convergence is a cornerstone of the european monetary union on which the success story of the euro is built. since its introduction back in 1999, the euro has become one of the major currencies of the world. the low inflation environment in the euro area can be largely attributed to the well anchored inflation expectations and the high credibility of the ecb β s monetary policy strategy to ensure price stability over the medium - term. during the global financial crisis, it became apparent that the euro has been an important shelter for the euro area countries to protect them against what otherwise may have resulted in an exchange rate and balance of payments crisis. this led to the widespread perception that the euro area is a safe haven. let me in the following speak about the economic situation in the cee countries and their prospect on joining the euro. the cee countries have been strongly hit by the financial crisis following the bankruptcy of lehman brothers, the cee countries have been strongly hit by the global financial crisis, although at varying degrees across countries. due to the slump in global activity, heightened risk aversion by international investors and a de - leveraging by financial institutions, most cee countries have seen a significant weakening of export demand and a substantial worsening of their external financing conditions. it seems | 0 |
empowerment & participation of women in social and economic activities. so you see, we are interested for the simple reason that microfinance can play a key role in the economic development and wellbeing of our people and country. we believe that through microfinance, many of the poor and unbaked in our communities will have the opportunity to access financial services to improve their living standards. ladies and gentlemen, microfinance is not only about loans. it also includes savings, payments, micro insurance services and capacity building of clients. i hope that at the end of our expo, the people of labasa would be better informed about these financial services. not only that, but we would like to see new micro business initiatives spring up, resulting in improved living standards. the theme for this third microfinance expo is β inspiring growth through microfinance β. when we look at statistics, the informal sector, which includes small and microentrepreneurs, contributes around 17percent of our gdp. 1 in some asian countries, this particular sector form around 60 β 80 percent of gdp. you can see then that there is a lot that can be done to develop the microfinance and small business sector to become a major contributor to the development and growth of our country. the north can contribute to this objective. labasa, as well as the entire northern division has become a national priority in government β s current development focus. there is availability of vast untapped resources in the northern division. with proper policies and support in place, these resources can be harnessed to produce business opportunities and source of living for the people in this region. the government is keen on realizing this. we intend to visit some projects under the northern development initiatives today. we have heard some encouraging developments and will see them whilst we are here. rbf policies to support and promote microfinance in the last 17 months, you may have noticed that the reserve bank has implemented a number of new initiatives to promote microfinance and greater financial inclusion in fiji. in april 2009 a new department was established in the bank, the financial systems development and compliance group. this group has been tasked with spearheading developments in the areas of microfinance, financial literacy, remittances, complaints management, capital markets and payments systems. to develop microfinance in fiji, the reserve bank issued a policy in december last year to all commercial banks to establish microfinance units at all their branches by january | to highlight some of these major accomplishments : β’ the enhancement to its life product offering through the launch of the bula prime product in 2011. β’ the re - branding of dominion house to bsp life centre, which now accommodates all of bsp life β s operations. β’ the opening of a new customer services centre on the ground floor of bsp life centre. i am told that walk - in customers are averaging 2, 000 per week, double what they were before the office opened. β’ the opening of a lautoka office, to complement the nadi branch and to provide greater service to customers in the west. β’ the rollout of new medical products earlier this year, including the introduction of an india evacuation product at very affordable premiums. i understand that bsp life has partnered with the world renowned apollo chain in india which provides a broad range of specialist medical services. access to india is now seamless via hong kong or seoul and the quality of services at apollo, i am told, is world class. in 2012 apollo treated over 60, 000 international patients at their delhi facility alone. i think these numbers provide some indication of the acknowledgement of the quality of the treatment available. bis central bankers β speeches β’ in so far as investments go, the bsp life portfolio has grown to $ 323 million. most of this money is invested in fiji, helping to provide employment for our people and helping to grow our economy. β’ i also note the strong financial standing of the business as publicly declared in the company β s recent key disclosure statement for 2012. this augurs well for future growth and ongoing returns to bsp life policy holders. i am pleased to note a significant investment in marketing by the bsp group to create awareness of the need to invest and protect our financial future. with the take - up of life insurance at less than 15 percent of our population, bsp life has taken a lead role in creating awareness of the critical need for us to have insurance and protect our loved ones. bsp life and bsp bank have also been key partners, along with other stakeholders, in the reserve bank of fiji β s ongoing efforts to promote financial inclusion and financial literacy in fiji. launch of bula elite and concluding remarks ladies and gentlemen, it is clear that bsp life has strongly established itself in life and health insurance in the fiji market over such a short period of time. tonight is another special milestone in the company β s growth as a major player in fiji β | 0.5 |
to regard the decision of the mediation panel as binding. the problems i have just set out highlight the crucial importance of a principle which the founders of the eurosystem were keen to safeguard : the independence of the ecb, and of its governors. if the governments decide to mandate the ecb with additional tasks, this basic principle still applies, as long as the treaty is not changed. thus, if the ecb is mandated with banking supervision, the governing council of the ecb will be the one deciding on all relevant supervisory matters, as long as there are no changes in primary law. this implies that β following a common principle of reason β those responsible for a decision need to be able to shape that decision. bis central bankers β speeches 4. conclusion let me sum up my main points. the single supervisory mechanism is a good step forward towards improving the european institutional framework. there is no doubt about that. however, the envisaged institutional set - up needs to take into account a basic feature of the eurosystem β the independence of the ecb and of the members of the governing council. hence i am not only looking forward to working with my supervisory colleagues within the ssm, but also to reading the final regulation governing the new system. thank you for your attention. bis central bankers β speeches | in order to insulate banks from weak public finances, we need not only appropriate supervision but also suitable regulation ; regulation that will prevent banks from taking on excessive risk through state financing. such regulation should, for instance, include upper limits for lending to governments. it should also encompass appropriate capital backing for government bonds β which is another proposal made by stefan gerlach, incidentally. but the single supervisory mechanism and suitable regulation are just two elements of a banking union, and there are also other means available for severing the link between sovereigns and banks. the third tool in this respect is a european recovery and resolution mechanism for banks that has access to β european β funds. in this context, it is necessary that any such mechanism ensure that investors are first in line to bear the risk of their investment decision. taxpayers must be spared the burden of other people β s investment decisions β at the national level and even more so at the european level β for as long as there is no proper balance between liability and control. ladies and gentlemen, i have very briefly highlighted a few arguments in favour of european banking supervision β the β why β, so to speak. now, let us take a look at the β how β. 3. european banking supervision β the β how β the establishment of the single supervisory mechanism will see wide - ranging banking supervisory functions being transferred to the ecb. at least seventeen countries will give up their sovereignty in supervisory matters to the ecb ; the ecb will be directly responsible for the supervision of the most systemically important banks domestically and at european level. nevertheless, national legal systems and national market structures will still be of utmost importance for the welfare and success of these banks. given the multitude of different s gerlach, a schulz, g wolff ( 2010 ), banking and sovereign risk in the euro area. centre for economic policy research, discussion paper, no 7833. bis central bankers β speeches supervisory traditions, legal systems and people involved in supervision, the ssm will only be successful if appropriate governance and transparent cooperation and task - sharing are installed. one of the β hot β topics when swiftly organising a banking supervisory function for the ecb is future cooperation between the ecb and the national supervisors. organising a european banking supervisory mechanism in such a short time firstly means building upon existing structures. secondly, supervision will only be successful if the ecb is able to benefit from cross - border comparisons, taking into account the macroeconomic and microeconomic knowledge and | 1 |
peers. especially italy, which has larger accumulated debt, has undertaken bold budgetary cuts. both countries have speeded up their budgetary consolidation and are implementing balanced budget rules to their constitutions. * * turning now to banking, we can see that the markets and banks themselves are not happy with the condition of the banking system, as shares have declined and interbank markets are not working as well as one would hope and expect. in europe, the systemic liquidity of the sector is supported by the european central bank which continues to provide liquidity on a full allotment basis, against a broad range of collateral, both marketable and non - marketable. the ecb has committed itself to continuing this flexible method of liquidity provision as long as necessary. and the amount of collateral available in the market is large enough to allow even much greater creation of liquidity than at present, if demanded. i think that the main problem with the banking system is that a further recapitalization of banks is already long overdue. this is the case throughout the world. perhaps this task is especially urgent for the euro area, because uncertainty regarding the health of banks aggravates the negative effects of economic imbalances and divergence in the area. bis central bankers β speeches this should be the task primarily of the shareholders of the weaker banks, who should refrain from taking dividends or should inject more capital if needed. in some cases, government investment in bank equity may also be necessary. coming from finland, i can understand very well the political problems involved in cleaning up the banking system. in the 1990 β s, after the great finnish banking crisis, the finnish government had to support the asset management company that handled the banks β problem assets, in amounts that at one point reached about 10 per cent of gdp. most of this money was later recovered, but in the meantime taxpayers were furious. the public frustration with the costs of the banking crisis has not been forgotten in my country. despite the short - term discomfort it entails, the resolution of banking problems is necessary for us to move forward to a lasting recovery. on the one hand, the recapitalization of the weaker but viable banks is necessary to restore confidence. on the other hand, the wellmanaged closure of weakest banks is necessary, so that they do not distort the market for the viable banks. an important part of the decisions of july 21 by the euro area heads of state or government was | ignazio visco : press conference remarks by mr ignazio visco, governor of the bank of italy, at the second g20 finance ministers and bank governors meeting, 7 april 2021. * * * good afternoon, today we discussed sustainable finance and two specific topics relating to financial regulation. on sustainable finance, the discussion concerned the work plan of the sustainable finance study group, which we decided to reactivate at our february meeting and which is co - chaired by china and the united states. the group has made rapid progress in the last few weeks and, following the inputs of the presidency, has agreed to focus its work this year on three areas : the first is sustainability reporting ; the second is related to the metrics for classifying and verifying investment sustainability ; and the third concerns how to enhance the contribution of international financial institutions to the goals of the paris agreement. in addition, the group will develop a multi - year roadmap on sustainable finance to address the most pressing issues relating to sustainable development. this will help in prioritizing its activity, which will initially be focused on climate but will subsequently look at sustainability more broadly. ministers and governors concurred on the importance of this agenda and agreed that the study group should be upgraded to a fully fledged working group. as regards financial regulation, today we discussed two documents submitted by the fsb : a report on the covid - 19 support measures and the main issues concerning their future evolution, and the final evaluation report on the effects of too - big - to - fail reforms. the first report shows that in the current and still uncertain circumstances most of the covid - 19 support measures remain in place, and their withdrawal is generally not imminent. authorities tend to view the potential risks to financial stability arising from the early removal of support measures as significant, and as being greater than those associated with a late withdrawal. we, ministers and governors, shared the main message of the report, which is that the persisting uncertainty over the evolution of the pandemic and the uneven pace of the recovery across countries call for a state - contingent and data - driven approach when deciding whether to adjust or end the support measures. this should be done in a gradual and targeted way, in order to minimize long - term financial stability risks. we also agreed on the need to maintain an internationally coordinated approach in responding to the pandemic, with the support of the financial stability board ( fsb ), to ensure that the financial sector continues to | 0 |
provision measures have improved system liquidity in the past weeks and stabilized broad funding conditions. however, risks to the growth outlook continue to be tilted to the downside and currently a ushaped recovery is expected. the challenge, therefore, is to provide tangible boost to the economy through the appropriate combination of fiscal response and monetary measures. rest assured, macroeconomic policy measures are in place to address downside risks associated with the covid - 19 pandemic. in line with this, the bsp will continue to work with market participants and relevant government agencies to ensure that its policy responses remain timely and appropriate particularly during these challenging times. thank you. 2 / 2 bis central bankers'speeches | ##ubscriptions in the latest t - bill and t - bond auctions of the btr on 13 and 14 april, respectively, as well as in the term deposit facility ( tdf ) auction on 15 april. at the same time, the infusion of funds has resulted in lower weighted average interest rates ( wair ) in the interbank market. moreover, gs purchases by the bsp in the secondary market helped improve gs market activity. to date, bsp has purchased a total of p62b worth of gs from the secondary market. the bsp is prepared to use the full range of its monetary instruments and to deploy monetary policy and regulatory relief measures as needed in fulfilment of its price and financial stability objectives. the monetary board has already approved the granting of temporary regulatory and rediscounting relief measures to bsp supervised financial institutions ( bsfis ). ( mb resolution no. 397 dated 13 march 2020 ) 1 / 2 bis central bankers'speeches the bsp recognizes that the outbreak of covid - 19 has potential significant impact on the operations of bsfis in terms of risks related to exposures to borrowers and / or industries or businesses severely disrupted or affected by the covid - 19 as well as disruption in operations due to measures implemented to control the spread of virus such as the lockdown situation, localized work suspension, and heightened health and safety risks faced by bsfis β employees and customers. moreover, the bsp has implemented extraordinary liquidity measures to complement the national government β s broad - based health and fiscal programs in mitigating the impact of covid - 19. these measures include the β±300 billion repurchase agreement with the btr as well as launching a package of measures to support lending to micro, small, and medium enterprises. loans granted to msmes shall be counted as part of banks β compliance with reserve requirements. at the same time, the bsp continues to monitor the developments arising from the pandemic. in calibrating its monetary policy settings, the bsp will continue to be data - dependent, guided by its assessment of the inflation outlook over the policy horizon and the risks surrounding such outlook as well as data on demand conditions. the bsp has responded swiftly and decisively to mitigate economic and financial fall - out form the covid - 19 pandemic through its monetary instruments and regulatory relief measures. moreover, evidence suggests that the bsp β s liquidity - | 1 |
interview capital markets union : the role of equity markets and sustainable finance contribution by luis de guindos, vice - president of the ecb, on the occasion of the publication of the ecb report on β financial integration and structure in the euro area β, frankfurt 3 march 2020 the release of the ecb report on β financial integration and structure in the euro area β is an excellent opportunity to share some thoughts on the european capital markets union, or cmu project. well - functioning and innovative capital markets are essential in enabling firms, households and governments to access stable funding and saving opportunities that are vital for consumption, investment and, ultimately, economic growth and employment. one could even argue that the cmu is a common denominator across many β if not all β eu strategies and a pillar for strengthening the eu β s autonomy on the global stage. without progress towards a fullyfledged cmu, we will face significant difficulties in effectively addressing the global challenges facing the eu. further developing and integrating eu capital markets takes on even more urgency in light of the challenges posed by the united kingdom β s departure from the eu. last, but certainly not least, there are strong synergies between the completion of the cmu and the finalisation of banking union. though the world of finance may sometimes seem distant or arcane, it is more important to people β s everyday lives than many might think. for one, badly functioning financial systems have the potential to harm all of us β as the experiences of 2008 and beyond have shown. i will start with a short update on the progress achieved so far, and then turn to the way forward, focusing on two key dimensions in developing deeper capital markets : risk capital markets and sustainable finance. significant advances were made in the first phase of the cmu, but more can be achieved following its launch in 2015, the cmu agenda led to some important accomplishments. thanks to the efforts of the european commission together with the council and parliament, 11 out of 13 proposals from the original action plan were successfully adopted across a number of important areas, including insolvency frameworks, covered bonds, securitisation markets and the development of a pan - european pension product. these policies are expected to have very positive effects on the development and integration of eu capital markets, even though initial ambitions had to be scaled back in some cases in order to reach agreement among the co - legislators. while it will take time for the full impact of these measures to un | benny bm popoitai : prudential supervision of the financial system in papua new guinea speech by mr benny bm popoitai, mbe, acting governor of the bank of papua new guinea, at the seminar for external auditors of regulated financial institutions to cpa - png, port moresby, 7 april 2005. * * * my dear auditors, good morning. it gives me great pleasure to address your association once again. the purpose of this seminar is to enhance the bank of papua new guinea β s relationship with important players in the financial system, with respect to compliance with the bank β s reporting requirements to ensure stability of the financial system in papua new guinea. bpng, as a corporate statutory body established by the central banking act 2000 ( cba ), is empowered to supervise the operations of the licensed financial institutions, including commercial banks, licensed financial institutions, savings & loan societies, superannuation funds and life insurance companies. the primary function of bank, as the prudential supervisor, is to foster efficiency, maintain confidence and stability in the financial system. effective prudential supervision of financial system is an essential component of a strong economic environment because the financial sector plays a central role in mobilizing the necessary capital for private sector participation in the economy to stimulate economic growth. prudential supervision, however, cannot, and should not, provide an assurance that financial institutions will not fail. in a market economy, failures are a part of risk - taking and the objective of the bank, as the prudential supervisor, is to ensure that the number of failures and the resulting financial losses to depositors, policyholders and contributors, is minimized. financial crises are a serious concern and can be extremely costly β not only in terms of the direct cost to the government and taxpayers, but also in terms of foregone growth. the npf saga is a classical example. perhaps, the challenging part of prudential supervision and threat to stability in the financial sector in papua new guinea is the potential for corruption and blatant dishonesty creeping into our financial institutions, and the bank will have to ensure that there is zero tolerance to such behaviors. this is the reason why the bank requires individuals holding or intending to hold board, trustee and management positions to go through a vigorous β fit and proper person β test before occupying responsible position in any financial institution regulated by the bank. the primary responsibility for the overall conduct of the financial institution is vested in the | 0 |
. as central bankers, it's critical that we remain focused on carrying out our responsibilities, while keeping pace with the world around us. and that's what brings us here today. this workshop is an important part of learning and understanding the challenges and opportunities that lie ahead so that we can be prepared for and successful in the future. thank you all for participating in what will surely be thought - provoking and constructive discussions. president's working group on financial markets, the federal deposit insurance corporation, and the office of the comptroller of the currency, report on stablecoins, november 2021. board of governors of the federal reserve system, overnight reverse repurchase agreement facility, january 3, 2018. | speech the song remains the same june 01, 2022 john c. williams, president and chief executive officer remarks at the new york fed and columbia sipa monetary policy implementation workshop, new york city as prepared for delivery good morning, everyone. i'd like to give my thanks to columbia university's school of international and public affairs for partnering with the new york fed once again and for hosting us today. it's wonderful to be here and to see so many colleagues who have traveled from near and far to attend this workshop. we'll have many important conversations over the next two days. to kick us off, i'm going to share some observations on the digital transformation of money and payments. i'll also discuss the potential implications for monetary policy implementation and for central banks more broadly. before i begin, i must give the standard fed disclaimer that the views i express here are my own and do not necessarily reflect those of the federal open market committee ( fomc ) or anyone else in the federal reserve system. i will get to payments technology in a minute. but first allow me to take you back to the year 1877. you're amazed at the sound of music coming out of a new inventionaβ¬ β the phonograph. fast - forward a century, and you're listening to your favorite band on a cassette tape. in the 1980s, it's a cd. in the 2000s, you're scrolling through the greatest hits on your ipod. and today, perhaps even on your way here, you listened to a streaming service on your phone or watch using voice commands. there's been much innovation over the years, and many improvements in terms of convenience and costs, but at the most basic level we are still doing the same thing : enjoying music. it's how we're doing it that's changed. the same is true with money and payments. both are fundamentally changing through technological transformations. as happened with the delivery of music, the pace of technological advancement is accelerating, and it's clearing the way to do things faster or more efficiently. on top of that, the development of digital currencies has boomed. this includes cryptocurrencies that are not fully backed by other assets. it also includes stablecoins that are fully backed by safe and liquid assets, and central bank digital currencies ( cbdc ). both stablecoins and cbdc that are fully backed by safe assets have the | 1 |
speeches over the past year, the risk of recession has diminished in canada and globally. inflation in most economies has come down, and inflation targets are in sight. however, there could be volatility in markets as expectations shift about when and by how much central banks will lower their policy rates. and there continue to be important geopolitical and economic risks on the horizon. against this backdrop, households and businesses continue to adjust to past interest rate increases. some indicators of financial stress have risen. at the same time, the valuations of some financial assets appear to have become stretched. this increases the risk of a sharp correction that could generate system - wide stress. the recent rise in the use of leverage in the non - bank financial sector could amplify the effects of such a correction. what's most important is that to properly manage risks, financial system participants need to remain proactive. and financial authorities need to remain vigilant. let me now pass things over to carolyn. thank you, governor. let me touch on each of the sectors we cover in the fsr. i'll start with households. so far, most households have proven resilient in the face of higher interest rates and inflation. overall, we've seen households adjusting to higher debt - servicing costs. this does not mean the adjustment has been easy. clearly, there are individuals and families who are feeling very stretched. what we're evaluating in the fsr are the indicators of overall stress in the system. some of the indicators of household financial stress that fell during the pandemic are back to or above normal levels. survey data suggest renters are experiencing the biggest increase in financial stress. after hitting historical lows during the pandemic, the share of households without a mortgage that are behind on credit card and auto loan payments has come back up to - or surpassed - typical levels. and over the past year, the share of borrowers without a mortgage who carry a credit card balance of at least 80 % of their credit limit has continued to climb. among mortgage holders, indicators of financial stress have remained relatively low even as many have been coping with higher mortgage payments. since the bank began raising its policy rate in march 2022, payments have increased for roughly half of all outstanding mortgages. over the next two and a half years, most of the remaining mortgages will renew, and these borrowers are likely to face relatively larger payment increases. at the same time, many mortgage | holders have also seen their wages go up. some have proactively adjusted their spending to help offset higher debt payments. many also report higher levels of savings available to offset increased payments. 2 / 3 bis - central bankers'speeches overall, the evidence suggests that households have the flexibility to continue servicing their debt at higher rates. we will be watching the data closely for signs of increased financial strain among households, both mortgage holders and non - mortgage holders. we'll also be watching how the labour market evolves, since the biggest factor that determines whether someone can service their debt is if they have a stable income. higher interest rates are also affecting businesses. higher rates are slowing demand for the goods and services that businesses sell, while also increasing their financing costs. so far, the financial health of large businesses appears solid. but smaller businesses are showing more signs of financial stress. insolvency filings by smaller firms have recently jumped after several years of below - average filings. there is some indication that this recent increase could be a catch - up or normalization, and the timing could be driven in part by the expiry of government support programs put in place during the pandemic. turning to canadian banks, overall, credit performance remains strong. banks are proactively contacting customers who are facing payment increases at renewal and working with them on a payment plan. they have also been putting more money aside to cover future loan losses, and they continue to maintain healthy capital and liquidity buffers. this means that even if financial conditions and credit performance deteriorate, banks are positioned to absorb losses and continue to provide credit. in the non - bank financial sector, more frequent volatility in financial markets in recent years has led to an increased focus on liquidity risks. at the same time, some firms are increasingly using leverage, or borrowed money, to fund trading activities. this makes them more vulnerable in the event of large market swings. let me close by repeating an important point the governor made at the beginning : the connections in the financial system mean that if risks materialize in one sector, they can spread quickly. this puts a premium on preparedness. the proactive steps taken by financial system participants have been positive. and they need to continue. a stable and resilient financial system benefits all canadians. the governor and i will now be happy to take your questions. 3 / 3 bis - central bankers'speeches | 1 |
support these initiatives. whatever the outcome of the technical work, the instrument should be designed in line with the fsb guiding principles. this means : it should only be available on a temporary basis, when private funding sources are insufficient, on conditions that minimize moral hazard. concluding remarks when looking at the progress made on bank resolvability, i can say that from an fsb perspective the glass is half full and that i remain optimistic. much progress has been made on resolution planning, tlac and funding in resolution. this has helped to increase the resolvability of the banks and the preparedness of the authorities. the challenge will be to keep up the good work. this means banks should invest in improving their capabilities to execute the resolution strategy. authorities need to continue to provide the banks with guidance and make sure they are operationally ready for a resolution case. i hope i can count on your efforts in this endeavour of making your banks resolvable, especially in the areas of operational continuity, tlac and funding in resolution. thank you! | ##sb determines the minimum amount of loss - absorbing fout! onbekende naam voor documenteigenschap. capacity g - sibs should have. last month, the tlac principles were implemented in european legislation through the banking package. this means that, as of last friday, all g - sibs in europe are required to have a minimum loss absorbing capacity of at least 16 % of risk weighted assets, plus the combined buffer requirement. the european legislation on some aspects goes beyond the tlac term sheet, for example by requiring mrel targets for all banks instead of only g - sibs. also, the new brrd2 introduces binding minimum subordination requirements for banks with over 100 billion euro on their balance sheet. this will ensure that sufficient loss - absorbing capacity is available for bail - in during resolution. the fsb has been monitoring the progress g - sibs are making in building up loss absorbing capacity. we see that progress has been steady and significant, both in the setting of tlac requirements by authorities and in the issuance of tlac instruments by banks. this has been instrumental in enhancing resolvability and boosting market confidence in authorities β capabilities to address β too - big - to - fail β risks. however, despite all this, we are not at the end of the road yet. the tlac review that the fsb recently finalized, has shown that additional steps relating to loss - absorbing capacity are necessary. i will address three topics where i believe progress is required. first, it is clear that there will be less issues when bailing - in a subordinated liability compared to bailing in a senior instrument. no creditor worse off issues come to mind in this context. the tlac term sheet, by way of exception, allows for senior instruments to be counted towards tlac. in my view, more analysis is required as to how these exceptions influence the resolvability of banks. second, we have to make sure that adequately distributing loss - absorbing capacity within the group, needs to be prioritized. this means making sure losses in subsidiaries can be upstreamed to the parent company, and capital generated through bail - in can be downstreamed from parent to subsidiary. without an efficient internal mechanism, bail - in simply will not work. it is good to know : this topic also has the attention of the srb. third, further work is needed on bail - in execution. | 1 |
trading behavior of banking entities. indeed, that is what congress intended in enacting these provisions. congress has itself made the judgment that this prohibition will enhance financial stability and is socially desirable. the task of the agencies is to implement congressional intentions, as manifest in the statute itself, as efficiently and effectively as possible. the approach taken in the proposed rulemaking is concededly not a simple one. but, at least to date, it has seemed the most feasible. two alternative approaches have been suggested, and we considered each prior to issuing the proposed regulation. one considerably simpler approach would be to articulate high - level principles for differentiating prohibited and permitted activities and then leave it to the firms to self - report violations based on internal models or other devices, presumably with compliance and systems monitoring by regulatory agencies. while having the virtue of simplicity at the outset, this approach would provide little bis central bankers β speeches clarity about whether an activity is permitted or prohibited. it seems quite likely that, either formally or informally, the regulatory agencies would regularly be asked to offer guidance or approve specific practices. otherwise, this approach would essentially rely on self - policing by banking entities. a second alternative would be to establish definitive bright lines for determining whether an activity is permitted or prohibited. this approach would be very difficult in practice, at least with current information and data, because of the many asset classes, business models, and transaction types covered by the statutory provisions. hard - and - fast rules would also run the risk of being either too restrictive, and thus inadvertently classifying legitimate, customerdriven market - making or hedging activity as prohibited, or too narrow, and thus failing adequately to capture the full range of activities that are prohibited under the statute. the more nuanced framework contained in our proposal was designed to realize some of the advantages of both of these approaches while minimizing their potential adverse effects. the dodd - frank act provides a long conformance period for firms that are subject to the volcker rule. the agencies have proposed to use that conformance period to study the effects of the statutory prohibitions on the activities of banking entities before the volcker rule is fully implemented. to assist in this undertaking, the agencies have proposed to begin collecting and reviewing trading data that should help firms subject to the statutory provisions, as well as the agencies in our efforts, to monitor and understand the contours of the activities that are prohibited, permitted, and affected by the statutory provisions that make up the vol | of the smooth functioning of payment systems. however, the involvement of central banks in retail payment systems is, in general, less pronounced than in large - value payment systems, mainly because retail payment systems entail significantly lower systemic risks. nevertheless, the eurosystem is concerned with efficiency issues related to cross - border retail payments. at present, the performance of cross - border retail payment systems is clearly lagging behind the policy objectives of economic and monetary union and, indeed, the expectations of many european citizens and small enterprises. after the introduction of the euro banknotes and coins on 1 january 2002, these differences in service levels for national and cross - border payments within the single currency area will become even more apparent. against this background, the ecb strongly advocates the creation of a single payment area in order to fully reap the benefits of the single currency. in order to give a clear signal to the banking industry and the public, the ecb published a number of objectives in september which it expects the industry to fulfil and which should contribute towards substantial improvements. the current inadequacies are linked, in part, to the still predominant recourse to correspondent banking and the lack of adequate interbank infrastructures. more efficient funds transfer arrangements have been set up in recent years, but they are too fragmented and economies of scale are very limited. one pre - condition, therefore, for achieving a substantial enhancement in the processing of cross - border retail payments is undoubtedly the fact that the banking industry must implement common technical features in the processing of funds between banks. however, this is unlikely to be sufficient. the banking industry must also improve substantially its internal procedures for processing cross - border payments, as well as its communication with the customer. this, in turn, requires a more extensive use of automation and standardisation. in this respect, i should like to draw attention to the standards agreed within the framework of the european committee for banking standards, which i consider to be of particular importance. the ecb is organising meetings with all parties involved in order to bring the implementation of the standards forward. once the conditions related to interbank processing and internal procedures have been met, it should be possible for the banking industry to decrease substantially the price of cross - border credit transfers and to reduce the execution time to that needed for domestic payments plus one day. the ecb expects the banks in the euro area to achieve substantial improvements by 1 january 2002 at the latest. the ecb will act as a catalyst for | 0 |
##hypothecation and the risks involved can severely undermine confidence in counterparties. the abs market in europe continuing on the development of a particular shadow banking activity, i would say that a step towards the right direction has been taken as the new regulation supports the abs market ( or securitisation market in generally ) and endeavors to ensure growth, while for example the proposed regulation on structural reform in eu aims to better separate shadow banking from the traditional one. furthermore, it enhances the market discipline, which in turn, provides a decent and solid ground for well - functioning shadow banking system. as the ecb governing council decided in june 2014 to β intensify preparatory work related to outright purchases in the abs market ( to enhance the functioning of the monetary policy transmission mechanism ) β, i would also like to say a few words about the abs market in europe and its potential. 3 the current abs market in europe is small and impaired : public issuance of asset backed securities is minimal and the market is shrinking. it is unfortunate as the abs - market has a good potential to contribute to unlocking the europe β s credit market, by offering a viable complementary funding source for the real economy, in particular for the sme sector. considering the weakness of the securitisation market, it is obvious that the market is still suffering from the stigma it received when the global financial crisis erupted and the failures of the securitisation market were uncovered. the market suffers from a reputation as a capital arbitrage tool of banks that turned out to be disastrous for financial stability. the stigma is persistent and mutual, even though the european abs market performed relatively well during the crisis compared with the respective american one. another reason behind the small and weak european securitisation market may be the heterogeneity of the european securitisation market, namely the differences in for example lending criteria, banking institutions, rating standards and default laws among the european countries. 4 diminishing these differences would enable a better - functioning european securitisation market. harmonising some standards and enhancing relevant data availability could dispel the risk that banks would off - load bad parts of their balance sheets with securitisation activities. moreover, common rules and standards would support the development of the currently very fragmented market to a pan - european one in a single market spirit. finally, considering the potential role of the abs market in the monetary policy transmission mechanism, a central bank should avoid a situation in | regular banks, this might give a misleading signal to the market that they implicitly also enjoy a similar safety net. formal surveillance by authorities can also reduce the incentives of outsiders to monitor shadow banking entities. shadow banking entities have to earn the trust of investors and counterparties on their own merits. they have to be able to compete independently by prudently managing the business and maintaining sufficient buffers. appropriate disclosure of information and sufficient transparency of operations enable efficient monitoring and are instrumental in building trust. esrb ( 2014 ) is the eu overbanked? reports of the advisory scientific committee 4. bis central bankers β speeches secondly, in spite of our best efforts, supervisors tend to follow a step or two behind the actions of those we supervise. this is the case also with regular banks, which operate in and adjust to a continuously changing environment. still i would argue that the banking business is more stable. moreover, there are more similarities across regular banks than there are across the heterogeneous group of shadow banking entities, making regular banks easier to supervise. thus regulating and supervising the shadow banking system might be particularly challenging, if not even impossible. a better option might be to make sure they have the right incentives to do their job well. regulating systemically important shadow banking entities and the importance of separation between the regular banking and shadow banking system however, there are some exceptions to the ideal situation i have tried to picture, making more comprehensive and stricter regulation warranted. first of all if a shadow banking entity becomes systemically important its failure may have devastating effects on the rest of the financial system and eventually on the real economy. as some risks are likely to shift to the shadow banking system due to the tighter regulation in the regular banking sector, risk concentrations may very well be built up in the shadow banking system. there is an externality that calls for regulation. here the us has taken the lead and already allows the authorities to ensure that the perimeter of prudential regulation can be extended as appropriate to cover systemically important ( and significant ) shadow banking institutions. 2 this avenue is one option to be considered in europe. secondly, the systemic risk building up in the shadow banking system and the failure of a shadow banking entity should not cause contagion to the regular banking sector. thus there is a need to regulate and supervise the link between the regular banking sector and the shadow banking system. much has already been done to this end. for example the risk retention rule guarantees that an originator has | 1 |
financial markets, the increased presence of financial institutions in new jurisdictions and more recently, the increased number of islamic financial institutions which have shareholders from multiple jurisdictions. greater financial integration has essentially been facilitated by the more rapid pace of liberalisation that has been supported by the progress that has been achieved in the development of the international islamic financial infrastructure. this trend has also been prompted by the need for greater diversification of risks in the management of funds. in the current international financial environment, this trend has become more pronounced prompting investors to consider other asset classes and markets that provide stability. thus far, the global financial crisis has had limited direct effects on islamic finance. while islamic finance by its very nature only engages in transactions that have underlying tangible productive activities, the slower overall growth and the increased uncertainties have affected pricing and activity in certain market segments. however, this in part reflects the shift in activity from the financial markets to the islamic financial institutions. the scope of islamic financial business has now expanded to more sophisticated financial products in response to the changing global customer base. such shariah - compliant products include private equity, project finance, the origination and issuance of sukuk, as well as fund, asset and wealth management products. the sukuk market in particular, has become an important avenue for international fund raising and investment activities. this market has expanded by an annual growth rate of 40 %. the year 2007 saw an exceptional growth of the global sukuk market which expanded by more than 70 %. new issues during the year reached a record high to about us $ 47 billion and the outstanding global sukuk market has now surpassed the us $ 100 billion mark. up until august this year, it has held its ground with a total global issuance now exceeding us $ 14 billion, and is expected to exceed usd200 billion in 2010. this growth is spurred in part by the growing funding requirements in emerging market economies, in particular, in asia and the middle east. this is reinforced by the continued confidence of investors in the islamic financial instruments. malaysia's islamic finance journey let me now turn to malaysia's journey in the development in islamic finance. islamic finance in malaysia first started as a strategy for greater financial inclusion, so as to have a greater outreach to the underserved segment of society to basic banking and insurance products that are compatible with shariah principles. after three decades, the islamic financial industry in malaysia has evolved as an integral and competitive component of the overall financial system that | ##ra ) was established this year to conduct applied shariah research on the contemporary islamic finance issues. isra also provides a platform that promotes active engagement and dialogue among global shariah scholars that promote mutual respect in shariah and the convergence of views from different jurisdictions in the global islamic financial system. the third strategy is to promote greater financial integration with the global islamic financial system. the malaysian islamic financial system has also been progressively liberalised to allow for increased foreign entry and participation in our financial system, thus facilitating greater cross border flows and thus strengthening the international financial inter - linkages. this has taken the form of issuance of new licences and increasing foreign participation in both islamic banks and takaful companies to 49 %. new licences were also issued to foreign fund managers and foreign stockbrokers. in this new phase of development for islamic finance, malaysia as an international islamic financial hub, has increasingly become a meeting place for businesses from different parts of the world that need to raise funds and for investors that have surplus funds for investment. islamic finance going forward there is now a strong and growing demand for islamic financial products in the global market, far exceeding the current availability of financial products and services being provided by the islamic financial institutions. going forward, there is therefore tremendous upside potential for islamic finance. as the pace of development of the islamic financial services industry accelerates, the increasingly more complex and challenging environment will continue to shape the advancement of the industry. central to this will be the expansion of the business parameters and innovative product offerings. for this, there is increased investment in research and development to yield new instruments and structures to meet the changing requirements of the international community. an area of focus, in particular, is related to the development of mechanisms for risk mitigation and liquidity management. of importance, are the solutions needed to converge the market requirements and the shariah compliance. increased innovation also calls for greater emphasis on the implementation of best practices and higher standard of risk management. vital to this is the implementation of the prudential standards promulgated by the ifsb. there is also a need to leverage more on it applications and the strengthening of management capabilities of the islamic financial institutions. going forward, with the increased awareness and understanding of islamic finance, the role of market discipline will become increasingly important in driving islamic financial institutions towards ensuring shariah compliance in the operations, in improving operational efficiency and in instituting sound and dynamic risk management practices. the forces of innovation also | 1 |
muhammad bin ibrahim : catalysing sme growth speech by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the official book launch of β catalysing sme growth β, organised by credit guarantee corporation malaysia berhad ( cgc ), kuala lumpur, 21 june 2013. * * * saya ingin mengucapkan tahniah kepada cgc atas pelancaran buku β catalysing sme growth β, sempena menyambut ulangtahun yang ke - 40, yang merakam sejarah cgc dalam menyokong institusi kewangan di malaysia bagi mambantu menyediakan pembiayaan kewangan untuk perusahaan kecil dan sederhana. cgc sebagai satu institusi, terus kekal kukuh dan teguh serta mempunyai pengetahuan yang dalam mengenai teras perniagaannya setelah melalui pelbagai kitaran perniagaan dan ekonomi sepanjang 4 dekad. izinkan saya meneruskan ucapan saya dalam bahasa inggeris. the malaysian economy has undergone many changes in terms of both size and sectoral composition since cgc β s establishment in 1972. from being an agricultural - based economy with a gdp per capita of rm1, 5981, malaysia has become a more industrialised and serviceoriented economy with a gdp per capita of rm32, 124 as at end - 2012. 1 this remarkable story of growth is supported by the expansion of financing to the private sector by the financial system. in 1973, outstanding loans by commercial banks in malaysia stood at rm5. 5 billion. as at 30 april 2013, total outstanding loans by commercial banks increased to rm1, 138. 6 billion2 with annual growth rate ( cagr ) of 19. 6 % since 1973. the outstanding amount of sme financing stood at rm184. 5 billion ( 16. 2 % ). relative to large companies, smes were traditionally considered riskier, as smes tend to have fewer assets that can be offered as collateral, lack of sufficient credit history and regarded as unbankable for some. cgc was established to address these concerns, by providing guarantees that enable smes to have | are a few things that we could do for the smes. first, we can lower the financing cost for smes which obtain guaranteed financing under cgc. on the average, smes are being charged between 10 to 12 percent. this is about blr plus 5 to 6 percent. the rate imposed is much too high. it seems that pricing mechanism doesn β t price properly the guarantees given by cgc. we ought to work on this. on the part of cgc, we need to response quickly to the banks when guarantees are being called upon. an ideal situation is akin to an irrevocable undertaking where once a guarantee is called upon, it will be made good immediately. second, to intensify promotion and awareness program on cgc products and services. cgc needs to work closely with the trade associations and generate more media exposures through radios and tvs. make cgc a household name among the smes. third, expand further advisory services, its reach and contents. not all smes require financing, some might need more β hand holding β, and rather than access to financing above. lastly, come up with new and specific guarantee products for new growth area, start - ups and young entrepreneurs. existing guarantee products might not be suitable to meet the needs of these groups. cgc should embark a study on this matter and come up with an action plan. before i end my speech, i would like to express my heartfelt congratulations and appreciation to the board, management and staff of cgc for 40 years of service to the malaysian smes. it is our greatest wish that cgc will continue to walk and grow alongside our smes in our effort to make our country prosperous. bis central bankers β speeches | 1 |
to a low two - digit inflation in the first half of the 1990s, and then to a low one - digit inflation at the turn of the century. in this respect we have joined a worldwide trend and to - day there is no meaningful inflation differential between israel and the developed world. - in the first half of last year, 2002, inflation rose temporarily to 6 % for the period, but then declined practically to zero in the second half of the year. in this sense we returned to the record set in the years 1999 - 2001, when the annual pace of inflation was set in the range of zero to 1. 5 %. hence we can, and should, devote all our energy to follow one major target : stop the contraction of the economy and start growing again. employment and growth what, then, are the policies required to change course in terms of employment and growth : 1. fiscal consolidation, by which we mean : - reduce the deficit to redirect downward the government debt ratio, to reduce long - term interest rate, to promote investment. special care should be taken that the 2003 budget will indeed result in a deficit no higher than 3 %, as the government decided. - restructure government spending to increase infrastructure investment, cut the government wage bill, arrest the increase in defense spending, and implement series of programs to divert potential employees from welfare to work. the most promising way to reduce poverty is to upgrade programs to increase the overall employment rate, were we lag very much behind the world. - follow scrupulously, if not expedite, the program to cut the individual income tax rate, to reduce the marginal rate, including social security, to 49 %. we ought to remember that our ability to compete with the world depends also on our tax regime. 2. foreign workers change track in dealing with the urgent need to reduce significantly the number of foreign workers in israel. foreign employment in israel has reached a level of 11 % of the labor force, almost the highest in the world. the number of foreign workers in israel exceed the number of the unemployed. the new track should aim at equalizing, at least, the cost of employing a foreign worker to that of employing an israeli one. the difference now may amount to 40 % in favor of the foreign worker. immigration police is indeed necessary, but far from being enough. 3. social pact the government should reach an understanding with the labor union and the employers association regarding a new set of rules governing wage determination | depends, among other things, on how employment develops in arab society in the next few years. if we know how to maximize the potential for increased growth and how to reduce the gaps, we will all β jews and arabs β be able to enjoy the fruits of this process. if we can β t manage to do this, then in my estimation, we will pay a heavy economic and social price in the years to come. later in the conference, there will be an in - depth discussion of the details, solutions and plans on the agenda. i wish us all an interesting and productive conference. bis central bankers β speeches | 0.5 |
jerome h powell : coronavirus aid, relief, and economic security act testimony of mr jerome h powell, chair of the board of governors of the federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington, dc, 1 december 2020. * * * chairman crapo, ranking member brown, and other members of the committee, thank you for the opportunity to update you on our ongoing measures to address the hardship wrought by the pandemic. our public health professionals continue to deliver our most important response, and we remain grateful for their service. the federal reserve, along with others across government, is using its policies to help alleviate the economic burden. since the pandemic β s onset, we have taken forceful actions to provide relief and stability, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy. economic activity has continued to recover from its depressed second - quarter level. the reopening of the economy led to a rapid rebound in activity, and real gross domestic product, or gdp, rose at an annual rate of 33 percent in the third quarter. in recent months, however, the pace of improvement has moderated. household spending on goods, especially durable goods, has been strong and has moved above its pre - pandemic level. in contrast, spending on services remains low largely because of ongoing weakness in sectors that typically require people to gather closely, including travel and hospitality. the overall rebound in household spending is due, in part, to federal stimulus payments and expanded unemployment benefits, which provided essential support to many families and individuals. in the labor market, more than half of the 22 million jobs that were lost in march and april have been regained, as many people were able to return to work. as with overall economic activity, the pace of improvement in the labor market has moderated. although we welcome this progress, we will not lose sight of the millions of americans who remain out of work. the economic downturn has not fallen equally on all americans, and those least able to shoulder the burden have been hardest hit. in particular, the high level of joblessness has been especially severe for lower - wage workers in the services sector, for women, and for african americans and hispanics. the economic dislocation has upended many lives and created great uncertainty about the future. as we have emphasized throughout the pandemic, the outlook for the economy is extraordinarily uncertain and | ( a ) fixed exchange rate, ( b ) open capital account, and ( c ) independent monetary policy. the basic message of the β trilemma β is that a central bank can achieve any two of the above - mentioned parameters, but not all the three. illustratively, if a country wants to have fixed exchange rate and independent monetary policy then it is difficult to maintain an open capital account. another important issue in monetary policy is the extent of transparency. central bankers all over the world are not exactly known for clarity in their language. nevertheless, the rational expectations school in macroeconomics holds that no policy can be successful over a period by β fooling β the economic agents. in this context, one may differentiate between genuine uncertainties about the future vis - a - vis not revealing the expected outcome of the policy. in fact, since the 1990s, there has been a preference all over the world to improve the transparency of monetary policy. in the context of improving transparency, the recent trend has been towards direct inflation targeting. adoption of explicit inflation targeting as the final goal of monetary policy involves the preparation of an inflation forecast, which, in a way, serves the purpose of both an intermediate target and final objective. the pre - requisites for inflation targeting include a considerable degree of operational autonomy or independence for central bank, flexible exchange rate conditions, well - developed financial markets and absence of fiscal dominance. in view of the growing complexities of macroeconomic management, several central banks including the european central bank have placed reliance on a broad set of economic and leading indicators rather than focusing exclusively on an intermediate target or a direct inflation target. the federal reserve has traditionally been following a more broad based approach to the conduct of monetary policy in the us. operating procedures : instruments and targets operating procedures refer to the day - to - day implementation of monetary policy by central banks through various instruments. these instruments can be broadly classified into direct and indirect instruments. typically, direct instruments include required cash and / or liquidity reserve ratios, directed credit and administered interest rates. cash reserve ratio ( crr ) determines the level of reserves ( central bank money or cash ) banks need to hold against their liabilities. similarly, liquidity reserve ratio requires banks to maintain a part of their liabilities in the form of liquid assets ( e. g., government securities ). credit and interest rate directives take the form of prescribed targets for allocation of credit to preferred sectors / industries and prescription of deposit and | 0 |
activity. economic activity is expected to increase in the upcoming quarters and reach roughly 0. 5 % for the entire year 2012. over the short run, increased government expenditure in the first half of the year exerts some positive contribution to domestic demand. but, euro area recession and dented economic growth of serbia β s other foreign trade partners will reflect negatively on demand for serbian products and the inflow of fdi in the course of this year. despite this, past and current investments in export branches of industry, primarily in the automotive industry, will lead to increased production and exports from the second half of the current year. past weakening of the dinar will also give impetus to exports growth. in view of high unemployment and modest economic growth, final consumption is expected to contract this year as well. coupled with a fall in investment demand and past weakening of the dinar, this will probably result in lower imports in 2012. with production picking up in the mostly export - oriented automotive industry, a more palpable growth of the serbian economy of 3 % could be expected in 2013. this, however, will largely hinge on the speed of the global economic recovery. growth may turn out slower than anticipated in case stricter fiscal consolidation measures are applied. in our view, however, application of stricter consolidation measures is desirable as it would contribute to macroeconomic stability, public debt sustainability, lowering of the country risk and, consequently, of the cost of borrowing, all of which would have a positive long - term impact on the economic activity in serbia. we wish to underline again that sustainability of economic growth in serbia is more important than its pace, which assumes further shifting of the sources of growth from domestic final consumption towards net exports and investments, primarily into export - oriented industries. * * * bis central bankers β speeches inflation has been on a steady decline throughout the last year, mostly as a result of weakening cost - push pressures on food prices, low aggregate demand and restrictive monetary policy measures applied at times of strongest inflationary pressures. the fall in year - on - year inflation was particularly pronounced in the first months of the year, as substantial price hikes from early 2011 dropped out from the calculation. inflation thus fell from 7. 0 % in december to 3. 2 % at the end of the first quarter and to 2. 7 % in april 2012, which is the lowest year - on - year inflation rate since records are available beginning in 1980. this is also slightly below the lower | 2008, while the european central bank announced it would keep its main rates at current or lower levels at least through mid - 2020. this should sustain favourable financial conditions for longer than expected, as well as capital inflows to emerging markets. as monetary easing by leading central banks appeared more certain and positive macroeconomic developments at home continued, the national bank of serbia decided to lower the key policy rate in two instances, july and august, by 25 bp each, to 2. 5 %, i. e. its lowest level in the inflation targeting regime yet. thus, in conditions of subdued inflationary pressures, the national bank of serbia continued to provide additional support to economic growth and a sustainable rise in employment. as so far, monetary policy decisions will continue to be made in consideration of the effects of past monetary easing on the future inflation profile, as well as of the effects of other domestic and external factors. given that the key risks to the projection are still mostly associated with the international environment, the national bank of serbia will keep a close eye on developments in the international commodity and financial markets and assess their impact on economic movements in serbia. as before, monetary policy will be predictable and consistent in delivering low and stable inflation in the medium term. this will at the same time help maintain macroeconomic and financial stability and contribute to sustainable economic growth. owing to this, there is a constant rise in the number of domestic and foreign investors who are investing at a longer horizon, having recognised the stability and prospects of our economy. current economic trends and the results achieved thus far are a good basis for further sustainable and dynamic economic growth. this is confirmed by our latest projections and key macroeconomic developments, which will now be presented to you in detail by our colleagues from the economic research and statistics department. | 0.5 |
great potential in this area, as demonstrated by the role of europe β s innovative pharmaceutical companies in developing a vaccine against covid - 19. and we have a lot of scope to go further. while different governments will naturally have their own goals and strategies, there are three cross - cutting areas where we can make progress. first, if we want new, innovative firms to emerge after the pandemic, governments have to remove barriers for them. this is not only about easing regulatory barriers, but also about creating a dynamic business environment. research shows that onerous business conditions β such as poor contract enforcement β penalise new firms much more than they do existing ones. and what young firms need is not only the ability to enter easily, but also to grow quickly. companies with new ideas need to be able to hire and achieve scale as fast as possible. [ 13 ] the rate of firm creation is actually similar in the united states and europe, but us firms grow faster. this is an area where we can make huge gains simply by taking full advantage of our single market. a deep, complete and digital single market would allow firms to expand faster and achieve european scale, thereby increasing the return on innovation and capitalising on a large market. second, for young firms to grow quickly, resources need to flow towards them. and since the new firms that create the most jobs are typically the most risky, access to early - stage financing is particularly important. so the financial sector has a key role to play. in particular, equity finance has been shown to be an important complement to bank finance in allocating resources to new rather than traditional industries. [ 15 ] this matters when it comes to green innovations in particular. recent analysis shows that equity finance helps to reduce an economy β s carbon footprint and to increase the rate of green innovation. [ 16 ] however, while venture capital investment in 2019 reached 0. 63 % of gdp in the united states, that figure was just 0. 05 % in the eu27. here again, we can achieve clear economies of scale by working together in europe. one reason that early - stage financing is lower in europe is that national financial markets are fragmented : funding highrisk, high - reward technologies is much more effective when there is a larger stream of new projects to compensate for the fact that the majority of them will fail. in the post - pandemic world, completing the capital markets union is therefore no longer a β nice - to - have β, it | svb was much faster than expected β much faster than lcr calculations take into account. which raises the question : should the lcr be calibrated differently? should we assume higher outflow rates? and do we need to improve our stress tests? we might also ask ourselves if there are shortcomings in the way we look at interest rate risk and the mismatches banks have on their balance sheets. in europe, the basel standards for interest rate risk have been introduced through the institution - specific pillar 2 requirements, and they apply to all banks. the recent turmoil underlines the importance of this regulation, as well as the need for continued vigilance. are we sure that the underlying assumptions for customer behaviour and deposit duration are conservative enough in today's digital world? banks should monitor very closely the assumptions they make when managing interest rate risk and adjust those assumptions if there is reason to do so. 2 / 4 bis - central bankers'speeches and finally, should unrealized losses β that is the difference between market value and the valuation based on historical cost β should those unrealized losses be better reflected in the capitalization of banks? and should we look at how instruments that are not marked to market daily are reflected in liquidity buffers? it would be for example useful to tighten the use of these assets as high - quality liquid assets. these are all valid questions that i think should be addressed. so that we can learn everything there is to learn from what happened at svb. let me now turn to this side of the atlantic, where we had our own shattered windshield. shattered by credit suisse, a bank that had suffered from a series of mismanagement problems in recent years, and that experienced previous outflows of deposits at the end of 2022. here, too, we witnessed a rapid succession of events. it took, almost literally, only one tweet to lead to the downfall of credit suisse. deposit outflows quickly followed, the share price fell and the cds spread spiked. in the end, the swiss national bank provided additional liquidity assistance, and credit suisse was sold to ubs. finma, the swiss supervisor, came with a write - down of credit suisse's at1 securities. the bank was not bailed out. instead capital providers contributed significantly to its restart, exactly as intended by the new legislation after the global financial crisis. at the same time, things did not go as smoothly as | 0 |
speeches industry. the industry is expected to cooperate in matters that directly impact on our shared objectives of system efficiency and resilience. this includes clearing and settlement rules and standards, industry governance and risk management. product features such as end - user fees, delivery channels and customer service fall outside the cooperative sphere and will be used as basis of competition. the formation of the psmb and the peso net and instapay achs essentially sets in motion the operationalization of these nrps principles. the psmb serves as the industry - level cooperation and governance body composed of qualified banks and e - money issuers. by organizing as a formal body, participants can effectively identify and drive strategic initiatives to promote the efficiency and resilience of the system and promote the sustained growth of the industry. the multilateral achs, on the other hand, lays down the clearing and participation rules for a particular payment stream to facilitate electronic fund transfers among its participants. payment streams that are covered by a multilateral ach promotes greater efficiency, better risk management and interoperability compared to those that are covered by separate bilateral agreements as currently practiced. our journey towards a modern retail payment systems is just beginning but we can take pride in the significant progress we have made thus far. we couldn β t have gotten to this point if not for the willingness of the key stakeholders present here today to collaborate, dialogue, and commit to the nrps vision. and so let me conclude by expressing our deep appreciation for your support to the nrps. with the same commitment and cooperation, we shall move forward with the full implementation of the nrps and realize its vision of establishing a safe and efficient retail payment system in the country, a vision of a highly digital financial system in the philippines that serves the interest of all financial consumers. mabuhay po tayong lahat! 3 / 3 bis central bankers'speeches | includes a term proportional to the squared rate of goods price inflation and another term proportional to the squared rate of wage inflation each period. in this case, optimal policy involves a trade - off between inflation stabilization, nominal wage growth stabilization, and output - gap stabilization Β». 17 finally, there are two important issues related to the measurement and interpretation of the output gap. first, it is well known that any output gap variable is very imprecisely estimated, particularly in real - time. second, the theoretically consistent output gap that plays a central role in the newkeynesian literature bears little resemblance to the three empirical measures presented in the paper. the theoretical output gap is defined as the deviation of output from its equilibrium level in the absence of nominal rigidities. given that the theoretically consistent output gap is model - dependant, this adds to the difficulty of defining a reliable and applicable objective function. all this indicates that, as no central bank should be committed to a pure instrument - rule, in the same way it should not commit to and make public a precise objective function. in effect, if the information changed about the transmission mechanism the central bank should have then the opportunity of changing the parameters without facing a very difficult communication task of explaining that change. woodford, michael ( 2006 ) β rules for monetary policy β in nber reporter : research summary spring 2006, http : / / www. nber. org / reporter / spring06 / woodford. html. blanchard, olivier and jordi gali ( 2005 ) β real wage rigidities and the new keynesian model β nber working paper no 11806, november 2005. see note 15. regarding the price index to use in the definition of the target for inflation i tend to sympathize with the author β s position. to the arguments mentioned in the paper one could add that the same analysis by woodford about the relationship between welfare and the loss function for monetary policy, demonstrates that Β« if prices are adjusted more frequently in some sectors of the economy than in others, then the welfare - theoretic loss function puts more weight on variations in prices in the sectors where prices are stickier β¦ this provides a theoretical basis for seeking to stabilize an appropriately defined measure of " core " inflation rather than an equally weighted price index Β» 18. there are nevertheless important practical obstacles to the use of a sort of core inflation index. first, the communication difficulties would be very significant and the principle of accountability to public opinion would be compromised | 0 |
and monetary policy β are generating new patterns of funding, new players and changes in capital flows across global markets. those issues will be reviewed in the initial session. as i mentioned before, the euro area has to deal with a severe crisis which has led to the fragmentation of the european financial system. while there are signs of a certain reversal in this process, a failure in this respect would be particularly harmful for the european project, since integration is at the core of the european union itself. the policy actions of the ecb and other european authorities, including the decisive drive towards a banking union, have been able to overcome or dissipate the worst fears, but the road ahead is still long and difficult. finally, the role of central bankers should be highlighted in this new context. we are big players in the financial arena, both from the regulatory and monetary policy standpoint ; and the framework for our actions β and reactions β must necessarily change and adapt to the new environment. the renewal of the set of instruments to address the price stability bis central bankers β speeches mandate, be it in a situation of low growth, as happens to advanced economies, or in a situation of large capital inflows, as happens to emerging market economies, is one aspect of that change. the need to take on board financial stability considerations is another aspect widely discussed. you will devote the final part of the day to this quest. and i do not want to take more time out of the tight agenda you will follow now. thank you very much for your attendance to this conference. i wish all of you and excellent day and a good discussion. bis central bankers β speeches | luis m linde : international financial integration and fragmentation. drivers and policy responses opening remarks by mr luis m linde, governor of the bank of spain, at the conference on β international financial integration and fragmentation. drivers and policy responses β, organized by the reinventing bretton woods committee and the bank of spain, madrid, 12 march 2013. * * * good morning to all. buenos dias a todos y bienvenidos a madrid : it is for me a pleasure to welcome you to banco de espana and to this seminar on international financial integration. i would like to start by thanking marc uzan and the reinventing bretton woods committee for their fruitful cooperation in organizing an agenda that is indeed very promising. more than five years into the crisis, it is still hard to grasp the real magnitude of the changes that our financial systems are undergoing. in fact, we are still trying to restore the financial channels to support the growth of internal and external demand. while we perform such, so to say, β fire - fighter task β, it is not easy to take a step back and look at how the contours of our economic and financial landscape are evolving. but we can already distinguish some of the characteristics of the new scenario that is taking shape, and that will be our habitat as central bankers, regulators, financial intermediaries or analysts in the years to come. it seems that one trend is towards disintermediation and a more important role of capital markets, gaining ground to banks, in a global financial system that will probably end up being smaller and more attuned to the size of the global economy. another trend points to a reduction of financial linkages between national financial systems, as bis banking statistics, for example, are starting to show. here, the role of central banks β policies and operations, as well as regulators is crucial, as they must walk a fine line in promoting domestic financial stability without falling into the nets of protectionism, something that would be indeed damaging for growth and prosperity. as we all know, the risk of fragmentation and re - nationalisation of the financial system has materialized at the european level, in the unique institutional context of european monetary union ; and the solutions to overcome this situation are changing the foundations of the euro. each of the three sessions which make up the programme will focus on a particular perspective on how the new trends are shaping the global financial system. the crisis and the policy response β in the areas of financial regulation | 1 |
moral hazard arises because a borrower has incentives to invest in high - risk projects, in which the borrower does well if the project succeeds but the lender bears most of the loss if the project fails. historically, banking institutions and other financial intermediaries have played a major role in reducing the asymmetry of information because they are well placed to collect information from borrowers and to engage in long - term relationships with clients. in more recent times, note that my remarks here reflect my own views and not necessarily those of others on the board of governors or the federal open market committee. i thank roberto perli for his excellent comments and assistance on this speech. a more detailed discussion of my views on what causes financial instability and of the effect of such instability on economic activity is in mishkin ( 1997 ). improved transparency and financial innovation β in the form of new financial products as well as new types of institutions that have become active in markets β have also contributed to the efficient flow of information across the system. the continuity of this flow helps keep adverse selection and moral hazard in check and is crucial to the process of price discovery β that is, the ability of markets to collect information and properly evaluate the worth of financial assets. during periods of financial distress, information flows may be disrupted, and price discovery may be impaired. the high risk spreads and reluctance to purchase assets that are characteristic of such episodes are natural responses to the increased uncertainty resulting from the disruption of information two types of risks are particularly important for understanding financial instability. the first is what i will refer to as valuation risk : the market, realizing the complexity of a security or the opaqueness of its underlying creditworthiness, finds it has trouble assessing the value of the security. for example, this sort of risk has been central to the repricing of many structured - credit products during the turmoil of the past few months, when investors have struggled to understand how potential losses in subprime mortgages might filter through the layers of complexity that such products entail. the second type of risk that i consider central to the understanding of financial stability is what i call macroeconomic risk β that is, an increase in the probability that a financial disruption will cause significant deterioration in the real economy. because economic downturns typically result in even greater uncertainty about asset values, such episodes may involve an adverse feedback loop whereby financial disruptions cause investment and consumer spending to decline, which, in turn, causes economic activity to contract. such contraction | . pdf. king, mervyn, and david low ( 2014 ). β measuring the β world β real interest rate, β nber working paper series 19887. cambridge, mass. : national bureau of economic research, february, https : / / www. nber. org / papers / w19887. pdf. nakov, anton ( 2008 ). β optimal and simple monetary policy rules with zero floor on the nominal interest rate, β international journal of central banking, vol. 4 ( june ), pp. 73 - 127, https : / / www. ijcb. org / journal / ijcb08q2a3. pdf. nessen, marianne, and david vestin ( 2005 ). β average inflation targeting, β journal of money, credit and banking, vol. 37 ( october ), pp. 837 - 63. rachel, lukasz, and thomas d. smith ( 2017 ). β are low real interest rates here to stay? β international journal of central banking, vol. 13 ( september ), pp. 1 - 42, https : / / www. ijcb. org / journal / ijcb17q3a1. pdf. reifschneider, david l., and john c. williams ( 2000 ). β three lessons for monetary policy in a low - inflation era, β journal of money, credit and banking, vol. 32 ( november ), pp. 936 - 66. roberts, john m. ( 2006 ). β monetary policy and inflation dynamics, β international journal of central banking, vol. 2 ( september ), pp. 193 - 230. romer, david ( 2010 ). β a new data set on monetary policy : the economic forecasts of individual members of the fomc, β journal of money, credit and banking, vol. 42 ( august ), pp. 951 - 57. ruge - murcia, francisco ( 2014 ). β do inflation - targeting central banks implicitly target the price level? β international journal of central banking, vol. 10 ( june ), pp. 301 - 26, https : / / www. ijcb. org / journal / ijcb14q2a12. pdf. simon, john, troy matheson, and damiano sandri ( 2013 ). β the dog that didn β t bark : has inflation been muzzled or was it just sleeping? β | 0.5 |
in the dssi, their response has not been encouraging. there has been a notable shift in the creditor composition of low - and middle - income countries between 2010 and 2021. the share of lending by private creditors in long - term public and publicly guaranteed debt was 61 per cent in 2021 ( 46 per cent in 2010 ) and the share of debt owed to bondholders was 47 per cent in 2021 ( 29 per cent in 2010 ). 10. a distinct shift in the creditor base over time in favour of private lenders and nonparis club official creditors has added a new dimension to debt restructuring processes for the low - income international development assistance ( ida ) - eligible debtor countries. the share of debt owed to non - paris club creditors rose to 68 per cent in 2021 from 42 per cent in 2010. the increasing reliance on private creditors has raised debt servicing costs and complicated creditor coordination in debt resolution efforts. during 2010 - 2021, the average maturity on loans from private creditors was 12 years as compared with 26 years for loans from official creditors, and the average interest rate on loans from private creditors was 5 per cent vis - a - vis 2 per cent on loans from official creditors. 11. the role of multilateral organisations, particularly the imf and the world bank, becomes crucial in making debt treatment efforts more effective, while also strengthening the mechanism of recording, reporting and analysis of debt data so as to enhance transparency and preserve debt sustainability. the imf's role in capacity building in the region, with a focus on region specific macro dynamics, policy effectiveness challenges, and economic aspirations of the nations would also be helpful. raising productivity 12. while sustained and broad - based economic recovery remains the current policy focus, it is necessary to undertake deep structural reforms to raise the potential growth trajectories of the economies in the south asian region. ongoing global realignment of supply chains, green transition and advances in technology offer new opportunities for investment and growth, but policies would need to create the congenial climate for attracting new private investment, with public sector taking the lead in areas that can create large positive externalities, such as infrastructure, education, and health. 13. in this context, let me highlight some specific areas of policy priority. first, undertaking desirable structural change would require an improvement in resource allocation β moving production from low productive sectors to high productive sectors and promotion of innovation. second, skill mismatches β a major constraint to resource reallocation β would warrant | how and designing adequate instruments in advance. the payments sector. we believe that efficient and easy - to - use payment methods at a competitive price are key to improved overall competitiveness of the economy and decreasing social or regional exclusion. we have thus designed and implemented measures to facilitate widespread adoption of innovative payment methods β concentrating particularly on instant mobile payments. among the most important steps so far is the provision of open access to our payments infrastructure for non - bank service providers. new players are constantly joining the system β just in the last several days, for instance, three internationally - renowned companies have come on board. such open - access infrastructure allows reducing the new players β dependence on banks, providing them with a level playing field and creating an additional source of competition for the established banking sector. this comes hand in hand with payment schemes standardization β creating a one - stop shop for both firms and consumers. this allows eliminating intermediaries and increasing the efficiency and speed of payment chains. standardization helps ensure that individual service providers do not develop incompatible systems, which would fragment the market and reduce their 2 / 3 bis central bankers'speeches competitiveness vis - a - vis commercial banks. trading and investment strategies. these activities have decisively shifted toward systemic quantitative decision - making and minimization of the human factor. the aim is clear β improving the risk - to - reward ratio and increasing efficiency in asset management. questions of artificial intelligence or even quantum computing may seem far from central banking. but again : authorities cannot fall behind in face of critical changes taking place. this is the one and only way of implementing effective regulation. and it is crucial for central banks to master these new paradigms so as to maximize efficiency of public funds management. we have already taken steps in this direction β for instance, we have launched an automated trading project. the central aim of this project is to enhance and diversify the bank β s investment decisions by employing cutting - edge automated quantitative strategies. i believe these examples illustrate that the bank of lithuania is aiming to constantly stay not just side by side but one step ahead of the market. our goal is to function as an accelerator of innovative solutions. solutions, which, under the right regulatory regime and supervision, would lead to more efficient and resilient financial markets. wrapping up, these are the principal takeaways from this presentation. firstly, financial innovations can bring benefits for the real economy β for instance, by boosting global trade. secondly, new players in the financial markets create additional competitive | 0 |
control, central banks steer short - term interbank interest rates, which, via the transmission mechanism of monetary policy, have an impact on the price level. another objective of central banks is to ensure the smooth functioning of the payment system. central banks provide intraday liquidity to bridge the timing mismatch between banks β incoming and outgoing payments during the day. this not only facilitates intraday liquidity management of banks, but also makes payment gridlocks less likely and therefore contributes to financial stability. payment systems clearly matter for monetary policy. monetary policy implementation today means steering short - term interest rates. if you are the treasurer of a bank and plan for the end - of - day settlement of your accounts, uncertainty about whether expected incoming payments will actually be received is obviously a major issue. it does not make an immediate difference if expected incoming payments are at risk for payment system reasons, or because the payments may not have been initiated. in both cases, the treasurer will need to look for alternative funding, and if there are no internal buffers, will turn to the interbank market for overnight funds. there, the treasurer will be ready to pay a premium and will thus bid up rates. if uncertainty about incoming payments generally increases and affects all banks, be it for payment system or other reasons, banks will all tend to enter the interbank market on the buy side and will bid up the overnight rate accordingly. this is a monetary policy issue and will imply the need for the central bank to inject excess reserves into the system to bring interest rates down again. while payment system disruption may hence potentially have an impact on monetary policy, central banks have found ways of safeguarding price stability, while at the same time ensuring the smooth functioning of the payment system. this is achieved by drawing a clear line between providing intraday liquidity for payment system purposes and providing credit for monetary policy implementation. let me therefore turn briefly to these two types of liquidity provision by central banks. central banks need to define the conditions under which they provide these two types of liquidity. in particular, they need to decide on the fee / interest they wish to charge and on the level and type of collateral they consider appropriate. allow me to discuss briefly both features. for further details see charles m. kahn ( 2006 ) : why pay? an introduction to payment economics. central banks typically provide intraday liquidity on more generous terms than overnight credit. why? to answer this question, consider the following alternatives : imagine that | and undertake structural reforms, national governments retain the key powers to improve the performance of their economies. if the terms of the stability and growth pact are adhered to, there is sufficient flexibility to allow automatic stabilisers to work in the event of cyclical fluctuations. together with the social partners, governments have a key responsibility to act decisively to ease the unemployment problem in europe. structural reforms provide the only means of achieving lasting reductions in unemployment, preparing for the ageing of the population and reducing the burden of government debt. | 0.5 |
andreas dombret : international coordination to enforce regulatory reform speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the salzburg global seminar β financial regulation β bridging global differences β, salzburg, 16 august 2012. * 1. * * introduction ladies and gentlemen, to cut to the chase : international collaboration between regulators has never been so challenging β and yet never has collaboration been so important. let me explain. 2. financial sector reform β time to slow down? the regulatory community is currently facing enormous pressures. the sovereign debt crisis has given a fresh impetus to calls to water down or delay regulatory reform. some argue that the ongoing uncertainty in financial markets and the weak global economy are good reasons to ease up on regulatory pressure. they say the financial sector is being asked to do too much too soon, and regulators should slow the speed of adjustment. yet i see it as more a case of β too little, too late β : if there is a reproach to be made, it is that regulatory progress has not been faster. the sovereign debt crisis, which is not least driven by systemic problems in some countries β banking systems, underscores the urgent need to make the financial system more resilient. relying on financial markets β self - regulation will not do, i am afraid. we must deliver on our promise and extend regulation and oversight to all systemically important financial institutions, instruments and markets. to deliver this promise, close international collaboration is essential. given the truly global financial system, β going it alone β is no longer a viable option. it will only lead to the migration of business and to regulatory arbitrage, undermining not only the integrity, efficiency and orderly functioning of financial markets, but ultimately undermining financial stability. 3. international consistency versus one - size - fits - all the crisis has clearly demonstrated that countries cannot successfully regulate their financial markets and firms in isolation. capital flows do not stop at geographical borders ; quite a number of financial institutions operate globally. therefore, an internationally coordinated regulatory response is imperative. to be successful, reforms must be implemented at least at the major financial centres. international cooperation is not an end in itself, however. instead, i suggest to measure its value by the extent to which it provides financial stability. while adopting a robust, common set of rules is essential, it is neither practical nor desirable to fine - tune all details of financial regulation internationally. as the characteristics of each country | ##think the policies of central banks. there is another important factor that could push inflation higher in the future. and that factor 4 / 7 bis central bankers'speeches could be strengthened by the russian aggression against ukraine. i am talking about the green transformation of our economies. this process of β decarbonisation β, as it is known, which gained urgency as this new geopolitical event unfolded. in particular, our economies β dependence on fossil energy is increasingly becoming an issue not only for climate policy but also for national security. in general, carbon pricing is considered the most efficient way to reduce carbon emissions. higher carbon prices have an impact on carbon emissions, but also on consumer prices. at least during the transformation period, they would make energy more expensive and drive up the production costs of goods. furthermore, the necessary, accelerated transition to renewable energies inevitably implies new and costly capital investment, while existing capital stock has to be written off more quickly than expected. one specific aspect of this is investment in the carbon industry. according to the international energy agency, investment in oil and gas supplies has been reduced sizeably since 2015, in part because of uncertainty about climate - related policy measures. this low investment would suffice to meet demand only if there are strict climate policies to reduce carbon - related emissions to net zero by 2050. under currently implemented climate policies, however, projected demand is higher than supply. 7 during the transition phase, the decarbonisation of our economies may thus add to inflationary pressures. we do not know exactly to what extent. but even in the case of an orderly transition, the euro area could temporarily experience significant price pressures. the network of central banks and supervisors for greening the financial system estimates that climate policy measures could increase annual inflation rates in the period up until 2030 by between 0. 3 pp and 1. 1 pp, relative to a scenario without climate change and without climate policies. these numbers are the outcome of an orderly transition. in alternative scenarios, figures could be much higher. 8 to sum up : the war in ukraine is unlikely to bring about major new inflation dynamics on its own. but it may clearly accelerate pre - existing tendencies in both the short and the long run, as exemplified in energy markets and international trade. 4 implications for monetary policy how should monetary policy respond to these developments? clearly, the eurosystem must ensure that the current elevated inflation does not become entrenched and persist at an excessively high level over the | 0.5 |
##demic, ensured that the economic fallout from the second and further waves was more subdued. the rapid roll - out of vaccines in developed countries led to a gradual lifting of restrictions on economic activity and to a resumption of investment and consumption with far fewer bankruptcies than expected, although at the cost β consciously incurred β of a one - off increase in public debt. many advanced countries have now reached, or are close to reaching, pre - crisis output levels. under the italian presidency, the g20 also took action to help the weakest economies that had been disproportionally hit by covid - 19. it provided support to multilateral mechanisms, ensuring wide access to tests and vaccines. in addition, to address the structural weaknesses highlighted by the pandemic, it established a new panel on prevention and preparedness that advanced proposals to improve the mobilisation of funding and enhance coordination between health and finance ministries and international organisations. work to deliver a shared solution on these issues will continue in the next few months under the indonesian presidency. the g20 also agreed to extend the suspension of debt service payments for 50 countries until 1 / 5 bis central bankers'speeches the end of the year, and to renew efforts to operationalise the common framework for the treatment of the distressed debt of some eligible countries. while the latter has encountered some difficulties, last october g20 ministers and governors reiterated their commitment to make progress. the g20 also agreed to make 650 billion dollars available in additional reserves through a general sdr allocation, with rechannelling options to allow low - income countries to receive further support. on the second issue β the fight against climate change β our presidency began at a time of swiftly rising awareness of the issues raised by climate change among savers, investors, financial market operators and the public at large. the attitude of g20 delegations was ( and is ) also changing. it is no surprise that countries differ widely in their priorities and sensitivities on this issue, but there appeared to be a worldwide surge in the feeling that a conversation on actions needed had to be held within the g20 framework in a multilateral format. the italian presidency, of course, cannot claim to be the prime mover of any of these global developments. however, i think we can fairly say that the presidency quickly sensed the new spirit, and saw the opportunity to channel it into a concrete discussion of steps to take. under our presidency, the sustainable finance study group has been | to step up significantly the pace of purchases to be conducted under the pepp until the end of june compared with those made in the first months of the year. the governing council will in any case continue to purchase flexibly according to market conditions. 2 / 5 bis central bankers'speeches the balance sheet at the end of 2020, the bank of italy β s total assets amounted to β¬1, 296 billion. of this, 70 per cent is ascribable to monetary policy operations ( compared with 40 per cent in 2014 ) : securities reached β¬539 billion, up by β¬155 billion compared with 2019, of which β¬473 billion are italian government securities. refinancing operations, totalling β¬374 billion, rose by β¬154 billion. compared with the previous year, the value of the gold reserves rose by β¬15 billion, to β¬122 billion, increasing by almost 50 per cent compared with ten years ago. in line with eurosystem accounting rules, this appreciation is recorded in the revaluation account on the liability side and does not contribute to the bank β s net profit. investment assets other than those held for monetary policy purposes rose by β¬8 billion, to β¬148 billion ; of these, 86 per cent are public sector securities, 10 per cent are equity and investment fund shares, and the remaining 4 per cent consist of other financial assets. investment criteria that take into account environmental, social and governance ( esg ) best practices, which were introduced in 2019 for the management of equity portfolios, were extended to other types of financial instruments. applying these criteria has made it possible to achieve, in the last two years, risk - adjusted returns that exceeded the corresponding benchmarks, especially during the phases of strong turbulence that affected the financial markets in connection with the pandemic. together with the other central banks of the eurosystem, we agreed on a common stance on the climate - related sustainability of euro - denominated investment not connected with monetary policy operations. in doing so, the eurosystem is contributing to the achievement of the european union β s climaterelated objectives, in line with the provisions laid down in the eu treaties. moreover, by recognizing the importance of providing the market with adequate information on environmental risks and on the activities that affect the climate, the eurosystem β s central banks are promoting the production and dissemination of reliable data and of statistical and accounting standards that are as suitable and homogenous as possible | 0.5 |
##condition for restoring the confidence in banking ; β’ build capacity in the central bank itself for pursuing an independent monetary policy and efficient banking system supervision ; β’ establish a modern payment system. many of these issues were successfully solved. manu of them are still being successfully treated. the national currency was successfully introduced, inflation was surmounted, and in the past 12 years it has been on average on the level of only 2. 2 percent, annually. the function of prudential supervision has been established, which is continuously being improved and upgraded. payment operations are conducted smoothly. so is the function of the government's fiscal agent. the capacity for conducting the monetary policy is in constant progress. from april 1992 until december 1995, the national bank applied a monetary targeting strategy, with the money supply m1 being the intermediate target. at that time, mainly direct instruments were used : selective credits, minimum liquidity, compulsory cb bills, discount rate and reserve requirement. the choice made was imposed by the circumstances : lack of developed financial instruments and institutional financial structure ; absence of the interest rate transmission mechanism, and high interdependence between the aggregate demand and money supply. in october 1995, nbrm made a shift towards monetary strategy of targeting the nominal exchange rate against the german mark, and later against the euro, with the denar exchange rate stability being the intermediate monetary policy objective. such a strategy, applied in a small and open economy such as ours, has proved to be very successful for maintaining the price stability until present day. all reforms in the monetary policy instruments since the independence have been directed towards introducing indirect, market - oriented instruments for enabling efficient monetary policy conduct. therefore, in 1993 deposit and credit auctions were introduced, and at the end of 1994 cb bills auctions were introduced. the initial development and strengthening of the financial system of the republic of macedonia, especially of the government securities market, enabled us to include new instruments, following the example of the modern central banks. in april 2005, we promoted the overthe - counter market for government securities. in the same year, we launched the general repo agreement and we started with repo operations when concluding lombard credits. in march this year, together with the ministry of finance we introduced treasury bills for monetary policy purposes. the transition of the monetary strategy and of the monetary instruments would not have been successful without adequate banking reforms. therefore, rehabilitation and privatization of banks were undertaken, deposit insurance fund was established and new regulation on prude | not of a monetary nature. at the member state level, fiscal consolidation policies and structural reforms were needed and are being implemented to better accommodate domestic behaviour to the patterns of stability required within a monetary union. as for euro area governance, a deep process of reform has been undertaken. the stability and growth pact has been strengthened to preserve fiscal stability ; and a new procedure β the macroeconomic imbalance procedure β has been established to prevent the accumulation of other non - fiscal imbalances. also, the european stability mechanism and the banking union process have filled in two serious gaps. now, to conclude, i shall try and respond to the questions to this panel about germany β s role in the european debt crisis and whether germany is a reluctant hegemon. indeed, germany has played a key role in the response by the european monetary union to its financial and fiscal crisis and to the dangers this crisis has entailed for the union and the euro. in early 2012, many analysts and politicians considered it very possible that certain bis central bankers β speeches countries might exit the monetary union, thereby triggering an extremely serious crisis. many believed the european monetary union was running an almost terminal risk, at least in its formulation under the maastricht treaty. to germany, then. its economy and its government have been fundamental in facing and overcoming these risks. without a german political stance in defence of the monetary union and the euro, the single currency would surely not have survived. obviously, germany has not acted alone, but as the euro area β s leading economy, its role has been crucial. i do not believe germany may be said to have exercised this role reluctantly. in germany, as in other euro are countries, there were and are forces in disagreement with the monetary union, analysts and economic agents who considered the break - up of the euro as likely. but what counts is what the german government β s position was and its support, at key moments, to save the monetary union and the euro, its support to the programmes for stressed countries and the banking union process. rather, we can say that the new hegemon is the culture of monetary and fiscal stability that has gained in strength over the course of the crisis. the strengthening of the institutions and of the rules to ensure fiscal stability is essential for maintaining the stability of the monetary union and of the euro. this is because, as we all know, the source of the monetary union crisis lay basically in certain countries β fiscal performance, even more so than | 0 |
regulation and generally competent management. while the episode is not yet over, at this point the economy overall has been recording growth. we will very shortly get a reading on gdp and the various expenditure and income accounts for the september quarter. looking ahead, nationally, the outlook appears to be for a continuation of moderate growth. the reserve bank issued its latest forecasts a few weeks ago. i won't go into detail here, but, in brief, year - ended gdp growth is forecast to be in the range of 2 to 3 per cent in june 2016 and to pick up a bit during the following year. domestic inflationary pressures are expected to remain subdued. inflation is forecast to be in the range of 1Β½ to 2Β½ per cent over the year to bis central bankers β speeches june 2016, and 2 to 3 per cent over the year to june 2017. the unemployment rate is projected to remain around 6 per cent or a little above over the next year, before gradually declining. we do not make detailed forecasts at state level, but obviously the picture for wa relative to the rest of the country looks different from the way it did a couple of years ago. previously, economic activity was very strong in the west and the north - east, driven by the investment boom, while in the south - east of the country it was somewhat subdued. now, as the mining investment boom in the west is in the reversal phase, economic activity here in wa is more subdued, while in the south - east it is picking up. these differences are plain in most of the economic data. whereas business investment in nsw and victoria is growing ( albeit modestly ), in wa it is, of course, contracting very sharply ( as it is in queensland ). i think most people have understood for some time that this was on the cards. consumer spending and employment growth in wa, which had outpaced the national average by a wide margin, have come back to be a bit below the national average. the rate of wa's population growth has slowed. housing prices have declined a little, while those in sydney and melbourne have, at least until recently, risen at quite a clip. measures of business conditions in wa are at about their long - run average, having been a long way above that for some years. so wa has β come back to the pack β, though the pack has actually picked up some speed in the meantime. yet even with all that, employment in wa is still increasing. | of newspapers the price on which australians typically focus most intensely β that of a house. the spill - overs of these activities have been felt around the country. for the fifty years up to 2005, resources sector investment had averaged just over 1Β½ per cent of national gdp. periodically, in a boom it tended to reach a peak of perhaps 3 per cent of gdp. this peak was about 8 per cent β nearly three times the size of the β normal β peak, and easily the biggest such surge for over a century. the resources sector was doing 40 per cent of the nation's total business capital spending. and, as you know, a big share of that was occurring here in wa. on other occasions, these types of events have ended up being very disruptive for the national economy. terms of trade surges in the 1950s and the 1970s produced significant inflation on the way up and were followed by very major slowdowns or recessions in economic activity as the terms of trade fell back. that hasn't happened at a national level on this occasion. inflationary pressure was relatively contained on the way up, and while aggregate growth has been a little disappointing for the past couple of years, in the circumstances we face β including very difficult global conditions in the aftermath of the financial crisis β the outcomes are, i think, quite respectable. in fact, in a number of respects the economy has adjusted to the shocks in the way you would hope. productive resources were re - deployed to sectors where returns looked like they would be higher. this was true for capital but also for labour β relative wages shifted upwards in wa, for example. population shifted in response, we had fly - in - fly - out and an immigration response, facilitated by visa arrangements and so on. these were helpful parts of the adjustment process. likewise, the exchange rate adjusted, as would be expected in a flexible system. when we were here in early september 2011, the australian dollar was trading around us $ 1. 07 and had been as high as about us $ 1. 10. today it is about 35 per cent lower than that against the us dollar, and about 20 per cent lower against a relevant basket of currencies. this movement β both up and down β was part of what helped the economy through the commodity super - cycle without seriously inflating or crashing. through all that, tested macroeconomic policy frameworks have aimed at overall stability, and the financial sector has been kept in good shape by sensible | 1 |
hence offset an increase in demand stemming from additional fiscal measures. under such circumstances, the output gap will not improve and prices will not rise. that said, whether or not a central bank can control bond prices depends not on its intention but on market judgment. it is for that reason too that i emphasize the importance of fiscal consolidation. see sims ( 1999 ), christiano and fitzgerald ( 2000a, b ), leeper ( 1991 ), cochrane ( 2000 ), and woodford ( 1996, 2001 ) for details regarding the fiscal theory of price level. bis central bankers β speeches concluding remarks a. government β s commitment for fiscal consolidation now, let me sum up. in my speech today, i have repeatedly emphasized the importance of fiscal consolidation. indeed, the japanese government has already said that it will halve the deficit in the primary balance relative to gdp by fiscal 2015 from the level registered in fiscal 2010. furthermore, it is committed to turning the primary balance from a deficit to a surplus by fiscal 2020. those moves constitute an important part of the government β s commitment to fiscal consolidation and are now widely accepted by the international community. accordingly, the government decided to raise the consumption tax from 5 to 8 percent in april ; moreover, the tax rate is scheduled to be raised to 10 percent in october 2015. down the road, we may hear more discussion concerning whether the consumption tax of 10 percent is enough to make the fiscal structure sustainable. whatever the discussion might be, it is important to acknowledge that the government will take a crucial first step toward fiscal consolidation, given mounting social security spending. there is no question about that, and financial markets understand the government β s intention on that. b. qqe based on fiscal consolidation recent long - term rates have been stable in light of signs of overcoming deflation. that is not just due to the effects of the bank β s jgb purchases. it also hinges on the fact that market participants and businesspeople have full confidence in the government β s strong commitment to fiscal consolidation. that enables the bank to conduct massive jgb purchases without being trapped in fiscal dominance. the bank offers full support to the government β s commitment. the commitment for fiscal consolidation by the government is imperative so that the qqe β which is designed to overcome deflation β should not be perceived as the means for β financial repression β. at the same time, a problem will arise if the government creates a fiscal cliff, as epitomized by the enforcement | and most people will see their budgets stretch further. consumer price inflation is projected to slow in the coming years and run slightly above 2 percent at the end of 2027. unemployment is projected to increase a little, albeit slightly less than we envisaged in september. 2 / 2 bis - central bankers'speeches | 0 |
bring it back under control. in any event, it is not an option for ireland. the burden of some of this debt has been partly mitigated by the low - for - long interest rate policy of the ecb β its policy rate has averaged well below 1 per cent for the past 5 years β which has brought the servicing costs of tracker mortgages well below where they were when the loans were contracted. another category often mentioned are retired persons whose wealth was concentrated as was traditional on long - standing holdings of bank equity. bis central bankers β speeches because it too reached the limit of its debt capacity ( for the reasons mentioned above ), the government has little room left for policies involving net additional spending, so in practice it is limited to broadly cost - neutral adjustments to tax and spending. along with this limited capacity, there has been little appetite for a transfer from taxpayers to those indebted households who can still afford to service their debts. personal insolvency legislation has, however, been modernised and streamlined, offering viable options for over - indebted borrowers. ideally, though, lenders should be, and increasingly are, negotiating more favourable arrangements than bankruptcy that restore borrowers to a sustainable position, while husbanding ( as is their responsibility ) the capital of the bank and avoiding unwarranted losses from concessions to borrowers that can afford to pay β concessions that would largely fall on the banking system β s largest shareholder, the state. i need hardly recall that walking this tightrope has been a very slow process. some home - owners have seen their income situation deteriorate to the point where they can no longer afford to service the mortgage debt. fortunately, the number of involuntary owneroccupier repossessions has so far remained low : given the sharp fall in property prices between 2007 and 2012, it can make sense for lenders to avoid repossession even for a homeowner who can no longer fully service the original debt. banks have been pressured by the central bank, within the limitations of prudential regulation and their constitutional property rights, to accelerate the conclusion of sustainable loan modification solutions where the existing contracts are no longer viable. gradually β too gradually β we are seeing progress on this front. banks are obliged to comply with the central bank β s code of conduct on mortgage arrears in arriving at sustainable solutions in a fair and transparent way. this remains a focus of our close attention at the central bank. indeed, | gabriel makhlouf : opening remarks - economics winter workshop opening remarks by mr gabriel makhlouf, governor of the central bank of ireland, at second annual " economics winter workshop ", organised by the central bank of ireland, dublin, 20 december 2024. * * * good morning everyone, it is my great pleasure to welcome you all to the central bank of ireland for our second annual " economics winter workshop. " building on the success of last year's inaugural event, it is fantastic to see this workshop going from strength to strength. the program ahead promises a very interesting array of speakers and papers, addressing some of the most pressing issues at the forefront of our work here in policy institutions. this workshop is being held following a turbulent few years for countries around the world, including ireland. policymakers have navigated the profound economic disruptions of the covid - 19 pandemic, the geopolitical upheaval following russia's invasion of ukraine, and the resulting surge in inflation - levels not seen in most advanced economies since the 1970s. at last week's ecb governing council meeting, we made the decision to cut our three policy rates by 25 basis points, reflecting confidence that the disinflation process remains on track. for us, sound policymaking rests on a foundation of robust, evidence - based research. only by delving deeply into understanding individual questions can we fully comprehend and address the complexities of the broader economic landscape. research plays a central role in fulfilling our mandate at the central bank of ireland. earlier this year, for example, our thematic signed article on housing in ireland demonstrated how rigorous internal research directly informs and enhances our policy advice and communication. this thematic article approach is something we plan to continue into the future, exploring some of the most relevant questions for the irish economy. today's sessions and policy panel reflect the four main pillars of our research agenda : the small open economy, new horizons, central bank frameworks, and the evolving financial system. these themes guide our efforts to navigate a rapidly changing global economy. while we are fortunate to have highly skilled researchers within the bank, we recognize that collaboration with external academics and institutions strengthens our capacity to do policy - relevant research. initiatives such as our research affiliates program are helping us forge valuable connections, and we were delighted to host our first two visiting scholars this year. looking ahead, we are excited to welcome several more scholars and research affiliates next year as part of our continued commitment | 0.5 |
changing economic, social and international environments. i expect that through discussion, those from both academic circles and central banks will learn more, share insights, and make the most of the wisdom for the future conduct of monetary policy. i certainly welcome discussions on how central banks can best contribute to sustained economic growth and sound development of the global economy. thank you. | toshihiko fukui : the challenges for sustained economic growth under changing economic, social and international environments opening speech by mr toshihiko fukui, governor of the bank of japan, at the 11th international conference sponsored by the institute for monetary and economic studies, bank of japan, tokyo, 5 july 2004. * * * introduction good morning, ladies and gentlemen. i am very pleased to address the 11th international conference hosted by the institute for monetary and economic studies. on behalf of my colleagues at the bank of japan, i welcome the participants from all over the world. this year β s conference is focused on β the challenges for sustained economic growth under changing economic, social and international environments. β over the two - day conference, we will explore a broad range of issues on economic growth. what are the major engines of economic growth? what are the long - term effects of uneven growth over the economies on global resource allocation? what roles should a government and a central bank play in promoting sustained economic growth? major engines of sustained economic growth our understanding of economic growth has advanced significantly since the revival of growth theory in the mid - 1980s. for the last two decades economic growth has been one of the most sought - after subjects of economic research. the new β endogenous β growth theory has provided various systematic expositions of technological progress, such as creation, accumulation and diffusion of new ideas. the standard growth theory tells us that economic growth in per capita basis comes from mainly two sources : capital deepening and total factor productivity growth, or tfp growth. capital deepening increases output along the production function. tfp growth increases output by pushing the production function upward. the former faces the diminishing marginal productivity as capital deepening progresses, and the latter becomes increasingly important in achieving sustained growth in the long - term. as the new endogenous growth theory suggests, tfp growth is closely related to accumulation of the intangible capitals, such as human capital and research and development. we see a lot of evidence that such investments have actually trended upward. in particular, workers with high educational backgrounds and those engaged in research and development have both increased in major industrial countries. interactions between trend growth paths and business cycles growth theory tends to focus on the trend growth paths in the long run. observed growth paths, however, are not smooth. there exists a dynamic interaction between trend growth paths and business cycles. how do macroeconomic fluctuations influence the trend growth paths? how do the trend growth | 1 |
opening remarks by francois groepe, deputy governor of the south african reserve bank, at the launch of the project khokha report sandton convention centre, johannesburg 5 june 2018 good afternoon, ladies and gentlemen. on behalf of the south african reserve bank ( sarb ), i would like to extend a sincere and warm welcome to everyone here today on the occasion of the launch of the report on project khokha, which had as its scope the trial of interbank wholesale settlement using distributed ledger technology ( dlt ). this was our first dlt initiative ; its aim was to contribute to the global initiatives that assess the application and use case for dlt. i am pleased to confirm that project khokha was successful in that it proved that the typical daily volume of the south african payments system could be processed in less than two hours with full confidentiality of transactions and settlement finality. this was done using iso1 20022 standard messages within two seconds across a network of distributed nodes and with the requisite resilient distributed consensus. the sarb is pleased that so many of you have taken the time out of your busy schedules to join us today. we appreciate that there is great interest in this work, both locally and from abroad. 1 international organization for standardization page 1 of 4 i will make brief introductory remarks and then hand over to the governor of the sarb, mr lesetja kganyago, to deliver the keynote address. my remarks centre around three observations. barely six months ago, i could not have imagined that we would successfully trial the use of dlt to process high - value transactions. this was in part because i am acutely aware of the challenges involved in building wholesale payments capabilities and appreciate that, and proofs of concept can be both complex and take time to develop. as an example, the requirements for such an endeavour need to be carefully defined, prioritised, and mapped into functional and technical specifications. furthermore, the coding, development and testing required is an intense and laborious exercise. add to that the challenge of integration between multiple participants one comes to an appreciation why such initiatives are often multi - year projects. the design, building and delivery of project khokha happened in less than three months. this is a noteworthy achievement. it is evident that the pace of innovation and technological development requires a shift to this new β agile design approach β which demands fast turnaround. after all, the mantra of financial technology, or β fintech β | to incorrect pricing and, in turn, improper allocation of resources. a lack of confidence in the financial system generally means rising counterparty risk, requirements for higher risk premiums, and raising the overall cost of capital in the economy. without sound values and proper conduct, we will not be able to restore trust, and this will affect confidence. and when there is little or no confidence, there are risks to stability, growth, jobs, and development. thank you. bis central bankers β speeches | 0.5 |
the covid - 19 pandemic and the fiscal and monetary policies implemented to mitigate it, together with the effects of the war in ukraine, have been the main factors that have determined the global economic environment and economic policy priorities in the world. first, the performance of the global economy is less now than it was three years ago. the slowdown of the asian emerging economies, especially china, given the pandemic closures and the deepening of the housing crisis, explains part of it. the downward revision of growth in europe has also been influenced by the war in ukraine. in addition, above all, we must highlight the tightening of monetary policy associated with the resurgence of inflation as a global phenomenon. lower growth and high inflation have significant implications for capital flows to emerging economies. in mexico, the economic landscape has also changed substantially over the past three years. in june 2019, a stagnation of economic activity was already perceived, led by the weakening of domestic demand, particularly investment. however, overall inflation showed a downward trend, while core inflation, which eliminates the most volatile prices and better reflects domestic inflationary pressures, remained above our inflation target of 3 %. since then, an environment of considerable uncertainty for the growth of the mexican economy had already stood out, and the risk balance was downwards. the main concerns stemmed from uncertainty due to global trade disputes and the extended ratification process of the usmca. however, the slowdown in domestic investment and consumption was also a cause for concern. regarding inflation, while there was also a perception of significant uncertainty, the balance of risks remained balanced. currently, the growth outlook has deteriorated, but unlike 2019, it is now mainly responding to the weakening of the external environment. on the other hand, domestic demand has recovered gradually, primarily driven by consumption. however, inflation has risen to unrecorded levels in two decades, and there are signs of price formation contamination and the beginning of the de - anchoring of inflation expectations. therefore, since june 2021, banxico began to raise its benchmark rate by 450 basis points from 4 % to bring it to 8. 5 %, the highest level in history. it is clear that reducing inflation towards our target is a job that needs to be done ; otherwise, the costs would be much higher. thus, we expect to face a global environment characterized by economic weakness with high - interest rates for longer than expected. price stability is the foundation for investment and sustained growth. but | manuel sanchez : mexico β s reforms progress and economic outlook remarks by mr manuel sanchez, deputy governor of the bank of mexico, at the 2015 institute of international finance ( iif ) latin america economic forum, busan, republic of korea, 28 march 2015. * * * i would like to thank the institute of international finance for the invitation to participate in this conference. it is an honor to share the panel with such distinguished speakers and to be in south korea, an economy that has shown extraordinarily rapid development in the last few decades, achieving the level of an industrialized nation in an amazingly short lapse of time. mexico has benefited greatly from economic ties with south korea. in particular, this country is the second most important source of investment from asia to mexico, especially in manufacturing, commerce and mining, and it is also a significant trading partner. in this talk, i would like to touch first on structural reforms recently undertaken in mexico and, second, comment on mexico β s economic outlook. as usual, my views are entirely my own and do not necessarily reflect those of the bank of mexico or its governing board. mexico β s progress on structural reforms mexico has embraced an ample program of structural reforms encompassing labor, education, the financial system, telecommunications, and energy, among other areas. the general aim is to promote greater market flexibility, investment in both human and physical capital, and competition, thereby boosting total factor productivity growth, the stagnation of which has inhibited long - term overall economic expansion. legislative changes necessary for the reforms have been passed by congress, and the country is currently in the process of implementing them. challenges are inherent in this task. as all of us know, the effectiveness of reforms anywhere in the world rests heavily on the details. today, i would like to bring you up to date specifically on the telecommunications and energy reforms, given the essential role these sectors play in the overall economy and consumer wellbeing. the telecommunications sector has been characterized by limited access and high cost. in both telecoms and broadcasting services competition has been scant, with each sector dominated by one company. in particular, the privatization of the government telephone operator more than two decades ago transferred exclusive fixed - line rights to one buyer, without adequate regulation favoring serious competition. in the following years, new providers of telecoms services encountered a playing field that was not at all level. while some price reductions occurred thanks to incipient competition, services remained expensive and their quality | 0.5 |
, are harder to quantify than those from conventional monetary policy. as there is not a single monitored policy variable, studies have to rely on indirect measures of unconventional monetary policy surprises. typically, a quantity that monetary policy appears to target, such as corporate bond spreads or term premia, has been used to do so. one difficulty in interpreting the results of this strand of the literature stems from the possibility that interest rate spreads may reflect information that goes beyond what is captured by us monetary policy. as a second caveat, i would like to add that almost all unconventional monetary policy measures that were taken so far were expansionary. as available studies are necessarily based on past data, they might not be informative regarding the effects policy actions have in the opposite direction. spillovers from euro area monetary policy turning to the euro area, the evidence suggests that spillovers from euro area monetary policy are smaller than those from the us, not least because of the dominance of the us dollar in global financial markets. 12 us inflation is shielded from exchange rate fluctuations in response to a euro area monetary policy loosening due to its β privileged insularity β, as almost all of us imports are invoiced in dollar. by the same token, euro area exports to the us would not benefit much from a depreciation of the euro vis - a - vis the dollar. at the same time, considering that a very large share of us exports to the euro area are invoiced in us dollar, there is a larger potential for real spillovers from euro area monetary policy to the us through expenditure switching away from us goods in the euro area. in this context, however, i would like to stress that if our monetary policy succeeds in stimulating euro area aggregate demand, then this will also increase euro area demand for us goods, counteracting the loss in competitiveness for us firms from the dollar appreciation. and as argued above, the income expenditure channel β in this case an expenditure increase β appear to be quantitatively more important than the expenditure switching channel. as regards the spillovers from the euro area to emerging economies, given that about 70 % of extra - euro area exports to these countries are invoiced in euro, there is a potential for a large impact through expenditure switching abroad. and due to the sheer size of the trade flows, such expenditure switching could have noticeable spillovers in neighbouring economies in for example, kim ( 2001 ) estimates that between one - fourth and one - half of | that the global economy has witnessed over recent years. first, several emerging economies β china in particular β have integrated in the global economy to an unprecedented degree. second, the increasing international fragmentation of production has given rise to tight links between countries along the global value chain. third, the liberalisation of capital flows and the rise of global banks have brought about strong cross - border financial linkages. fourth, the zero lower bound has rendered central bank balance sheets and forward guidance crucial monetary policy instruments. there is compelling β prima - facie β evidence that monetary policy in major advanced economies has significant spillovers to the global economy, at least in the short term. i refer here to the high sensitivity of global bond yields and exchange rates to recent monetary policy announcements in the us and the euro area. likewise, the changes in market expectations bis central bankers β speeches about the timing of us monetary policy tightening have given rise to bouts of financial market volatility. 1 however, over the medium term, considering the multiplicity of channels of monetary policy transmission, the impact on other countries β macroeconomic outlook is much less clearcut. it also critically depends on the economic fundamentals of the receiving countries, as i will explain in more detail later. the truth of the matter is that given the lack of historical precedents on what the impact of a major economy departing from a zero lower bound environment is, market analysts and policy makers do not have much of a choice other than β learning in real time β. while recent work in academia and policy institutions has improved our understanding of the transmission mechanisms that give rise to global spillovers, we still live with more open questions than answers. in the remainder of my remarks, i would like to discuss the spillovers generated by monetary policy in the us and in the euro area in more detail. i shall also briefly touch upon the implications of a growth slowdown in emerging economies. i will then share my views on how policymakers can deal with these spillovers. finally, i will briefly touch upon policies that may help increase the resilience of the international monetary system. monetary policy spillovers international spillovers from the monetary policy of one country to other economies are a corollary of globalisation. this entails that we, as policymakers, have to rise to the challenge of conducting monetary policy in the presence of these unintended side - effects. the sign and magnitude of monetary policy spillovers is, a priori, less clear than assumed in some economic | 1 |
senior levels of regulated entities can help to reduce the likelihood of groupthink, increase the level of challenge and improve decision making and risk management. there is also a clear connection between the diversity in an organisation and its culture. these are all attributes that as a regulator we should and do care about. groupthink, in particular, was identified in the nyberg report as a contributing factor to the financial crisis in ireland. in my own experience, a lack of diversity at senior management and board level in organisations is a leading indicator of elevated behaviour and culture risks, and consequently prudential and conduct risks. if we look at the causes of the financial crisis, we can see clear linkages to behaviour, culture 3 / 7 bis central bankers'speeches and diversity. it is clear that there were multiple failures and multiple individual and collective decisions leading up to the financial crisis. for example, collective groupthink, business model and strategy failures, governance and control issues, financial misconduct, excessive optimism, regulatory failures, political interference and so on. there are behavioural and cultural linkages across all of these failures. the behaviours and underlying cultures within financial services firms were wholly inappropriate. short termism was incentivised, particularly with respect to shareholder returns. effective internal challenge of the prevailing views was not. while many improvements have been made, not enough progress has been made with respect to underlying behaviours, cultures and incentives. the culture in the retail banks has led to catastrophic failings in the treatment of customers affected by the tracker mortgage scandal, which has done further lasting damage to the reputation of the irish banking sector. globally, there is evidence of cultural failings across the financial services sector, be it wells fargo, the libor scandal, rbs, ppi and so on. moreover, at an individual firm level, i have seen too many examples where regulated firms are having to be pushed too hard by the regulator to address failings and remediate issues, where the focus is on the letter of the law and not the desirable outcome. in some cases this has led, ultimately, to the failure of the firm when earlier acceptance and change would have, perhaps, preserved it. i spoke at an event last year21, during which i highlighted that the consequential breakdown in public trust and confidence in financial services, and the need for meaningful cultural change to repair and restore trust. as the reputation of financial services firms has been damaged there is a tendency for a greater | put in place to deliver this outcome. we will analyse data showing the outcomes from a firm and a sector perspective on an annual basis. we expect to publish data in this regard this coming march. we are including aspects of diversity in the upcoming behaviour and culture review of the retail banks. this is a major step forward in our approach, which we will apply in other reviews in different sectors. it puts the central bank at the forefront, internationally, of the regulatory work on diversity. we are reviewing our governance codes and requirements to be more explicit in terms of 5 / 7 bis central bankers'speeches expectations regarding diversity policies. we will also be considering whether our own actions are inhibiting change. for example, in our consideration of fitness and probity applications, are we considering exclusively on an individual basis or a more rounded consideration of the construct and diversity of the board, executive and so on? that is not to say that we should lower our standards, but that we will be enhancing how we consider the effectiveness of the board and the executive as a whole. risks and barriers i would accept that change is not without risk or challenge. there are deeply entrenched issues that need to be overcome β many of which are societal. recent studies of the gender pay gap affecting uber drivers25 are interesting in highlighting deep rooted issues and behaviours that go beyond an individual firm β s, no matter how large, ability to change. there is also more controversial research which shows correlation ( and argues causation ) between higher levels of diversity and higher levels of societal mistrust26. whatever the drivers for this mistrust, it is clear that an organisational level and a more macro level, a focus on inclusion is critically important too. but these risks and barriers are relatively small compared to the potential benefits at both a system wide level and an individual firm level if they can be overcome. conclusion in my role i am focused on ensuring that the central bank is safeguarding stability and protecting consumers, and delivering a vision whereby the financial services system in ireland delivers for both the economy and its customers in a sustainable way over the long term. there is clearly more to be done to have confidence in the achievement of this vision for the irish financial services system. diversity and inclusion has a role to play in achieving this vision. this includes through ensuring that regulated firms have appropriate and effective governance, risk management and control frameworks in place, that their actual cultures are consistent with their stated aspirations, and that their | 1 |
, the progress with the recapitalisation of greek banks. in 2015, the stock of non - performing loans increased. non - performing exposures as a percentage of total exposures ( npe ratio ) rose to 43. 6 % at end - september 2015 ( up from 39. 9 % in december 2014 ). this deterioration was visible and similar in size ( roughly 4 percentage points ) across all loan categories. in particular, the npe ratio reached 55. 4 % for consumer exposures, 43. 3 % for business exposures and 39. 8 % for housing exposures. this can in part be attributed to the postponement of the implementation of the code of conduct on the management of npls and to the less active loan portfolio management on the part of banks, which seemed to focus mostly on short - term solutions. however, from the third quarter onwards, especially after the recapitalisation, banks appeared to step up their efforts towards more active npl management. bis central bankers β speeches the completion of the first review will enhance the prospect of recovery contrary to what was the case in 2015, 2016 could mark a new beginning leading greece out of the crisis and onto a path of sustainable growth. as mentioned previously, however, there are a number of major challenges, arising not only from unpredictable developments in the international environment but also, more importantly, from potential risks to the domestic macroeconomy, such as delays in the completion of the first review of the new stabilisation programme or failure to implement the programme β s actions. real gdp growth is expected to be negative, at least during the first half of 2016, largely reflecting a carry - over effect from 2015. however, as already mentioned, the objective conditions are in place for greece to exit recession and come closer to positive growth from the second half of this year. this is also conditional on a number of steps that will help to avert risks and strengthen the prospect of recovery, which is feasible. the first step, and the one with the most crucial bearing on future developments, is the successful completion of the first review of the programme, currently in progress. this will require, among other things, the completion of the social security reform and the alignment of farmer income taxation. these are not just prior actions for the review of the programme. they are necessary to ensure the sustainability of the social security system and of public debt and to restore social and tax equity both across generations and across taxpayer groups. a positive | targeting social spending to remove the bias against the new generation and improving labour mobility from overstaffed to understaffed parts of the public sector. 5. encouraging business investment and protecting private investors greece has been plagued by serious investment inertia. between 2007 and 2014, total investment expenditure as a percentage of gdp fell by half. underlying this disinvestment are anaemic demand, political and economic uncertainty, as well as financing constraints. the prompt rebound of business investment expenditure is key to sustainable growth. the restoration of economic and political stability that would strengthen investor confidence and encourage business investment plans, the rapid shift of the domestic production model from non - tradable to tradable goods and services and the easing of financing constraints are instrumental in stimulating business investment expenditure. a decisive contribution should also come from actions such as the enactment of a new development law with clear growth incentives, but especially initiatives from the financial system to address non - performing loans in the context of the new institutional framework, which also enables creditors to cooperate in restructuring productive businesses. furthermore, the greek state must help restore investor confidence and protect private investors by ensuring a stable, businessfriendly economic environment. this can be achieved through the establishment of a clearcut, simple and stable tax and legal regime fostering healthy entrepreneurship, and through initiatives to settle long - pending, and harmful for the country β s investment appeal, disputes with major international investors. 6. increasing exports the competitiveness gains achieved by the greek economy at considerable social cost do not seem to have been fully exploited. these gains, together with improved labour market flexibility, are strong incentives for investment initiatives. despite the recouping of losses in international competitiveness, mainly in unit labour cost terms, exports have not yet recorded the anticipated upward dynamics. this can in part be explained by the lack of financing, the bis central bankers β speeches comparatively higher cost of long - term borrowing and the increased tax burden which weighs on the economy β s overall competitiveness. in part, however, it is also due to a number of inherent structural weaknesses that hamper the penetration of greek products in international markets and relate to non - cost aspects such as product quality, protected designation of origin and branding, red tape, etc. 7. combatting high unemployment the observed gradual decline in unemployment and the continued recovery of the employment rate have been supported by the active employment policies implemented through programmes and actions using resources from the national strategic reference framework ( 2014 β 2020 ). in order to | 1 |
, interpretations and practices. to complement the efforts to create a sustainable and comprehensive islamic financial system, consumer education and awareness on islamic banking and finance should be extensively undertaken. concerted efforts between the governments and islamic financial fraternities should be engaged to develop such a consumer education programme. such programmes would increase transparency on the virtues and availability of islamic financial instruments offered by the islamic financial institutions. how consumers can expect to benefit will depend on how well informed they are about the financial services being provided. barriers across geographical boundaries can be removed by leveraging upon the advances on information communication technology to create an integrated internet platform as means for the knowledge sharing on research findings, conference discussions, shariah rulings and other vital information on islamic banking and finance. improvements can be made to the existing internet portals to be more comprehensive with linkages to other useful information providers. equally important is the consumer protection infrastructure. an international financial information dissemination body should be set up to disseminate the development of islamic banking and finance worldwide. in addition, with greater disclosure and transparency on the manner in which islamic financial transactions are being conducted and the risk and return profiles of the products, the role of market discipline in driving islamic financial institutions towards ensuring shariah compliance will be strengthened. this will ensure operational efficiency, strengthen risk management infrastructures and institute sound and dynamic risk management practices. as part of the process of enhancing inter - linkages with the rest of the world in the area of islamic finance, malaysia is also encouraging the domestic islamic financial institutions to be more global by expanding beyond the domestic shores. with the experience that has been acquired in islamic banking and finance that has been accumulated over more than three decades now, it is timely and desirable to extend this experience beyond our own borders. the domestic islamic financial institutions would need to undertake feasibility studies and in - depth groundwork to identify new markets to expand their business operations, in particular with economies in which there is potential for greater economic linkages and integration. as the pace of globalisation and liberalisation accelerates, securing financial stability and confidence has increased demands for more robust and resilient financial systems. while affected by some market instability and uncertainties, it has not, however, undermined the development of the global islamic financial system that has now become an increasingly integral component of the international financial system. the approach to building a sustainable and progressive domestic islamic financial system involves the creation of the key components comprising the islamic banking industry, islamic financial markets, the islamic insurance or tak | committed to create a robust regulatory environment where innovation can thrive within. thank you for being here and for your continued commitment to responsible innovation and value creation. let us embark on this journey of " innovation reimagined " together. 2 / 3 bis - central bankers'speeches 3 / 3 bis - central bankers'speeches | 0.5 |
amando m tetangco, jr : the philippine economy : developments and prospects speech by mr amando m tetangco, jr, governor of the central bank of the philippines, at the 4th national convention, chinese β filipino business club inc, manila, 9 february 2006. * * * the officers and members of the chinese - filipino business club, inc. led by president rufino ko pio, special guests, ladies and gentlemen, good afternoon. thank you for inviting me to join you at your 4th national convention. i am truly glad for this opportunity to be with you. chinese - filipino businessmen represent a very important segment of the philippine economy. you have a unique place in our economy as you personify the convergence of the best from two cultures : the highly admired chinese work ethic combined with filipino ingenuity. this formidable combination has given wings to a strong entrepreneurial spirit that has helped strengthen the backbone of the philippine economy. i am pleased therefore to give you an overview of how our economy performed in 2005, the developments that can affect your business and how we at the bangko sentral ng pilipinas see the prospects for the philippine economy. later, we can have a discussion on economic issues of particular interest to you. recent economic developments i will now give you a brief overview of recent economic developments. we had to deal with many challenges in 2005. among others : we had to grapple with the impact of record high oil prices ; slower growth in exports ; the el nino weather phenomenon which stunted the growth of agricultural output ; credit ratings downgrade ; and domestic political concerns. and yet, in the face of all these, our economy proved its resilience and fundamental strength. our domestic economy, as measured by gross domestic product, continued to expand and managed to grow by 5. 1 %. as businessmen, you know that achieving such growth, in a year marked with challenges, did not happen by chance ; it resulted from the continuous implementation of a comprehensive economic reform program involving both the government and the private sector. part of this reform program is fiscal consolidation, which is now generating benefits for the country. the combined effects of government β s cost cutting programs, improved tax collection efforts, and higher revenues from sin taxes and the evat, brought down the government β s fiscal deficit in 2005 to p146. 5 billion, substantially lower than the programmed deficit of p180 billion. this has led government to say that it is now possible for | concluding remarks ladies and gentlemen of the chinese - filipino business club, there is no doubt, we have made solid economic gains ; even foreign media have taken notice. for instance, the international herald tribune noted that investors are now looking to the philippines, often shunned in the past for being " the sick man of asia. " and while there is still much that we need to fix in our economy, we can do this better and faster if the government and the private sector will cooperate and work more closely together in making our economy efficient and more globally competitive. the success of policymakers β efforts to sustain economic growth ultimately depends on the support of the private sector ; you and i know, government cannot do everything on its own. in this regard, i commend the tireless efforts of industry groups such as the chinese - filipino business club for its role in keeping the economy healthy and buzzing with activity. moreover, i congratulate your organization for its spirit of volunteerism in supporting community projects. may your tribe increase. it is my hope that you will become even more proactive in ensuring the long - term growth of our economy. finally, i wish the leadership and members of the cfbci good health, wealth and good fortune, at all times. marami pong salamat. | 1 |
this is, obviously, unrealistic in the current environment. but these are potential avenues for progress and debate. international liquidity the provision of international liquidity has been severely disrupted during the crisis. emerging ( and some industrialized ) countries have suffered from acute dollar liquidity shortages which had to be remedied, inter alia, through a network of currency swaps between central banks. the crisis is a powerful reminder that liquidity β both domestic and international β can never be taken for granted. how will international liquidity be provided in the future, and by whom? these are not new questions. over the last ten years, the build up in foreign exchange reserves in emerging economies has been spectacular, which is a sign that the supply of international liquidity was seen both as insufficient and uncertain. more recently, governor zhu, from the people bank of china has raised the issue of reserve currencies. according to governor zhu, current arrangements for liquidity provision are a source of instability and have played a role in causing the crisis. governor zhu has mentioned, in particular, the intrinsic contradiction embodied in the famous β triffin dilemma β. because the dollar is the major reserve currency, international liquidity supply depends on the us running a sufficiently large current account deficit which, by itself, aggravates global imbalances and creates instability. governor zhu suggested that the role and status of the sdr be enhanced, with the long term objective of creating a β super reserve β currency. however, international liquidity provision should now be considered in a broader framework. the triffin dilemma goes back to a period when international capital markets were poorly developed. by then, international liquidity was limited to instruments used to settle payments between official monetary authorities. it was represented by claims on such official entities. by contrast, in today β s world, most international liquidity is privately provided and represented by claims on private institutions. interbank markets play a crucial role in this process. the more capital markets become integrated at the short end, the more international liquidity is provided by the private sector. as a consequence, there is a strong continuity and complementarities between domestic and international liquidity. both depend on the willingness of counterparties to extend credit to each other. both are subject to aggregate supply and demand shocks with sudden shifts in risk aversion or liquidity preference. both result from leveraging and deleveraging by private institutions ( adrian and shin, 2008 ). when markets seize, | and by the way that is why financial regulators β including banque de france and acpr β pay close attention to the proposed merger between the london stock exchange and deutsche borse. * * * let me draw a parallel to illustrate the situation. in france and in europe, we have the raw materials β savings. we have the processing industry β the financial sector. but we are missing two links in the economic chain : downstream, we need to open up new opportunities in productive investments via a broader range of processed savings products ; and upstream, we need stable and legible rules to allow the industry to conduct its business. therefore, i see two ways forward. first, better channel our abundant savings towards productive investment. as i said, the core challenge for increasing innovative investment is to boost equity financing, both in france and in europe : β in france, this means new savings products and an appropriate trade - off between risk and return. indeed, the share of households wealth invested in risky assets is more than three times lower in france than in the us : 77 % of gdp versus 241 % of gdp. but french and european savers are more attached to security β or capital protection β than to liquidity. therefore professionals should offer them savings products that are less liquid, with some long - term capital guarantee, and that offer the best equity performance over time. a crucial point is to avoid any tax distortions that might penalise these products more than liquid and risk - free investments. low interest rates are not the disease, but the symptom of an imbalance between savings and investment ; and low interest rates are probably an opportunity to speed up the cure towards productive investment. β at the european level, we need to build an ambitious β financing and investment union β ( fiu ) bringing together existing initiatives β namely the juncker plan, the capital markets union and the banking union β which currently work in isolation and therefore do not bring sufficient results. we definitely need to put the pieces of the puzzle together to create a multiplier effect towards private risk - sharing in europe : with more equity financing and more cross - border flows. the second way forward for raising investment and growth in europe is to rapidly stabilise the regulatory environment for banks, eight years after the financial crisis. however, in finalising the basel iii reforms we need to avoid two pitfalls. first, as has been stressed by bis central bankers β speeches the ghos and the g20, the completion of reforms should | 0.5 |
. at the beginning of the 1990s, the erstwhile closed - off states of the eastern bloc gradually began to open up, and so too did china and other asian countries. since then, economic integration worldwide has been considerable. today, the value of goods and services traded internationally is three and a half times higher than it was then. average real per capita income worldwide has increased by two thirds. the proportion of the world β s population living in extreme poverty has fallen from just under 40 % to 10 %. this rapid improvement in prosperity was made possible by the better use of the three factors needed for growth : labour, capital and technology. 1 / 5 bis central bankers'speeches after 1990 we saw an increasingly international division of labour. countries specialised in areas where they were particularly proficient compared with their trading partners. the manufacture of labour - intensive products was outsourced to countries with relatively low wage levels. this increasing division of labour resulted on the one hand in rising incomes, above all in the new production countries, and on the other hand in a decline in goods prices worldwide. this effect was strengthened further by international competition. with increasing economic integration, capital, the second factor influencing growth, could be invested globally. foreign direct investment and loans helped in the construction of production facilities and infrastructures in the newly opened regions of the world. the high levels of savings in the advanced economies were thus put to productive use in the catch - up growth of these regions. that leaves the third factor : technology. the integration of the global economy led to a massive transfer of knowledge between countries, which greatly accelerated the economic development of the poorer nations. furthermore, the growth in the number of people participating in the global economy meant that there were a lot more ideas and innovations. more ( and more highly specialised ) workers, better and more broadly invested capital and a rapid exchange of knowledge β all this led to higher economic growth and greater prosperity worldwide. globalisation also had a major impact on monetary policy. the most important change in this respect was the increasingly global production of goods, which reduced inflationary pressure. the latter also fell because the global economy was able to satisfy increases in demand in individual countries comparatively easily. in the less integrated economy of the cold war era, higher demand quickly led to bottlenecks and rising prices. with inflationary pressure lower, central banks were able to react more strongly to adverse economic developments. and this was often appropriate, in retrospect. for the global integration of the financial | thomas jordan : what are the consequences of the war in ukraine for the snb's monetary policy? speech by mr thomas jordan, chairman of the governing board of the swiss national bank, at the 114th ordinary general meeting of shareholders of the swiss national bank, berne, 29 april 2022. * * * madam president of the bank council dear shareholders dear guests i would like to warmly welcome you all to our annual general meeting, and i am delighted that this year we are able to meet in person again. the geopolitical situation has changed fundamentally in the past few months. russia β s attack on ukraine has shaken us all. our thoughts are with the victims of this terrible war. considerations of the economic consequences pale by comparison with this suffering. nevertheless, such deliberations are also important for the citizens of switzerland, and the swiss national bank is therefore working intensively on addressing the impact the war will have. on the one hand, we have to properly contextualise the immediate economic effects. on the other hand, we also have to address questions pertaining to the longer term. i will begin my speech by looking at the closely interconnected global economy as we knew it until just recently, the gains in prosperity it brought, and what it meant for monetary policy. i will go on to explain how the consequences of the war that can already be felt are influencing our current monetary policy. i will then discuss the other side of global economic integration, namely the interdependencies between countries and markets. at the end of my remarks, i will offer some thoughts on what is likely to change with regard to monetary policy if global economic integration were to decrease again as a result of the war. monetary policy in an integrated global economy the world has become increasingly interconnected economically over the past decades. until a short while ago, we thought these ties would continue to become closer. the us - china trade dispute of recent times had already cast some doubt on the durability of global integration. the coronavirus pandemic has restricted mobility and strained global supply chains. however, the geopolitical confrontation we see today has an entirely different dimension. russia β s invasion of ukraine has reopened old rifts in many respects. we therefore have to ask what the consequences would be if the economic fragmentation already caused by the war were to persist, or even increase further? to assess this, i would first like to look briefly at the process of globalisation over the past thirty years or so | 1 |
on 5 may 2011 confirms continued upward pressure on overall inflation, mainly owing to energy and commodity prices. a cross - check of the outcome of the economic analysis with that of the monetary analysis indicates that the underlying pace of monetary expansion is gradually recovering. monetary liquidity remains ample, with the potential to accommodate price pressures in the euro area. furthermore, the most recent data confirm the positive underlying momentum of economic activity in the euro area, while uncertainty remains elevated. overall, our monetary policy stance remains accommodative, lending support to economic activity. on balance, risks to the outlook for price stability are on the upside. accordingly, strong vigilance is warranted. on the basis of our assessment, we will act in a firm and timely manner. we will do all that is needed to prevent recent price developments giving rise to broad - based inflationary pressures. we remain strongly determined to secure a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. this is a prerequisite for monetary policy to make an ongoing contribution towards supporting growth and job creation in the euro area. turning to fiscal policies, all parties involved in the preparation of the 2012 national budgets must ensure that they are fully in line with the requirement to support confidence in fiscal policies. a comparison between the latest economic forecasts by the european commission and the fiscal plans embodied in the stability programmes points to the need for many countries to underpin their budget targets with concrete consolidation measures in order to correct their excessive deficits by the commonly agreed deadlines. the implementation of credible fiscal adjustment strategies is crucial in view of ongoing financial market pressures. at the same time, the implementation of ambitious and far - reaching structural reforms is urgently required in the euro area to strengthen substantially its competitiveness, flexibility and longer - term growth potential. in particular, countries which have high fiscal and external deficits or which are suffering from a loss of competitiveness should rapidly carry out comprehensive economic reforms. in the case of product markets, policies that enhance competition and innovation should be vigorously pursued to facilitate productivity growth. regarding the labour market, the priority must be to enhance wage flexibility and incentives to work, and to remove labour market rigidities. we are now at your disposal for questions. bis central bankers β speeches | first time in two decades. in this year β s negotiations, base pay was raised for the second year in a row, and at many firms the increases were larger than last year ( chart 4 ). base pay increases were achieved at more firms than last year and became widespread across industries and firms of different size. as for price setting, an increasing number of firms seem to be able to pass increased costs, including the rise in input prices and personnel expenses, on to sales prices. in addition, it seems that households have started to accept such sales price increases on the back of an increase or prospects for an increase in their wages. there is a variety of evidence that firms β price - hiking behavior has become widespread and sustained since the start of this fiscal year. for example, looking at the items that make up the cpi ( all items less fresh food ), the share of items for which prices rose minus the share of items for which prices fell has risen markedly since the beginning of this fiscal year and recently has reached the highest level since 2000 ( chart 7 ). in addition, price indices compiled by the university of tokyo and hitotsubashi university by aggregating the prices of food and daily necessities also show clear price increases since april this year on a year - on - year basis, and the increases seem to be accelerating. many firms attempted to raise their sales prices at the beginning of last fiscal year, but this coincided with the consumption tax hike, which was followed by a decline in demand. firms therefore were forced to quickly take price rises back. the price changes this year present a clear contrast with those last year. the simultaneous occurrence of base pay increases and price hikes should be regarded as evidence that a positive feedback loop between the increases in employment and wages and the moderate rise in inflation is now in place. given these developments, although annual cpi inflation is likely to be about 0 percent for the time being, with the underlying trend in inflation steadily rising and the negative contribution of the crude oil price decline dissipating, annual cpi inflation will accelerate toward the price stability target of 2 percent. the timing of reaching around 2 percent is projected to be around the first half of fiscal 2016, but it should be noted that the timing could be either earlier or later than the projection, depending on developments in crude oil prices. iii. monetary policy going forward the bank has been pursuing qqe, aiming to achieve a state in which the 2 percent inflation rate is maintained in | 0 |
and inflation around its 2 percent target. just as a healthy, fit individual is more likely to shake off a covid - 19 infection, a healthy economy is more likely to recover quickly from a major negative shock. third, canada has enjoyed considerable success in keeping inflation close to target for more than 25 years. this means that investors, firms and households expect that the bank will act to help return the economy to capacity and bring about stable, 2 percent inflation. the bank β s recent actions should be seen in exactly that light. in recent weeks, governing council lowered our policy interest rate three times to 0. 25 percent, which we consider to be its effective lower bound. these moves were based on analysis of the factors we could measure immediately β mainly the likely fallout on the economy from the collapse in oil prices, as well as the immediate effects of measures to contain the novel coronavirus. this preliminary analysis indicated that cutting rates all the way to the effective lower bound was the best contribution the bank could make to stabilizing the economy and complementing the government β s efforts. looking ahead, the outlook is highly conditional on how long the containment measures remain in place, and how households and firms adapt. governing council agreed that it would be false precision to offer its usual specific forecast. instead, we chose to offer two plausible illustrative 1 / 2 bis central bankers'speeches scenarios for the economy β one should be thought of as a β best case β given where we find ourselves today, while the other is a much more severe scenario. many possible outcomes lie between these scenarios, but based on the bank β s new analysis, governing council concluded that substantial monetary stimulus needed to be in place to lay the foundation for the postcontainment economic recovery. for the bank β s policy actions to reach companies and households and foster a robust recovery, it is crucial that financial markets function well. in the past few days, governing council β s deliberations focused mainly on what additional actions the bank could take to achieve this goal. there has been some improvement in market functioning. but important strains continue, and governing council acknowledged that near - term borrowing requirements of governments and the private sector are likely to pose further challenges. we decided to increase the bank β s participation in the government β s treasury bill auctions to 40 percent of each new issue, and to underscore that our program of purchasing at least $ 5 billion per week of government of canada bonds in the secondary market could be increased at | made positive steps forward β here i β m thinking about joint initiatives we β ve taken with indigenous partners to identify barriers to economic inclusion, and some education and capacity building we β ve embarked upon together. now it β s time to broaden our engagement and reflect on what we can and should do. we know we have more to learn. and we know that there are many other voices that need to be heard β including those of you gathering with us today and tomorrow. so we β ll take the best of the growth and learnings from our recent efforts. and we β ll ask our partners to walk alongside us as we take the next steps in our journey. together, we β ll define what reconciliation means for the work of the bank of canada β toward a more inclusive and prosperous economy for everyone. conclusion 2 / 3 bis central bankers'speeches as i wrap up my remarks, i want to leave you with some inspiration to guide us over the next two days. and i can β t say it any better than this quote from elder commanda β s grandfather, william β who was also an elder. he said : β we must come together with one heart, one mind, one love and one determination. β i invite you to keep this vision top of mind as we work together to reshape our relationship with indigenous peoples and foster inclusive growth and prosperity. we have much to learn from each other. i am grateful to all our presenters, discussants and participants. and i am confident that, guided by your insight and wisdom as well as the collective spirit of collaboration, this gathering will be an important building block toward better understanding, better operations and better policies. 3 / 3 bis central bankers'speeches | 0.5 |
time, subjecting all banks active in the markets to ifrss for consolidated accounts, certainly reduces its ability to exert an influence in this area. in short, the spanish experience shows both the usefulness and feasibility of an involvement of the supervisor that is compatible with the law in force. the need for this involvement is heightened by the entry into force in 2018 of the new standard ( ifrs 9 ) under which banks will switch from using the concept of incurred loss to that of expected loss in order to calculate the credit portfolio provision. this standard is undoubtedly an improvement on the current situation, since it enhances the measurement of the risks of loans and receivables. at the same time, it significantly increases the complexity of calculating provisions and, thus, increases the risk of heterogeneous application across banks, which is something the supervisor should be aiming to mitigate. the work under way in the basel committee on this matter is therefore very timely. my comments so far imply that there are in practice significant obstacles to satisfying the legitimate expectations that a rigorous and granular supervision will help moderate the intensity of the regulatory changes needed to promote financial stability. bis central bankers β speeches the regulatory frameworks in force and different supervisory cultures, along with the difficulty of becoming more involved in accounting practices, often place considerable limits on the intensity of supervision attainable. this explains why the actions of the authorities to prevent financial crises largely rest on the definition of clear and demanding prudential standards to underpin the work of supervisors. in the area of the ssm, these restrictions are particularly significant at the moment since, given the variety of supervisory practices and cultures in place, only adequate codifying of rules and procedures can help to ensure that banks are treated equitably, even if this means that some of the benefits, in terms of supervisory effectiveness, that an appropriate amount of discretion involve, have to be sacrificed. clearly, as the new european supervisory regime matures, we must strive to develop a specific action framework that incorporates the best practices and that is sufficiently robust to enable its application to be adapted appropriately to each specific circumstance. thank you for your attention. bis central bankers β speeches | range of instruments needed to tackle such situations with the speed required in each instance. finally, it is difficult for supervision to be effective if it does not include a thoroughgoing review of banks β financial statements. allow me to elaborate on this point. evidently, an essential aim of supervision is to oversee banks β solvency through the monitoring of capital ratios. insofar as these ratios are calculated on the basis of accounting information, it is essential to ensure that such information properly reflects the value of the bank β s assets and liabilities. it is true that auditors and securities supervisors also perform this task. however, the specific nature and complexity of bank business, the evident relationship between published financial information and financial stability, and the occasional lack of specificity of prevailing accounting principles all make it advisable that the prudential supervisor should contribute to encouraging supervised banks to follow the best practices, in full conformity with current regulations and the distribution of competencies among institutions thereunder. consequently, the effectiveness of the supervisory framework, which has doubtless been broadly strengthened by the changes to prudential regulation, depends on three aspects : firstly, the legal availability of a broad set of instruments through which requirements or restrictions may be imposed on banks ; secondly, the ability to effectively influence management decisions and policy through formally non - binding actions, and finally the ability to ensure the accounts give a fair view of the bank β s financial situation. true, these elements have largely been present in the supervisory framework in place in spain in recent years. the banco de espana has had a relatively extensive range of powers and has, in the exercise of its supervision, frequently used moral suasion and the issuance of recommendations, which banks have always followed. further, it has been empowered to issue accounting rules affecting individual statements, which banks and audit firms have used as a frame of reference to properly complete with the consolidated statements that, generally, must adhere throughout the european union to international financial reporting standards ( ifrss ). this supervisory approach is not identical to that followed in other jurisdictions. within the single supervisory mechanism ( ssm ), most authorities, including the ecb, have somewhat less extensive powers than the banco de espana. moreover, in various european jurisdictions, the supervisory strategy adheres to a greater extent than in spain to the strict bis central bankers β speeches use of the supervisory instruments formally recognised in the rules, with less dependence on recommendations or informal guidelines. for example, a recommendation, like the one made | 1 |
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