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##lter even before the crisis. so the financial crisis deepened the economic slowdown, but this was not the only cause. last years have also shown that the economic pillar of the maastricht emu was not robust enough. the contagion can be an especially pronounced problem in a monetary union and we need stronger framework and stronger tools to tackle it. at the same time, we need to be fair : this has not been just a crisis of politics or a crisis of the emu. the economic theory and especially the modern theory of finance have been challenged. this crisis has cast doubt on many commonly held beliefs from the last 25 years. many textbooks will be re - written. bis central bankers ’ speeches but still there are issues which we have learnt in economics and economic history which have passed the test. first : a growth model based on ever - growing debt levels won ’ t last. second : the stability of the whole economy is important, not only the control of public deficits. the economy needs to be competitive. third : an educated workforce, reliable institutions and a functioning infrastructure provide a foundation for renewing the economy. how have we changed the eu and emu? as to the emu, the economic governance has been strengthened based on the lessons learnt. first, we have now a stronger stability and growth pact ( sgp ) and the new macroeconomic imbalances procedure, which pays attention on the balanced development of the whole economy. the governance has also been improved. second, the crisis management structures have been developed and the esm has been in place since last october. third, the banking union is an important step towards further strengthening of financial stability. we have not only new rules, we have also more market discipline. we need both. true ownership of the governance is crucial. we need more europe and we need more national responsibility. a clear separation of responsibilities between brussels and the member states is very important. as regards the crisis management structures, the esm as a crisis fund is just a part – although an important part – of the story. it is of utmost importance that the design of the adjustment programmes relies on state of the art expertise, practices and experience. the programmes must be built on realistic assumptions on the macro outlook and public debt stability. this is the best way to guarantee that the financial support drawn from the esm remains a bridge loan instead of becoming a permanent transfer. i find also the role of the imf important and useful. i hope
( 3 - year - long ) refinancing operations were conducted to remove liquidity uncertainty and facilitate the function of the euro area money market. again, the final objective was to improve the transmission of the proper monetary policy. another crucial segment in the monetary policy transmission is the government bond market. partly due its size – it is the largest capital market in the euro area – it lays the foundation for price formation in other capital markets, like bank and corporate bonds. government bonds are also important repo instruments. a year ago, in spring and summer 2012, fears of a break - up of the single currency area and the associated implicit exchange rate risk led to several tensions in the euro area capital markets. as a result, the steering of monetary policy was not functioning fully, or was, in part, not functioning at all. at the same time, economic indicators pointed to a significant credit crunch and a severe decline in economic activity. as a result, there was a risk of an incipient deflationary spiral ; the primary goal of the governing council – price stability – was not ensured. against this background, the governing council set up the omt programme. there are three crucial elements in the programme. first, a necessary conditionality is to ensure that the member state remains under considerable pressure to implement reforms and maintain fiscal discipline. second, this necessary conditionality is not yet sufficient. in addition an omt transaction must be warranted from a monetary policy perspective. this decision will be made independently by the governing council of the ecb. third, the transactions will be discontinued during the quarterly efsf / esm programme evaluation period. the continuation of omt transactions requires that the programme remains on track. the omt is designed to stay strictly within the mandate of the ecb. central banks have been able to play a stabilising role first against the forces of the financial collapse and then supporting a recovery of the real economy. but the central banks cannot repair the balance sheets. they cannot consolidate the public finances. central banks cannot implement the structural reforms. everyone has to take his or her own responsibility. bis central bankers ’ speeches we need more growth. how can we achieve it? the pace of recovery in advanced economies has been disappointing. still between 2001 and 2007, they grew 2. 3 %. between 2010 and 2012 annual average was 1. 3 %. the bis report from 23 june 2013 reads : β€œ the only major exception is germany, which bounced back from a
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housing prices. lending to non - financial companies and to households increased by 10 – 15 per year in the years preceding the crisis and house prices increased by around 10 per cent per year. the prices of tenant - owned apartments increased even more rapidly. this trend began already in the mid - 1990s, but it accelerated in the years preceding the crisis6 ( see figure 9 ). giavazzi, francesco and mishkin, frederic : an evaluation of swedish monetary policy between 1995 and 2005, riksdag committee on finance, november 2006. see for example svante oberg : potential gdp, resource utilisation and monetary policy, sveriges riksbank, 7 october 2010. giavazzi and mishkin ( op. cit. ) said that one reason why inflation had been low in the period 2002 – 2004 was that the riksbank, since 2002, had begun to take house prices into account. however, in later papers mishkin wrote that one lesson from the crisis is that that there are stronger reasons for monetary policy to counteract credit - driven asset price bubbles, see for example mishkin, frederic : monetary policy strategy : lessons from the crisis, october 2010. bis central bankers ’ speeches a comparison with a simple taylor rule7 also indicates that the repo rate should have been significantly higher. a taylor rule can indicate whether the level of the repo is reasonable. based on inflation measured in terms of the cpif or the hicp8 and the gdp gaps i presented earlier, the repo rate, according to the taylor rule, should have been around 7 per cent in the third quarter of 2008. i now believe, as i said earlier, that the presented positive gdp gaps are exaggerated. with my assessment of the gdp gap, the repo rate according to the taylor rule would instead have been around 6 per cent in the third quarter of 2008, but still considerably higher than the 4. 75 per cent it reached before the crisis ( see figure 10 ). when i look back on the monetary policy conducted since i joined the riksbank on 1 january 2006 up to the point when the financial crisis hit sweden in september 2008, i therefore believe that monetary policy was too expansionary in the years preceding the crisis. inflation increased and reached a level that was tangibly higher than the inflation target, resource utilisation was higher than normal and there was a rapid expansion of credit. despite this, the repo rate was lower than normal for
##see the financial crisis, but once it hit the swedish economy with full force in september 2008 the riksbank acted quickly and forcefully. this mainly concerned measures to preserve financial stability. however, the expansionary monetary policy conducted by the riksbank also played an important role in reducing the severity of the downturn that followed in the wake of the financial crisis. looking forward, i think that the repo rate should be raised at every meeting this year, considering the economic development we envisaged at the last monetary policy meeting. if inflation becomes higher than we had expected, it may be necessary to raise the repo rate to a normal level of around 4 per cent as soon as next year. the average for the repo rate over the last 10 years cannot be taken as a starting point for what the average repo rate should be in the longer term. however, at the same time, i am, of course, prepared to reassess my view of the direction of monetary policy if the external conditions should change significantly, as they did in september 2008. there are those who think that monetary policy is too tight. however, with a rate of growth of over 5 per cent and a repo rate of 1. 50 per cent, i do not think we can say that monetary policy is tight. it is just gradually becoming slightly less expansionary. there are not four hawks and two doves on the executive board at present, only six doves. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches
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, our analysis demonstrates that even if growth were to return to between 2 and 2. 5 percent per year – an optimistic scenario – debt as a share of gdp would continue to rise under the bis central bankers ’ speeches current fiscal balance and debt structure. this underscores that the current regime is not sustainable. second, while fiscal reform is definitely needed, restoring economic growth remains a crucial ingredient to achieving a sustainable fiscal regime. puerto rico slipped into recession in 2006, and a decade later a recovery has yet to materialize. any fixed level of debt will grow even more burdensome if the economy is shrinking. consequently, this long deep recession has exacerbated the island ’ s fiscal woes. much of last week ’ s analysis focused on a key contributor to economic growth – the labor force – so let me point out a few conclusions that i drew from that work. puerto rico ’ s outmigration remains an important concern, and is both a cause and an effect of the economic decline. although the skills of those who have migrated to the mainland look much like those who remain, the departure of tens of thousands of residents each year represents a huge drain on puerto rico ’ s potential growth. among those who remain on the island, low labor force participation, an aging population and relatively poor preparation for skilled jobs represent significant headwinds to growth. while our analysis seems to paint a somewhat dark picture of economic conditions on the island, it ’ s important to remember that there are significant opportunities for action that can leverage the island ’ s strengths to foster economic growth. these include its bilingual adult population, an open economy occupying a central position in the caribbean, wide experience as host to international corporations, and close economic ties to the u. s. mainland. it is in exactly this spirit that we present this analysis – in the hope that it will help policymakers focus on actions that can help to restore growth and prosperity to the commonwealth. going forward, we will stay engaged in this effort. middle - wage jobs returning let me conclude by returning to the theme of the labor market. job growth is essential to the vitality of an expansion, but the types of jobs being created are also important. while the labor market has continued to add jobs at a solid pace, many remain concerned about a lack of job opportunities for the middle class. indeed, growth of middle - wage jobs has been lackluster for the past few decades, with gains occurring disproportionately in higher -
william c dudley : β€œ remarks at the new york fed ’ s economic press briefing on the regional economy ” opening remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the economic press briefing on the regional economy, federal reserve bank of new york, new york city, 18 august 2016. * * * jaison abel, jason bram, hunter clark, giacomo de giorgi, richard deitz, jack gutt, andrew haughwout and joseph tracy assisted in preparing these remarks. good morning and welcome to the new york fed ’ s economic press briefing. i am pleased to have this opportunity to speak with the journalists covering our region. you are an important communication channel to the people in our district. this morning i want to focus on economic conditions in our region, giving particular attention to job growth. i also want to discuss our ongoing work on puerto rico. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee or the federal reserve system. the new york fed is deeply committed to serving our region. this commitment manifests itself in several ways. we produce business surveys and local economic indexes to help our constituents track regional economic conditions. my staff writes papers and blog posts on economic issues important to our region. we meet with a number of advisory boards comprised of community and business leaders. and, i regularly visit different parts of our district so that i can meet with local businesses, community development professionals, and the people who live and work here. this on - the - ground intelligence is valuable to me and helps inform my view of the region and the economy, which, in turn, plays an important role in shaping my outlook on policy. let me now talk a bit about job growth in our region. job growth in the region nationally, the labor market has added 2. 4 million jobs over the past year. and, the strong jobs reports released over the past two months have helped allay concerns that arose earlier this year that job growth was beginning to stall. indeed, these reports reinforce my view that labor market conditions continue to improve. turning to conditions closer to home ; job growth in our region has generally been somewhat below the national pace. one important exception is new york city, where job growth has been strong, despite the relatively sluggish performance of the financial services industry. in the past, the city has counted on job growth from wall street to fuel economic growth
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2007. pending legislative changes, feasible options could be explored based on understanding with the government. 20. there are examples in emerging markets which have attempted solving the netting issue, such as, the recent malaysian example. malaysia has enacted unified legislation for all kinds of financial services [ financial services act 2013 ] which provides a β€˜ safe harbour ’ for β€œ qualified financial agreements ” ( qfas ). approach to market regulation 21. in order to have a more focused approach towards market development and regulation along with a surveillance system for ensuring market integrity and stability, a new department called financial markets regulation department ( fmrd ) has been set up at rbi. the technical advisory committee ( tac ) on financial markets has recently been reconstituted to guide our future agenda. going forward, the explicit entity - neutral legal bis central bankers ’ speeches framework prevailing in india for regulation of money, interest rate and currency markets will be leveraged, to put in place a structured process focusing on ( i ) making market access norms easier for all participants ( ii ) expanding the menu of products and participants across all segments ( iii ) strengthening market infrastructure in line with global standards ; and ( iv ) leveraging the market and surveillance mechanism for policy inputs. interest rate options 22. in line with the above approach, introduction of interest rate options in the indian market is a key part of agenda. a working group has already been constituted under the tac to comprehensively look into all relevant issues and give its recommendations on the product design. 23. the committee is deliberating on the hedging requirement for these options. for retail participants, a small threshold without explicit underlying requirement is being considered. this would help retail participants and small enterprises to hedge their risk without much documentation burden. for larger corporates, while the underlying exposure requirement may be necessary, but similar to forex hedging, concept of β€œ anticipated interest rate exposures ” is being explored. review of fpi limits 24. the limit for fpi investments in government securities in india has been part of the larger framework for capital account management. the risks of sovereign borrowing in foreign currency, the β€œ original sin ”, have been extensively analysed over the years, particularly after the asian crisis in the nineties. the concerns relating to sudden stops, however, are as relevant for domestic currency denominated debt as foreign currency debt. it is therefore imperative to balance the benefits of lower yields in normal times and the costs associated with increased volatility and yield
harun r khan : financial market regulation in india – looking back, looking ahead keynote address by mr harun r khan, deputy governor of the reserve bank of india, at the fimmda ( fixed income money market and derivatives association of india ) – pdai ( primary dealers ’ association of india ) 16th annual conference 2015, prague, 17 august 2015. * * * the speaker acknowledges the contributions of shri vaibhav chaturvedi and shri vivek singh of the reserve bank of india. 1. mr. jiri rusnok, former prime minister & member of the board of the czech national bank ; dr. m. venkatachalam, charge d ’ affairs indian embassy, prague ; mr. n. s. venkatesh, chairman fimmda ; mr. pradeep madhav, pdai ; distinguished panelists and all the delegates. it gives me great pleasure to be delivering the keynote address for the fimmda – pdai annual conference in this culturally rich, historically vibrant, naturally blessed city of prague which still maintains its old - world charm. 2. the theme for this year ’ s conference evolving markets – institutions & regulations rightly underscores the role of both the regulations as well as institutional practices in influencing the market development. the post - crisis overhaul of the global financial regulatory regime may, however, have altered the balance between the two as newer regulations have been changing the institutional practices themselves in very fundamental ways in many jurisdictions. it may still be a bit early to definitively conclude about the impact of these changes on evolution of markets going forward. the shift to ccps and increased costs of otc transactions ; increased capital requirements for trading activities ; new leverage and liquidity regimes, etc. all are contributing to reshaping the financial markets landscape globally. while the state of financial markets may be qualitatively heterogeneous across countries, the harmonized implementation of the reform program is an essential necessity countries are confronted with. 3. given the above backdrop, i thought it appropriate on this occasion to undertake a broad assessment of the evolution of our own financial markets and the issues we have been grappling with. it is critical for us to learn the right lessons from the experience of other countries in reshaping their regulatory frameworks while we debate the right model. there could be different viewpoints and perspectives but it is imperative that certain basic principles are agreed upon. introduction 4. regulation of financial
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tool for supervisors in quantifying the vulnerabilities of regulated entities or those of the financial system as a whole. they are both a micro and macro - prudential tool for financial supervisors and central banks. as an aside, let me remind you that this year the larger insurance undertakings will also undergo a stress test. the methodology and parameters of this stress test are currently being finalised at eiopa. the scenarios for this insurance exercise will be different to the ones used for the banking exercise. scenarios are chosen to reflect the risks and vulnerabilities of each sector. tailored scenarios are needed to maximize their relevance. there is no read across from the set of parameters chosen for insurance stress testing to the set chosen for banking. for insurance undertakings, natural catastrophes and a prolonged period of low interest rates would be two significant challenges to their resilience. in banking, the main vulnerabilities centre on the course of risk aversion, credit quality, balance sheet repair, and policy reforms. the knock - on effects of adverse development on one or several of these fronts would alter the paths of a number of macroeconomic variables such as gdp growth, consumer price inflation, real estate prices and unemployment. so where and when are these stress tests decided? the baseline for the next three years is to be provided by the european commission, starting with their 2014 and 2015 economic forecasts. as for the adverse scenario, it is a matter for the esrb and eba to decide. meetings of their respective boards will be held shortly so that the scenarios can be finalised and published soon. the overarching objective of the stress test element of the comprehensive assessment is to build on and compliment the asset quality review. the stress test will provide a forwardlooking view of banks ’ shock - absorption capacity under stress. the stress testing process will overlap with the aqr so that an initial forward looking assessment can be made at the end of the summer. this will allow aqr specific adjustments, for example to the assumed level of provisions required and common equity tier 1 ( cet 1 ) ratio, to be integrated into overall results and applied to derive the final capital assessment. so both the aqr and stress tests will be published at the same time – in november. a framework for disclosure will be agreed across countries and banks. banks will have to pass capital thresholds of 8 per cent for the baseline scenario and 5. 5 per cent for the
. " stability is a necessary condition for sustainable growth " has become the universal central - banking credo - though that doesn't necessarily make it any easier to achieve! this emphasis on macro - economic stability - and sustainability - has served to focus attention increasingly on the supply - side of our economies - on structural reform and supply - side flexibility - as the key to raising the underlying rate of growth which our economies can maintain. and that is the second general trend i'd like to touch upon. it has meant increasing reliance upon free markets - again both nationally and internationally - to allocate productive resources to where they can most effectively contribute to meeting demand. the collapse of communism is a dramatic example, but the promotion of free trade through the wto and of the free movement of capital through the imf, or the spread of privatisation and deregulation all around the world, not least in financial markets, can all be seen as aspects of essentially the same thing. this emphasis on free markets cannot mean " anything goes ". public policy concerns, of course, remain ; and we need to have rules to ensure that competition is fair as well as free. but it does mean less centralised, bureaucratic, intervention telling people what they may or may not do, leaving them much greater freedom to do what they choose provided they meet the necessary nationally or internationally agreed standards. the resulting intensification of competition can, of course, be uncomfortable for existing producers - and can lead to protectionist pressures at the micro - economic or even the national level - so we still have a long way to go. but it is increasingly accepted as the best means we have raising the sustainable rate of growth - and employment - and living standards - at the macro - economic, and international, level. these trends together have resulted in substantial economic progress in most of the developed economies. but - and this is the third theme i would draw attention to this morning - there was growing recognition of the fact that not all countries were equally well - placed to share in the potential benefits of free markets within a stable macro - economic framework, and of the need - as a matter of self - interest and not just social responsibility - to help draw other countries in to the global economy. emerging markets and transition economies have increasingly gained access to international capital markets. and there is an increasing emphasis on the need to help the poorest countries that are seeking to help themselves to participate. this last concern will be on the agenda
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not. it is a fundamental weakness of the risk based approach. mathematical modelling is a hugely useful tool. models are probably the best way we have of forecasting what will happen. but in the end, a model – as the bank of england economic forecasters will tell you with a wry smile – is only a crude and simplified representation of the real world. models have to be built and calibrated on past experience. when events occur that have no clear historical precedent – such as large falls in house prices across us states – models based on past data will struggle to accurately predict what may follow. in the early days of the crisis, an investment bank cfo is reported to have said, following hitherto unprecedented moves in market prices : β€œ we were seeing things that were 25 standard deviation moves, several days in a row ”. well, a 25 standard deviation event would not be expected to occur more than once in the history of the universe let alone several days in a row – the lesson was that the models that the bank was using were simply wrong. and even if it is possible to model credit risk for, say, a bank ’ s mortgage book, it is much more difficult to model the complex and often obscure relationships between parts of the financial sector – the interconnectedness – that give rise to risk in periods of stress. moreover, allowing banks to use their own models to calculate the riskiness of their portfolio for regulatory capital requirements opens the door to the risk of gaming. deliberately or otherwise, banks opt for less conservative modelling assumptions that lead to less onerous capital requirements. though the supervisory model review process provides some protection against this risk, in practice, it can be difficult to keep track of what can amount to, for a large international bank, thousands of internal risk models. the underlying principle of the basel 3 risk - weighted capital standards – that a bank ’ s capital should take account of the riskiness of its assets – remains valid. but it is not enough. concerns about the vulnerability of risk - weights to β€œ model risk ” call for an alternative, simpler lens for measuring bank capital adequacy – one that is not reliant on large numbers of models. this is the rationale behind the so - called β€œ leverage ratio ” – a simple unweighted ratio of bank ’ s equity to a measure of their total un - risk - weighted exposures. by itself, of course, such a measure would mean banks ’ capital was insensitive to
coming to completion this year – it did not currently see a case for recommending changes to the uk regulatory framework. i am afraid, for financial stability, that is as good as it gets. the financial sector evolves at a phenomenal speed. risks can change and build very quickly. so the fpc will have to repeat its assessment of risks from the non - bank financial sector at least annually. in this area, as in the banking sector, it has to keep risk under close and regular review. and it has to be prepared to act. but that, of course, is the nature of preserving financial stability and preventing a reoccurrence of the illusions i described earlier. bis central bankers ’ speeches
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of the system as a whole rather than individual ccps. the european securities and markets authority is already expanding its supervisory stress testing exercise to incorporate liquidity risk. a similar exercise here in the united states should be seriously considered. ensuring efficiency the industry collectively needs to ensure that the liquidity flows involved in central clearing are handled efficiently and in a way that minimizes potential disruption. as i noted, there was some concern about the size of margin calls following brexit, and certain ccps have taken measures to address this. for example, lch has subsequently made changes to its intraday margining procedures in an effort to reduce liquidity pressures on its clearing members, allowing them to offset losses on their client accounts with gains on the house account. 12 β€œ supervisory stress test of clearinghouses, ” commodity futures trading commission, november 2016, www. cftc. gov / idc / groups / public / @ newsroom / documents / file / cftcstresstest111516. pdf. lch has also moved forward by one hour the timing of the last intraday margin call and made procedural changes that will speed up the processing of the call, which should also help with payment flows. other ccps are also actively engaged in efforts to increase their efficiency. ficc is looking at potential solutions using distributed ledger technology to clear both legs of overnight repo trades, which could allow for greater netting opportunities and thereby reduce potential liquidity needs. 13 several ccps are also looking at ways to expand central clearing to directly include more buy - side firms, which could also offer greater netting opportunities. doing so could also offer new sources of liquidity if the new entrants are able to take part in the ccp ’ s committed liquidity arrangements. diversification of sources of liquidity would offer tangible benefits - - ccps would avoid relying on the same limited set of clearing members for all of their liquidity needs. as one example, the options clearing corporation established an innovative pre - funded, committed repurchase facility with a leading pension fund. as regulators, we should encourage innovations that increase clearing efficiency and reduce liquidity risks where they meet the pfmi and our supervisory expectations. central bank accounts as i discussed earlier, ccps have a complicated set of decisions on how and where to hold their cash balances. title viii of the dodd - frank act authorized the federal reserve to establish accounts for dfmus, and we now have accounts with each of the eight institutions that
funding advantages it confers are plentiful. but i believe that it is so ingrained in our thinking that we sometimes take it for granted. think how obvious the subsidy would be if it involved another industry - - for example, if the government guaranteed that commercial paper holders of the automobile industry would be repaid in full. to complete the other strands of the safety net - - the discount window and the payment system - - let us assume that automobile companies experiencing liquidity problems could borrow from the federal reserve for the purpose of repaying commercial paper, and that they are able to achieve risk - free settlement. the effects of extending such a subsidy are not difficult to imagine. automakers would find it very easy to place their commercial paper, and would be able to pay a below - market yield. and, to the extent the hypothetical allowed, i would not be surprised to see automakers use this funding advantage to enter other businesses. so it is with banks - - and with subsidiaries of banks. regulators can limit a bank ’ s ability to subsidize its subsidiary through loans by capping their amount or regulating the rates the subsidiary must pay. but although one can limit the aggregate investment a bank can make in its subsidiary by requiring that such injections be deducted from the capital of the bank, the equity investment in the subsidiary is still funded from subsidized resources, and that subsidy transfer cannot be eliminated. thus, both analytically and practically, i think it difficult to deny that banks and their subsidiaries benefit from a federal subsidy, and benefit in ways that an affiliate of the bank does not. nevertheless, some argue that a parent - subsidiary structure is more efficient than a sibling structure, and must be allowed for a broader range of activities. but in light of the recent regulatory changes that i have described, i believe that this argument is now questionable. a bank and an affiliate can now avoid a redundant work force and duplication of effort by having employees serve in a dual capacity, or by allowing reporting lines to cross. for example, a common back office or treasury can be maintained. furthermore, the two companies can market their products jointly to both retail and corporate customers. with these regulatory changes, banks and bank holding companies have opportunities to make considerable adjustments to their organizational structures and operating procedures as well as to offer new products to customers in new ways. conclusion let me conclude by pointing out that the legislative debate has only just begun. opinions are still developing, new ideas are
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##pinned this trend to argue that a new capitalist system would progressively emerge, with the relevance of nation states as economic actors dwindling in importance. in contrast, other observers saw the growing internationalisation of the world economy as part of a broader and longer - dated trend where sharp intensifications in trade and financial exchanges underpinned by growing economic liberalism were not without historical precedent ( for example during the period ranging from 1870 to 1913 ) 5. these observers were thus more bullish as regards the ability of nation states to retain their economic power going forward, consolidating this inter alia through strategic alliances in economic blocks6. in spite of these nuances, the common thread between the two views was that the underlying economic forces were seen as inevitable in the international ( or global ) domain. complementarities between globalised economic performance and policymaking second, following the broad acceptance of the premise that the globalised world would be durable in nature, academics and policymakers devoted their attention to fleshing out the practical implications of globalisation in different policy environments. insofar as monetary policy was concerned, the debate was broadly captured by the relative weight of improved policymaking versus globalised factors in accounting for successful economic outcomes. a first dimension in this regard was backward looking in nature and stemmed from the sharp reduction in the variability of both inflation and output during the 1990s. this phenomenon, which became known as β€œ the great moderation ”, coincided with both the intensification of according to wto data, the average growth of world merchandise export volumes per annum was 15 % from 1960 to 1990 inclusive, as compared to average real gdp growth per annum of 8 % over the same period. according to unctad data, the world stock of outward fdi increased from usd 564 billion in 1980 to usd 1763 billion in 1990. see the end of history and the last man, book by f. fukuyama ( 1992 ). see the borderless world ( 1990 ) and the end of the nation - state ( 1995 ), books by k. ohmae see for example globalisation, history and development : a tale of two centuries, article by d. nayyar ( 2006 ). the author notes that export shares in gdp for selected industrialised countries ( e. g. uk, germany, japan ) were broadly comparable in 2000 relative to 1913, and that the relative increase in export shares to gdp for these same countries between the periods 1900 – 1913 and 1973 –
peter praet : monetary policy lessons from the financial crisis – some remarks dinner speech by mr peter praet, member of the executive board of the european central bank, at the snb research conference, organised by the swiss national bank, zurich, 24 september 2015. * * * it is a pleasure for me to share with you some thoughts on the topic of this conference. let me start with a word of caution. i think we are not yet in a position to draw firm lessons. the final verdict on many aspects of the crisis and the way policy - makers, including central bankers, reacted to it – both globally and in their respective jurisdictions – is still out. therefore, somewhat less ambitiously, please allow me to offer some remarks on the conference topic. based on my own experience, the overarching challenge that was faced by major central banks in terms of their response to the recent financial crisis can be captured with two insights. first, when the crisis intensified at a global level, we faced a trade - off we had not seen for a very long time, namely how to prevent the meltdown of the financial system without causing undue harm to the incentive constraints that are of vital importance for the functioning of market - based economies. the pre - crisis macroeconomic debate had spent considerable time and effort explaining that negative supply side shocks could present central bankers with a very difficult decision : whether to stabilise inflation at the cost of slowing growth further, or be more patient at bringing inflation back to target at the cost of destabilising inflation expectations. we thought that a situation like this was the worst scenario for central bankers. therefore, when we finally faced the post - lehman brothers meltdown and the different – and far more serious – decision of handling panic against preserving incentives, the required experience on how to deal with it had, to some extent, been lost. we could consult history books – the recurrent financial crises of the 19th century were regularly haunting central bankers – but not macroeconomic textbooks. second, while a global meltdown had successfully been prevented, a second type of tradeoff emerged, which is typical for balance sheet recessions. 1 what essentially had happened is that banks, emerging painfully from a liquidity crisis, had started to deleverage actively in an attempt to structurally reduce liquidity needs by shedding excess exposures. the deleveraging was an additional downside force contributing to the slump. in this situation, a central banker is again torn between
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pursuing efforts to strengthen the resilience of the financial system by preparing for and implementing new regulations the international financial regulatory framework evolved substantially in 2012, and will continue to do so in 2013. it is therefore particularly important to adapt to these changes. 2. 1 the insurance sector must continue, in france and europe, to prepare itself for the application of the new prudential regime, solvency ii admittedly, 2012 was marked by tough discussions about the omnibus ii directive and in particular the question of the treatment of insurance products with long - term guarantees. these discussions were unfruitful and will delay the entry into force of solvency ii. however, a positive signal was sent thanks to the agreement reached between the eu council, the european parliament and the european commission at the end of december on the terms of reference of the impact study on long - term guarantees. this study will give impetus to the discussions and i count on the contribution of the institutions chosen by the acp. insurance companies must take advantage of the extra time before solvency ii comes into force : in coordination with eiopa at the european level, we consider that it is already possible and necessary to make use of certain definitive elements in the solvency ii directive, in particular concerning governance and the orsa ( pillar 2 ), and reporting to the supervisory authority ( pillar 3 ). bis central bankers ’ speeches 2. 2 in the banking sector, credit institutions must continue strengthening their solvency – a process that is already well underway – and they must intensify their initiatives to adapt to future regulations concerning liquidity. the prudential supervisory authority has organised a series of meetings designed to familiarise the french financial sector with the changes resulting from the implementation of the basel 3 reforms. in terms of liquidity, the coverage ratio ( lcr ) is now stabilised. in my new year address of january 2011, i said that the work on liquidity ratios was unsatisfactory and that it clearly needed to be reviewed. this has now been done. in order to counter the fears of the recessionary impact on loan distribution that the first version of the text might have prompted, a transition phase has been introduced to give banks more time to conduct their adaptations. moreover, the calibration of the liquidity requirements has been refined to better reflect experiences of the crisis, while the list of assets that can be held to satisfy the liquidity requirements has been extended. even if adjustments are still possible in the framework of
christian noyer : new year ’ s wishes to the paris financial community mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, presents his new year ’ s wishes to the paris financial community, paris, 21 january 2013. * * * ladies and gentlemen, i would like to start by extending my warmest wishes to you, your colleagues and your institutions for 2013. admittedly, 2012 was a difficult year, but it was above all a fruitful year that marked a turning point in the euro area crisis. crucial decisions were taken, providing lasting solutions to enhance and safeguard the functioning of our monetary union : the implementation of the european stability mechanism ( esm ) ; the treaty on stability, coordination and governance ; the new agreement on greek debt ; and lastly, the banking union agreement, on which i will speak in greater depth. this progress was achieved through a collective effort : the ecb and the eurosystem played a decisive role in restoring confidence, thanks especially to a new and particularly powerful tool : outright monetary transactions ( omts ). today, there are no longer any doubts about the irreversibility of the euro. at the national level, countries have shown that they were capable of taking all possible measures to reduce their deficits and to put their public finances on a sustainable footing while undertaking the structural reforms necessary for a return to growth. i hope that 2013 will be the year in which this progress is consolidated and built upon. today, i would like to give my views on the challenges that lie ahead this year. i believe that the four main challenges are to : β€’ adapt to an environment that is still changing rapidly ; β€’ resolutely pursue efforts to strengthen the resilience of the financial system by preparing for and implementing new regulations ; β€’ further improve the competitiveness of the paris financial centre ; β€’ continue to support the economy by ensuring the best possible financing conditions. 1. a rapidly changing legislative and regulatory environment first, your working environment will continue to evolve rapidly, in terms of both international financial regulation and france ’ s legislative framework. 1. 1 a few words on the draft banking reform law in france the financial crisis highlighted some major shortcomings of international banking and financial sector regulation as well as the inadequacy of the tools at the supervisory authorities ’ disposal to reduce and address risks. the draft banking reform law reflects the commitment of the president of the french republic to separate activities that are
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single supervisory mechanism for systemically important banks as well as a single resolution mechanism will be an important step forward. in this regard, a common resolution regime will have to ensure that banks without a viable business model can exit the market in an orderly fashion. such a regime is crucial not only for financial stability, but for sustainable growth as well. a functioning resolution regime strengthens incentives for effective credit monitoring and moderates banks ’ risk appetites. in so doing, it enhances the allocation of capital and reduces the risk of a bubble emerging. better still would be if banks didn ’ t reach the point of having to be wound down in the first place. in this regard, higher capital requirements are a big part of the solution – the single supervisory mechanism is another. the role of monetary policy these are necessary steps that will put the euro area back on the path to prosperity. finally, please allow me to make a few short remarks on the role of monetary policy during the crisis. monetary policy has already done a lot to absorb the economic consequences of the crisis, but it cannot solve the crisis. this is the consensus of the governing council. the crisis has laid bare structural shortcomings. as such they require structural solutions. β€œ structural reforms may hurt a few vested interests, but they would clearly strengthen the effectiveness, competitiveness and, yes, also the fairness of our economies. ” those are mario draghi ’ s words, not mine. i agree, however. the best contribution a central bank can make to a lasting resolution of the crisis is to fulfil its mandate : that of maintaining price stability. and this is what jacques rueff actually meant when he made that famous statement in 1949. as david marsh has pointed out, it was a declaration of support for common principles of monetary stability rather than an early advocacy of a single currency. we should not jeopardise now what we have fought so long to achieve. conclusion ladies and gentlemen, let me conclude. monetary union has always been both a political project and a prosperity promise. to fully unleash the common currency ’ s potential, efforts are needed on two fronts : structural reforms as well as the abolition of implicit guarantees for banks and sovereigns. but i did not come here to preach ; i came here to discuss, to listen, and to learn. so without further ado, i would like to hand over to our moderator, nicolas beytout. bis central bankers ’ speeches
promised to foster prosperity as well. hopes were high that the euro would set in motion a process of real convergence. it was expected that governments would have no choice but to implement structural reforms and improve their supply side, since stimulating demand would no longer be an option. fiscal policy was supposed to be bound by the rules of the stability and growth pact and by the disciplining effect of the financial markets ; monetary policy, meanwhile, would no longer be available to national policymakers at all. we now know that things did not quite work out as expected. that poses a fundamental question : do we need to shift economic policies to the european level to make monetary union viable? or will it suffice to amend the existing framework? in my remarks, i wish to argue that both avenues can in principle lead to a stable framework. the changes required to amend the current framework are by no means trivial. but it is my impression that, at the current juncture, they might be more feasible than giving up national sovereignty in fiscal and economic matters. bis central bankers ’ speeches a stable framework for a prosperous monetary union the crisis can be read simultaneously as a sovereign debt crisis, a balance of payments crisis and a financial crisis. but in my view, there is one basic economic principle which goes a long way towards explaining it : people respond to incentives. and in the case of europe, implicit guarantees for banks and sovereigns caused shareholders, investors, governments and voters to ignore, or worry less about risk. underestimated contagion effects between countries exacerbated these effects. in the end, the balance between liability and control – which is essential for any market economy – had got out of kilter. this, for me, largely explains the unsustainable developments in the run - up to the crisis. and this is what needs to be changed for the euro area to regain its footing. in terms of the implicit guarantee given for sovereigns, a genuine fiscal union would be a path towards establishing a framework which balances liability and control. in this scenario, control and intervention rights would be shifted to the european level. if this prerequisite were fulfilled, a greater mutualisation of liabilities would become feasible – and may be justified. but it seems to me that giving up national sovereignty in fiscal matters does not enjoy a majority in europe at this juncture – neither among politicians nor among the general public in the member states. president hollande ’ s recent response to the european commission
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ilmars rimsevics : standing firm against manipulations with lats'exchange rate article by mr ilmars rimsevics, governor of the bank of latvia, published in the daily diena on 16 february 2007. * * * economists are currently discussing ways to improve the ability to compete of the latvian economy and they are right to do so because it is being undermined by high inflation. morten hansen from the riga school of economics has also devoted this issue a great deal of thought, sharing some of his insights with the readers of the newspaper diena ( 10 february ). the latvian economy is still the fastest growing economy in the european union and that should make us happy because our standard of living is raised. the downside, from the macroeconomic perspective, is that the speed at which we are traveling can be compared to driving at 200 kilometers an hour, because it is accompanied by high inflation, record high prevalence of imports over exports ( current account deficit ), decreased ability to compete, a fast growing foreign debt. for quite a while now, the main problem of the latvian economy has been the overly high domestic demand that exceeds supply ; the economists call it β€œ overheating ” of the economy. the budget deficit is also too high for this juncture in our economic development : we are not saving for the moment when the pace of the economy will abate. estonia, where the situation is very similar, last year recorded a budget surplus of 3 % of gdp. ) if we fail to have a firm grip on the steering wheel and we dismiss the danger of driving too fast, our breakneck speed can land us in a ditch! we can only regret that mr. hansen has not applied his theoretician ’ s savvy to come to the aid of the latvian economic policy makers : to specify the list of tasks that would allow the excessively rapid development to slow down so that latvia would continue to develop in the long term with a yearly growth of 6 - 7 % instead of running the danger of overheating as is obvious from the estimates of the last quarter of last year. it would have been wonderful if mr. hansen had made use of his teaching skills, which involve the ability to get things across with ease, to remind us that in the marathon distances – in our case, approximating the level of european standard of living – sprinter ’ s tactics are of no use. in such a list, there would be tasks that produce immediate
ventspils port decreased, while the other ports of latvia performed well. vibrant economic activity allows us to project that gdp growth will be higher in the latter half of 2002 ( 5. 5 % - 5. 7 % ) than it was in the first half of the year ; and therefore, real gdp is expected to grow by 5 % in 2002. the year - on - year growth of 10. 0 % in latvia's exports that was observed in the first nine months of 2002 despite weak global economic growth should be noted as a positive development. in the country breakdown, exports grew in all groups, with most rapid growth reported in exports to the united states, sweden, russia and lithuania. exports to the principal trading partner, the european union, rose 6. 9 %. the principal contributors to the growth were exports of prepared foodstuffs, wood, furniture, machinery and mechanical appliances, electrical equipment, and base metals and articles of base metals. with domestic demand remaining high, imports were up by 12. 6 %. as latvia's exports rose more markedly, deficit in the balance of payments current account decreased substantially in july and august. in september, the current account deficit increased again, as imports of goods rose. in the first nine months of 2002, the services surplus was 12. 0 million lats higher than the year before. the increase in the services surplus resulted from rising exports of travel and other services and lower imports of other services. the transportation services surplus declined largely because of a low cargo turnover at the ventspils port. in the first nine months of 2002, the services surplus covered 40. 5 % of the goods deficit. the current account deficit continued to be adequately covered with foreign direct investment ( in the amount of 75. 5 % in the first nine months of 2002 ). if the external and internal economic environment does not deteriorate at the end of the year, the current account deficit for 2002 is likely to remain at 8. 5 % of gdp. the country's fiscal position was still better than the year before. in the first nine months of 2002, fiscal deficit in the general government consolidated budget was 19. 8 million lats ( 2. 2 times higher than the year before, when the deficit amounted to 43. 6 million lats ). the general government consolidated budget was affected by an increase in the local government consolidated budget fiscal deficit, which amounted to 20. 3 million lats. nevertheless, according to the preliminary data released by
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time, but like the uk, it is the average that matters. one consequence of lower inflation in australia is the convergence of our bond yields to international norms, or at least the us norm ( graph 4 ). some of you may have been able to remember that as recently as a decade ago, australian government bonds were 400 basis points higher than us government bonds. we think of that as the bad old days, but if you were an international funds manager, you may look back on it as the good old days. another factor that has contributed to the improved acceptance of australian government paper is the recognition that our fiscal policy is very responsible by international standards. the budget has been in surplus for some time now. this, together with the proceeds of the privatisations i referred to earlier, has meant that the outstanding stock of government debt has fallen in absolute terms, and as a percentage of gdp is now the lowest among developed countries ( table 5 ). table 5 : public debt per cent of gdp ; 1999 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - italy 117. 7 belgium 114. 1 japan 105. 4 canada 86. 9 spain 70. 4 sweden 68. 3 france 65. 2 netherlands 62. 9 germany 62. 6 united states 59. 3 denmark 55. 4 united kingdom 54. 0 finland 44. 9 new zealand 34. 8 norway 34. 3 australia 31. 3 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - source : oecd economic outlook, december 1999 i am not sure how fully aware international investors are of these excellent figures on growth, inflation, productivity, public debt, etc., so i have taken the liberty today of indulging in a bit of trumpet blowing. one economic fact, however, that markets are aware of is that australia always runs a substantial current account deficit and, therefore, is a net importer of capital. i have nothing very new to say on this subject other than to point out that it is the result of private agents ’ decisions rather than government ’ s demands on capital markets, and that its magnitude has not changed very much in the last 20 years. it has varied cyclically, of course, but around a basically flat trend. at its cyclical
recent years, growth in the number of dwellings in australia has exceeded growth in population ( graph 10 ). this was especially so during the pandemic, when population growth declined to its slowest pace since the first world war. despite this, there was only a modest increase in the rental vacancy rate. this is primarily because the demand for residential floorspace increased as people worked from home and the average number of people living in each household fell ( graph 11 ). graph 10 population and dwelling stock * year - ended growth % % dwelling stock 2. 0 2. 0 1. 5 1. 5 1. 0 1. 0 population 0. 5 0. 5 0. 0 * dashed lines represent forecasts. sources : abs ; rba 0. 0 graph 11 average household size * capital cities no no 2. 60 2. 60 2. 55 2. 55 2. 50 2. 50 * average number of persons usually resident in an occupied private dwelling ; estimated using labour force survey microdata ; seasonally adjusted ; smoothed line is a 13 - period henderson trend. sources : abs ; rba we are now in a different phase following the opening up of australia ’ s international borders. population growth has picked up sharply and it now seems likely that the annual rate of population growth will soon be around 2 per cent, which would be close to the peak reached during the resources boom. in contrast, the expansion in the supply side of the housing market is expected to be fairly modest. it takes a long time for housing supply to respond fully to shifts in population growth – in the previous episode of strong population growth, it took around five years. one possible adjustment over the near term is that the average number of people living in each dwelling might increase, reversing the pandemic - period fall. this would reduce overall demand for new dwellings. but even if this were to happen, it is likely that the balance between demand and supply in the housing market will result in rents inflation being quite high for a while. this will be one factor adding to inflation over the period ahead. another area where supply - side factors are having an important bearing on inflation is in the energy sector. the price of electricity, as measured in the cpi, increased by 12 per cent last year and we are expecting a further increase of around 15 per cent this year. this surge in prices is not because the demand for electricity in australia has been unusually strong. total electricity consumption has been little changed over the past
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this had an impact on exchange rate developments. in addition, special factors in the global economy led to a stronger krone than might have been expected from the higher interest rate differential alone. themes in foreign exchange markets shift. in periods, investor focus on stock returns feeds through to exchange rate movements. during periods of political and economic unrest, investors may choose individual currencies as a safe haven. in autumn 2002, the norwegian krone was probably also perceived as a safe haven. over the past 18 months, developments in the interest rate differential between norway and other countries appear to have had a particularly marked impact on our currency. norwegian interest rates have been pushed down towards the level prevailing abroad. through 2003, the interest rate differential has narrowed as a result of monetary policy easing. the interest rate has been reduced by 5ΒΌ percentage points and is now approximately the same as among our trading partners. through 2003 and up to march 2004, the krone depreciated by about 15 per cent, measured by the import - weighted index i - 44. since the monetary policy meeting on march, the krone has appreciated again by about 3Β½ per cent. inflation has edged up, but is still low. in march, inflation stood at 0. 3 per cent. apart from some temporary, technical factors that may together account for 3 - 4 tenths of a percentage point, three main factors have contributed to explaining the substantial deviation from the inflation target : β€’ first, the global downturn had considerable implications for the impact of interest - rate setting in norway, via the exchange rate and other channels. the strong krone contributed to low inflationary pressures. the depreciation in the krone exchange rate since january 2003 has not resulted in a significant rise in prices for imported consumer goods, as might have been expected. in recent months, however, there have been signs of higher prices for imported goods. clothing prices in particular slowed in march. β€’ second, low external inflation and rapid shifts in the international division of labour have resulted in a fall in prices for imported goods and services. this also applies when these prices are measured in terms of what norwegian importers pay in foreign currency. β€’ the change in trade patterns has made a considerable contribution to the sharp decline in prices for clothing, footwear and audiovisual equipment. we have nonetheless observed that the fall in prices for clothing has been somewhat more subdued in svalbard than on the mainland, partly due to the higher incidence of snowscooter
more favourable schemes. the proposal implies that many private sector employees that are not currently covered by a company pension scheme will be included in the proposed scheme. the proportion of employees without any employment - based pension is greatest in retail trade, the hotel and restaurant sector and the construction industry. financial stability developments in real economic variables are mirrored in credit markets. in recent years, household income has shown solid growth, and household confidence has been high. however, corporate earnings have been low, and until recently enterprises have primarily focused on enhancing efficiency. credit developments are giving ambiguous signals to our interest - rate setting. growth in household borrowing is high, but enterprises have reduced debt. the change in the breakdown of credit may have been amplified by banks ’ increased eagerness to extend credit to households after a period of losses on loans to the business sector. some reports from our regional network indicate that are some liquidity constraints for the business sector in some areas. according to reports from northern norway, banks seem to have become more cautious in extending loans to the business sector. banks are requiring higher levels of capital and earning capacity. total credit is expanding broadly in line with normal growth in nominal gdp. developments in credit to enterprises shadow developments in their investments. low credit growth indicates that corporate investment in the mainland economy has still not picked up even though there seem to be signs that the decline is levelling out somewhat. norwegian households generally finance their mortgages at an interest rate that follows the short - term money market rate. floating interest rates tend to vary widely over time. the interest rate level is very low at present, and long - term investments cannot rely on this interest rate spanning the life of a housing loan. according to money market expectations, the interest rate will eventually stabilise around 5Β½ per cent. this is consistent with an inflation target of 2Β½ per cent and a long - term real interest rate in line with the level abroad. this interest rate, with a mark - up for banks ’ margins, provides a more realistic expression of the interest rate level that will apply over the loan ’ s life than the floating interest rate prevailing today. when the interest rate is abnormally low, it can be particularly challenging for borrowers to assess their debt - servicing capacity over time. such a low interest rate also places particular demands on banks in assessing the creditworthiness of borrowers. but experience has shown that the underlying cause of loan defaults can be overly optimistic assessments on the part of both the lender and borrow
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on a sample of investment banks ( ib ), consensus forecast and international monetary fund. wti oil price ( us $ / barrel ) 2008 ( f ) 2009 ( f ) jan. mpr mar. 08 jan. mpr mar. 08 doe ( 11 mar ) deutsche bank ( 07 mar ) jp morgan chase ( 14 mar ) scotiabank ( 14 mar ) lehman brothers ( 29 feb ) barclays ( 19 mar ) - - - - - - goldman sachs ( 04 mar ) merril lynch ( 19 mar ) - - - - - ib's mean - - - - central bank of chile actual mean ( 1 ) excludes goldman sachs and merrill lynch. ( 2 ) up to 24 march 2008. sources : central bank of chile based on a sample of investment banks ( ib ), consensus forecast and international monetary fund. we are in the presence of a significant relative price shock. the relative price of foodstuff and energy has changed in a number of countries. given the persistency of these international relative prices changes, domestic prices are adjusting accordingly, giving the appropriate signals for resource reallocation. chile is an interesting case in this respect. relative food prices for several countries ( ratio ) 1, 2 1, 2 1, 1 1, 1 1, 0 1, 0 0, 9 0, 9 0, 8 0, 8 0, 7 0, 7 usa mexico chile euro zone china brazil new zealand sources : each country ’ s central bank and statistics bureau, bloomberg and international monetary fund. relative energy prices for several countries ( ratio ) 1, 6 1, 6 1, 4 1, 4 1, 2 1, 2 1, 0 1, 0 0, 8 0, 8 usa mexico chile euro zone china brazil new zealand sources : each country ’ s central bank and statistics bureau, bloomberg and international monetary fund. the impressive scale of the supply shocks and their transmission to chilean domestic prices can be appreciated by comparing the unusual increase of some prices in 2007 with their average increase since the year 2000. non - perishable foods rose by nearly 15 % last year, while only around 2 % per year in 2000 - 2006. the prices of fresh fruit and vegetables – even considering high - price years like 2002 and 2005 – fell by an average of nearly 2 % between 2000 and 2006, while in 2007 they increased by more than 30 %. during last year, the price of gasoline unexpectedly increased by almost 15 %. one characteristic of the chilean economy is that changes in
addition, the persistence of relatively high inflation is likely to diminish the degree to which expectations are anchored. on the one hand, inflation expectations may increase, making it costlier to bring it back down. on the other hand, medium and long term inflation expectations are likely to become more sensitive to shocks, introducing undesired volatility to the economy with the associated costs of said volatility. all this can derive on an inflation spiral, fueled by higher prices, higher indexation practices, accelerating wages and increases in inflation expectations. these processes can be very persistent and extremely costly to the economy. in some cases they may even result in sudden uncontrolled inflation acceleration with catastrophic consequences. nevertheless we have learnt the lesson, and we know today the importance of price stability and appropriate risk management. references bernanke, b. ( 2007 ), β€œ inflation expectations and inflation forecasting, ” speech delivered at the monetary economics workshop of the nber summer institute, cambridge, massachusetts, july 10. de gregorio, j. ( 2007 ), β€œ comments, ” in clarida, r. ( ed. ) g7 current account imbalance, sustainability and adjustment, nber and chicago university press, also as documento de politica economica no. 115, banco central de chile. fatas, a. ( 2002 ), β€œ the effects of business cycle on growth ”, en n. loayza y r. soto ( eds. ), economic growth : sources, trends and cycles, banco central de chile. gali, j. y l. gambetti ( 2007 ), β€œ on the sources of the great moderation ”, mimeo, upf. mishkin, f. ( 2008 ), β€œ monetary policy flexibility, risk management, and financial disruptions, ” speech delivered at the federal reserve bank of new york, january 11. obstfeld, m. and k. rogoff ( 2007 ), β€œ the unsustainable current account revisited, ” in clarida, r. ( ed. ) g7 current account imbalance, sustainability and adjustment, nber and chicago university press. ramey, g. y v. ramey, ( 1995 ), β€œ cross - country evidence on the link between volatility and growth ”, american economic review, vol. 85, no. 5, pp. 1138 - 1151.
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address the threat to the information systems. the forums such as this provide great opportunity to interact bis central bankers ’ speeches and understand the role that each one of us has to play and to also ensure that our actions and plans are complementary and not at cross purposes. cyber security preparedness – five commandments for safety in banking 14. let me start with a most common requirement. thou shall know your customer – which is my first commandment. all of us are aware of the requirements relating to know your customer or kyc as commonly referred to. much has been said, discussed and detailed about kyc that i shall not repeat all of them ; suffice to say now that it is essential to know our customer well or else we shall have to face the consequences which may be detrimental to our business objectives. 15. the second commandment of mine states that thou shall know your employee. most of the cyber frauds have some direct or indirect role of an insider, who generally happens to be an employee of the organisation which has been the target of the cyber security attack. there is an urgent need for an organisation to not only perform the antecedent verification of an employee at the time of recruitment, but also continuously monitor employee behaviour, trends in operational usage of the organisational resources, interaction levels with peers and subordinates and the like. today, it tools provide a lot of information on employee behaviour and patterns ; it is essential that organisations ascribe adequate importance to these aspects. 16. the third commandment reads as follows : thou shall keep your it systems up - to - date and free of all risky components such as viruses, spams, malware, spoofing software and so on. today, there are centralised it system facilities which can ensure that the updates are implemented centrally and also monitored centrally. 17. the fourth commandment is thou shall provide for maximum it governance. the broad requirement in this area relates to the need for ensuring good it practices such as β€˜ maker and checker ’ for financial transaction processing, a four - eyes principle for it based operations, regular monitoring of system and operational logs, conduct of regular, periodical and well defined it system audit followed by suitable corrective action wherever required, and a separate distinct ciso ( chief information security officer ) who would continuously monitor the quality and efficacy of it and is security in the organisation. 18. my final commandment is thou shall ensure continued cyber security awareness amongst all players in the chain. the world of
mall. by the way, my classmate, bobby claudio, will tell you about this - the power of the malls. when i talk to foreigners, they marvel at how many people are in our malls. you explain to them, the traffic is [ like ] this. [ they ask, ] " what is that [ volume ]? [ is it ] per year? " no, that is per month. the real problem is growth - sooner or later, unless met by rising exports - grinds to a halt because the current account deficit will get larger. so, the real question is : how do we attract manufacturing fdi [ foreign direct investment ]? by the way, it is not a problem in banking. the philippines is the primary source when it comes to global services. for 1 / 6 bis - central bankers'speeches instance, jpmorgan has 20, 000 employees here. if we can have the same success somewhere else [ in different sectors of the economy ] - mining has already been mentioned - then growth will continue. fortunately, we do not have to step on the brakes too soon because the central bank fx [ foreign exchange ] reserves are high. in other words, if we get a bad year or two, the central bank can actually sell some of its fx reserves. well, of course, if it keeps doing that, then the central bank fx reserves fall, confidence in the currency will fall, and we will have all sorts of problems that we have had historically. by the way, i started too soon. i should greet all my friends. [ pcci president ] george barcelon. we graduated the same year, but i did not have grade 7 and kinder. addressing the inflation question your [ pcci's ] press release is that " the government must act immediately to reduce inflation in the first quarter of 2023. " from what i see, a lot of important things are already happening. for instance, the importation of sugar took a long time, but it is now finally coming. by the way, in the case of sugar, all the protectionist policies have been embedded there for decades. so, it is not easy [ to reverse ]. of course, one can say that it is about time that we review [ our sugar importation policy ]. when you have to close bottling plants because of the shortage of sugar, what you have is a problem. the economy is growing rapidly. and if you say " do not import
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mid - 2018. clearly, this objective cannot be achieved without a strong commitment from the greek authorities to continue implementation of the reforms necessary to bring the fiscal stance on a sustainable path and to support growth. over the past years, greece has achieved a significant adjustment in terms of reversing the twin deficit of fiscal and trade balance. greece is moving towards a more outward - oriented economy with a prudent fiscal stance. the challenges, however, remain considerable, and it is essential to maintain the momentum and persist with the reform efforts to have a sustained improvement. regaining market access needs to be also based on restoring debt sustainability. to this end, the full implementation of the programme needs to be complemented by a set of debt - mitigating measures in accordance with the eurogroup agreement of 25 may 2016. this in turn can provide the assurance that markets require for financing the future needs of the greek economy. 1 / 4 bis central bankers'speeches what will happen to greece if this programme is not successful either? is there a plan b? there are already rumours and scenarios of a fourth memorandum of understanding ( mou ). this is not an option that anyone is considering. it is vital for greece that the third programme is a success. what do you believe will be the final outcome of the discussions on greek debt? will the interventions that will be decided now be enough to ensure the much talked - about β€œ sustainability ”? the ecb supports the need for debt measures in line with the eurogroup agreement of 25 may 2016. the nature of the measures is for the euro area member states to decide. the international monetary fund ( imf ) argues that greek debt is not sustainable and that the primary surpluses foreseen in the july agreement will be difficult to achieve. greece ’ s eu creditors take a different view. doesn ’ t this disagreement between the institutions send mixed signals to the international markets and to investors? all the institutions have voiced concerns about the sustainability of greek debt. there are different views on the primary surplus which the measures included in the mou can deliver, but diversity of views is in itself useful : risks should be highlighted and accounted for by specific debt measures. let me say again that i consider imf participation to be a factor of credibility for the programme. do you agree with the view that the policy mix applied in greece, with successive tax increases, spending cuts and high targets for primary surpluses, is β€œ deadly ” for economic growth? bringing public finances back into
mario draghi : interview in handelsblatt interview with mr mario draghi, president of the european central bank, in handelsblatt, published on 2 january 2015. * * * mr president, the pope is of the opinion that, these days, europe is looking old and sick. do you share his opinion? draghi : europe needs to regain its self - confidence after the crisis. this cannot happen by miracle. it hinges upon european governments and european institutions. it requires the introduction of reforms and a stable financial framework. this way, european citizens will regain confidence in their future and their opportunities. confidence is the prerequisite for a society in which people buy and invest. europe can do that and i am firmly committed to that goal. the pope says that, also for the sake of the rest of the world, europe should regain youth and health, and it is in our power to make it happen. what is causing this lack of confidence that you refer to? draghi : it is a legacy of the various crises that happened in 2008 and 2009 which clearly revealed the weaknesses in the old framework. and what did you find? draghi : we found that the debt levels of banks and nation - states were too high. important rules of a market economy – for example, the rule that risk and responsibility go hand in hand – had been forgotten. all this contributed to shatter the confidence of many people in europe. this is why europe is in need of structural reform. i have been saying this for a very, very long time. i can only repeat it. you keep saying it but you are not being heard. the ratio of debt to gdp has continued to rise everywhere in the west. in europe, the government debt to gdp ratio has risen by almost 50 % since the start of the financial crisis in autumn 2008. at the moment, only five of the 18 euro area countries do not exceed the debt limits laid down in the stability and growth pact. draghi : this is partly due to the fact that, in some parts of europe, there has been absolutely no growth over the past few years. however, more recently, most countries have started to grow again, though weakly, and to put their fiscal positions in order and to undertake structural reforms. and, as a result, debt levels are falling for the first time. but, this takes time. moreover, progress on the important structural reforms – more flexible labour markets, less bureaucracy, lower taxes – is clearly
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increased market uncertainty in the euro area and worldwide continue to present challenges to accurate loan - loss forecasting. furthermore, the continuing dislocation – to date – in the transmission of monetary policy throughout the euro area presents banks in stressed countries like ireland with profitability challenges, especially in respect of tracker mortgages ( whose running yield is tied to the ecb policy rate ). since march 2011, economic conditions ( both in ireland and in ireland ’ s main international trading partners ) have generally been worse than the base case employed in pcar2011, but rather better than the stress case. of course in the coming years the implementation of basel 3 will also lead to higher capital ratios. the aim must be to have the banks return to sufficient profitability in a stable overall the deleveraging losses are the highest component. partly this reflects the unavoidable discount that would be incurred by a seller of opaque loan contracts ( even if β€œ firesale ” conditions do not prevail ), partly reflecting the informational disadvantage of likely purchasers. note, however, that this figure should be interpreted with caution inasmuch as prospective hold - to - maturity losses on the assets to be deleveraged were not separately evaluated. as such the loss shown on deleverage overstates the cost actually incurred by having to dispose of assets rather than holding to maturity. bis central bankers ’ speeches environment so that additional needed capital in future years can come from investors other than the state. instruments used just as with the previous capital increases, the going concern banks worked to reach the objectives as far as they could by liability management exercises and the sale of non - core assets. in the case of bank of ireland, some new cash was raised from issuance of equity. when a government recapitalises a bank, it generally provides an asset to the bank in return for the acquisition of a capital claim on the bank. as things have worked out, to a first approximation, the irish government ’ s practice has been to inject cash into going concern banks ( aib, bank of ireland, ilp ), and non - marketable promissory notes into the entities now being wound down ( ibrc, formed from the former anglo and inbs ). the cash was sourced either from the national pension reserve fund, a sovereign wealth fund established by the irish government in the late 1990s at a time of fiscal strength, or directly from the exchequer. the promissory notes represented a besp
the government of the day to include these two failed entities in its blanket guarantee. bis central bankers ’ speeches table 1 increasing recapitalisation requirements for irish banks, 2009 – 11 figure 1 components of phase 3 ( pcar2011 ) recapitalisation ( € billion ) figure 2 cumulative recapitalisation requirements on irish - owned banks by announcements date 2009 – 11 ( € billion ) bis central bankers ’ speeches
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##rimonious budget dispute in congress was taking its toll and the us dollar was showing signs of weakening. this situation was compounded by weak economic data in the first half of 2011, which pointed to the risk of another global recession. swiss franc appreciation accelerated in response to these developments, with the currency reaching historic highs against the euro and the us dollar and threatening to plunge switzerland into a deep recession ( cf. chart 3 ). the discontinuation of the minimum exchange rate in january 2015 the minimum exchange rate – which was to remain in place for almost three and a half years – halted the appreciation of the swiss franc and helped to ease tensions. when we discontinued the measure in january 2015, the decision was criticised in some quarters. this is understandable, as the scale of the minimum exchange rate ’ s negative side effects was not yet fully apparent. however, the discontinuation of the minimum exchange rate was bis central bankers ’ speeches unavoidable ; conditions had changed and an analysis of the risks clearly favoured the decision to remove the floor. the overall situation had improved significantly since the introduction of the minimum exchange rate. the economy had regained momentum, confidence in the us dollar had been restored and uncertainty had decreased considerably. then there was the issue of divergence : the monetary policies of the us federal reserve and the ecb were moving in opposite directions. as the markets were expecting the americans to tighten and the europeans to substantially loosen monetary policy, the euro had been weakening against the us dollar since mid - 2014. not just the euro, but the swiss franc, too, had been losing ground against the us dollar. in contrast to summer 2011, when the swiss franc had been significantly overvalued against all other currencies, by the time of the discontinuation, swiss franc strength had given way to euro weakness. the increasingly divergent monetary policy stances of the federal reserve and ecb were also putting pressure on the minimum exchange rate against the euro. the snb was forced to intervene in the foreign exchange market on an ever larger scale. this was reflected in the monetary base ( the volume of liquidity created by the snb ), which had expanded in several surges since 2009 and was now rising sharply again ( cf. chart 4 ). given the changed international environment, the minimum exchange rate of chf 1. 20 per euro was no longer sustainable. the snb could only have enforced it through ongoing foreign currency
bankers ’ speeches chart 5 interest and exchange rates from 2012 to the present day bis central bankers ’ speeches
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for allocating tools, clarity in the division of responsibility and in legal status. this is problematic as it has contributed to delaying measures that can counteract the high and growing household indebtedness. in their evaluation, goodfriend and king point out that both the mandate and division of responsibility for macroprudential policy are in need of review. i agree. without going into more detail about their concrete recommendations, i can see that, based on a socioeconomic efficiency perspective, it would be appropriate to utilise the expertise, experience and resources in the macroprudential policy area, possessed by the riksbank in its capacity as the central bank, in a better way than is currently the case. there are many different ways of doing this, of which, from both an international and national perspective, the most efficient in the long run would probably be to merge the riksbank and finansinspektionen. this would gather our skills and expertise together and strengthen sweden ’ s voice internationally. this is certainly a far - reaching change, the collective effects of which would most definitely need to be analysed very thoroughly. it is not in line with the current structure, but when the world around us is changing, our central agency structure sometimes also needs to do the same. at the beginning of the 1990s, the bank inspection board was merged with the private insurance supervisory service into finansinspektionen. in the majority of eu member states, the central bank and banking supervision are nowadays under the same roof. there are of course other less far - reaching solutions that would be possible if we wanted to improve our swedish macroprudential policy structure. regardless of the solution chosen, each has its specific challenges as regards governance and accountability. but having a well - functioning and effective arrangement for macroprudential policy is extremely important for sweden. what the best arrangement might be is something i hope the riksdag will reflect on in conjunction with the planned review of the sveriges riksbank act. the time this will take is certainly beyond my active time. my focus is on what is good for sweden. the whole of sweden ’ s welfare is built on the endeavour to increase productivity. this is clearly true within the private sector and it would be strange if this endeavour did not also lead to some form of structural transformation as regards public sector regulation and bis central bankers ’ speeches oversight of the financial system, especially in light of our large,
banks that have more geographically diversified loan and deposit portfolios are more resilient to local shocks and can keep their lending activity more stable. we must hence continue enhancing the conditions for cross - border banking in the euro area. the first step is to reduce the legacy non - performing loans on banks ’ balance sheets which have hampered cross - border lending and m & a transactions over the past few years. 6 that would then pave the way for the completion of the banking union, which we need to reinforce in order to boost confidence in the resilience of the whole financial sector. financial market fragmentation may be exacerbated by perceived or actual differences between the national safety nets for banks which undermine the banks ’ capability and willingness to expand their cross - border activities. the introduction of a common and credible fund for the single resolution mechanism ( srm ) would inspire confidence that banks can be resolved more efficiently, regardless of their location. likewise, the creation of a european deposit insurance scheme ( edis ) would enhance depositor confidence throughout the euro area and create a level playing field for banks. the main benefit of edis is that it will generate confidence in the financial system as a whole. provided that the standards on minimum requirements for own funds and eligible liabilities ( mrel ), total lossabsorbing capacity ( tlac ) or other risk reduction measures are not eroded, edis will probably never be deployed at all. at the same time, we should not fail to mention that especially smaller institutions have next to no experience in accessing capital market funding. this makes it more difficult to rigorously apply the mrel requirements. moreover, the introduction of such security mechanisms at european level could give national governments less incentive to restrict the free flow of capital and liquidity ; this would in turn promote cross - border activity. but edis must be incentive - compatible. its introduction must not result in any retrospective sharing of the burden of legacy non - performing loans. and in order to avoid systematic transfers between banking sectors, the banks ’ contributions to the fund should be structured to reflect banks ’ risk appetites. strengthening the institutional architecture of economic and monetary union these economic and fiscal reforms are essential in order to make the euro area more resilient. however, they cannot fully prevent the risk of severe economic shocks. in the future too, effective crisis management will be indispensable to protect the member states from serious imbalances. in this respect, i am very much in favour
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sabine lautenschlager : cyber resilience - a banking supervisor's view statement by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the single supervisory mechanism, at the high - level meeting on cyber resilience, frankfurt am main, 19 june 2017. * * * this week i learnt that the first computer virus dates back to 1971. it spread via the arpanet, which was a precursor of today ’ s internet. the arpanet connected about two dozen universities and government hosts in the united states. the virus had been written for experimental purposes and was not malicious. it just displayed a simple message on infected computers : β€œ i ’ m the creeper : catch me if you can ”. things are a bit more complex today, and the outcome of cyber incidents much worse : they can disrupt business, cost a lot of money and destroy reputations. and indeed, the potential for damage is great, as so much relies on it and so much happens online – the financial sector is a case in point. as you all know, banks have always been attractive targets for criminals. although the damage has been limited so far, we banking supervisors take cyber risk very seriously. and we insist on banks doing the same. cyber risk has been a priority for ecb banking supervision from day one. in 2015, we established a working group that had three goals. first, to get an overview of how supervisors deal with such risks both at national and international level. second, to get an overview of how prepared banks are for cyber risk. and third, to propose to the supervisory board a strategic direction and a dedicated work plan on cyber risk. we have learnt a lot over the past two years. and we have used it to address this risk from several different angles. for us, one of the first steps was to establish a cyber incident reporting framework. we conducted a successful pilot phase in 2016. and now we will implement a long - term solution for all those banks that we directly supervise. as from this summer, they will be required to report all significant cyber incidents. this will help us to assess more objectively how many incidents there are and how cyber threats evolve. it will also help us to identify vulnerabilities and common pitfalls. in addition to our ongoing supervision we also perform thematic reviews on cyber security and it outsourcing. these reviews help us to assess the risks
facing each bank as well as the risks that might affect the entire sector. and they also help to raise awareness of cyber risk at board level. the insights that we obtained in 2015 and 2016 were applied in three ways. first, they informed a dedicated section in our methodology for on - site inspections. second, they were used to create new analytical tools for our off - site supervisors. and third, they were used to produce a cyber risk profile of each bank. so we are working to obtain a comprehensive picture of what is happening out there. but how to deal with cyber risk? well, the world health organization says that the best way of stopping diseases from spreading is basic hygiene : washing your hands. and the same is true for it. basic it β€œ hygiene ” can take banks a long way. have the latest updates been installed? are passwords strong enough? have backups been made and their restoration tested? such simple things are so important, but often 1 / 2 bis central bankers'speeches neglected. so we are taking a close look at our banks to see whether they are following the relevant standards and best practices. and there are plenty of these ; i cannot stress this enough. we also work with the european banking authority, the eba, on how to supervise cyber risk in an effective and harmonised manner across europe. as for the euro area, we plan to issue our supervisory expectations on how banks approach it risks in general. and what we expect clearly goes beyond basic it hygiene. this will be an important step for two reasons. first, it will help to forge a common understanding of it risks between supervisors and banks. and second, it will help to ensure a harmonised treatment. to increase awareness and to communicate our expectations, we will organise seminars and discussions with banks. and we also look beyond the euro area, of course. we cooperate with supervisors worldwide to align priorities and exchange best practices. to sum up, we take cyber risk very seriously, and we approach it from various angles. my advice to banks is to do the same. it is vital to be alert and ready to react. thank you for your attention. 2 / 2 bis central bankers'speeches
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more sophisticated demand, banks introduced new channels of services such as internet banking and tele - banking to satisfy the technology savvy demands of emerging new generation of customers. these efficiency gains have been achieved without forsaking comprehensive risk management. on the contrary, banks have begun to move away from collateral - based lending to risk - based approach. at the same time, financial literate board of directors has bolstered its oversight function to ensure that banks are managed in a sound manner. in the area of credit risk management, credit scoring has been widely applied in the retail loan originating process, whereas internal credit rating models have been used for significant corporate loan portfolios. moreover, banks also have in place security measures, contingency plans and auditing standards within their system of internal control to monitor reputational risk, strategic risk and other risks. the logical question to ask here is how do we ensure that these positive developments will maintain their momentum and that the banking sector will remain strong and sound amidst a more liberalized environment, fierce domestic and external competition, and the advent of more advanced technology and financial innovation? we can wait passively for external forces to inflict changes on us, or we can chart our own path of development in anticipation of any change. the asian crisis brought it to the fore that complacency when met with abrupt and radical reforms as a result of external forces could entail enormous output loss and social cost. thus, we must do what we can to ensure that the banking system is up to meeting any challenge. this brings us to the second point i want to make - what the authorities intend to do to enhance the financial system ’ s competitiveness and its capability to withstand forces of change in this age of globalization. the authorities are quick to grasp the opportunity of healthy economic and banking conditions conducive to embarking on a structural reform, with the announcement of the financial sector master plan. thorough discussion on the master plan will require a separate session of its own. so, let me just pick some of its key features that will have the most significant impacts on the structure and efficiency of the banking industry. first and foremost, under the β€œ one presence ” principle, existing financial institutions must choose one form of deposit - taking financial institutions ; be it a commercial bank, retail bank, foreign bank subsidiary or foreign bank full branch. this principle will foster a new structure that is clear, competitive and efficient. specifically, the structure whereby many types of financial institutions offer
essentially the same services to the same pools of customers and whereby a financial group has more than one type of deposit - taking institutions must go. financial institutions will therefore have to address the issue of redundancy resulting from this principle. moreover, the master plan has introduced additional competitive pressure to the banking industry. qualified foreign banks that opt to upgrade to subsidiaries will be able to open some branches, adding healthy competitive pressure to the market. on the part of regulators, we will streamline regulations to ensure a smooth transition process and to provide adequate flexibility for banks to conduct their businesses. for instance, the authorities are working to resolve tax impediments to mergers. moreover, banks have been allowed to outsource their administrative works and cut cost on redundant operations by back - office sharing. while the structural reform is under way, we continue to forge ahead with our prudential supervision to maintain banking system soundness. in this regard, there are a few key regulations in the pipeline, some aiming at expediting the npl resolution and others at strengthening the risk - based supervision. the bank of thailand is rolling out a new measure in the second half of this year with a view to giving banks a nudge to deal with npls head on. for npls that have long been pending without proper restructuring or legal actions, financial institutions will be required to set aside provisions for the collateral at an increasing rate, depending on the overdue period. essentially, banks will be required to make provision in full, regardless of the collateral value, for loans that have been non - performing for over four years. also, the asset management corporation, set up exclusively to buy npls from the finance companies that were closed down during the crisis, will be enabled to buy npls of banks. we are now in the process of amending the corporation ’ s charter. on risk - based supervision, the bank of thailand has issued a market risk supervision policy framework at the end of last year - a timely move given a possible upward trend of interest rates. this measure will ensure that financial institutions instill mechanism to manage market risk commensurate with their risk - taking activities, especially in the trading book. recognizing the need for financial institutions to adjust, the bank of thailand will implement the measure in transitional phases. by june 2005, banks will be required, for the first time, to maintain capital fund against market risk. prior to that, they will have to comply with guidelines on internal control and trading book
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interesting speeches on various aspects of this challenging topic in our conference programme for this afternoon, which deal with interaction and repercussion effects between financial reporting, financial regulation and financial stability. given that accounting data are used as the basis for financial reporting, regulatory reporting, and for market and financial stability analysis, you may hear some interesting views on, for example certain accounting approaches, and with regard to the extent of disclosures and transparency. turning to the third part of our conference that will deal with central bank balance sheets during the crisis, the financial crisis required unconventional monetary policy tools and liquidity support that had a considerable impact on the size of many central banks ’ balance sheets, influenced their risk profile and left marks on their financial buffers and profit and loss accounts. the eurosystem reacted to the financial crisis by increasing its intermediation in bank funding markets via an increased range of monetary policy instruments. consequently the eurosystem risk profile partially shifted and increased, from fx rate and gold price risk to credit risk related to domestic assets. any related counterparty default risk is however mitigated by adequate underlying collateral which provides an additional guarantee. the operational framework was adapted accordingly – examples thereof are the extension of credit maturities, outright purchase programmes for securities and changes to the collateral framework. similar developments were experienced by many central banks around the world. in the case of the eurosystem, the balance sheet expansion was largely due to an increase in the size and maturity of temporary lending operations under the fixed rate full - allotment tender procedures. the eurosystem had increased its lending to banks after tensions in the money market emerged in august 2007, but the increase in its balance sheet size remained relatively limited until september 2008 ; it became significant only after the collapse of lehman brothers. as of mid - 2012, excess liquidity and, concomitantly, the size of the eurosystem balance sheet have started to decline again. on 23 may 2014, monetary policyrelated lending to euro area credit institutions stood at eur 640 billion, which is roughly half as much as at the peak in 2012. other major central banks have conducted mainly largescale outright asset purchases. in the aftermath of the financial crisis, the eurosystem ’ s risk control frameworks were developed further and refined. the eurosystem ensures that it is protected in financial terms, inter alia, through the implementation of prudent risk management and accounting frameworks, and through a cautious allocation of its invested
just as cautious as we would expect banks to be. and we must remember that these technological advances are no substitute for supervisory judgement, which will still play an important role in the supervisory approach, supporting the outcome of supervisory assessments and underpinning the use of discretion in supervisory actions. 4 / 5 bis central bankers'speeches conclusion ladies and gentlemen, i have touched on two major structural changes. now it is time to come to a conclusion. as i said at the beginning, the job of a supervisor is to be slightly less optimistic than the average person. we have to make sure that banks are ready for anything, even for a bad outcome. so we will continue to push banks to prepare for brexit and any other challenges we see coming their way. and although we might be less optimistic and more cautious than others, we do not shy away from innovation. against the backdrop of brexit, we have put forward many ideas on how to improve the european supervisory framework. and we see technology as an opportunity to make supervision more efficient and effective. the world is changing constantly, and we all have to adapt – banks as well as supervisors. 1 weinstein, n. d. ( 1980 ), unrealistic optimism about future life events, journal of personality and social psychology, 39 ( 5 ), pp. 806 – 820 ; sharot, t., riccardi, a. m., raio, c. m. and phelps, e. a. ( 2007 ), β€œ neural mechanisms mediating optimism bias ”, nature, 450 ( 7166 ), pp. 102 – 105. 2 broeders, d. and prenio, j. ( 2018 ), β€œ innovative technology in financial supervision ( suptech ) – the experience of early users ”, fsi insights on policy implementation, no 9. 3 ibid. 5 / 5 bis central bankers'speeches
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to look forward to, and prepare to face the challenges of the future. at the core of the bank ’ s statutory mandate is monetary policy and financial regulation. in the coming decades, our monetary policy will continue to prioritise, above all else, the control of inflation. bis central bankers ’ speeches this is because low and stable inflation is a precondition for mobilising high levels of savings and investment and for efficient resource allocation, which are essential for sustained economic growth. along with other central banks around the world, the bank of uganda prioritises the control of inflation because it is the only institution within the country, which has the tools to do this, through its monetary policy. for most of the last 25 years uganda has enjoyed relatively low inflation, averaging approximately 6 percent per annum. that achievement would not have been possible had the bank not put inflation at the forefront of its monetary policy objectives. bank regulation and supervision must constantly evolve to meet new challenges arising from the structure and technology of the financial services industry. in the coming decades, the financial services industry will be transformed by information technology. this has already started to happen with the advent of mobile money. it is also likely that cross border banking will become even more important than it is today, especially where institutional arrangements such as the east african common market enable services to be traded freely across borders. the priority objectives of our bank supervision will remain the protection of depositors and the preservation of financial system stability. a key challenge for the bank will be to ensure that the introduction of new financial products and new ways of delivering financial products, which will be made possible by technological innovations and which offer immense benefits to customers, can be achieved in a manner that is consistent with our key prudential objectives. in addition, the increasing importance of cross border banking means that effective bank supervision in uganda will not be possible without close collaboration with our counterparts in other countries. economic integration in east africa is vital for uganda ’ s long term prospects for development. the east african community ( eac ) partner states have a three - phase programme for economic integration in the region, which involves : first, the customs union ; second, the common market ; and, third, the monetary union. the bank has been an active participant in the preparations for eac monetary union under the monetary affairs committee of the regional central banks. monetary union will be very challenging to implement effectively, and we must study and heed the lessons to be learned from the difficulties faced by
remarks by prof. emmanuel tumusiime - mutebile, governor, bank of uganda uba informal dinner residence of the ceo, stanbic bank kyadondo road, nakasero 12 may 2017 let me begin by thanking you all for coming to this informal dinner. as always on these occasions i am delighted to see you all here. i want to make a few brief remarks about the current state of the economy and the prospects for the near and medium term. when we open our newspapers in the morning we often read articles about how the economy is performing badly. but much of what is written is either exaggerated or misconstrued. it is true that real growth in the current fiscal year will be lower than was initially projected, but that does not mean that the economy is in recession – which entails a contraction of output. there is a slowdown in economic growth but this should prove to be only temporary. page 2 of 9 as we discussed at the last uba meeting in april, real economic growth in the current fiscal year has been pulled down by the supply side shock to agriculture, caused by the drought. the quarterly gdp data from ubos indicate that real output was about 1. 5 percent below its trend – which is a proxy for the equilibrium level of output - in the first half of 2016 / 17, with most of the shortfall due to lower than trend agricultural output. we do not yet have the quarterly gdp data for the third quarter of 2016 / 17, but the bou ’ s composite indicator of economic activity – which is a high frequency indicator – shows that there was a rebound in economic activity in that quarter, with an acceleration of growth in both the industrial and services sectors. page 3 of 9 given the trends in the third quarter of the fiscal year and the fact that we are now enjoying better weather for agriculture, i expect that in the second half of the fiscal year, the economy should claw back some of the output losses which it suffered in the first half. however, we are forecasting that real growth for the full fiscal year will be only about 4 percent, which is one percentage point below potential. nevertheless, the supply side shock to agriculture should be reversed in the next fiscal year, which will enable real output to revert to its medium term trend. this means that we should experience growth of more than 5 percent in 2017 / 18. i also want to refute the claim that the economy is suffering from a lack of demand. of
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##s occurring, and therefore contributes significantly to favourable financing conditions for the private sector. at the same time, it allows an appropriate medium - term orientation of fiscal policy which fosters confidence and thereby growth. in order to fully reap the benefits of this framework, it is important that countries respect its objectives and implement appropriate consolidation plans where needed. hence, the commitments made in the stability programmes and the requests to further improve fiscal positions, as subsequently agreed in the ecofin council, must be met in full. these benefits would be magnified if the underlying policy measures were part of a comprehensive reform strategy to support economic growth. it is, in fact, the implementation of structural reforms at the micro level that ultimately raises the production potential, improves flexibility in the economy and makes the euro area more resilient to external shocks. clearly, lack of progress in structural reform is one of the key factors currently hampering a recovery in confidence. therefore, the governing council welcomes a recent communication by the commission on the implementation of the broad economic policy guidelines. it emphasises the need to step up the pace of labour market reform to achieve the lisbon objectives, to fully implement the internal market and to enhance competition in product markets as well as to foster capital market integration, entrepreneurship, a knowledge - based economy, and research and development. we fully share the commission ’ s assessment that policy inertia and backtracking are widespread. against this background, renewed momentum in the process of structural reform will be crucial to foster confidence among consumers and investors.
european central bank : press conference - introductory statement introductory statement by mr willem f duisenberg, president of the european central bank and mr lucas papademos, vice - president of the european central bank, at the press conference held in frankfurt, 6 february 2003. * * * ladies and gentlemen, the vice - president and i will report on the outcome of today ’ s meeting of the governing council of the ecb. we have reviewed monetary, financial and economic developments and have incorporated new information into our assessment. overall, the current monetary policy stance remains appropriate to preserve a favourable outlook for price stability in the medium term. consequently, we have kept our key interest rates unchanged. their low level should help counterbalance the negative effects on economic activity that currently stem from the high degree of worldwide uncertainty and should, thereby, contribute to a sustainable economic recovery in the course of 2003. for the time being, we still assume that the high degree of uncertainty will decline in the course of this year. however, at this juncture it is very difficult, if not impossible, to form a conclusive judgement on the impact of geopolitical developments on the world economy in general, and the euro area in particular. turning to the analysis under the first pillar of our monetary policy strategy, the three - month average of the annual growth rates of m3 declined to 6. 9 % in the period from october to december 2002, from 7. 1 % in the period from september to november 2002. the continued strong monetary growth reflects an ongoing pronounced preference for liquidity in an environment of high financial, economic and geopolitical uncertainty. however, it also mirrors the low level of short - term and long - term interest rates in the euro area. although liquidity remains ample, it is unlikely at this stage that it will give rise to inflationary pressures, given the current economic environment and the expectation that some of the portfolio shifts will be reversed once the financial market uncertainty diminishes. this assessment is also supported by the continuing moderate growth of loans to the private sector. as regards the information under the second pillar, economic activity in the euro area remained subdued around the turn of the year, as suggested by recently published data and survey information. these indications are broadly in line with previous expectations which suggest a gradual increase, starting in the second half of the year, in real gdp growth rates to levels close to potential. whereas the appreciation of the euro over recent months may contribute to dampening export growth to some
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46th acu board of directors meeting colombo, sri lanka / 13 july 2017 address delivered by dr. chiranjibi nepal, governor of nepal rastra bank honorable chairperson mr. indrajit coomaraswamy, fellow governors and members of the acu board of directors, acu secretary general mrs. lida borhan - azad, distinguished delegates and observers, ladies and gentlemen, 1. it gives me immense please to participate and address this 46th annual meeting of board of directors of the asian clearing union in this beautiful city of colombo. at the outset, i would like to extend my sincere appreciation to governor mr. indrajit coomaraswamy and the entire team of central bank of sri lanka for the warm hospitality extended to us and also for the excellent arrangements made for this meeting in colombo. fellow governors and distinguished delegates 2. allow me now to shed some light on some current developments of the nepalese economy. after almost 20 years, elections for the local governments concluded recently following the promulgation of constitution of federal democratic republic of nepal. the provincial and national level elections are to be held within 21 january 2018. the political uncertainty has now vanished and the economy is now ready for high growth trajectory. 3. most of the macro - financial data of the first ten months of 2016 / 17 show that the economy is gaining traction. nepal is the third fastest growing economy in the world in 2017 according to a report of the world economic forum. the economy rebounded strongly in 2016 / 17 following a good monsoon, reconstruction efforts after the 2015 earthquake and normalization of trade with india. the gdp growth estimate of 6. 9 percent demonstrates optimistic growth outlook at least in the short term. 4. the government is targeting a growth of 7. 2 percent in 2017 / 18 as economic activities are expected to expand due to increased government expenditure from the elected local governments. acceleration in reconstruction works will potentially increase trade deficit further at least in the near term. expected increase in foreign aid and foreign direct investment will, however, be instrumental in keeping the country ’ s balance of payments in surplus. decelerated growth in migrant workers'remittances is moderating deposit growth. going forward, bridging the gap between deposit and credit growth is the key for reducing the financial frictions. 5. the consumer price inflation has been hovering below 4 percent since the last six months. this is attributed to the previous year's base price effect and improved supply situation. 6
has remained lopsided, as many still do not have access to finance due to low financial literacy rate. 11. safe, sound and self - regulated bfis, transparent and consumer friendly banking transactions, adoption of international best prudential norms and best supervisory practices, mitigation of the systemic risks through advanced approach of supervision, and ultimately safeguarding financial stability have always been the prime aims of nepal rastra bank as a regulator and supervisor. 12. nrb has taken a number of initiatives to consolidate the financial system. it introduced merger and acquisition policy a few years ago for preserve financial stability. this policy has encouraged the merger of urban - centered institutions while according priority to the expansion of rural branches in the underserved areas. till now, 138 bfis were involved in merger and acquisition. out of this, the license of 94 bfis was revoked thereby forming 44 bfis. 13. in july 2015, nrb quadrupled the minimum capital requirements for bfis in order to promote financial stability, mobilize the resources needed for the long - term development financing as well as to encourage merger and acquisition of bfis. 14. the nrb is of the view that the expansion of the financial sector will be constrained without the growth of the real sector. thus, priority has been accorded to the productive use of bank credit to the promotion of the real sector and this demands the judicious use of credit and macro - prudential policies. as a competitive, efficient and healthy financial system is vital for enhancing growth, ensuring economic efficiency and maintaining macro - economic stability, a reasonable growth of the real economy is equally important to sustain the expansion of the financial services. 15. in order to establish finance - growth nexus, nrb is pursuing the financial sector development strategy ( fsds ) that aims to further consolidate the banking institutions, reduce the interest spread, introduce provisions on credit insurance and raise the banking sector ’ s contribution to the gross domestic product ( gdp ) to eight per cent. fellow governors and distinguished delegates, 16. while going through the overall acu transaction, trade routed through acu in 2015 has declined significantly by about 9 percent while in 2016, trade increased by about 21 percent. similarly, following the trend of preceding years, total transactions have surged by about 19 percent during the first ten months of the current year on y - o - y basis compared to the corresponding figure of last year. further, trade is concentrated primarily within a few member countries.
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##ulatory posture, see daniel k. tarullo, β€œ financial regulation : still unsettled a decade after the crisis, ” journal of economic perspectives, 33 ( 1 ), 2019 winter, 61 – 80. 6 / 7 bis central bankers'speeches 15 board of governors of the federal reserve system, supervision and regulation report, november 2018. 7 / 7 bis central bankers'speeches
msar reserve fund, the balance was mop11. 6 billion. as far as monetary policy is concerned, the msar continues to adhere to a policy which maintains free flow of capital, free currency convertibility, market driven interest rate and the link of the mop to the hkd. in the past year, we ensured the sufficient and timely circulation as well as the stability and convertibility of the mop through the flexible use of different kinds of monetary policy instruments. simultaneously, effort has also been made to strengthen our supervision to cope with the changing market situation. to protect the stability and healthy development of the local financial system, we have coordinated and cooperated with other government departments to combat illicit financial activities. as ever, we abide by the framework of applicable laws and regulations to carry out routine supervision on financial institutions through onsite inspection, offsite surveillance and other measures. in the past year, we did onsite inspection on 7 banks, 5 money changers, 2 exchange counters and 2 cash remittance companies. furthermore, we strengthen and perfect formulation of relevant supervisory policies. in the area of banking supervision, guideline on anti - money laundering was revised and put into force on november 12 last year. besides, consultation on the draft β€œ guidelines on the management of country risks ” has been completed and is ready for promulgation and implementation this year. β€œ guidelines on the risk management of electronic banking ” has been revised and is ready for second consultation. β€œ licensing - review and approval procedures ” for financial institutions such as banks has been finalized. it is expected that through the use of these procedures, the approval process can be made more systematic, effective and transparent. internally, β€œ onsite inspection manual ” has been revised with an aim to achieve higher degree of standardization and better efficiency in daily operation. a survey was conducted last year to assess market risk. the related findings will be used as a base to establish market risk supervision capital requirement. basel ii is planned to be implemented in macao in stages to cope with the actual market situation. under pillar i, capital charge for credit risk will be appropriately adjusted and capital charge for operational risk will be introduced. implementation will be made by taking into consideration the development of the credit market and credit risk management technique. for pillar ii, supervisory process will be enhanced. supervision and capital requirement will apply based on the nature of risk, risk management techniques, measures and standard adopted by the financial institutions. under pillar iii, banks
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norhana endut : into tomorrow's malaysia - institutions, inequality and innovation welcoming remarks by ms norhana endut, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the 2023 ameu economics summit, kuala lumpur, 13 august 2023. * * * assalamualaikum and good morning, everyone. thank you to the association of malaysian economics undergraduates, ameu, for the invitation to deliver the opening remarks for this flagship event, the ameu economics summit 2023. let me start by saying, welcome to sasana kijang! yesterday was international youth day, celebrating the energy, hope and new ideas that youths bring to the table in shaping the future of our nation. let me therefore commend the ameu for organising today's event, with the theme " into tomorrow's malaysia : institutions, inequality and innovation ", which in my view, aptly focuses on the important issues which is on our institutions, and the role they play in building a progressive and advanced malaysia. ladies and gentlemen, let me begin by borrowing a phrase from one of my professors during my phd years, the late, professor douglas north who was the 1993 nobel prize laureate in economic sciences for his work on the role of institutional change and cognitive approach to economics. he said, and i quote, " to predict the future we would have to know today what we learn tomorrow which will shape our future actions ". professor north underscored that institutions form the incentive structure of a society and thus, the political and economic institutions of a nation are the underlying determinant of a country's economic performance. to this, i would like to add that, after more than two decades in policymaking, i would argue that institutions are the sole determinant of a nation's economic development. institutions are the humanly devised constraints that structure how humans interact individually and as a society. these constraints are either formal constraints, such as rules, laws and constitutions, or informal constraints such as norms, behaviours, conventions, and self - imposed codes of conduct – and importantly, how these constraints are being enforced. north argued that learning the evolution of institutions and what drives the evolution helps inform us of the path of economic performance of a nation. what does this mean for today's discussion? 1 / 4 bis - central bankers'speeches firstly, a critical assessment of our institutions is important for us to predict where our nation is heading
assessing how their business and operations could be affected by climate risks. throughout the journey of conducting the stress test, financial institutions will uncover gaps related to data, technology, and methodologies. this serves as a starting point for the institution to assess their internal capability and find 1 / 3 bis - central bankers'speeches ways to address these gaps. in other words, the climate stress test is a forward - looking tool to help financial institutions in identifying, measuring and mitigating their climate risk exposures. when designing this stress test for malaysia, at bank negara malaysia, we have strived to incorporate learnings from other jurisdictions, including adapting and incorporating several malaysia's specific elements in terms of its economic structure and financial system. we have also incorporated feedback from domestic industry players. in this regard, i would like to take this opportunity to extend bank negara malaysia's gratitude to many of you here who have provided invaluable feedback during the drafting of the methodology paper and reporting template. we truly appreciate the open and collaborative spirit extended by everyone, an approach that continues even up to today. climate risk stress testing is still in its infancy globally. therefore, we have strived to balance between pragmatism and accuracy when specifying our requirements. where possible we have tried to work around data limitations, lack of technical expertise as well as under - developed modelling techniques. however, considerable challenges remain for financial institutions to successfully run this stress test. we will journey with you through these challenges. it is as much a learning experience for bank negara malaysia as it is for all the financial institutions running the stress test. that is one of the reasons we are all here today at this workshop. i believe that together we can overcome many of the hurdles. climate risk is a collective action problem. it may be in each individual's best interests to act selfishly, regardless of what other individuals do. however, if all individuals act selfishly, then the outcome for everyone is worse than if we all cooperate. at the country level we see this playing out in global emissions reduction. a single small country may feel that spending money to cut emissions may do little for global climate change, and hence choose not to do so. however, such situation could lead to some other, or even all, countries, to opt not to cut emission, and thus, we will end up in a bad outcome globally and having the adverse impact of unattended climate risks being faced collectively. at the individual
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michelle w bowman : closing remarks - " gender and career progression " closing remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at the joint bank of england, federal reserve bank of new york and european central bank conference on β€œ gender and career progression ”, european central bank, frankfurt am main, 21 october 2019. * * * congratulations on what i have no doubt was a productive and thought - provoking day, though one, i am sure, that also underscored the many remaining challenges for women and minorities in the professions of economics and finance. i want to thank our hosts, the european central bank, who put so much work into making this conference a success, as well as the conference organizers from all three sponsoring institutions β€” the ecb, federal reserve, and the bank of england. i also want to express my appreciation to the many researchers from universities and from other central banks, as well as the members of women's and minority committees of economics and finance associations from around the world, who are attending the conference in frankfurt. i wish that i could have been there with you to participate in the discussions. i found the conference program to be particularly interesting, and i look forward to federal reserve staff coming back to washington to share what they learned from the research and discussions. at the federal reserve, we greatly value this conference, not only for the interactions that our staff have while they are there, but also when they bring back what they learn and share it with our staff. last year, we had over 200 staff members from across the organization attend summary presentations in dc given by several staff members who had attended the conference in london. in fact, staff in washington had a " watch party " to view the webcast of today's panels. the topics of today's conference, including papers on the promotion of women, the role of culture and institutions, and the dynamics of publishing, conferences, and seminars, will all spur additional conversations and ideas for action among staff at the federal reserve. in my view, central banks have a responsibility to be leaders in addressing diversity and inclusion, not only for our own institutions, but also because of our influence on the profession as a whole. part of the value of this conference is that we, as central banks, can promote the study of these issues and discuss concrete steps that we can take together to address them. certainly, we take diversity and inclusion issues to heart at the federal reserve. 1
washington next fall to attend the third such conference, hosted by the federal reserve. we hope these conferences will inspire further work on these important topics and will highlight the issues that researchers are addressing, and more broadly promote the conversations we are having in the economic and finance professions. thank you for your work, and i look forward to seeing you at the federal reserve next year. 1 1. see www. federalreserve. gov / aboutthefed / diversityinclusion. htm 2 2. www. federalreserve. gov / publications / minority - women - inclusion. htm 2 / 2 bis central bankers'speeches
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many open questions remain on the subject of treasury market liquidity. 2 at the same time, the agenda for this conference makes it clear that there are many other important questions beyond market liquidity worthy of consideration and debate. the breadth and expertise of the attendees at this conference make this forum an excellent opportunity to advance our collective thinking on this range of important subjects. while the recent joint staff report on the events of october 15 certainly revealed that much has changed, it is also important to recognize that both private and official sector efforts to ensure a healthy and efficient treasury market have been ongoing for some time. 3 one obvious example is the treasury market practices group, or the tmpg. set up in february 2007, the what i have to say today represents my own views and not necessarily those of the federal open market committee or the federal reserve system. see regulation and liquidity provision, remarks at the sifma liquidity forum, september 30, 2015. joint staff report : the u. s. treasury market on october 15, 2014. bis central bankers ’ speeches tmpg is a group of market professionals committed to supporting the integrity and efficiency of the treasury market. 4 a core purpose of the tmpg is to develop and update a set of best practices related to trading, settlement and risk management, thereby establishing a set of behavioral norms to which market participants are expected to adhere. most recently, the tmpg updated its best practice guidance to address automated trading, and published a companion white paper on the subject. and no discussion of the tmpg can go without mention of the β€œ fails charge. ” instituted in may 2009, this practice provides a standard procedure for market participants to assess – or pay – a fee for settlement failures, and this has proven to be a highly effective remedy for curbing the volume of fails in the treasury market. 5 i want to thank the entire tmpg for their leadership in supporting the efficiency and integrity of the treasury market. i ’ d like to single out tom wipf with a personal thank you. tom has served with distinction as the tmpg ’ s chair since its inception, providing credible, balanced and independent leadership to the group. i would be remiss if i did not also mention the ongoing work of the inter - agency working group on treasury market surveillance, or the iawg. after the salomon auction bidding scandal in january 1992, the official sector established the iawg. since that time, it has been a
##goff ( 2009 ). β€œ this time is different : eight centuries of financial folly ”. princeton, nj : princeton university press. azahin, ayayegul ; joseph song ; giorgio topa ; and giovanni l. violante ( 2012 ). β€œ mismatch unemployment ”. federal reserve bank of new york staff report number 566, august. woodford, michael ( 2012 ). β€œ methods of policy accommodation at the interest - rate lower bound ”. paper presented at the federal reserve bank of kansas city economic policy symposium, jackson hole, wy. august. bis central bankers ’ speeches
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arising from effective exposures to the same hedge fund through funds of funds or from investments in different funds with similar trading strategies. current restrictions on hedge fund investors, which limit direct investors to institutions or wealthy individuals, reflect the recognition of the difficulties that a retail investor would face in adequately assessing these types of risk. but as instruments and trading strategies become more complex and intertwined, even the most sophisticated investors will be challenged to make reliable judgments about their risk exposures. likewise, complex and difficult - to - value financial instruments could be exploited as vehicles for profiting from insider trading or market manipulation, although, as history shows, simpler instruments can be used in this way as well. policymakers must be confident of their ability to detect such market abuses when they occur. a principles - based, risk - focused approach how best to respond to these daunting challenges? as i noted, there are powerful arguments against ad hoc instrument - specific or institution - specific regulation. the better alternative is a consistent, principles - based, and risk - focused approach that takes account of the benefits as well as the risks that accompany financial innovation. some commentators have sought to draw a sharp distinction between the approach to financial regulation in the united states and that in the united kingdom. these observers have characterized the british approach as being principles - based and as using a " light touch " – the implication being that these two features somehow go together. in a speech in february of this year, sir callum mccarthy, the head of the united kingdom's financial services authority ( fsa ), took issue with this interpretation. 1 sir callum confirmed that the fsa's approach is built on a framework of principles, although he noted that the fsa also has an 8, 500 - page rulebook to accompany the eleven principles it has laid out. but the fsa head rejected the view that their approach is " light touch. " rather, he said, it is risk - based, which means that regulatory resources and attention are devoted to firms, markets, or instruments in proportion to the perceived risks to the fsa's regulatory objectives. in fact, as in the united kingdom, the principles - based, risk - focused approach to regulation has had considerable influence on this side of the atlantic as well. for example, as you may know, the president's working group on financial markets ( pwg ) recently issued a statement of principles – ten in this case – relating to the regulation of private pools of capital, including
). to the extent possible, we should work toward common principles and approaches as well as improved information sharing. international cooperation is also essential for establishing and maintaining effective oversight of the payment and settlement systems that constitute the infrastructure of global financial markets. organizations such as the committee on payments and settlements systems ( cpss ) and iosco have developed shared international principles to ensure the safety and efficiency of payment systems. see callum mccarthy ( 2007 ), " financial regulation : myth and reality, " speech delivered at the british american business london insight series and financial services forum, february 13. investor protection can also be addressed in a risk - focused, principles - based manner. most important, disclosures and protections should be tailored to the level of sophistication of the investor. mutual funds, for example, must provide disclosures sufficient to help retail investors make informed choices. when instruments and strategies are so complex that an unsophisticated investor could not be expected to effectively evaluate and manage the associated risks, u. s. regulators have chosen to limit the exposure of those investors. for example, most retail investors are effectively precluded from engaging in over - the - counter credit derivative transactions or from investing directly in hedge funds unless they meet various criteria regarding income and net worth. retail investors may have indirect exposures to complex instruments and strategies – for example, through pension funds. the appropriate principle for investor protection in this case is that the investors'agents – pension fund managers, for example – must apply sound risk - management practices and take risks consistent with the stated objectives of the ultimate investors. regulators have a role to play in imposing fiduciary duties and standards on the investors'agents. for example, the employee retirement income security act ( erisa ) sets standards for private pension fund managers, including the requirements that, as fiduciaries, they act prudently and solely in the interest of the pension fund participants. supervision of these fiduciaries must ensure that these standards are consistently met and that fiduciaries themselves fully understand the nature of their risk exposure. market integrity is the third public policy objective that i noted earlier. consistent with a principlesbased approach, u. s. securities laws against insider trading and market manipulation apply broadly to all financial institutions, including hedge funds, and to trading in a wide range of financial instruments, including securities - based over - the - counter derivatives transactions. just as institutions and other investors need to adopt best practices to measure and manage
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in oil prices. there have been a number of positive signs in this regard : first, various surveys indicate that inflation expectations have been edging up steadily over the last two years or so. second, annual spring wage negotiations appear to have started reflecting higher inflation expectations : base pay levels rose last year for the first time since the 1990s, and further accelerated this year. third, the bank ’ s economists recently confirmed, based on a rigorous quantitative analysis, that a β€œ regime - shift ” in trend inflation from zero to a meaningful positive level indeed occurred under qqe. 4 all these signs indicate that we are now overcoming the deflation that has long been afflicting our economy. we must maintain our current efforts in order to achieve the 2 percent inflation target at the earliest possible time, which we now expect to be around the first half of fiscal 2016. another interesting fact illustrated by the graph is that the recent unemployment rate in japan, about 3. 5 percent, is low even by japanese standards. with everything else being equal, the lower the unemployment rate, the better the economic welfare. however, that may not be the whole story. the fact that we have achieved this very low level of unemployment with only modest economic growth in the last two years indicates how heavily our adverse demography is weighing on the supply side of the economy. japan ’ s working - age population started to decline in the middle of the 1990s, and this decline is now gaining pace. this represents a considerable threat to potential growth, which has declined to an anemic 0. 5 percent, or possibly even lower. in order to restore a stronger supply side, we need to raise labor participation rates among the female and elderly population as well as labor productivity. as a matter of fact, the third arrow of abenomics is already working on these issues. although a central bank cannot directly change the potential growth rate, the bank of japan ’ s unprecedentedly accommodative monetary stimulus is certainly helping the reforms by dispelling the deflationary mindset. in professor tobin ’ s day, the policy problem was primarily related to a trade - off between the social costs of unemployment and those of inflation. the picture is different now. most major economies are in need of both higher inflation and more jobs. in this sense, there is no tradeoff. the new challenge has more to do with expanding our policy frontier than with choosing between trade - offs. this challenge is further complicated by the structural weakness of
labor supply and demand - related indicators, the unemployment rate has declined to around 3. 5 percent, and the active job openings - to - applicants ratio continues to improve as a trend, exceeding 1. 00. if the tightening trend continues in labor supply and demand conditions, this could help underpin consumption because of growing confidence regarding job security and expectations for wage increases. moreover, in the medium to long term, firms ’ efforts to boost productivity in response to labor shortages, such as investment aimed imputed rent is a concept for evaluating owner - occupied homes – which do not involve actual payments and receipts of rent – in terms of general market prices, on the assumption that such homes are rented and thus generating production and consumption of services similar to homes and rooms rented in the usual way. in international comparisons, this concept is very useful in compensating for the difference in housing costs derived from varying home ownership rates. however, such rent is not an actual expenditure from households ’ perspective. bis central bankers ’ speeches at labor saving, are likely to lead to a strengthening of japan ’ s growth potential. wage increases accompanying growth in labor productivity are expected to occur in the future. indicators of labor supply and demand conditions are effective in demonstrating firms ’ confidence about the future, and for this reason i will pay careful attention to monthly changes, including developments in job openings. the second point for attention is the price - setting behavior of firms. movements to pass the past increase in costs onto prices have been spreading steadily, as shown by the fact that in the june 2014 tankan the diffusion index ( di ) improved for output prices ( the proportion of firms responding that output prices β€œ rise ” minus the proportion of those responding that they β€œ fall ” ). in particular, the di for small nonmanufacturing firms moved into net β€œ rise ” territory for the first time since 1991. the di for input prices also continued to be in net β€œ rise ” territory, suggesting that a certain degree of potential pressure to raise output prices remains. whether such pressure will materialize as a rise in sales prices depends on economic developments. therefore, i will pay attention to whether the price - setting behavior of firms becomes even more active after overcoming the effects of the decline in demand following the front - loaded increase prior to the consumption tax hike. the third point for attention is developments in exports. the environment surrounding exports is expected to gradually improve, as the global economy – mainly advanced economies – recovers. on the other hand,
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if a group of persons acquires sizeable equity or voting rights in a bank without following the acknowledgement procedure. there is no statutory power for directing disgorgement of shares and as such, if any such acquisition takes place, it may result only in contravention in provisions of br act. the main object of preventing the management of a bank from being captured by persons who are not fit and proper for holding such sizeable interest will not be achieved. rbi should, therefore, have the power to direct, by order, at any time that persons who are not fit and proper to hold such equity or voting power in contravention of these provisions, shall not have voting power. the 2011 bill proposes to confer such power on rbi. this will help prevent unscrupulous persons from exercising control over banks. deposit collection activity currently, collection of deposits from members / shareholders is not treated as acceptance of public deposits. this is a matter of serious concern, particularly, with respect to co - operative societies. deposits are accepted by enrolling members on tap and by collecting nominal bis central bankers ’ speeches amounts from them, exposing such depositors to serious risks. banking regulation act does not apply to such co - operative societies and they are outside the regulatory purview of the reserve bank. it is necessary to plug this important loophole. unless deposits are received from members who have voting rights, the deposits have to be treated as public deposits and the exemption from the provisions of banking regulation act should not be made applicable. every entity that accepts deposits from persons having no voting rights has to be treated as deposit accepting entity and should be regulated as such by rbi. rbi should have the discretion to determine the level and intensity of regulation and supervision depending upon the risk to the system from such entities. financial conglomerates in india, banks are entitled to carry on certain financial activities under the bank subsidiary model. some banks have formed subsidiaries to carry on securities and insurance business. the performance of the subsidiaries affects the balance sheet of the bank. on account of varied activities carried on by the entities in the group which fall within the regulatory jurisdiction of multiple regulators, the risk to the system as a whole posed by such financial conglomerates is difficult to assess. these raise systemic issues and rbi as the regulator of banks needs to be empowered to obtain information, with respect to each of the entities functioning under the umbrella of a bank. the 2011 bill proposes to confer such powers on rbi to get information with respect
anand sinha : legislative reforms – strengthening the banking sector address by mr anand sinha, deputy governor of the reserve bank of india, at the financial planning congress ’ 11, organised by the financial planning standards board of india, mumbai, 18 december 2011. * * * inputs provided by p r ravi mohan, g s hegde, subrat das and smt sadhana varma are gratefully acknowledged. justice ( retd. ) shri b. n. srikrishna, chairman, financial sector legislative reforms commission ( fslrc ), shri swarup and shri malegam ( members of fslrc ), shri yogesh agarwal, chairman, pension fund regulatory and development authority ( pfrda ), shri mudholkar and shri chikermane, and other delegates. it is an honour and privilege for me to address you today, on some of the key issues with regard to β€œ reforms in the banking sector ” and i thank financial planning standards board of india for this opportunity. this financial planning congress comes at a very opportune time when the far reaching exercise of rewriting financial laws is being undertaken by the fslrc and i commend the organisers for their efforts in putting together this congress. i. introduction empirical research shows that better developed financial systems accelerate economic growth and shrink income inequality by disproportionately increasing the earnings of lower income families1 i. e. enabling growth with equity, which is so vital for our country. a well developed financial system will require sound legislative framework because, legislation is the foundation on which institutional frameworks stand. to be effective, legislation not only needs to be unambiguous and fair but also should be robust enough to address all the existing concerns while, at the same time, being flexible enough to accommodate the new needs on account of evolving environment. role of legislation in the context of economic development in general and the financial sector in particular, is an interesting area of study. it has been argued that strong legal systems foster development of sophisticated financial markets and intermediaries2, which enhances the economy ’ s ability to manage risk and eventually lead to economic growth. measures such as robust contract enforcement and disclosure discipline go a long way in strengthening the financial systems. every legislation has a time dimension and its relevance has to be seen vis - a - vis this dimension. with the changing environment, practices and processes change, necessitating a review of extant legislations. this holds
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countries should be to prevent a build - up of imbalances that could threaten financial and bis central bankers ’ speeches macroeconomic stability. the main tasks are to identify and implement on a timely basis measures to curb the boom and to build the capacity to cope with a possible bust. an advantage here is that, because of the differences in cyclical position, policy conflict between monetary policy and prudential policy is absent, unlike in the case of countries suffering from balance sheet recession. given the integration of cesee countries in the world financial markets, credit growth in these countries has acquired an international dimension. there is significant presence of foreign - owned banks and external funding is an important source of bank liquidity. while external bank funding for the region has been on a declining trend since the onset of the global crisis and sizeable deleveraging has already occurred, parent bank funding still represents a large share of bank funding in several cesee countries. thus, countries in the region are highly vulnerable to changes in the external environment. if parent banks come under pressure to deleverage and build up capital in the period ahead on account of the results of the just concluded euro area asset quality review and stress tests or because of tighter global financial conditions, the liquidity support for credit growth in the daughter banks may not be forthcoming. i would like to conclude by pointing out that central banks alone cannot succeed in reviving credit growth and economic growth. putting the economies in the region back on track will require an integrated national policy strategy to restore the health of the financial sector, restructure the corporate sector, reinforce the sustainability of the public finances, improve the flexibility of product and labor markets, and reform the business environment. because of the complementarity of the measures, coordination between government agencies and other stake holders is essential in policy implementation. successful and timely policy implementation will require political resolve and social consensus. if there is no determined follow through on policies, the fragile recovery that is underway will come to an end and economic problems will intensify. bis central bankers ’ speeches
wound down, and the privatization of one state - owned bank ( nkbm ) has already been initiated. the new european resolution mechanism is scheduled to take effect in 2016. banka slovenije is seeking to speed up the process. it intends to create in 2015 a deposit insurance fund and a resolution fund to facilitate the consolidation of weak banks. the banking sector is undergoing a necessary process of structural reforms, and the world of banks is changing. regulation and supervision is being strengthened to make the future of the banking system more stable and less crisis - prone. on 4 november, the european central bank assumed responsibility under the single supervisory mechanism for supervising 8 banks in slovenia accounting for more than two - thirds of the market share. the supervisory culture will change under the new regime. supervision will become more quantitative and the ecb will also inspect the business models of banks. for the 10 credit institutions not covered under the ssm, banka slovenia will align its supervisory approach with that of the ssm. the central credit registry is being upgraded to support banking supervision. banka slovenije has established, like other european central banks, an institutional framework for macroprudential oversight of the financial system that is in line with the recommendations of the european systemic risk board. the basic aim is to safeguard the stability of the financial system by identifying the emergence of systemic risks at an early stage and taking preventive measures to mitigate these risks. * * * * bank rehabilitation is only a necessary condition for unlocking credit growth to the slovene economy. successful corporate restructuring, which entails both financial and business restructuring, is also essential to lay the foundation for productive investment and strong employment creation. unless enterprise restructuring is undertaken decisively in a timely fashion, the capital buffer of banks created by their recent recapitalization will erode and further injections will be needed once again. the enabling legislative framework for enterprise restructuring is in place, but systematic restructuring is yet to begin. this should be given priority by the government. a decision must be made with regard to the most urgent restructuring cases a critical constraint that slovenia faces is the availability of funding for corporate restructuring and increasing investment activities. given that the feasibility of using state resources for these purposes is limited, privatization and entry of private investors should be the key vehicles for the required non - debt capital infusion foreign direct investment is a key source of potential equity. the business and political culture will need to adapt and embrace the realities of globalization and slovenia ’ s integration
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be used by the supervised institutions to identify and report unusual transactions to the financial intelligence unit ( mot ). our commitment to deter and detect money laundering and terrorist financing amongst supervised institutions, has also been recognized and highlighted by the imf. in its final report issued in february 2004 on the former netherlands antilles, the imf concluded on page 7 of its report that : ( quote ) β€œ overall the legal and institutional framework for financial supervision meets high standards. it is comprehensive, effective, and to a great extent in line with international standards. the central bank ’ s staff is highly capable, well trained and dedicated, … ….. to perform its functions ” ( end quote ). nonetheless, the central bank realized the importance of not becoming complacent. the bank has continued to intensify its efforts by taking the necessary measures to further strengthen its supervisory regime by continuously upgrade the aml & cft requirements in line with international standards. you will certainly hear more about these efforts during your visit. bis central bankers ’ speeches to conclude, i would to say that significant progress has been made in our jurisdiction over the past years in the fight against money laundering and terrorist financing. it is therefore imperative for the market participants to continue to work closely with us and other competent authorities to combat money laundering and terrorist financing. the central bank is in that respect striving to constantly promote a compliance framework that ensures the soundness and stability of our financial sector and to promote an effective compliance environment that not only deter problems, but also detect problems at an early stage. we are committed to continue to promote an aml & cft regime that is dynamic and constantly adapting to international standards. we wish you all the best with your assessment and want you to know that our staff is available to provide you with any information you need concerning our activities and to answer any inquiry you may have. once again thank you for your support and your commitment to combating money laundering and terrorist financing in the caribbean region. bis central bankers ’ speeches
emsley tromp : opening of the 2011 cfatf assessment welcome remarks by dr emsley tromp, president of the central bank of curacao and sint maarten, on the occasion of the 2011 cfatf assessment, willemstad, 22 august 2011. * * * good morning. i would like to welcome you to the central bank and at the same time express my appreciation for the commitment of cfatf over the past years to help its members combat and deter money laundering and terrorist financing. as a member of the cfatf and the fatf, we applaud the efforts of the cfatf to continuously perform evaluation of its member jurisdictions. these evaluations serve as an excellent tool for the member jurisdictions to receive an independent opinion on their aml & cft regime and take the necessary actions to further strengthen their aml & cft regime. the central bank has played an important role in the fight against money laundering and terrorist financing in our jurisdiction. since public confidence in the supervised institutions and the financial system can be easily undermined by adverse publicity as a result of the misuse of institutions by criminals for money laundering and terrorist financing purposes, as a regulatory authority, we are constantly vigilant in deterring criminals from misusing the supervised institutions for money laundering and terrorist financing purposes. the central bank has been instrumental in the drafting of several legislations governing aml and cft, including the national ordinances on the reporting of unusual transactions and national ordinance on identification when rendering services. these legislations were enacted in 1996 and lastly amended in 2009. the central bank has also issued sector - specific provisions and guidelines in the area of aml and cft for the various sectors under its supervision. these guidelines date back to 1991 and were lastly amended this year. the sector - specific provisions and guidelines have significantly increased the awareness of good compliance under the supervised institutions. as a result hereof, we have noticed that the industry is increasingly devoting more resources to combating money laundering and terrorist financing and that the compliance function has taken an even more prominent place in the supervised institutions. furthermore, the compliance programs of the supervised institutions are regularly being subjected to our review during our on - site examinations at the institutions. the aml and cft deficiencies identified during our on - site examinations are communicated to the supervised institutions and the institutions are in that respect requested to take corrective measures in a timely manner. the bank has also been instrumental in the drafting of the list of indicators that must
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##roen dijsselbloem, mario draghi and martin schulz, and which was presented at the end of june, appears to me to aim clearly for centralisation and risk - sharing. but the five presidents say nothing about the transfer of effective control rights, not to mention sovereignty rights – understandably so, one might add. after all, there is very little willingness among european governments to veritably relinquish sovereignty. and the national parliaments insist on retaining their most prestigious right, the right to make the budget. nobody likes having their affairs meddled with. that ’ s already a common response whenever the european commission requests corrections be made to national budget plans. last autumn, when there was the prospect of the european commission rejecting the french budget, the french finance minister michel sapin said : β€œ the commission (... ) has absolutely no power to reject or knock down or censure a budget. here as elsewhere, sovereignty belongs to the french parliament. ” nobody would really dispute that comprehensive reform can only be achieved one step at a time. but if we don ’ t want to stumble, the steps also have to be taken in the right order. i will give you two examples. the five presidents call for the prompt establishment of a joint deposit guarantee scheme. given that we now have a system of joint banking supervision in the euro area, it would be logical in a way, at least for the institutions supervised directly by the ecb, to belong to a single deposit guarantee scheme. however, the fortunes of banks do not hinge solely on supervision, but are still heavily influenced by national economic policy and national legislation, too. consider the national insolvency codes, for example. more forgiving rules on the insolvency of corporates or private individuals can impair the profitability of banks and shift burdens from the private or public sector into banks ’ balance sheets. if this drives banks into distress, depositors from other european countries would then effectively have to foot the bill. this is why i regard cross - border risk - sharing in respect of deposit protection as premature. i feel similarly about another form of risk - sharing that is proposed again and again, specifically the creation of a single unemployment insurance fund. as long as member states themselves control the main job creation levers – which is to say, they decide autonomously whether to implement labour market reforms, how high to set the minimum wage or even if they are investing
backfire ), but more market economy and competition. and the road to more competitive structures is only through a stable, i. e. tight, money. it is true that the great master of viennese popular theatre, johann nestroy, once philosophised : β€œ the phoenecians invented money - - but why so little of it? ” however, the central bank must limit the supply of money and set the interest rates accordingly. that is its task. it is also true that arthur schopenhauer once said : β€œ there are people who would pay any price for money. ” yet philosophers are not always right, especially when it comes to analysing the economy. the same applies to schopenhauer ’ s dictum ; otherwise, it would be virtually impossible, above all, to manage the money stock by using interest rates. vi the disintegration of monetary policy strategies in the 1970s did not only have the economic implication that countries had diverging degrees of economic success. there was an important european policy implication, too. the plan to implement a phased monetary union that we developed in the werner group in 1970 soon foundered ; not only on differing monetary strategies, but also on the lack of willingness of at least one country, at that time, to surrender national sovereignty. in its day, in fact, the werner plan had two advantages over today ’ s maastricht treaty : β€’ firstly, the six - nation ec of the time was relatively homogeneous in economic terms. β€’ secondly, with regard to its strategy for integration, the werner plan was more consistent than the maastricht treaty. it envisaged a marked intensification of both political and monetary integration. but, in the final analysis, at that time there was neither the willingness to realise this deeper political integration nor a convergence in monetary policy. the monetary union, which had already been planned for the 1980s, did not come into being. the lack of convergence in the 1970s was not even enough to keep a larger monetary arrangement together. in the end, all that was left was the ” mini - snake β€œ. the exchange rate mechanism ( erm ) of the european monetary system, newly formed in 1979, was also not very stable to begin with. it was not until 1983 that an important change took place in the history of monetary integration in europe. with finance minister delors at the helm, france changed course towards a clearly non - inflationary policy. others
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: β€œ that ’ s odd. every time i see a numerical example, i have to turn it into a formula to be able to understand it. ” 12 i wish you good luck with your studies. you have made a good choice. thank you for your attention. ragnar frisch ( 1995 ) : β€œ troen pa nΓΈkken ( a collection of essays, lectures and articles ) ”, universitetsforlaget. robert e. lucas, jr. ( 2003 ) : β€œ macroeconomic priorities ”, the american economic review, vol. 93, no. 1, p. 1. dagens nΓ¦ringsliv ( 1989 ) : β€œ sky nobelpris - vinner ( shy nobel prize laureate ) ”, 12 october 1989.
of the restructured accounts, providing evidence that this action has been taken as a last resort as required under the ccma. approximately two thirds of these were surrendered or voluntarily sold, with the remainder repossessed through the courts. the majority of those in the legal process now have been deemed non - cooperating before the legal process was initiated. 87 % are in arrears over 720 days with an average arrears balance of over €53, 00023. recognising the individual distress these numbers represent, i would again urge anyone in arrears to engage with their lenders and / or the supports that are available. the central bank, as part of the ssm, continues to require banks to reduce non - performing loans in a sustainable way. there are multiple tools available, including : re - engaging with borrowers, restructures, accounting write downs, mortgage to rent, engaging through the insolvency service, sales and securitisations and the legal process. it is in this context that the irish retail banks have submitted updated npl reduction strategies. these strategies include both planned workout and potential sales24. in the three years to december 2017, about one quarter of the €45bn of npl reduction in the irish retail banks was achieved through portfolio sales. the remainder was due to on - going restructuring, workouts and write - offs. similar proportions could be expected for the next three years. portfolio sales are a legitimate and necessary approach for banks to use to address non - performing mortgage loans. sales have proved to be controversial, particularly for pdh loans, in part due to a perception that the non - banks will seek to foreclose more aggressively than banks. to date, this has not been the case. there has been no material difference in the number of legal proceedings issued between banks and non - banks, as a percentage of the total number of pdh accounts in arrears25. it is also important to emphasise that the central bank has, with the support of the oireachtas, ensured that the protections of our codes of conduct, including the ccma, travel with the loans – it is the activity of credit servicing that is regulated, not the ownership of credit. a credit servicing firm cannot take an action on behalf of or on the instruction of an unregulated loan owner, which would be a prescribed contravention of the code or the ccma. this approach already being taken in ireland
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will launch next year. we plan to conduct the survey biannually to seek views on key financial system risks and developments, as well as measure overall confidence in the canadian financial system. the survey will support our surveillance of the financial system, inform policy decision making and help strengthen our network. we are finalizing the details and expect to launch in early 2018. the results will be published in the fsr. conclusion 5 / 7 bis central bankers'speeches as a central bank, we rely heavily on our excellent models and incoming data for our forecasts. yet we know that the intelligence we gather is a critically important complement to them, particularly during times of transition or when sentiment is playing a bigger role. this information gives us a deeper understanding of how the economy is performing and how markets are functioning and evolving. and what we learn from all of it β€” our models, the data, our analysis and intelligence from our contacts β€” feeds into our judgment on policy actions. i want to emphasize that although our policy judgments are guided, in part, by our intelligence gathering, we know that financial markets are dynamic and that we will never have a perfectly complete, up - to - the - minute picture of all activity. we are realistic about this and are constantly learning and seeking to know more. so it is essential that we communicate regularly with participants across all dimensions, be they investors or issuers, the operators of financial market infrastructures, regulators or other capital market facilitators. and we share much of what we learn. while we are committed to transparency, we are mindful of the need to respect the confidentiality of what we hear from individual firms. we publish our findings broadly in the fsr and other bank publications and in cfif minutes posted on our website to educate and raise awareness both domestically and internationally. so let ’ s talk. our ultimate goal is to promote a stable and resilient financial system that serves all market participants. we need and value your collaboration and feedback. 1 bank of canada act. 2 the governor of the bank of canada is a member of the senior advisory committee, a non - statutory body that discusses macroprudential policy. its other members are the federal deputy minister of finance, the superintendent of financial institutions, the chair of canada deposit insurance corporation, and the commissioner of the financial consumer agency of canada. 3 bank for international settlements, β€œ market intelligence gathering at central banks, ” december 2016. 4 under the terms of basel iii, the minimum amount
kinds of users : β€’ investors, who should be fully aware of the risks they are taking ; β€’ residents of countries where there is no trustworthy national currency ; and β€’ those undertaking illicit transactions, including tax evasion, money laundering and terrorist financing, for which the property of pseudonymity makes them an ideal way to move funds. the crypto ecosystem so far, i have been talking about digital tokens launched with the ambition of becoming a form of currency. now, many digital tokens are being created without any such ambition. every month, dozens of new crypto products are launched through initial coin offerings ( icos ). in an ico, investors purchase a new digital token in exchange for cash or for other, more established cryptoassets. some of these resemble the initial public offerings that private companies use to raise capital by offering their stock to the public for the first time. in this way, they are like crowdfunding β€” a means to raise equity capital without jumping through all the regulatory hoops needed to issue publicly traded securities. other icos offer the purchaser the right to use services on a platform that has yet to be built β€” and are thus more like the economic equivalent of a gift card. in yet other cases, the promised benefits to the purchaser are more nebulous. 6 see the results of the 2017 bitcoin omnibus survey conducted by the bank of canada. 7 see bitcoin average transaction fee. - 5those icos that function in a similar way as shares in a new company raise all the same issues as any other stock offering. their value is based on the profits from some enterprise, so investors need to be able to verify that the enterprise actually exists and keep track of what it is doing with the funding it raises. in practice, icos have not always met that standard. for example, failure to meet funding targets hasn ’ t always resulted in the return of money to investors. and in cases where funding targets were exceeded, it ’ s not always clear how icos are using the extra money. thus, while there are certainly advantages to a flexible, technologically advanced method of funding innovative enterprises, investors in icos need to be wary of fraud and misrepresentation. given the steady introduction of new types, crypto products are often hard to classify. many will prove to be short - lived. yet it would be a mistake to dismiss all these innovations as fleeting fads. some products may turn out to be
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in 2021, after a challenging year with significant difficulties caused by measures to prevent the covid - 19 pandemic. preliminary estimates of kas suggest that the country ’ s economy in 2021 marked a real growth rate of 10. 5 %. significant impact on the growth of economic activity had the measures of movement relaxation, which greatly increased the visits of our diaspora in kosovo, visits which represent a very important source of funding for the country ’ s economy. the concept of transition elaborated by the ebrd report rightly argues that a well - functioning 1 / 2 bis central bankers'speeches market economy must be competitive, inclusive, well - governed, environmentally friendly, sustainable and integrated. we welcome the conclusions and recommendations from the transition report and consider them to be a good guide for kosovo ’ s economic perspective. the report pays special attention to digitalization, which is also transforming the financial system worldwide. we see the digital transformation process as an opportunity for financial institutions to become more efficient as well as improve access to financial services for households and businesses. in terms of payments, the cbk has taken some important steps in market liberalization, where payments and money transfer services are also allowed to be provided by non - bank financial institutions. the cbk plans to further liberalize the payment services market by adopting the eu payment services directive known as psd2, as well as two eu directives addressing payment accounts and electronic money, in under the new law on payment services. for the end, allow me to once again express my highest appreciation to the ebrd, which has consistently proven to be a very important supporter of kosovo ’ s economic development and promoter of structural reforms in the country ’ s economy. 2 / 2 bis central bankers'speeches
fehmi mehmeti : kosovo ’ s economy in 2021 marked a real growth rate of 10. 5 % speech by mr fehmi mehmeti, governor of the central bank of the republic of kosovo, at the european bank for reconstruction and development ( ebrd ) conference, pristina, 23 march 2022. * * * honorable mr. taylor, head of the ebrd kosovo office honorable representatives of embassies in kosovo honorable representatives of the eu office in kosovo honorable deputy minister honorable mayors distinguished representatives of local and international financial institutions dear participants, it is a special pleasure to welcome you to the central bank of the republic of kosovo and to be part of this ebrd event for the presentation of the transition report for 2021 / 2022. this event demonstrates the commitment and the important contribution that the ebrd has continuously given to support the institutions of kosovo and in general for the economic development of the country. both, around the world and in kosovo, recent years have been quite challenging and characterized by a high degree of uncertainty, for the financial system and the economy of the country. as a result of the adequate regulatory framework as well as high supervisory standards, the pandemic situation found the financial system in kosovo with high levels of capital and liquidity as well as very good quality of assets. also, prudent measures taken by the cbk in cooperation with financial institutions operating in kosovo have been shown to be very effective in maintaining financial stability and minimizing the consequences for the country ’ s economy in general. as a result of these measures, the banking sector managed to maintain a high degree of resilience to the impact of the crisis and to meet very well the challenges and implications of the pandemic, and to play a very important role in the recovery of the economy through continuous lending and providing mitigation measures for borrowers. currently, the non - performing loan rate in the banking sector stands at around 2. 3 %, while the annual loan growth rate stands at 15. 7 %, which indicates that we are talking about a sound banking sector with a very significant contribution to the financing of economic activity. our priority remains for banks to continue to maintain a high degree of stability, so credit risk continues to be the focus of the cbk in 2022, especially focusing on assessing credit risk management practices, the adequacy of provisions for credit losses and overdue credit management. kosovo ’ s economy has marked a very successful recovery
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, are being collected. while such accumulation of non - anonymized data substantially enlarges the potential of data usage, the relevant entities are required to pay extremely careful attention to data protection and privacy. if people were to worry about the practices of managing big data and feel uneasy about their own privacy, it would become difficult to make big data contribute to economic development and welfare. thus, i would like to ask all the relevant entities, who collect and utilize data, to pay due attention to ensuring data security. iii. big data and central banking big data also has substantial implications for central banking. all the operations and policy conduct of the central bank are closely linked with data collection and processing. every operation including the settlement of funds and securities, and the processing of treasury funds through daily operations of the central bank ’ s system, the core infrastructure of the economy, is made up of gigantic amounts of data processing. in carrying out macro policies such as monetary policy, it is an important precondition that policy entities including the central bank can collect and analyze various types of economic data quickly and efficiently, and timely grasp the developments of aggregate demand, general prices, and the impacts of policy actions on the economy and financial markets. indeed, many central banks, including the bank of japan, are collecting and aggregating large amounts of data such as price statistics, corporate surveys, and financial market data, by themselves. since central banks are processing as well as utilizing large amounts of data, central banks are required to continuously examine how to utilize and leverage new technologies for collecting, processing, and analyzing various types of data. iv. closing remarks i think that big data has great potential to vitalize various economic activities, innovate financial services, and increase economic welfare, as long as data security is firmly secured. in the well - known movie β€œ moneyball, ” open - minded and thorough analysis of data, free of prejudice and convention, leads to the finding of new and advanced strategies that drastically change traditional baseball tactics. also in volleyball, the current offense strategy with multiple options of attack including those from backguards, which is supported by precise data analysis, has been widely adopted in recent years, which i could not imagine when i was coaching high school students decades ago. as such, analysis and utilization of data has demonstrated its potential in various areas more than ever before. given rapid increases in the volume of data and significant improvements in its processing capacity, i also have great expectations for the possibilities
utilization of big data and ai may improve productivity in various ways, such as accurate analysis on demand, more efficient business processing, and enhancing added value. in emerging and developing countries with large populations, several e - commerce enterprises, backed by rapid popularization of smartphones, accumulate gigantic amounts of customer data, and the utilization of that data has facilitated the expansion of various businesses and economic activities in those countries. potential of big data on financial services big data may also extend the frontiers of financial services. firstly, financial services themselves can be more sophisticated through effective use of big data. by using customers ’ transaction data to grasp their needs and analyze risks, it becomes easier to provide customized financial services tailored to each user, and to flexibly adjust the contents of services if necessary. for example in the field of insurance, in order to overcome β€œ adverse selection ” and β€œ moral hazard, ” which have been regarded as inherent problems in the insurance industry, efforts are being made to finely adjust the insurance fees by using a new technology known as a β€œ smart contract, ” and collecting a wide range of data such as how customers drive, and how they manage their health. moreover, new authentication technologies such as biometrics authentication through big data analysis enable customers to use various financial services in a more secure manner. secondly, big data may facilitate the networking of financial services with broad industries. for example, safe and efficient payment instruments are extremely important for e - commerce and the sharing economy. on the other hand, data obtained through these businesses can be useful for providing and customizing financial services. consequently, new networks between financial services and various industries can be established, such as linking retail sales businesses with payments, loans, and insurance services. thirdly, big data may also enhance financial stability through facilitating refined risk management and the efficient allocation of risks. however, when a variety of entities which are different from traditional financial service providers enter financial services, central banks are required to closely monitor their impacts on financial stability and their structures. data security issues along with the enhanced utilization of big data, cyber security, data protection, and stakeholders ’ consent on the usage of big data, are becoming all the more important. since β€œ trust ” has an important meaning especially in finance, these issues are becoming critical factors for 3 / 5 bis central bankers'speeches maintaining the stability of payment settlement systems as well as financial systems. recently, enormous amounts of non - anonymized data such as, who bought what, when, and where
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policy makers would have to orchestrate this sustainable outcome at a national level through direct incentives or disincentives to the sectors of strategic concern. if the government lacked tools such as tax policy to influence financing behaviour, it would continue to have to rely on direct, though less efficient intervention to influence external financing patterns. this is the positon in which the bahamas still finds itself, and will likely have to focus if we are to further optimise external financing inflows to locally owned businesses over the medium - term. as to stability, the bahamas must still be able to accommodate the volume and speed of capital flows, without losing control of the exchange rate or the solvency of financial institutions. funds that move through capital markets or sit in liquid bank deposits are examples of flows that can relocate swiftly. again, from a regulatory point of view, the risk of bank insolvencies can be suppressed, by requiring that banks do not rely on short - term foreign currency deposits inflows to finance long - term lending. reserve requirements can also be placed on banks to reduce such tendencies and to provide some insurance against sudden outflows. that said, there could also be vulnerability to sudden outflows if, en masse, residents are allowed to shift out very liquid funds they hold in local currency. faced with such developments, the exchange rate could be allowed to depreciate β€” that is, the price of foreign exchange could be allowed to increase. such an outcome would not be desirable for the bahamas. 6 therefore, we should be striving for an outcome, where other than for diversification residents are indifferent between holding deposits in local or foreign currency. this would be an outcome where portfolio decisions are not materially driven by speculative movements to outrace expected depreciations in the exchange rate. among other factors, given high import reliance, a fluctuating exchange rate would affect prices but little else, as it would not confer any competitive advantages to the economy. instead in tourism, for example, depreciation would be offset by higher local currency costs on imported inputs, and in negotiated wages which would also respond to exchange rate generated increases in the cost of consumed goods. 6 | page speculations about whether the currency would maintain its value would depend on whether it is believed that the government was doing a credible enough job of keeping its finances in order ; whether it is believed that public sector debt dynamics would be kept within a comfortable zone, or whether misali
the euro should enhance the economy ’ s potential to grow faster. the elimination of exchange rate risk and currency conversion costs should result in increased trade, while the lower interest rate and inflation environment of the euro area should make for reduced business costs and greater macroeconomic stability. combined with the fiscal discipline associated with monetary union, this is expected to translate into higher credit ratings and better investment prospects. from a central banker ’ s viewpoint, moreover, a key benefit of euro area membership will be the elimination of the costs inherent in managing a small, vulnerable currency like the maltese lira and their replacement by the greater security and credibility afforded by a strong international currency. euro adoption necessary but not sufficient viewed from this perspective, therefore, the euro is but one element in a continuum of changes necessary to enhance the international competitiveness of the maltese economy. the benefits of the single currency will not suffice, especially in the presence of downside risks to global growth such as higher oil prices, a potentially disorderly unwinding of current account imbalances and the rise of protectionism. although the ongoing preoccupation with the level of the external reserves will cease once we join the euro area, moreover, any imbalance between what we buy and sell abroad will continue to cause the depletion of assets or the accumulation of liabilities, and be reflected in the country ’ s international investment position. any loss of competitiveness, therefore, will still result in slower growth. raising productivity a key challenge in setting out to overcome this challenge, a primary objective should be the correction of existing macroeconomic imbalances. output growth must, therefore, match spending growth more closely, and a key element in bridging that gap is increased productivity. put differently, since we are price takers in the markets that matter, notably those for electronics and tourism, we must have a cost structure that does not discourage investment. domestic inputs, particularly labour, must be competitively priced. and since the cost of labour in malta is relatively high, we must increase the value of output per employee. once again, the only way forward is through productivity growth. in this regard, there is much room for improvement. the level of productivity has remained roughly unchanged since 2001, while it is projected to increase at an annual rate of only 1 % to 2 % in 2007 and 2008. for a country that is highly dependent on exports, this is not good enough when many of our competitors are achieving faster productivity growth. faced with
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performing loans ( npls ), albeit slightly higher, remain manageable. the npl ratio stood at 3. 2 percent as of october 2020, way better than the double - digit npls we saw in the aftermath of the asian financial crisis. meantime, we have embarked on a reform momentum toward the β€œ new economy. ” this is our way of helping ensure the crisis β€” which has given a sense of urgency for reforms β€” is put to good use. our legislative agenda include : ( i ) a bill that will expand the list of sectors that banks can lend to, in compliance with the mandated lending for agriculture development ; 2 / 3 bis central bankers'speeches ( ii ) a bill that will lift secrecy of bank deposits, which will help efforts against tax evasion and money laundering ; ( iii ) a bill meant to enhance accessibility of credit to msmes through a comprehensive credit database, and ( iv ) a bill that will improve the protection of consumers of financial products and services. the bsp also has stepped up efforts toward financial digitalization β€” side by side our efforts to improve cyber security supervision. last october, we launched the digital payments transformation roadmap. this will aid faster economic growth and usher an era of a more financially inclusive philippines. with financial technology ( fintech ), credit, as well as savings, investments, and insurance products become accessible to more people. also, since it hastens payments, fintech increases the velocity of capital turnaround, thereby boosting income growth. also, we have issued frameworks for open banking, for the creation of digital banks, and for enhanced risk management. with our efforts, the philippines is recognized for having one of the best regulatory environments for financial inclusion. prior to the pandemic, the philippines had made significant strides in the economic and social fronts. poverty incidence had fallen from 23. 5 percent in 2015 to 16. 7 percent in 2018. unemployment rate had dropped to 5. 1 percent in 2019 from 7. 5 percent in 2009. and, we were about to become an upper - middle income economy. the covid - 19 crisis has caused setbacks for us. to return to our growth trajectory, medical and macroeconomic interventions should go hand in hand to protect public welfare, which is crucial to boost consumer and business confidence. having enough monetary space and tools, the bsp will continue to coordinate with the other government agencies as it shares in the heavy lifting to quicken economic recovery. with our whole - of -
greater use of financial services. role of banks beyond products a third aspect is the value added by banks or specifically bankers beyond β€œ cold ” availing of savings, loan and insurance products and payments platforms. ideally, bankers are partners in ensuring optimum benefits from the products they offer ( including maximising benefits and minimising costs ). this is through the advice they give customers, monitoring of performance of accounts and funded projects, as well as customer counselling and taking corrective action to address emerging account maintenance challenges. in so doing bankers help sustain value addition and productivity of financial resources and services towards welfare enhancement and positive impact on overall economic growth. i implore bankers to ( and indeed trust they will ) prioritise and elevate these roles in their operations, which to date appear to be peripheral, in order to amplify the impact of their products and services on welfare, livelihoods and economic performance, broadly. financial literacy and discipline a fourth factor in ensuring meaningful financial inclusion is financial literacy and discipline at the individual or customer level. this entails knowledge of banking products, their value in terms of impact on welfare, related costs and risks. it also involves understanding and execution of responsibilities such as repayment of loans in accordance with the agreed terms, good conduct and honesty in handling financial matters. ultimately the backbone of financial discipline is reasonable spending that is aligned to one ’ s income. notably, it is also financial discipline and good conduct of accounts that contribute to soundness of a bank, financial stability and prospects for monetary policy undertaken by the bank of botswana and government programmes to have a meaningful impact on welfare and economic activity. inversely, financial indiscipline, such as borrowing from multiple sources and overindebtedness has the potential to undermine macroeconomic stability and, more broadly, the safety and soundness of banks. distinguished guests, against this background, it is appropriate that botswana savings bank has responded positively to the need to extend the reach of financial services to an otherwise underserved part of the country. this is within its mandate. botswana savings bank, a wholly owned botswana government entity, was established by an act of parliament in 1992, with the mandate to mobilise affordable financial services, mostly savings, and grant loans on commercial terms and provide efficient banking and financial services to meet the needs of the rural and urban dwellers in botswana. in fulfilment of this mandate, the bank has three standalone branches in gaborone, francistown and pal
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s decision to transition from consumption credit to a more productive credit as the later will help contribute to the production capacity of our economy and contribute to the stability of your bank and ultimately sustainable economic development in namibia. 16. ladies and gentleman 17. on 28 october 2010, i ended my speech with the chinese adage β€œ a journey of thousand miles begins with the first step ” i believe we have taken the first step toward financial inclusion. we have travelled about 500 miles of that journey, we still have some more miles to get there, but getting there we shall. getting there, however, requires that all of us should continue to work hard as a team to create a sustainable and an inclusive financial sector for our children and their children ’ s future. i believe, letshego is one of the trailblazers on this journey, we look forward to continue travelling with you. i thank you for your kind attention iipumbu shiimi.
regulate the operations of credit bureaus in namibia. prior to 2014, there was no regulatory framework to regulate and protect consumers against unfair treatment by credit bureaus. the regulations provide for a dispute resolution mechanism in the event of disputes arising between consumers, credit bureaus and credit providers. 6. more importantly, the financial services adjudicator bill which will handle complaints against financial institutions has been developed and tabled in the national assembly. the adjudicator will cater for consumer concerns related to both banks and non - bank financial institutions under one roof. 7. bank of namibia and namifisa are also currently working on the consumer credit bill which will regulate all consumer credit related issues and consolidate outdated laws regulating credit such as the credit agreements act of 1980 and the usury act of 1968. the second issue is financial literacy and capability. 8. the importance of financial literacy cannot be overemphasized. there is a saying that knowledge is power. it is thus important that we empower our consumers of financial services with the knowledge in order for them to make informed financial decisions. the financial literacy of the average namibian above the age of 16 was calculated as 42. 75 % in 2013. indicating that we have some kilometers to travel to make the majority of namibian more financially literate. 9. on this front, the collective efforts of the partners of the financial literacy initiative under the ministry of finance have done a lot of work to educate consumers and this work should be intensified to close the gap. the fli is currently planning a follow - up survey this year which will show us how much progress we have made since the last survey in 2013. access to financial services and products 10. access to quality financial services and products has been identified as a catalyst for economic growth and poverty alleviation, both in developing and advanced countries. the potential of the financial sector to contribute meaningfully to economic growth and social progression of any economy depends on the full participation of individuals and firms in that sector. it is for this reason that a number of initiatives have been introduced in our financial sector to ensure access to financial services and products. 11. the ultimate aim of such interventions are to enhance access to banking and financial services for the previously excluded members of our society. high fees and charges contributes to the exclusion of the majority of the society from participating in the formal financial system. for this reason, two targeted interventions were introduced to deal with the issue of high fees and charges in order to allow access
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. investment cycle is expected to be further strengthened by the continuation of the productive fiscal investments. as the external demand is envisaged to recover further, additional stimuli is expected through this channel. the above mentioned growth factors are expected to strengthen further the labor market and the disposable income of the households, hence boosting the private consumption as well. the growth expectations provide room for additional rise of the deposit potential in the banking system, which accompanied with the rise in the credit demand and the willingness of the banks to lend, should enable credit growth at a rate of 9 – 10 % in the period to come. the inflation is expected to be influenced mainly by the global prices of primary commodities and the consumers prices of our main trading partners. an average inflation of 0. 5 % is expected for 2015, with the current forecast indicating its reversal to 2 % in 2016, reflecting the rise in the demand and in the import prices. the structural improvements in the export sector are expected to continue in 2015, which along with the overall external recovery and the much lower oil prices, are envisaged to bring about a moderate current bis central bankers ’ speeches account deficit of bellow 1. 6 % of gdp. in the following year, widening to 3 % is expected, reflecting the fall in private transfers and import pressures from the new investment. the external financing needs, within the current scenario, are expected to be covered by further inflows of foreign direct investments and by the public borrowing for infrastructure purposes. the current forecast points to a rather stable external debt to gdp ratio. no major pressures are foreseen in the following two years on foreign reserves, and they are to be maintained at the adequate level. risks surrounding this baseline macroeconomic scenario should not be neglected. for us, as a small an open economy, they mostly come from the external environment and our main trading and financial partners. although with the latest monetary easing of the ecb the downside risks to the euro zone growth are less pronounced, and in general the global growth risks are more balanced, they are still present and if being materialized, could impact the economy. additional source of risks are the sharp and sudden swings in the primary commodities prices, which for country like ours, can change the envisaged economic profile to a large extent. a new, additional source of risks is the current domestic political context, which can harm the economy, if not being tackled swiftly. of course, the risks are challenging and are to be closely
broadly speaking have only one instrument, i. e. interest rates, and can therefore only achieve a single long - term macroeconomic goal, it is natural to set price stability as the ultimate monetary goal. this is not to say that price stability is a more important goal than, say, full employment, but simply that monetary policy instruments are inherently better suited to impacting prices. it is pointless to set objectives for monetary policy which it cannot achieve. through price stability, a forward - orientated monetary policy can contribute towards creating a stable economic environment on which the long - term growth potential of the economy is based. from the above it is clear that the central bank ’ s main task is to achieve the inflation target, and this is what it aims to do. there have been vocal calls recently for the central bank to ease its monetary stance in order to soften or even prevent a looming economic contraction. the growth outlook has an impact on the output gap, i. e. the deviation in demand from a level which is consistent with balanced supply and demand for domestic goods and factors of production. the output gap is subsequently one of the factors that play a key role in the inflation cycle. all things being equal, the growth outlook thus exerts an influence on monetary policy, namely the worse the outlook, the lower the interest rate, and the contrary. for as long as inflation remains at its present high level, however, it is unavoidable to allow the output gap to shrink sufficiently and the central bank cannot apply its instruments at this stage to prevent that happening. high interest rates are counter - inflationary the central bank has held the view that, until clear signs emerge that its august inflation forecast will hold good, it is still not safe to lower interest rates. impulsive action could entail a risk that inflation will magnify even further, with very dire consequences for households, businesses and economic growth conditions. claims have also been heard that iceland ’ s high interest rates are inflationary rather than counter - inflationary. the central bank does not agree with this view, which cannot be supported with economic theories, studies or research. on the contrary, there is every indication that interest rates have a similar effect in iceland to that elsewhere. the icelandic economy was showing signs of strong overheating which apparently peaked last year. it is beyond doubt that the tight monetary stance made a major contribution towards cooling the economy. and such a winding down was necessary, too, since great macroeconomic
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christine lagarde : remarks on the occasion of receiving the grand prix de l ’ economie 2019 from les echos speech by ms christine lagarde, president of the european central bank, at the " grand prix de l ’ economie des echos pour l ’ annee 2019 ", paris, 5 february 2020. * * * it ’ s a great honour to be awarded this prize, and to receive it in the presence of so many leading figures from the french business community. the environment facing european business today is characterised by both uncertainty in the short term and a changing landscape in the longer term. the short - term uncertainties are mainly related to global risks – trade, geopolitical and now the outbreak of the coronavirus and its potential effect on global growth. over the last two years, the euro area economy has been quite resilient to global shocks, with our accommodative monetary policy supporting employment and consumption. and, though gdp growth in the last quarter was weak, it was broadly in line with our expectations. but while the threat of a trade war between the united states and china appears to have receded, the coronavirus adds a new layer of uncertainty. so we ’ re continuing to monitor closely how these risks develop and how they feed into our central scenario for the economy. in the face of these uncertainties, the ecb ’ s forward guidance on interest rates and asset purchases acts as an effective automatic stabiliser. the longer - term picture is different. ambitious proposals are gathering momentum within europe today and look set to profoundly reshape the environment for business. in particular, two big ambitions are pervading many aspects of policymaking in ways that create change, but also opportunity : the goal to build real β€œ european autonomy ” ; and the aim to urgently fight the consequences of climate change. i know that, as business leaders, you naturally seek the new opportunities that emerge for your companies in such times. so i ’ d like today to talk about how i see these ambitions evolving, and where they intersect with the tasks and priorities of the ecb. european autonomy we all have a sense of the world around us moving more quickly. the post - war global order is fracturing, tensions between great powers are rising and technological change is transforming the way we produce, distribute and consume. this environment clearly exposes europe to new types of risk, as demonstrated today, for example, by the turn towards protectionist policies and
in the expected path from β€œ a ” to β€œ b ”. the β€œ be ” path ( the yellow line ) illustrates a transition path of inflation that is even lower than originally envisaged. by providing additional monetary policy accommodation, the central bank can aim towards the upper region of the β€œ bcde ” zone, so that the adjustment is closer to the β€œ bcd ” path. chart 6 shows a stylised sketch of the choice facing the ecb in terms of the monetary stance. before the onset of the pandemic, inflation was expected to rise gradually towards the inflation aim, represented by the β€œ ad ” path ( the blue line ). the initial negative impact of the pandemic shock – in the absence of additional monetary policy accommodation – is captured by the downward shift in the expected path ( the drop from β€œ a ” to β€œ b ” ). one option would be to simply accept that convergence to the inflation aim will take more time and that inflation will be even lower than originally envisaged during the transition path, as illustrated by the β€œ be ” path ( the yellow line ). however, this option is costly in terms of the implied higher path for real interest rates and the slower economic recovery that results. it is also risky, since a longer phase of even lower inflation might become entrenched and contribute to a downward drift in inflation expectations, which would make it even more difficult to deliver the inflation aim over the medium term. a substantial weight should be attached to these risks in the context of the euro area, in view of the already - low pre - pandemic inflation rate and the long interval of below - target inflation. it follows that, for the ecb to deliver on its mandate, the more effective and safer option is to aim towards the upper region of the β€œ bcde ” zone by providing additional monetary stimulus, so that the adjustment is closer to the β€œ bcd ” path. this is the line of reasoning behind the design of the pepp, with a temporary phase of additional asset purchases intended to restore momentum to inflation dynamics. accordingly, the monetary policy challenge consists of two stages. the first stage is to counteract the negative shock to the expected inflation path caused by the pandemic : through an intense temporary phase of additional monetary accommodation, the pepp ( in combination with the other monetary policy instruments ) is designed to accomplish this first - stage task. once the negative shock has been sufficiently offset, the second stage is to ensure that
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and its further reduction a strategic imperative. annualised growth in real gross domestic product accelerated from 3, 5 per cent in the first quarter of 2005 to 4, 8 per cent in the second quarter, with firm growth recorded in virtually all the main sectors of alan greenspan in his testimony to congress on 3 november 2005 said : β€œ the bottom line is that in periods of extreme chaos, it ’ s turned out that gold has been the ultimate means by which transactions have been consummated. it occurred, for example, during world war ii that you could only negotiate transactions with gold. ” the economy. all the final demand components – household consumption, government consumption, and fixed capital formation – have been expanding briskly. as could be expected, the upswing in economic activity and expenditure was accompanied by a strong increase in import volumes. accordingly, the current account of the balance of payments moved into deficit from 2003. the current - account deficit amounted to approximately 3Β½ per cent of gross domestic product in the first half of 2005. information on visible foreign trade suggests a larger trade deficit in the third quarter of 2005 than in the first two quarters of the year, but comprehensive data on services and income flows for the third quarter still need to be finalised before the current - account balance for the third quarter of the year can be determined. relatively favourable prices for most of south africa ’ s export commodities have been helping to contain the trade and current - account deficits. at the same time sizeable inflows of financial capital have been recorded over the past three years, exceeding the current - account deficits and enabling the bank to increase its foreign exchange reserves. on a trade - weighted basis, the rand appreciated by 11, 7 per cent in 2004. during the first 10 months of this year it has depreciated by 9 per cent. the rand ’ s overall recovery since the lows of late 2001 can be mainly attributed to improved perceptions about south africa ’ s economic fundamentals, us dollar weakness, rising commodity prices, positive interest rate differentials, and, of course, a recovery from heavily oversold levels. the emerging view of the rand is that it will respond to changing fundamentals in an orderly manner. rising income levels, improved confidence and lower interest rates have bolstered credit extension, resulting in banks ’ loans and advances to the domestic private sector increasing by 21, 5 per cent over the twelve months to september 2005. mortgage lending has been exceptionally strong, supported by
. contrary to the boe, the acpr and the ecb have chosen to rely on such assumption, as it allows to take into account the concept of double materiality and to assess how financial institutions would implement their commitments or steer their alignment strategies. the second lesson we learned is that the implementation of scenario analysis can expose data gaps on firms ’ exposures. such data gaps are particularly acute in the case of scenarios, which go beyond the horizons typically considered by firms and their supervisors. this make disclosures of climate - related data and forward looking metrics all the more important to support effective scenario analysis. progress in this area has already been made, following the cop21, with the creation of the task force on climate - related financial disclosures ( tcfd ). in 2017, the tcfd published its recommendations in terms of reporting. these guidelines take into account the double materiality of climate matters : both the information on the exposure of the company to climate change, and the information on the impact of the company on climate must be considered significant. nonetheless, more progress is necessary concerning climate disclosure. a first step is the shift from β€˜ voluntary ’ to β€˜ mandatory ’ reporting. on june 7, g7 nations came to an agreement to make climate - reporting mandatory in line with tcfd recommendations. mandatory requirements have been enforced in the eu since 2014, and will be extended to a larger set of corporates when the corporate sustainability reporting directive ( csrd ) will enter into force ( expected to apply as of october 2022 ). it will also be completed by the development of a comprehensive set of eu sustainability reporting standards. the first set of standards would be adopted by october 2022. we expect that the international standards to be developed by the international sustainability standards board ( issb ) will ensure interoperability with regional standards and offer common building blocks across jurisdictions and sectors. * * * * * let me conclude in highlighting that we are just at the starting point of what we can do with and what we draw from those scenario analyses. further collective work is needed to improve them. i have no doubt that we will succeed in doing so. financial institutions need to step up their effort to combat climate changes. scenario analysis can be an important and useful tool in the hands of financial institutions and their supervisors to guide such necessary 2 / 3 bis central bankers'speeches effort. thanks a lot for your attention. 3 / 3 bis central bankers'speeches
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often much more risky than lending to the services and construction sectors, but that should not be an insurmountable obstacle if banks can upgrade the skills they need to evaluate borrowers and develop innovative products to help mitigate the risks. the need to channel more credit to the traded goods sectors also underlines the urgency of reducing real lending rates in uganda. industries which sell their products and services on competitive global markets cannot normally expect to earn very high rates of return to capital ; this inevitably limits their capacity to borrow at real lending rates in the region of 20 percent, as is currently the case in uganda. i would also like to signal a note of caution about the rapid build up of foreign currency lending by the banks, which stands in sharp contrast to the stagnation of shilling denominated lending. the ratio of foreign currency denominated loans to total outstanding loans has risen sharply since mid 2011, from 25 percent to the current level of 38 percent. most of this increase is not attributable to the depreciation of the exchange rate which has occurred in the last few months because the dollar value of these loans has itself risen by 27 percent over the last 12 months and by over 60 percent in the last 18 months. i am not worried about the foreign exchange market risk carried by the banks, because their net foreign exchange exposure is very small, but i am concerned about the liability dollarization of the real sector, which could translate into future credit risk if real exchange rate depreciation raises its real debt burden. the sector which has experienced the fastest growth in foreign exchange borrowing over the last two years is construction, mortgages and real estate ; this sector now accounts for a quarter of all foreign exchange borrowing from the banking system. it is a sector where the underlying demand for the services provided is derived from domestic residents rather than export markets and hence the ability to generate revenues to pay for these services must be bis central bankers ’ speeches affected by changes in the real exchange rate. similar considerations are relevant to foreign exchange borrowing by other sectors, such as most of the trade sector and telecommunications which account for a further quarter of foreign exchange borrowing. i hope that banks will be very careful about extending foreign currency loans to borrowers who do not have a strong foreign currency revenue stream from which to service their debt and which might, therefore, be vulnerable to adverse shifts in the real exchange rate. to conclude i would like us to take pride in the achievements of the banking industry over the last
decade ; it has become one of the most dynamic sectors of our economy. but i also want you to think about how the industry needs to evolve in the years ahead so that it can best meet the needs of its customers and the ugandan economy. thank you for listening. bis central bankers ’ speeches
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that system are fully meeting their capital requirements. in these circumstances, having a highly variable capital requirement presents a significant management challenge. we are considering ways of preserving the dynamism of stress testing while reducing its volatility, and plan to seek comment on a proposal in this area in the not - too - distant future. in addition, we are also exploring ways of improving our approach to measuring risks in the trading book. firms'trading books are dynamic and complex, as firms hold both long and short positions. many have noted that a single market shock does not adequately capture risks in firms'trading book, and we agree with those comments. we are exploring ways to incorporate multiple market shocks in our stress test without adding volatility to the results and without increasing the compliance burden. we are also considering adjusting another element of the scb proposal in order to provide more notice to firms. currently, and under the scb proposal, a firm must decide whether to increase or decrease its planned dividends and share repurchases for the upcoming year without knowledge of a key constraint : the results of the stress test. in other words, we require a firm to give us a formal plan for dividends and stock repurchases without knowing what its effective capital requirement is. if it guesses wrong, it could be publicly shamed for failing the stress test ( if its dividends are too high relative to capital ), or penalized in the markets for inadequate distribution of income ( if its dividends are too low relative to capital ). now, while this might at first blush appear to be pointless and obdurate cruelty, the reasoning behind the practice was initially perfectly sensible : it reflected the view that firms should think rigorously about their capital uses and needs in developing their capital distribution plans, rather than rely primarily on the results of the supervisory stress test to guide those plans. now that we all have several years'experience with this system, however, firms have told us that they would be able to engage in more thoughtful capital planning if they had knowledge of that year's stress test results before finalizing their distribution plans for the upcoming year. i am sympathetic to their concerns, and will ask the board to adjust the operation of the rule so that firms know their scb before they decide on their planned distributions for the coming year. this adjustment in sequence will also help firms manage volatility in the scb. we expect firms to continue to maintain robust stress testing practices and use
in broad terms, the basic structure of higher education remains much the same today, and it has been one that has proven sufficiently flexible to respond to the needs of a changing economy. certainly, if we are to remain preeminent in transforming knowledge into economic value, the u. s. system of higher education must remain the world leader in generating scientific and technological breakthroughs and in preparing workers to meet the evolving demands for skilled labor. however, the pressure to enable all workers to benefit from the new technologies also requires that we strengthen the significant contributions of other types of training and educational programs, especially for those with lesser skills. the notion that formal degree programs at any scholastic level or that any other training program established today can be crafted to fully support the requirements of one ’ s full working life has become subject to increasing doubt. it is evident that we need to foster a flexible education system – one that integrates work and training and that serves the needs both of experienced workers at different stages in their careers and of students embarking on their initial course of study. community colleges, for example, have become important providers of job skills training not just for students who may eventually move on to a four - year college or university but for individuals with jobs – particularly workers seeking to retool, retrain, or simply to broaden their skills. the increasing availability of courses that can be taken β€œ at a distance ” over the internet means that learning can more easily occur outside the workplace or the classroom. economists have long argued that a significant proportion of the work knowledge that one acquires in a lifetime is produced on the job. several decades ago much of that on - the - job training was acquired through work experience. today, businesses and labor unions are placing greater emphasis on the value of formal education and training programs – ranging from corporate universities to partnerships with community colleges and other providers – as well as relationships with public agencies, including welfare - to - work and school - to - work programs. these efforts recognize that technologically advanced learning must be grounded in real - world curriculums that are relevant to changing business needs and that it be provided in flexible venues that open access to development of skills to as many workers as possible. meeting the complex range of skills likely to be required of our workforce in the future presents a significant challenge to our educational system. but it is a challenge we cannot afford to ignore. we must provide young people with the opportunities and incentives to learn. we must ensure that our population at all
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banks encouraging customers to move more and more towards electronic modes of payments, it is necessary to realize that however robust and secure the systems deployed may be, it is the customers ’ perception that matters in the end. bis central bankers ’ speeches it may not be out of place to mention that the reserve bank of india recently commissioned a survey of the customer service obtaining at various atms across the country. while the overall satisfaction with the usage at atm at the national level was found to be at 7. 8 on a scale of 1 - 10, it was well below the national average in states like uttar pradesh, gujarat and chandigarh. however, the survey revealed scope for improvement in the grievance redressal mechanism. over two third of the respondents revealed that they had noticed the help - line number at the atms. over 52 % of the respondents reported that complaint resolution took about two weeks or more. but what is disquieting is that the response of banks about their inability to offer a proper solution to the grievance in over 43 % of the cases was β€œ they are following rbi guidelines ”. i think it is necessary for the customer relations personnel are adequately trained to guide customers with greater clarity. while the focus of the conference is on secure banking, it is not adequate to ensure that all banking transactions are duly authorized and customer interests protected. it is important for banks to realize that they have a vital role and responsibility to ensure that appropriate risk management measures are in place particularly to address issues relating to money laundering and terrorist funding. i recall that an year or so back, we found on enquiry that about 3 - 4 cards issued overseas were used extensively in the atms of one bank resulting in cash withdrawal of over rs. 2. 00 crore in a short span of three months. obviously, whoever used the card was not a tourist on a shopping spree! when the matter was brought to the notice of the bank, they conceded that with reasonable risk mitigation measures, the transactions could have been identified and remedial action initiated. in this regard, we at rbi also noticed that a bank overseas was offering prepaid cards which could be delivered in india by courier. while we had no idea about the kyc aspects overseas, these cards could be used at any atm in india to withdraw cash. the implications of such a system to our country are not hard to imagine. while rbi stepped in to halt the use of these cards in india, it
is important for banks to be vigilant against similar events and alert the appropriate authorities if necessary. another area of concern that has emerged relates to fraudsters soliciting information by directing unsuspecting customers to a website purported to be that of an authentic institution, through a link in the email. this has also happened when mails were received by members of the public that a huge amount was received in their name and held with the reserve bank of india. they were provided with a link which masqueraded as rbi website and inviting them to provide their bank account details. while rbi has cautioned the public through advertisements in the media, banks also need to be watchful. but an important question that begs an answer here is that in many of these cases money has been paid by the unsuspecting public into bank accounts from where the funds have been withdrawn. how did these accounts get opened in the first place? are banks lax in observing kyc requirements? is monitoring getting increasingly lackadaisical once the machines have taken over the work hitherto done manually? another challenge faced by the industry is handling of systems, data and processes by third party vendors, which is a necessity today, and the need to have effective control over the actions of these vendors / service providers. this is in addition to the internal threats as often computer criminals are employees of the same organization. so, while still aware of outside threats, banks have a new threat, inside violations concerning data at rest. today ’ s employees are able to easily export sensitive files and information via email, ftp or by copying data to portable media. banks have to control over where their sensitive information is, how it is used, and who obtains it. ( e. g customer data being compromised at citi account online, hyundai capital and sony ) banking industry has been conscious of the challenges to security and appreciable efforts are being made by all the stakeholders in the context, viz. governments, regulators, banks and technology providers. as you know, a working group was constituted by rbi under the chairmanship of shri. g. gopalakrishna, ed, rbi on information security, electronic banking, technology risk management and cyber frauds which provides detailed bis central bankers ’ speeches suggestions in areas relating to it governance, information security, it operations, information system audit, cyber frauds, business continuity planning, customer education and legal issues arising out of use of it. the group has given recommendations that need
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and disintermediation risks. moreover, we are not aware of any instances where lvr restrictions have been applied to sectors other than housing. accounting - based tools expected loss provisioning expected loss provisioning is a return to the more forward - looking ( and less pro - cyclical ) standards of the 1990s, where general provisions may be based on the expected loss over the life of a portfolio of loans, rather than current loss experience. the two international accounting boards – the iasb and the fasb – have each published proposed models for expected loss accounting and the two boards have since been working to align these proposals. a return to a system of expected loss provisioning in due course can be expected to play its part in contributing to a less pro - cyclical financial system. liquidity tools core funding ratio the core funding ratio is a tool that can help promote greater financial system resilience by requiring banks to fund credit using more stable sources than they might choose in the absence of the requirement. this discipline is particularly desirable during periods of rapid credit growth, when recourse to relatively cheap short - term wholesale funding rather than more stable longer term funding is more likely. bis central bankers ’ speeches as a tool to actively lean against excessive credit growth, our simulations suggest that the core funding ratio could, in some circumstances, play a useful supplementary stabilising role by requiring banks to always maintain a proportion of core funding which is typically more expensive than shorter - term wholesale funding. alternatively, the core funding ratio could be used as a counter - cyclical policy tool. although the core funding ratio could be a less effective anchor on credit growth during a global boom ( when funding spreads become compressed ), it would still be effective in its primary role of ensuring that banks resort to more stable funding sources. capital - based tools countercyclical capital buffers a countercyclical capital buffer is a further potential tool for building resilience in the face of excessive credit growth, which could be very beneficial during the subsequent downswing. it has also been suggested that these buffers might help to dampen the credit cycle directly. however, our calculations suggest it would have only a small dampening effect on the upswing of the credit cycle through its effect on the cost of funds ( unless one makes extreme assumptions about the size of the counter cyclical buffer or the market cost of capital ). sectoral risk - weight adjustments sectoral risk weights could be adjusted to boost capital requirements for lending to
national bank chief executive ’ s employment contract be between that person and the board of the national bank, and that any amendments to the national bank ’ s constitution have our consent. the intent of these measures is to ensure that there is coherence in the national bank ’ s local accountability arrangements and that the local board remains in a strong position to exercise independent and meaningful governance of the management of the national bank, in the best interests of the national bank, in good times and in bad. this requirement should be seen as a means of reinforcing our emphasis on the role of directors in overseeing a bank ’ s operations, and our ability to manage a crisis involving the failure of any large bank in new zealand. third, we require all prospective appointments of directors or senior executives to the anz or the national bank to be advised to us and the appointments made only if we have no objection. this measure ensures that the appointment process is in line with our new obligation introduced by the rbnz amendment act to have regard to the suitability for their positions of directors and senior managers of registered banks. generally speaking we would be unlikely to object to an appointment unless there were strong reasons to believe the individual would be unsuitable for a position of responsibility over a registered bank. finally, we require that each registered bank in the anz group maintain a level of capital in line with our current policy on capital adequacy for consolidated banking groups. this tightens up the capital adequacy rules a little in this case, to account for the fact that the anz group now contains two systemically important registered banks. we regard it as important that each of these banks maintain adequate capital on a solo basis. we took these steps in pursuit of our statutory obligations to promote the maintenance of a sound and efficient financial system in new zealand, and to avoid significant damage to the financial system that could result from the failure of a registered bank. we don ’ t think the conditions will make a great difference to the current day - to - day running of the national bank ’ s operations under normal circumstances. however, we do see them as important in bolstering our ability to deal with a crisis situation involving the bank or the anz group. we sought to impose the conditions in a manner consistent with our general approach to banking regulation, which is not to get into the business of managing banks, but to put the onus for effective bank management on the shoulders of those bestplaced to carry that task - the
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##trants, a substantial share of which were community banks. 16 small business access to credit at the federal reserve, we view small business credit from several perspectives. for the economy, small businesses need adequate and affordable credit in order to form, grow, and succeed ; otherwise they may underperform, slowing growth and employment. for many small business owners, personal and business finances are intertwined. a well - functioning housing finance market is vital for small business owners who may draw upon the equity in their homes to fund their businesses. student loans may be needed to help fund the education that is important for both small business owners and their employees to boost profits and productivity. and, short - term credit matters for day - to - day management of cash flow, while longer - term credit is essential for capital investments. so, entrepreneurs β€” just like consumers β€” need access to a variety of credit sources. recently, i had the pleasure of meeting a group of small businesses from across the country. by β€œ small, ” i mean some of these companies have just a handful of employees. the group included owners of a catering company from dallas, a mechanical engineering company from philadelphia, a marketing consulting firm from cleveland, a combination bar and bakery from 3 / 7 bis central bankers'speeches brooklyn, and a gluten - free bakery from my hometown, salt lake city. they shared with me the joys of running their own businesses, of creating jobs, and of providing for their families as well as creating opportunities for their employees. they also spoke of their challenges, which i ’ m sure are familiar to many of you in this room. for one, the owners wear many hats, including ceo, chief operating officer, chief finance officer, head of sales and marketing, and some β€” quite literally β€” chief bottle washer. they also spoke of the day - to - day difficulties of finding, training, and retaining employees. and, they raised the challenges they often face in gaining access to working capital, the lifeblood to sustaining and growing their businesses. the anecdotes i heard touched on three related trends we have been observing in the small business credit environment. first, although lending standards have eased since the recession and the financial condition of businesses has improved, some small business credit needs, especially for the smallest of firms and minority small business owners, continue to go unmet. according to a 2016 small business credit survey conducted by our 12 federal reserve banks, some small businesses still face persistent credit gaps,
. several of the businesses i met with mentioned they had turned to nonbank online lenders after being turned down by banks. some online lenders obtain access to a prospective borrower ’ s accounting software, merchant accounts, shipping, and payroll data in real time in order to underwrite businesses. business owners can receive funds in a couple of days or even hours. this emergence of online lenders is part of a broader evolution of financial technology β€” or β€œ fintech " β€” as seen in a wide range of products and services for both consumers and small 4 / 7 bis central bankers'speeches businesses. i ’ m not surprised to see this important topic on your conference agenda. the use of fintech to expand access to credit has great promise and also associated risks. for example, online origination platforms and more sophisticated algorithms may enable credit to be underwritten and delivered in a manner that is still prudent but with greater efficiency, convenience, and lower processing costs. and as regulators, we do not want to unnecessarily restrict innovations that can benefit consumers and small businesses. at the same time, our interest is in ensuring that banks understand and manage their risks when introducing new technologies or partnering with fintech companies, and that consumers and small businesses remain protected. 23 this is why the federal reserve has been engaged in a broad and multidisciplinary effort to develop a robust understanding of the technologies and activities in this space, in order to study fintech ’ s opportunities and risks, and assess policy and supervisory implications. 24 fintech is also one of the factors driving calls for regulators to modernize the community reinvestment act, or cra, as technology changes how financial products and services are accessed. as i ’ m sure most of you know, the cra is an important law that recognizes banks ’ affirmative obligation to meet the credit needs of the communities they serve, including low - and moderate - income communities. the cra promotes financial inclusion by encouraging banks to extend mortgages, small business loans, and other types of credit as well as to provide investments and other services in communities where they take deposits, consistent with safe and sound banking operations. the arrival of new financial technologies, along with significant industry consolidation and other structural changes, has changed the way that financial services are delivered to consumers and the ways in which banks lend in communities. we continue to study these shifts, and share the common goal of improving the current supervisory and regulatory framework for cra to further the
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, changes in world - wide trends on secured currency, and the costeffectiveness of production and handling. our banknotes began with paper substrate but since 1991 we have moved on to introducing polymer notes, the second country outside australia to do so. we find polymer banknotes more cost - efficient, more durable and last longer, especially in our humid png climatic conditions. the new five kina polymer banknote to be launched this afternoon is the last denomination to be converted and completes the series of polymer banknotes. advanced security features are incorporated in the latest series of our banknotes as protection against counterfeiting. we have also standardized the main theme running throughout all our banknotes. on the back of our banknotes, we retain our traditional forms of money ( for the 2, 5, 10 and 20 kina ), the grand chief sir michael somare appears on the k50 note depicting our road to nationhood and guardianship of our country. the progress in economic and technological development is reflected on the back of the k100 note. on the front of each of the banknotes, you will note that we now have the image of the national parliament. this family of notes using the β€œ parliament theme ” shows different aspects of the parliament house together with a smaller image of the national crest. these are symbols of nationhood. papua new guinea is predominantly a cash - based economy and will remain so for some time. the majority of our people will continue to use cash ( coins and banknotes ) as the main form of payment in settling their transactions, in conducting their business activities and meeting social obligations. we at the bank of papua new guinea will therefore ensure that our currency are of an acceptable standard, are durable, and longer lasting, given our tropical humid conditions and the frequent and rough handling of currency by the public. for this reason, the bank has introduced a clean bank note policy to maintain the standards and increase public awareness of the quality of our currency. with these few remarks, ladies and gentlemen, it gives me great pleasure to invite our minister, honourable patrick pruaitch to officially launch the new five and ten kina banknotes.
l wilson kamit : tackling extreme poverty in papua new guinea address by mr l wilson kamit, cbe, governor of the bank of papua new guinea, to the lowy institute for international policy conference on β€œ tackling extreme poverty in papua new guinea ”, sydney, 14 may 2009. * * * distinguished guests, ladies and gentlemen may i firstly thank the organizers of this conference, namely the lowy institute for international policy, care australia and the australian national university for the invitation to address this conference on tackling extreme poverty in png. it is not very often that governors of central banks are asked to comment on social issues or microeconomic matters. we tend to look at the macroeconomic level. given the global financial crisis and its adverse effects that are being felt right across the globe, i am pleasantly surprised at the invitation to this conference. recently, i have been asked to address different audiences on this subject at home and abroad. i was asked to comment on the impact of the current global financial crisis on the png economy and its impact on poverty. i have some comments to make on the first part, which is the likely impact of the global financial crisis on png. i must however confess that there are others gathered here today who are better placed to comment on the second part of our discussions on the impact on poverty. i will therefore restrict myself to making some general remarks. ladies and gentlemen, much has been said and written about the causes of the current global financial crisis and its effects around the globe. i will therefore not dwell on them. the maxim that β€œ no nation is an island ” is never more so true than now, where all countries, developed and developing, if they have not been so far, will be affected in one way or another by this crisis. development through globalisation, international trade and global finance has meant that we, in png, will also be affected by activities and events taking place far away in the major financial centres and industrialized countries. as a small, open economy, png is a price taker for our exports and is vulnerable to the global economic and financial conditions. given this, the question for us, therefore, is in what ways is png likely to be affected by this financial crisis. we are, to an extent, fortunate in png in that our banking system is shielded from the immediate effects of the crisis. our banks and financial institutions are engaged in the traditional financial activities of raising funds from depositors and
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at a micro level. in the midst of a crisis, a central bank faces growing demand for introducing unconventional policy measures, which involve more or less quasifiscal policy elements. since a central bank generally thinks that such measures need to be decided and implemented by government in democratic society, a central bank falls into a difficult position, when decisions by government are just postponed. the border between pure monetary policy and quasi - fiscal policy sometimes becomes ambiguous. looking back at the experiences of various countries since the 1990s, when their central bank law had clauses for making some quasi - fiscal policy measures possible, they decided to carry out such measures after careful consideration. once a crisis was overcome, with the help of such unconventional policy measures, central banks were criticized for violating the fundamental rule in democratic society. as a result, such a situation is likely to undermine credibility for central banks, and thus affect their policy performance. iv. tasks for central banks as i discussed so far, central banks face new and difficult challenges at the moment. with considering such difficult challenge, i will point out some tasks in addressing such difficult challenges. understanding of a primary mandate for a central bank the first is the understanding of a primary mandate for a central bank. without social understanding on that point, central bank independence and, eventually, central bank credibility itself are likely to be undermined. i think that a primary mandate for a central bank should be to achieve a stable financial environment, that is, a financial environment that is consistent with, and contributes to, sustainable economic growth. price stability is certainly one important element in achieving a stable financial environment. that is, however, not the sole factor. when a central bank feels constrained by short - term developments too much, that is more likely to amplify macroeconomic fluctuations. after all, deposit money, which has a major share in broad money, is created as a product of maturity mismatches and leverage of private financial institutions. a central bank needs to adequately monitor the financial environment, including such behavior of financial institutions. macroprudential perspectives, recently reemphasized in light of the current global financial crisis, should be understood as examining the interactions between the real and financial sides of the economy, considering the behavior of private financial institutions. such an analysis is an essential task for a central bank, although it is a typical example of β€œ easier said than done. ” in addition, macroprudential analyses and perspectives are crucially important in conducting monetary policy as well as
bear the risks. will they be such that regulators do not need to regulate them? will financial regulators even need to know where the risks are distributed? one view is that as long as the participants in this market are large institutional investors, or high net worth individuals, they will need no protection. let the risks be distributed among those who wish to take such risk, and let it be distributed according to their capacity as determined by the market itself. hence, there is no need for any safety net like the one that is implicitly embedded in the lender of last resort role of central banks. what will be important in such markets is the availability of adequate market liquidity at all times for them to operate efficiently, enabling market participants to take and liquidate positions as necessary. the job for regulators would then be to ensure that there is adequate depth in the markets, that clearing and settlement systems are efficient and safe, that there are no dominant market players who can move markets, and that the players are themselves large and sophisticated. in times of market stress, the only issue would be the availability of adequate liquidity. given that the extraordinary growth of credit and other financial derivatives is still a relatively new phenomenon, and that this has happened in the context of accommodative monetary policies in g3 countries in recent years, it is too early to assess how such markets will work in times of stress and what the overall regulatory approach should then be. one positive side of this assessment is that, unlike the 1980s and 1990s, when financial crises were frequent in developing and developed countries alike, the past decade has been remarkably free of such crises, worldwide. high oil prices, large business failures, large stock market fluctuations that have been witnessed in this period have not resulted in financial crises, or disruptive effects on financial intermediaries. this is attributed to the wider dispersion of risk by some, whereas others point to the overall benign macroeconomic and healthy global growth conditions that have prevailed over this period. what is my take on these international developments and their implications for india? i don't have a clear answer. we need to embrace these financial developments in such a way that we continue to ensure financial stability, and that we enable domestic market participants, both financial and nonfinancial, to increasingly deal with the kind of risks that are emerging with greater market liberalization both at home and abroad. as a monetary authority and financial sector regulator, we will need to enhance our own risk management capacity
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want to underscore some encouraging progress in improving data collection to enhance visibility into hedge fund activities. 7 in addition to their ongoing work on emerging risks, the financial stability oversight council ( fsoc ), the office of financial research ( ofr ), and individual fsoc agencies should continue to work together to ensure regulators have appropriate information to assess the financial stability risks posed by nonbank activities and their interconnectedness with banks. in conclusion, the financial system is substantially more resilient than it was in the mid - 2000s. however, vulnerabilities have risen somewhat in recent years, as highlighted by fragilities at nbfis, in the treasury market, and β€” most notably this year β€” at some banks. our framework and assessment of financial stability vulnerabilities help us understand these issues, but i am cognizant of the limitations. we cannot β€” and do not expect to β€” foresee all potential risks. the financial system is too complex and evolves too rapidly for that to be possible. what we can do is remain vigilant to emerging vulnerabilities and build resilience to a variety of potential shocks. i think it is particularly important to enhance resilience at large banks, and i support seeking public comment on federal banking agencies ’ basel iii endgame proposal on bank capital requirements. i will also focus on monitoring vulnerabilities at nbfis and the functioning of treasury markets. i strongly support continued efforts across the regulatory agencies to share more information and to boost resilience of the entire financial system. for example, the sec ’ s improved form pf reporting and the ofr ’ s bilateral repo data collection. - 10 looking forward, an area that i think deserves more attention is the financial stability implications of artificial intelligence ( ai ), especially its applications in financial services. i can imagine many of you, especially graduate students, are using or exploring the use of machine learning and other forms of ai in your research in economics. on the one hand, ai innovations could expand credit access for consumers and small businesses and bring greater efficiency to broader financial markets. on the other hand, the potential widespread adoption of powerful new ai, especially generative - ai applications, inevitably raises questions about potential benefits and risks to the stability of the financial system as a whole. academics, regulators, and financial market participants are all looking carefully at ai, and more research is welcome as we move ahead in exploring the policy and regulatory
evidence in favor of efficiency gains is weak. the study also found that the effects of consolidation on competition and credit flows are very case - specific and depend on the nature of markets for specific products and services. as i noted, this study was commissioned by finance ministers and central bank governors, so we investigated the implications of consolidation for central bank policies. the study found that financial consolidation has not significantly affected either the conduct or the effectiveness of monetary policy. however, it also suggests that central banks should remain alert to the implications of future consolidation - induced reductions in the competitiveness of the markets most important for monetary policy implementation. similarly, central banks ought to monitor potential future changes in the transmission mechanisms for monetary policy. importantly, the study also concluded that existing policies appear adequate to address individual firm and systemic risks now and in the intermediate term. however, going forward, the study identifies a number of areas that deserve careful attention by policymakers. for example, enhanced contingency planning could reduce the risks to individual firms and the broader financial system, should a large and complex financial institution become seriously distressed. because no institution is too big to fail, i believe that regulators should develop a clearer understanding of several key factors. these factors include the administration of bankruptcy laws and conventions across borders ; the coordination of supervisory policies within and across borders ; the treatment of over - the - counter derivatives, foreign exchange, and other " market " activities in distress situations ; the roles and responsibilities of managers and boards of directors ; and the administration of the lender - of - last - resort function. our study helped to clarify the need for international attention to contingency planning. in general, both crisis prevention and crisis management could be improved by additional communication and cooperation among central banks, finance ministries, and other financial supervisors, both domestically and internationally. consolidation in the us against this international background, i would like to look at what has been occurring in the united states. in the u. s., more than 4, 000 commercial banking and thrift organizations were acquired between 1990 and 2000. the pace of merger activity generally increased between 1990 and 1998, peaking at more than 500 deals in 1998. in 1999 and 2000, the number of mergers and acquisitions returned to the levels experienced at the start of the decade. partly offsetting this trend, more than 1, 400 charters for new banks and thrifts were issued during the 1990s. 1998 was also the standout year in terms of transaction size. deals completed in that year accounted
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by a press conference of the cbc governor at the bank's premises. by publishing this report the day after the meeting, the board will have the chance to reinforce the communication of the grounds that justify the policy decisions. in general, the vast majority of central banks publish their reports or similar documents on the same day that monetary policy decisions are announced. the monetary policy report will continue to be submitted to the senate immediately after its publication, in dates that will be agreed upon with the respective instances. the financial stability report, for its part, will continue to be published twice a year, but will now be made separately from the monetary policy report, in may and november ( table 4 ). the two reports will now more actively integrate the outcome of the economic and financial research work carried out by the bank in matters of particular relevance to the institution's policy decisions. a first step in this direction is the document on trend growth attached to the present mp report. all the changes i have described will become effective in january 2018. in addition, in september of each year we will publish the calendar with the dates of the monetary policy meetings and the publication of the reports of the next calendar year. for 2018, this calendar will be published next thursday, september 14th. all these changes are part of the bank's strategic plan and are intended to strengthen the current monetary policy framework, in order to reinforce compliance with the objective of price stability. moreover, these measures are the product of a thorough internal evaluation and reflect both the bank's accumulated experience and the best practices established at the international level. concluding remarks with this presentation i hope to have shown how the central bank of chile continues to fulfill the responsibilities assigned to it by the law, while progressing in its adaptation to new challenges and the need to maintain and enrich the trust of the citizens. the bank has no agenda other than the functions and tasks entrusted, but these are enough to motivate a continuous effort of improvement that today takes special relevance. as i mentioned in my first presentation to the finance committee last december, this year we are carrying out a strategic planning exercise that will allow us to establish a framework for our institution ’ s development over the next five years. to prepare this exercise, we did widespread consultations, which included, among other things, close to a hundred interviews with corporate counterparties. i would like to thank the senators who answered our questions. a series of initiatives will come out from the strategic planning process that will help the
0. 3 0. 3 0. 0 0. 0 - 0. 3 - 0. 3 - 2 - 2 - 0. 6 - 0. 6 - 4 - 4 - 0. 9 - 0. 9 - 6 - 1. 2 - 1. 2 - 8 - 1. 5 - 1. 5 resto total - 6 rr. nn. - 8 apr. 14 apr. 15 apr. 16 apr. 17 ( * ) difference between annual variations of the original and the seasonally - adjusted non - mining imacec. source : central bank of chile. figure 3 domestic demand and components ( real annual change, percent ) private consumption final demand ( * ) - 2 machinery & - 5 equipment ( right axis ) - 4 - 10 construction & other works - 6 - 15 - 8 - 20 ( * ) without inventory change. source : central bank of chile. figure 4 labor market ( percent ) total employment ( annual change ) unemployment rate self - employed ( annual change ) ( right axis ) - 3 salaried ( annual change ) - 6 - 5 - 10 source : national statistics institute ( ine ). figure 5 consumer expectations : ipec interest rate by type of loan ( original series ) ( index, july 2017 = 100 ) 80 country's economic purchases of situation 12 mo. household 70 ahead items housing commercial consumer current personal economic situation ipec ( 1 ) value above ( below ) 50 indicates optimism ( pessimism ). ( 2 ) weighted averaged rates of all operations performed in each month. ( 3 ) loans denominated in ufs. sources : adimark and central bank of chile using sbif information. figure 6 contribution of gfcf to annual gdp growth imports of capital goods ( annual change, percent ) ( percentage points ) 2. 0 2. 0 1. 5 1. 5 gfcf 1. 0 0. 5 1. 0 machinery & equipment 0. 5 0. 0 0. 0 - 0. 5 - 0. 5 - 1. 0 - 1. 0 - 1. 5 construction & - 1. 5 other works - 2. 0 - 2. 0 total - 20 - 20 minus other - 40 transportation ( * ) - 60 - 60 10 11 12 13 14 15 16 17 - 40 ( * ) excludes non - regular transportation vehicles ( airplanes, ships, helicopters and trains ). source : central bank of chile. figure 7 parities with the us dollar real exchange rate ( change accumulated
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investors have been using hong kong as their main platform for overseas direct investments ( odis ) to reach out to the world. this clearly demonstrates that hong kong, under the β€œ one country, two systems ” framework, is serving the needs of mainland customers for offshore financial services. it is therefore natural to see the rapid growth of hong kong ’ s private banking business in recent years. from mid - 2010, 7 new private banks have been set up in hong kong, taking the total number of private banks to 39. further, the hkma is seeking to modify the licensing requirements for banks so as to facilitate a broader range of financial institutions, including those specialised in private banking, to establish an operation in hong kong. what kind of regulatory framework hong kong needs to support the sustainable development of private banking? while hong kong is fortunate enough to be endowed with many underlying competitive advantages, these advantages are not enough, in my view, to sustain the healthy development of our private banking industry in the long run. hong kong also needs a regulatory framework that is user friendly to private banking clients and yet sufficiently robust to provide appropriate investor protection. the regulatory framework in hong kong is basically a disclosure - based regime, supported by suitability assessment by intermediaries at the point of sale. in a nutshell, product issuers have to make adequate disclosure in product documents about the features and risks of investment products. intermediaries, when making a recommendation or solicitation in respect of an investment product, must assess the product suitability for individual clients, and clearly explain to clients the key product features and risks. a proper suitability assessment starts with a robust know - your - client ( kyc ) process and client risk profiling. these processes not only help to fight money laundering and the financing of terrorism, but also enable private banks to obtain relevant information to better understand their clients, including their background and, most importantly, their risk appetite and investment needs. by doing so, private banks can agree on an investment strategy with clients and provide suitable products and services that fit their needs. bis central bankers ’ speeches as we all know, private banking clients cover a wide spectrum of individuals. at one end of the spectrum there are clients who are highly seasoned investors, at the other end there may be unsophisticated clients with only very basic investment knowledge, notwithstanding that they have substantial wealth. while our regulatory framework is aimed at providing appropriate investor protection to all clients, regardless of the size of their wealth,
joseph yam : can the euro be a benchmark for asian monetary co - operation? remarks by mr joseph yam, chief executive of the hong kong monetary authority, at the keynote discussion : β€œ the euro : a stabilising factor of the international monetary system. can the euro be a benchmark for asian monetary co - operation? ” before the paris europlace financial forum : the euro markets in a global investment strategy, hong kong, 21 march 2005. * * * it is a great pleasure to be here this morning to take part in this keynote discussion on the euro hosted by paris europlace. one of the great benefits of living in an international financial centre is the opportunity to share something of the life and culture of other parts of the world without leaving one's own city. we have always been fortunate in hong kong in our enjoyment of the fruits of european and particularly french - civilisation. we are currently enjoying, as part of " the year of france in china ", the superb impressionism exhibition at the hong kong museum of art : together with all of the excellent performances in our international arts festival, and the growing popularity of al fresco dining, this is helping to create a very european atmosphere in hong kong this spring. and, from what i see on the streets, i do not get the impression that the strong euro is having any effect on sales of european fashion. today's forum therefore seems to fit in very well with the european spirit now sweeping hong kong, and i congratulate the organisers on putting together a very lively and topical programme. it is a particular pleasure to be presenting together with christian noyer, governor of the banque de france. he has made some very thoughtful remarks on the first question for discussion. i intend to comment on the second question : " can the euro be a benchmark for asian monetary co - operation? " but before i address this question, we need to ask another question : how ready is asia for closer monetary co - operation? we are, i think, all aware of the considerable differences in the political systems, the cultures, the historical backgrounds, and the economic, financial and monetary systems of the countries in this region. i think it is largely accepted that these differences are greater than the differences between the various economies that make up the euro zone. nevertheless, it is important not to overstate them. nor should we overlook the regional integration already in progress in the trade, financial and monetary spheres. let
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% 8 on march 30, 2009, before being raised back to the initial rate of % 18 on october 1, 2009. bis central bankers ’ speeches dear participants, so far i have touched on the impacts of movements in commodity prices on inflation and economic growth. now i will talk about the impact of fluctuations in commodity prices on foreign trade balances. the dependency of the turkish economy on energy imports makes the current accounts balance more sensitive to changes in commodity prices. uncertainties regarding the global economy in recent years and the exceptionally loose monetary policies adopted by advanced economies, such as the united states, japan and the euro area, foreshadow the high probability of continued excess volatility in commodity prices. in the face of these developments, we welcome the recent concrete steps, as part of the medium term program in turkey, towards reducing the dependence on energy imports by shifting to domestically produced and renewable energy sources. these measures will hopefully ease the susceptibility of the current account to commodity prices in the long run. the key question in the short - run is how to smooth out the impact of the commodity prices on the domestic economy in the short to medium term, while there is a heightened degree of uncertainty regarding financial and real factors. in turkey, ex - refinery fuel prices, in addition to the 18 percent - value added tax ( vat ), are also subject to the special consumption tax ( sct ). special consumption tax, which is not only a fixed tax but also comprises a major part of the final prices of fuel products, helps to smooth out significant fluctuations in crude oil import prices. thus, consumers are less affected by such fluctuations. esteemed guests, it seems that uncertainties regarding commodity prices will continue to be an important factor to be considered carefully in policy implementations in the forthcoming period, too. i believe that the papers presented in this conference will guide us in overcoming the policy challenges we will face along the road. thank you very much for your interest and participation. bis central bankers ’ speeches
the turkish manufacturing industry. this is the case in sectors populated by firms with high market shares and thus with high concentration ratios. it is observed that in sectors lacking a well - established competition environment, the competition pressure exerted by imports is relatively low and the downward pressure exerted by imports on domestic prices is not strong enough despite the high share of imports. another example revealing the significance of the competition policy for the central bank is related to the unregistered economy. as you all know, unregistered employment is about 50 % in our country. this rate is higher in agriculture, construction and the services sector, where inflation is relatively higher. unregistered economic activities prevent firms from attaining the most efficient scale of production and producing at the lowest unit cost. firms failing to attain the lowest cost scale price their products at a relatively higher level. one of the factors influential in this is the financial burden brought about by registration procedures. in order to remain unregistered, firms are not willing to grow in scale. they also abstain from applying for bank credits and delay technological renovations due to financial hardship. on the other hand, the competitive power of registered firms is eroded against their competitors, which take advantage of remaining unregistered. besides, growing in scale becomes harder for these registered firms. major reforms were made in turkey in 2003 to improve the business environment. the most remarkable of these are the regulations to reduce the procedures in starting businesses and to ensure that all the required transactions are carried out under the body of a sole authority. as a matter of fact, the results of the β€œ doing business ” report by the world bank reveals that our country ranks fairly high compared to other countries in terms of the duration for starting businesses, reservation of ownership, enforcing contracts and paying taxes. the concrete consequences of these reforms are apparent in the number of newly launched businesses in the period following the year 2003. however, as pointed out in the same report, turkey is at the bottom of the list in terms of costs for starting businesses ( issuing licenses and permits after starting the business ), regulations for firms exiting the industry, licensing procedures, ease of recruiting and employing workers. we can list transport vehicles, white goods and consumer - oriented electronic products such as radio and television as the sectors where turkey ’ s competitive power is relatively high at present. the increased market share of china and india in these sectors poses a potential risk for the turkish economy. in response to these risks, some structural reforms
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explain our assessment in greater detail, starting with the economic analysis. following the 0. 3 % quarter - on - quarter increase in euro area real gdp in the fourth quarter of 2010, recent statistical releases and survey - based indicators point towards a continued positive underlying momentum of economic activity in the euro area in early 2011. looking ahead, euro area exports should be supported by the ongoing recovery in the world economy. at the same time, taking into account the relatively high level of business confidence in the euro area, private sector domestic demand should increasingly contribute to economic growth, benefiting from the accommodative monetary policy stance and the measures adopted to improve the functioning of the financial system. however, the recovery in activity is expected to be dampened somewhat by the process of balance sheet adjustment in various sectors. in the governing council ’ s assessment, the risks to this economic outlook remain broadly balanced in an environment of elevated uncertainty. on the one hand, global trade may continue to grow more rapidly than expected, thereby supporting euro area exports. moreover, continued strong business confidence could provide more support to domestic bis central bankers ’ speeches economic activity in the euro area than currently expected. on the other hand, downside risks relate to the ongoing tensions in some segments of the financial markets that may potentially spill over to the euro area real economy. downside risks also relate to further increases in energy prices, in particular in view of ongoing geopolitical tensions, and to protectionist pressures and the possibility of a disorderly correction of global imbalances. finally, there are potential risks stemming from the economic impact on the euro area and elsewhere of the recent natural and nuclear disaster in japan. with regard to price developments, euro area annual hicp inflation was 2. 6 % in march 2011, according to eurostat ’ s flash estimate, after 2. 4 % in february. the increase in inflation rates in early 2011 largely reflects higher commodity prices. pressure stemming from the sharp increases in energy and food prices is also discernible in the earlier stages of the production process. it is of paramount importance that the rise in hicp inflation does not lead to second - round effects in price and wage - setting behaviour and thereby give rise to broad - based inflationary pressures over the medium term. inflation expectations must remain firmly anchored in line with the governing council ’ s aim of maintaining inflation rates below, but close to, 2 % over the medium term. risks to the medium - term outlook for price developments remain on the
in productivity. on the labour market, the priority must be to enhance wage flexibility and incentives to work, and to remove labour market rigidities. finally, the governing council is of the view that the package of six legislative proposals on economic governance, adopted by the european council at its summit on 24 – 25 march 2011, goes some way to improving economic and budgetary surveillance in the euro area. however, in our view, the proposals fall short of the necessary quantum leap in the surveillance of the euro area which is needed to ensure the smooth functioning of economic and monetary union. therefore, the governing council, in line with the ecb ’ s opinion of 17 february 2011 on these proposals, urges the ecofin council, the european parliament and the commission to agree, in the context of their β€œ trialogue ”, on more stringent requirements, more automaticity in the procedures and a clearer focus on the most vulnerable countries with losses in competitiveness. all this would help to ensure that the new framework is effective in the long run. bis central bankers ’ speeches
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toshihiko fukui : a review of the bank of japan ’ s conduct of monetary policy statement by mr toshihiko fukui, governor of the bank of japan, concerning the bank ’ s semiannual report on currency and monetary control, before the committee on financial affairs, house of representatives, tokyo, 23 march 2004. * * * introduction the bank of japan submitted its semiannual report on currency and monetary control for the first half of fiscal 2003 to the diet in december 2003. i am pleased to have this opportunity to present an overall review of the bank ’ s conduct of monetary policy. i. developments in japan ’ s economy japan ’ s economy is recovering gradually. exports have recently increased substantially, and business fixed investment continues its path of recovery. reflecting these developments, industrial production has also been increasing. the decline in household income is gradually coming to a halt, and private consumption is currently showing some positive movements. as for the outlook, japan ’ s economy is anticipated to continue recovering moderately, reflecting the projection that overseas economies will continue growing relatively fast and final demand, particularly exports and business fixed investment, will continue recovering. the features of japan ’ s current gradual recovery are as follows. first, reflecting the steady recovery of the world economy led by it - related demand worldwide and the high growth of the chinese economy, japan ’ s exports are increasing substantially. a virtuous cycle is starting to operate in the economy initiated by the increase in exports, leading to an increase in production and corporate profits, and then to a recovery of business fixed investment. second, firms ’ efforts to tackle their structural problems such as excess debt and labor are finally starting to show results. large manufacturers ’ profitability has improved considerably as a result of streamlining of business operations and restructuring of industries, although adjustment pressure remains at nonmanufacturers and small firms. as for the japanese financial system, there are some encouraging signs that, especially at major banks, various efforts to restore banks ’ financial soundness are paying off, although the system is still in a difficult situation as a whole. given this economic situation, domestic corporate goods prices are recently rising due mainly to the strengthening of overseas and domestic commodity prices, and are expected to continue increasing for some time. the year - on - year rate of change in consumer prices ( excluding fresh food ) has been close to zero percent, while temporary factors such as the rise in rice prices have exerted upward pressure, and is likely to
be around zero percent for the time being. however, consumer prices are basically projected to continue falling slightly, since the imbalance between supply and demand in the economy remains considerable despite a gradual improvement. financial markets have been stable on the whole, even during the approach of the fiscal year - end at the end of march 2004 as the bank has been providing ample liquidity. the environment for corporate finance is becoming somewhat more accommodative on the whole, although it remains severe for firms with high credit risks. the lending attitude of private banks has been slightly more accommodative, and the issuing environment in the corporate bond and cp markets continues to be favorable. ii. conduct of monetary policy the main features of current monetary easing policy are as follows. first, the bank has been providing ample liquidity to the money market, with the outstanding balance of current accounts at the bank as the operating target for money market operations. second, the bank is committed to maintaining the quantitative easing policy until the consumer price index ( excluding fresh food, on a nationwide basis, hereafter the core cpi ) registers stably zero percent or an increase year on year. and third, the bank is working to strengthen the transmission mechanism to ensure that the effects of monetary easing permeate through the economy. the bank has been implementing additional measures since the autumn of 2003, as in the past, in line with these three main features. with regard to the bank ’ s provision of funds to the money market, it raised the upper limit of the target balance of current accounts at the bank by 2 trillion yen in october 2003, to provide scope for conducting money market operations in a more flexible manner. in addition, in january 2004, the bank raised the target range for the outstanding balance of current accounts at the bank by 3 trillion yen to around 30 to 35 trillion yen in order to reaffirm its policy stance of overcoming deflation and to ensure a continued recovery. regarding its commitment to maintain the quantitative easing policy, the bank released a more detailed description in october 2003. that is, the commitment to maintain the quantitative easing policy until the core cpi registers stably zero percent or an increase year on year is underpinned by the following two conditions. first, it requires not only that the most recently published core cpi should register zero percent or above, but also that such tendency should be confirmed over a few months. second, the bank needs to be convinced that the prospective core cpi will not be expected to
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1970. more and more often, physical risks impact our supply chains. as a result, they aggravate already severe pandemic - related disruptions and increase price levels further. climate risk is not something to worry about tomorrow, climate risk is something to worry about today. especially because we did not worry enough yesterday …. in addition, research by dnb and our international counterparts shows that nature - related risks surrounding biodiversity also are in need of our attention. the green transition can no longer wait. we need to step up : as vaclav havel put it : β€œ vision is not enough, it must be combined with venture. it is not enough to stare up the steps, we must step up the stairs. ” the implementation of sustainable finance is our venture, our decisive step up the stairs. we must implement serious climate policies which take into account the negative externalities of carbon emissions. that means encouraging sustainable initiatives rather than subsidizing fossil fuels. that means incorporating esg risks into our policies and business strategies. that means providing a wide array of sustainable and transparent financial products for our clients and partners. at the end of the day, renewables also remain our best bet to establish energy security. fortunately, the financial sector overwhelmingly supports the paris agreement and pledged en masse that they – that we – will do our part to establish a net - zero economy. while more is still needed available capital should be put to maximum use for financial while more is still needed, available capital should be put to maximum use. for financial institutions, this means implementing proper risk management policies to price in esg risks. but for risks to be understood by the broader public, we also need common reporting regimes. in this regard, i applaud the ambitious eu initiatives regarding climate disclosures. at the same time, financial institutions have voiced concerns regarding the different metrics that are currently being drafted between the eurozone and standard setters such as the issb. therefore, i would like to echo my previous message regarding the harmonization of regulatory policy. by designing internationally comparable climate disclosures from the start, we maximize their impact. this puts the industry in the best possible position to put their capital to work. just as our ancestors joined hands to create a strong financial sector by means of the joachimsthaler, we now have to honor their legacy by keeping it that way. today, a strong financial sector requires resilience and a transition to a balanced, sustainable economy. we
rethinking the way we do things. it entails changes at a fundamental, foundational level, which means that it requires organisations to evolve. three examples of how technology is transforming how we do business come to mind immediately. the first is payment systems. in recent years, we ’ ve seen the emergence of mobile wallets and crypto assets, offered in many cases by entities that fall outside the rubric of traditional prudential regulation. these developments can influence how the financial sector landscape evolves. we must determine if and how to regulate them, and we must develop the capacity to do so. in barbados, we envisage that new payments system regulation will seek to address this gap in our regulatory framework. the second is data. more than ever, both the public and private sector rely on accurate, timely, and specific data for analysis and forecasting, and they look to central banks to provide much of 1 / 5 bis central bankers'speeches that data. we need to ensure we are able to offer the breadth and depth of statistics they require. in this regard, we recently relaunched our online statistics to make access easier for users. the third is communication. when the central bank of barbados was established 47 years ago, we undertook the task of educating and sensitizing the public on economic matters, using, inter alia, quarterly press conferences and physical documents for our economic review and annual reports. now, our audiences are more fragmented than ever, and consume information in different ways. we have to retool our communications to meet their needs. most of what we produce is now available online, our press conferences are streamed, and our information is disseminated on social media platforms. hr ’ s role in digital transformation all three examples demonstrate how technology is altering how we function as a central bank. but the transformation that we are witnessing is not about technology only. if it was, it would fall exclusively under the ambit of our it departments. but at its core, this transformation is really about people. this is why hr is critical to its success. you will have to guide your organisation and its employees through this dramatic change. this is always a difficult feat, but one compounded by the potential anxiety about the new technologies that will form part of this shift. for while in our private lives we readily embrace technology and the conveniences it facilitates – smartphones, alexa, the myriad social media platforms, and if we travel, uber and airbnb – professionally
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inter alia, by our recently introduced consumer protection risk assessment ( β€˜ cpra ’ ) model, which is designed to assist supervisors in assessing how risks to consumers are being identified and managed within firms. in addition, the central bank has placed a specific focus on improving the levels of diversity at senior levels in financial services firms. the aim is to improve decision - making with these firms, reduce the risk of groupthink, improve risk management, and in doing so, ensure that organisations give sufficient priority to the experience and treatment of their customers. culture report – findings in our view, effective organisational culture builds on a shared purpose and standards such as professionalism, honesty, integrity and accountability to deliver fair outcomes for consumers – and we expect to see it in all the firms that we regulate. the culture report assessed the current culture at the five retail banks : aib, bank of ireland, permanent tsb, ulster bank and kbc. in summary, the report finds that banking system still falls short in terms of embedding a truly consumer - focused culture. to undertake the assessment, we worked with our counterparts in the dutch central bank ( the β€˜ dnb ’ ), a recognised leader in the assessment of bank cultures. the review team was diverse in composition, comprising conduct and prudential supervisors, governance risk experts and 2 / 7 bis central bankers'speeches organisational psychologists. the reviews involved both on - site and off - site assessments in order to ensure the necessary breadth and depth. we undertook 1, 400 hours of desk - based review, ran more than 500 surveys and conducted 75 interviews, in addition to observing meetings and assessing decisions in each bank. our assessment focused on the executive committee of each bank, since the senior leadership is responsible for driving the behaviour and culture in an organisation, under the direction of the board. an effective consumer - focused organisational culture is one in which consumer needs are adequately identified, discussed and taken into account. the reviews identified that all banks have recently taken steps to reinforce the consideration of the consumer interest in strategy, decision - making and procedures. while all five banks are working to embed a consumer - focused organisational culture, some are more advanced than others. furthermore, the reviews revealed behavioural patterns in leadership, strategic decision - making and outlook that could jeopardise the successful transition to a consumer - focused culture. as a result, it is clear that consumer - focused cultures in the banks remain under - developed and will only be
hires ’ earnings in ireland ”, research technical paper, vol. 2016, no. 6, central bank of ireland. [ 28 ] for a review of these programmes, including evaluations of effectiveness, see β€œ labour market policy thematic review 2017 : an in - depth analysis of the impact of reforms on inequality ” and igees [ 29 ] card, d., kluve, j., & a. weber ( 2017 ) β€œ what works? a meta analysis of recent active labor market program evaluations ” journal of the european economic association, volume 16, issue 3, june 2018, pages 894 – 931. [ 30 ] according to the cso, between 25 and 31 % of pup recipients in q4 2020 were economically β€˜ inactive ’ – in other words, not working, but also not available or looking for work. [ 31 ] this is because, as the oecd ( 2020 ) has pointed out, the likelihood of re - employment, including through almps, is typically higher for individuals that remain in the labour force ( aside from periods of inactivity due to re - entering education or training ). [ 32 ] the pandemic is accelerating pre - existing employment trends. for example, labour - saving automation in customerfacing settings - to meet public health measures during the pandemic - are unlikely to be reversed, even where they are not necessarily productivity improving. there is some evidence this may affect women especially hard. a recent brookings paper considered historical patterns of workers moving across sectors suggest a limited switching between sectors or occupations in the us. this could mean that considerable upskilling and re - training is required to prevent this sort of mismatch, and a permanent increase in the unemployment rate. [ 33 ] see for example covid - 19 : a backward step for gender equality, work, care, and gender across uk lockdowns & the gender gap and covid - 19 : evidence from eight advanced economies. [ 34 ] lambert, d., mccann, f., mcquinn, j., myers, s. & f. yao ( 2020 ). β€œ sme nances, the pandemic, and the design of enterprise support policies ”, financial stability note, vol. 2020, no. 8, central bank of ireland. [ 35 ] see speech and q & a by the president of the eurogroup and minister for finance, paschal donohue, td at the dublin economics workshop on
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nout wellink : challenges and opportunities for corporate pension fund management speech by dr nout wellink, president of the netherlands bank and chairman of the basel committee on banking supervision, at hoofdkantoor shell, den haag, 26 june 2007. * * * the organizers have asked me to contribute to this seminar in honour of peter bronkhorst, who is stepping down as managing director of the shell asset management corporation. in view of peter ’ s outstanding contributions to the dutch pension business in general, and to that of shell in particular, i decided to agree to this request. an additional reason, of course, is that this is an excellent opportunity to address a prominent group of asset managers. although it is tempting to resort to breezy lightheartedness on a festive occasion such as today, i have opted for substance, as peter bronkhorst is widely known as a man of content and professionalism. given today ’ s theme – challenges and opportunities for corporate pension fund management – i would like to discuss some challenges that pension funds have recently encountered. more specifically, i would like to explore how company pension funds have dealt with these challenges in the netherlands and in the us. in this respect, it is interesting to compare the dutch corporate pension industry with its american equivalent, as they have chosen different routes to cope with the increasing burden of aging : whereas the americans have individualized their pension system to a large extent, collectivity was preserved in the netherlands. in evaluating these different routes, i will emphasize four key messages. first, i will argue that a clear separation between a sponsor and its pension fund is a desirable feature of any pension system. second, i will point at the added value of collective pension plans over individual ones. third, i will argue that this collective nature saddles pension fund asset managers with an important social mandate. and fourth, i will also point at an opportunity in the pension delivery market, which i challenge you to seize. comparison of the dutch and american pension system since most of us are more familiar with the dutch pension system, i will start with a brief overview of the american system. the us pension system is characterized by a relatively small governmentimposed pay - as - you - go system. this benefit constitutes only 45 percent of total retirement income in the us. here, the netherlands and the us are comparable. indeed, the dutch state pension scheme is also fairly small, as it provides the average employee with about 50 percent of
wake of the 2001 financial market storm. during this period, peter kept a constructive, open attitude that contributed to agreement on the necessary adjustment measures. with the recovery of the dutch pension system now well - established, this all seems like long ago, but we wouldn ’ t be sitting so comfortably now if it hadn ’ t been for the necessary measures taken and for peter ’ s contribution to implement them. conclusion i am coming to the end of my speech. i have stressed four important interconnected messages, relevant for the future world of pension finance. first of all, i believe that we should preserve and promote a clear separation between a sponsor and its pension fund. second, i have pointed out the added value which collective pension arrangements have over individual ones by protecting pension plan participants against their own shortcomings, by exploiting economies of scale, and by enabling intergenerational risk - sharing. third, i have emphasized that asset managers need to realise that their fiduciary mandate saddles them with important social responsibilities. last, i challenge you to come up with pension products that are tailored to individual preferences, but are also able to maintain the benefits of collectivity. i congratulate peter bronkhorst on the excellent job he has done in these respects. the flipside is that i regret his stepping down from a prominent position in the pension industry. as a real – and therefore internationally oriented – dutchman, peter was often able to build bridges, even in intense debates. now time has come for you, peter, to harvest, as a pensioner, the fruits of the seeds you have sown. i wish you all the best in the future.
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flat and enable enterprises to purchase new equipment. everybody does well if the saving and credit scheme runs smoothly. 2. economic growth by 3. 5 % in 2009 is very challenging indeed! lower economic growth implies lower income, and in case of no decline in spending, a higher than currently planned growth of 1ΒΎ % in consolidated budget deficit will automatically follow! hence, it is of utmost importance that we design a set of measures to be implemented in case economic growth turns out to be lower than planned for the period ahead. 3. proving that serbia is different than other countries in the region. serbia was the first country in the region to seek financial arrangement with the imf as a precautionary measure. this proves that we are a responsible state and wish to implement transparent economic policy under the imf umbrella. this is certainly a point in our favour and will prove useful in serbia ’ s attempts to remain an attractive foreign investment destination in the near future of extremely cautious capital spending and restrictions on investments. thank you for your attention!
shut down and new ones should not be opened? does it mean that a healthy economic development of our country should be slowed down or prevented? most certainly not! this is why we need to enable uninterrupted development, but one that is greener – and all of us must participate in this and start doing our share of the work. growing environment sustainability problems that we increasingly face have become visible everywhere around us. these are global challenges, posed particularly to future generations. hence, it is no surprise that environmental challenges have been the focus of global leaders ’ attention over the past years. economic policy makers are also devoting more and more attention to this issue. voices are getting louder in recent years. they emerged in europe, then in the usa, and now 1 / 3 bis central bankers'speeches they are roaring from asia, too – they are calling not only for awareness raising, but for action in greening the planet as well. from economic and financial perspective, this implies rewarding projects aimed at reducing carbon use and increasing reliance on alternative sources of energy. more specifically, an efficient method is sought for sanctioning, from the financial market perspective, toxic emissions in production and processing. the transformation to a β€œ green ” economy has numerous, scientifically confirmed advantages. it is expected to be the key engine of sustainable global growth in the medium and long run. depending on the region where they operate, financial markets have developed new, β€œ green ” instruments ( such as β€œ green ” bonds ). the purpose of these instruments is to increase the level of financial flows towards β€œ sustainable ”, environmentally friendly projects. β€œ green ” bonds are gaining in popularity, not only because of their importance for mobilizing funds for environmentally acceptable industries, but also because of the numerous benefits they offer to both issuers and investors, while having positive final effects on the general population. a well - known example is that of germany which decided to issue β€œ twin ” green bonds, with the same characteristics as the conventional bonds. to ensure price equality, they committed to performing the so - called switch transactions – exchanging one bond for the other. central banks worldwide also took action. some central monetary institutions have already adjusted their strategies and goals ( and many are planning to do so ). thus, in addition to targeting low and stable inflation, the bank of england recently decided to update its remit to include support to environmentally sustainable growth. environmental objectives were also included in the ongoing monetary strategy review by the european central
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seen so far. the attempts to address capital markets and their role as the β€œ financial foundation for main street, ” appear to place a much higher value on rhetoric than on substance and necessary reform. as a nation, we have violated the central tenants of any successful system. we have seen the formation of a powerful group of financial firms. we have inadvertently granted them implied guarantees and favors, and we have suffered the consequences. we must correct these violations. we must reinvigorate fair competition within our system in a culture of business ethics that operates under the rule of law. when we do this, we will not eliminate the small businesses ’ need for capital, but we will make access to capital once again earned, as it should be. the inevitable crisis the banking system has gone through an unprecedented era of change starting in the 1980s when lawmakers began removing the roadblocks to interstate banking. this evolution continued to pick up speed in the years that followed through a number of legislative moves that validated the creation of ever larger banks. the scope of activities continued to grow through the 1990s and by the end of the decade we saw the merger between citicorp and travelers group. that merger required the divestiture of certain activities, but this became unnecessary with the passage of the gramm - leach - bliley act. the legislation allowed a single financial company to engage in commercial banking, investment banking, insurance underwriting and brokerage. this expansion of activities, some argued, created a stronger system overall because the institutions were more diversified. for example, rather than being entirely reliant on a single community or industry, such as real estate, a stronger system was being created because banks were serving a broader nationwide base. a downturn in a single market would be offset by stability in other areas. although this new era of finance was widely supported, a critical ingredient was missing on the road to expansion and innovation : a framework that would limit dangerous excesses or the development of perverse incentives. undoubtedly, the most important omission was a way to deal with the larger firms that were using the new growth opportunities to become β€œ too big to fail ( tbtf ). ” although banking legislation in 1991 specifically tried to limit the federal deposit insurance corporation ’ s ( fdic ) ability to protect failing banks and their creditors, regulators could make an exception for large institutions whose failure might pose a threat to the economy or to financial stability. as a result, tbtf was embedded in our
’ s condition and the amount of leverage. not only do these firms get to use more debt, but the debt is cheaper. this framework has failed to serve us well. during the recent financial crisis, losses quickly depleted the capital of these large, over - leveraged companies. as expected, these firms were rescued using government funds from the troubled asset relief program ( tarp ). the result was an immediate reduction in lending to main street, as the financial institutions tried to rebuild their capital. although these institutions have raised substantial amounts of new capital, much of it has been used to repay the tarp funds instead of supporting new lending. in other words, i suggest that our economy would be better served by a more diverse financial system. certainly community and regional banking organizations were hurt by the financial crisis and recession and many of these firms are facing large losses associated with problems in commercial real estate and other lending areas. but despite these problems, many smaller banks have continued to lend. in 2009, 45 percent of banks with assets under $ 1 billion increased their business lending. policy changes all of these events bring us to where we are today, talking about the lack of credit availability for main street. the good news, such as it is, is that the market is slowly correcting, and credit growth is or will begin flowing to main street, providing job growth and economic recovery. however, it will not be rapid or easy. the fact is that main street will not prosper without a healthy financial system. we will not have a healthy financial system now or in the future without making fundamental changes that reverse the wrong - headed incentives, change behavior and reinforce the structure of our financial system. these changes must be made so that the largest firms no longer have the incentive to take too much risk and gain a competitive funding advantage over smaller ones. credit must be allocated efficiently and equitably based on prospective economic value. without these changes, this crisis will be remembered only in textbooks and then we will go through it all again. as steps toward avoiding this outcome and to assure a more consistent allocation to main street, i have three recommendations. first, we must enable capitalism to work and reduce the incentive of our largest financial institutions to take on too much risk by allowing them to fail in an orderly manner. this can be accomplished, but to do so, we must have a credible resolution process that forces shareholders, responsible senior management, and creditors to incur loss if the company takes on excessive risk and
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where we fixed the price of liquidity and let the market decide over the quantity that is needed to support that price. β€’ also, in the aftermath of lehman ’ s default we extended the term at which liquidity was lent to banks from three to six months to one year ( in june 2009 ) and we broadened collateral rules. by allowing banks to liquefy a larger share of their assets and by stabilising the liquidity horizon of those banks in liquidity deficit, which had lost access to the money market, we averted a major disruption in the first stages of the transmission mechanism. bis central bankers ’ speeches β€’ in the face of the 2011 – 2012 escalation of the debt crisis ( when the confidence collapse reached two systemic countries ) we concentrated on banks ’ loss of access to the wholesale market to address a major roll - over risk. we conducted two threeyear operations ( ltros ) that helped banks in a wide part of the euro area to do funding substitution. a significant share of the increase in eurosystem credit to banks in spain and italy, for example, was used to reimburse bank securities that were coming due over the next 12 months and would not have been rolled - over by the market. without this relief banks would have had to shed assets on a large scale ( given high leverage ), with potentially systemic implications for the euro area economy as a whole. β€’ finally, when a major tail risk emerged in the securities market in mid - 2012, as more and more weight was given in the pricing of market debt to the risk of a euro area break - up, we announced our decision to conduct outright monetary transactions in the market for sovereign securities, conditional on the issuer submitting to strict multilateral surveillance. in a very difficult environment the ecb succeeded in preserving its credibility, as witnessed by the anchoring of inflation expectations throughout the crisis. over the following 12 months or so, the cumulative effects of this action were able to eliminate fears of disaster events, remove tail - risk from the market and thereby reduce fragmentation. however, with growing evidence since the start of 2013, banks in large parts of the euro area started to respond to the funding challenges and the need to reinforce their capital structure by reducing their activities, in particular their loans to the real economy. the funding crisis had morphed into a trend which could lead to a widespread credit crunch. therefore, in may 2013 against the background of subdued monetary and loan dynamics and very weak economic
because of the feared negative impact on the economy. 2. as countries show hesitation in addressing their budgetary problems, access to financial markets tends to become more difficult. 3. when market access deteriorates, the budgetary measures required to restore confidence are much more drastic and painful. some observers, especially outside europe, have suggested that european democracies are not able to deal with such a vicious circle. they consider that the only way out of the dilemma is a default, or a partial default. some have – even recently – voiced openly this view, maybe with the intent to influence financial markets and increase the probability of such an event to occur ; an event from which they would presumably take profit. this view, however, does not take into consideration that in advanced economies a sovereign default is very damaging for the citizens of the country concerned, as it would drastically affect their wealth. increasing the primary surplus, either by cutting expenditure or by increasing – in certain cases by starting to pay – taxes, has in most cases less damaging effects on the economy and on citizens ’ well - being than a cut in the value of their financial assets. to sum up, consolidating public finances is painful economically and politically, but the alternative is worse. governments in europe are fully aware of this. let me move to the second issue, which concerns the strengthening of the institutional framework underlying the single currency. to understand the issue one should first consider what did not work as expected during the first ten years of the euro. two main things did not work. first, in some countries the behaviour of the private and public sector was not fully consistent with the long run requirements of a single currency area. divergences may occur in currency unions, or even within countries, as some regions may grow more than others and experience booms which then burst. in the euro area, the lack of a federal budget transforms country - specific shocks into public finance shocks and thus financial stability shocks. this is why a currency union like the euro area needs a system of discipline for both the public and the private sector, to be exercised at the level of the member states. the euro area had a system aimed at disciplining the public sector, i. e. the stability and growth pact ( sgp ), with rules and procedures aimed at avoiding excessive deficits. the pact worked in some cases, but not all. the main reason has been that the eurogroup, which comprises the finance ministers of the euro area and
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individuals, circumstances differ hugely. young people starting out in the housing market probably always will borrow a large proportion of the price of their first house, and a large amount relative to their current income. such loans are risky for the individual borrower if bis central bankers ’ speeches something goes badly wrong. but for a well - managed bank ( and for the economy as a whole ) higher risk loans like those will typically be balanced with other loans which have gradually been being repaid for 20 or 30 years. for whole economies, β€œ too much ” debt can cause problems. but researchers are not really sure quite what is β€œ too much ” ( among other things, measurement and institutional differences complicate things ). historically, a much better indicator to watch out for has been large increases in debt ( relative to incomes ) for several years in succession. as reinhart and rogoff have documented, financial crises are often followed by tough economic times. but even without a financial crisis, periods of rapid increases in debt tend to be followed by periods of economic stress – recessions that last longer and prove more troublesome than a β€œ plain vanilla ” recession, in which any lost output is recovered very quickly ( new zealand ’ s mild 1998 recession might have been an example of that sort of recession ). there are good reasons why a large and rapid increase in debt ( to gdp ) seems to matter. debt is not taken on in a vacuum. people are readier to take on debt when they are relatively more optimistic than usual about the future. banks are keener than usual to lend when times feel good. and people make choices, re - organise their balance sheets and their spending patterns on the basis of that heightened optimism. any number of factors, often at least a couple in combination, can result in a credit boom getting started. countries ’ experiences differ on that score, even in the most recent boom. but, typically, something causes spirits to lift, and with them spending and business activity. people become more willing to take the risk of buying a house or farm, of consuming more of their incomes than previously, or of expanding a business. once credit is growing rapidly, the process tends, for a time at least, to be self - reinforcing. easy credit tends to lift asset prices ( strengthening expectations of further price increases ), and people feel wealthier as a result. experience tends to confirm people ’ s initial heightened sense of optimism. expectations of future incomes are revised up and people make
grant spencer : prudential lessons from the global financial crisis presentation by mr grant spencer, deputy governor of the reserve bank of new zealand, to the financial institutions of nz 2012 remuneration forum, auckland, 3 may 2012. * * * new zealand has a small open economy and a financial system that is well integrated into the international financial system. so, not surprisingly, new zealand was heavily affected by the global financial crisis ( gfc ) and the global recession that followed. in the real economy, our export prices tumbled and gdp growth remained negative or flat through most of 2008 – 2009. in the banking system, while we saw no failures, the banks were unable to access funding from the international markets for a number of months. this was alleviated through reserve bank liquidity support and government guarantees. in the non - bank sector of course, we saw a string of finance company failures. these were related more to the domestic property sector downturn and weak internal governance than international developments. however, increasing investor caution and competition for funding in the wake of the gfc did increase the funding pressures on finance companies. the gfc has taught us many lessons and it will continue to do so as we witness the follow - on effects of the original shock. today i want to talk about three key lessons from the gfc that i regard as the most important for prudential policy in new zealand. indeed i believe they are very relevant for all countries with well developed banking systems. the three lessons are : 1. the contagion effects of a crisis can be heavily amplified by the contraction of liquidity in funding and asset markets. 2. the credit cycle is a major driver of risk in the financial system – the seeds of crises are often sewn in the credit booms that precede them. 3. large bank failures can have devastating effects on both financial systems and government finances. governments must find ways of protecting the financial system from bank failures without having to resort to bail - outs. i will look at these three lessons in turn, considering the broad international responses we have seen, and looking specifically at what we are doing here in new zealand. the net result of all this is a raft of changes aimed at strengthening our existing prudential regime for banks, which we believe will enhance the soundness of new zealand ’ s financial system going forward. 1. heightened contagion and liquidity risk in the gfc, the first round of credit losses was seen in institutions holding us sub
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su ning : keep good credit records and endeavor to aim for a harmonious society speech by mr su ning, deputy governor of the people ’ s bank of china, at the launch ceremony of the national credit information education month, beijing, 31 may 2008. * * * vice mayor mr. gou zhongwen, ladies and gentlemen, good morning! welcome to the launch ceremony of the national credit information education month. i appreciate your care and support to the building of china ’ s credit information system. enterprises and individuals, as the subjects of a credit information system, comprise an important force pushing ahead the building of a credit information system. improved awareness of enterprises and individuals of the credit information system and expanded outreach can help protect the rights and interests of enterprises and individuals and promote the healthy development of the credit industry. it remains a priority in the pbc ’ s credit information work to popularize the knowledge about credit information, help enterprises and individuals to understand and use credit information to create more transaction and development opportunities. in recent years, under the guidance of the central publicity department and with the support of the ministry of education and other central government authorities and local governments, the pbc has undertaken various credit information educational campaigns and achieved some good results. credit information is no longer a strange word, but has penetrated into the daily life and economic and financial activities of the public, starting to influence behaviors of enterprises and individuals in its unique manner and propelling the building of a social credit system. in order to improve understanding of credit information system and expand its use, the pbc has decided to launch the national credit information education month, in a bid to generate synergy and magnify the results. credit is not something that you are endowed with. if default is not recorded or punished, people will not have the motive or discipline to value creditworthiness, and it is possible that honest enterprises and individuals will turn their back to credit and honesty. as such, the building of social credit is not only to be held up by moral standards, but also be regulated by legal and institutional systems. the credit information system, as an institutional guarantee regulating credit - related behaviors of enterprises and individuals, is the foundation for the social credit system and the cornerstone for the stable performance of a modern financial system. in recent years, the pbc has implemented policy measures of the state council on social credit system building, organized commercial banks to establish a national database covering credit information of both enterprises and individuals, namely the
credit information system for enterprises and individuals. credit records were created for 13 million enterprises and nearly 600 million natural persons, including information of their borrowing activities and law - compliance in environmental protection etc, facilitating their economic and financial activities and promoting economic and social harmony. banking financial institutions have included inquiry into the credit information system as an indispensable step in pre - lending examination. some regions mandate that personal credit reports should be referred to when reviewing candidacy of deputies of the national people ’ s congress and delegates of china people ’ s political and consultative conference and admitting public servants. authorities in charge of human resources, social security, environment protection and quality inspection and quarantine also access the credit information system for information that will help them with industrial credit building and law enforcement. the credit information system, while exposing and preventing financial risks, promoting the deepening of china ’ s financial sector and improving the international competitiveness of china ’ s financial sector, contributes to the improvement of the social credit environment and the healthy development of economy. today the national credit information education month is kicked off in beijing. we hope the event is the just the beginning of credit knowledge dissemination and the improvement of credit awareness. the pbc will continue to support and actively engage itself in the building of a credit system in beijing so as to push forward the reform and development of beijing ’ s financial sector. this event takes the theme of β€œ keep good credit records and enjoy a happy life ”. if you want to know more about credit information, how to build good credit records and etc., you are welcome to join our activities in the education month. i wish the education month a complete success.
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these policy failures were also made possible by a general failure to acknowledge the new governance responsibilities associated with membership of emu. put simply, β€œ keeping your own house in order ” is necessary, but not sufficient, in a highly integrated monetary union. it is the responsibility of every euro area government to exercise vigorous and effective mutual surveillance over others ’ policies. as a crisis in a country like greece representing only 2 % of euro area gdp can become systemic, disregarding emu governance may come at a high cost to taxpayers. yet the latter was the attitude prevailing prior to the crisis. the stability and growth pact – the set of eu level rules for guiding fiscal policies – was never properly implemented. member states tended to adopt a principle of β€œ non - interference ” over each others ’ policies. peer pressure, on which the framework was predicated, gave way to peer support. by watering - down of sgp in 2004 – 05, the largest euro area countries signalled that they had no stake in the rules. this allowed a certain country to run deficits over 3 % of gdp every year it was in emu and never face corrective action. moreover, the euro area surveillance framework was β€œ blind in one eye ”, with no formal framework for monitoring macroeconomic and financial imbalances. the lisbon strategy focused on the structural level, but on policy implementation rather than imbalances. eurogroup discussions on imbalances had no enforcement mechanism. the lamfalussy framework for financial supervision did not use the concept of systemic risk. thus a situation prevailed where countries could be congratulated for strong headline fiscal numbers when these data in fact reflected substantial imbalances that were building up in the private sector. to a certain extent, the weakness of these governance procedures was linked to a misplaced faith in market discipline. the institutional design of emu gave market discipline a central role in economic governance. the absence of a transfer mechanism between member states was supposed to encourage markets to actively discriminate between euro area issuers. this was based on the assumption that financial markets would always have perfect incentives to enforce the β€œ rules of the game ”. this assumption, in retrospect, looks somewhat naive. it is well established in the academic literature that markets have complex incentives and dynamics. market psychology tends towards pro - cyclicality. perceptions converge around certain information sources, such as ratings, or certain benchmarks, such as indices, which creates herd behaviour. structural features of the financial system, such
of existing efsf resources in order to increase the fund ’ s ability to act. but perhaps the most significant development, relative to past expectations, is the implementation of root - and - branch reform programmes in a number of euro area countries. bis central bankers ’ speeches one should not underestimate the significance of eu - imf programmes for structural changes in some economies. they are dealing with long - needed pension reforms, opening up closed sectors of the economy, modernising public administration. in terms of collective economic management, this development goes further than many federations. can we imagine, for example, the u. s. federal government requiring a similar depth of reform in california? countries outside of eu - imf programmes have also implemented major reforms. spain has recently passed a constitutional balanced budget amendment, disproving the view that major policy changes are impossible in an election year. italy has agreed to a technocratic government to ensure structural reforms are implemented, and invited the imf to give extra credibility to this process. all euro area countries, except those under a programme, have committed themselves to bringing their budget deficits below 3 % of gdp by 2013 at the latest. overall, the forward commitments of euro area countries to fiscal sustainability go far beyond what has been agreed in the u. s. or japan. each of these measures, seen individually, may not represent the β€œ shock - and - awe ” or β€œ big bazooka ” that some commentators and markets participants call for. but when seen collectively, they represent a comprehensive broadening and deepening of euro area economic governance. and relative to a reasonable benchmark – the status quo ante – they are very significant developments. it is also worth noting that many steps have been taken to strengthen the financial sector regulation and supervision. under the leadership of the g20, a remarkable amount of work has been done by the financial stability board ( fsb ) and the basel committee in a demanding timeframe. profound regulatory reforms need to be implemented to address the underlying deficiencies that have become apparent in our financial system. in general, europe is exceeding international benchmarks in implementing these reforms. the commission issued a proposal in july 2011 aimed at transposing the basel iii framework into eu law. by doing this, it is among the first to introduce the basel iii framework and is taking a leading role in delivering on the g20 commitments. in line with basel iii, the commission ’ s proposal ( so - called crd iv ) provides
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set out the measures national governments should take to implement effective anti - money laundering programs. the fatf works closely with other international bodies involved in fight against money laundering. and, one of those international organizations is the asia pacific group on money laundering ( the apg ) in which samoa is a member. the apg was officially established as an autonomous regional anti - money laundering body in february 1997 for asia and the pacific region at the fourth asia / pacific money laundering symposium in bangkok, thailand. this was the culmination of a process of β€œ awareness raising ” in the asia pacific region initiated by the fatf as part of its global strategy. to date, the apg has 39 member countries and a number of international and regional observers, including the united nations, the imf and the world bank. as a member of the apg, samoa is required to undertake a domestic review of its npo sector to determine the degree of vulnerability to money laundering and terrorist financing activities. i should stress that this workshop is part and parcel of such a review. under the conditions of membership, all apg members have committed to implement the fatf forty recommendations and nine special recommendations. special recommendation viii relates to non - profit organizations. srviii calls on all countries to β€œ review the adequacy of laws and regulations that relate to entities that can be abused for money laundering and financing of terrorism. non - profit organizations are particularly vulnerable and countries should ensure that they cannot be misused : i ) by terrorist organizations posing as legitimate entities ; ii ) to exploit legitimate entities as conduits for terrorist financing, including for the purpose of escaping asset freezing measures ; and iii ) to conceal or obscure the illegal diversion of funds intended for legitimate purposes to terrorist organizations. ” what is the scale of the problem? by its very nature, money laundering occurs outside of the normal range of economic statistics. nevertheless, as with other aspects of underground economic activity, rough estimates have been put forward to give some sense of the scale to the problem. the international monetary fund ( imf ), for example, has stated that the aggregate size of money laundering in the world could be somewhere between two to five percent of the world ’ s gross domestic products ( gdp ). and using latest statistics, these percentages would indicate that money laundering range between 2 to 3 trillion us dollars. the program a quick look at today ’ s workshop agenda indicates that you have an intensive program ahead of you. you will be covering a lot
: i am happy to assure the microfinance industry that the central bank will continue to initiate key reforms and structural changes that are necessary in the sector ’ s legal, regulatory and supervisory frameworks. as you are aware, key among these legislative changes was the specific amendment to the microfinance act in january 2011 that introduced agency definition. the amendment anchored agency business in the law and, the central bank is in the process of designing guidelines to facilitate the contracting of agents to provide financial services on behalf of deposit taking microfinance institutions. the move will undoubtedly allow microfinance institutions to leverage on additional cost effective distribution channels to offer financial services. this initiative is informed by the need to leapfrog access to financial services to kenya ’ s bankable who remain totally outside the orbit of these services at affordable cost. ladies and gentlemen : another remarkable initiative in the pipeline is in the area of credit information sharing ( cis ) for microfinance institutions. as you are aware, the cis mechanism is already in place for commercial banks. the central bank is currently working on modalities of incorporating the deposit taking microfinance institutions into the cis mechanism. indeed, it is the government ’ s intention to create a framework whereby all financial institutions such as banks, deposit - taking microfinance institutions, sacco ’ s and other licensed credit providers will have access to and exchange credit information across the board. it is hoped that the merging of credit information from these various players will provide for a stronger credit market that will improve the pool of credible borrowers, decrease defaults, reduce credit costs and ultimately result in a stable financial sector. before i conclude, ladies and gentlemen, i would like to once again congratulate smep dtm for its achievement as a deposit taking microfinance institution. on its part, the central bank would like to assure smep and the industry and all the stakeholders of its continued support in the development of the microfinance industry and look forward to working collaboratively with the market to increase access to financial services in the country. the central bank is out to create strong financial institutions. indeed, the new constitution has provided us the wonderful space to create strong institutions. strong institutions both from the regulator and the regulated will support the market, define appropriate incentives ( and for a regulator, define appropriate penalties as well ) to encourage prudent behavior in the market. that is the way we can develop and deepen the financial market. with those few remarks, ladies and
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, is audit, it operations, it services outsourcing, cyber fraud, business continuity planning, customer awareness programmes and legal aspects. the guidelines, since issued by the rbi, clearly underlined that implementation of these recommendations needed to be risk based and commensurate bis central bankers ’ speeches with the nature and scope of activities engaged into by individual banks as well as the level of dependence of the business processes on technology. board level committees in the banks had been mandated to monitor the implementation of these guidelines in their respective banks. while substantial progress has been made in the past few years, i believe that banks still have to travel a lot of distance before the requirements are fully met. given the centrality of technology in the functioning of banks today, this can no longer be treated as mere matter for compliance but has to be viewed as a core business issue. supervisory concerns 9. with computerisation of various activities within a bank, as a regulator and supervisor, we have come to expect much higher capability from banks in generation of relevant management information for decision making purposes. however, one feels that there is a substantial gap between the promise and the delivery. let me highlight a few specific areas. 10. one of the primary areas of concern for the financial world is to ensure that the banking system is not abused by the unscrupulous elements for money laundering purposes. regulations on know your customer / anti - money laundering are robust across jurisdictions. however, we often find banks not having robust systems to comply with the regulations. at the time of on - boarding of the customers, banks are required to assess their customers, their business and expected turnover in their account, source of such transactions etc. in recent times, we have come across several instances of banks having allowed transactions in their customers ’ accounts without any due consideration to their declared business profiles. the accounts received multiple rtgs / neft inward transactions and several such remittances were sent out of these accounts as well. several accounts were abused to send money abroad in the form of advance import remittances. despite the disproportionate activity in such accounts, the monitoring mechanism of banks fell short of our expectations. i wonder why banks are not able to devise fool proof technology - based solutions to identify such transgressions. as you may be aware, rbi had to impose penalties on 13 banks for non - compliance with extant kyc / aml instructions including failure to categorise their customers in line with their
. currently, these institutions provide the platform for running missioncritical and secured payment system applications like rtgs, secured financial messaging system, negotiated dealing settlement system etc. 4. information technology act enacted in the year 2000 gave a further fillip to conducting of transactions in a computerised environment by providing a legal underpinning. internet penetration gradually increased which led to increasing use of internet as a channel for delivery of banking products and services. the exponential growth of mobile phone users in the country also fast - tracked their usages as a delivery channel. the latest in the long line of innovations in the banking technology space is unified payment interface ( upi ), which has pushed the boundaries on remittances. to cut a long story short, technology adoption has increased manifold and today no bank can survive without robust technology, customer friendly digital products, hassle free user experience and continuous innovation. bis central bankers ’ speeches fintech revolution 5. with the advent of fintech related innovations across the globe, well established banks are challenged once again. today most of the banking needs can be managed through the mobile. card based payments also have matured with the advent of pre - paid cards, tap and go, virtual card, multi - currency card, qr code based payments, etc. technology has moved from being an enabler and differentiator to being an ultimate necessity and a way of life. by the end of this year, a handful of payment banks would have commenced their operations in india, stretching the banks on technology front. some technological advancement that are gradually making a foray into financial sector include big data, artificial intelligence, block chain technology and internet of things. let me mention a few examples. 6. banco santander has expressed its intention to provide secure transactions using voice recognition via its banking app. rbs has trialled β€œ luvo ”, an ai customer service assistance to interact with staff and to potentially serve customers in near future. japan ’ s softbank, in collaboration with paris - based robotics experts, aldebaran has developed pepper, the world ’ s first humanoid robot. pepper is already being used in customer services industries as a replacement to an information booth or the welcome desk. mizuho financial group inc. bank has reportedly introduced pepper to its flagship branch in tokyo in 2015 to deal with customer enquiries, while mitsubishi ufj financial group has tested β€œ nao ”, a humanoid robot to interact with customers. taking cue from their japanese counterparts,
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opportunity should not go wasted. as the sense of urgency imposed by the crisis vanishes, the risk is that complacency slows down reforms, while the road that lies in front of us is still long. but the decision to complete the global reform agenda through enhanced international cooperation is entirely in our hands. this is why i believe that the kiel prize for the global economy is a reminder for us of the importance of globalisation and international cooperation. therefore, i want to conclude with warm congratulations to the winners of the prize. thank you for your attention. bis central bankers ’ speeches
must subsequently develop the rules and standards that are needed in order to establish technical interoperability for card payments. another important issue is cards standardisation, which is crucial to ensure the interoperability and harmonised use of cards across europe. in the area of standardisation, there is a clear separation of responsibilities. first, the european payments council ( epc ) is responsible for the strategic vision and business rules for cards. second, the cards stakeholders group is responsible for establishing functional, security and procedural requirements. third, various market initiatives have developed implementation standards and specifications for the various domains of card payments. this is very welcome ; however, work on the implementation of these specifications is lagging behind and should be accelerated. in the field of security certification for cards and terminals, a set of implementation specifications have been developed by the common approval scheme ( cas ). however, governance - related aspects of the sepa security certification framework are still under discussion. therefore, we urge the epc and cas members to swiftly agree on concrete proposals for a permanent governance structure with regard to security certification for cards and terminals. last, but not least, i would like to stress that, from a european perspective, it is of strategic importance to adopt a more coordinated approach to global standard - setting bodies, such as the iso and emvco. these requirements should lay the foundation for a competitive european cards market. however, i personally believe that the european cards market would also benefit from the power of choice. therefore, a duopoly in the european cards market is not the outcome that i would prefer to see for the sepa project, which brings me to new year ’ s resolution number three. new year ’ s resolution number three : let ’ s move forward with an additional european card scheme the eurosystem has been calling for an additional european card scheme for four years. therefore, we are closely monitoring the work of the three initiatives that have been launched. it is important to emphasise that we have not selected any β€œ favourite ” out of the three projects, but treat all three equally. all three face some of the same challenges : the main challenge is certainty as regards the potential business case. some clarity has been provided with regard to the sensitive issue of multilateral interchange fees ( mif ) thanks to the agreements reached by the eu commission with visa and mastercard. however, the market asks for more certainty and it may be that this must ultimately be provided in the form of a regulation. i would
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toronto, ontario, december 12, 2011 ). 4 specifically, none of these countries saw a large drop in house prices during the crisis. in addition, in all three economies the usual financing channels continued to work ; government support encouraged further lending ; and as house prices rose following the crisis, debt levels did too. 5 public debt has also been on the rise in some emerging - market economies. as of august 2018, more than 45 per cent of low - income countries were at high risk of, or already in, debt distress as measured by the international monetary fund ( imf ) ’ s debt - sustainability ratings. see the imf ’ s global financial stability report ( october 2018 ). 6 according to the imf, about 25 percentage points of this debt is incurred by local government financing vehicles. 7 for more detail, see j. bowman, m. hack and m. waring, β€œ non - bank financing in china, ” reserve bank of australia bulletin ( march 2018 ). 8 an example of this exchange rate risk is when the us dollar rises because of normalization of monetary policy by the us federal reserve. 9 leveraged loans are loans provided to highly indebted non - financial corporates. non - bank institutional investors typically invest in these loans, including through collateralized loan obligations. 10 see the fsb ’ s global monitoring report on non - bank financial intermediation 2018 ( february 2019 ). 11 liquidity and maturity transformation are key vulnerabilities that could lead to runs by investors in the absence of prudential regulation. see b. y. chang, m. januska, g. kumar and a. usche, β€œ monitoring shadow banking in canada : a hybrid approach, ” bank of canada financial system review ( december 2016 ) : 23 – 37. 12 for more detail, see osfi ’ s december announcement. 13 see t. duprey, x. liu, c. macdonald, m. van oordt, s. priazhkina, x. shen and j. slive, β€œ modelling the macrofinancial effects of a house price correction in canada, ” bank of canada staff analytical note no. 2018 – 36 ( november 2018 ). 14 see o. blanchard, β€œ public debt and low interest rates ” ( aea presidential lecture, january 2019 ). 15 see s. s. poloz, β€œ toward 2021 : the power β€” and limitations β€” of policy ” ( remarks to the chamber
must always be ready to consider questions that challenge our old answers. how do we do that? by giving innovative thinking a central place in our strategic plan and by creating a corporate culture that fosters different perspectives and challenges the status quo. as former governor david dodge once said to bank staff, β€œ we can have clashes of ideas secure in the knowledge that there are no winners or losers … what we ’ re doing is exploring all aspects of an issue. ” 5 focusing on critical central bank issues let me turn to what ’ s in our plan. the bank of canada remains committed to inflation targeting and to the expert execution of all of its responsibilities. the bank is also committed to exploring how best to contribute to the canadian economy in a world that is going through fundamental structural change. it ’ s in this context that the bank is seeking to advance the frontiers along all its business lines. let me focus on monetary policy. the current inflation - targeting framework is working well, so the bar for change is high. but history tells us we can ’ t cling indefinitely to a particular way of doing business. one important challenge for central banks now is that conventional monetary policy is stretched to its limits in some countries, where policy interest rates are at, or below, zero. because of this, a number of countries are using innovative monetary policy measures to return inflation to target. canada was fortunate to avoid the worst of the crisis, thanks to the relative strength of our economy, our prudently managed and resilient financial system, and well - anchored inflation expectations. tiff macklem, my predecessor and your dean, can take a lot of credit for that. it ’ s not surprising that we are focusing our research firepower on the monetary policy lessons from the crisis. the first lesson is that we have to be innovative with the instruments we have in our monetary policy toolbox. structural changes have reduced the economy ’ s potential to grow without creating inflation, so the neutral rate of interest is lower than it was before the crisis. 6 that means that, if we continue to target a 2 per cent inflation rate, it ’ s more likely that policy interest rates will fall to zero than in the past. remember, only a few years ago, many believed zero was where monetary policy was out of bullets. we now observe that some european countries have tested this limit. there, central banks are charging commercial banks for their deposits, and governments are effectively getting paid to borrow. we published today an interesting staff
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settle payments not only in local currency but also in major international currencies, the first of its kind in sub - saharan africa at that time. the automation of the port louis clearing house constituted the second phase of the modernisation of the payment systems. this phase required, as a pre - requisite, the standardisation of cheques using magnetic ink character recognition. this process was completed in 2003 and led to the electronic settlement of cheques. the last leg of the second phase consisted of carrying out clearing of cheques based on the electronic images of cheques, known as cheque truncation, and was completed in september 2011. honourable prime minister, through this initiative, the bank supports the development of mauritius into a digital economy. maucas is a payment ecosystem designed to benefit all stakeholders of the payment industry, from end - customers to merchants and service providers as well as the government. maucas will be a game changer in the way payments are carried out in mauritius and creates many firsts in mauritius : as the first national payment platform to operate round the clock, a feature attributable to a handful of countries in sub - saharan africa, maucas effects retail payments outside official operating hours. this will change the dynamics of currency circulation in the country, reduce float in the system and allow banks and businesses to manage their liquidity more efficiently. it sets rolling the instant payments system, which will enable customers to effect transfers between any two accounts in any two institutions within seconds. instant payment services will also comprise instant direct debits and credits. it introduces the concept of dissociating an account from a payment service. thus, any person can avail the service offered by any operator, bank or non - bank, and tie it with an existing account in another bank. this will allow new payment services to emerge while letting banks maintain their customer base. maucas allows non - bank payment service operators to access selected account details of their customers in banks through the bank of mauritius under strict security norms. this provision represents our adherence to the european payment service directive 2, which sets the legal framework for banks to open their core banking systems through application programming interfaces ( apis ). maucas which is api enabled, will permit operators to come up with open banking solutions. it introduces the concept of payment through alias, where customers make payments through easy to remember pseudonyms such as email addresses while keeping account numbers safe and secure. the alias feature of mauca
attracted hateful criticisms. the tendency of some groups, like a special - forces warrior, to fight every new regulation had reached a vexing point. despite resistance from pressure groups to resist, the bank had proceeded with its regulatory reforms and soldiered on effectively. it took quite some time for players in our economic system to fully realise that banking is a different kind of business and financial systems are not and will never be totally free market systems. over the years much has been achieved in terms of the health improvement of deposit - taking institutions in the country. effective banking supervision is an evolving discipline. free flows of capital in a globalised world marked by all kinds of disruptions, unleashed by economic and non - economic forces, the quests for high returns by investors and quick profits by speculators, fraudulent practices, excessive risk - taking and violent economic cycles, amongst others, have made regulation and supervision of financial institutions an unprecedentedly challenging task. the regulator ’ s job has become increasingly complex and demanding in terms of skills and clairvoyance, more so after the august 2007 international financial crisis. as regulators, we need to constantly bear in mind that any capitalist economy inevitably progresses from conservative finance to reckless speculation. the economy has financing regimes under which it is stable and financing regimes under which it is unstable. in other bis central bankers ’ speeches words, over a period of prosperity, a capitalist economy transits from financial relations that make for a stable system to financial relations that make for an unstable system. we also need to bear in mind that it ’ s in the personal interests of the ceos of banks to show profits, often by any means, for the benefit of their shareholders. and it is simply not true that the pursuit of their individual interests will lead to financial stability. what ’ s good for an individual ceo may not be necessarily good for the banking industry as a whole. the self - interests of bankers and levered investors do occasionally lead to economic contractions and a loss of human welfare. i need not emphasise to a crowd like this one that financial stability is an indispensable precondition for economic growth and human welfare. there is every reason for regulatory authorities to act proactively in order to prevent financial crises from developing in the first place. with the recent experience that the bank of mauritius had with regard to an ailing bank, i cling to the view that regulators must broaden their scope and take initiatives to prevent the development of practices that favour financial
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yi gang : welcome address - tenth lujiazui forum welcome address by mr yi gang, governor of the people's bank of china, at the tenth lujiazui forum, shanghai, 14 june 2018. * * * secretary li qiang, vice chairman zhou xiaochuan, distinguished guests, ladies and gentlemen, good morning! it is a great pleasure to join friends both old and new at the 10th lujiazui forum, which is jointly organized by the people ’ s bank of china ( pbc ), china banking and insurance regulatory commission ( cbirc ), china securities regulatory commission ( csrc ) and shanghai municipal people ’ s government. on behalf of the organizers, i would like to extend a warm welcome to you all! this year marks the 40th anniversary of china ’ s reform and opening - up. the development of socialism with chinese characteristics has entered a new era, and china ’ s economy has been transitioning from a phase of rapid growth to a stage of high - quality development. the city of shanghai is an international financial center with a rich history of financial sector development and a full - fledged, sound financial market system, and has been a pioneer in china ’ s financial reform and opening - up. the development as international financial center is an important mission that the party central committee and state council has entrusted to shanghai, based on the overall arrangements of china ’ s reform, opening - up and modernization. in recent years, shanghai has made steady progress in a series of financial pilot programs including the reform measures adopted in the pilot free trade zone, cross - border use of rmb, shanghai - hong kong stock connect, bond connect, and crude oil futures, and has, in these valuable experiments, accumulated replicable and expandable experiences for financial reform and opening - up in the country. therefore, the theme of this forum as β€œ shanghai ’ s development towards an international financial center in the new era ” is of great significance. on april 10 this year, secretary - general xi jinping pointed out at the boao forum for asia that china will continue its fundamental national policy of opening - up, and that the door of opening - up will never shut and will only open wider. meanwhile, he also stated that china will significantly broaden its market access, including in the financial sector. the pbc has attached importance to and supported the development of shanghai as an international financial center. going forward, the pbc will implement the decisions and arrangements of the
pandemic, bank npls will edge up. in this sense, strengthening disposal of non - performing assets is crucial for enhancing the sustainability of banks ’ support for the real economy. this is also an important aspect of the financial sector to bear the costs of the real economy, which is deemed as the financial sector ’ s contribution to the real economy. we believe that the financial support policies in response to the covid - 19 are phased policies. therefore, regarding policy design, focus should be placed on ensuring incentive compatibility and fending off moral hazards. we should pay attention to the β€œ aftereffects ” of the policies, keep the aggregates at appropriate levels, and consider in advance the reasonable timing of exit for the policy tools. fourth, we achieved effective money and credit growth while keeping the pbc ’ s balance sheet basically stable. the pbc has lowered the rrr ten times since 2018, releasing about rmb8 trillion of liquidity and bringing the average rrr down from 15 percent to the current nine percent. a reduced rrr will correspondingly increase the money of commercial banks at their disposal and thus boost the money multiplier. the process of rrr cuts, on one hand, was reflected in the shrinking of the pbc ’ s balance sheet. on the other hand, it was reflected in the monetary expansion effect, as commercial banks could issue more loans. in the meantime, however, the pbc β€œ expanded its balance sheet ” by increasing the scale of central bank lending, central bank discount and adopting other monetary policy instruments. rrr cuts and scale rise in central bank lending are both expansionary monetary policy tools, yet when reflected in the pbc ’ s balance sheet, the former leads to balance sheet shrinking while the latter results in balance sheet expansion. in recent years, the values of the pbc ’ s balance sheet shrinking and expansion have been basically equivalent. therefore, the size of the balance sheet has been kept basically stable at around rmb36 trillion. this mechanism differs from those of the world ’ s major economies, whose central banks substantially expanded the size of their balance sheets. however, the commercial banks in china have been expanding their balance sheets in a continuous and reasonable manner, with loans growing relatively rapidly. this demonstrates the improved efficiency of monetary policy transmission and the sound functioning of market mechanism. thank you! 3 / 3 bis central bankers'speeches
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bank plc ) ii. member - mr. patrick iyamabo ( first bank plc ) iii. member - mr. adamu lawani ( zenith bank plc ) iv. member - ms. ngover ihyembe - nwankwo ( rand merchant bank ) v. member - mr. ashafa ladan ( national university commission ) vi. member - engr. abbati d. k. muhammad ( national board for technical education ) vii. member - dr. friday okpara ( smedan ) viii. member - mr. tope fasua ( global analytics consulting ) ix. member - brigadier - general folusho oyinlola ( national defence college ) x. member - ms. bolanle adekoya ( pwc ) xi. secretary - mrs. temitope akin - fadeyi ( cbn ) 11. distinguished ladies and gentlemen, today as well, cheques shall be presented to five ( 5 ) beneficiaries under the term loan component of the scheme. these beneficiaries are among the many who submitted their applications via the dedicated portal and their applications processed. i would like to urge the recipients of these loans to judiciously utilize the funds for the purpose for which they had indicated in their applications. it is my strong belief that the scheme will offer our youth entrepreneurs access to much needed finance, which has been identified as one of the major limiting factors to entrepreneurship development in nigeria. 12. we are aware that there has been agitations by some tertiary institutions that were not included in the pilot phase of the scheme. let me reiterate here that with the launch of the tertiary institutions entrepreneurship scheme today, other deserving tertiary institutions will be brought on board over time. with ongoing dialogue and engagements with other segments of the educational sector, feedbacks received shall form the basis for the periodic review of the guidelines, with the intent to scale up participation under the scheme in future. 13. distinguished ladies and gentlemen, let me restate the central bank of nigeria ’ s total and unrelenting commitment to supporting the country ’ s educational sector in all ramifications, as without a robust educational sector wholesome development shall remain a mirage. i believe with the launch of the tertiary institutions entrepreneurship scheme, and other programmes such as this, it is only a matter of time before our tertiary institutions return to the glory days, where they churned out graduates, not only ready and able to provide real solutions to the various
opening remarks by dr. godwin i. emefiele, con at the official launching of the tertiary institutions entrepreneurship scheme ( ties ) thursday, 25th november, 2021 protocols good afternoon, distinguished ladies and gentlemen. i am pleased to welcome you to the official launching of the entrepreneurship tertiary scheme institutions ( ties ), an intervention of the central bank of nigeria aimed at addressing the dual challenge of youth unemployment and underemployment in nigeria. the scheme, developed in partnership with nigerian polytechnics and universities, is designed to harness the potentials of graduate entrepreneurs by creating a paradigm shift from the pursuit of white - collar jobs to a culture of entrepreneurship for economic development and job creation. 1. as you are all aware, at the occasion of the 51st convocation of the university of lagos, in july 2021, i delivered the convocation lecture titled, national development and knowledge economy in the digital age : leapfrogging smes into the 21st century. at that event, i promised that the central bank will seek fresh collaboration with the nation ’ s tertiary institutions entrepreneurship to programmes, develop and to support β€” through the provision of access to finance β€” graduates and undergraduates who have bankable ideas, to bring the ideas to fruition. engagements have been on - going between the central bank and the leadership of some of our tertiary institutions regarding the framework for an innovative financing model that will support entrepreneurship development among our graduates and undergraduates. this launch of the tertiary institutions entrepreneurship scheme today, is a culmination of the engagements and fulfillment of that promise. 2. with about 600, 000 students graduating yearly from nigerian tertiary institutions, and without the commensurate employment opportunities in both the public and private sectors, it has become imperative that government, at all levels, puts in place policy measures to development measures support among would our create entrepreneurial youth. an such enabling business ecosystem that supports innovation and enables the youth to unleash their entrepreneurial potential, by redirecting their focus from seeking white - collar jobs to a culture of entrepreneurship development. the ecosystem should provide support in reorientating, training, and providing a financing model apt to the peculiarity of the sector within which the businesses operate. 3. ladies and gentlemen, entrepreneurship is an integral part of any economy, and entrepreneurs play a key role in driving growth and innovation, which in turn results in job creation. in line with its mandate of ensuring monetary and price stability, and its developmental mandate of ensuring inclusive growth in the
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was, therefore, a major task, that started precisely by introducing policies of riskmanagement, transparency and efficiency that would protect the bank ’ s institutionality and autonomy. in global terms, it was tantamount to placing the central bank at the same level in management as it was in monetary and financial policy matters. i can say with satisfaction that it has been materialized during my period and it is also largely stated in our strategic plan for the period 2006 - 2008. we then proposed to implement a risk - management culture, strengthening the work of our comptroller department to operate by international standards in matters of internal control, risk management and corporate governance. we gave it tools that grant increased autonomy and efficiency. today the board receives also specialized advisory on the matter, through an independent audit and compliance committee, made up by highly qualified members. all of this has helped to improve our accountability and safeguard our autonomy. in addition, to strengthen the bank ’ s autonomy, this process had to come hand in hand with necessary advancements in access to information, in matter of transparency and in communications, both internal and external. i can say today, on the day that i leave, that i feel satisfied with our advances in internal management, of administrative, human resources and risk - management aspects, all under the framework granted us by our constitutional organic law that sets clearly defined objectives and corporate governance. i sincerely thank the bank ’ s staff that took in these changes with responsibility and understanding and made them their own. the central bank of chile supports its stronghold in the institution ’ s credibility and reputation. this can only be built with the rigorous and careful work of all the people that work in it. for this reason, parallel to decisions adopted with respect to internal management and the promotion of a risk - awareness culture, we continued to work on strengths already present in key areas of the bank, namely the research, financial policy and financial operations division. in this sense, it is good to recall the whole process of reorganization introduced by the board to improve the bank ’ s efficiency, taking advantage of economies of scope and reducing transaction costs. our policy of transparency and diffusion crystallized in the creation of a department of communications, that later evolved into a department of institutional affairs and a department of communications advise, with the purpose of providing an organized structure to all the information that stems from the central bank of chile and that is intended to emphasize equity and depth in the delivery of information, as well as to give the chilean people a
daniel mminele : ten years of inclusion of the south african rand in the cls remarks by mr daniel mminele, deputy governor of the south african reserve bank, at the continuous linked settlement ( cls ) reception to mark ten years of inclusion of the south african rand in the cls, johannesburg, 17 march 2015. * * * good evening, ladies and gentlemen. it is an honour for me to make a few remarks on this occasion of the cls reception to mark ten years of settlement of the rand in the cls system. i am particularly pleased that the cls delegation to mark this key milestone is led by none other than the chairman of the cls board, mr kenneth harvey. we welcome you and your colleagues to south africa, and thank you for coming all the way. the cls is one of those mission - critical systems that can be compared to the plumbing system of a building. just as most of us never think about the plumbing of a building and take for granted that it is there and works, the cls also runs very much in the background of the foreign - exchange market. it is only when there is a leak or a pipe bursts that we realise how important plumbing is. in the context of the cls, if a big pipe bursts and cannot be fixed quickly, this can result in major disruptions to the foreign - exchange market, with potential rapid spill - over effects to the rest of the financial system, which at worst could bring about financial instability on a global scale. as many of you will know, the cls plays a fundamental role in the foreign - exchange market, where it operates the largest multi - currency cash settlement system to mitigate settlement risk for the foreign - exchange transactions of its members and their customers. in its offering, the cls mitigates settlement risk through the provision of its unique payment - versuspayment settlement service which has direct links to the real - time gross settlement ( rtgs ) systems of the currencies it settles. in addition to mitigating settlement risk, the cls also contributes to streamlining and standardising foreign - exchange operations, helping to reduce costs. a foreign - exchange settlement usually requires potentially large cash funding liquidity to settle the obligations of settlement members. these values are materially reduced in the cls system through the multilateral netting of the obligations between member banks to deliver best - in - class liquidity management. as regulatory requirements for larger liquidity buffers
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above. as a result, the system could run a rising deficit as from 2025. it should also be highlighted that the latest demographic developments, in particular the heightened migrant inflows into spain, do not resolve the problem. at best, the inflow of working - age immigrants holds back the increase in the dependency ratio derived from population ageing and, therefore, delays the emergence of the problems. but the full scale of these problems will persist. how can we tackle the challenge that demographics pose for our pension system? the scale of the problem calls for a three - pronged strategy. first, the strategy should be far - reaching, i. e. blending measures on different fronts. specifically, the measures should pursue healthy public finances, implement structural reforms in the economy and seek to reform the pension system, as i shall now expand upon. second, discussion of these measures should not stretch out over time. and, finally, the reforms should have sufficient scope, acting along the lines of the recommendations made in the review of the toledo pact. regarding the scale of the strategy, its first pillar should be based on maintaining healthy public finances. once again, we should adopt a medium - term perspective here. irrespective of the fact that 2008 saw the re - emergence of a budget deficit and that, almost certainly, it will hit significantly higher levels in 2009, two matters will be vital in the medium term, once the effects of the economic crisis have abated. we must resume a healthy public finances path and, above all, bring public debt back onto the declining trend witnessed recurrently, with the exception of 2008, since 1997. these considerations also clarify why the rise in the budget deficit cannot go unchecked in the current situation, so as to prevent a strong increase in public debt arising, which would impose an excessive burden on future generations. in this respect, commitment to the medium - term fiscal rules laid down in the stability pact at the european level and in spanish budgetary stability laws continue to offer the best guidelines for conducting fiscal policy. secondly, as the specialist reports emphasise, from the macroeconomic standpoint the public finance sustainability problems are eased if employment and productivity in the economy trend favourably. here the room for improvement is extensive and calls for structural reforms in many areas, such as the labour market and the markets for goods and services, along with education and job training. once again, the time perspective is important here. the long - term view that should
investors are already altering their strategies. moreover, banks themselves need to factor in climate risks in their operations. this is a serious challenge to the economy, the financial system, and the regulator. we should learn how to adequately assess not the risks that have been accumulated before. we are differentiating risk assessment in regulation relying on actual data showing how these risks materialised. we should assess future risks and model these future risks, building these stress scenarios. in our opinion, we may not blindly lower the requirements for these green instruments, but we should develop an approach helping an investor understand that a particular project is really a green one and assess the level of its sustainability and risks that may arise, as well as how they differ from those inherent in socalled non - green projects. this is an issue to be addressed in the course of our joint work. we have already made a certain progress towards better information transparency. probably, the first step is to disclose data, provide information on green social bonds the committees shall offer to market participants. these standards will become effective in autumn 2021. in addition, we are currently developing the rules for verifying financial esg instruments. cyber security which has been mentioned by anatoly aksakov is also a critical topic that will become increasingly important. information security is essential in the conditions of digitisation as a key trend impacting the financial industry. overall, the issue of operational risks and cyber risk resilience will certainly be in the focus of our attention. in this regard, we will be developing an adequate approach to assessing these risks, working jointly with you, so as to ensure banks ’ resilience to them. among other things, it is possible to create joint market - based infrastructure solutions. wrapping up, i would like to say that, despite the problems and challenges that are important for banks and the regulator, we believe that banks really made their best last year in terms of both their own robustness, so to say, fire resistance at the moment they had to face the crisis, and the support they provided to their clients. the crisis will be over, while these two components will remain as significant. i truly hope that bank owners will continue to act in a responsible manner they demonstrated last year, taking care of the future of their banks, probably selecting not always the simplest way, but the one that would ensure long - term stability for their banks and well - being for their clients and promote the development of our economy. of course, we welcome
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the best possible solution at the time. no, national accounts were not harmonised. and yes, the data were patchy and incomplete at first. but as imperfect a measure as it was, it enabled progress and was a fundamental step towards lifting economies out of the great depression. fast forward 90 years – and you will find us here, today, facing an even greater challenge than the great depression : climate change. we have got better at collecting information on the consequences of climate change. as patchy as those data may be for now, it will enable progress in climate issues too. and in any case, banks do already have access to enough information to start making real progress. climate change and banking supervision let me give you some background. 1 / 4 bis central bankers'speeches the ecb has identified climate change as a key risk factor for the european banking sector in 2021. the latest edition of our financial stability review1 suggests that around 80 % of european banks are already exposed to climate - related physical risks. in november of last year, ecb banking supervision published a guide on climate - related and environmental risks. 2 in that guide, we make it clear that we expect banks to take a comprehensive, strategic and forward - looking approach to disclosing and managing all climaterelated and environmental risks – which also include, for example, the risks of biodiversity loss and pollution. 3 we then asked banks to conduct a self - assessment relating to the expectations we set out in that guide, and to draw up action plans for how they intend to comply with them. this supervisory exercise will begin with, but not be limited to, taking stock of banks ’ self - assessments – and it will have important consequences for banks. we are now in the process of benchmarking the banks ’ self - assessments and action plans, and will then challenge them as part of our ongoing supervision. next year, we will conduct a full supervisory review of banks ’ practices for incorporating climate risks into their risk frameworks, as we gradually roll out a dedicated supervisory review and evaluation process ( srep ) methodology that will eventually influence banks ’ pillar 2 requirements. let me clarify that in the context of next year ’ s stress test exercise the reflection of its outcomes will be of a qualitative nature. a possible impact – if any – will be indirect, via the srep scores on pillar 2 requirements. but let me stress as well that this is not the end game. gradually we will start treating climate related risks
banks have developed implementation plans, and many have started to progressively improve their practices. there are some areas where banks have made substantial progress. for instance, roughly half of them have started to integrate climate risks into their client due diligence. they have developed dedicated client questionnaires to better understand the climate risks to which they are exposed, and they use this information when deciding to whom they grant credit. in addition, roughly half of banks are now integrating climate risks into their lending policies, sometimes requiring that a specialised climate - related risk function advises them on higher - risk transactions. what is remarkable is that the progress we are seeing on all these fronts was identified in banks from different countries, with different business models and different asset volumes. some banks have also been proactively trying to overcome the scarcity of climate - related data by independently developing their own indicators – such as financed carbon emissions, financed technology mix and energy performance certificates – to identify corporate clients with high sensitivity to climate transition risks. they have then set limits at portfolio level to manage those risks. and one bank has developed a climate risk dashboard to present to its board ’ s risk committee on a quarterly basis. this shows that data scarcity can be overcome. finally, some banks have already started to identify and manage other environmental risks beyond climate, such as those associated with biodiversity loss and pollution. for instance, one bank has started to develop a methodology to measure the biodiversity footprint of its investment and lending portfolios, while others have developed a dedicated group policy regarding their commitments and lending criteria related to biodiversity risks. in our guide, we recognise that other environmental factors related to the loss of ecosystem services, such as water stress, biodiversity loss and resource scarcity, have also been shown to drive financial risk. and we therefore expect banks to evaluate all environmental risk - related information, beyond climate risks, to ensure that their risk profile is sufficiently covered against them. 4 these practices are proof that, contrary to some of the industry ’ s claims, what the ecb is asking is not unreasonable or impossible. some banks have effectively raised the bar, and those lagging behind should take inspiration from them and follow suit. conclusion to conclude. for all their many flaws, national accounts data continue to be extremely useful for policymaking to this day. they have been extensively reviewed and gradually harmonised – the same path we should expect for climate data and the architecture supporting them. no, climate data are not harmonised yet. and yes, they are
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the shiw, from 5. 3 in 1993 to 6. 4 in 2004. this is clearly a pattern shared by many other countries. on the other hand, net financial assets show a much more moderate trend. overall, there seems to be little question that over this long period wealth has increased at higher rates, for many countries much higher rates, than household disposable income ”. the work by thomas piketty has shown that these trends began even earlier, in the 1970s, 26 although the global financial crises may have somewhat modified them. in the united states the ratio of real assets to household disposable income fell back to 4. 2 in 2013, although in italy it still stood at 6. 6 in 2014. the increase in wealth may reflect the accumulation of personal savings or changes in asset values. but saving rates do not seem to show marked increases ; if anything, in some countries they have been on a declining trend. so, much of the substantial rise in wealth - to - income ratios was due to asset prices. this raises several questions, that matter from analytical as well as policy perspectives. why have we been observing such a long - term trend in asset prices? what is it that made for such a significant change in the prices of real, and perhaps to a lesser extent, financial assets relative to consumer goods and services? the financialisation of economies, the growing role of stock exchanges, the privatisation of state - owned firms, the expansion of household insurance technical reserves ( due to the crisis of public pension schemes ) can go some way towards explaining the rise in the ratio of financial wealth to gdp. 27 in particular, there may be merit in considering the changes in shelter costs for owneroccupied housing as part of general consumer price changes. in this case, one should conclude that the prices of housing services went up substantially compared to other consumer goods and services. yet, in part housing expenditure is clearly of a capital - good nature. one should also conclude that house owners were able to extract substantial rent from their accumulated real estate. 28 as i observed in the july 2007 conference of the luxembourg wealth study, β€œ in the first case we have an issue of relevance for monetary stability, in the second for financial stability, especially as house prices have been moving faster in relatively short periods of time and the larger house values have been used as collateral in financial deals ”. conclusions : lessons from the past and challenges for the future these remarks on the bank of italy
##ffi, set in a letter to luzzatto fegiz that the main purpose of the survey was β€œ ascertaining the prevalent opinions on the allocation of a given income rise … between consumption and saving, after distinguishing the former into current expenses and durable goods and the latter into direct investment ( real estates and businesses ), financial assets and other savings ”. 4 for some unknown reason the bank ’ s primary role in this survey was not publicised, but it testifies to the involvement of the bank of italy in the first attempts to measure the income and the consumption behaviour of italian households. this involvement is remarkable as it reveals the early support of the bank for the use of representative probability sampling. official sample surveys were still in their infancy : they had become accepted by statistical agencies in the united states only in the 1940s with the start of the current population survey. 5 the bank ’ s position is even more significant when seen against the background of an environment which was not necessarily favourable to this statistical tool. 6 the readiness to engage in these new statistical techniques is an example of the bank ’ s attitude towards paying attention to and taking advantage of developments at the frontier of research. the survey has continued to be a source of innovation. this has happened, for instance, as regards the dissemination of its results : first, in the 1980s, with the release of anonymised micro - data to academic researchers ; then, with the participation since the 1990s in the luxembourg income study, an international cooperative project for the assembly and standardisation of income data at a household level. the integration of use and production of statistical data the bank ’ s involvement in the ( second ) doxa survey is also noteworthy since it shows that the statistical collection was conceived as closely connected with the needs of economic analysis from the outset. this is not to be taken for granted. still in 1985, zvi griliches observed that β€œ while economists have increased their use of surveys in recent years and have even begun designing and commissioning special purpose surveys of their own, in general, the data collection and thus the responsibility for the quality of the collected material is still largely delegated to census bureaus, survey research centers, and similar institutions, and is divorced from the direct supervision and responsibility of the analyzing team ”. 7 the history of the bank of italy ’ s shiw is not one of β€œ divorce ” between producers and users but the citation from einaudi ’ s speech and the subsequent information are drawn from p.
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for catch - up growth – proved to be the most resilient. the czech republic was also quite resilient ( it experienced its own banking crisis in the late 1990s, with banks becoming more conservative and risk - averse in consequence ). hungary and slovenia proved less resilient, and in these countries the government had to intervene in the financial market. in the case of the czech republic, the fact that our host financial sector was more resilient to shocks than its home countries was the reason why we never joined the vienna initiative. the resilience of emerging economies is now under the spotlight also because we remember the effects of the 2013 taper tantrum. that year, many emerging countries experienced a huge outflow of capital, while at the same time some other countries like the czech republic and poland were effectively trying to discourage foreign short - term capital from coming in. this discouragement was accompanied by interest rate cuts and other forms of monetary easing in general. and we are observing no taper tantrum in response to the current plans aimed at unwinding the ecb ’ s qe : so far, emerging countries appear to be surprisingly resilient. the likely reason is a different backdrop, with rising commodity prices and synchronised global growth as the leading factors. i will close with a short observation on the so - called china effect in relation to emerging markets ’ resilience. for decades, china has pumped savings into the global economy. among other effects important for advanced and emerging economies alike, this inflow of savings has depressed the global equilibrium interest rate. the decrease in the equilibrium rate has, in turn, restricted the options of central banks around the world and nudged them to rely more on unconventional policies, with important effects on the stability of flows to and from emerging economies. but the china effect will soon start to ebb as the country ’ s dependence ratio spikes, pushing global interest rates higher. 2 / 2 bis central bankers'speeches
( such as greece ) are dealing with problems typical of developing countries, issues including incomplete land registries and an insufficient basic ability to collect taxes. this confusion in taxonomy complicates our discussion a great deal, especially in the years of the crisis and its aftermath. the question at the beginning of the crisis was : who in europe will prove to be most vulnerable to shocks? many believed it would be central and eastern european countries. but, in contrast to that prophecy, at the end of the day the countries that did not have to bail out any of their financial institutions were, with one exception ( malta ), located typically in the cee region. so it seems to me that gdp per capita, human development and industrial tradition are not the criteria driving the market ’ s classification of β€œ emerging ” economies. should euro membership automatically make a country β€œ developed ”? in other words, does giving up independent monetary policy make a country more β€œ stable ”? but why, then, isn ’ t bulgaria considered a developed country, when it holds a fixed exchange rate against the euro? why not kosovo and montenegro, which have adopted the euro unilaterally? much space has been devoted to the so - called decoupling debate, in which many experts 1 / 2 bis central bankers'speeches claimed that emerging countries were less affected by the global financial crisis. but with the benefit of hindsight, we now know that the gdp declines in emerging countries were, on average, just as steep as those experienced by developed countries. a part of the explanation, once again, lies in the confusing taxonomy : we see huge differences among individual emerging countries as well, even within brics. i suggest an analogy to the decoupling debate : we are now observing a β€œ brics decoupling ” to the power of two : only china and india have shown robust growth since the great recession. russia, brazil and south africa have been stagnating, each for its own specific reasons. but despite these differences, a common theme arises : emerging markets dependent on the production and export of raw materials ( russia, brazil and south africa serve as good examples ) are less resilient than countries dependent on vigorous labour force and innovations ( exemplified, within brics, by china and india ). there are also differences in resilience among the β€œ emerging ” countries of central europe. during the great recession, poland – a big country ( by central european standards ), less open and with greater potential
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delisle worrell : the strength of barbadian institutions and the resolve of barbadians will see us through the crisis op - ed article by dr delisle worrell, governor of the central bank of barbados, 15 august 2013. * * * barbadians have every reason to be confident that we can cure the foreign exchange imbalance which has emerged in the last three months, and revive the growth of our economy. first, we have the highest standard of living in the caribbean, and we have earned it by transforming the economy and investing in infrastructure and human resources, over many decades. figure 1 compares the human development index ( hdi ) for barbados with the rest of the caribbean. the hdi is the best indicator of the quality of life available for countries worldwide. second, barbados has strong institutions for decision making : our social partnership is the envy of countries worldwide ; our economic information systems are the equal of many industrial countries ; our media are knowledgeable ; and we have a strong mechanism for putting policy into effect. thirdly, we have preserved the value of our dollar, protecting the value of people ’ s savings, and providing more predictable returns for investors. fourthly, we have reserves which are more than sufficient to ride out the storm, as may be seen in figure 2. with these resources we may confidently address the challenges, which are twofold. the first is to balance foreign exchange inflows and outflows. following the june 27th economic consultation, government is in discussion with the social partners on measures that will be introduced to reduce the fiscal deficit. the required adjustment is considerable, about 4. 5 % of gdp, but not sufficient to cause major social disruption, as may be seen in figure 3. the adjustment will protect the value of our currency, which is vital to barbados ’ economic prosperity. figure 4 shows how the caribbean countries which have devalued have fared, compared with those that have maintained an unchanged value of their currency in terms of the us dollar. economic growth is the second challenge. the social partners continue to pursue actions to revive the economy. investment amounting to $ 2. 3 billion is in prospect for the foreign exchange sectors, and government contemplates $ 1 billion of infrastructure and other projects. initiatives are underway to improve access to finance by small and medium enterprises. labour is charged with an urgent need to improve productivity and quality of service in every area of activity, so that barbados becomes a byword for
, are liable to pay corporation tax. we are seeking new opportunities to strengthen ibfs activities, with the exploration of new markets in latin america, africa, the middle east and elsewhere. we are also introducing new products and services geared to the needs of the various markets from which we draw our clients. this conference offers an opportunity to share ideas and information on how we may perfect our strategy and message. we will begin by looking into the future a bit, with a panel and discussion on the prospects of business with cuba, a country with which barbados has a long history of diplomatic and other relationships. we will also be discussing issues of the regulatory framework, and initiatives to strengthen institutional support and facilitation of the industry. our final presenter today will suggest ways forward for the wealth management industry. we live in an interconnected world in which the execution and financing of international commerce is open to competition to all nations, large and small. we can be assured of barbados ’ future as a player in this global market, so long as we strive always to offer a superior value proposition. i look forward to today ’ s discussions towards that objective. bis central bankers ’ speeches
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##sintermediated – finance. in my view, based on the early lessons that can be drawn from the turbulence of recent months, we need to devise a cautious and differentiated response to the issue of the appropriateness of crisis prevention and management frameworks in the era of digital financial services, depending on whether we are dealing with traditional or β€œ decentralised ” finance. in the case of traditional finance, i believe the priority would appear to be more effective deployment and adaptation of this framework, whereas for decentralised finance, it is time to develop and apply it in a consistent manner. i. a crisis prevention and management framework for traditional finance that needs to be implemented more effectively and adapted ( slide 3 ) a - priority needs to be given to implementing the regulatory framework and to enhancing oversight as regards the crisis prevention framework for traditional finance, based on regulation and individual supervision of financial intermediaries – known as β€œ micro - prudential ” supervision – priority should be given to more effective implementation due to the following lessons that can be drawn from the " in just a click " bank run on svb in the united states. first off, this framework – which for banks is based on regulations issued by the basel committee on banking supervision ( bcbs ) – has not been invalidated by the collapse of svb. on the contrary, svb's demise illustrates the consequences of insufficient implementation rather than the ineffectiveness of this framework, for at least 2 reasons : β€’ since 2019, under the principle of proportionality, svb had been subject to lighter regulation than under the basel framework, especially with regard to the twin liquidity and interest rate risks whose crystallisation triggered its collapse. β€’ the post - mortem analyses performed and published by the fed suggest that, had it been subject to these regulations, svb would not have complied with minimum international standards – neither the liquidity coverage ratio nor the alert threshold for sensitivity to interest rate risk stipulated under the basel framework. had these been applied, several warning lights would have turned red and alerted the oversight authority. however, these observations do not mean that there is no lessons to be learned in terms of regulatory developments from the role of new technologies and social networks in accelerating the liquidity stress suffered by svb. the basel committee has identified a number of avenues that could be explored, such as run - off rates for certain deposits – especially large deposits not covered by guarantee mechanisms. ( slide 4 ) in a nutshell, as regards the
. a second important example is provided by decentralised finance or " defi ” – at the banque de france and the acpr, we prefer the term " disintermediated " – based on distributed ledger technology ( dlt or, more simply, the blockchain ). blockchain technology provides a means of storing and sharing information in a decentralised, secure and transparent way, without the need for a central control structure. in this domain, regulators ’ focus is more forward - looking : banque de france is pioneering thinking here and the acpr published a document in april exploring possible regulatory frameworks for defi. from the ensuing public consultation process, we drafted a summary document which we have just published, setting out the possible regulatory frameworks taking shape on each of the three defi'floors': ( 1 ) ensuring the resilience of the blockchain infrastructure, public or otherwise, through security standards ( 2 ) certifying smart contracts, even if this raises a number of operational issues - and ( 3 ) regulating defi entry points to protect users. our approach to innovation based around digital assets and defi remains the same as for other types of innovation ; this innovation is welcome, but it cannot be achieved at the cost of less regulation. as we have seen elsewhere, this would merely work against the interests of the players themselves. b - this transformation also calls for a review of the services offered by central banks ( slide 7 ) new distributed ledger technologies – and blockchains in particular – are driving new financial services, based mostly around tokenisation. tokenisation involves issuing a financial security on a blockchain and it is attracting growing interest from traditional investors and issuers, as well as from new players such as bigtechs and fintechs, because it promises to enhance the settlement and delivery of financial assets by making processes faster, cheaper and more transparent. although tokenisation currently represents only a marginal proportion of financial market capitalisation, its development could still generate counterparty, liquidity and liquidity fragmentation risks which could become systemic. this is why central banks must remain vigilant. we have a duty to anticipate and secure such developments so that players can fully benefit from the potential of tokenisation. how can we do this? by ensuring that at least the most sensitive transactions from a financial stability standpoint – i. e. those between financial intermediaries – are settled in central bank money, the safest
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. continuous processes for the entire ai lifecycle still have to be defined and scaled for business needs. that means that ai must be embedded in the process of acquiring and organising data, modelling, analysis and delivering analytics. the skills gap, particularly with regard to data science and machine learning expertise, is the foremost challenge. at this stage, non - human intelligence is far from replacing the human brain in any respect. computers are like school pupils dividing numbers mechanically without having understood what they were doing. 3 consumers should take care : they remain the risk - takers what makes this development so significant is the fact that it is not just occurring at the level of systemic institutions, markets and stock exchanges. with robo advisers, for example, ai can directly influence and control the daily financial decisions of customers and ultimately their personal wellbeing. society has barely begun to understand the economic, ethical and social implications of ai. while client interaction is made more convenient by mobile banking, chatbots or virtual customer assistants, banks can find out more about customer habits and provide them with tailor - made financing. consumers may be rated by ai when applying for a mortgage. pooling data points from internal transactions, social networks and other sources provides a more meaningful picture of banks ’ borrowers. but denials may be hard to understand. it may become even harder to challenge a decision made by algorithms. the proper functioning of the applications is not a given. simple flaws, cyberattacks and criminal behaviour render the systems extremely vulnerable. consumers should be cautious. they need to be protected. laws may have to be modified to cover new threats. responsibility and liability in the case of malfunctioning machines have to be clarified. 4 fintechs should not ignore the legitimate concerns of society and supervisors agile tech companies are driven by an admirable energy and inspiration. by nature, they take risks. they create an idea, build a prototype and try it out immediately in the real world. regulation, supervision, obligations and requirements must make them extremely nervous. but the wellbeing of society depends on rules. the public demands cybersecurity, data privacy, consumer protection and financial stability. fintechs should not brush aside the concerns of 2 / 4 bis central bankers'speeches their stakeholders. business can only flourish if it is broadly accepted by citizens. fintechs usually pick up specific elements of the work chain of finance or create new features. using technology, they modularise and customise products as a third
party or standalone provider. fintechs are part of the finance sector but are not necessarily supervised. as long as they carry out tasks for supervised entities, these institutions are responsible for the behaviour of the fintech. 5 ai needs new forms of supervision β€œ artificial intelligence ” may sound glamorous from a technological perspective, but in banking supervision, the well - established principle of " same business, same risk, same rules " has so far proved to be a sound standard for innovations. whether they employ ai themselves or outsource it to fintechs, from the supervisors ’ point of view responsibility remains entirely with the bank. for german supervisors, it governance and information security nowadays are equally as important as capital and liquidity requirements. all financial institutions should address the risks posed by new technologies. banks have to implement effective control environments needed to properly support key innovations. this includes the requirement to have appropriate processes for due diligence, risk assessment and ongoing monitoring of any operations outsourced to a third party. the european mifid ii includes the requirement that firms applying algorithmic models based on ai and machine learning should have a robust development process in place. firms need to ensure that potential risks are considered at every stage of the process. regulators increasingly have to apply ai - supported analytical methods themselves to recognise vulnerability patterns, scan lengthy reports or analyse incoming data. in any case, we must strike a balance between financial stability and avoiding barriers for potential new entrants, products and business models. alongside technological progress, regulators have to constantly reassess the current legal framework, supervisory models and resources. 6 central banks should embrace ai central banks have access to huge amounts of very valuable data stemming from market operations, supervision, payments and statistics. they are well positioned to tap the benefits of ai so they can enhance their ability to fulfil their mandate for price stability and the stability of the financial system. machine learning is already being used at the bundesbank in different narrow segments. the experiences of all users have been good without exception. while monitoring the technical progress, we are currently discovering further use cases and defining our ai foundation, strategy, organisation and processes. here is a list of examples, which is by no means exhaustive : in risk management, neural networks assess and evaluate the financial soundness of the markets. market research is supported by adopting web mining techniques and machine learning in content analysis, topic modelling and clustering of relevant articles. in statistics, machine learning enables new methods
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##economic policy aiming at stability, where monetary policy is oriented towards price stability and fiscal policy, within the framework of the so called pact for stability and growth, towards sound public finances. these objectives are crucial for the confidence of economic agents and sustainable economic growth. the single currency is also a major step forward in terms of more efficiency, by lowering transaction costs and increasing price transparency and competition, which will be even more evident once the notes and coins will have been introduced. monetary union also intensifies the integration of european financial markets, which improves financing possibilities for companies. the single currency should also help speed up other necessary structural reforms in europe. finally, the introduction of euro banknotes and coins will provide not only the new currency but europe itself with more visibility all over the world. and within europe, the use of the same notes and coins from helsinki to lisbon and athens via brussels will give the european citizens, much more than is now the case, the feeling of belonging to a community sharing the same destiny.
##ing risk. i have also made it clear to the financial institutions that use of danmarks nationalbank ’ s lending facilities is not an acceptable solution for managing refinancing risk. i take this opportunity to repeat that message. securities should only be pledged as collateral to danmarks nationalbank in connection with ordinary monetary - policy operations. if we find bis central bankers ’ speeches that the system is being misused to support the housing market, we will take action and perhaps have a friendly talk with the institution in question. we have done that before. eligibility as collateral must not be a precondition for a given mortgage - credit product. * * * today i have presented a number of proposals for regulating various issues in relation to mortgage credit in order to make the system more resilient to future developments. the financial crisis has demonstrated that rare misfortunes do actually strike from time to time. this should be taken into account in financial regulation. this applies not only to banks – but also to mortgage banks. finally, i would like to thank the federation for our good cooperation during the past year and for inviting me to speak at today ’ s meeting. thank you for your attention. bis central bankers ’ speeches
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liberalisation and financial innovation. banking liberalisation has produced a notable increase in competition among institutions and in financial integration. for example, the cajas ( savings banks ) have started to compete geographically and in different business segments. the increased competition has also led, at different times during these 20 years, to strong competition for bank deposits ( e. g. la β€œ guerra del pasivo ” at the end of the 80s ). in general, banking competition brings very positive aspects for the real economy and to welfare, and there is no doubt that liberalisation of the banking sector in spain has been very positive for the country. however, we should bear in mind, as some chapters of the book point out, that too much competition may significantly increase bank risk - taking and that this may have negative implications and that bis central bankers ’ speeches this may undermine financial stability. 1 the recent very intense competition for retail deposits may also be a notable example in this regard. another important aspect of liberalisation has been the internationalisation of the banking sector, which is very well explained in the book. i would like to stress two aspects of this phenomenon : i ) the foreign expansion by spanish banks ( particularly santander and bbva ), and ii ) the significant dependence on foreign liquidity ( mainly through international wholesale markets ), especially after the introduction of the euro. 2 expansion abroad, when it is well executed, definitely brings benefits in terms of geographical diversification, which have become clear during the crisis, however a reliance on funding from abroad may bring some fragility if that source of liquidity dries up, as the crisis has shown. 3 in previous banking crises, banks typically suffered from runs on retail deposits, whereas nowadays these runs are wholesale - based. 4 in the light of this, the sector should aim to diversify its sources of funding liquidity. the second defining element over the past decades has been the increase in financial innovation, notably in securitisation and market funding. securitisation can have many positive effects, e. g. by increasing the supply of bank credit to the private sector thanks to greater bank liquidity. some crucial segments of the economy, such as small and medium - sized firms, may also significantly benefit from the development of securitisation. at the same time, recent research has shown that securitisation may lead to a lowering of banking standards and ultimately weaken financial stability. 5 once a bank is no longer responsible for a loan that it
credit availability. the crisis calls for change some key features of the recent crisis have been, in my view, the fragility both on the liability and asset sides of banks, coupled with a densely interlinked global financial sector. banks ’ capital reserves, transparency, funding, risk management, corporate governance and both micro and, especially, macro supervision and regulation need to be adjusted. let me start with the fragile liabilities. we have experienced since august 2007 a funding liquidity dry - up. as i said before, in the run - up to the crisis, spanish banks were highly dependent on foreign wholesale funding. as a result, the sector as a whole ended up suffering and some of the more dependent banks have been hit very badly. but bank liquidity also depends crucially on bank capital and, hence, banks with stronger balance sheets suffer much less from a lack of liquidity. 8 the liquidity provided by the eurosystem has been vital to minimise the liquidity shortages, but bank capital needs to be stronger so that all banks have access to private funding liquidity. fragile assets were an important factor too, as very high volumes of credit ( and risk ) were granted during the good years. some banks took more risk than others in the real estate bubble, and some banks recorded substantially lower profits and higher ( realized and potential ) loan losses during the current crisis. hence, bank capital significantly decreased, especially for some groups of cajas ; they, moreover, cannot easily raise capital because of their specific structure. the availability of bank capital is essential for two additional reasons : first, a bank capital crunch may lead to a credit crunch. thus, in order to help the real economy recover, some weak banks need to be recapitalised. this is why the recent regulatory changes on capital in spain are crucial. 9 banking assets are however opaque, which – combined with the high leverage – make recapitalisation in private markets difficult, especially in crisis periods. 10 therefore, to reduce these problems, high transparency is extremely important : the stress tests and bank of spain ’ s publications on key bank variables are thus indispensable. if, after these exercises to promote transparency, some small groups of banks cannot fulfill the capital requirements, restructuring may be the only solution. banks are still too highly exposed to real estate assets in their balance sheets and so the new haircuts introduced by the bank of spain go in the right direction. geographical diversification ( notably the international
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intellectual bankruptcy of economic research. nearly two weeks ago, chancellor merkel also made reference to this. at the 5th lindau meeting on economic sciences ( attended by nobel laureates in this field ), she noted that β€œ we are coming from years in which one (... ) did not always have the impression that economics already knew everything about the future. ” many are now indeed wondering quite fundamentally what use economics is to society. the question of the usefulness of economics to society is probably also a reason why, at the aforementioned gathering of nobel laureates, the closing panel discussion was entitled β€œ how useful is economics – how is economics useful? ” 3. the lessons of the crisis ladies and gentlemen, christoph schmidt, chair of the german council of economic experts, was quoted in yesterday ’ s frankfurter allgemeine zeitung newspaper as saying bis central bankers ’ speeches that, β€œ despite the uncertainty surrounding our statements, our work is still important because we can contribute to imposing a limited amount of order on a complex and uncertain world without feigning false certainties. ” the job of economics is to explain economic interrelationships and to use these explanations as a basis for making economic policy designed to increase public welfare. economics is thus, if we accept that view, a discipline which is certainly of relevance to society. however, we must admit that economics has not always been up to the task. the financial crisis showed that there were many things about financial markets which we did not know, and that much of what we thought we knew was not reality - based. this is not least because, some of the time, economists act much like the one in the story i told you at the beginning. often, they were looking where the light was, not necessarily where the knowledge was. in that vein, precisely what the standard macroeconomic models were lacking was the financial sector, which made these models incapable of predicting the financial crisis. the framework of these models therefore needs to be broadened. in the meantime, many highranking economists are working on integrating the financial sector into standard macroeconomic models : mark gertler, lawrence christiano, massimo rostagno, roberto motto and markus brunnermeier, to name but a few. although progress is being made, research has not yet reached the finishing line. but why was the financial sector missing from the models? well, it is undoubtedly very difficult to model it mathematically. this seems to have been a hurdle initially
nation whose economy is expected to contract in 2023. our experts see this as the outcome of two developments in particular : the at times very high energy prices caused by the russian war against ukraine and a currently weak global economy. 1 / 3 bis - central bankers'speeches the bout of weakness in the german economy is not, then, primarily structural, as is being suggested by the debate on potential deindustrialisation. this, in turn, is consistent with most forecasts for germany for 2024, which are already predicting a recovery in economic activity. therefore, i cannot agree with the " sick man " diagnosis. 2 challenges to and opportunities for the german economy however, germany and its firms face major challenges – of that, there is no doubt. we discussed this in an article in the september issue of the bundesbank's monthly report. [ 1 ] i would like to briefly address two of the key challenges. for one thing, there is the decarbonisation of the economy. climate change is advancing rapidly and affecting all of humanity. for another, the high electricity and gas prices are continuing to show us in no uncertain terms how heavily we still rely on fossil fuels. transitioning away from oil, gas and coal and expanding renewable energy will therefore not only be good for the climate, but will also make us more independent and may potentially lead to lower electricity prices again in germany over the long term. however, another thing is clear as well : the era of at times very low energy costs is over for now. that's something that all consumers of electricity – be they big or small – will have to get used to. some parts of industry, claiming that they are at an acute competitive disadvantage to their foreign rivals, are calling for a rapid artificial reduction in the price of electricity for some firms. in my view, however, this will only delay the inevitable structural change. transitioning towards net zero means comprehensively restructuring our economy : prominent examples include energy generation, networks, new storage capabilities, heating technology and transport. all of these will require extensive investment : in new equipment, but also in research and development, in order to use energy efficiently. policymakers can play a supportive role in this regard : reliable and consistent climate policymaking will create planning certainty on the path to carbon neutrality by 2045. at the same time, government approval processes and judicial review procedures need to be sped up. at the european level, germany should campaign for further progress to be made
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gave rise to a significant appreciation of real exchange rates and a rapid expansion of credit, including through the shadow banking system, in many emes, thus increasing their vulnerability. second, the β€œ taper tantrum ” episode of 2013 provides further evidence on the significance that spillovers from shifts in monetary policy in the advanced economies, even when they are only perceived and do not actually occur, can have on emerging markets. expectations of an unwinding of the unconventional monetary policy implemented in the united states led to a strong market reaction during that period. consequently, financial volatility rose sharply and capital flows to emes fell, leading to pressures on the exchange rates and asset prices in these economies, increased external risk premia, and in general a severe tightening of financial conditions. some authors have stressed the significance of financial market turmoil during may - august 2013, despite the relatively small decrease in capital flows to emes ( about 1 % of gdp ). 4 it is of course natural to ask to what extent the above experiences are applicable to the current situation. in other words, is the normalization of monetary policy in the us likely to have a major impact on emes? here we have divergent views. on the one hand, there are those who believe that the outlook for emerging market economies is not as gloomy as it seems : β€’ the upcoming tightening cycle will most likely take place within the context of a firmly established recovery in the united states, which is a scenario that has seen emerging market economies thrive in the past. as a reference, some estimates point out that, over the year following the beginning of the last three tightening cycles in the united states, industrial production in emerging markets grew between 7. 5 % and 10 %, while export volumes did so by some 10 % to 15 %. 5 all in all, the argument see sahay, r. et al. ( 2014 ) : β€œ emerging market volatility : lessons from the taper tantrum ”, imf staff discussion note no. 14 / 09, september. see dahlhaus, t. and g. vasishtha ( 2014 ) : β€œ the impact of u. s. monetary policy normalization on capital flows to emerging - market economies ”, bank of canada working paper 2014 – 53, december. see musalem, alberto g. ( 2015 ) : β€œ us macroeconomic and regulatory developments and emerging market economies ”, speech at the international financial conference annual meeting, cartagena, colombia, 9
is the most important contribution the federal reserve can make to the global economy, and that this is precisely the focus of monetary policy in this country. 10 they have also stressed the need for effective communication to limit the risk of surprises and the possibility of abrupt market responses. i have no quarrel with these arguments, and i believe there is widespread recognition of the major efforts undertaken by the fed to increase transparency and communication in recent years. however, i see room for further action from advanced economies in at least three areas. first, unconventional monetary policies, though fundamental to overcome the global financial crisis and underpin the recovery of demand in recent years, provide only a temporary stimulus to economic activity. ensuring adequate and sustained rates of growth implies the adoption of measures focused on enhancing efficiency and productivity that go well beyond the reach of monetary policy. indeed, there is a lot that advanced economies still need to do to meet these needs. second, actions taken by major central banks have important consequences for other economies which deserve careful consideration. yet, an adequate understanding of such spillovers is still lacking. although literature on the subject is scant and definitive conclusions are difficult to arrive at, to have an idea of the challenges we are facing, it may be useful to note that recent research carried out at the bis concludes that us quantitative easing has see, among others, sahay, r. et al. ( 2014 ) : β€œ emerging market volatility : lessons from the taper tantrum ”, imf staff discussion note no. 14 / 09, september ; world bank ( 2015 ) : β€œ hoping for the best, preparing for the worst : risks around u. s. rate liftoff and policy options ”, special feature 1 in global economic prospects, june ; eichengreen, barry and poonam gupta ( 2014 ) : β€œ tapering talk : the impact of expectations of reduced federal reserve security purchases on emerging markets ”, policy research working paper no. 6754, the world bank, january ; and international monetary fund ( 2013 ) : β€œ taper talks : what to expect when the united states is tightening ”, box 1. 1 in world economic outlook, october. see for instance dudley, william, op. cit. and fischer, stanley ( 2015 ) : β€œ the federal reserve and the global economy ”, remarks at the conference held in honor of professor haim ben - shahar, tel aviv, israel, 26 may. bis central bankers ’ speeches had a greater impact on emerging market
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emmanuel tumusiime - mutebile : basic principles guiding monetary policy in uganda speech by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the annual dinner of uganda ’ s bankers ’ association, kampala, 30 november 2012. * * * the chairman and members of uganda bankers ’ association, members of the diplomatic corps, distinguished invited guests, ladies and gentlemen. i am very pleased to be here with you at the traditional end of the year annual dinner of the uganda bankers ’ association. i would like to thank the chairman of the uba for inviting me to be guest of honour at this occasion, which is an honour i appreciate greatly. i want to take this opportunity to make a few remarks about the basic principles which guide our monetary policy in uganda, especially in the light of the reforms we have introduced over the last 18 months which, of course, are very pertinent for the banking industry. as you all know, the bou introduced a new monetary policy framework at the start of the last fiscal year. the new framework is an inflation targeting lite framework ( itl ), similar in its basic features to that used by many central banks in advanced economies and emerging markets around the world. the primary objective of our monetary policy is to hold the annual rate of core inflation to 5 percent over the medium term. that does not mean that we will aim to keep core inflation at five percent all of the time, because that is neither possible nor desirable. prices are subject to supply side shocks which can drive inflation up well above policy targets, as happened in 2011. monetary policy cannot realistically prevent inflation from rising in the short term if prices have been hit by a large supply shock, such as a food price shock, in uganda or anywhere else in the world. what monetary policy can realistically achieve is to bring core inflation back down over a period of time, which in most cases will probably be in the region of a year at least, depending on the size and nature of the shock. when faced with a supply side shock to prices, of the type which hit our economy in 2011, the goal of the central bank must be to ensure that the initial rise in prices triggered by the shock does not feed into a self reinforcing spiral of higher prices, which would lead to higher inflation becoming persistent. the central bank cannot prevent a temporary rise in inflation, but it must not allow this to turn into permanently higher inflation. to
the field on topics related to the digitalization of banking services, including presentations on how banks can strategically position themselves in rapidly changing financial markets, new paradigms for financial page 6 of 7 inclusion, risk based oversight and regulatory compliance and career development. you will have the benefit of an excellent team of resource persons, most of who are senior officials in the financial services industry in east africa, and who have come here to share their expertise with you. i am confident that the presentations and discussions in this banking school will offer you valuable insights and contribute to the development of your careers. thank you for listening. page 7 of 7
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of the legal infrastructure and lobbying in european structures. facing these problems in group rather than separately will allow to benefit and embrace the positive effects of β€œ economies of scale ”. i also invite the ecb and ec to explore the possibility of adopting a β€œ party ” treatment for the entire see region, by adopting a specific program for a specific group of countries ”. it might even sound overly optimistic i see this as a mutual beneficiary relationship. the region, on its account, does provide several important advantages : labor markets are positioned right in the middle between asian countries and new eu members ; sufficient investment opportunities in real estate and infrastructure as well as high return on capital ; it counts more than 20 million people and represents a fantastic touristic attraction as a product of an interesting combination of different climates with diversified geographical features and multi ethnic and cultural traditions. i think that means in real terms economic stability and sound long term regional geopolitical solution. thanking you for your attention i ’ m ready to take several questions.
. regardless i sincerely think that the process of transformation that has changed our societies since the fall of the berlin wall is irreversible. the real question is how long this process will take to be complete. i believe that laying down solid foundations for efficient allocation of financial support and financial intermediation will significantly shorten this process. this will also provide the necessary infrastructure framework for the integration objectives and will supplement this process with the support of private initiative. on the other hand, a developed and financially integrated region will be more attractive for foreign strategic investors, opening up the path toward regional development projects, particularly infrastructure, labour market, real estate ones where region ’ s banks might be the financing and co - financing ones. if i would have been asked to say with simple word how i understand the convergence process my answer would be very simple : the convergence means a set of performance criterion and structural reforms benchmarks. this means that each country should adopt the standards stemming from the acquis communautaire and different international codes ( basle ’ s ii ) combined with energetic steps in improving economy, society, culture and environment as well. i think this is a must for promoting financial market efficiency in the entire region. ” allow me to summarize financial system in the region along the following characteristics : - the system is dominated by commercial banks. financial intermediation role of the other financial institutions is weak. the insurance industry in most countries of the region is quite small and underdeveloped. traditionally poor governance, inadequate risk management practices and lack of consumer confidence have limited total assets held by these institutions, in the same time limiting to some extent the possibility to present a source of systemic risk to the financial sector. however this sector ’ s rapid expansion in some countries including albania calls for the development of an adequate legal framework for conducting insurance business and the strengthening of the supervisory framework. other financial intermediation such as leasing activities have grown sharply in the last years ( serbia, bosnia and herzegovina ) representing an important source of funding source for fixed investment and for small and medium - size enterprises. micro credit institutions have a significant presence in bosnia and herzegovina, being mostly established with donor funds but over the last years having shifted their funding source toward bank loans. consolidation into larger credit unions would be a viable method to be able to offer larger loans and provide more banking - like services. financial sector assessment program ( fsap ) calls for further strengthening of the underlining of the supervisory framework,
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john c williams : building an equitable future remarks ( via videoconference ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at the economic inequality policy forum : the impacts of covid - 19 on communities of color and policy insights for an equitable economic recovery, 24 september 2020. * * * hello everyone, and welcome to the new york fed ’ s third economic inequality policy forum. it ’ s a pleasure to speak with all of you who are joining us for this conversation. for me, today ’ s event is about sharing research and hearing your recommendations, so i ’ m going to keep my opening remarks brief. before i continue, let me give the disclaimer that the views i express are mine alone and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. since the outbreak of the pandemic, we ’ ve seen severe economic pain, unprecedented levels of unemployment, and enormous uncertainty about the future. the health and economic effects of covid - 19 have created tremendous hardship for many americans across the country, but they have been especially painful for communities of color. we know that people of color and black people in particular have experienced higher rates of illness and death. significant representation in essential services work and insufficient access to healthcare are key factors that have contributed to these outcomes. 1 the pandemic ’ s convergence with a moment of reckoning for the united states around racial justice makes conversations on issues like equitable growth even more important and relevant. when i think about equitable growth, i think about an economy where everyone can realize their full economic potential. while today ’ s conversation is about equitable recovery, everyone here is aware that an equitable economy did not exist before the pandemic. another important dimension of equitable growth is equal access. and the pandemic exposed just how dramatic the fault lines in racial disparities are, for access to things like healthcare, credit, and housing. recent research by the new york fed revealed that black - owned businesses are almost twice as likely to shutter during covid - 19 as white - owned firms. black - owned businesses are also more likely to be located in coronavirus hot spots. 2 i ’ m hearing about how these statistics are playing out for families through regular conversations with community leaders like many of you in our district and beyond. far too many are facing unemployment, losing access to their healthcare, and dealing with
##s increased on that day, with a substantial amount of trading activity at fairly low rates. these year - end effects were transitory, and the level and distribution of rates in the federal funds and eurodollar markets returned to pre - year - end conditions on the following day. although the effects were transitory and did not adversely affect policy implementation, spending a bit more time on this episode can contribute to our understanding of money market relationships. why did we see the year - end drop in unsecured rates? recall that the framework functions by creating opportunities for investors to borrow funds in money markets to earn ior whenever there are significant differences between market rates and the ior rate. on quarterends, the actual and perceived marginal balance sheet costs of a number of depository institutions increase as they publish financial statements and calculate regulatory ratios. 38 these increased balance sheet costs mean that depository institutions borrowing funds in money markets to earn ior must do so at a lower interest rate to account for these costs. further, the reduction in balance sheet capacity can temporarily lower the bargaining power of lenders, again allowing borrowers to obtain funds at lower rates. many lenders in the federal funds and eurodollar markets with access to the on rrp facility responded to these low rates by increasing their use of the facility, as shown in figure 10. however, other lenders remained in these markets, including those without on rrp access, those who received funds late in the afternoon after the on rrp operation had already occurred, and those for which the on rrp was not an acceptable substitute. on this last point, for some institutions, the on rrp is an imperfect substitute to lending in private unsecured markets because, in the tri - party repo system through which the on rrp is settled, cash is not returned at maturity until late the next day, whereas in private unsecured markets, earlier return of funds can be negotiated. 39 these quarter - end effects, as measured by the effective federal funds rate, are likely to appear a bit larger when we switch in early march to a median calculation. as i mentioned, on december 31, the median fell a bit more than the mean did, 20 basis points in the median versus 15 for the mean. a larger relative decline isn ’ t unusual ; averaging across the quarterend dates in march, june, and september 2015, the median declined by 7 basis points while the mean declined by 6. the median declines more
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, and community groups – to discuss their concerns and to gain information about market developments. we are conducting a top - to - bottom review of possible actions we might take to help prevent recurrence of these problems. first, we are committed to providing more - effective disclosures to help consumers defend against improper lending. three years ago, the board began a comprehensive review of regulation z, which implements the truth in lending act ( tila ). the initial focus of our review was on disclosures related to credit cards and other revolving credit accounts. after conducting extensive consumer testing, we issued a proposal in may that would require credit card issuers to provide clearer and easier - to - understand disclosures to customers. in particular, the new disclosures would highlight applicable rates and fees, particularly penalties that might be imposed. the proposed rules would also require card issuers to provide forty - five days ’ advance notice of a rate increase or any other change in account terms so that consumers will not be surprised by unexpected charges and will have time to explore alternatives. we are now engaged in a similar review of the tila rules for mortgage loans. we began this review last year by holding four public hearings across the country, during which we gathered information on the adequacy of disclosures for mortgages, particularly for nontraditional and adjustable - rate products. as we did with credit card lending, we will conduct extensive consumer testing of proposed disclosures. because the process of designing and testing disclosures involves many trial runs, especially given today ’ s diverse and sometimes complex credit products, it may take some time to complete our review and propose new disclosures. however, some other actions can be implemented more quickly. by the end of the year, we will propose changes to tila rules to address concerns about mortgage loan advertisements and solicitations that may be incomplete or misleading and to require lenders to provide mortgage disclosures more quickly so that consumers can get the information they need when it is most useful to them. we already have improved a disclosure that creditors must provide to every applicant for an adjustable - rate mortgage product to explain better the features and risks of these products, such as β€œ payment shock ” and rising loan balances. we are certainly aware, however, that disclosure alone may not be sufficient to protect consumers. accordingly, we plan to exercise our authority under the home ownership and equity protection act ( hoepa ) to address specific practices that are unfair or deceptive. we held a
a β€œ balanced approach ” in seeking to mitigate deviations of inflation from 2 percent and employment from estimates of its maximum sustainable level. i see this language as entirely consistent with modern descriptions of flexible inflation targeting. for the past four years, a major challenge for the federal reserve and many other central banks has been how to address persistently high unemployment when the policy rate is at or near the effective lower bound. this troubling situation has naturally and appropriately given rise to extensive discussion about alternative policy frameworks. i have been very keen, however, to retain what i see as the key ingredient of a flexible inflation - targeting framework : clear communication about goals and how central banks intend to achieve them. with respect to the federal reserve ’ s goals, price stability and maximum employment are not only mandated by the congress, but also easily understandable and widely embraced. well - anchored inflation expectations have proven to be an immense asset in conducting monetary policy. they ’ ve helped keep inflation low and stable while monetary policy has see gill hammond ( 2012 ), state of the art of inflation targeting ( pdf ), centre for central banking studies, ccbs handbook no. 29 ( london : bank of england ). bis central bankers ’ speeches been used to help promote a healthy economy. after the onset of the financial crisis, these stable expectations also helped the united states avoid excessive disinflation or even deflation. of course, many central banks have, in the wake of the crisis, found it challenging to provide appropriate monetary stimulus after their policy interest rate hit the effective lower bound. this is the point where β€œ many instruments ” enters the discussion. the main tools for the fomc have been forward guidance on the future path of the federal funds rate and largescale asset purchases. the objective of forward guidance is to affect expectations about how long the highly accommodative stance of the policy interest rate will be maintained as conditions improve. by lowering private - sector expectations of the future path of short - term rates, this guidance can reduce longer - term interest rates and also raise asset prices, in turn, stimulating aggregate demand. absent such forward guidance, the public might expect the federal funds rate to follow a path suggested by past fomc behavior in β€œ normal times ” – for example, the behavior captured by john taylor ’ s famous taylor rule. i am persuaded, however, by the arguments laid out by our panelist michael woodford and others suggesting that the policy rate should, under present
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that level of progress has been less apparent on putting in place arrangements for handling and resolving cross - border crises. during that period a number of countries, including the uk, have improved their processes for handling financial crises – including for crises sparked by business continuity events. and there have been a number of exercises and co - ordination initiatives in different regional groups ( for example amongst the nordic countries, dutch and belgian authorities, and more widely across the eu ). but there has been less progress on the wider international front. overall, i do not know anyone who believes that we have established either the common approach to crises or the practical machinery which would enable us to handle a complex cross - border failure with confidence. i would like to make some suggestions tonight on how we might take matters forward. when and how should the state intervene to prevent or manage a financial crisis? of course the underlying questions are very difficult even for one country. financial markets are often volatile and they can only work well if investors and firms expect to live or die by their own decisions and do not come to rely on a safety net to mitigate their losses. to avoid that β€˜ moral hazard ’, authorities have tended to be reluctant to spell out in what circumstances and what ways they would gerard caprio and daniela klingebiel, 2003. β€œ episodes of systemic and borderline financial crises ”, world bank research dataset. http : / / econ. worldbank. org http : / / www. fsforum. org / home / home. html be willing to help support a market or a participant, beyond making clear that it would only be in exceptional circumstances and where it was essential in the wider systemic interest. but the difficulty in spelling out underlying reasons must not become an excuse for lack of analysis and preparation. in order to make cross - border crisis management work, we may have to consider sacrificing some mystery – even if only amongst ourselves – for greater effectiveness. the most recent cases of official emergency liquidity support to uk banks occurred in the early 1990s, when the bank lent to a few small banks in order to prevent wider loss of confidence in the banking system. the memorandum of understanding ( mou ) between the treasury, fsa and bank which sets out our current roles in maintaining financial stability makes clear that decisions on support operations now rest with the chancellor, acting in the light of advice from both the bank and the fsa. following the early 1990s experiences, eddie – now lord george – discussed
hirsh describe case western university ’ s work to support community organizations by providing critical data and information to help them determine which properties are priorities for acquisition and rehabilitation, keep abreast of current property conditions, and monitor issues as they arise. this means keeping up - to - date records of foreclosures, sheriff ’ s sales, and the reo status of properties, as well as gathering information on vacancies and tax delinquencies that can serve as a proxy for identifying properties that may be falling into delinquency. these researchers are also using technology to develop tools to help communities strategically invest in areas with significant needs, but also great potential. moreover, they recognize the need for tools to help community organizations monitor the ongoing conditions in their neighborhoods so that they can anticipate and plan for bumps along the road to recovery. the partnership between case western and its cleveland community partners is a fine example of the fourth lesson we have learned from this crisis : the need to collaborate in new ways in order to develop a comprehensive approach to neighborhood stabilization efforts. researchers from case western are part of a neighborhood stabilization team that meets monthly to exchange information on the status of particular properties and discuss intervention strategies. the conference publication is replete with examples of local collaborations that have successfully addressed neighborhood stabilization issues through partnerships between federal, state, and local governments, community organizations, lenders, servicers, universities, foundations, and others. moreover, the most promising initiatives that you will be hearing about over the next two days take a comprehensive view of community development. it is not sufficient, given current economic conditions and the significant needs of our neighborhoods, to do things the way we have always done them. homeownership, long promoted by federal policy and facilitated by local housing organizations, cannot and should not be the only alternative for reo properties. indeed, redevelopment strategies profiled in the conference publication include rental housing, lease - purchase, and even converting owners to renters to avoid vacancies. including rental options among the mix of stabilization strategies makes particular sense at a time of high unemployment. even in the best of times, homeownership limits mobility in the labor market. today ’ s summit and companion publication also highlight several promising models of β€œ non - redevelopment ” to stabilize communities, such as simple code enforcement, land banking, and demolition. the scale of the problem is such that communities must consider a variety of strategies to repurpose reo properties within the context of
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on this as regional cooperation looms large in the african monetary cooperation programme that you have embarked upon. today, all countries – rich or poor, big or small – are confronted with the various challenges thrown up by globalisation. smaller countries face bigger challenges and even greater risks, as we know only too well. we have to reckon with unpredictable external shocks, such as oil price hikes, drop in the export price of our commodities, or of our manufactured exports. how should we react in the face of globalisation? should we, like one latin american country did last week, pull out of the imf and the world bank? it would be disastrous to envisage such a scenario on our continent as most of our countries are still indebted to these institutions, which for all their imperfections, have done a creditable job. of course, we are not denying that there is considerable scope for achieving a better and more equitable international financial architecture more suited to the needs of our region. faced with the challenges stemming from globalisation, we have to build greater economic resilience into our economies. turning our back on globalisation is not an option. protecting our markets and insulating our labour force from competition can buy short - term peace and create the illusion of growth and welfare. sustainable growth does not lie in that direction. burying your head in the sand was never a good strategy. nations across the world are integrating their economies with those of their neighbours, to create larger and more competitive regional economic groups, and to engage in international trade – not as individual states but as regional powers. in africa, now more than ever before, regional economic cooperation and integration has become a necessary condition for longterm sustainable development. it is in this context that we must focus on the objectives of the african monetary cooperation programme. this programme requires us to adopt collective policy measures to achieve a harmonised monetary system and create a common management institution. the harmonisation of the monetary cooperation programmes of the various sub - regional groupings constitutes the first stage. these will then serve as building blocks for the single african monetary zone, which we expect by the year 2021, with a common currency and a common central bank. to move in this direction, the aacb has adopted a set of quantitative macroeconomic convergence criteria, that should be observed by at least 51 percent of aacb members, before we can launch the african monetary union. there are some encouraging signs. growth performance during the last three years in sub
about future developments, and growing debt service due to higher interest rates, ( ii ) the close link between the banking sector and the government sector, and ( iii ) the polarization of credit institutions by size. the slowdown in lending, which started in the second semester of 2022, was also due to the rise in financing costs amid the tightening of both monetary policy stance and 2 / 3 bis - central bankers'speeches credit standards. in the second quarter of 2022, banks tightened credit standards for loans to non - financial corporations and to households, and were expected to continue to do so in the third quarter of 2022. the prolonged energy crisis, the heightened geopolitical tensions and the mounting uncertainty about the economic outlook prompted banks to reassess the level of risk. in respect with challenges raised by climate change and energy efficiency, as of may 2022, the nbr started collecting information on green loans from banks. the data shows that, between may and september 2022, companies took out green loans totalling 976 million lei ( 0. 56 percent of the corporate loan portfolio ). the composition of these green loans was dominated by credit for green buildings ( 42 percent ), followed by loans for electricity and heating and cooling systems ( 24 percent ) and those for energy efficiency ( 13 percent ). last but not least, a word on economic growth. for 2022, the annual real gdp growth is estimated to reach about 5 percent, which is lower than the one recorded in 2021. for the past year, growth was driven by the substantial advance during the first part of last year. in 2023 domestic economic activity is projected to lose significant momentum, due to certain substantial adverse influences, as previously mentioned. a favourable contribution to economic growth is expected to come, particularly over the medium term, from european funds, including the next generation eu programme. with these in mind, i now invite vice - president pavlova to take the floor. afterwards, i wish you all fruitful discussions, stemming from the eib investment survey findings. thank you. 3 / 3 bis - central bankers'speeches
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housing prices – it remains a bit below average. and after deducting offset balances, household credit growth has been flat for the past year or so. moreover, the level of household credit ( net of offset accounts ) has declined as a share of household disposable income. the decline in this measure of household indebtedness is apparent in several other indicators. for example, average loan - to - value ratios for new loans have declined over this phase of monetary policy tightening. also, loan discharges from property sales have increased, and by more than the rise in new lending ( which is shown as commitments in graph 7 ). these trends are likely to reflect incentives to reduce or limit indebtedness in response to higher interest rates. r e s e r v e b a n k o f au s t r a l i a graph 6 household credit % % growth * household household net of offsets % % per cent of annual hhdy * * housing net of offsets personal * six - month - ended annualised ; dashed average post - 2008 calculated gross of offsets. * * household disposable income. sources : abs ; apra ; rba. graph 7 housing loan discharges * quarterly ; seasonally adjusted $ b $ b value commitments discharges % ratio of discharges to loan commitments % * discharges and commitments are net of external refinancing. sources : abs ; apra ; rba. increases in the cash rate have led to tighter financial conditions for businesses increases in the cash rate have also flowed through to higher business lending rates and higher corporate bond yields, although pass - through has varied across different markets ( graph 8 ). average rates on large business loans have increased by more than 425 basis points over the tightening phase, compared with around 310 basis points for small businesses. however, small businesses continue to face substantially higher interest rates than their medium and large counterparts. large businesses with access to wholesale funding markets have benefited from favourable conditions in those markets. in particular, corporate bond yields have risen by less than the rise in riskfree yields over the tightening phase because credit spreads have narrowed noticeably. graph 8 cost of business debt % % business lending rates * small business medium business large business % % corporate bond yields * * 5 - year yields 3 - year yields * average variable interest rate on credit outstanding. * * for bbb - rated non - financial corporations. sources : apra ; bloomberg ; rba. despite
a large economy, the extent of that annual flow of saving is now globally very significant. in absolute terms, according to the available national income statistics, china is in fact now the world ’ s largest saver. its gross national saving, at an estimated us $ 3. 2 trillion, exceeded that of both the united states and the euro these and subsequent trade figures refer to merchandise exports. bis central bankers ’ speeches area in 2010. 2 its gross investment is also the world ’ s largest – at an estimated us $ 2. 9 trillion in 2010. the gap between these two figures – around us $ 300 billion – is of course china ’ s current account position. that is the extent to which china, in net terms, exports capital to the rest of the world. as you might expect, to deal with this large volume of saving china has some large banks. as measured by total assets, 12 of the world ’ s 100 largest banks are chinese. this is a higher number than for any other single country, including the united states. between 2005 and the start of this year, the shanghai and shenzhen stock exchanges grew by over 800 per cent. as measured by the market capitalisation of listed domestic companies, the shanghai stock exchange is still far smaller than the new york stock exchange, but it is now more than two - thirds the size of the london and tokyo stock exchanges. in terms of turnover, the annual value of share trading on the shanghai stock exchange in 2009 surpassed that of each of the london and tokyo exchanges. 3 asian bond markets, and particularly those in china, have also grown in size. five years ago, total domestic debt securities outstanding in china were less than half of those outstanding in countries such as france, germany and italy ; today these markets are roughly all comparable in size. 4 so it is not just the centre of gravity of economic activity that is shifting to asia – the weight of financial assets is also shifting. now this is a slower process since the stock of wealth is a result of a long accretion over time and economies that rapidly become large in production terms may have a smaller stock of wealth than countries that have been similarly large for a long time – such as europe and the united states. so at this point the advanced industrial countries still account for the lion ’ s share of global wealth. nonetheless, things are moving quickly. within the remainder of the careers of many of us here today, we will very likely see a pretty substantial change in relative positions.
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unemployment rate was 5. 4 percent. the underlying consumer price inflation eased to 1. 2 percent in the second quarter over a year ago. for 2009 as a whole, real gdp is projected to contract by 3. 5 - 4. 5 percent and cpi inflation is projected at 0. 5 percent. hit by the global recession, the economy of macao sar contracted 12. 8 percent in the first half of 2009, with pronounced declines in both exports and investment. however, labor market performance remained stable, with the latest unemployment rate remaining at 3. 7 percent. inflationary pressures were quickly alleviated. as the tourism industry income stabilizes, economic activity is gradually improving, and the decline in gdp is expected to moderate gradually in the second half of the year. iii. reform and future mandate of the fund the current financial crisis, which originated in developed countries, has resulted in substantial losses for the countries of the world. the failure of major international financial institutions to issue timely early warnings highlights the consequences of its misfocused surveillance. only through the acceleration of fundamental reforms will the major international financial institutions be able to discharge the mandate assigned to it by its member countries. the persistently misaligned quota shares and underrepresentation of emerging market and developing countries hamper fund governance and even - handed surveillance. it undermines fund legitimacy and effectiveness. the traditional unreasonable quota allocation and adjustment method have intensified the misalignment. it is critical that the fund complete in a timely manner the reform objective announced by the g - 20 leaders, namely a shift of at least five percentage points of the quota shares in favor of the emerging market and developing country members. we support increasing fund resources through a variety of means. however, the fund is a quota - based institution and quotas should be its primary resource. from the long - term perspective, the fund should introduce a reasonable automatic quota adjustment process in order to reflect changes in the relative economic positions of its members and avoid serious quota share misalignment. we join in the call for prompt approval of the 2008 quota reforms. building on the quota reform, we support the broader reform of fund governance, which will result in a strengthened role of the executive board, better oversight over the management, and a transparent, competitive, and merit - based process of management selection. emerging market and developing countries should also have greater participation in management and staff. even - handed surveillance is an important condition for fund legitimacy and effectiveness. the fund needs to strengthen
by 1. 2 percent in the same period year - on - year, the august cpi registered a 0. 5 percent increase from the previous month. money growth accelerated in the first eight months, with m2 and m1 up 28. 5 percent and 27. 7 percent respectively, resulting in a credit growth of 34. 1 percent. the renminbi exchange rate remained stable. the domestic demand has become the dominant source of growth. the package of macroeconomic measures in response to the global financial crisis – suited to the chinese circumstances – has proven to be timely, forceful, and effective, and has helped reverse the sharp decline in growth. the projected growth target for this year is within reach. efforts are also being made to contain fiscal and financial risks. the government intends to limit the fiscal deficit and public debt to around 3 percent and 20 percent of gdp, respectively. the banking system has improved its asset quality and resilience to shocks. the nonperforming loan ratio of the banking sector declined by 0. 64 percentage points in the first six month to 1. 8 percent at end - june. and their capital adequacy stood at 11. 1 percent. the chinese government is faced with an uncertain global environment. in the first eight months, exports dropped by 22. 2 percent while imports, by 22. 7 percent. the task for structural adjustment remains formidable. while the effect of the supportive policies is expected to phase out, the measures aimed at addressing longer - term issues will take time to yield results. the government is committed to maintain stable and consistent macroeconomic policies while accelerating structural adjustment. promotion of domestic demand, particularly consumption, will remain a top priority. in this regard, the government is committed to maintain a reasonable investment growth, improve investment structure, and enhance efficiency by eliminating inefficient capacity and encouraging merger and restructuring. it will continue to restructure and revitalize key industries, encourage innovation, and improve the people ’ s livelihood. it will monitor closely the developments in the domestic as well as the global economy and stand ready to take contingent actions, as necessary. china will also remain vigilant against various potential risks, including the risk of inflation, and sustain strong economic growth. against the economic rebound in mainland china and easing of the downside risks in the global economy, the hong kong sar economy in the second quarter recorded a 3. 3 percent rebound over the previous quarter, and the decline in exports moderated. total employment stabilized and the
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raising interest rates is a successful method for supporting the exchange rate because of uncovered interest parity. but this ignores the possibility that raising interest rates to defend a fixed exchange - rate regime will simply call into question the durability of the regime itself and raise the probability that the peg or target zone will be abandoned. in such circumstances an increase in interest rates may lead to a fall in the exchange rate. a second example of the same phenomenon is the pressure on sterling during 1992 and its forced departure from the exchange rate mechanism on 16 september of that year. massive speculation on that day led to the announcement in the morning of a 2 percentage points rise in interest rates and, when that failed to dampen the pressure on sterling, of a further 3 percentage points rise in rates. that second announcement, far from bolstering the exchange rate, merely convinced financial markets that britain ’ s membership of the erm could no longer be sustained politically. the strong political commitment to joining european monetary union, which was the effective support for other currencies in the erm, was absent in the united kingdom. following its departure from the erm, the uk introduced an inflation target regime for monetary policy. it succeeded in bringing inflation down to around 2Β½ percent ( see chart 2 ). chart 2 : uk inflation and inflation expectations, oct 1991 - oct 2003 per cent implied inflation ( a ) from igs rpix inflation rate oct - 91 inflation target announced bank independence oct - 93 oct - 95 oct - 97 oct - 99 oct - 01 oct - 03 ( a ) implied average inflation expectations from 5 to 10 years ahead, derived from index - linked gilts. source : bank of england, ons but long - term inflation expectations did not fall as quickly. only after the announcement in may 1997 by the new labour government that the bank of england would be made independent did inflation expectations fall quickly to the target level, as can be seen from chart 2. that reform created an expectation that it would be in the interests of all political parties not to repeal the legislation. for the first time since the second world war, there was a broad - based and credible commitment in the uk to stable and low inflation. the need for any monetary regime to command sufficient support in order to acquire a reasonable lifeexpectancy was given insufficient weight in the discussions that took place at the imf and elsewhere on brazil and other financial crises of the 1990s. the point is made by guillermo calvo and frederic mis
was inevitably some uncertainty about the prospects of the new regime and the new currency that it issued. the circulation of swiss dinars in kurdish controlled iraq during the 1990s was a market solution to the problem of devising a medium of exchange in the absence of a government with the power to issue currency. changes in the relative price of swiss and saddam dinars show that the value of money depends on beliefs about the probability of survival of the institutions that define the state itself. v. case study 3 : monetary policy in japan and the zero bound on interest rates my third case study shows that institutional arrangements need to be consonant with the underlying economics, or failure will result. recent experience in japan has led to the rebirth of interest in monetary policy when official interest rates are constrained by the zero lower bound. official shortterm interest rates in japan have been approximately zero since the beginning of 1999. of particular interest in this context is the question of how responsibilities should be divided between the central bank, on the one hand, and the finance ministry, on the other. guy debelle and stanley fischer ( 1994 ) introduced the distinction between instrument and goal independence of central banks. that distinction has become the standard framework within which to analyse the optimal constitution of central banks. but such a distinction presumes the existence of a source : compiled by the central bank of iraq, based on data collected by the united nations world food program. policy instrument that is uniquely available to the central bank. that instrument is the level of official short - term interest rates. but when interest rates are constrained at their lower bound of zero, the position is much less clear. indeed, i shall argue that in such circumstances both instrument and goal independence are impossible. rather when interest rates are at their zero lower bound, policy relies on successful cooperation between central bank and finance ministry. i shall assume that, when interest rates are zero, monetary policy takes the form of open market purchases or sales of government securities using central bank money. a well - known policy prescription, which has become known as unconventional monetary policy, is that the central bank should buy long - term government bonds rather than the more conventional shortterm bills. the bank of japan did indeed follow this prescription. the logic of such a proposal is as follows. long - term bonds are likely to contain a significant premium to compensate investors for their lack of liquidity - the fact that, in practice, investors face significant costs when switching between bonds and goods. when the central bank offers to
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bostjan vasle : speech – slovenian bankers'day speech by mr bostjan vasle, governor of bank of slovenia, at the slovenian bankers'day, organised by the bank association of slovenia, ljubljana, 24 november 2021. * * * ladies and gentlemen, my greetings to you all! i am delighted to be able to speak to you again at your annual gathering, although i would much rather be able to do this in real life. alas, the worsening health situation makes this impossible. the great uncertainty surrounding the future evolution of the health situation is not affecting just our gatherings, but also the entire economic picture in slovenia, in europe and across the globe, and thus economic policy decisions too, including monetary policy, about which i will say more later. the slovenian and euro area economies have recovered well in recent quarters : slovenia has already surpassed its pre - pandemic gdp, while the euro area overall is very close to reaching it. the unemployment rate has fallen, and firms are again facing labour shortages. a key contribution to this positive picture has been made by economic policy : fiscal support to alleviate the impact of the pandemic amounted to more than 5 % of gdp in slovenia last year, and will be slightly lower this year at around 4 % of gdp. similar large - scale packages have been seen throughout the euro area. in the area of monetary policy too we have put in place the largest measures to date. there are two key measures : ( i ) the pandemic emergency purchase programme, in the amount of eur 1, 850 billion, and ( ii ) extremely low - cost long - term loans to banks in the amount of eur 2, 200 billion. the two measures together amounted to an incredible 36 % of euro area gdp. but uncertainty remains high, with regard to the health picture and the economic picture alike. despite the availability of vaccines, the health situation is worsening again, and the pandemic is once again curtailing economic activity. further uncertainty relates to the normalisation of our policies, which we will have to embark on in the months ahead. meanwhile other effects of the pandemic and the measures are becoming evident : after several years of low inflation, the rate passed 4 % in the euro area and 3. 5 % in slovenia in october. it will rise slightly further before the end of the year. for the moment the rise is largely being ascribed to temporary factors related to developments and measures during the early part
mark carney : the three rs – review, reflect, and reaffirm remarks by mr mark carney, governor of the bank of canada, to the greater victoria chamber of commerce, victoria, british columbia, 28 september 2009. * * * september is a time to review the past, reflect on the present, and reaffirm goals for the future. like students who returned to school this month, i will follow this annual discipline today by ( i ) reviewing the extraordinary events of the past year ; ( ii ) reflecting on the policy response and the current economic outlook ; and ( iii ) reaffirming the bank of canada's commitment to price stability. while this september brings signs of renewed growth around the globe, the recovery is in its earliest stages and almost entirely driven by public policy. over the medium term, a difficult hand - off from public - to private - led growth must occur. over the longer term, the economic environment will be challenging as the global economy undergoes a fundamental restructuring. review a year ago, we were in the midst of the most severe economic crisis since the great depression. major institutions had collapsed, and the very functioning of the global financial system was threatened. virtually every financial asset in the world was being repriced : equity markets plunged, credit spreads soared, and currency volatility spiked. the financial crisis in the united states, the united kingdom, and continental europe spread rapidly through financial, trade, and confidence channels, triggering a synchronous and deep global recession. major central banks reacted immediately by providing hundreds of billions of dollars in extraordinary liquidity to keep the system functioning. on 8 october, g - 10 central banks, including the bank of canada, conducted an exceptional, coordinated interest rate cut of 50 basis points, the first since the 11 september terrorist attacks. a few days later, the g - 7 took decisive action. in a historic meeting on 10 october 2008, g - 7 countries, including canada, committed to : β€’ use all available tools to support systemically important financial institutions and prevent their failure. β€’ take all necessary steps to ensure that banks and other financial institutions have broad access to liquidity and funding. β€’ ensure that our banks can raise capital from public as well as private sources, in sufficient amounts to re - establish confidence and permit them to continue lending to households and businesses. the ambition and clarity of these commitments were unprecedented. in those countries at the heart of the crisis, governments re - capitalized banks and
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william c dudley : brief remarks about the centennial β€œ the fed at 100 ” exhibit introductory remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the museum of american finance, new york city, 25 september 2013. * * * thank you all for being here to commemorate the opening of the centennial exhibit for the federal reserve system and the federal reserve bank of new york at the museum of american finance, just a few blocks from the new york fed ’ s landmark head office at 33 liberty street. i would like to say thank you to our friends at the museum for their work and interest in the fed and for supporting us in organizing this event. before making some brief remarks about the centennial, i would also like to acknowledge some of the people in attendance tonight. we have two former new york fed presidents here this evening : jerry corrigan and bill mcdonough. i met jerry, the seventh president of the bank, when i was still wet behind the ears. i was just out of graduate school at the board of governors in washington, but jerry was already a force to be reckoned with and a part of paul volcker ’ s inner circle. jerry ’ s tenure as president had many memorable moments, including the october 1987 stock market β€œ break ”. jerry, of course, was instrumental in working with then chairman alan greenspan in devising a response to provide liquidity to the market, and an episode that could have ended in financial crisis soon passed. jerry also tackled many other difficult issues during his tenure, including the latin - american debt crisis and the development of the first basel accord. we also have bill mcdonough, the eighth president of the bank, who built on the accomplishments of jerry ’ s tenure, and made great strides in connecting the new york fed to the broader region. at the same time, he helped ensure that the federal reserve was prepared to face new, salient challenges presented by developments in the global economic and financial landscape. during his tenure, the city, the country and the bank experienced a very significant crisis on september 11, 2001. under bill ’ s leadership, new york fed staff worked tirelessly on liberty street, supporting the efforts of first responders, while ensuring that financial markets continued to operate and serve their vital function in the u. s. and global economy. a number of the members of our board of directors, including chairwoman rafferty, are with us, as is one of
these developments caused considerable fluctuations especially in energy - exporting emerging countries. overall, the risk premia of emerging economies followed a volatile course due to the monetary policy uncertainties, the slowdown in economic activity and the course of oil prices ( chart 2 ). effects of this volatility in global markets emerged in the turkish economy as fluctuations of risk premium indicators and exchange rates. the fall in commodity prices, chiefly in oil, is expected to improve the economy especially in terms of inflation and external balance. additionally, the tight monetary policy stance stands out as a factor that limits the negative effects of global volatilities on turkey in this period. annual growth recorded some deceleration following the first quarter of 2014. this was mainly led by receding agricultural output amid unfavorable climatic conditions as well as the slowdown of export growth resulting from geopolitical risks. indicators regarding the last quarter show that annual growth remained moderate due to weak foreign demand. in 2015, we expect the growth rate to increase gradually with the increased contribution of domestic demand. bis central bankers ’ speeches the positive effects of the tight monetary policy stance and macroprudential measures continued in the last quarter of 2014 leading the core inflation trends to approach the target. moreover, plummeting oil prices supported the disinflation process and inflation expectations have recently seen a noticeable improvement. due to the fading cumulative effects of the exchange rate, the reverting of food inflation to past years ’ averages as well as the falling oil prices, we project a notable decline in inflation in 2015. accordingly, inflation is estimated to approach the levels consistent with the target in mid - 2015. 1. monetary policy and financial conditions the central bank of the republic of turkey ( the cbrt ) maintained its tight stance in the last quarter of 2014 and in consideration of global volatilities, supported the tight monetary policy with a tight liquidity policy. as you can see on the slide, the bist overnight repo rates have remained close to the upper bound of the interest rate corridor since october in line with the liquidity policy ( chart 3 ). the cbrt funding has been made mainly through one - week repo auctions since early 2014 ( chart 4 ). thus, the cbrt average funding rate hovered around the 1 - week repo rate in this period. as we all know, core inflation trends are following a downward trend. considering the fall in oil prices and improved expectations that result in favorable developments in the
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the cpc central committee has made it clear that local government special bonds are allowed to be used for idle existing land buyback, new land acquisition and reserve, and for - profit housing purchasing. this will further accelerate the de - stocking of the real estate market and enable the real estate market to stop declining and stabilize. the fourth is to lay emphasis on the internal and external equilibria in the economic growth. in recent years, the external equilibrium of the chinese economy has been effectively improved. the current account surplus - to - gdp ratio dropped from around 10 percent in 2007 to around 2 percent in 2011, and remains within the range of 1 to 2 percent in recent years, which is generally considered as reasonable by the international community. the current geopolitical tensions have led to economic deglobalization as well as politicalization and instrumentalization of international trade, which hampers sustained growth of the world economy and the increase in the global welfare. we will firmly follow the path of reform and opening up and the path of multilateralism, advocate free trade and fair competition, and make better use of both international and domestic markets and resources, so as to accelerate the building of a new development paradigm. recently, the us dollar index has remained high, and most non - usd currencies have depreciated. the rmb has also depreciated moderately against the usd, but overall shows strong resilience. after years of endeavor, china's foreign exchange market has achieved remarkable development. market participants are more mature and the 3 / 6 bis - central bankers'speeches trading activities are more rational. the rmb cross - border payments and receipts have reached 30 percent in goods trade, lowering the exchange risk exposure faced by enterprises in production and operation. as the regulators of the foreign exchange market, the people's bank of china ( pboc ) and the state administration of foreign exchange ( safe ) are now more composed and experienced in the face of market changes. we are confident and capable of maintaining stable functioning of the foreign exchange market. we will pursue the principle of letting the market play a decisive role in exchange rate formation, and leverage the role of exchange rate as an auto stabilizer in macroeconomic management and for the balance of payments. meanwhile, we will firmly correct pro - cyclical behaviours, fight against conduct that disrupts market order, and prevent the risk of exchange rate overshooting, so as to keep the rmb exchange rate basically
own purposes and the chinese government shall not levy taxes in hong kong. moreover, china will not draw on or resort to hong kong ’ s exchange fund or other assets in any way and for any reason. all financial transactions between the mainland and hong kong will be conducted in accordance with the rules and practices of international financial activities. claims and liabilities between institutions from the mainland and those from hong kong will continue to be regarded as external claims and liabilities. when participating in the hong kong market, chinese entities will have equal treatment as other international and local market participants. apart from the above, it is also important for hong kong as an international financial centre to continue to develop its international monetary relations and participate in the activities of international and regional financial institutions. there are therefore provisions in the joint declaration and the basic law that hong kong may, on its own, maintain and develop financial relations with other countries, regions and relevant international organisations after 1997. the 1997 world bank / imf annual meeting will be held in hong kong just a few months after china resumes the exercise of sovereignty over hong kong. this is a magnificent financial event and i am confident that it will be successful. iii the strengthening of financial co - operation and the promotion of economic prosperity and stability between the mainland and hong kong mainland china and hong kong have close financial links with each other. since the implementation of financial reforms and the open - door policy, such links have been strengthened further. it is necessary to further enhance such a mutually beneficial relationship between the two places. first of all, the mainland and hong kong should work together for the prosperity, stability and smooth transition of hong kong. china ’ s commitment to the implementation of the β€œ one country, two systems ” principle is increasingly accepted and appreciated by the people of hong kong and the international community. worries and doubts about the future of hong kong which emerged in the early 1980 ’ s have largely subsided. we are pleased to note that the financial situation in hong kong is heading towards a smooth transition. we are confident that hong kong will enjoy financial stability before and after 1997. even though there may be some fluctuations in hong kong ’ s financial market, we believe that the hkma is fully capable of handling these situations satisfactorily. if necessary, the people ’ s bank of china will, at the request of the hkma and in accordance with the basic law and market practices, offer support to the hkma. financial stability in hong kong before and after 1997 is not
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banking services. the codes and rrbs 15. all banks offer the same products with variants but what distinguishes and sets apart and gives the competitive edge to a bank is the quality of customer service extended by the bank. 16. the codes are the rrbs mandate, adopted by rrbs with the specific approval of the board of directors. rrbs must take full ownership of these codes and facilitate their adoption ensuring complete adherence. 17. rrbs have undergone a sea change. they are now almost treated on par with other commercial banks. the customers of the rrbs are illiterate and poor ; there is also an asymmetry of information. hence the adoption of standards of behaviour and codes of conduct framed by bcsbi for dealing with customers is an imperative. 18. at one point we are all customers of banks. what are the ingredients of treating customers fairly? transparency, proper disclosure, non - discriminatory and non - exploitative pricing, building a robust and responsive grievance redressal mechanism within the bank and also making the customer aware of redressal available through the banking ombudsman scheme. transparency does not mean bombarding the illiterate customer with humungous bis central bankers ’ speeches amount of information which she is neither able to understand or use. it merely means no hidden charges. the customer must up front understand what she is letting herself in for ; the terms and conditions of the contract should be clearly understood. 19. the codes need to be clearly understood and fairly implemented by regional rural banks. banks are commercial establishments. they are not philanthropic organizations. however, they enjoy great leverage and an oligopolistic position simply as the borrower in the rural areas may lack choice which his urban counterpart enjoys. this casts a much greater responsibility upon the rrbs. knowledge and general awareness about the codes of the bcsbi needs to be increased. just this morning, mr mahajan shared with me that despite valiant attempts knowledge of and appreciation of the bcsbi codes was spreading very slowly and this was a cause of concern. the chairmen of the rrbs must appreciate that the poor borrower who comes to the door step of the bank is highly unlikely to meet the chairman of the bank. for him the frontline manager is the bank. the frontline manager needs to be sensitized to the importance of the code of bank ’ s commitment to customers. he must understand and believe in them. this affirmation will then translate to increased
down in line with growth deceleration. several idiosyncratic factors are put forward to explain this uniqueness of our macroeconomic situation : supply bottlenecks, particularly in infrastructure, bis central bankers ’ speeches sectoral imbalances, rise in wages without a corresponding increase in productivity, higher fiscal deficit and larger depreciation of the exchange rate than in the case of our peers. reserve bank ’ s action to curb inflation 32. to control inflation, the reserve bank reversed the crisis period ’ s accommodative monetary stance in quick order. we raised the policy interest rate ( repo rate ) 13 times, cumulatively by 375 basis points ( bps ) – from 4. 75 per cent to 8. 5 per cent. also we raised the reserve requirement on banks – the cash reserve ratio ( crr ) – by 100 bps from 5 per cent to 6 per cent. monetary policy is known to work with lags, and as a consequence of the tight monetary policy, wpi inflation which peaked at 10. 9 per cent in april 2010, has come down to 6. 6 per cent in january 2013. 33. in response to deceleration in growth and decline in inflation, the reserve bank eased the monetary policy stance starting january 2012 cutting both the repo rate ( by 75 bps ) and the crr ( by 200 bps ). criticism against reserve bank ’ s monetary policy stance 34. the reserve bank has been criticized for its anti - inflationary stance. let me address some of the main strands of that criticism if only to illustrate the dilemmas that we face in managing the growth - inflation trade - off. monetary policy has only stifled growth, but has not tamed inflation 35. by far the most common criticism has been that tight monetary policy has stifled growth but has not tamed inflation. my response to this criticism is the following. first, inflation has come off from its peak by over about 4 percentage points. admittedly, growth too has moderated. however, the reserve bank ’ s anti - inflation stance is motivated by the dictum that inflation is inimical to growth and that only in a situation of price stability can consumers and investors make informed choices. 36. it is important also to note that in order to contain inflation, monetary policy seeks to curb demand which, in turn, restrains growth. as per this logic, reduction in growth is an inevitable outcome of tight monetary policy. but this sacrifice is only
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triggering factor. no doubt that joining the eu next year will give the polish economy an additional boost. but your accession will also contribute to creating a more dynamic and competitive europe. and this is our common interest.
an interest rate policy geared to the needs of the swiss economy. membership would also spell the end of the interest rate advantage with respect to the euro area, which still stands at one and a half to two percentage points. this would entail the loss for the swiss economy of an important competitive advantage. if there are grounds for hoping that an enlarged eu will lead to greater stability and prosperity on the european continent, it is also conceivable that a larger market will open new opportunities for switzerland. once the bilateral agreements have been extended to cover the new member countries, our economic relations with the enlarged eu will be regulated by the same network of bilateral treaties, as is the case with the current eu. the swiss economy will thus enjoy easier access to a greatly expanded market totalling 450 million people. however, eu enlargement also represents a challenge for switzerland. a larger union needs to work out its joint position in lengthy internal consultation and decision - making procedures. it could thus become increasingly difficult for us to defend our own interests. enlargement is therefore very likely to influence our relationship with the eu. let me now move to one of the key features of our economy : our financial sector, which currently also faces some major challenges. 4. switzerland as a european financial centre since the beginning of the last century the swiss financial sector has been a mainstay of our economy. it accounts for just under 6 % of total employment, but currently generates over 10 % of the country ’ s gdp. relatively speaking, therefore, it is more than twice as big as the german or french financial sectors, for example. switzerland ’ s globally active big banks and insurance groups are also major international competitors in most market segments. the two big banks are among the world ’ s ten largest banks. in terms of value added by the financial sector, switzerland occupies fourth place behind new york, london and paris, but is ahead of frankfurt. switzerland plays a leading role in banking, above all, in asset management. almost four trillion francs worth of assets are managed in switzerland. this accounts for around one - third of the world ’ s portfolios of cross - border investments. over the last 10 years, our financial institutions have also greatly expanded their activities abroad on a global basis. in 2000 the value of their foreign investments amounted to some 54 billion swiss francs, which is equivalent to around 14 % of total swiss investments abroad. switzerland is also a magnet for foreign banks. nearly one in every two banks in switzerland
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