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stop, at least for some time. we need, first, to give a minimum of stability to the regulatory framework ; second, to take stock of the work done and gain experience to evaluate its longer - term effects ; third, and perhaps most importantly, strike a balance between securing the financial system and avoiding rules that would overly penalize risk - taking, without which no growth is possible. at the beginning of this year the group of central bank governors and heads of supervision of the g20 instructed the basel committee to refrain from β significantly increasing overall capital requirements β 1 at this stage. the basel 3 package is currently being finalised on this premise. while agreement is not yet assured, i think we are close. let me take this opportunity to say that my firm view is that an agreement is necessary to give certainty to the financial world. the conditions are there and we should not miss the opportunity. assuming such an agreement can be reached, in the field of banking regulation the next few years should be devoted to maintaining the regulatory system, not to overhauling it radically once again ; we also need to review the rules, by checking for any embedded procyclicality or other unintended consequences, rather than establishing further capital requirements. efforts to limit banking risks, however, are only part of the answer. the financial landscape is changing apace. the growth of intermediaries outside the banking sector points to the need for new micro - and macro - prudential tools. work has begun in this area but much remains to be done. furthermore, a host of innovations ( digital currencies, distributed ledgers, peer - to - peer lending, crowdfunding, to name but a few ) have opened new frontiers for financial services and started to blur the boundaries of the financial sector itself. there is great potential for financial inclusion and efficiency gains here, but there are also implications for monetary operations and transmission, as well as new risks to stability, integrity, and end - user protection. this raises issues about the group of central bank governors and heads of supervision ( 10 january 2016 ) ; as stefan ingves, chairman of the basel committee, recently noted, this must be one of the most frequently cited phrases in regulation debates these days. perimeter of financial regulation and the appropriate regulatory and policy measures. the fsb and various standard - setting bodies have already conducted a broad discussion on general themes like definitions, opportunities and risks ; it is now time to turn to discussing concrete policy questions. | road towards the completion of the banking union. indeed, the banking union is still missing two very important pieces : the availability of common public funds to support resolution procedures in the case of ailing banks β the single resolution fund β s fiscal backstop β and a common bank deposit insurance scheme, again supported by a common public backstop. these are key ingredients for the overall balance of the new system : in their absence, it would not be easy to counter the views of those who claim that the fiscal backstop should remain a national prerogative and that, therefore, the national authorities should have the final say in all interventions aimed at minimising the overall costs of the distress. furthermore, we should also reflect on how to deal with possible crises of banks for which the existence of public interest, necessary for the initiation of a resolution procedure, is denied. this is the case for the smaller banks, but it may also apply, as it has been recently the case, to banks considered significant within the ssm. indeed, it would be difficult to object to the observation that the current framework calls on these banks to pay into a crisis management system from which they cannot benefit. * * * to conclude, progress on all these fronts β and, more generally, toward a deeper european integration β can be achieved only if we overcome the mutual distrust and prejudice among member countries that have developed in recent years. in doing this, we should strive to give sound and fair application to the principles underpinning the new european rules, preserving the value of banking activity, to the benefit of savers and borrower households and firms. thank you for your attention. designed and printed by the printing and publishing division of the bank of italy | 0.5 |
year, the nbs created a stable economic environment and successfully slashed inflation, forcing the government and policy makers to face the reality. and the reality is unyielding : inflation does not create jobs, it does not push gdp up, and, perhaps most importantly, inflation has not created welfare anywhere in the world! is it then possible that, even after the devastating consequences of the 1992 - 1993 hyperinflation on the country β s economy, serbia has still not grasped how damaging the effects of inflation can be? | radovan jelasic : the national bank of serbia β creating a stable economic environment speech by mr radovan jelasic, governor of the national bank of serbia, at a roundtable on β stable currency for a healthy economy β, belgrade, 16 february 2007. * * * ladies and gentlemen, mr yves thibault de silguy, the role of the national bank of serbia is well defined by the law adopted in mid - 2003, maybe because that particular point was copied from eu treaty provisions on the european central bank. the definition reads as follows : β the primary objective of the nbs shall be to achieve and maintain price stability. in addition to its primary objective, the nbs shall also pursue the objective of financial stability. without prejudice to its primary objective, the nbs shall support the economic policy of the government of the republic of serbia, acting in accordance with the principle of a market economy. β hence, the law clearly defines the main objective β β to achieve and maintain price stability β β and says nothing about growth, employment, exports, wages, roads, etc... the reason why almost all developed countries adopted this law β and why we thankfully copied it β is simple enough : there is nothing that contributes more to growth and economic development, higher employment and growth in exports than stability of prices. this assertion has been proved right in all developed countries in the course of the last two decades. all other arguments remind me of stories from 1860s when prince mihailo reigned in serbia and people were debating, believe it or not, whether serbia needed railroads. the comments were like : β foreign machines, foreign machine drivers, foreign managers, and all of it at our expense. " and, while there is a clearly defined objective that we as a central bank need to achieve, the means for achieving it are not strictly specified β though in serbia, like in other countries of the region, it is often much more important to find a good excuse than to face reality. in simple words, the law clearly defines our assignment without delineating the means to realize it! β experts β in serbia still engage in theoretical discussions about monetary policy while, at the same time, thinking in terms of exchange rate only! the facts relating to the exchange rate, however, show that the role of the nbs in setting the exchange rate was never as insignificant as in 2006 while the volume of interbank trade in foreign exchange was never more vigorous than last year β | 1 |
area have been especially weak in manufacturing. the purchasing managers β index for the manufacturing sector has declined significantly. recently, manufacturing output has declined in germany. during 2018, it was thought that the headwinds for the euro area economy were mostly coming from idiosyncratic factors related, in particular, to the auto industry. in the course of this year it has become more likely that we are witnessing a more lasting deterioration. however, all this recent gloom in international trade and manufacturing does not necessarily mean a serious slump in the euro area economy as a whole. domestic demand has remained quite robust, supported by an accommodative monetary policy and strong labor markets. [ slide 6 ] the unemployment rate in the euro area stood at 7. 5 % in june, close to an all - time low. the labor force participation rate has risen from 59 % to 67 %, the highest level ever recorded. moreover, since reaching the trough of the business cycle over six years ago, euro area employment has increased by about 10. 5 million persons. so, the strong labor market development is supporting domestic demand in the euro area and partly compensating for the decline in external demand. [ slide 7 ] however, despite the stronger labour market and accelerating wages, inflationary pressures remain muted and indicators of inflation expectations have declined with the weakening economic outlook. therefore, a significant degree of monetary stimulus continues to be necessary to ensure that financial conditions remain very favourable and to support euro area growth and domestic price pressures. in its meeting in july 25, the ecb governing council communicated the need for a highly accommodative monetary policy stance for a prolonged period, as inflation rates, both realised and projected, have been persistently below levels that are in line with our aim. 2 if the medium - term inflation outlook continues to fall short of our aim, the governing council is determined to act, in line with its commitment to symmetry in the inflation aim. with the symmetric approach, inflation may vary around 2 % in the short - term, to reach our target in the medium term, thus supporting the anchoring of inflation expectations. we stand ready to adjust all of our instruments, as appropriate, to make inflation converge towards its aim in a sustained manner. we are currently examining options, including ways to reinforce our forward guidance on policy rates, mitigating measures related to the negative deposit facility rate β such as the design of a tiered system for reserve remuneration β and options for the | crisis era, the world trade organisation is in great need of reform today. that could be one important transatlantic project for the coming years. when we join forces, we are stronger. i am always happy to see europe and the united states acting together and improving the multilateral system. i β d like to see more of that. thank you very much for your attention! 1 the official name is economic and monetary union ( emu ), but i use european monetary union here to adapt to a u. s. audience. 2 the june 2019 eurosystem staff forecast for the euro area foresees annual hicp inflation at 1. 3 % in 2019, 1. 4 % in 2020 and 1. 6 % in 2021. 4 / 4 bis central bankers'speeches | 1 |
expected to emerge. integration could also be advanced via electronic banking, or crossborder lending, both of which are still relatively limited. in fact, e - banking could represent a forceful boost to integration, since it could allow customers to access banking services offered by banks in other countries, or it could be a powerful way to enter a new market without the need to establish a costly branch network. responses by european authorities as noted, banks with international operations have to develop local products, also to comply with different legal systems, which implies significant costs. important steps are being taken by eu authorities to overcome the obstacles of segmentation. however, legal aspects are only one element hindering the integration of the retail markets, since proximity to the customer is still an important factor. even though it is likely that the retail markets will maintain local features at least for some time to come, any unnecessary burden on the cross - border expansion of activities should be lifted to the maximum extent possible. at the regulatory level, the european commission is generally striving to finalise the single market programme via the so - called financial services action plan. the higher cost of cross - border retail payments, as compared with domestic ones, has been a very topical issue, and it has been taken as a sign of a lack of integration. in july 2001, the european commission proposed a draft regulation to close the gap between domestic and cross - border payments. in the draft now being examined by the council and the parliament, banks would be obliged to equalise prices for cross - border and domestic payments. the ecb has stated that the eurosystem shares the general objective of the regulation. however, the eurosystem has expressed reservations about the chosen method, because it gives too little time to the banking industry to adjust in a rational way. in this context, i find the recent initiative of the european banking federation for a self - imposed calendar for reducing the level of such fees extremely promising. steps are also being taken in the field of consumer protection legislation. the aim of the recently launched revision of the consumer credit directive is to promote transparency and to ensure that cross - border credit can flow in harmonised conditions for both consumers and lenders. also, a report on the regulation of e - commerce in financial services has just been launched by the commission. it draws attention to the problems that arise from the interplay between different legal systems and makes proposals to overcome them. at the supervisory level, the economic and financial committee has stressed the | open - ended process, it is obvious that the " eurosystem " as an additional construct to clarify the relationships between the " ins " and the " outs " within the escb is here to stay for the foreseeable future. even so, it is also clear that the introduction of the euro is the final destination for accession countries. in fact, there is even a certain β i believe, understandable β impatience on the part of future new member states to adopt the euro as soon as possible. however, the treaty lays down clear criteria for entry into the euro area, and requires their fulfilment in a sustainable manner. the eventual entry of new member states into the euro area will also require an adaptation of the institutional framework of the escb. examples of central banks from around the world, such as in united states or in germany, show that it is possible to design appropriate structures which allow effective decision - making in federal, decentralised systems and to reconcile efficiency demands with considerations of adequate representation. therefore, i am confident that we will be able to find a solution that guarantees the efficient conduct of a stability - oriented monetary policy also in an enlarged eurosystem. ladies and gentlemen, thank you very much for your attention. | 0.5 |
##isations. i can only encourage eiopa to press on this issue and ensure that firms that would not be authorised in one country do not find a home in another. two of the panel discussions today focus on the customer in tomorrow β s world. let me comment on the role of technological innovation in distribution channels. first, more widespread deployment of online distribution channels has the potential to reduce costs, expand access to insurance products and improve consumer convenience. however, at the same time, online distribution requires a parallel increase in attention to cyber risk. the international association of insurance supervisors has recently discussed this topic, highlighting that the foundation of the insurance business is trust, and that trust could be irrevocably shaken if sensitive data were lost or claims payments disrupted. our assessment at the central bank of ireland is that cyber risks pose not only financial and reputational risks for individual insurance firms but that there are wider consequences for prudential supervision, consumer protection and financial stability. bis central bankers β speeches second, the automation of advice to potential customers is a promising development. however, as recently highlighted by the joint committee of the european supervisory authorities, there are pros and cons to these tools from a consumer perspective. the potential benefits include lower costs, increased convenience and greater consistency in advice. the primary disadvantage is the risk of an unsuitable final recommendation due to the lack of a human advisor. to represent a net gain for consumers, the design of automated advice systems must ensure that consumers are provided with clear, accurate and relevant information and recommended suitable products appropriate to their needs. the properties of suitability and transparency are among the most important principles underpinning the central bank β s consumer protection framework and are increasingly important in this period of rapid technological innovation. one of the panel sessions will focus on global and european financial stability. in the international regulatory community, there is increasing interest in the inter - relations between the insurance sector and the stability of the broader financial system. in one direction, excessive risk taking by insurance firms can be a source of financial instability, both directly and indirectly through the interconnections between the insurance sector, other financial intermediaries and financial markets. in the other direction, the insurance sector can make a positive contribution to financial stability, given the potential complementarities between the balance sheet structure of the insurance sector and the balance sheet structures of other sectors. much of the current risk discussion has focused on the implications of a protracted low interest rate environment for the insurance sector. | β irrespective of quality of counter party or credit β’ encouraging regulatory arbitrage by cherry picking β’ lack of incentives for credit risk mitigation techniques β’ not covering operational risk as time passed, some of the major international banks began using sophisticated models to measure risk. this was when a need was felt to upgrade the basel framework. therefore, the basel committee on banking supervision thought it desirable that the present accord is replaced by a more risksensitive framework. three pillars the new basel accord has its foundation on three mutually reinforcing pillars that allow banks and bank supervisors to evaluate properly the various risks that banks face and realign regulatory capital more closely with underlying risks. the first pillar is compatible with the credit risk, market risk and operational risk. the regulatory capital will be focused on these three risks. the second pillar gives the bank responsibility to exercise the best ways to manage the risk specific to that bank. concurrently, it also casts responsibility on the supervisors to review and validate banks β risk measurement models. the third pillar on market discipline is used to leverage the influence that other market players can bring. this is aimed at improving the transparency in banks and improve reporting. issues and challenges having given you a brief overview of the current and proposed new framework, i shall now move on to the implementation challenges for the banks especially in a developing country like india. here, i would skip the methodological details and technical nitty - gritty associated with the new accord, and concentrate instead on more profound implications for the banking industry. issues and challenges while there is no second opinion regarding the purpose, necessity and usefulness of the proposed new accord - the techniques and methods suggested in the consultative document would pose considerable implementational challenges for the banks especially in a developing country like india. capital requirement : the new norms will almost invariably increase capital requirement in all banks across the board. although capital requirement for credit risk may go down due to adoption of more risk sensitive models - such advantage will be more than offset by additional capital charge for operational risk and increased capital requirement for market risk. this partly explains the current trend of consolidation in the banking industry. profitability : competition among banks for highly rated corporates needing lower amount of capital may exert pressure on already thinning interest spread. further, huge implementation cost may also impact profitability for smaller banks. risk management architecture : the new standards are an amalgam of international best practices and call for introduction of advanced risk management system with wider application throughout the organization. | 0 |
to fostering external collaboration. when it comes to research, i think it is important to be humble and open - minded about the various methods from which policy makers can learn. the tools available to economists and policymakers are constantly evolving. what is considered conventional wisdom in one era may be forgotten or relearned in another, while advancements in data and computational capabilities continually expand the boundaries of what we can 1 / 2 bis - central bankers'speeches study. so whether it is through the use quantitative models, empirical analysis and case studies, new theory, the documentation of new stylized facts, or experimental methods, by bringing together diverse perspectives, we challenge our assumptions, refine our understanding, and ensure we remain responsive to the ever - changing global economy. one particularly exciting frontier in economics research is the use of data. the increasing availability of large, rich datasets, whether from statistical organizations, administrative sources or private firms, has revolutionized our ability to analyze complex economic questions. an ever increasing share of papers published in top - tier journals incorporate a reliant on such microdata. in the area of monetary policy, this has allowed researchers to explore how various types of households and firms respond to monetary policy shocks, allowing us to understand the transmission channels of monetary policy, better discipline our models, and make better policy decisions. here at the central bank, we collect a lot of data on bank lending and other areas, which has been instrumental in shaping our insights on various topics, for example how non - bank lending can affect financial stability. however, we see further potential in collaborating with other institutions to maximize the public good. by making our data more accessible to external researchers, and by integrating it with other sources, we can unlock new opportunities for research that delivers even greater societal benefits. in closing, i want to extend my heartfelt thanks to everyone who has contributed to organizing this event, as well as to all of you for attending, particularly our speakers and panelists. this workshop is an invaluable opportunity to connect economists and policymakers from diverse backgrounds, fostering both enduring friendships and new, fruitful collaborations. i wish you a productive and enjoyable conference and, for those visiting from abroad, a warm and memorable stay in dublin. i'll now hand you over to martin o'brien, who will chair our first session. 2 / 2 bis - central bankers'speeches | oil and commodity prices which have also been buffeting the economy ) and taking into account the underlying structure of the euro area economy. one question that could arise here is whether the massive injections of liquidity into the banking system come at the price of either an inappropriate monetary policy stance or a less than optimal signalling of it. in practice, this is very unlikely to be the case. indeed, since the beginning of the financial turmoil in august 2007, the ecb has repeatedly emphasised that the policy stance is defined in terms of the interest rate at which financial intermediaries can obtain liquidity, rather than by fixing the quantity of liquidity which is provided. as early as 1970, william poole's classical analysis of the instrument - choice problem taught us that using the interest rate as policy instrument is desirable when short - term uncertainty stemming from instability in the money multiplier or from money demand shocks is high relative to the uncertainty stemming from aggregate demand shocks. the provision of liquidity then becomes an endogenous variable as it is steered in order to stabilise the money market rate at its desired level. in this framework, the sometimes substantial liquidity injections by the eurosystem should be seen as simply offsetting the sudden and sharp declines in the money multiplier induced by the financial crisis. as far as our monetary policy decisions are concerned, they depend on our medium - term assessment of the risks to price stability and are based on our two - pillar strategy, which enables us to cross - check developments in the money, credit and financial markets with the signals provided by economic analysis. given existing upward inflationary pressures from oil and other commodity prices and the associated likelihood of second - round effects, euro area monetary policy was until recently faced with predominantly upward risks to price stability. however, as the financial crisis intensified further, financial conditions for the private nonfinancial sector have tightened β independently of monetary policy β and the supply of credit from financial institutions might be reduced. as a result, expectations regarding economic activity have rapidly deteriorated over the last two months and the upward inflationary pressures have eased, partly as a result of lower commodity prices but also because of the change in the outlook for domestic economic activity. therefore, the coordinated interest rate cut of 50bp last week was also the appropriate response for the euro area to the materialisation of previously identified downside risks to growth and the associated decline in the upward risks to price stability. for the near future, we will continue | 0 |
more stable euro area banking sector that is willing and able to extend credit to the private sector for productive investment. thank you very much for your attention. bis central bankers β speeches | fact, the real rate of return on deposits had been persistently negative during previous decades, but savers had not realised it because of higher inflation. 2 second, real wealth can only increase in an environment of sustained growth and price stability. and the purpose of our measures is to help steer the economy back on to a sustainable, long - term path. this is not only in line with our mandate under the treaty. it is see deutsche bundesbank : β nothing new about negative real interest rates on deposits β, http : / / www. bundesbank. de / redaktion / en / topics / 2014 / 2014 _ 06 _ 30 _ nothing _ new _ negative _ interest _ rates. html. bis central bankers β speeches also in the best interest of savers. a stagnating economy does not generate returns for savers. indeed, paradoxically, in a stagnating economy, savers complain about low returns, while borrowers complain about too restrictive credit conditions. in a chronically stagnant economy, this imbalance between the two sides of the credit market is bound to last and become entrenched. only an economy with sustainable growth and price stability can resolve this dilemma : firms will pay a fair price for credit that is commensurate with their capacity to repay and reflects the economic value of their business projects. savers will receive a fair compensation for their savings, which in real terms will tend to exceed the growth rate of economic potential. however, monetary policy can only facilitate the return of the economy to a sustainable, longterm path. it cannot change that path, which depends on structural features that only other policies domains can influence. in fact, the only way to move on from the current low interest rate environment is to reinvigorate the productive potential of the euro area economy. much like ludwig erhard put germany back on its feet by establishing a social market economy, euro area governments today need to persevere with their fiscal, structural and institutional reform efforts to revive the area β s productive potential and, together with the social partners, trigger a virtuous circle in which price stability and economic dynamism reinforce each other. as for financial asset prices, their current level is high and can only be justified by the prospect of a continuing reduction in public and private debt levels in euro area countries, and sustained reform efforts to lift productivity. a continued rise that was not matched by underlying improvements would be a matter of | 1 |
tom k alweendo : accelerated economic growth and job creation β the need for a paradigm shift annual address of mr tom k alweendo, governor of bank of namibia, windhoek, 5 november 2009. * * * ladies and gentlemen, thank you for attending our regular annual address. i know that we are competing for your time with many other events. the theme of my annual address this year is on the need for a paradigm shift, in order to accelerate economic growth and job creation. before doing that, i would like to give you a brief update on the state of the economy and the banking system. as we all know the global economy went through a period of extraordinary financial instability in 2008 and 2009. this was accompanied by the worst global economic down turn and a collapse in trade. no country escaped the reach of this economic storm, and we were no exception. our export oriented sectors, notably minerals and tourism, have been especially hard hit. consequently, the economy is expected to contract by about 1. 1 percent in 2009, while a moderate recovery is envisaged for 2010. in part, due to depressed international demand conditions, inflationary pressures have been largely under control. the annual rate of inflation has declined to 7. 1 percent in september. declining levels of inflation has allowed the bank of namibia to ease monetary conditions, but domestic demand is yet to show a sustained recovery. in line with the global economic recovery, there are encouraging signs of a recovery in the namibian economy, but it will take a while for economic activities to reach pre - crisis levels and become more sustainable. with respect to the financial system, our banks remain profitable. banks are adequately capitalized, sufficiently liquid, and non - performing loans as a ratio to total loans remain well below internationally acceptable standards. i am also certain that most of you have been following the recent debate on the appropriateness of the difference between the bank of namibia β s official interest rate and the commercial banks β average lending rates. at the heart of the debate is whether the interest rate differential is a correct reflection of the risk commercial banks undertake to intermediate between the savers and borrowers. we do agree that commercial banks, just like any other business, need to be rewarded for the risk they take in conducting banking business. we also believe that the reward must be commensurate with the risk being taken. as we all know, the banking system is the main transmission channel for our monetary policy actions. that means therefore that | it can hardly be characterised as a trend, some countries still adopt a pegging of their exchange rate and groups of countries are opting for cooperation in a currency area or monetary union. alternatives for namibia namibia is indirectly linked to what appears to be the present norm in exchange rate arrangements. this is because the namibia dollar is linked to the rand, which is floating and its fluctuations will in the future be influenced by a monetary policy based on inflation targeting. if for some unknown reasons the present arrangement should be terminated some time in the future, the most relevant alternative would be that namibia adopts a floating exchange rate of its own. it is the bank of namibia β s view that the benefits of the present membership of the cma outweigh the costs. a peg arrangement will also continue to remain the optimum as the country battles with an attempt to reduce fiscal deficit. for the foreseeable future, therefore, namibia should not take any initiatives to terminate its membership. but there is another alternative. the present arrangement should - to the extent possible - be managed in such a way that the stability is utilised in promoting the development of the national economy. in my opinion, namibia would benefit from evolution of the cma arrangement toward a full monetary union. as mentioned earlier, this would require a closer coordination of economic policy in the currency area. political structures would have to be established and made operational. the group of countries that comprise the cma could be extended to include countries in our region with similar economic structures and development priorities. i am fully aware that the realisation of this objective can only be achieved in a long - term perspective. in the meanwhile, namibia β s benefits from the cma arrangement could be increased by extended consultations between the member countries. for example, the adoption of the inflation targeting framework in south africa would be a good occasion for extending the discussion on the framework itself and, later, on the implementation of monetary policy in response to the monetary authorities β expectation of future inflation. such extended consultations should not be limited to monetary matters, but apply to other areas of economic policies as well. in the end, the achievement of monetary union will require that countries in the region commit themselves to confront the process of solving conflicting national interests in a fair and democratic manner. in order to reach a common objective of monetary stability and economic prosperity, a regional solution may also be the route to take for us here in southern africa. conclusion in conclusion, i hope that my explanation of this | 0.5 |
if we want to be able to tackle the next crisis and have sufficient fiscal room for manoeuvre, strictly applying the rules of the stability and growth pact today is both logical and imperative. but on the other hand we have seen the political limits of the rules - based framework. every time the rules are set to bite, national interests prevail over those of the euro area. this is built into the framework : as long as economic and fiscal policies are in the end a matter of national competence and as long as commonly agreed rules are perceived as an intrusion into policies that are seen as genuinely national, the interests of the euro area as a whole will probably not be strong enough to carry the day unless a country is forced to enter a financial assistance programme. therefore, we will, in the end, have to accept certain economic and fiscal policies in the euro area as truly shared competences, as the internal market already is ; others, which are not essential for the smooth functioning of emu, should remain solely a national competence. hence, such a step should certainly not mean centralisation at european level for each and every policy. but it should mean that in those policy areas that are crucial for the functioning of emu common legislation and policies will be needed where appropriate and warranted to ensure the primacy of the common interests of the euro area. such legislation and policies will in turn necessitate the further development of our institutional architecture. one element here will be to strengthen the euro area executive with a euro area treasury, be it within the commission or as a separate body. another element will be to build up a genuine legislative capacity at euro area level and to make institutions acting in the euro area β s interest, such as the european stability mechanism, accountable to it. the lamfalussy moment β making the debate on emu political and then there is a third principle on which i hope agreement can be found, namely that we will see sustainable economic convergence only if accompanied by political convergence. why is that so? it is because discussions on economic governance in the euro area in recent years have revealed that we still have no common understanding in europe of what economic and fiscal policies should look like in a monetary union. bis central bankers β speeches a common understanding of the aim of monetary policy did develop when the monetary union was being set up ; today, we have a clear and broadly shared consensus that the ecb should first and foremost pursue price stability. we have seen a similar approach and | look at the data : this phenomenal growth brought in its wake certain undesirable consequences, like high stressed assets. more of this later. a few economic characteristics differentiate infrastructure assets from other asset classes. 1 / 5 bis central bankers'speeches these characteristics also make it more difficult to match investment demand and financing supply : firstly, infrastructure projects are often complex and involve a large number of parties. infrastructure often comprises natural monopolies such as highways or water supply, and hence governments want to retain the ultimate control to prevent an abuse of monopoly power. this requires complex legal arrangements to ensure proper distribution of payoffs and risk - sharing to align the incentives of all parties involved. secondly, infrastructure projects are long term and are therefore subject to various risks including those due to changes in policies, delays in clearances, etc. every event that delays the implementation of a project leads to cost and time overruns that in turn have a bearing on the techno - economic viability of the project or would necessitate revision in the price of the endproduct. very often the infrastructure products are meant to serve public good which imposes a limitation on ability to determine their price. thirdly, where debt financing is dominated by the banking system, the fundamental problem posed by the asset - liability mismatch is critical. in india, the dominance of psbs may partly offset this risk because the perceived assurance of government backing provides the requisite flow of deposits. because of these reasons, there are always challenge in financing infrastructure. at the same time, infrastructure sector will be a key driver for the indian economy. given the high priority that the government is according to the infrastructure sector, there is no gainsaying the enormous potential for financing the sector. as per an estimate, india needs rs 31 trillion ( us $ 454. 83 billion ) to be spent on infrastructure development over the next five years, with 70 per cent of funds needed for power, roads and urban infrastructure segments. it is essential that the stakeholders take the right steps to participate in this move and also make a decent return from this opportunity. let me quickly recall here some of the important measures that the rbi has taken to help flow of funds to infrastructure : 1. in view of the fact that projects take long time to implement during which the interest cost is part of the project cost, the importance of a specified time for commencement of commercial operations is high. taking into consideration the different reasons due to which project implementation can be delayed, | 0 |
tourist arrivals from china at 4, 087 was just 0. 8 percent of total arrivals. in 2010, the figure rose to 18, 147 or 2. 9 percent and further increased to 24, 389 or 3. 6 percent in 2011. the latest figure for january to march 2012 is 5. 2 percent. with the increasing trend in arrivals from china, we know that such an alliance will be beneficial to china unionpay and bsp. bis central bankers β speeches card policy ladies and gentlemen, the reserve bank issued a press release on thursday last week upholding the β no surcharge rule β for credit and debit card payments in fiji. this extends to all merchants and all cards used in fiji and will be effective from 1 november 2012, allowing a necessary transition period for banks to roll out awareness and merchants to review their existing practices and procedures. the β no surcharge rule β is already in place as stipulated by major credit card providers in agreements with banks and contained in agreements between banks and merchants. i hope that this announcement will make shopping in fiji more transparent, convenient and attractive for our visitors from china. so whether you pay by cash or credit card, the price is the same. we look forward to compliance by the commercial banks and merchants in the implementation of this policy. the fijian economy let me take this opportunity to say a few words about the fijian economy. based on economic activity for the first six months of 2012, overall performance has been on track and the projected growth of 2. 7 percent for the year remains intact. however, we still need to be mindful of developments in the global economy and any likely impact on our trading partners. inflation in fiji was 4. 0 percent in july. this is lower than the inflation rates in the previous months. the decline is due to lower commodity prices and current benign domestic driven inflationary pressures. as a result, we still expect the year end inflation to be around 3. 5 percent. the level of foreign reserves is currently just under $ 1. 6 billion or adequate to cover 5 months of retained imports of goods and non factor services. we are currently reviewing economic data and the next official update on the economic variables will be during the 2013 national budget announcement. conclusion in conclusion, i take this opportunity to thank the chinese government for its continuing goodwill and willingness to engage in closer economic ties with fiji. i also extend my best wishes towards this partnership between china unionpay and bank south pacific. this | in terms of assets. while islamic finance still constitutes a small share of the industry, roughly 1 per cent of overall global financial assets, it has witnessed a rapid expansion over the last decade, with annual growth rates in the range of 10 β 15 per cent. it has also gained further momentum following the financial crisis. islamic banking accounts for about 80 % of total islamic financial assets but the development of islamic securities, notably the sukuks, has also contributed to increasing this sector β s activity in international capital markets. the industry has seen a wide dissemination across countries, beyond its traditional centres of gravity in the middle east and south east asia. according to available estimates, islamic financial institutions are currently operating in around 70 countries. europe has also been part of the process, with the opening of islamic banks in the uk, the issuance of a sukuk bond by a german land, an increased activity in the field of islamic investment funds, some tax and regulatory changes introduced in france to facilitate the use of islamic financial products. bis central bankers β speeches this global expansion is expected to continue also in the near future : some market estimates foresee that by the end of this year islamic financial assets will have reached 1. 9 trillion dollars. several factors underlie growth in this sector : the need to invest the abundant liquidity acquired by oil exporting countries ; the search for risk diversification and for shari β ah compliant / ethical investments ; the increased need for funding for socio - economic development in islamic countries ; and support from regulatory and supervisory authorities. part of this trend can also be attributed to the growing interest in the industry coming from non - traditional markets, like the eu, the us, south korea, hong kong, etc. in banca d β italia we are interested in deepening our knowledge of this subject, in view of its relevance for the bank β s institutional duties, as a member of the eurosystem and as the authority for banking and financial supervision in italy. a seminar on islamic finance was organized here in 2009 and a collection of research papers on islamic finance vs. conventional financial systems, focusing on supervision and the implications for central banking activity was published in 2010. hosting this ifsb seminar is a fruitful occasion to further improve our knowledge and to share it with our financial community and academia. the opportunity to attract foreign capital to underpin economic progress, on the one hand, and the intensity of the commercial and financial links with the southern shores of the mediterranean, on the | 0 |
current outlook, the fomc in its statement noted that we now anticipate that we are likely to keep short - term interest rates exceptionally low at least through mid - 2013. we also discussed the range of policy tools available to promote a stronger economic recovery in a context of price stability. further details on the discussion at the meeting will be available when the minutes are published in three weeks time. i will not comment on monetary policy any further today. following the release of the fomc β s statement, market interest rates generally moved lower, which should help provide some additional support for economic activity and jobs. i would note, however, that conditions remain unsettled and the equity market in particular remains very volatile. bis central bankers β speeches regional economic conditions turning to our region, the economic recovery continues to be slow, although much of the region is performing reasonably well compared with the nation as a whole. to frame our current situation, let me put this recession and recovery in the context of previous cycles. while this recession lasted longest, caused the deepest job losses, and has shown the slowest employment recovery of any post - war recession for the united states, it has not been the worst on record for the region. new york state sustained fewer severe job losses than the nation during the recent recession β a reversal of historical patterns. upstate new york, which has struggled with sluggish economic growth in recent decades, has proven particularly stable. in fact, while job losses were quite severe during previous recessions, that was not the case this time around. similarly, new york city β s job losses were more moderate than in previous recessions. new jersey, on the other hand, saw steeper jobs losses than new york and a more tepid recovery. puerto rico endured a serious downturn lasting for over five years and is now just beginning to show signs of stabilization. why was the downturn in our region less severe than in many other parts of the country? part of the reason is that the effects of the housing boom and bust on the region β s economy were less consequential. of course, we have seen declines in construction employment, losses of housing equity and people losing their homes. however, as in most mature regions, the housing market tends to be less influential here than it is in parts of the country where population growth has been more rapid. this is particularly true across much of upstate new york, which experienced little in the way of a construction boom, home | at Β§ 343 ( 3 ) ( b ) ( iv ). 22 see, e. g., lev menand, " unappropriated dollars : the fed's ad hoc lending facilities and the rules that govern them, " law working paper no. 518 / 220 ( may 2020 ). 23 see robert c. hockett & saule t. omarova, " private wealth and public goods : a case for a national investment authority, " 43 j. corp. l. 437 ( 2018 ). 24 martin wolf, " monetary financing demands careful and sober management, " financial times ( apr. 9, 2020 ). 25 see financial crimes enforcement network ( " fincen " ), " the financial crimes enforcement network provides further information to financial institutions in response to the coronavirus disease 2019 ( covid - 19 ) pandemic, " press release ( apr. 3, 2020 ) ( " compliance with the bank secrecy act ( bsa ) remains crucial to protecting our national security by combating money laundering and related crimes, including terrorism and its financing. fincen expects financial institutions to continue following a riskbased approach, and to diligently adhere to their bsa obligations. " ). 26 see, e. g., fincen, " fincen issues advisory on medical scams related to covid - 19 and companion notice providing filing instructions for financial institutions, " press release ( may 18, 2020 ) ; financial institution regulatory authority ( " finra " ), " finra reminds firms to beware of fraud during the coronavirus ( covid - 19 ) pandemic, " regulatory notice 20 - 13 ( may 5, 2020 ) ; u. s. securities and exchange commission ( " sec " ), " sec charges microcap fraud scheme participants attempting to capitalize on the covid - 19 pandemic, " press release ( june 11, 2020 ). see also jennifer achilles and alejo cabranes, " banks may need to update policies to fight covid - 19 fraud, " law360. com ( june 16, 2020 ) ( discussing the role of banks in identifying medical fraud in light of fincen advisory ). 27 see randall k. quarles, letter to g20 finance ministers and central bank governors ( apr. 11, 2020 ) ( " the financial stability risks that would be associated with an unsuccessful transition away from libor are as relevant in the current environment as they were before. " | 0.5 |
giuseppe grande and fabio panetta ( 2014 ), β the negative feedback loop between banks and sovereigns β, banca d β italia, questioni di economia e finanza ( occasional papers ), no. 213. bis central bankers β speeches to studies by the bank of italy, the overall effect on italy β s gdp of the measures i have listed can be estimated at a little less than three percentage points in the two years 2012 β 13. 21 these measures also highlighted the operational autonomy of the eurosystem, which was able to bring a wide array of instruments to bear on the different manifestations of the financial crisis, selecting the most suitable one case by case. however, the success of the ecb β s extraordinary measures must not make us forget the difficulties that monetary policy in the euro area has faced in recent years. the global financial crisis and the sovereign debt crisis have brought risks for the eurosystem β s de facto independence that it would be naive to ignore or underestimate. i will mention two of them. the first concerns financial autonomy and derives from the fact that the unconventional measures have expanded the size of the ecb β s balance sheet, though far less, at present, than those of the us federal reserve and the bank of japan. the quality of the securities held or accepted as collateral for bank refinancing has declined. in principle, monetary measures of macroeconomic stabilization can produce both losses and profits for the central bank adopting them. 22 but if a central bank made losses, its reputation would be endangered 23 and its ability to pursue its objectives could be put in doubt ; ultimately, there could be mounting political pressure to reduce its independence. this is especially true in the case of the eurosystem, which not only manages a currency without a state but finds itself facing a multiplicity of states which in these years of crisis have become more sensitive to what divides them rather than strengthening what unites them. the second, and far more important, risk consists precisely in the incompleteness of the european construction. some are calling for amendments to the treaty in order to expand the ecb β s mandate. 24 in particular, on the american example, it is urged that the objective of price stability be flanked by an explicit objective of equal status in terms of unemployment or employment levels ; and that the ecb be allowed to purchase government securities directly at issue. naturally it β s not up to me, a central banker, to say what objectives the political | economist at the oecd, the asian crisis of 1997 - 98 unfolded, spreading to russia, brazil, argentina and other countries. the great moderation of the 1990s and early 2000s provided some respite. but italy's performance was poor, hampered by low productivity. ignazio was aware of the scale of the problem, and he initiated and led a major collective effort to identify the reasons for italy's malaise. the results of this research are well documented and widely accepted today. ignazio joined the governing board of banca d'italia in 2007, on the eve of the global financial crisis. and he became governor in 2011, during the eurozone sovereign debt crisis. 1 / 3 bis - central bankers'speeches ignazio and i worked together closely during this period. the crisis forced us to talk more about spreads, deficits, and non - performing loans than about productivity. and events moved so quickly that we did not have time to delve into these issues as much as we would have liked. in essence, it was time to act, not speculate. in spite of the pressure, or perhaps because of it, our interactions were always calm, stimulating and productive. of course i am not in a position to give an impartial view of what we have done together, but i do believe that the work carried out by banca d'italia has been extremely valuable in many areas, both domestically and at european level. at the end of 2014, the risk of deflation appeared on the horizon. a broad, persistent price decline put the ecb in a situation it had never faced in its short existence. nevertheless, the response was swift, creative and effective. i do not want to praise the central bankers in this room too much, but i believe that, on balance,'unconventional monetary policies'have been a success. as famously stated by ben bernanke, these measures do not work in theory, but do work in practice. i am sure that this is a lesson that will remain useful in the future. in 2018, with the risk of deflation and italy's banking problems largely under control, ignazio dared to publish'difficult years': a retrospective book wrapped in a thin veil of optimism. some of his readers were quick to point out that the following years could be even worse. well, they were not wrong. the last part of ignazio's mandate saw a truly exotic mix of shocks | 0.5 |
to adjust to the external environment. facing the outbreak of crisis in the euro area was relatively painless. yet, it does not mean that the risks have passed. the forecasts for 2012 are also marked by uncertainty and potential adverse effects of the events related to the euro area crisis. given the generally unfavorable expectations for the european economy, the growth prospects of the countries in the region are also uncertain and accompanied by downward risks, considering the relatively close trade relations with the european union. the lower external demand, along with the lower capital flows to the region, creates a need of proper adjustment of the domestic demand aimed to ensure sustainable external position. therefore, some countries will need fiscal consolidation. the growing european debt crisis, the series of downward revisions of credit ratings of several international banks, the volatility of stock markets and the uncertainty clouding the future developments undermined the confidence of investors, in global terms, thus making the issue of deficit financing more pronounced and being treated more prudently. bis central bankers β speeches besides the macroeconomic performances, the attention has been and will be focused on the financial stability. the new risk to the financial sector triggered by the european debt crisis is either direct or indirect exposure to the greek debt and the subsequent potential losses. the second risk is attributable to the reduced availability of funding from foreign parent banks, when some of them face the need of recapitalization that refers to additional risks to the intensity of credit activity in the countries from the south - eastern europe, particularly those where borrowings from foreign banks played a significant role in the establishment of credit potential. the third risk is induced rather by the effects of the global developments on the gradual deterioration of macroeconomic performances of the economies in the region, and resulted in impairment of the credit portfolio quality of the banking system, which has undoubtedly affected or will affect their future activities and performances. let me summarize the first point β the region has successfully dealt with the euro area crisis so far, but the risks remain. many issues are still open and accordingly, the alertness of policy makers has to remain high. what are the lessons learnt from the crisis? the financial crisis shifted many traditional views in the economy, including the role and the objectives of monetary authority, where besides the conduct of monetary policy and the concern for the price stability, there is an obvious need for more active engagement of the central banks in the maintenance of financial stability in the economy. the period of crisis worldwide | is full of many successful examples, probably the most so far in the world history, of application of wide range of prudential measures, modifications in the standard set of instruments and implementation of nonstandard measures of monetary policy. the need of comprehensive risks monitoring in the economy and greater flexibility concerning the intensity and the type of measures, taking into account the ultimate monetary objectives, is probably one of the major lessons from the crisis. the economic theory clearly refers to the fact that the financial system is a relevant factor for economic growth, and the new message, clearly sent by the recent crisis, as the president of the bundesbank, weidmann, once said in one of his recent addresses, 1 is that there is a need of β well designed regulatory reform β. otherwise, a financial system which is developed and widely globalized today could become an obstacle for the economic growth. thus, even though the crisis is still present in our everyday life, the financial institutions have already been facing new banking standards, and the national regulators seek to incorporate them in the national regulation. the debt crisis in the euro area resulted in establishment of new fiscal framework of the european union and emphasized the need of fiscal consolidation. fiscal imbalances are not sustainable on a long run, which is a postulate that also applies to the countries of the region, particularly countries where fiscal consolidation is crucial for maintaining macroeconomic equilibrium. besides the experiences above, during the crisis we also gained many other experiences related to the market sensitivity, the promptness of market response to the changes arising from the development of crisis, and the slow reversible process of regain of confidence among market participants. lessons and experiences learnt from the crisis should help us face future challenges more successfully. jens weidmann, president of the deutsche bundesbank, keynote speech at the frankfurt finance summit, frankfurt, march 2012. bis central bankers β speeches conclusion please allow me to ascertain that this crisis broadened our perspectives, imposed new aspects of policy making, and increased our interdependence in the global economy. the south - eastern european countries which have been facing many challenges on their pathway to the european union will probably face new future challenges arising from the current conceptual shifts in the union. however, the countries from south - eastern europe should continue seeking to create sound macroeconomic policies, inevitably accompanied by structural reforms that need to ensure higher structural quality and structural flexibility of economies, which is a sine qua non not only for prompter | 1 |
and economic environment that give us pause for thought. market prices are at historically unusual levels : real and nominal returns on risk free assets are low and credit spreads are tight, both in traditional and structured products. it is of course hard to say definitively the extent to which today β s markets are merely reflecting changed fundamentals. but it is quite possible that some investors have unwittingly taken on higher levels of risk in pursuit of what they would consider to be β normal β levels of return. and it is certainly prudent to plan for the possibility of a sharp reversion of prices to historically more normal levels ( or even beyond them, given the tendency of markets to overshoot ). there could be a period of impaired market liquidity during any such correction. one could imagine a number of potential catalysts for such a correction, ranging from a geo - political event to some form of major operational disruption. the bank concurs with the widely held view that the growth of markets in risk transfer should contribute to greater financial stability, by allowing a more efficient dispersion of risks. but the depth and reliability of the more recently developed markets in risk under stressed conditions has not yet been fully tested. moreover, risk transfer markets can, and probably at present do make the ultimate destination of risks more opaque. this hampers our ability to assess the overall stability of the financial system, and, potentially, to react effectively in a crisis. 3. how have firms reacted to these changes? the banking industry has, not surprisingly, responded to these changes by paying greater attention to liquidity risk management. and, as well as day - to - day management, banks have given more consideration to how they would cope with extreme or β tail β events. banks have developed, or are at least in the process of developing, sophisticated scenario analyses, and are assessing the contingency arrangements that would be required to respond to these scenarios. it is certainly encouraging to observe the determination with which many banks are addressing liquidity risk, and it is at the same time noteworthy how efficiency drivers have led many banking groups to take a more centralised approach to liquidity management. but, despite the progress that banks are making in addressing liquidity risk, the framework that underpins their contingency plans makes a number of assumptions, particularly regarding access to funding markets. there seems, for example, to be a widespread view that, whatever has happened to a firm β s access to wholesale unsecured | the euro's weakness gave rise to widespread β but in my view unjustified β criticism of the ecb. the task of a central bank operating an independent monetary policy is necessarily a limited task, not least because it effectively has only one instrument β its control over short - term interest rates. its role β as i said earlier β is essentially, to use that instrument to influence aggregate demand in the economy, with the aim of keeping demand broadly in line with the supply - side capacity of the economy. the measure of its success is consistently low inflation. against that criterion the ecb has been relatively successful. the euro area economy has grown, above trend, with core inflation nevertheless remaining within the tolerance range of 0 - 2 %, even though on the headline measure, influenced by rising oil prices and the weaker exchange rate, inflation has for the time being moved above the top of that range. the ecb would have put that internal stability of the euro area as a whole at risk if it had attempted at the same time to use monetary policy to target the euro's exchange rate. the more recent criticism has been that the ecb has been slow to respond to the weakening of the us economy. implicit in that criticism is no doubt a judgement about the extent and duration of the us slowdown and its likely impact on the euro area. as i have said there is a great deal of uncertainty about that. but the ecb has to take account, too, of domestic demand pressures in the euro area, and of the fact that even on the core measure euro area inflation has been moving up gradually towards the top of the ecb's 0 - 2 % range. frankly i don't see how anyone can be confident whether the ecb has it precisely right or wrong β it is perfectly normal for even the best - informed people to disagree on these judgements, as anyone who reads our own monetary policy committee meeting minutes will tell you. but i am wholly confident that the ecb is sensitive to the issues surrounding those judgements, including the downside risks in the us. so, too, are we in the united kingdom. in our case, we again enjoyed relatively steady overall economic growth last year combined with a further fall in unemployment to its lowest rate for 25 years. inflation meanwhile continued to run somewhat below the government's 2Β½ % target, partly at least as a result of the dampening effect of sterling's surprisingly persistent strength against the euro. the problem | 0.5 |
christopher j waller : welcoming remarks - 2023 international journal of central banking conference welcoming remarks by mr christopher j waller, member of the board of governors of the federal reserve system, at the 2023 international journal of central banking conference, dublin, ireland, 22 june 2023. * * * thank you, gabriel, and thank you to the central bank of ireland ( cbi ) for hosting this year's conference. from the outside, central banking can look like the work of individual policymakers, parsing the data and making the hard decisions. in truth, it is a team effort of many people, and that has also been true for editing the international journal of central banking ( ijcb ) and putting together this conference. i have a long list of people to thank who did the lion's share of that work during the year that i have served as managing editor. but first, for those who may not know it, let me review the history of the journal and touch on what this conference will address. in the summer of 2004, the bank for international settlements ( bis ), the european central bank, and the group of ten central banks agreed to support the development of a new publication focused on the theory and practice of central banking. there was no shortage of research on central banking, and, indeed, central bankers themselves did and continue to publish peer - reviewed research in leading journals, not to mention many working papers published by central banks and other outlets. this work was prevalent, but there was a sense that there lacked a place for scholarly research that focused exclusively on central banking and could serve as a forum for the community of central bankers around the world. the creation of the international journal of central banking filled this deficit. the primary objectives of the ijcb are to widely disseminate the best policy - relevant and applied research on central banking and to promote communication among researchers inside and outside central banks. we do this with publication of the journal, which will now be coming out six times a year, and with the added attention of this conference, which presents research on timely policy topics. with the possible exception of myself, the journal has attracted distinguished managing editors, including my colleagues from the federal reserve and my immediate predecessor, luc laeven from the european central bank. we have the strong support now of 55 sponsoring institutions, including the cbi and the bank of canada, which hosted last year's conference. in 2022, we chose the theme for this year ' | and possibly also with the adverse effects of the el nino phenomenon. | 0 |
orazio p. attanasio and guglielmo weber ( 2010 ), β consumption and saving : models of intertemporal allocation and their implications for public policy, β journal of economic literature, vol. 48 ( september ), pp. 693 β 751. bis central bankers β speeches that variation on aggregate consumption β and, ultimately, growth β requires more exploration. 3 but since household behavior is surely driven by more than the size of the paycheck coming in the proverbial front door, the distribution of wealth β as distinct from the distribution of income β could have clearer implications for the macroeconomy. indeed, wealth inequality is greater than income inequality in the united states, although it has widened little in recent decades. for example, according to the survey of consumer finances ( scf ), a survey conducted every three years by the federal reserve board, the top one - fifth of families ranked by income owned 72 percent of the total wealth in the economy in 2010, whereas families in the bottom one - fifth of the income distribution together owned only 3 percent of total wealth in 2010. 4 hence, families with more - modest incomes have much less wealth to cushion themselves against income shocks, such as unemployment. for example, in 2010, the median value of financial assets was less than $ 1, 000 for families in the lowest income quintile. moreover, what wealth low - and middle - income families do have is typically concentrated in housing. for families in the top quintile of income, the value of residential properties accounted for about 15 percent of total wealth in 2010. for families in the middle and lower half of the income distribution, the ratio of their home values to total net worth was near 70 percent. in contrast, stock market wealth ( and the value of other securities ) constitutes a very small share of wealth for low - and middle - income families. because the wealth of people at the lower end of the distribution is concentrated in housing, these households are disproportionately exposed to swings in house prices. this compositional effect was intensified during the housing boom, as the share of wealth accounted for by housing grew even faster for low - and middle - income families than for highincome families. that said, the increases in homeownership and house values during the boom were largely financed by rising mortgage debt. thus, the direct positive effect of rising house prices on most households β net worth was largely offset by the | ##t. in light of the moderate upward trend in underlying inflation, the bank continued to restrain the growth rate of commercial bank credit to the private sector. after an adjustment to take account of the extension and subsequent early repayment of loans by certain large borrowers, using offshore funds, credit rose by 21. 4 percent over the year, compared to 18. 1 percent in 2001. this growth rate was well above the bank β s target range of 12. 5 - 14. 5 percent, which had been judged to be consistent with the economy β s underlying growth potential and the inflation objective. moreover, the high rate of growth of government spending, estimated at 18 percent during 2002, albeit below the 20 percent growth rate recorded in 2001, also continued to exert pressure on inflation, thereby placing a heavier burden on monetary policy. the expansionary fiscal policy implied an undesirable imbalance between fiscal and monetary policies in dealing with inflation. monetary policy implementation during 2002 in light of the high growth rate of credit and the need to contain inflationary expectations following the introduction of vat, the bank tightened monetary policy towards the end of the year by raising interest rates by a total of 1 percent in october and november 2002 - half a percent at each time. consistent with past practice, the two changes in interest rates were immediately followed by press releases, which emphasised that the increase in interest rates was not a response to the rise in inflation resulting from the introduction of vat, because the bank considers the vat - induced impact on inflation as a transitory event, which did not directly justify a monetary policy response. the bank β s focus was on the impact that vat may have on inflationary expectations. hence it was important to forestall the development of expectations of higher inflation by pointing out the dangers of accommodating second - round effects of vat - related price increases and advising against possible compensatory wage increases. higher interest rates were, therefore, aimed partly at ensuring that such expectations do not develop. this was done in order to demonstrate the bank β s commitment to containing inflation arising from any temporary vat - related price increases, and in order that expectations of rising prices do not become entrenched. there was also a need for a tighter monetary policy given that credit growth was still higher than desired. the effect of the exchange rate on inflation was benign during 2002. while the pula appreciated in nominal terms against major international currencies, it depreciated | 0 |
received less attention so far β the effects of financial regulation on financial structures, in particular at times of fast technological change. allow me to explain these two observations in more detail. a holistic view on regulatory trade - offs over the past ten years, the financial market landscape has changed significantly, both in terms of how risk is being transformed and how it is being pooled and managed. on the intermediation side, the non - bank financial sector has substantially increased its share of the market, from 43 % in 2008 to 55 % in early 2017. on the risk management side, central clearing houses have emerged following the introduction of mandatory central clearing for standardised over - thecounter ( otc ) derivatives β as agreed by the g20 at its pittsburgh summit in 2009. these changes have also impacted the nature and scope of financial regulation. for example, the fsb has progressed towards tighter regulation of market - based finance, while cpmi - iosco and other international bodies have worked tirelessly since 2012 to establish a regulatory framework that makes central clearing counterparties ( ccps ) more resilient and easier to resolve. 3 1 / 6 bis central bankers'speeches a more diverse financial sector, however, also means that regulatory spillovers have become both more likely and more difficult to identify. let me take the example of ccps and their interactions with the basel iii leverage ratio. because clearing services require clients to post collateral, the non - recognition of such collateral in the leverage ratio framework may cause banks to scale back their clearing services, potentially leading to an unhealthy concentration of clearing services. in other words, there is a risk that the leverage ratio could potentially make our markets more, not less, risky. some have publicly concluded on this issue, asking the basel committee to consider how it could be amended. others are still reviewing these dynamics, including an fsb - led review of incentives to centrally clear, the derivatives assessment team ( dat ). so, different from regulation for one category of financial players, such as banks, where overlapping rules may be desirable for the reasons explained by andy and colleagues ( the β tinbergen β and β brainard β rules applied to financial regulation 4 ), regulatory spillovers across financial players may be more a source of concern. ideally, quantitative models would support policymakers in characterising and overcoming such trade - offs. this approach, however, faces two high hurdles. the first is that policymakers would need to specify better their loss | ecb has always emphasised the broad - based nature of its monetary analysis. in order to distil the policy - relevant β signal β about risks to price stability from the monetary data, the inevitable β noise β in shorter - term movements needs to be identified and removed. to do so, the ecb employs a variety of instruments, such as analysis of the components and counterparts of money, and other economic and financial data as necessary, as well as statistical and econometric models. the practical side of this signal extraction problem in the euro area can be illustrated by the experience between 2001 and 2003. financial and geopolitical uncertainty at that time triggered portfolio shifts into safe and liquid monetary assets. since these shifts reflected portfolio behaviour rather than an accumulation of transaction balances, the ensuing strong monetary expansion was assessed by the governing council not to pose risks to price stability under the prevailing economic conditions. on this basis, strong monetary growth of the m3 measure during that period was analysed as relatively benign in terms of inflationary risks, in line with the information extracted from the economic analysis. this example illustrates how the ecb has eschewed a mechanical interpretation of the development of m3. rather, the ecb has sought to explain monetary developments in a comprehensive manner, extract from these developments the policy - relevant signal about the medium to long - term outlook for inflation, and set interest rates in a manner that addresses the risks to price stability revealed by this analysis as well as by the complementary economic analysis. since mid - 2004, monetary growth in the euro area has been of a different nature to that observed between 2001 and 2003. in particular, the strengthening of m3 growth has been driven by the low level of interest rates rather than portfolio shifts into money. this has been reflected in the strong contribution that the most liquid components, such as currency and overnight deposits, have made to m3 growth. moreover, strong money growth has been primarily driven by a rapid expansion of loans to the private sector, underpinned by the economic recovery. taking the appropriate medium - to longerterm perspective, the continued expansion of money and credit through the course of 2005 gave an intensifying indication of increasing risks to price stability, fully in line with the results of our economic analysis, and vindicating our orientation to progressively increase interest rates by 150 basis points from december 2005 onwards. i thank you for your attention. | 0.5 |
loi m bakani : economic overview and future developments in papua new guinea statement by mr loi m bakani, governor of the bank of papua new guinea, at the 2010 annual meetings of the international monetary fund and the world bank group, washington dc, 8 october 2010. * * * mr. chairman, colleague governors, president of the world bank group, managing director of the international monetary fund, ladies and gentlemen, it is my pleasure to address this 2010 annual board of governors meeting. on behalf of the government of papua new guinea i would like to extend our appreciation to the bank and the fund for the ongoing effort and initiatives to improve our living standards and global financial systems. we look forward to a fruitful round of discussions here in washington dc. governors and colleagues, the prospects for global growth continue to be impacted by the aftermath of the financial crisis. i reiterate the international monetary fund β s ( imf ) outlook on the world economy with an anticipated growth of 4Β½ per cent in 2010. whilst the growth is heading in the right direction we must acknowledge that growth remains sluggish by past standards. at the same time downside risks remain, due to rising concern over sovereign debt and fiscal imbalances that could trigger a repeat of the financial and economic crisis. the downside risks underscore the need for ongoing cooperation and commitments from mutual partners to develop policies and governance mechanisms to address the challenges and secure global prosperity. at the global level, we should support policies that address structural imbalances over the medium term including supportive monetary conditions, accelerating financial sector reform, and rebalancing global demand. papua new guinea, as a small open economy, was able to navigate the negative impact of the global financial crisis and grew by 5Β½ percent in 2009. in 2010, growth prospects remain positive as the economy enters its fourth year of economic expansion. the combination of a stable exchange rate and moderate interest rates is encouraging businesses expansion. employment is strong, foreign exchange reserve level is high and government debt is at a sustainable level. the solid performance of the papua new guinea economy reflects increased investor and consumer confidence following a period of macroeconomic and political stability. the country has also benefited from a number of important economic and structural reforms the government has undertaken in recent years to complement its macroeconomic policies and management. at the same time, competition has improved the delivery of telecommunication services throughout the country. this is one of our success stories of the past few years. services | making loans to borrowers. almost all the funds raised by our commercial banks are done so through deposit takings domestically. deposits comprise over 80 percent of our commercial banks β liabilities, much of it in kina. foreign currency deposits are only a small component of the banks β deposit base. as at the end of december 2008, foreign currency deposit was around 9 percent of total deposits. the commercial banks are generally sound with high capital adequacy ratios. in 2008, their capital adequacy ratio was 25 percent, higher than our limit of 12 percent ( see chart 1 ). the banks have no exposure to sophisticated financial products such as mortgage - backed securities that are linked to the demise of the sub - prime mortgage market. the high level of liquidity in the banking system also provided sufficient funds for commercial banks to operate without resorting to borrowing from the international financial system. despite the high level of liquidity, the commercial banks β lending is prudent with low levels of non - performing loans. in 2008, non - performing loans totaled k70 million, down from k277 million in 2001 ( see chart 2 ). lending also comprises a small share of the banks β assets, about 35 percent. the banks are well managed and closely regulated by the bank of png. in addition, the two subsidiaries of australian banks have in place guarantees from their parent banks ( letters of comfort ) for any lending in excess of prudential exposure limits set by the bank of png, giving confidence to the stability of the financial system. both these banks β parents have double β a β credit ratings by standard and poor β s. however, the financial institutions and companies most likely to be affected by the crisis are the superannuation funds and png dual - listed companies in overseas stock markets. the two major superannuation funds, the nambawan super ltd and nasfund ltd, have some of their assets invested in offshore equities, while the rest are invested in commodity - based stocks that are dual - listed in png and overseas markets. they have reported positive returns in 2008 and remain positive and confident, though with lower returns projected for 2009. indeed, much credit must be given to the financial sector reforms introduced by the government in 2000, which created an independent central bank and introduced improved supervision of the financial system. the reforms saw much needed changes done to strengthening our financial sector after the excesses and mismanagement of the 1990s ( see chart | 0.5 |
the first world war led to higher tariffs as governments scrambled to raise revenue. income tax was introduced in 1917, which finally gave governments another important source of revenue and made tariffs what they are today β purely a tool of protectionism. foreign investment into canada slowed sharply, immigration came almost to a halt and a major recession followed the first world war. things improved briefly during the roaring twenties amid industrialization in both canada and the united states. but the us stock market crashed in 1929, and shortly afterward, the western world fell into the great depression. foreign investment and immigration to canada slowed again during the depression. from 1929 to 1932, canada β s economy shrank by 25 per cent. with public sentiment turning against the banking system, then - prime minister r. b. bennett set up a royal commission, leading to the establishment of a central bank to act in the public β s interest. and since 1935, the bank of canada has been operating with a mandate to promote the economic and financial welfare of canada. meanwhile, in a bid to protect american workers and farmers from foreign competition, the us congress pushed up the average tariff rate on dutiable goods to nearly 60 per cent by 1932. this policy backfired spectacularly. most other countries, including canada, retaliated with tariffs of their own. the trade war had no winners ; everyone suffered as international shipments collapsed. canadian trade fell by more than 50 per cent during the depression ; us trade, by 70 per cent. unhappily, the second world war is what happened next. post - war success our final episode follows the second world war. after the depression and war, many countries β including canada β were determined to create international institutions aimed at preventing such disasters from happening again. at the 1944 international conference at bretton woods, canadian economist and future bank of canada governor, louis rasminsky, not only led the drafting of many of the documents but was also credited with breaking deadlocks between the british and american delegations. canada would benefit greatly from this international push toward openness. a consensus emerged on the wisdom of an open trading system, and three years after bretton woods we saw the general agreement on tariffs and trade ( gatt ). over the next 50 years, successive rounds of gatt talks led to lower and lower tariffs, from the roughly 22 per cent average seen before the war to about 4 per cent following the uruguay round in the 1990s, 4 / 7 bis central bankers'speeches reducing | in december 2005, included an in - depth article on pension funds β future prospects and uncertainties by guΓ°mundur guΓ°mundsson and kristiana baldursdottir. the study found that pension fund assets could peak at more than double the value of gdp. however, the pension funds β future profitability is fraught with uncertainties. the most important criterion is return on investment, which could change and drastically affect the level of contributions required to sustain the pensions that the funds are expected to pay. changes in life expectancy and disability expectancy will have some effect, although these are not as crucial as the uncertainty over return in investment. this indicates that the most important task ahead for pension fund management will be to optimise their return on investment, within the prudential limits that pension funds must respect. the foreseeable expansion of pension funds suggests that they will gradually have to step up their outward investment, which means that returns on foreign portfolios will be crucial for their future. clear long - term strategies are needed on which to base their investments. ladies and gentlemen : earlier i mentioned the extensive international coverage of the icelandic economy and the position of its banking sector. the depth of the analysis has varied. among the best informed observers of the icelandic economy are the three international rating agencies that assign iceland β s sovereign credits ratings, and international organisations such as the oecd and imf. all the rating agencies recently affirmed the sovereign rating, while one changed the outlook from stable to negative. the two agencies that have already assigned ratings to all the icelandic commercial banks have also affirmed them, while the third agency recently awarded a first β and strong β rating to an icelandic bank. earlier this week, an imf mission visiting iceland published the concluding statement for its article iv consultation with the authorities. in it, the imf says that the medium - term outlook for the icelandic economy remains enviable and institutions and policy frameworks are strong. however, the current conditions require a tight fiscal and monetary stance to reduce macroeconomic imbalances. the central bank of iceland will play its role in that effort. | 0 |
view as the distinctive necessary conditions to such a remarkable achievement can be summarised in some decisive factors of the institutional framework of emu on the one hand and of the ecb β s monetary strategy on the other hand. first of all, the treaty clearly establishes that monetary policy in the euro area is conducted by an independent central bank. the treaty itself guarantees for the independence of the ecb thereby ensuring that the ecb will have no impediment in pursuing its primary objective of price stability. market participants in the euro area as well as social partners and the public at large know with certainty that the maintenance of price stability over time will not depend on short - term considerations of any nature. this is certainly a necessary pre - condition for the anchoring of long term inflation expectations. turning to the elements of the strategy that are more directly instrumental in helping long term inflation expectations to be firmly anchored to the ecb β s definition of price stability, i shall list first the clarity of the ecb β s objective. the ecb β s governing council aims at maintaining the euro area inflation rate at β below and close to 2 % β. the wording is precise enough to provide a reference point for those individuals, social partners and market participants who need to take decisions based on the price outlook. at the same time, the definition of the inflation objective takes into account both the uncertainty that monetary policy has to face and the limits to its own actions. it is my opinion that inflation expectations in the euro area have proved to be consistently anchored in the medium term because everybody has appreciated the ecb β s honesty and transparency as well as its firm commitment to ensure price stability in the euro area. furthermore, people have recognised in the quantitative definition of price stability complete continuity with the definition existing before in the national currency areas that had crystallized the highest level of confidence. the second element of the strategy that, i think, provides a solid conceptual anchoring to inflation expectations is the comprehensiveness that characterises the macroeconomic analysis leading up to the governing council β s policy decisions. the ecb has always explained that its approach to organising, evaluating and crosschecking the information relevant for assessing the risks to price stability is based on two analytical perspectives, referred to as the β two pillars β. the two - pillar approach is a way of conveying to the public the notion of a diversified analysis and of ensuring robust decision - making based on different analytical perspectives. in particular, by taking into account the | the outlook for economic activity and prices ( hereafter the outlook report ). as a result of the revision to seasonal adjustments carried out in april 2010, it is likely that a portion of the significant drops in production in the october - december quarter of 2008 and the january - march quarter of 2009 is recognized as seasonal rather than actual movement. such a seasonal adjustment method would push up future growth rates for the october - december and january - march quarters, but push down those for the april - june and july - september quarters. therefore, it is necessary to assess actual terms for the apriljune and july - september quarters by adjusting for such downward pressure. bis central bankers β speeches starting with the outlook for the economy, the pace of recovery is likely to slow temporarily in the second half of fiscal 2010 due to factors such as the slowdown in overseas economies and the ending of the boost from policy measures targeted at durable consumer goods, as well as the recent appreciation of the yen. the growth rate of the economy for the october β december quarter of 2010, in particular, is highly likely to turn out negative following the higher - than - expected growth in the july β september quarter. however, although the effects of the appreciation of the yen may continue to linger, the economy is expected to return to a moderate recovery path once we enter fiscal 2011, given that β with growth in overseas economies expected to pick up again β exports are projected to continue increasing and firms β sense of excessive capital stock and labor is likely to dissipate gradually. in fiscal 2012, japan β s economy is expected to continue growing at a pace above its potential amid the continued relatively high growth in overseas economies, especially emerging and commodity - exporting economies. although my view regarding the outlook is basically in line with the bank β s projection, i am concerned about the extent to which japan β s economy will be able to benefit from global economic growth. in fact, i have a growing sense that japan has not yet enjoyed much success in this regard, given that the pace of growth in japan β s exports has been more moderate than that of other countries since the mid - 1990s and that japan β s share in world exports has been declining since the mid - 1990s despite trade liberalization in countries such as china. moreover, japan is likely to face an even tougher global competitive environment due not only to the recent rapid appreciation of the yen β in a situation where domestic capacity is yet underutilized β but also to factors unrelated to | 0 |
forms the backbone of our economy. to reap the benefits of such a young work force, we need to implement the reforms in the education system and also bring forth new factors of production, namely knowledge, skills and technology which have the ability to unleash the productive frontiers of the economy in the most efficient and dynamic way. besides, taking a leaf from the western hemisphere, india should try to become β knowledge economy β to promote inclusive growth. i, therefore, would like underline three major areas to be focused to ensure that our education system is sustainable and meets global standards : i. quality of education β in terms of infrastructure, teachers, accreditation, etc. ii. affordability of education β ensuring poor and deserving students are not denied education. iii. ethics in education β avoiding over - commercialization of education system. let me take this opportunity to again wish jre group of institutions in establishing jre school of management which i am sure will play an important role in the 21st century in the indian education system by providing world class education at an affordable cost to the young students and achieve success in all frontiers of educational activities. thank you. bis central bankers β speeches annex 1 gross enrolment ratio ( ger ) for higher education source : chinaeducenter. com, unesco global education digest 2009 ; ey analysis annex 2 capacity utilization source : maharashtra dte, aitce ; ey analysis bis central bankers β speeches annex 3 student - teacher ratio source : β higher education in india β, ugc report, 2008 ; unesco institute for statistics 2010 ; ey analysis bis central bankers β speeches | educate the individual as a part of society β virtually all our knowledge, our clothes, our food is produced by others in our society, thus, we owe society and have responsibility to contribute back to society. c. through education, knowledge must continually be renewed by ceaseless effort, if it is not to be lost. it resembles a statute of marble which stands in the desert and is continually threatened with burial by the shifting sand. the hands of service must ever be at work, in order that the marble continue to lastingly shine in the sun. while discussing the importance of education, i must state that schools have become the most important means of transforming wealth of knowledge and skills from one generation to another. however, the role of institutions becomes more challenging in the modern world bis central bankers β speeches with innovations and technological developments. investment in education and educational institutions should be viewed as an investment for economic prosperity. in india, there are about 26, 478 institutions providing higher education and accounting for the largest number in the world. in comparison, according to a report1, in 2010, the u. s. had only 6, 706 higher education schools and china had 4, 000. it is important that given the large number of schools of higher learning in india, we must target to bring more students under the system. investment in human capital, lifelong learning and quality education help in the development of society and nation. demographic contour according to the national commission on population, it is expected that the age profile of population of india will experience changes in the coming years. by 2016, approximately 50 per cent of the total population will be in the age group of 15 β 25 years. it is projected that a vast population would enter the working age group in the next 15 years, leading to increase in productive activities and also savings rate as witnessed in japan in the 1950s and china 1980s. in other words, there would be a tremendous rise in the number of employable work force in the job market which would demand commensurate investment in education. in the literature, demographic dividend refers to population β lump β in the working age group of 15 β 60 which can be described as a major advantage for pushing the economic growth. it suggests that the major challenge before india is how this advantageous demographic profile can be harnessed to reflect in the macro - economic parameters of the country. given the demographic profile advantage, the average indian will be only 29 years old in 2020 as compared with 37 years for | 1 |
. 4. however, this will only be possible if the government approaches the oil and gas sector and the green hydrogen initiatives in a national, rational, and strategic manner. we are fully aware that these sectors cannot only bring significant financial resources and enormous transformational opportunities but also come with challenges. there are many examples around the world where developing countries have obtained windfalls from oil and gas but eventually ended up poorer than before. we must avoid the resource curse at all costs. we must learn from the experiences of others. 5. in my message today, i would like to talk about the following three key issues ; first, how namibia should position itself to maximize its gains from these discoveries ; second, briefly reflect on some critical measures to be put in place to avoid resource mismanagement ; and finally, speak to the head - start we have made as a country through the establishment of the newly established sovereign wealth fund, the welwitschia fund. 6. regarding the gains maximization, i would like to highlight some critical success factors that the country should embrace to ensure benefits for all namibians. the question in the mind of every citizen is how as a country, we should expect to gain from these new discoveries. one of the most immediate ways should be through additional direct and indirect employment. exploration activities should also generate new infrastructures such as roads, railway lines, electricity supplies, schools, and hospitals that, although provided for the minerals industry and its workforce, can also benefit the rest of the population. it should contribute to developing skills and local businesses at the local level. skills development should entail using the migration policy to facilitate skills transfer and the acquisition of skills that are not locally available. meanwhile, the economy can be stimulated as mineral companies forge multiple outward linkages β backwards to industries that supply goods and services or forwards to industries that process mineral outputs. 7. the issue of ensuring optimal local content in the exploitation of resources must remain prominent. the finalisation and adoption of the local content policy is therefore of paramount importance. facilitating local content and participation in the oil and gas value chains has the potential to ensure broad - based benefits from these resources. to avoid and prevent the much dreaded " resource curse " that has plagued many developing countries with newly discovered natural resources, the private sector will need to capitalize on these opportunities. 8. this brings me to the second critical success factor, transparency and accountability in allocating resources. this would ensure that access to these resources is granted in | possible from the islamic banking experts in order to enhance your understanding of islamic banking. ladies and gentlemen, this workshop could not have come at a more opportune t ime than now, when the bank of uganda is in advanced stages of putting in place a supervisory and regulatory framework for islamic banking. since january 2016 when h. e the president of the republic of uganda assented to financial institutions ( amendment ) act, 2016, which embraced islamic banking, there has been tremendous work going on internally in the bank of uganda, which is mainly aimed at fast tracking the development of an enabling supervisory and regulatory framework for islamic banking. the consultant engaged by the bank of uganda prepared a draft islamic banking legislation, which is currently under review by the various stakeholders, whose feedback, shall be considered in finalizing the legislation. mission : to f oster price stability and a sound financial s ystem macroeconomic stability vision : to be a centre of excellence in upholding bank of uganda is aware that the banking sector and the general public are eagerly waiting for the rollout of islamic banking in uganda. i wish to assure you all that the bank of uganda is fast tracking the establishment of a supervisory a nd regulatory framework for islamic banking. all stakeholders shall be informed as soon as the requisite processes have been completed. i wish to reiterate that an effective supervisory and regulation framework is key to ensuring the success of islamic banking and bank of uganda is keen to achieving this objective. islamic banking has gained prominence internationally due to its exponential growth and resilience to financial crises as well as the nature of shari'ah - compliant finance models that focus on the principles of investment in real assets and risk - sharing. in the islamic banking model, each contract is backed by an underlying asset or investment activity which creates a direct link between financial markets and economic activity. the islamic finance model has thus contributed to the spread of real - asset - based finance principles in many jurisdictions and is regarded as an ideal option for the financing of infrastructure projects. this provides a condu cive environment for achieving a more integrated approach to economic growth. the success stories of islamic banking experienced in other jurisdictions would, without a doubt, be replicated in emerging markets like uganda once islamic banking is rolled out. i am happy to note that the agenda for this workshop covers the envisaged benefits of islamic banking, among other topics. in conclusion, i wish therefore to emphasize that while islamic banking and finance is envisaged to significantly | 0 |
##ity assistance has been a classic and impeccable exercise of long - standing central banking doctrine, but it has been on a scale for which there are few precedents in history. to an extent, the need for such liquidity is the mirror image of the scale on which the international market was previously tapped. indeed, it has often been remarked that membership of the euro area facilitated bank access to foreign funds. but over - borrowing by european banking systems was not limited to the euro area. and euro membership has provided the safety net on the way down. the european central bank has risen to this challenge and the eurosystem has extended credit to irish banks on an unprecedented scale. governed by a detailed legal framework, the lending has been carried out either through normal eurosystem operations ( to the extent that the banks concerned had collateral satisfying the specific requirements, both as to assured and rated quality, and as to marketability, defined by the ecb ) or directly from the central bank of ireland. the direct lending by the central bank of ireland is of course carried out with the prior knowledge and approval of the ecb : the suggestion sometimes heard, that the ecb might be about to cut - off the irish banks, is very wide of the mark. they hope, as we all do, for faster progress towards restoring the confidence of the market in ireland and its banks ; but that is a very different matter. all central bank lending to banks is collateralised, whether by other financial assets of the banks ( with appropriate haircuts ), or by government guarantees. but inasmuch as almost all of the central bank lending has gone to repay bank liabilities that were already guaranteed, this process has not increased overall government obligations. ( it β s important not to doublecount here ). indeed, the quantum of irish government guaranteed bank liabilities has diminished substantially over the past year. * * * the process of rolling back the excesses that have marred the great advances made by the irish economy over the past two decades has heightened uncertainty. in order to underpin a vigorous economic recovery, risk must be reduced, not least by ensuring the conventional elements of fiscal discipline and cost competitiveness, but also through an intensified process of clarifying and crystallising the position of the banks and reducing their exposure. the eu - imf programme funding provides a window of time in which to help restore the fundamentals and reduce the risks. bis central bankers β speeches | only over a period of time, but in our case, within months of publication, one of the underlying assumptions of the 2010 stress tests was unluckily undermined. we had to go public on them part - way through the big programme of loan purchases by the state property company nama. these loan purchases crystallised those embedded bank losses immediately, but the prices at which the purchases would be made were calculated in a very elaborate and time - consuming way mandated by competition law. the stress - test β s seemingly aggressive assumption that the seemingly severe haircuts in the first tranche of loan purchases would read through to the lower tranches also proved to be wrong. with hindsight it would have been great to have built in more insulation by providing for even tougher haircuts ; but at the time it would have seemed an arbitrary and hard to justify exercise of regulatory powers. this year, we are determined to present a stress test that will not only be more convincing to the market, by providing much more granular detail, but also be better insulated against surprises by using aggressive stress assumptions and modelling. the emphasis is clearly on determining appropriate capital levels to meet stresses. the higher capital required will be driven by this rather than from any increase in expected losses : to be sure the somewhat weaker economic growth projections now available would imply some increase in expected losses, but it is the stress scenario that is the focus of the present exercise. we will seek to largely free the tests of any excessive expectations from irish exceptionalism in loan - loss recoveries ( over the years very few irish residential mortgages have been foreclosed in downturns by comparison with the experience in the uk and us, for example : with the help of external consultants we are referencing experience in those countries β though not slavishly so β in the analysis that will lead us to choose new tougher capital levels for the banks sufficient to convince the markets. and less reliance will be made on extrapolation from recent experience. * * * the downsizing of the banks is already under way. not only did they enter the crisis with sizable businesses outside ireland, including a long - standing presence in the uk, as well as more recent ventures in poland and the united states, among others, but their large property - backed portfolios of lending to irish borrowers was heavily financed by wholesale international borrowing most of which has now been repaid, and replaced, for the time being by central bank funding. by | 1 |
toshihiko fukui : developments in economic activity and prices and the bank of japanaβ¬β’s conduct of monetary policy summary of a speech by mr toshihiko fukui, governor of the bank of japan, at a meeting with business leaders, nagoya, 3 december 2007. * * * introduction today, i would like to explain the bank of japan's view regarding developments in economic activity and prices and the basic thinking behind its conduct of monetary policy. in addition, i would like to touch upon the issues currently facing japan's financial system. i. the current situation and the outlook for economic activity and prices i would first like to talk about the current situation and the outlook for economic activity and prices. japan's economy as a whole has continued to expand moderately, although the pace of improvement in the household sector has remained slow relative to the strength in the corporate sector. at the end of october, we released the outlook for economic activity and prices ( hereafter the outlook report ), and presented the projection through fiscal 2008. the gist of the outlook report is that although there are uncertainties regarding overseas economies and global financial markets, japan's economy is likely to continue its sustained expansion under price stability. in terms of the rate of real gdp growth, we projected that this is likely to register around 2 percent on average, somewhat higher than the potential growth rate. i would now like to elaborate on the mechanisms that form the basis for the outlook as well as some associated risk factors. within the corporate sector, exports have remained on the increase, reflecting the widening base of continuing world economic growth. business fixed investment is likely to keep rising steadily, supported by high corporate profits. the rate of growth is, however, likely to be lower than it was up until fiscal 2006, since capital investment has continued to increase at a rapid pace for the last several years. the positive influence of the strength in the corporate sector has been feeding through into the household sector slowly but steadily. with the number of employees rising, employee income has been increasing moderately, and growth in household income has continued to be further supported via various other channels, for example, increased dividends. meanwhile, wages have been somewhat weak recently, reflecting labor cost restraint by firms in the face of greater exposure to global competition and capital market discipline, and increased materials prices. the change in the composition of the workforce due to the retirement of the high - salaried baby - boomer generation and increases in | account of fruits, vegetables, mineral oils, fuels, and cotton textiles. two important international factors have contributed to more than the unanticipated upward pressure on prices. first, international oil prices have remained firm. the average price of opec basket had reached us $ 29. 5 a barrel at the end of 2003, while us prices are hovering around us $ 32 a barrel. the global oil prices today are thus about 10 per cent higher than they were at the time of the mid - term policy statement. the outlook for oil prices in the near term appear highly uncertain. secondly, world primary commodity prices have also increased in 2003. these trends, along with revival of growth and falling excess capacities in several advanced economies have brought about a noticeable shift in the outlook for prices. the fear of deflation in advanced economies has been replaced by a possible upward pressure, led by increases in commodity prices. no doubt, these international developments enhance the probability of international transmission of inflation. at the same time, there are three favourable factors to counter these recent adverse global developments. first, in the normal course, it is expected that the inflation rate would fall in the period mid - january to march 2004. secondly, there are cushions in terms of food stocks and ample forex reserves. thirdly, our economy has, in recent years, shown remarkable resilience in absorbing shocks including on the oil front. in view of all these factors, it is possible that the downward bias may not be attainable but it appears that the range of 4. 0 per cent to 4. 5 per cent for inflation indicated in the mid - term review continues to be relevant for policy purposes unless there are unanticipated severe shocks. it may be noticed that the policy assumption in april 2003 was 5. 0 - 5. 5 per cent and the latest assessment placing it in the range of 4. 0 - 4. 5 per cent demonstrates that, overall, inflationary situation continues to be benign for 2003 - 04. there has been a marginal improvement in central government finances since the mid - term policy statement. the gross fiscal deficit of the central government as at the time of mid - term review which was higher by 40. 3 per cent ( based on fiscal data available up to september 2003 ) is now higher by 12. 3 per cent ( based on fiscal data available up to november 2003 ) over the corresponding periods of last year. similar improvement is also seen on the revenue account, which was higher by 37 | 0 |
and the means to achieve the desired results. the fundamental objectives of economic development in our country remain the same : growth and social justice. instrumentalities to achieve these will have to change in tune with our experience and according to the demands of the time and the responses of the society. in bringing about faster growth we need to address many issues. perhaps one that is most relevant in the context of work that is going on at iima is the issue of productivity. in ensuring a higher growth rate, there is no doubt that we must bring about an increase in the saving rate and, consequently, the investment rate. but at the same time one cannot over - emphasise the need for improving the productivity and efficiency of input use. economists in fact talk about total factor productivity, which identifies the contribution to the increase in output of influences other than increase in factor inputs. the total factor productivity growth thus encompasses the effect not only of technological progress but also of better utilisation of capacities, improved skills of labour, etc. in fact during the period 1960 - 87 the total factor productivity growth of east asia was 1. 9 per cent per productivity and efficiency. contrary to the general impression, the natural resources of our country are not large. from the point of view of long - range sustainability, the need for greater efficiency in the management of natural resources of land, water, minerals, etc. has become urgent. in a capital - scarce economy like ours, there can be no excuse for under - utilisation of capacity. macro - policy framework and micro - management practices must be such as to bring about the desired increase in productivity. while the policy framework must be supportive, industrial structure must be such as to compel firms to continually innovate and to cut costs. the policy environment, the organisational structure and the attitude to work and technology : all these have to be right. needless to say, institutes of management have an important role to play in bringing about this improvement in productivity by sharpening the skills and the vision of managers. - 2the recent development experience has clearly shown that countries which have grown fast are those which have made very heavy investment in education. even as we aim at creating a broad - based educational system, including compulsory education at the primary and secondary levels, we also need institutions of excellence. living as we are in a complex and globally competitive world, institutions of excellence in all disciplines are required to meet the challenges of competition, which in effect is the competition in skills | mr. rangarajan addresses a special convocation of the indian institute of management address by the governor of the reserve bank of india, dr. c. rangarajan, at a special convocation held to confer upon him the honorary title of fellow of the indian institute of management at ahmedabad on 3 / 10 / 97. it gives me immense pleasure to be on the campus of the indian institute of management. i accept in all humility the award of the title β fellow of the indian institute of management β, ahmedabad. what can be a greater honour than the recognition by one β s own peers and family? i look back with immense satisfaction on the years that i spent on the campus here. those fourteen years marked the most productive period of my academic life. it is no mean task to have created here an institution of world - class excellence. all those who have been associated with iima can take legitimate pride in this achievement. this, however, makes the task of the current faculty members and students even harder. the race of excellence is a perpetual one and is, therefore, very demanding. i am sure that iima will always remain ahead. we are celebrating this year the golden jubilee of india β s independence. as a nation, we have accomplished much during this period. we have moved from the status of dependent country stricken at periodic intervals by famine and shortages to that of an independent nation with a high degree of stability. but the unfinished agenda is still long. our rate of growth, though high in relation to our own performance in the previous fifty years, has fallen short of our expectations and that of what certain other countries have been able to achieve. the miracle of east asian countries may to some extent have been dimmed by the recent crises in these countries. nevertheless, they have shown that it is possible for countries to grow at a sustained rate of 7 per cent or more for several decades. we need to set our goals high. we have over time created the wherewithal for progress. the real task today is to use these advantages for further growth. all of us are conditioned by history. history is a great teacher if we can draw appropriate lessons. the present is an extension of the past. we should not, however, become prisoners of the past. where changes are called for, we must be willing to make them. it is only by making such changes that a nation can progress. in the recent period we have made some basic changes in our approach to economic development | 1 |
and medium - sized enterprises have seen borrowing costs from banks somewhat reduced. all of this should support investment. target balances, which provide a powerful summary indicator of fragmentation, have declined by almost 300 billion euros or 25 % from their peak. the costs of protection against see, for example, cukierman, a., 2013, monetary policy and institutions before, during, and after the global financial crisis, journal of financial stability, in press, and curdia, v. and woodford, m., 2011, the centralbank balance sheet as an instrument of monetary policy, journal of monetary economics, 58 ( 1 ), 54 β 79. bis central bankers β speeches risks of deflation have fallen from peaks twice their long - term average last summer to slightly below average now2. overall, monetary policy has regained steering capacity, which had become lost for large parts of the euro area in mid - 2012. this is an important positive development. let me turn now to the limitations of monetary policy. here i see two possible dimensions. the first is positive and refers to the effectiveness of central bank actions at the margin β for example, when interest rates are close to zero. the second is normative and refers to the constraints imposed on us by our mandate and to the fears that boundaries between central bank policies and other policies might become blurred. i will not dwell on the first dimension because i do not think that we are materially challenged in our ability to deliver our objective of price stability by the low level of interest rates. looking back, despite extraordinarily testing economic circumstances, inflation in the euro area has remained on the whole consistent with the ecb β s objective of below but close to 2 %. looking forward, eurosystem staff project annual hicp inflation at 1. 4 % in 2013 and 1. 3 % in 2014, but medium - term inflation expectations remain anchored in line with our definition of price stability. one reason why inflation expectations have remained broadly stable is that we β and other major central banks around the world β have prevented the materialisation of deflation risk by adopting both standard and non - standard measures as and when necessary. in the euro area, one such non - standard measure was the introduction of the outright monetary transactions ( omt ) programme last year, the stabilising effects of which are widely recognised. there are numerous other measures β standard interest rate policy and non - standard measures β that we can deploy and that we will deploy if circumstances | induced them to change their ways just in order to have these marks erased again and thus - in their perception - their wealth restored. friedman concludes that this example illustrates β how important appearance or illusion or β myth β, given unquestioned belief, becomes in monetary matters. our own money, the money we have grown up with, the system under which it is controlled, these appear β real β and β rational β to us. yet the money of other countries often seems to us like paper or worthless metal, even when the purchasing power of individual units is quite high. β the euro has been in existence for almost two years now. it does not come in the form of stone wheels. in fact it does not yet have any concrete and tangible expression at all. until the introduction of euro banknotes and coins at the beginning of 2002 it will essentially remain a β virtual β currency, which may perhaps seem as remote, unfamiliar and unnatural in the eyes of the public as the stone wheels described by friedman. this lack of tangibility and visibility of the euro in part accounts for the particular challenges that the euro faces in winning the hearts of the general public as a new currency which has yet to replace the familiar and trusted national notes and coins in circulation. as friedman β s example shows : symbols may be important in monetary matters. at the same time, irrespective of the particular symbols and media to which money functions are attached - be it stone wheels or computer chips - money is ultimately a question of trust. the euro β s current existence as a β non - tangible currency β perhaps makes this point - which is valid for any fiat money - more plain and obvious. no matter what specific medium of exchange a society might wish to adopt, the efficiency of money in facilitating economic transactions via the price mechanism depends on its stability as a unit of account, i. e. as a common financial denominator, for the economy. in order to hold and accept money economic agents must not only be confident that money remains accepted as a medium for exchange, but also be confident that money will retain its value over time, thereby ensuring that price signals can provide accurate guidance for markets to function efficiently. in contrast, if money loses its value, this also undermines its usefulness for exchange. indeed in periods of very high inflation currency tends to be replaced, for example, by cigarettes or other goods - or, perhaps, β bads β - in everyday transactions. an inflationary currency will simply cease | 0.5 |
changing the stance of monetary policy, and that this liquidity would flow unimpeded through the financial system. the events of last summer have challenged this consensus. the financial system will be more stable, and the effects of monetary policy actions more predictable, if the central bank directly supports liquidity in a wider range of markets when appropriate. such support, which would be expected to occur only during extraordinary circumstances, could entail expanding the range of terms, collateral, and counterparties for central bank operations beyond what is required for routine monetary policy operations. 6 considerations around a central bank decision to intervene let me elaborate on two of the words i just said : " when appropriate. " how can a central bank determine, with any level of confidence, when actions to support market liquidity are appropriate? at the bank of canada, we have been thinking about the principles that would govern any facilities that we might offer. w. bagehot, lombard street : a description of the money market ( new york : wiley, 1999 ) p. 173. in the bank of canada's case, some of its legal authorities would need to be modernized in order to be able to carry out interventions to the same degree as other institutions. amendments to the bank of canada act that would address this issue are currently before parliament. a central bank may want to make several judgments before deciding to lend to market makers. in particular, it should ask itself four questions : first, is the impairment of the market temporary or permanent? second, will the instruments at its disposal be effective? third, what net benefits could come from intervention? fourth, what are the likely costs? in the heat of financial market turbulence, it is difficult to determine whether a situation of illiquidity ( a market impairment ) is temporary or permanent. to make this determination, it is useful to recall the arrow - debreu theorem of complete markets. 7 in reality, complete markets do not exist because of information costs and because not all agents participate in all markets. a central bank must decide whether its provision of liquidity is a bridge β while information asymmetries are resolved and potential market participants return to the market β or whether it is a pier because there is a permanent impairment. to underscore the distinction, consider again three aspects of recent events. first, before the current market turmoil, many investors relied on rating agencies for credit analysis about structured products, and this information was relatively inexpensive to obtain. the process of financial turbulence | differ from the key monetary policy interest rate. as well, an auction can provide a central bank with the flexibility needed to tailor the provision of liquidity to the specific need. auctions can also provide the central bank with valuable information about the health of a particular market or participant. finally, they can help to restart markets that have stopped by providing a multi - party mechanism to determine asset prices. 9 the search for symmetry before closing, i would like to raise one final issue. much of the discussion about central banks and liquidity in markets has been motivated by current circumstances, in which banks and market makers are unable to create a sufficient level of liquidity themselves. this is a one - sided approach to the issue. one of the reasons that the bank of canada's monetary policy has been successful in anchoring inflation expectations is that we implement policy symmetrically. our actions are motivated as much by inflation threatening to fall below our target as by inflation threatening to rise above it. indeed, our recent decisions to lower our key policy rate were motivated by a concern that future inflation was poised to remain below our 2 per cent target. is a symmetrical approach to liquidity also appropriate? as i mentioned earlier, a lack of liquidity can hamper the efficient allocation of resources and distribution of risk, and complicate the conduct of monetary policy. it is equally true that an overabundance of liquidity β or, more precisely, easy financing conditions for financial assets themselves β can have similar effects. logically, if a central bank were concerned enough to lend to market makers in a time of scarce liquidity, would it not also want to borrow from the same institutions in periods of excess liquidity, again assuming that such periods could be determined with confidence? unfortunately, liquidity instruments such as those i have described today are poorly suited to this task. central banks are the stores of liquidity in our economy, and can readily supply it by agreeing to take less - liquid assets from counterparties in exchange. generally speaking, central banks are not set up to operate in reverse ; that is, they do not have on their balance sheets a ready supply of illiquid assets that can be used to absorb excess liquidity held by banks or market makers. moreover, during an asset boom, they may have limited influence over the confidence of financial market participants. the principle, however, remains. central banks and other authorities should be as concerned about the distortions and inefficiencies created by | 1 |
##eration phase, with weak demand. if, as we expect, supply is restored more quickly than demand, this could lead to a large gap between the two, putting a lot of downward pressure on inflation. our main concern is to avoid a persistent drop in inflation by helping canadians get back to work. policy tools let me now turn to our monetary policy tools. in normal times, we deliver or withdraw stimulus as needed by adjusting our target for the overnight interest rate. that one - day interbank interest rate generally doesn β t affect consumers directly, except those with variable - rate mortgages. but changes in the overnight rate affect borrowing costs further out on the yield curve, which is where most consumers and businesses borrow. at the onset of the pandemic, we could see that there would be a huge hit to confidence. so, back in march, the bank rapidly lowered our policy interest rate to 0. 25 percent. this action was not really expected to boost spending in the early days of the pandemic. its immediate purpose was to help support confidence and provide some interest rate relief. but as more retail businesses reopen, low interest rates will help support spending. the policy rate is now at its effective lower bound. some central banks have taken their policy rates below zero. we feel that bringing that rate into negative territory could lead to distortions in the behaviour of financial institutions. however, the bank has a number of other tools we can use to help stimulate demand. the bank has launched a series of purchase programs that involve buying different types of assets. we have launched programs to buy canada mortgage bonds, commercial paper, bankers β acceptances, corporate bonds, and provincial and federal government debt. we introduced these programs to make sure that key markets would function properly, and that credit would continue to flow. credit is the lifeblood of market - based economies. during a crisis, it is imperative that central banks maintain access to credit in order to avoid a credit crunch. when markets aren β t functioning properly, the ability of monetary policy to provide stimulus also breaks down. but financial markets are now working considerably better. with this improvement, our asset - purchase programs are becoming a source of monetary stimulus. the bank has committed to buying at least $ 5 billion of canadian government bonds a week until the recovery is well underway. as these large - scale asset purchases build up, they are delivering stimulus through a process that is often called quantitative easing, or qe. here β s how it works | track record of success with inflation targeting, which reinforces its effectiveness. as i said, the inflation target is really a beacon to guide our policy. by grounding our actions in our framework, we will always be working toward bringing the economy near capacity with full employment. policy and the pandemic a successful inflation - targeting monetary policy framework has a number of core ingredients. clearly, we need to agree on a measure of inflation to target. we need to assess how much demand is in the economy relative to its productive capacity or supply. we need tools to influence demand, or spending, and bring it in line with supply. we also need an outlook for the economy because it takes time for our tools to affect spending and inflation. and because there are many unknowns, we need an understanding of the risks to the outlook. 1 / 4 bis central bankers'speeches these are the basic ingredients of inflation targeting. and covid 19, combined with structurally low interest rates globally, is affecting all of them. a measure of inflation let β s start with our measure of inflation. our target is the 12 - month rate of change in statistics canada β s consumer price index ( cpi ) β the most common and comprehensive inflation measure out there. we target the 2 percent midpoint of a 1 to 3 percent range for the annual inflation rate. but in any given month, the cpi can be quite volatile and not reflect its long - term trend. that β s because prices of items such as fresh fruit and vegetables or gasoline can jump around a lot, affecting the cpi. so, we look at several specific measures of core inflation to get a better sense of the underlying trend in inflation. total cpi is weighted to reflect the buying patterns of the average canadian household. in normal times, for example, canadians spend a lot more on gasoline than on alcohol, so gasoline has a larger weight in the index. but these aren β t normal times. because of the pandemic, canadians are spending much less on gasoline and air travel, and more on food purchased from stores. and until very recently, they weren β t spending anything on haircuts. the implication is that the cpi isn β t fully reflecting people β s current inflationary experience. bank staff have been working with statistics canada to better understand the implications of these shifts in spending patterns. as the economy reopens, many of these shifts will unwind. we will be working to look through temporary shifts while capturing any more enduring changes. | 1 |
common sense culture, not a compensation culture β, speech given at the institute for public policy thinktank, reported in the guardian. available at : http : / / www. theguardian. com / politics / 2005 / may / 26 / speeches. media. blinder, a ( 2004 ), β the quiet revolution : central banking goes modern β, new haven, ct : yale university press. blinder, a and morgan, j ( 2007 ), β leadership in groups : a monetary policy experiment β, international journal of central banking. available at : http : / / www. ijcb. org / journal / ijcb08q4a4. pdf. broadbent, b ( 2013 ), β forecast errors β, speech given at the mile end group of queen mary. available at : http : / / www. bankofengland. co. uk / publications / documents / speeches / 2013 / speech653. pdf. calomiris, c ( 2014 ), β fragile by design : the political origins of banking crises and scarce credit β, princeton university press, isbn 978 β 0691155241. capie, f, goodhart, c and schnadt, n ( 1994 ), β the development of central banking β, in capie, f. ; fischer, s., goodhart, c. and schnadt, n. ( eds ), the future of central banking : the tercentenary symposium of the bank of england. cambridge, uk : cambridge university press, pp. 1 β 261. cross, k ( 1977 ), β not can - - but will college teaching be improved? β, new directions for higher education, 17 ( spring ) : 1 β 15. bis central bankers β speeches debelle, g and fischer, s ( 1994 ), β how independent should a central bank be? in j. c. fuhrer ( ed. ), goals, guidelines and constraints facing monetary policymakers. federal reserve bank of boston, 195 β 221. diamond, p and vartiainen, h ( 2007 ), β behavioral economics and its applications β, princeton university press. elder, r, kapetanios, g, taylor, t, yates, t ( 2005 ), β assessing the mpc β s fan charts β, bank of england quarterly bulletin 2005 q3. available at : http : / / www. bankofengland. co. uk | we should tax computer investment? the distribution of the benefits : i want to end this section with something else the early economists would recognise β that, whatever it has done to widen the distribution of income, free trade with labour - rich countries can have significantly progressive effects on prices. in their early writings on international trade the classical economists reserved particular hostility for the corn laws. introduced after the napoleonic wars, in the midst of an economic downturn, these measures imposed heavy restrictions and tariffs on agricultural imports. the result was a much higher price of food, benefiting agricultural landowners and penalising the less well - off, for whom food was the major part of their consumption. their eventual repeal in 1846, a landmark in britain β s move towards ( and support for ) free trade in the second half of the century, owed much to the intellectual arguments of the classical economists. but it also came about because of what those restrictions meant for the poor. see for example acemoglu ( 1998 ) and behar ( 2013 ). there are some obvious historical exceptions to this support. in 1779, there was a spate of β anti - machinery β riots. in one of them, richard arkwright β s new mill in birkacre, in lancashire, was destroyed. thirty years later the β luddites β, formed mainly of textile workers, also sought to destroy labour - replacing weaving machinery. quoted in irwin ( 1996 ). the campaigner richard cobden described the opponents of corn law abolition as β the bread - taxing oligarchy, unprincipled, unfeeling, rapacious and plundering β. all speeches are available online at www. bankofengland. co. uk / speeches again, it is worth remembering this point today. much of the work on trade and inequality focuses on the potentially differential effect on wages and employment. the gross costs of trade may not be evenly distributed. as chart 11 demonstrates, however, the gross benefits of lower import prices are probably skewed as well. on average, things that are more tradable are also consumed disproportionately by the less well - off. it turns out this pattern is common to all developed economies. chart 12 is taken from a recent study by fajgelbaum and khandelwal ( 2016 ), describing what would happen to relative consumer prices, and thereby the distribution of income, if international trade with the developing world were suddenly shut down. in every | 0.5 |
and fabian winkler ( 2020 ), β how robust are makeup strategies to key alternative assumptions? β finance and economics discussion series 2020 - 069 ( washington : board of governors of the federal reserve system, august ), https : / / doi. org / 10. 17016 / feds. 2020. 069. see don kim, cait walsh, and min wei ( 2019 ), β tips from tips : update and discussions, β feds notes ( washington : board of governors of the federal reserve system, may 21 ), - 12 making those adjustments, tips - based 5 - and 10 - year inflation expectations were 1. 41 percent and 1. 66 percent, respectively, on the final day of the third quarter, up from the lows experienced in march but well below their historical average. finally, it is useful to consult measures of underlying trend inflation. 15 a variety of estimates using time - series models suggest that underlying trend inflation may have moved down by as much as 1 / 2 percentage point over the past decade. 16 it is difficult to anticipate how long it will take to achieve the conditions set out in the forward guidance. the september summary of economic projections shows that most participants do not currently anticipate that the policy rate will depart from its lower bound by the end of 2023. when it does lift off, the policy rate could be expected to change only gradually, reflecting the commitment to remain accommodative until inflation has moderately exceeded 2 percent for some time. of course, the pace of the https : / / www. federalreserve. gov / econres / notes / feds - notes / tips - from - tips - update - and - discussions20190521. htm. see lael brainard ( 2017 ), β understanding the disconnect between employment and inflation with a low neutral rate, β speech delivered at the economic club of new york, new york, september 5, https : / / www. federalreserve. gov / newsevents / speech / brainard20170905a. htm. stock and watson introduced an estimate of trend inflation that assumed time - varying volatility. cecchetti and others provided an update of that model that estimated trend inflation for core pce prices in 2017 as about 1 - 1 / 2 percent in the past few years, compared with readings above 2 percent in the 2006 β 08 period ( see figure 4. 1 | sound banking practices. 9 this includes, for example, waiving certain fees, easing restrictions on check - cashing, expanding availability of credit, providing alternative service options, and offering alternative payment options. prudent efforts to modify terms on new or existing loans will receive favorable cra consideration. in addition, financial institutions will receive cra consideration for community development activities, e. g., activities that help to revitalize or stabilize low - or moderate - income geographies such as support for food services and digital access, as well as lending, investment and service activities that support health care and small businesses, particularly for low - and moderate - income individuals or communities. in terms of supervisory focus, the fed has prioritized monitoring to evaluate the impact on consumers to ensure that banks work in good faith with consumers, apply fair treatment and mitigate consumer harm. we are monitoring consumer loan deferrals and modifications and corresponding servicing activities to ensure banks'responsiveness. we are also monitoring consumers'needs regarding access to funds, including stimulus payments, through traditional deposit accounts, as well as for individuals without a traditional banking relationship who utilize pre - paid cards. conclusions taken together, these steps demonstrate the fed's strong commitment to help the u. s. banking system support the u. s. economy and protect consumers during the covid - 19 pandemic. we are aware, however, that many low - and moderate - income and minority communities remain severely impacted. the regional partnership between the new york fed and socially responsible providers of capital continues to inform our understanding of the needs for access to credit for these critical small businesses. we will continue to work with you to ensure that the financial system acts as a source of strength to support all segments of the u. s. economy. thank you. 1agencies issue revised interagency statement on loan modifications by financial institutions working with customers affected by the coronavirus 2federal reserve provides additional information to financial institutions on how its supervisory approach is adjusting in light of the coronavirus 3agencies announce changes to the community bank leverage ratio 4the fed has also taken action to support the provision of credit by larger institutions. federal banking agencies provide banks additional flexibility to support households and businesses and federal reserve board announces temporary change to its supplementary leverage ratio rule to ease strains in the treasury market resulting from the coronavirus and increase banking organizations β ability to provide credit to households and businesses 5federal reserve actions to support the flow of credit to | 0 |
, such changes in inflation expectations are contained by the central bank's commitment to aggressive tightening to control inflation. indeed, since the 1980s, many countries have developed monetary policy frameworks with a view to stabilizing inflation expectations. inflation targeting, of course, is a typical example. however, there are many issues that need to be better understood regarding inflation expectations. for example, market participants, firms, and households all have different expectations formation, given different perceptions of current inflation. in addition, these expectations are susceptible to the influence of their experience or psychological conditions, as well as to the central bank's communication. moreover, there is no guarantee that the way they are formed will remain stable over time. there is still much room for further research in this area, including in relation to central bank communication. new challenges next, i would like to mention two new challenges. the first is about the changing inflation and economic environment. from a long - term perspective, many countries, 2 / 4 bis - central bankers'speeches including japan, typically went through a period of great inflation and the subsequent great moderation, followed by the global financial crisis, and then faced a period of " low for long " before the pandemic. there is a view that the current ongoing global inflationary pressure will eventually subside and that a period of " low for long " will resume. on the other hand, there is also a view that the current period of high inflation will change people's views on prices, leading to a departure from " low for long. " we have seen higher levels of public and private debt as a result of the pandemic and the policy responses. in addition, people have once again been concerned about geopolitical risks since 2022, leading to a partial reversal of globalization. therefore, it may be difficult to deny the possibility that we are already in a new normal that is different from the period of " low for long. " the second challenge is about the changes in central banks themselves. in the period of " low for long, " many central banks faced the effective lower bound of policy rates, which is the traditional policy instrument, and have created various unconventional policy toolkits, including large - scale asset purchases and forward guidance. while a number of empirical studies support some effectiveness of these instruments in stimulating demand, it seems that the mechanisms at play are not fully understood even today. compared to conventional instruments, which have a long history, unconventional instruments have issues such | plan to set up an industry - led disclosure task force on climate - relate risks in 2016. this initiative was welcomed by the g20. bis central bankers β speeches de nederlandsche bank and sustainable finance now, as frank elderson will elaborate on this afternoon, de nederlandsche bank believes it can β and must β contribute to sustainable development. it follows from our legal mandate. and it follows from our mission, which is to contribute to the sustainable prosperity of the netherlands by safeguarding the financial stability. to achieve this, we have begun to incorporate sustainability into our core business. we are conducting research into the carbon bubble, the energy transition and sustainable investments in the pensions industry. the outcomes will be used to advice policy makers and to guide financial institutions into incorporating sustainability more fully into their business. and we are exploring ways to integrate sustainability more fully across our own range of instruments. over the coming period, we will define the exact scope and scale in close co - operation with all our stakeholders. what we do know, however, is that we will increasingly take a forward - looking approach and assume the role of catalyst. this way, we hope to ensure that : β business models of financial institutions are sustainable over the long run ; β the interests of financial service clients are not subordinated to those of the industry β s shareholders ; β the organisation of social welfare does not lead to an unintended distribution of wealth and income among generations or groups ; β solid government finances contribute to solid economic development ; β no financial or economic disbalances occur ; β and finally, that the external effects of the economy β including the generation and usage of energy β are adequately priced and regulated. closing remarks ladies and gentlemen, we are at a crossroads. the challenges to our system will have serious, long - term consequences unless we act now. and sustainable development is key to securing the wellbeing and welfare of this generation and the many that will follow. de nederlandse bank is eager to play a catalysing role and use its instruments to promote sustainability. i challenge you to do the same. thank you. bis central bankers β speeches | 0 |
, 2 percent over the medium term. this situation changed somewhat after 2012, when the rate of change in the harmonized index of consumer prices ( hicp ) began to decrease continuously. the decline occurred across a wide range of goods and services in the face of a re - deterioration in the output gap and a price drop in various commodities ( charts 7 and 8 ). nevertheless, the hicp excluding food and energy remains at around 1 percent. following the decrease in hicp, short - term inflation expectations declined significantly, whereas medium - to long - term inflation expectations decreased moderately ; they currently stand at around 1. 8 percent. the inflation swap rate ( implied five - year forward rate, five years ahead ) strengthened a declining trend from mid - 2014 and reached around 1. 5 percent by early 2015, which triggered concerns over the risk of disinflation. thereafter, the inflation swap rate has increased moderately and recovered to around slightly below 2 percent, owing to the impact of the ecb β s asset purchase program ( including an announcement effect ) and the greater - than - expected performance of economic activity and prices. but most recently, the gap from the target has somewhat widened, partly owing to the recent re - drop in crude oil prices ( chart 6 ). a recent decline in the inflation swap rate is also observed in japan. this might be a reflection of a decrease in inflation risk premium associated with declining oil prices rather than declining inflation expectations. c. gap between households β price perception and price performance in japan : different feature from the euro area i would now like to turn to households β price expectations and spending patterns. owing to the lack of comparable data, i will use short - term data ( about one year ahead ). from the boj β s opinion survey on the general public β s views and behavior, the following data are available from june 2006 : ( 1 ) the perception diffusion index ( di ) of present price levels ( the present price perception di ) ; ( 2 ) the one - year - ahead price di ; and ( 3 ) the one - year - ahead spending di. from the european commission β s business and consumer surveys, i will use the following data from 1999 : ( 1 ) the price trend di over the previous twelve months ; ( 2 ) the price trend di over the next twelve months ; and ( 3 ) the spending expectation di for major purchases ( such as furniture and electrical or electronic devices ) over the next twelve months. bis central bankers β speeches | leading role in shaping the development of the country β s payment systems, in line with its statutory mandate to promote safe, efficient and reliable payment systems. we have taken important steps to correct price signals associated with the use of different payment instruments, and created market mechanisms to better align incentives at the institution level. along the way there was resistance, but we had experienced that left to its own devices, the market is not capable of making strategic changes necessary to drive payment efficiency, financial inclusion and competitiveness. but, cooperation is key. 1 / 5 bis central bankers'speeches indeed, the various measures that were implemented have been instrumental in accelerating the e - payment agenda forward, only because of the cooperation of the industry, sometimes with a bit of nudging. but truth be told, we have been able to achieve so much. today, the payments industry is no longer the exclusive domain of banks. the advent of fintech driven by the increasingly inexpensive and pervasive internet and mobile technology has encouraged the entry of more agile non - bank players as potential disruptors or collaborators of the incumbent players. this has set the stage for an exciting new era in payments, an era in which the industry is expected to take on a larger role in delivering a more robust and efficient payments system for malaysia. the bank will facilitate this in three key ways : i. first, through policy initiatives to encourage collaborative competition or β co - opetition β ; ii. second, by further strengthening industry alignment ; and iii. third, by supporting more inclusive governance arrangements for the development of the payment system. policies to promote co - opetition as a key enabler for greater efficiency, competition and innovation network effects are critical to an efficient payment system. the larger the network of a payment system, the more valuable it is to users of the payment system. instead of duplicating resources to build costly and overlapping payment infrastructures, the industry should collaborate at the infrastructure level to improve the network architecture and achieve this more quickly, thus benefitting from economies of scale and new opportunities to serve customers better. competition should continue to exist at the product level, where industry players compete to deliver a positive user experience through value - added product offerings. this would not only avoid market fragmentation, but also allow a more optimal use of scarce industry resources. such β co - opetition β is not new in malaysia. we used to have three atm networks in the country. in 1997, the three atm networks were consolidated | 0 |
michelle w bowman : welcoming remarks - " fed listens " welcoming remarks by ms michelle w bowman, member of the board of governors of the federal reserve system, at the " fed listens : joining the labor force after covid, a discussion on youth employment ", hosted by the federal reserve bank of chicago, chicago, illinois, 22 august 2023. * * * thank you, president goolsbee. it is a pleasure to be here today to participate in our first in - person fed listens event in chicago since before the pandemic. i am really looking forward to being a part of today's conversation. when we began fed listens in 2019, the initiative was part of a broad, comprehensive review of the decisionmaking framework the federal open market committee uses when making decisions that impact the economy. since that time, we have met with people across the country from a wide range of backgrounds and perspectives, and we've learned about how our monetary policy actions affect them, their businesses, and their communities. in light of the insights we gained during those original listening sessions, we decided to expand the scope of fed listens to become an ongoing process of consultation with the public to better understand economic conditions from their point of view. these fed listens events provide us with a valuable opportunity to learn about the economy by engaging directly with those experiencing economic conditions. these conversations provide context for the economic and financial data that we monitor, and they help us look beneath the national - level data reporting to see how americans in different areas of the country are faring. so, again, i am very happy to be here in chicago with president goolsbee to learn about the topic of today's fed listens, which focuses on the experiences of young people as they enter the workforce. an important aspect of that transition to employment is whether young people are effectively prepared, and whether our economy has enough skilled workers to meet the growing demand. it's not possible for america to achieve sustained economic prosperity unless young people are equipped with the benefit of an effective education system and have access to opportunity. like many families during the pandemic, my family faced challenges with school closures and a lack of access to normal childhood activities and social interactions. as our education system works to address the lasting impacts of student learning losses and the increased emergence of mental health issues, it is critical that we recognize the challenges many are facing as they prepare to enter the workforce. the pandemic was a | stringent, forward - looking assessment of prospective losses and revenues at the 19 largest u. s. regulated financial institutions. we took the unusual, if not unprecedented, step of releasing publicly the methodology and findings of the scap, including the capital needs and loss estimates for the 19 institutions. the decision to make this information public was made in the context of a systemic crisis, in which markets were hungry for information and in which the treasury stood ready to inject capital into any of the 19 institutions that were found to need it. even so, it was much debated within the federal reserve, in part because of concerns that weaker banks might be significantly harmed by the disclosures. but i think that regularizing both stress tests and the release of information relevant to them deserves serious consideration for at least two reasons. first, in line with my earlier discussion of market discipline, releasing such information could assist investors in the difficult task of valuing loan portfolios that at present are not very transparent. second, releasing details about assumptions, methods, and conclusions would expose our supervisory approach to greater outside scrutiny and discussion. whether the result is critique or validation of our approach, the reaction of informed investors and analysts to our assumptions and methods would be beneficial. i have previously identified several ways we might increase the transparency of our stress tests. 2 there are doubtless additional possibilities. there are, to be sure, countervailing concerns. in economic times more normal than those prevailing when we conducted the scap, market participants will not be fearing the worst and banks will not have access to government capital injections as a backstop. at such a moment, the revelation that some major banks may have capital needs under a stress scenario might be unnecessarily destabilizing, though the possibility of this kind of market reaction may be lower if such information is released frequently. major unpleasant surprises would be less likely with see daniel k. tarullo ( 2010 ), β lessons from the crisis stress tests β, speech delivered at the federal reserve board international research forum on monetary policy, washington, march 26. frequent, detailed disclosures. in any case, i hope that interested parties will consider the merits of these possibilities and help advance the debate. there are other ways to incorporate non - governmental views into the regulatory system. we have already taken steps in this direction in conjunction with the federal reserve β s overhaul of its approach to supervising the largest financial holding companies. as part of this effort β and with the aim | 0.5 |
growth in the medium term, determining the future prospects of the economy? domestic factors are also very important. sound macroeconomic policies in the pre - crisis period prevented major imbalances in the economy and left room for conducting countercyclical policies in the wake of the crisis relieving its effects ( which was not the case with the other countries in the region ). more intensive implementation of structural reforms, in particular, improving the business climate, also played a very important role, whose positive effects have become especially prominent in recent years. thus, despite the weak growth in foreign demand, our economy has grown by solid rates. the external environment is still not sufficiently stimulating. foreign effective demand has not yet offset the sharp decline of nearly 5 %, registered in 2009, although it shows signs of recovery, which gradually reduces its importance as a limiting factor for the growth of the domestic economy. it is estimated that it will continue to gradually recover, moving around 2 % in 2016. however, the key factors that ensure solid economic performance, with economic growth of 2. 7 % in 2013 and 3. 9 % in the first three quarters of 2014, are factors that are specific to macedonia, i. e. they are of inner character. one of the key factors that cause β decoupling β of the speed and intensity of the recovery of the macedonian economy and foreign effective demand, and increase the resilience of the economy to external shocks is the presence of new companies β foreign investments ( mainly in the tradables sector ), which gradually and steadily increase bis central bankers β speeches the capacity utilization and diversify the production and export structure of the economy. since 2010, their activity has grown steadily, with the current exports of these facilities accounting for around 35 % of total exports. however, more importantly, their net value added is constantly increasing and thus relieves the trade deficit of the economy. since 2010, the cumulative positive effect of these companies on the trade balance is about euro 200 million, or 2. 6 % of gdp. this reduces the external vulnerability and improves the risk profile of the country and its foundations. the raised technological level, the increase in manpower, the improved access to capital, the spillover effects on domestic companies ( which is already visible in our country ), the absorption of the workforce, are also significant favorable effects. in the medium term more positive effects should be expected. the second key factor that significantly contributes to achieving solid rates of economic growth is the fiscal stimulus | t expect that these tools will prove necessary, it is nice to have them available should we need to deal with unanticipated contingencies. how will financial markets react to the onset of normalization? my own view is that there likely will be some turbulence. after all, lift - off will represent a regime change after more than six years at the zero lower bound. recognizing this, we have a responsibility to minimize the amount of potential turbulence by communicating clearly in order to reduce uncertainty about conditions surrounding lift - off and the likely aftermath of lift - off. this means being clear about what factors are important in driving the timing of lift - off. however, this does not mean providing advance notice about precisely when lift - off will occur because the timing should depend on the incoming economic news and how this influences the economic outlook. instead, if you pay attention to the incoming economic news and listen to our assessment about how the outlook is evolving, then i think you will be able to judge for yourself when liftoff is likely. what also matters for financial asset prices is the likely post - lift - off trajectory of short - term rates over the medium - to longer - term. in fact, this should be more important than the particular month in which the normalization process starts. on this score, i think it is hard to be precise about the expected path of short - term rates. that is because it depends on two important factors : ( 1 ) how the economic outlook evolves, which depends, in part, on how loose or tight monetary policy actually is at a given level of short - term rates, and ( 2 ) how financial conditions broadly react to changes in the level of short - term rates. my own view is that the upward trajectory of short - term rates is likely to be relatively shallow. this reflects several factors. first, the lack of strong forward momentum in the economy despite the low level of short - term interest rates suggests that u. s. monetary policy is not as accommodative as one might think. in particular, the lack of strong momentum suggests that the real equilibrium federal funds rate today is considerably lower than the 2 percent rate assumed in the standard taylor rule formulation. work done by my federal reserve colleagues, thomas laubach and john williams, suggests that the so - called neutral real bis central bankers β speeches federal funds rate today may be close to zero. 4 this presumably reflects still - persistent headwinds from the financial crisis, such as the | 0 |
growth rate in money supply. commitment to an intermediate target would be inconsistent with inflation targeting except if it is the only determining factor of inflation. obviously this is unlikely. although growth in money supply is a precondition for a general rise in prices, it is not the only factor that causes inflation. in an inflation targeting framework the central bank has to adopt a strategy of determining directly what the likely path of inflation will be. in inflation targeting close attention is typically given to changes in indicators which in the past have affected inflation. this has led to sophisticated models for the prediction of inflation and detailed assessments of factors that could affect it. the prediction of inflation is of the utmost importance in the implementation of monetary policy because changes in policy measures are based on likely future price developments. the fact that inflation targeting has to rely on forecasting has led to the criticism that this is a weakness of the technique because forecasts are inherently unreliable. although it is true that an inflation targeting framework is based on forecasts, it is also true that any other monetary policy framework has to take account of the fact that policy changes will only affect inflation some time in the future. if the objective of the central bank is the attainment of financial stability, it will always have to take a view on how its current policy stance will effect future price developments, whatever monetary policy framework it decides to pursue. the difference between inflation targeting and other monetary policy frameworks is that inflation targeting makes forecasting explicit and transparent. the adoption of inflation targeting by a central bank does not mean that the central bank must apply definite rules and is not left with any discretion. exclusive emphasis on inflation goals over the short - term could lead to a highly unstable real economy in the case of serious supply shocks. if a severe supply shock hits the economy, keeping inflation close to the long - run target could be very costly in terms of lost output. in such cases, some discretion must be applied. many of the central banks opt for escape clauses in these circumstances. others have defined the inflation target in such a way that changes in food prices, the price of oil or the effects of value added tax are excluded from the index that they target. the degree to which the central bank is held formally accountable for inflation outcomes varies considerably. in new zealand the tenure of the governor of the central bank is linked directly to the achievement of the inflation targets. in most other countries there are no explicit sanctions on central banks if they miss the target. however, missing the target | mr. stals discusses the current economic situation and factors influencing monetary policy in south africa in 1999 address by the governor of the south african reserve bank, dr. c. stals, at an international conference arranged by abn amro bank and kagiso financial services, held in johannesburg, on 3 / 11 / 98. 1. domestic economy dominated by international developments during the past six months the south african economic scene was dominated by developments in the international financial markets. the east asian financial market crisis, which already started with pressures in thailand β s foreign exchange market in june 1997, took some time before it spread to other emerging markets outside of the east asian region, and also to the smaller industrial countries of the world. more recently, financial markets in major industrial countries also became contaminated. in the case of south africa, the contamination took place through the disinvestment of foreign funds from the south african bond exchange. during the first four months of 1998, non - residents increased their holdings of south african bonds by r16. 3 billion. during the next five months, from may to september 1998, they reduced their holdings of south african bonds by r22. 4 billion. this major switch was directly linked to a reassessment made by foreign investors during april / may 1998 of their investment positions, and the decision to reduce their exposure in fixed - interest bonds of the emerging market economies. it is interesting to note that non - residents continued to increase their investment in south african equities. after increasing their investment in south african shares acquired through the johannesburg stock exchange by r19. 4 billion in the first four months of 1998, they added a further r17. 3 billion during the following five months. the reversal in the investment trend on the bond exchange was, however, sufficient to change drastically the outlook for the south african economy, and some promising economic developments in the first quarter of this year were promptly aborted. 2. adverse financial developments lead the downward trend in the economy the sudden switch of foreign investors β sentiments had far - reaching effects in the south african financial markets : β’ β’ β’ the immediate effect of the withdrawal of investment funds from the bond exchange was a sudden and sharp increase in the yield on long - term bonds. the average monthly yield on long - term government bonds rose from 12. 9 per cent in april 1998 to 18. 3 per cent in september. the withdrawal of foreign investments created pressure in the foreign exchange market and the average effective exchange rate of the | 0.5 |
both the financial sector and the swiss economy as a whole depend on a secure and efficient fmi. the snb monitors developments in this area very closely given that facilitating and securing the operation of cashless payment systems is one of its statutory tasks. in this speech i will be discussing the significance of fintech for the financial market infrastructure. first, i will address dlt β s potential in the fmi. second, i will be talking about the tried - and - tested division of roles between the central bank and commercial banks. i will look at how this two - tier system paves the way for harnessing fintech innovations that could enhance efficiency, while ensuring that this is not to the detriment of either safety or reliability. third, using the example of retail payments, i will show that there is a lot more to fintech than just dlt, and that private sector players are much better suited to providing timely solutions and flexibly addressing the needs of customers in this area. and finally, i will take a brief look at digital central bank money for the general public, a subject currently generating a lot of debate, and will outline why there is no need for it if the system for cashless retail payments is efficient and innovative. the potential of dlt for the fmi so let me begin with the potential that dlt has to offer for the fmi. the fmi is the bedrock of our financial system, facilitating the reliable transfer of securities and money between buyers and sellers. the slide 2 shows a simplified fmi process chain for the settlement of a securities transaction. transactions are first made via a trading platform, for instance a security is bought on the swiss exchange. this purchase is then cleared and settled. security and money are simultaneously transferred between buyer and seller. in switzerland, this takes place via the securities settlement system secom and the payment system swiss interbank clearing, or sic for short. it is entirely possible that distributed ledger technology could take hold in various fields. i would like to look here at two possible areas of application : securities settlement and crossborder payments. page 3 / 8 one of dlt β s key characteristics is that it makes verified information available to a large number of parties simultaneously. it is therefore particularly appealing in the case of complex processes where coordination is required across a whole range of participants. this is the case in the securities business, which comprises a network of many different participants trading, settling and managing securities. examples of these market participants β | prospects. the assessment of inflation prospects in the longer term depends on a number of factors, such as the development of monetary and credit aggregates and different asset prices. long - term forecasts are fraught with a high degree of uncertainty. in spite of this, a central bank must make a sound assessment of the effects of its monetary policy in the longer term. the need for a forward - looking stance is due to the fact that monetary policy has its strongest effect on prices only after a lag of two to three years. m1 was 5. 4 % below the year - earlier level in november ; m2 was down by approximately 3 %. m3 increased by 1. 4 %. although there is still ample provision of liquidity, it has dwindled as a result of the latest developments. compared with the september assessment, we have therefore made a downward correction of our inflation projection for the years 2006 and 2007. according to our september forecast - based on an unchanged three - month libor rate of 0. 75 % inflation would have climbed to 2. 9 % in the second quarter of 2007. with an unchanged monetary policy, the current forecast predicts an increase of only 2. 3 %. at the end of the new forecasting horizon in the third quarter of 2007, inflation would stand at 2. 6 %. the lower long - term inflation forecast suggests that there is currently more room for manoeuvre in maintaining an expansionary monetary policy course. 4. exchange rate the dollar has plummeted since october. it has lost 7. 9 % vis - a - vis the swiss franc. notwithstanding the sharp fluctuations of the dollar, the franc has remained virtually unchanged against the euro. the depreciation of the dollar has a direct impact on the swiss economy in that it undermines the price competitiveness of the export industries. moreover, a weak dollar also exerts an indirect influence by clouding growth prospects in europe, our largest sales market. the appreciation of the franc has tightened monetary conditions. at the same time, the weaker dollar has a dampening effect on import prices and, consequently, on inflation prospects. 5. continuation of expansionary monetary policy i will now come to my concluding remarks. the inflation forecast shows that the process of normalisation of monetary policy has not yet ended. in light of my comments it should nevertheless not be difficult to understand our decision to leave the three - month libor rate at 0. 75 %. since inflationary | 0.5 |
lack funding and knowledge for meaningful transition. in this regard, the bank launched the rm2 billion low - carbon transition facility ( lctf ) in february 2022 to fund smes'working capital or capital expenditures related to low - carbon practices at an affordable rate. beyond that, other facilities such as the high tech and green facility and sme automation and digitalisation facility are also available for 1 / 3 bis - central bankers'speeches smes. in this respect, it is important to note that financing by the financial sector has returned to the pre - pandemic level with funds by bnm only constituting less than 10 % of the total financing. we acknowledge that technical know - how is equally crucial for successful transformation. smes need to be nurtured and equipped with the right tools and skill sets to kickstart their sustainability journey on the right footing. the roll - out of the greening value chain programme, or gvc in short, is a testament to the bank's commitment to ensure smes have access to the necessary support to implement longterm impactful changes. gvc complements available financing via its complimentary technical workshops, financial advisory services and emission measurement tools provided by the strategic partners. before i end my remarks, i wish to highlight the two key success factors of the gvc initiative. first, strong commitment from participants to undergo the programme and implement the changes recommended. this requires a genuine desire to transition to a greener and more sustainable practices, as well as willingness to invest the necessary resources and time to make it happen. participants must be committed to making real changes, both in your operations and in the products and services that you offer. second, proactive actions from large corporations in greening their supply chain network is a must - given their unique position to drive critical mass transition. gvc is the first of many pilot initiatives to come in gearing up our green agenda, and we hope to see more similar private - public partnerships in the future. the bank remains committed playing bridging role by bringing the national green agenda closer to the public. for this, we welcome any potential partners who are keen to explore new areas of collaboration. ladies and gentlemen, climate change is here to stay. as robert swan, the english polar explorer and environmental leader once said, " the greatest threat to our planet is the belief that someone else will save it. " let us play our part in taking proactive steps to manage climate risk before there is | nothing left to manage. i wish you all a fruitful outcome and a successful journey towards building your business resilience against the impacts of climate change. thank you and assalamu'alaikum. about gvc programme : the gvc programme is an initiative by bank negara malaysia together with the gvc strategic partners, which was announced at the cop - 27 conference in egypt in conjunction with finance day on 9 november 2022. the programme is envisaged to help smes begin their journey in sustainability reporting, to tackle climate change and reduce the nation's carbon footprint. this programme incentivises and assists malaysian smes in implementing impactful, long - term change to green their operations and benefit from the technical advisories and software tools from services provider partners and climate transition financing from the low carbon transition facility ( lctf ) 2 / 3 bis - central bankers'speeches by bank negara malaysia. climate change is one of the biggest challenges facing our planet, and gvc strategic partners remain committed to doing its part in addressing this global crisis. 1 source : united nation climate action 2 source : global turning point report 2022, deloitte center for sustainable progress 3 msme comprise 37. 4 % share of 2021 gdp, source : department of statistic malaysia. 4 source : sustainable finance institute asia 2022 report findings quoted in " green transition a quantum leap for smes " fmt news article september 2022 5 source : the global sustainability study 2021, simon - kucher & partners 6 source : the world economic forum 3 / 3 bis - central bankers'speeches | 1 |
we have with the banks. i would therefore also like to thank the representatives of the supervised institutions for the mutual trust we have built up together. i am thinking in particular of the risk directorates. in the vast majority of cases, we work in a calm and constructive manner, in the common interest of a more resilient european banking sector. this is an important asset. given the difficult challenges that lie ahead in the very near future, in europe and around the world, we will need more than ever to rely on these relationships of trust. it's now time for me to conclude. i would like to thank you for your attention, both on site and remotely, and to thank the various speakers for the quality of the debates and presentations. let us continue to work together to ensure that the ssm remains the world - class supervisor that we have built : an asset for a resilient and competitive 2 / 3 bis - central bankers'speeches european banking sector, a token of confidence for european citizens and, last but not least, a support for our common currency and european integration as a whole. thank you all very much. 3 / 3 bis - central bankers'speeches | rules should at least protect public investment. the third point on my european to - do list is to improve coordination in other areas of economic policy. to effectively tackle the divergent competitiveness in the euro area, all member states must play their part. less productive economies need to implement reforms and investments that increase their productivity and competitiveness. this has obvious benefits for exports, economic growth and employment. and it decreases the productivity gap with more productive economies. these reforms are, however, more likely to succeed if the stronger economies also do their fair share. large and persistent trade surpluses often hide underlying problems, such as corporate savings retained for tax reasons, or stagnant wage growth. reforms aimed at increasing households β purchasing power would therefore not only increase welfare in the more competitive member states, but also make life easier for the more vulnerable ones. but let β s be realistic : such reforms will take time. even with the right policies in place, it will still take decades for many member states to get to where they need to be. in the coming years, countries with high levels of public debt will unlikely be able to weather another serious downturn without implementing far - reaching budget cuts and tax hikes. these countries then risk falling even further behind. which would again overshadow our objective of creating a stronger and more coherent monetary union. the best way to deal with this, is something we will have to continue reflecting on. 4 i certainly do not have all the answers. but i do believe that the agenda i have outlined would put us on the way to a stronger currency union. with european governments investing in sustainable growth, both jointly and individually. through more closely aligned economic policy. more european integration is not a popular message nowadays, i realize that. we could also choose to abstain from further european integration. that β s also an option, certainly. but there is a price to pay for that option. the price involves continued economic divergence between euro area member states, more debt crises, more emergency support and lower levels of prosperity. would the euro survive such a scenario? all the same, we are living in a different economic and monetary union than we imagined back in the 1990s. with more sharing of risk. and more harmonization of policy. in recent years we have pushed the boundaries of the treaty. there is no guarantee we will not have to do that again. so it is equally crucial to reaffirm the political mandate. it is up to politicians to state their | 0 |
mark carney : bank note launch remarks by mr mark carney, governor of the bank of canada, to the mars discovery district, toronto, ontario, 14 november 2011. * * * it is a great pleasure to be here in the mars discovery district, where science and innovation meet. i am here to announce the issue of the new $ 100 bank note which is available, as of today, in banks across the country. we are very proud of our innovative polymer bank notes. they are more secure, more economical, and better for the environment than any we have issued previously. these notes are also potent symbols of our rich heritage. the design of the $ 100 bank note celebrates canadian innovation in medical research, including the discovery of insulin to treat diabetes. we are honoured to issue this note on the site where banting and best conducted their groundbreaking research almost a century ago. many forget that diabetes was once a death sentence. the discovery of insulin changed that. it was at that desk, sir frederick banting β s desk, where science and innovation met and the lives of hundreds of millions of people changed. today β s date is no coincidence. november 14 is world diabetes day and the 120th anniversary of sir frederick banting β s birth. this $ 100 note is a tribute to canadian researchers who have left their mark in many areas. allow me to mention the transformational work of john hopps, who invented the pacemaker in 1950. he developed this life - saving device at the university of toronto's banting institute, located across the street from here. this spirit of innovation carries on today and so the note also celebrates the scientists who continue to make our world a better place by improving the lives of many. here in mars, medical professionals are mapping the human genetic code as well as tackling some of the most daunting medical challenges of our time, including cancer and macular degeneration. these polymer notes don β t just celebrate innovation ; they are themselves at the frontier of bank note technology. they were developed by a team of physicists, chemists, engineers and other experts from the bank of canada and from across the bank note industry. there is no other currency like it anywhere in the world. these new notes contain a unique combination of transparency, holography and other sophisticated security elements. in addition to impressive security features to stay ahead of counterfeiting threats, these bank notes will last longer β at least two - and - a - half times | domestic activity collapsed. there are few institutional mechanisms within the economic and monetary union ( emu ) at present to offset the shock. in alberta β s case, a rising tide has lifted all boats. that is because the canadian monetary union has what europe does not : a single financial market ; a flexible, national labour market ; and significant fiscal transfers. these smooth the adjustments brought about by the large shifts in relative prices. fiscal federalism helps to share risks despite the equilibrating movement of real provincial exchange rates, shocks to our economy can still have a more significant impact on some regions than others. since monetary policy works at an aggregate level to support aggregate demand, it cannot easily deal with such distributional consequences. m. carney, β dutch disease, β a speech delivered at the spruce meadows round table, calgary, alberta, 7 september 2012. internal trade has been supported by the removal of interprovincial barriers following the implementation of canada β s agreement on internal trade in 1995. bis central bankers β speeches fiscal transfers are thus an important element of a successful monetary union. they are sizeable in canada, representing 8 per cent of gdp across all levels of government ( charts 6 and 7 ). canada β s equalization program helps stabilize the impact of asymmetric shocks. for example, between 2006 and 2011, federal support programs, including equalization payments and canadian social and health transfers, grew more rapidly for provinces whose economies were hardest hit by the crisis ( chart 8 ). 3 the employment insurance program also shares risk. through transfers to 2 per cent of the working - age population, the program particularly benefits provinces with higher unemployment rates ( chart 9 ). in the medium term, one of the building blocks of european fiscal federalism could be a paneuropean employment insurance scheme built on a common european labour market. this would reduce impediments for those looking across the continent for work, while providing a cross - country automatic stabilizer. labour market flexibility for canada and canadians to work, workers must be able to move to different jobs, and wages must adjust to help maintain full employment. by international standards, the canadian labour market is highly flexible, although there is still room for improvement. 4 our labour mobility as a whole is similar to that in the united states. by some estimates, the canadian labour market is almost four times as flexible as the european labour market. 5 an obvious example of this flexibility is the way that canadians have responded to the higher wages and | 0.5 |
. we should examine carefully the impact of these proposals on two areas, namely trade finance and sme finance. this is of particular significance for emerging economies. β’ across much of emerging asia, where capital markets are relatively undeveloped, banks are a major source of funding for trade and smes. β’ trade and smes are major engines of growth in many emerging market economies. let me start with trade financing. β’ being short - term and self - liquidating in nature, trade financing is probably one of the safer forms of bank lending. β’ but the proposal to move bank exposures completely to the revised standardised approach could result in imposing significantly higher capital requirements for trade finance, more punitive than justifiable by its historical losses. bis central bankers β speeches β’ while the availability and cost of trade finance have so far held up well in the face of basel iii implementation, the latest set of proposals could have the effect of discouraging banks from trade financing. β’ this is not what we need at a time when trade is growing more slowly than income in many parts of the world. second, sme financing. β’ i would say we are broadly on the right track. β’ while sme loans tend to be riskier on a standalone basis, as a portfolio the risks are more diversified than loans to larger corporates. β’ the basel committee recognises this and the current capital framework provides for preferential capital treatment for exposures to smes for banks using internal models. β’ and the basel committee has further proposed applying a lower risk weight for banks β sme exposures compared to unrated corporate exposures under the revised standardised approach. this will help alleviate the cost of sme financing. conclusion let me summarise my main points. we have made good progress in bank regulation since the crisis. β’ implementation has been generally good but some areas need more work and some jurisdictions need to close the gaps. β’ overall, the reforms have helped to make banks safer and more resilient. as we finalise the basel iii capital reforms, we must ensure that banks are not only safe but also serve their purpose of supporting the economy. β’ we should be mindful of the effects of low profitability on banks β ability and willingness to lend. β’ we should be mindful not to increase significantly the overall level of capital requirements on banks even as we finetune the detailed capital rules. β’ and we should be mindful not to unduly penalise lending to important segments of | ##ning the basel iii capital rules : β’ to reduce the variability in risk weighted assets applied by banks ; β’ to revise the standardised approaches for credit and operational risk ; and β’ to implement the leverage ratio. bis central bankers β speeches but in the course of adjusting the capital rules to better achieve these outcomes, it is important that the overall capital requirements on banks are not significantly increased. there is a real risk that overall capital requirements on banks could indeed increase significantly if we are not careful : β’ if internal modelling for certain portfolios are completely removed ; and β’ if risk weights and credit conversion factors under the revised standardised approach are calibrated too conservatively. we need to take a holistic perspective in this final stage of the basel iii capital reforms. β’ in trying to get the design right, we must not end up making the overall level of capital requirements too high. β’ in trying to get the micro calibrations right, we must not end up getting the macro settings wrong. we have already achieved more or less the right level of capitalisation for the banking industry through the initial set of basel iii reforms after the financial crisis. if we now precipitate a further increase in the level of capital requirements in the process of adjusting the framework and fine - tuning the calibrations, it would unduly constrain credit intermediation and consequently economic growth. we must guard against these unintended outcomes. it is therefore heartening that the basel committee has committed not to significantly increase overall capital requirements for banks. distribution of credit matters as much as allocation of credit even as we hold the line on aggregate capital levels, we need to be sensitive to the effect of capital requirements on specific business lines and on different economies. β’ this brings me to the second area that we should be watchful of : namely the distribution of bank credit across the economy as a consequence of regulation. the basel committee will be finalising this year its review of credit risk capital requirements, as it seeks to address excessive variability in risk - weighted assets. β’ the revisions to the capital standards for credit risk that are currently being proposed will require bank exposures to be risk weighted under a revised standardised approach instead of the internal ratings based approaches. β’ the return to a standardised approach is motivated in part by limitations in risk modelling, as the last crisis laid bare. however, in avoiding excessive reliance on models, we must be mindful not to β throw the baby out with the bath water β | 1 |
simon m potter : implementing monetary policy post - crisis β what have we learned? what do we need to know? remarks by mr simon m potter, executive vice president of the markets group of the federal reserve bank of new york, at a workshop organized by columbia university sipa and the federal reserve bank of new york, new york city, 4 may 2016. * * * i would like to thank antoine martin for his assistance in preparing these remarks. i would like to welcome you to this workshop, organized jointly by the school of international and public affairs at columbia university and the federal reserve bank of new york. we have assembled an excellent set of presenters and discussants focused on the topic of implementing monetary policy post - crisis, who are here to ask important questions such as what have we learned from our experience and what do we need to know going forward? i am expecting an active and stimulating dialogue on a range of topics. as always, these remarks are my own and do not necessarily reflect the views of the federal reserve bank of new york or the federal reserve system. as most of you know, the federal reserve system is engaged in an extended effort to evaluate potential long - run monetary policy implementation frameworks. 1 there are many reasons to take a close look at the issues now. for example, the federal reserve has new tools, like the authority to pay interest on reserves and reverse repurchase agreements with an expanded set of counterparties, which were not available pre - crisis. 2 the money markets in which the trading desk of the federal reserve bank of new york ( the desk ) operates have different dynamics than before, in part because of our large - scale asset purchases. we want to take stock of these changes and ask ourselves what the best way of implementing monetary policy is today and in future environments in a manner that is consistent with the federal reserve β s normalization principles. 3 to make good choices about the monetary policy implementation framework going forward, it is, of course, useful to learn from the past. our task is to assess the strength and weaknesses of existing and previous frameworks, particularly through the lens of what happened during the recent global financial crisis, when central banks were called on to innovate in a number of ways. in addition, the varied experience of other central banks prior to the crisis can also provide valuable insights. what have they learned about what worked well, or did not work so well, with their frameworks? the current framework in the united states looks very | emerging technologies possess the potential to revolutionize financial services, making them faster, more efficient, and more secure. notwithstanding this promise, challenges remain in their application to critical financial market infrastructures whose operational integrity represent a non - negotiable pre - requisite for our financial system. as we enhance existing services or develop new ones, our consideration of new technologies must strike an appropriate balance to ensure the risks are thoroughly 4 / 5 bis central bankers'speeches understood before their transformative potential is realized. in pursuing this suite of initiatives straddling the wholesale services, we seek to advance both the interests of customers and policy makers during this era of unprecedented challenge and change. standing before you today convicts me that our success as stewards of this business depends absolutely upon our active engagement with the depository institutions and end users to which we are operationally accountable. across this sphere and all others, either intentionally we are progressing or inevitably we are regressing ; there is no idleness. thank you for your generous attention today. i β d be pleased to respond to a few questions. 5 / 5 bis central bankers'speeches | 0.5 |
of covered bonds. β’ second, covered bonds are different in nature from the various asset - backed securities that became so popular before turning sour with the financial crisis. importantly, covered bonds do not involve the transfer of the credit risk implied by underlying assets from the issuer to the investor. the credit risk stays with the originator, preserving the incentives for prudent credit risk evaluation and monitoring. we could therefore say that covered bonds are incentive compatible while many asset - backed securities were not, at least not in the way the concept was implemented before the crisis. i have previously mentioned that covered bonds β pfandbriefe β existed in germany already 200 years ago. given that the financial crisis clearly exposed the dire consequences of the imprudent evaluation of credit risk, the usefulness of more conservative asset classes such as covered bonds, which have proved to be safe assets over a long time, is obvious. we are confident that this measure will contribute to support financial markets. the announcement effect has been encouraging. the purchase programme started last week and will be conducted gradually, stretching well into next year. we are already seeing a number of new issuances of covered bonds and a degree of compression in the spreads in this important segment, which might have an influence also on other financial markets. v. monetary and fiscal assignments this brings me to the last point in my speech. the ecb β s enhanced credit support measures are designed in full respect of the euro area macroeconomic framework. financial support measures potentially involving the significant transfer of credit risk from financial institutions to the taxpayer clearly fall within the realm of fiscal policy. our decision to conduct outright purchases of covered bonds is fully consistent with this fundamental principle. while they are expected to be effective in supporting credit, these purchases do not burden the eurosystem with excessive credit risk. more generally, i have already mentioned that different environments call for different actions, even if there is agreement among central banks about the ultimate objectives. this helps to explain why the ecb β s enhanced credit support measures, by contrast with the concepts of β credit easing β and β quantitative easing β, do not involve outright purchases of sovereign debt. on this feature, i would like to make three comments, stressing pragmatism, principles and preparations for exit. first, there is a pragmatic explanation. history matters to a prominent degree. in the united states, for example, in normal times outright purchases and sales of treasury bonds with short maturities belong to the | mr stark discusses the worldwide currency situation and international monetary cooperation speech by the deputy governor of the deutsche bundesbank, dr jurgen stark, to elec in kronberg on 4 / 12 / 98. i anyone comparing the global economic policy debate at the end of 1998 with the debate last year will notice not only a number of similarities but also some striking differences. it is true that there was already a debate under way at that time on the crises of some countries in south - east asia. in fact, president tietmeyer spoke in depth about them to elec pointing out potential domino effects. a general optimism prevailed in the public debate, however, particularly in respect of future developments in the us economy. at all events, i can well recall headlines announcing the β end of the business cycle β and predicting the arrival of the β new economics β, which probably referred to the theory of continuing progress in productivity or even the end of the economic problem of supply and demand itself. quite often, it is the same commentators who only a few weeks ago were forecasting a β global economic crisis β with a similar supposed degree of certainty and evoking the start of a world recession. two months ago β at the annual meetings of the imf and the world bank β talk was still of β doom and gloom β. but today we can read again headlines like β crisis, what crisis? β however, a return to the garden of eden and the decline of the old world are events that tend not to happen very often. at all events, we are still alive. the fact that people fail to strike a balance between optimism and pessimism was pointed out recently by the us economist paul romer, one of those talented people in his profession who are wrongly claimed to be proponents of the β new economics β. one cannot escape the feeling that one - sided and exaggerated perceptions are contributing to the present problems of the global economy. do they not create sentiment and expectations that tend to strengthen rather than reduce the much lamented herd behaviour of the markets? anyway, the transparency of opinions about supposed facts stands in sharp contrast to the transparency of the facts themselves. the media and the markets produce and process information incessantly. the question is whether it is the relevant information. if that were the case, there would scarcely be an international debate on improving transparency in the financial markets. ii certainly, a β worst case scenario β can never be completely ruled out in theory, although a scenario of that kind depends | 0 |
become large and costly. to do that in today β s markets, and in an environment in which technology and financial innovation can lead to rapid change, the federal reserve is pursuing a more risk - focused supervisory approach. we are well underway toward implementing this new supervisory framework, and initial indications about it - - from both examiners and bankers - - have been favorable. this risk - focused approach to supervision is seen as a necessary response to a variety of factors : the growing complexity and pace of change within the industry, the increasingly global nature of u. s. and world financial markets, and the methods available today for managing and controlling risk. as banking practices and markets continue to evolve, i believe this emphasis on risk - focused supervision will be even more necessary in the years to come. what is β risk - focused β supervision? with that introduction, let me clarify what i mean by risk - focused supervision. how does it differ from the way supervisors have traditionally done their job? what does it mean to the banking system? what is it? in short, risk - focused supervision simply means that in conducting bank examinations and other supervisory activities, we will seek to direct our attention and resources to the areas that we perceive pose the greatest risk to banks. in many respects, that would seem rather obvious and hardly earth shaking, and in many ways it is, indeed, nothing new. the federal reserve and the other banking agencies have long sought to identify exceptions and to prioritize examination activities. in the past, though, the business of bank supervision has focused on validating bank balance sheets, particularly the value of loan portfolios, which have been historically the principal source of problems for banks. much of the prior emphasis was on determining the condition of a bank at a point in time. in the process, we would go through the balance sheet, assuring ourselves that a bank β s assets and liabilities were essentially as stated and that its reserves and net worth were real. as part of the process, there was a review of sound management practices, internal controls, and strong internal audit activities, but that review was not the initial or primary focus. in earlier times that approach was adequate, since bank balance sheets were generally slow to change. banks held their loans to maturity ; they acquired deposits locally and at a pace similar to local economic growth ; their product lines were stable ; and management turnover, itself, was typically low. by tracking the quality of loans and other assets, examiners could generally detect | . 8. on this, i am very pleased to see that an amendment bill has been introduced into the legislative council earlier this year. the bill adopts a prescriptive and religion - neutral approach, and covers five of the most common types of sukuk globally. products that can meet the key features and qualifying conditions specified in the bill will be given tax treatments similar to those currently afforded to conventional bonds. this means that sukuk issuers and investors alike will no longer be subject to additional tax and stamp duty charges over and above what they would need to pay for conventional bonds. so, passage of the bill will be a very positive step forward in furthering the development of islamic finance in hong kong. synergy between hong kong and malaysia 9. with the legal infrastructure to be in place soon, the next important step will be to develop the islamic financial markets here. we definitely have a lot to learn from malaysia in respect of product development and market operation. as i see it, hong kong and malaysia each has different edges in the financial services industry, and the potential synergy between the two places in developing the islamic financial markets is tremendous. 10. malaysia is undoubtedly an important leading centre in the global islamic finance industry that has accumulated vast experiences and invaluable expertise over the past three decades. it has developed a well - diversified islamic financial market, offering a full suite of products covering sukuk, islamic equities, islamic funds, islamic etfs, etc. its sukuk market is by far the largest in the world, accounting for more than 70 % of global sukuk issuances last year. 4 it has also put in place well - developed financial infrastructure which can facilitate local and overseas market players alike in conducting islamic financial transactions. 11. on the other hand, hong kong as an international financial centre has developed a deep and highly liquid capital market with a diverse base of investors coming from all around the world. more importantly, with hong kong β s unique role as a gateway to mainland china and a leading hub for offshore rmb business, hong kong can offer an ideal platform to link islamic and rmb financing together by developing financial products that are shariah - zawya. bis central bankers β speeches compliant and, at the same time, denominated in rmb. through hong kong β s platform, international investors in the islamic world can easily tap the appealing growth story of the mainland. this is especially given the fact that | 0 |
y v reddy : monetary policy - an outline presidential address by dr y v reddy, governor of the reserve bank of india, circulated in the annual conference of andhra pradesh economic association, visakhapatnam, 12 february 2005. * * * respected vice - chancellor professor simhadri, professor bhanoji rao, professor k. c. reddy, and fellow - members of andhra pradesh economic association. i am thankful to the organisers for inviting me to be the president and deliver the presidential address. there are several reasons for my being keen to be in visakhapatnam to deliver the presidential address. i commenced my career in government of andhra pradesh in visakhapatnam as assistant collector under training over forty years ago - in 1965. i had the benefit of professional guidance from eminent scholars and economists in andhra university such as professors sarveswara rao garu, d. v. ramana garu, g. parthasarathy garu, k. v. ramana garu and s. chandrasekhar garu. subsequently, i acquired many friends with strong links here, such as professors krishnamurthy garu and r. radhakrishna garu. professor bhanoji rao garu has been a valued friend, whether he was in the world bank with me, or in singapore or in the administrative staff college in hyderabad. professor k. c. reddy garu worked alongside me when i was the secretary in planning and finance department of the government of andhra pradesh. with all these attractions, i regret to say that i am not able to be physically present in visakhapatnam to deliver the presidential address at the 23rd annual conference due to unavoidable official commitments. the andhra pradesh economic association has been one of the pioneering efforts in our country in organising a sub - national level professional body of economists. i have no doubt that it is a wise initiative and needs to be carried forward. as the economic reform in india progresses, the relative balance in public policy would shift in favour of the states relative to the centre. the important areas earmarked for the centre, such as external sector and financial sector, tend to be subjected to globalisation while in areas such as education, health, sanitation, roads, water works, power, etc. which are localized in nature, states could have a greater role. greater marketisation of economies and private capital flows tend to look for conducive governance at the state - level where economic activities | ( a ) fixed exchange rate, ( b ) open capital account, and ( c ) independent monetary policy. the basic message of the β trilemma β is that a central bank can achieve any two of the above - mentioned parameters, but not all the three. illustratively, if a country wants to have fixed exchange rate and independent monetary policy then it is difficult to maintain an open capital account. another important issue in monetary policy is the extent of transparency. central bankers all over the world are not exactly known for clarity in their language. nevertheless, the rational expectations school in macroeconomics holds that no policy can be successful over a period by β fooling β the economic agents. in this context, one may differentiate between genuine uncertainties about the future vis - a - vis not revealing the expected outcome of the policy. in fact, since the 1990s, there has been a preference all over the world to improve the transparency of monetary policy. in the context of improving transparency, the recent trend has been towards direct inflation targeting. adoption of explicit inflation targeting as the final goal of monetary policy involves the preparation of an inflation forecast, which, in a way, serves the purpose of both an intermediate target and final objective. the pre - requisites for inflation targeting include a considerable degree of operational autonomy or independence for central bank, flexible exchange rate conditions, well - developed financial markets and absence of fiscal dominance. in view of the growing complexities of macroeconomic management, several central banks including the european central bank have placed reliance on a broad set of economic and leading indicators rather than focusing exclusively on an intermediate target or a direct inflation target. the federal reserve has traditionally been following a more broad based approach to the conduct of monetary policy in the us. operating procedures : instruments and targets operating procedures refer to the day - to - day implementation of monetary policy by central banks through various instruments. these instruments can be broadly classified into direct and indirect instruments. typically, direct instruments include required cash and / or liquidity reserve ratios, directed credit and administered interest rates. cash reserve ratio ( crr ) determines the level of reserves ( central bank money or cash ) banks need to hold against their liabilities. similarly, liquidity reserve ratio requires banks to maintain a part of their liabilities in the form of liquid assets ( e. g., government securities ). credit and interest rate directives take the form of prescribed targets for allocation of credit to preferred sectors / industries and prescription of deposit and | 1 |
stefan gerlach : banking and fiscal union introductory remarks by mr stefan gerlach, deputy governor of the central bank of ireland, at a panel session at the eui conference on β the state of play in the euro area β fixing the emu for the long term β, florence, 21 january 2013. * * * i am grateful to rebecca stuart for her help in preparing these remarks. while plenty of work has been undertaken since last summer on establishing a european banking union, progress has been uneven and it has stalled in some areas. of course, it is difficult to build consensus in a situation where bank resolutions may become necessary, and deposit insurance schemes could be called on, in the near future. this is a matter that ideally should have been discussed and settled when emu was formed, much in the same way as a car must be insured before it can be driven. unfortunately, that route was not taken. much of the interest in banking union arises because it is a necessary, but not sufficient, condition for the esm to recapitalise banks. indeed, the establishment of the single supervisory mechanism ( ssm ) with the ecb is frequently seen as having been adopted precisely because this is the fastest road, legally and institutionally, to banking union. it is of course essential and urgent to enable the esm to support banking systems in order to overcome some of the tensions in the euro area, and there is intense public debate about how best to structure the ssm. in my introductory remarks today, however, i would like to take a step back from that debate and instead reflect more broadly on why a banking union is important for any monetary union to function well and why it is natural to locate the ssm with, or at least β close to β, the central bank in such a union. banking supervision why might it be beneficial to have a ssm in a monetary union? to my mind, one important reason is that a greater remove between supervisors and the banks they regulate can help improve the capacity for challenge and ensure a broader, more detached, perspective on the issues. in particular, it would ensure the independence of the supervisory and regulatory decision - making process from national political pressure, and avoid regulatory capture. for example, a distant supervisor may take action to address risks arising from a bubble in good times that a national supervisor would come under pressure to overlook. it also seems unlikely that a banking supervisor from, say, italy or ireland, sitting in frankfurt, | similarly, developments in the broader economy may first be reflected in supervisory information which may therefore be useful in setting monetary policy. of course, the intensity of the debate about banking union reflects its importance. thank you. bis central bankers β speeches | 1 |
possess similar competencies as those in the global workforce. i therefore hope that this conference will pave way for further progress of this important agenda. thank you for your attention. bis central bankers β speeches | β working together for sustainable growth β special address by dr. veerathai santiprabhob governor of the bank of thailand wfe general assembly & annual meeting programme 6 september 2017 | grand hyatt erawan bangkok, thailand khun kesara manchusree, president of the stock exchange of thailand, ms. nandini sukumar, chief executive officer of world federation of exchanges, chairpersons, presidents, chief executive officers and top management of leading global exchanges, ladies and gentlemen, a very good evening to you all. first of all, i would like to thank the world federation of exchanges ( wfe ) and the stock exchange of thailand ( set ) for inviting me to be a part of this annual event. i must admit that while i was at the set, i looked forward to participating in this forum every year, as it often generated good new ideas and reaffirmed our commitments to enhance capital market for the benefit of the global economy. i am delighted to be back at the wfe general assembly and annual meeting. but this year, i join the meeting in another capacity - wearing a different hat. it is my great honour and pleasure to be among distinguished guests and former colleagues. ladies and gentlemen, let me start by saying that it is an exciting time for the thai economy and our region. the thai economy continues to expand at a faster - than - expected pace. we are witnessing strong growth in exports and tourism. government large - scale infrastructure investments are making good progress. public investment, together with the government β s strategy to attract investments in industries for the future, will step up thailand β s competitiveness and lay a strong foundation for sustainable growth. thailand β s external position remains strong with large current account surplus of around 11 % of gdp1 and high level of international reserves, roughly more than 3. 5 times of the short - term external debt. financial conditions remain accommodative, and business financing through credit and capital market continues to expand. furthermore, our capital account liberalisation and recent efforts to reform foreign exchange regulations will help create a 1 source : office of the national economic and social development board gross domestic product : q2 / 2017 report ( page 33 ) http : / / www. nesdb. go. th / ewt _ dl _ link. php? nid = 5166 & filename = qgdp _ report conducive environment for financial market development and financial connectivity in the region. our regional efforts | 0.5 |
participants seek to steer the entire market, i. e. acting as herd leader. let β s look at an aspect that interests me particularly : monetary policy. the opinions expressed by analysts on monetary policy decisions often concern not only the impact of a given decision on the markets, but the substance of the decision, namely whether it is appropriate or not. the parameters according to which the analyst expresses his / her views are however not transparent. it is unclear, in fact, if the analyst is expressing an opinion based on an objective function which is the same as that of the monetary authority β price stability in the ecb β s case β or based on his / her specific interest, particularly his / her see, for example, bolton, p., freixas, x., shapiro, j. ( 2007 ), β conflicts of interest, information provision, and competition in the financial services industry β, journal of financial economics, 85, pp. 297 β 330 ; benabou, r. and g. laroque ( 1992 ) β using privileged information to manipulate markets : insiders, gurus, and credibility β, quarterly journal of economics, 107, pp. 921 β 948. for an overview, see, for example, mehran, h. and r. stulz ( 2007 ), β the economics of conflicts of interest in financial institutions β, journal of financial economics, 85, 267 β 296. investment choices. one might ask, for example, if a decision to increase interest rates would be judged right or wrong by a financial market participant based on the outlook for inflation β or based on the speculative position that the market participant itself has taken. what, then, should we think of the views that are expressed even before the central bank takes its decision? what are the criteria when a financial market participant expresses an opinion on what the central bank should do? do the criteria depend on the speculative positions it has taken or on other, more general criteria? i β ll take a concrete example, which is not related to the decision on interest rates but on the collateral the central bank accepts in exchange for funding provided to the market. on monday 3 may the european central bank decided to no longer follow the rating agencies when assessing the sovereign debt of a country that has an adjustment programme with the imf and the european union β a programme which the ecb has judged positively. it was a logical decision for several reasons. first, while for a company or | the media and public attention concentrates on developments in the foreign exchange market. in my view, it is mistaken to evaluate the experience so far by primarily looking at the developments in the external value of the euro. this tends to eclipse the overall bright picture so far. when was inflation lower in the past, even with the recent tripling of oil prices? when was economic growth in the euro area as high as it is at the moment? did we not make significant progress in fiscal consolidation over the past decade? is not unemployment finally falling? are we not seeing the integration of financial markets in europe? europe is doing better than even europeans themselves appear to perceive. above all, monetary union is about creating the conditions for long - lasting stability and prosperity in our countries and cannot be reduced to a sort of race among major currencies. historical evidence shows that, over longer horizons, the fundamentals of the economy - such as domestic price stability, the competitiveness of its products, the growth performance - ultimately determine the external value of a currency. based on this evidence, as i have already said on other occasions, i am very confident that a strong potential for the euro exists. having said that, let me add that we view the possible negative impact of the excessive depreciation of the currency on the prospects for price stability in the euro area with concern. indeed, the recent intervention in the foreign exchange markets has shown that we take this concern very seriously and that we are ready to back up our words with deeds. furthermore, since a common concern has arisen about the potential implications of a low level of the euro for the world economy, the intervention has shown the determination of the world β s major central banks to act jointly, when needed. external presentation of monetary policy decisions overall, it can be said that the monetary policy decisions of the ecb have served the primary objective of maintaining price stability in the euro area well. the strategy has been effective with respect to its internal role of guiding the ecb β s policy choices during a period of considerable uncertainty. at the same time, we recognise that a high degree of common understanding between the central bank and the public at large is in our best interests because, by reducing uncertainty and bolstering credibility, it facilitates the conduct of monetary policy. this naturally brings me to the external, presentational role of the strategy and to the issue of transparency in the presentation of policy decisions - an issue that has also received great attention in recent years, and | 0 |
and i would encourage alan blinder and his collaborators to extend their work on the production and role of forecasts in the decision - making of different central banks ; and how the communication of forecasts interacts with the communication of other elements of the policy process. see tucker, p m w, β money and credit : banking and the macroeconomy β, speech at the monetary policy and the markets conference, 13 december 2007, bank of england quarterly bulletin q1 2008, pp 96 - 106. other bits of central banking finally, and briefly, i would observe that blinder β s work on decision - taking processes and structures has so far focused entirely on the setting of interest rates. we have been living through a decade or more in which, at many although not all central banks, other decisions affected the financial landscape and risks to stability. again drawing on his experience as the vice chairman of the fed board and again comparing and contrasting different approaches, i think we would all benefit enormously if alan blinder took his scholarly apparatus and spirit of enquiry into other corners of central banking and how they fit together. | pierre duguay : the bank of canada β s perspective on the penny remarks by mr pierre duguay, deputy governor of the bank of canada, to the senate committee on national finance, ottawa, ontario, 26 may 2010. * * * good evening mr. chairman, honourable senators. i β m pleased to have the opportunity to appear before you tonight to provide the bank of canada β s perspective on the penny. first, let me take a moment to explain the bank β s role regarding canada β s currency. we are responsible for supplying canadians with bank notes that they can use with confidence. at year - end 2009, there were 1. 8 billion bank notes in circulation, with a total value of $ 55. 5 billion β approximately $ 1, 630 per canadian. the bank of canada is not responsible for coins. decisions on coinage rest with the federal government, in particular, the department of finance, and with the royal canadian mint. however, coins are an essential adjunct of bank notes to complete cash transactions. so, the bank does have an interest in coins, and we welcome your review of the case for keeping or eliminating the penny. i would like to remind you that cash remains very important to canadians, despite the popularity of alternative payment options. surveys by the bank of canada have found that almost three - quarters of canadians pay with cash at least once a week, compared with 64 per cent for debit cards and 36 per cent for credit cards. 1 these surveys show that cash is the preferred method of payment for purchases under $ 25. ( debit cards are preferred for purchases in the $ 25 to $ 100 range, and credit cards are preferred for purchases greater than $ 100. ) the bank β s interest in coins can also be viewed in the context of our responsibility for monetary policy, which is anchored in our commitment to achieve our 2 per cent target for inflation. experience has shown that the best way for monetary policy to contribute to economic performance is by keeping inflation low, stable, and predictable. therefore, the bank views the possible elimination of the penny in terms of the potential impact on inflation, and has conducted some preliminary research on this issue. the findings, which have been made available to other researchers, show that any impact on inflation would be insignificant and more likely non - existent. a common concern is that retailers, who often post prices ending in 9 cents, may round prices up to an even number, absent the penny, and that this would be inflationary | 0 |
white. there was only one female. it was more than clear that change needed to start at the top for it to have any meaning amongst the staff of the bank. so where do we stand today in terms of equity representation within the board of directors and the bank as a whole? the following statistics are taken from the bank β s annual report on the employment equity plan to the department of labour and has accordingly become a public document and is available for public scrutiny. as of the 31st march 2006, the board of directors was composed of ten ( 10 ) black directors and four ( 4 ) who were white. of these, five were female. the secretary of the bank is a black male. the board has a committee of non - executive directors which is chaired by a female director. the executive team is made up of five ( 5 ) black members out of seven ( 7 ). there is a vacancy for a deputy governor and hopefully this could be occupied by a female. the monetary committee ( mpc ) has seven members. at the moment five ( 5 ) are black and two ( 2 ) are white. the secretary of the mpc is a black male. this is quite a nice mix, ` me thinks `! the total workforce of the bank comprised 56 per cent blacks and 46 per cent women. the management levels of the bank comprised 43 per cent blacks and 36 per cent females. the strategic general management level comprised 51 per cent blacks and 20 per cent females. the figures speak for themselves. you can draw your own conclusions. so what were the successful strategies that supported these transformation objectives? they focused mainly on the manner in which the bank aligned its workforce movements with its strategic employment equity objectives. in general the bank β s staff turnover rate hovers between 5 and 8 per cent. in 2005, the bank β s black turnover rate was 6. 18 per cent and that of females was 4. 51 per cent with the bank total turnover rate at 5. 62 per cent. in 2006, the bank β s black turnover rate was 6. 64 per cent and that of females was 5. 56 per cent with the bank total turnover rate at 7. 07 per cent. the following discussion is focused on the bank β s workforce movements since its first employment equity plan in 2000. who has the bank been recruiting? the following recruitment percentages answer this question : table 1 recruitment by race and gender % blacks % females the executive team at that time was comprised of the governor, three deputy | significantly reduced to just 3 in 2006. some officials from the department of labour have often cited the consultation mechanism of the bank as a benchmark that other organisations could emulate. the bank β s eecb has hosted various organisations that were keen to learn about how the bank β s consultative mechanism functioned so harmoniously. further, the bank β s change management unit was instrumental in establishing the employment equity forum β a platform at which employment equity practitioners from the bank and various other organisations including telkom, escom, sabc and the big - four banks meet to discuss, debate and demystify employment equity issues and prepare for challenges going forward. the bank is committed to more than just achieving its numerical goals. we are convinced that supporting our staff to develop their skills and proficiencies to their full potential is a more important objective than just pursuing a numbers game. in the last year we have conducted both a skills audit and a bank - wide organisational culture and climate survey primarily because we wanted to establish the developmental needs of our employees and also to determine empirically, what makes employees want to stay in the bank β s employ and what issues may coerce or indeed induce them to resign. the findings of both audits have resulted in the need for a strategic response from the bank to mitigate against the issues that have been identified. over and above these interventions, the bank has revised all of its policies to ensure that we remove all vestiges of unfair discrimination against the designated group and also to ensure that we kept abreast with best practices both nationally and internationally. the bank has a generous study aid policy for both employees and their children. we have committed programmes that focus on abet. staff is encouraged to attend conferences both as participants and also as delegates in the country and internationally. maternity benefits have been significantly improved. the bank has joined the bankseta in its letsema project through which we fulfil some of our corporate social responsibilities. we have a dedicated programme that focuses on graduate recruitment ( this is our cadet programme ). the bank views the policy revision process as an ongoing endeavour. our philosophical views on transformation are documented in the bank β s vision 2010 which says that β the responsibility to effect change lies not only with management, but also with all staff β every one should be an agent of change. β the operative phrase here is that β everyone should be an agent of change β, not to sit around and whinge and complain, but to do something positive to | 1 |
banks i. e. the rbi provides the requisite synergy. the major elements of the regulatory framework for otc derivatives include a broad specification of products to be permitted, nature of participants in the markets, distinct responsibilities for market makers and users for all otc derivatives, effective reporting systems for capturing systemic information, governance and oversight and focus on developing market infrastructure for post - trade clearing and settlement. the underlying rationale for key stipulations is explained below. ( i ) there is a requirement that for an otc derivative transaction to be legally valid, one of the parties to the transaction has to be a rbi regulated entity. this is to ensure that the entire otc derivative market is within the regulatory perimeter. prudential prescriptions for each class of participants may be decided by the respective regulator within the broad policy framework but it makes systemic monitoring possible. risky pv01 represents the value change ( present value impact ) of the cds when the spread moves by 1 basis point. ( ii ) there is a clear distinction between the roles of market makers and users for all otc derivatives. it is the market makers which function as risk transferors in the system. it is extremely important that these entities function in a totally transparent and regulated manner. only banks and primary dealers in case of certain interest rate derivatives are permitted to act as market makers since extending this facility to all agents can result in risks building up on the balance sheets of such entities. box 1 rbi amendment act, 2006 in 1999, by the securities laws ( amendment ) act, 1999, section 18a was inserted in securities contracts ( regulation ) act, 1956 ( scra ) which reads as under : β 18a. contracts in derivative β notwithstanding anything contained in any other law for the time being in force, contracts in derivative shall be legal and valid if such contracts are ( a ) traded on a recognised stock exchange ; ( b ) settled on the clearing house of the recognised stock exchange, ( c ) in accordance with the rules and bye - laws of such stock exchange. β in view of the said section 18a of scra, a doubt was raised about the legality of otc derivatives such as forward rate agreements and interest rate swaps permitted under rbi guidelines issued in july 1999. it was felt that these otc derivatives could be deemed as wagering contracts and as such, void under section 30 of the indian contract act, 1872 and not legally valid under section 18a of scra. recognising | that otc derivatives play a crucial role in reallocating and mitigating the risks of corporates, banks and financial institutions and that the ambiguity regarding the legal validity of otc derivatives inhibits the growth and stability of the market for such derivatives, suitable amendments, effective january 9, 2007, were carried out to the reserve bank of india act, 1934 ( rbi act ). section 45v of rbi act, 1934 ( inserted by reserve bank of india ( amendment ) act, 2006 ) lays down that notwithstanding anything contained in scra or any other law for the time being in force, transactions in such derivatives, as may be specified by rbi from time to time, shall be valid, if at least one of the parties to the transaction is rbi, a scheduled bank, or such other agency falling under the regulatory purview of rbi under the rbi act, the banking regulation act, 1949, the foreign exchange management act, 1999, or any other act or instrument having the force of law, as may be specified by rbi from time to time. it also provides that transactions in such derivatives, as had been specified by rbi from time to time, shall be deemed always to have been valid. the act further gives powers to the reserve bank under section 45w to β... determine the policy relating to interest rates or interest rate products and give directions in that behalf to all agencies or any of them, dealing in securities, money market instruments, foreign exchange, derivatives, or other instruments of like nature as the bank may specify from time to time. β however, the directions shall not relate to β the procedure for execution or settlement of the trades β in respect of transactions on exchanges. ( iii ) the users, including financial entities, are permitted to transact in derivatives essentially to hedge an exposure to risk or a homogeneous group of assets and liabilities or transform an existing risk exposure. this stipulation is essentially to restrict speculative trading in derivatives by the real sector, whose primary economic interest in undertaking derivative transactions should be to hedge their exposures. ( iv ) derivative structured products ( i. e. combination of cash and generic derivative instruments ) are permitted as long as they are a combination of two or more of the generic instruments permitted by rbi and do not contain any derivative as underlying. structured products entail packaging of complex, exotic derivatives into structures that may lead to increased build - up of risks in the system. some of these structures may simply be unsuitable for a large section of | 1 |
insurance entities to sole - trading advisors β are continuing to operate in a regulated environment with no need for further assistance. it is important to keep this in perspective as we consider the future of regulation. many of the larger entities are foreign - owned : i especially welcome the participation of sound and well - managed foreign - owned financial firms in our economy, whether focused mainly on export business, or providing financial services locally. unfortunately as we are all well aware, a handful of ifsc firms β including one very large firm β got into serious difficulties in the past 30 months. even though primary supervisory responsibility in the larger cases lay elsewhere, we need to be continually vigilant to ensure that emergent problems are detected and forestalled in such firms also. much of the regulatory activity around the ifsc is of a routine character : for example, ensuring that the prospectuses of funds and securities that are listed here satisfy the requirements of eu directives. speed, reliability and accuracy in providing this assurance is something on which the relevant departments of my organisation pride themselves. they know they perform a modest but significant role in protecting investors all over the world. externally - determined requirements here continue to grow, placing additional demands on this segment of regulation ; we will meet these demands. with the continued welcome flow of new entrants, it is evident that more regulatory resources will have to be devoted to the task of assessing applications and monitoring approved firms. given the pressures on the public finances, i am forming the opinion that we can not expect the public purse ( through the central bank ) to continue indefinitely its practice of, in effect, paying half of the costs of regulation. moving to a 100 per cent charge - back arrangement for at least some of these activities seems inevitable to me. this may not be music to your ears, even though the costs involved are low in general relative to the scale of activities. there has been much international discussion in recent months about the desirability of far - reaching changes in the regulation of financial firms in the years ahead. many of the ideas that are floating around are very old β some of them none the worse for that. few are entirely original. they include the aspiration of much higher risk capital requirements, specific requirements to hold liquid assets, the creation of narrow banks focused on public utility services and higher taxation of banking and finance. i don β t have time to discuss all of these, some of which i have written about in the past. here too the international developments will | spending decisions. housing costs also influence where people choose to live or work. similarly, changes in commercial property prices and rents can affect businesses β profitability and net worth, as well as their ability to access capital. more broadly, construction is an important component of economic activity, with employment in the sector accounting for around 7 % of total employment in ireland. so there are a number of channels through which property markets interact with the broader economy. there are other factors that make property unique from a macro - financial perspective. first, in economic terms, property operates both as an investment asset and a consumption good. households or companies may purchase a property with different intentions : they could occupy it ( so, in our economic jargon, use it primarily for consumption purposes ). or they could treat it as an investment. given this dual role of property, demand for property purchases can be influenced by expectations of future capital appreciation. this can create pro - cyclical dynamics in property markets, especially if households or businesses form expectations about the future based on recent trends. second, property purchases are financed partly through debt. this creates a very strong link between the property market, financial intermediaries β such as banks or non - bank lenders β and the broader economy. this link has also grown significantly over time. globally, for example, the share of residential and commercial mortgages in banks β total lending portfolios has roughly doubled over the course of a century β from about 30 % in 1900 to close to 60 % in 2010. 2 this has also been the case in ireland, where the banking system now has a higher - than - average concentration on real estate lending relative to the rest of europe. 3 third, property is a key source of collateral across the economy. this creates a strong link between what happens to property valuations and the ease of financing conditions for the economy as a whole. in a rising property market, lenders are often willing to lend more and at easier terms, as the value of the collateral increases. at the same time, households and business may seek to borrow more, including to invest back in the property market. this can lead to further increases in property values, creating an endogenous dynamic that can eventually become unsustainable, reversing abruptly when adverse shocks hit. the combination of these factors means that the nature of financing matters, not just for the functioning of property markets themselves, but for the broader economy and society as a whole. the historical evidence here is | 0.5 |
. with the crs, the financial institutions are able to know and analyze the profile of prospective debtors, can assess possible risks, can streamline the cost, can lower npl and create sound credit culture. in the end, it will support the financial inclusion, and support the ultimate goal of macro economy, namely financial sector stability and economic growth. ladies and gentlemen < the purpose of the workshop > 12. in september 2013, world bank issued the general principles of credit reporting ( gpcr ). the gpcr intends to provide an international agreed framework in the form of international standards for credit reporting systems β policy and oversight. these principles suggest the key characteristics that should be satisfied in order to ensure that credit reporting systems are safe, efficient and reliable. 13. as part of fisf indonesia program, an assessment against the implementation of general principles of credit reporting ( gpcr ) in indonesia was conducted in 2015, involving associations, financial institutions, public utilities institutions, and the relevant authorities. the assessment found that there are some critical issues that need to be addressed by indonesian authorities, which includes legal gaps, oversight function and consumer protection aspects. 14. this workshop is expected to provide knowledge about the current condition, the development, and challenges of the implementation of crs in indonesia while learning from the experience of other relevant countries. such knowledge will provide input to the authorities in defining implementable actions on the management of crs in line with the gpcr. ladies and gentlemen, 15. before closing my speech, i would like to give thanks to the committee which have thoroughly initiated and prepared such a great event. i would also like to thank all the speakers and partcipants for the willingness and enthusiasm to participate in this event. 16. with that final note, i hope this event provides us with an understanding of the role and contribution that we can give in order to implement the gpcr, particularly with regards to the indonesian context. i strongly believe it will be beneficial for the industry and related authorities. henceforth, i would like to invite all of us here to share thoughts in what i hope would be a spirited discussions filled with fruitful conclusions. may allah bless and lighten our steps forward. thank you. erwin rijanto deputy governor | keynote speech international workshop on credit reporting system β strengthening crs in indonesia : role, challenge, & future development β bismillahirrahmanirrahim, distinguished speakers, a ) mr. yudi permana, head of licensing and banking information department, otoritas jasa keuangan ; b ) ms. fredesvinda fatima montes, senior financial specialist ; world bank group ; c ) mr. humberto panuco laguette, senior economist in directorate of financial system analysis, banco de mexico ; d ) ms. megan cox, bureau of consumer protection, federal trade commission, usa ; e ) ms. teh sew mei, deputy registrar in registrar office of credit reporting agencies, ministry of finance, malaysia. distinguished ladies and gentlemen, assalamualaikum warahmatullahi wabarakatuh, very good morning to all of you, 1. allow me to begin by thanking allah swt who has blessed us with the opportunity to rare but beneficial event. i would like to express my sincere gratitude towards our distinguished speakers who have travelled a long way to be with us today. on behalf of bank indonesia, i would like also to take this opportunity to express my appreciation to world bank for arranging the speakers to join this event. ladies and gentlemen, < overview of credit reporting system > 2. we have witnessed the transformation of credit reporting system in indonesia. since 1969, bank indonesia has been collecting information from regulated entities and managing the credit reporting system. in june 2006, bank indonesia has launched debtor information system ( sid ) that gather positive and negative information on both individual and business, provided by banks and other creditors. with the establishment of the sid, the growth of non - performing loan ( npl ) can be prevented and financial system stability can be maintained. 3. between 2010 - 2016, indonesia has made structural reform including simplified rules and regulations to support ease of doing business. in 2010, bi has developed basic report which contains historical credit information for the last 24 ( twenty four ) months, called historical information individual debtor ( informasi debitur individual historis / idih ). 4. in 2013, bank indonesia enacted bi regulation concerning credit bureau ( lpip ) that covers certain aspects of credit bureau operations, especially on the lpip licensing and the transfer of sid data to licensed credit bureaus ( lpips ). with this regulation, indonesian management of credit reporting system is transforming, from single credit reporting to | 1 |
capital requirements regulation ( crr ). they have been in force from 1 january 2014. finally, in 2012, the eu heads of states and governments decided on the banking union, which also started to come into force in 2014 as far as the ssm is concerned. the changes have been profound. i will try to give you a flavour of the depth and breadth of this new, multifaceted regime, starting with crd iv and crr. both the quantity and quality of capital that banks are required to hold are now much increased. whereas up to the end of 2013, banks could operate with as little as 2 per cent of capital, they need now at least 4. 5 per cent of a more tightly defined equity. furthermore the new regulatory framework introduces the possibility for macro - prudential authorities to impose several additional capital requirements, known as buffers, to all banks in their jurisdiction. the central bank has been designated as macro - prudential authority for this purpose in march 2014. from 1 january 2016, as agreed throughout europe, all banks will have to begin building one of these buffers, the capital conservation buffer, for an additional 2. 5 per cent of riskweighted assets. liquidity requirements, which were domestic until then, are now harmonised at a much tighter level under the liquidity coverage ratio. the existing central bank liquidity requirements which were introduced in january 2007 are being replaced by this lcr which will be fully binding in 2018. the crr also introduces a net stable funding obligation to enhance a bank β s funding profile into the medium term and a leverage ratio requirement which caps banks assets to no more than 33 times tier 1 capital. finally, the quality and granularity of banks β regulatory reporting have been also significantly enhanced from january 2014 by the crr and subsequent standards and guidelines of the european banking authority, covering financial reporting, credit risk, operational risk, own funds and capital adequacy ratios. the transformation of the regulatory framework for banks, from what it was up to the end of 2013 to what it is becoming, does not stop at prudential supervisory requirements. lessons were also learned about the way to resolve the difficulties of banks that are failing or likely to bis central bankers β speeches fail. this has entailed another change in regulatory framework through the adoption of the bank recovery and resolution directive ( brrd ) and the enactment of the single resolution mechanism ( srm ). the brrd and the srm aim | haruhiko kuroda : the bank's semiannual report on currency and monetary control statement by mr haruhiko kuroda, governor of the bank of japan, before the committee on financial affairs, house of councillors, tokyo, 10 november 2022. * * * introduction the bank of japan submits to the diet its semiannual report on currency and monetary control every june and december. i am pleased to have this opportunity today to talk about recent economic and financial developments and about the bank's conduct of monetary policy. i. economic and financial developments i will first explain recent economic and financial developments. japan's economy, despite being affected by factors such as high commodity prices, has picked up as the resumption of economic activity has progressed while public health has been protected from the novel coronavirus ( covid - 19 ). overseas economies have recovered moderately on the whole, but slowdowns have been observed, mainly in advanced economies. exports and industrial production have increased as a trend, with the effects of supply - side constraints waning. corporate profits have been at high levels on the whole, and business sentiment has been more or less unchanged. in this situation, business fixed investment has picked up, although weakness has been seen in some industries. the employment and income situation has improved moderately on the whole. private consumption has increased moderately, despite being affected by covid - 19. with regard to the outlook, japan's economy is likely to recover, with the impact of covid - 19 and supply - side constraints waning and with support from accommodative financial conditions and the government's economic measures, although it is expected to be under downward pressure stemming from high commodity prices and the slowdowns in overseas economies. the year - on - year rate of change in the consumer price index ( cpi ) for all items excluding fresh food has been at around 3 percent due to rises in prices of such items as energy, food, and durable goods. regarding the outlook, it is likely to increase toward the end of this year due to such price rises. the rate of increase is then expected to decelerate toward the middle of fiscal 2023 because the contribution of such price rises to this cpi is likely to wane. thereafter, it is projected to accelerate again moderately on the back of improvement in the output gap and rises in medium - to long - term inflation expectations and in wage growth. 1 / 2 bis - central bankers'speeches | 0 |
know, chile was one of the first few countries to introduce a structural fiscal policy, which has been applied consistently over more than 15 years. as part of this policy, the government has been able to save during good times and currently has two sovereign wealth funds, totaling almost 10 % of gdp. figure 9 public sector balance ( percent of gdp ) latin america : 1995 - 2015 average ( * ) 1. 1 - 1. 5 - 2 - 0. 5 chile peru brazil colombia - 6 argentina - 3. 4 - 3. 1 mexico - 4 - 0. 9 chile - 2 0 - 4 - 3 - 3 - 6 - 6 - 6 effective 14 18 ( f ) structural ( * ) general government financial balance. ( f ) for 2017 to 2019, forecasts obtained from the 2016 public finances report. sources : moody β s and national budget department, ministry of finance of chile. 18. strength of our country is the fact that compared to earlier low - growth periods it has more liquid external funds available. at the same time, the financial sector is healthy and non - performing loans have diminished over time. reforms currently under discussion, particularly a new general banking law, aim to bolster resilience and improve banking capital adequacy ratios ( figure 10 ). figure 10 regulatory capital npl ( percent of risk - weighted assets ) ( percent of total loans ) latin america ( * ) chile ( * ) shows the region β s simple average. source : global financial stability report, imf. the medium - and long - term outlook 19. the chilean economy has endured a long period of slow growth, while its potential growth has dropped to a range between 2. 5 % and 3 %, i. e., less than estimated a decade ago ( 4 % to 5 % ). in principle, this change is explained by : ( a ) a smaller contribution of the accumulation of productive factors, inherent to a maturing economy ; ( b ) a drop in gross fixed capital formation that has lasted several years ; ( c ) reduced mining productivity ; and ( d ) a limited contribution of productivity growth in the other sectors. 20. the reduced potential growth calls for closer attention to the determinants of longerterm growth. although the incidence of monetary policy is mild, every central bank must be able to monitor the developments affecting the future path of the economy to ensure a more effective monetary policy. 21. among chile β s future growth possibilities is the fact that closing the | 25bp, to 2. 75 %. the press release issued then stated that we will assess the need for some additional increase in the monetary impulse, which will hinge on the medium - term inflation outlook ( figure 8 ). this way, our monetary policy continues to be one of the most expansionary in a group of comparable economies. figure 8 mpr and expectations ( percent ) mpr financial asset prices, december 2016 report ( * ) financial asset prices, march report ( * ) ees financial asset prices ( 17 april ) fbs ( * ) constructed using interest rates on swap contracts up to 10 years. source : central bank of chile. 15. as usual when making forecasts, our macroeconomic scenario faces several risks. if they materialize, they may reshape the macroeconomic outlook and, therefore, may alter the course of monetary policy. we have identified two types of risks in the external front facing the chilean economy. some of them may potentially have a material impact, yet are hard to quantify ( such as political - economic uncertainty ). others risks have been mentioned for quite some time, but their likelihood have varied. regarding the latter, the expected trajectories of fiscal and monetary policy in the u. s. may potentially generate upside or downside risks. china remains a source of concern although its authorities appear to have successfully managed a gradual deceleration without a major disruption thus far. these are probably risks for most economies of the world, but particularly for a small open economy, such as chile. 16. on the domestic front, after several years of subdued growth, we cannot rule out that a more persistent phenomenon may be affecting the economy β s ability to grow, in which case it would be necessary to revise the public and private expenditure plans. moreover, while the labor market has gradually adjusted without generating a significant increase in unemployment, it is possible that after several years of low growth, firms require larger personnel adjustments, especially if the expected growth recovery towards the end of the year stalls. in contrast, in the context of the absence of observable macroeconomic imbalances that hinder growth, a scenario in which the global outlook improves, combined with the end of the adjustment of mining - related investment, and a rebound in sentiment, may lead to a more dynamic recovery ( figure 9 ). 17. in fact, several fundamentals of the chilean economy have remained quite solid during this weaker part of the cycle. as you might | 1 |
facilitate the digitalization, in terms of payments and other services, such as lending and investments, contributing significantly to the common objective for a formalised and sustainable economic growth. i also assess that by exploring the experiences of our neighbours and beyond, we can identify additional measures that will promote the formalization of the economy and reduce the use of cash in the economy. i would like to end my speech by expressing once again the full commitment of the bank of albania to support any necessary development, in order to achieve the intended objectives. i take this opportunity to congratulate the albanian association of banks for its huge and longstanding work, in boosting and supporting every project, initiative or need identified by the market and more broadly. your dedication and professionalism has contributed very effectively, in fully accomplishing the intermediation role between the parties, while also serving as a catalyst to promote the achievement of objectives. i am convinced that the discussions of this forum will be very fruitful in these areas and in addressing rather important issues. thank you! 3 / 3 bis central bankers'speeches | gent sejko : digitalisation vs cash speech by mr gent sejko, governor of the bank of albania, at the albanian association of banks ( aab ) forum on β digitalisation vs cash β, pristina, 14 june 2022. * * * honourable deputy prime minister ahmetaj, honourable minister of finance and economy ibrahimaj, dear chairman of the albanian association of banks, dear guests, it is a pleasure to attend this forum, which comes naturally as a further step and logical consequence of the joint discussions and round tables on digitalisation of financial services. i would like to highlight that the support and promotion of electronic payments, both in international experiences and the albanian context, are seen as one of the most effective and powerful mechanisms for bolstering financial inclusion and further formalizing the economy. in this context, despite the discussions and needs for interaction and developments from the actors, it appears like the objectives and targets are increasingly converging, and in turn the created synergy, absolutely, will drive to an acceleration towards the meeting of the stated objectives. in this framework, there should be underscored that the bank of albania has already established the effective premises for the foundation of a digital revolution in the payment market, through the legal and regulatory framework in force. this framework may be considered avant - garde in the context of the european union. meanwhile, at regional level, albania is the first country that has approved the legal and regulatory framework coupled with the promotion of β open banking β in the market. here, i would like to draw the attention and explain that the concept β open banking β implies the creation of technological developments, with a view that the information of banks β clients be open to third parties. in this regard, we should keep in mind that β though digitalisation is so far desired by all of us here β this development needs rather complex investments and regulations, which promote innovation in an environment that will guarantee a maximum security. taking into account that the need for establishing a highly prudent environment turns more meaningful in case of albania β where both financial education and inclusion are relatively low β the demand for market β s actors to make safe steps is quite important. beyond β open banking β and the re - dimensioning of market through the introduction of new actors and services, i would like to mention the set of the undertaken regulatory measures and infrastructural developments, which have been focused exactly on the promotion of electronic payments in the framework | 1 |
accumulated in the central banks are managed, and how the central banks assess the financial risks involved. this knowledge strengthens the support of the policies of central banks. since the beginning of the financial crisis, the ecb and the eurosystem have made a lot of progress in the transparency of the balance sheets. in particular, the content of the on - going asset purchase programme is made public, on a country - by - country and security - by - security basis. at the same time, we must always put financial risks in central banking in the broader policy context and take into account the objectives and results of such policy. in general, disclosure is necessary, but not enough. central banks need to ensure that the political decision - makers and the general public understand what the central banks are doing and why. deep and coherent participation by the central banks in the public economic debate at the national and euro area level is needed. * * * transparency is useful also for other reasons besides retroactive accountability. it is important for policy effectiveness. monetary policy is largely about managing expectations. in order for monetary policy to do its job smoothly, it is important that the market participants understand the intentions of the central 2 / 3 bis central bankers'speeches bank. this, in fact, makes communications the first, although not the ultimate instrument of monetary policy. in monetary policy, communication is an active form of transparency : transparency about the current interpretation of the economic situation, and about the goals and intentions of the central b a n k. charles evans spoke about the distinction between β delphic β ( or predictive ) communication and β odyssean β ( committing ) communication, where promises are involved. these terms were recently discussed by ben bernanke in his speech and paper about monetary policy in a new era. 4 at present, the role of communications is especially large, because of the increased reliance of central banks on forward guidance. when forward guidance is credible, it adds an important instrument to the central bank β s toolbox. it has proven useful, especially when the room of movement for the principal instrument of monetary policy β the interest rate β is restricted by the zero lower bound. using the chicago terminology, the ecb took an odyssean step in 2013 when it started to use forward guidance regarding its future interest rate policy. later, the degree of precision and commitment in the ecb β s forward guidance went further when the large - scale asset purchase programme was launched in 2015. forward guidance in | shown by the fact that the year - on - year growth rate for the april β june quarter, which was released in july, registered 7. 5 percent. the economy has faced downward pressure, such as a slowdown in the real estate market, as authorities have been progressing with structural reforms. on the other hand, the slowdown in growth momentum observed since the beginning of the year has come to a halt due partly to the economic stimulus measures that the authorities have been implementing since the spring. as for the outlook, the chinese economy is likely to continue to see stable growth, albeit at a slightly slower pace. emerging and commodity - exporting economies β mainly the asean economies that are japan β s major export destinations β have continued to lack growth momentum. however, the positive effects of recovery in advanced economies have spread to some emerging economies. moreover, as the financial markets have been calm on the whole, a pick - up in domestic demand has been observed in some asian countries. if such developments bis central bankers β speeches continue, emerging and commodity - exporting economies should gradually show an improving trend, although a high degree of uncertainty remains. in the world economic outlook released by the international monetary fund ( imf ) in july, the growth rate of the overall global economy for 2014 was revised slightly downward β affected by the deceleration in the january β march quarter β but the projection of the growth rate accelerating toward 2015 remained unchanged. the bank likewise expects that the global economy will moderately increase its growth rate. this is mainly because, as the chinese economy is continuing to see stable growth β albeit at a slightly slower pace β positive effects of the firm recovery in advanced economies will gradually spread to emerging economies. b. japan β s economic activity and prices 1. current situation a. economic activity now i will discuss japan β s economic activity and prices. the bank β s current assessment is that japan β s economy has continued to recover moderately as a trend, although the subsequent decline in demand following the front - loaded increase prior to the consumption tax hike has been observed. looking at developments in private consumption since april 2014, despite the decline i just mentioned, many firms have indicated that the degree of the decline has been broadly in line with expectations. in terms of sentiment, the consumer confidence index, which had been relatively weak for some time, has improved for two consecutive months. yet a wide range of indicators should continue to be monitored closely, as the adjustments in some aspects of housing starts and of automobile sales | 0 |
for kenya : infrastructure bond program and the plan by the government to issue a euro bond in the current financial year also signifies that the domestic market has matured over time and gained confidence from both local and foreign investors. this is evidenced by the stable country β s credit rating and an attractive environment for investors. 5. automation of primary market processes : in an effort to enhance efficiency and safety of its operations, the central bank launched the t - 24 system in all its operations in april 2012. i would like to thank the stakeholders for being patient while the bank was experiencing challenges leading to the implementation of the new system. going forward the bank is working towards providing internet banking bis central bankers β speeches which will allow for services such as : online bidding faster dissemination of auction results and statements for government securities. 6. competitiveness at auctions : the use of an auction - based method in the issuance of government securities over the years has promoted price discovery and competitive prices at the primary market which is a key ingredient for the secondary market. 7. kenya government bond index : in october 2012, the nairobi securities exchange ( nse ) launched the ftse nse kenya shilling government bond index as a benchmark tool for measuring market performance. this was a great step in market development because the market now has the benefit of further opening up to the rest of the world and increasing kenya β s financial sector competitiveness. ladies and gentlemen, as you all know our success has not been without challenges along the way. just to mention a few, the slow pace of reforms particularly in the secondary market has promoted market illiquidity and hampered faster growth. but above all, economic vibrancy has been constrained by shocks in both the domestic and international environment beyond our control and this has at times affected the momentum of our market development. i wish to emphasize that a well - developed and proper functioning financial market is critical to economies all over the world as it enhances effectiveness of monetary policy, cushions the economy against external vulnerabilities while mobilizing long term financing for public and private sector development. therefore, the development of a robust financial market is not only a priority of the central bank of kenya but for every stakeholder in this market to embrace. towards this objective i urge all the stakeholders to continue to build a competitive bond market that supports the country β s development agenda under vision 2030. in cognizance with today β s theme of β taking kenya β s bond market to the next | demonstrated that the free exchange of goods and services improves people β s standard of living. the list of positive effects of free trade is long : the division of labour and specialisation allows countries to produce what they are best at relative to their trading partners and import the rest ; 2 unrestricted access to foreign markets facilitates more cost - effective production given the larger sales volumes ; the availability of a broad array of foreign products increases choice for consumers with regard to end products and for producers with regard to primary and intermediate products ; increased competition from foreign rivals promotes efficiency and innovation ; the open exchange of goods and services also leads to the spread of knowledge and new technologies, and in so doing contributes to progress and growth as well. as a small open economy, switzerland is well aware of the benefits of the freest possible trade in goods and services with the rest of the cf. sachs and warner ( 1995 ) as well as frankel and romer ( 1999 ), for example. cf. ricardo ( 1817 ). page 2 / 9 world. chart 2 clearly illustrates the extent to which our country is integrated in the international trading system. switzerland profits tremendously from its openness. if the advantages of free trade are so strikingly obvious, then why is there any resistance at all? the answer is relatively simple : because not everyone is profiting from it to the same extent. although all countries that engage in free trade benefit overall from the unrestricted exchange of goods and services, this is not necessarily the case for every household and every company. free trade also has its losers. people working in industries that are structurally weak face the risk of losing their jobs if opening up the market means domestic providers are pushed out by more efficient competitors from abroad. the same applies to companies operating in such sectors and their owners, as they can also suffer heavy losses in this scenario. anyone who sees free trade as a threat to their livelihood is naturally going to reject it, irrespective of the fact that they stand to gain as a consumer and their country as a whole will benefit. while there is now scarcely any debate as to whether free trade leads to greater prosperity overall, the criticism is instead increasingly centred on inequality in the distribution of these prosperity gains. in phases of rapidly advancing globalisation, the distributional effects are particularly pronounced and apparent. for instance, china β s integration in world trade and its subsequent elevation to the leading trading nation is likely to have markedly accelerated the pace of structural change in some countries, negatively impact | 0 |
. by providing tailored financing solutions, green funds, and risk mitigation tools, the banking sector can indeed drive the transition to a low carbon economy. we also recognise that the future of our banking industry depends on our people. through the efforts of cab, our bankers receive regular training and have the ability to pursue international designations. this is crucial, as investing in the next generation of 5 / 6 bis - central bankers'speeches banking professionals and fostering leadership that can navigate our rapidly changing world, will be key to our continued success ; especially as it relates to our ability to compete with other jurisdictions and comply with international standards. concluding remarks in closing, it is encouraging to note that as we look to the future with optimism, we are confident that through the tireless efforts of cab, the caribbean banking sector is wellpositioned to tackle the challenges ahead while embracing new opportunities. this conference therefore provides the forum whereby cab and its members can reaffirm their commitment to collaboration, innovation, and leadership, as our banking landscape continues to evolve. let us therefore move forward together with unity and a shared vision for a resilient, inclusive, and secure caribbean banking sector, one that will serve as a foundation for prosperity in our region for decades to come. i thank you. 6 / 6 bis - central bankers'speeches | are wheelchair accessible and easy to navigate for people who are visually impaired. their digital interfaces must also accommodate people with disabilities, and their staff must undergo periodic training to equip them to interact effectively with and assist vulnerable customers. at the central bank, we understand that some financial institutions will need time to retrofit their properties and make the necessary updates to their online systems. as such, time is allowed for these licensed entities to complete this process. one aspect of the guideline that was in place even before it was published was the requirement that all commercial banks offer at least one " no - fee account " to all of their clients. the guideline also notes that " specially tailored low - fee accounts " should be available for vulnerable groups, including pensioners, minors, and students, ensuring these accounts are equipped with features that cater to their specific needs. " we are aware that other central banks in the region have adopted a variety of approaches to address the challenging issues of financial inclusion, fees, and accessibility of services by vulnerable groups and i encourage all of you to consider these aspects of customer care when preparing your future business plans. ladies and gentlemen, we know that one of the greatest challenges facing our region today is the issue of climate change. our region is disproportionately impacted by acute climatic events such as hurricanes and floods, which have been increasing in frequency and intensity due to rising temperatures. these events can have severe economic consequences. for instance, the recent devastation caused by hurricane beryl is still fresh in our minds. it brought widespread damage, particularly to grenada, saint vincent and the grenadines and jamaica, while in barbados, our fisheries sector was severely impacted due to many vessels being damaged or completely destroyed. furthermore, the impact extends far beyond environmental degradation, creating income loss, property damage, and this can lead to an increase in non - performing loans, reduced profitability, and even the destruction of critical it and physical infrastructure in the banking sector. we therefore commend cab for placing this issue on the table during their annual meetings. by prioritising sustainability and promoting esg goals, we can ensure that our banks play a vital role in addressing the challenge of climate change, particularly through investments in green technology and renewable energy projects. financial institutions across the region, under the guidance of cab, therefore have an opportunity to strengthen and expand mechanisms that incentivise and empower businesses to adopt practices, that are environmentally sustainable and support climate resilience | 1 |
to add one final point. what do you think of when you hear the following? this technology β β¦. is really good for humanity and it β s ultimately a win for each and every one of us. β¦ every person, every family, and every business will experience more liberty, more freedom, more opportunities, more abundance, more power, and more wealth. β the author, ceo of a us ( united states ) investment firm, was referring here to decentralised finance. but did we not already hear such β i would almost like to say β promises of miracle cures β β 25 years ago about the opportunities of the internet? the point i would like to make is this : the internet originally promised a decentralised form of free and equal communication between sovereign individuals. today, much is concentrated in the hands of a few bigtech firms. they are skilled at amassing and monetising rich volumes of data. as gatekeepers, they also determine who gets access to the platforms and who is denied it. with the proposed digital services act and digital markets act, [ 5 ] european legislators are now trying to clamp down on gatekeepers and enable more competition, data protection and consumer protection. in doing so, they have sent an important signal β also internationally. decentralised finance, bitcoins, ethereum and the like are also not as decentralised, free and equal as some all too eagerly proclaim. for example, a study by the national bureau of economic research has shown how the bitcoin ecosystem is dominated by large and concentrated players, be they miners, investors or intermediaries. at the same time, the vast majority of users continue to rely on intermediaries in order to use decentralised finance ( defi ( decentralised finance ) ) or purchase crypto - assets. they are just different ones to before! if we do not want to leave the huge potential that can lie in the use of crypto - tokens and stablecoins in the hands of the few, we must therefore act swiftly. first, there is a need for adapted regulation and supervision. the planned eu ( european union ) markets in crypto - assets ( mica ( markets in crypto assets ) ) regulation provides a sound initial basis for this. ms rodolphe explained bafin ( bundesanstalt fur finanzdienstleistungsaufsicht ) β s approach defi ( decentralised finance ) | . and inflation is increasingly demand - driven. core inflation, as measured by the hicp excluding energy and food, has risen to 5. 7 % in march. this was the highest figure ever and the fourth consecutive record high. on the topic of core inflation, central bankers are sometimes asked pointedly whether they neither eat nor heat. but rest assured : they do both. of course, the ecb does not target core inflation. its 2 % target relates to the headline rate of inflation. but looking only at the current headline rate could cause us to jump to conclusions. core inflation measures provide valuable information about the underlying inflation trend as they separate signals from noise. 1 they hint at where headline inflation will settle in the medium term. and therefore it is advisable to pay attention to core inflation. 3 the reaction of monetary policy when it became evident that the inflation surge was more persistent than initially thought, policymakers reacted decisively. after several years of ultra - loose monetary policy, the ecb governing council changed its course radically. we stopped purchasing additional assets. in the space of just eight months, we increased policy rates by 350 basis points. the relevant policy rate, which currently is the deposit facility rate, is now at 3 %. we created the transmission protection instrument ( tpi ), an instrument to support the effective transmission of monetary policy. the tpi can be activated in the event that the yields on government bonds diverge too greatly, if this divergence is not fundamentally justified, and if this is endangering price stability. its activation would be aimed to ensure that the monetary policy stance is transmitted smoothly across the euro area. and we have started to shrink our balance sheet. last month, we stopped fully reinvesting maturing securities bought under the asset purchase programme ( app ). from march until june, this will lead to an initial decline in our app portfolio by β¬15 billion per month. it is clear that the monetary policy measures still have some way to go for their full effect on inflation to unfold. to give you an idea : about a month ago, we estimated the extent to which the current tightening is already being reflected in some key variables. 2 / 7 bis - central bankers'speeches while we can assume that the measures have been passed through in full to money and capital market rates, the estimated share for loan rates is roughly 80 %. regarding the loan volume, the degree of pass - through is about 40 %, while pass - through to gdp | 0.5 |
emerging problems. 1. international aspects of the fiscal crisis and recovery of the 1980s in trade, migration and finance, ireland had of course been an exceptionally open economy for a very long time. the large migration flows, especially to the uk and the new world, and the currency and banking links go back to the early 19th century at least, with scarcely any overall interruption. irish banks parked their excess resources in the london money market right up to the 1960s β a pattern familiar to many african countries today. nor is the current crisis the first ( o grada, 2011 ) β indeed the potentially turbocharged nature of the globalized economy is well - illustrated by the rapid recovery from the previous severe crisis of less than a generation ago, whose onset coincided with the decoupling β for the first time since just after the napoleonic wars β of ireland β s currency from sterling. the earlier of the two macroeconomic cycles we look at happened at a point where global capital markets were still just beginning to move into the high gear that we see today. we may think of this as turbocharger mark 1. it allowed the irish government to access foreign capital to some extent without much by way of credit risk premium, but the fear of a sudden stop of this capital flow brought expansion to an end and resulted in a painful and protracted recession through the 1980s. that crisis had its origin in the turbulent macroeconomic years of the 1970s which themselves saw ireland make several severe demand management errors which stifled its capacity to benefit fully from the opportunities offered by eu ( ec ) membership from 1973. new opportunities there were, and especially the higher prices for agricultural produce under the common agricultural policy. but that was not all : eu membership became a major channel for transmitting globalization to ireland. but the expansionist fiscal response to the stagnation of the 1970s created a huge and spiralling government and balance of payment deficit which proved difficult to reverse in the early 1980s. by this stage, membership of the erm of the european monetary system had broken the currency link with sterling, and the irish pound was prone to being realigned against the stronger erm currencies β something that happened about once a year for the first 8 years of the system. it is interesting therefore to contemplate how international factors influenced the fiscal correction of the 1980s. although exchange controls still existed and indeed had been as with many african countries, the tendency for comparative advantage in trade to lead to heavy concentration in exports on just a few commodities is a | won β t. we are all too aware that low impact entities such as, for example, retail intermediaries, can also cause consumer detriment through overcharging, mis - selling and poor systems and controls. there will be a different approach to low impact firms but they will not fly beneath our radar and will not have an easier time. we plan to monitor the financial aspects of these firms through semi - automatic reviews of their on - line returns as our technology infrastructure evolves. our on - line returns programme, when combined with prism key risk indicators drawn from those returns and prism reporting functionality, is helping us advance rapidly down the automation route. we will box smarter through greater use of technology and make sure that the supervisory teams overseeing low impact firms are resourced to do focused thematic work, carefully targeted at higher risk areas, taking action when problems are identified. while we won β t be doing regular face - to - face meetings with every low impact firm, that doesn β t mean we won β t be watching them and that we can β t follow up when we discover wrongdoing. we may, on occasion, conduct spot - check inspections of low impact firms. we use themed inspections of regulated financial service providers to ensure that firms are meeting appropriate standards in terms of market conduct, consumer protection and financial crime controls, such anti - money laundering. so far this year, our consumer protection directorate has carried out some 77 inspections over eight themes, including an inspection on product design and selling, on openness and transparency and on current account switching. over the last 18 months, the central bank has targeted over a dozen investment firms and subjected them to a heightened level of prudential supervision. in some cases, this work has been augmented by themed inspections on consumer protection matters. in almost all cases, issues were identified requiring outcome focused mitigating actions ranging from improved governance arrangements to revocation of authorisation. themed inspections will continue to be an important supervisory tool, and going forward, we will publish our intended thematic work plan. a themed inspection focuses on a specific topic rather than on a range of topics and is usually carried out on a number of relevant regulated firms or on firms that represent a significant proportion of market share β in line with our riskbased approach. themes and firms for inspection are selected based on our market intelligence from a range of sources, including issues noted during on - going supervision, complaints received and referrals from the financial services ombudsman | 0.5 |
from 35 to 27 percent and the excluded falling from 38 to 33 percent, access to finance for rural areas is still low, with 64 percent of the rural populace not accessing formal financial services and 21 percent being excluded from any form of financial services. this is a huge drag to development that is driven by financial access. we know from established wisdom that poverty is very rural based in countries we come from. access to finance allows the poor to escape poverty by building their assets through savings and credit. at the central bank of kenya, we remain committed to promoting innovations that will enhance financial access and inclusion for the people of kenya. these reforms we believe will inevitably enhance access to finance in rural areas. my colleagues will be alluding to these reforms in the course of this conference. ladies and gentlemen : the size of credit to the agricultural sector in kenya by the banking sector has risen over the last five years from usd335 million ( ksh. 28. 1 billion ) in december 2007 to usd620 million ( ksh. 52. 7 billion ) as at february 2011. this growth is explained bis central bankers β speeches partly by the outcomes of the initiatives enumerated above. the level is expected to increase once the reform initiatives take root. to conclude my remarks, ladies and gentlemen, let me take this opportunity to reiterate the commitment of central bank of kenya to contribute to the fulfillment of afraca β s vision. it is my hope that this conference shall provide participants with key lessons on how to achieve a rural africa where people have access to sustainable financial services for economic development. i also reiterate that it is only through the concerted efforts of all players, governments, development agencies, donors, regulators and service providers that we will be able to deliver on this vision. with those few remarks, ladies and gentlemen, it is now my honour and pleasure to welcome the deputy prime minister and minister for finance, hon. uhuru kenyatta to deliver his keynote address and to officially open the 3rd afraca central banks forum. thank you. bis central bankers β speeches | and reporting practices, and building adequate capacity among the regulators. this requires moving swiftly to develop smart β standardized, measurable, actionable, reliable and transparent regulatory and supervisory frameworks β surveillance supervisory approaches, and assessment tools. this would effectively safeguard the soundness, integrity, efficiency, and stability of the financial system in kenya and the region. i believe smart regulation is the way to go because its very architecture minimises regulatory burden, focuses on outcomes rather that processes, and applies regulatory measures in proportion to the risk profile of individual institutions. smart regulations allow regulators to enforce more efficiently and allow regulated entities to comply cheaply and reliably. 3. stress testing : stress testing has become a cornerstone of prudential supervision and risk assessment across the world. the central bank has strengthened its capacity and has conducted banking system stress testing exercise using the cihak framework since january 2015. we have drawn important lessons from the results of these exercises and i bis central bankers β speeches urge other regulators to adopt similar tools, which clearly demonstrate the value of forwardlooking assessments of risks and vulnerabilities to the financial system. 4. financial innovations and consumer protection : new technologies have expanded the possibilities of financial services and products some of which have brought tremendous benefits to consumers, and resulted in measurable improvements in financial and greater access to the mainstream banking system. however, along with the rapid growth of these financial services is the emergence of complex financial products requiring enhanced consumer protection measures. i see the need to prioritise consumer protection in ways that will reduce if not eliminate consumer susceptibility to abuse or fraudulent activities. an effective consumer protection regime is essential and should broadly entail : β’ transparency and accountability in pricing ; β’ clarity on charges and terms of financial products and services ; β’ avoiding reckless and fraudulent lending practices ; β’ protection of financial service consumers against over - indebtedness ; β’ fair debt collections and transparent marketing practices ; β’ privacy of client data including credit information sharing arrangement amongst all credit providers through credit reference bureaus ; β’ ethical standards and staff behaviour in credit lending and screening practices ; and β’ alternative dispute resolution mechanism. in this regard, we should engage with our stakeholders to promote effective financial services consumer protection mechanisms through innovate financial education programmes and regulatory reforms. 5. recovery, crisis management and resolution frameworks : the global financial crisis that has affected us all since 2007, offers important lessons in crisis management and resolution frameworks. an important lesson from that experience is the central | 0.5 |
/ 4 per cent until the end of june 2010. i will elaborate on this conditional commitment in a moment. β’ in total, since december 2007, we have cut interest rates by 425 basis points to their historic lows and lowest possible levels. it is the bank's judgment that this cumulative easing, together with the conditional commitment to keep rates low for a considerable period, is the appropriate policy stance to move the economy back to full production capacity and to achieve the 2 per cent inflation target. a framework for conducting monetary policy at low interest rates β’ however, these are uncertain times and if additional stimulus were to become necessary, the bank retains considerable flexibility in the conduct of monetary policy at low interest rates. β’ we have outlined in detail how we would use that flexibility in conducting monetary policy at the effective lower bound, in the framework published in our recent mpr. in this document, we describe the unconventional instruments that are available, the principles that would govern our use of these tools β should we decide to apply them β and the exit strategies that we would employ when these instruments were no longer necessary. β’ the three key instruments we have identified for conducting monetary policy at the effective lower bound include : conditional statements about the future path of policy interest rates ; quantitative easing, which involves the creation of central bank reserves to purchase financial assets ; and credit easing, which includes outright purchases of private sector assets. β’ if required, these instruments could be used separately or in tandem to improve financial conditions in order to support aggregate demand and ultimately achieve the inflation target. β’ as you are aware, the bank deployed the first instrument on 21 april. as a result of our conditional commitment to keep rates at 25 basis points through the end of june 2010, interest rates across the maturity horizon of the commitment fell. they also dropped relative to those in the u. s. β’ let me reiterate that the bank's conditional commitment is not a guarantee. it is conditional on the outlook for inflation. we will always set our policy rate at a level consistent with achieving our 2 per cent inflation target over the policy horizon. β’ similarly, if the bank were to deploy either quantitative easing or credit easing, it would act in a deliberate fashion based on the following principles : ( i ) the focus of these operations would be to improve overall financial conditions in order to support aggregate demand and achieve the inflation target. ( ii ) asset purchases would be concentrated in maturity ranges in order to have the maximum impact on the economy. ( iii | ) actions would be taken in as broad and neutral a manner as possible. ( iv ) the bank would act prudently, mitigating the risks to its balance sheet and managing its ultimate exit from such strategies at an appropriately measured pace. β’ if we were to use these unconventional policy measures, the bank would closely monitor a number of indicators to assess their effectiveness. β’ the most important would be the effect on overall financing conditions faced by households and businesses. β’ other indicators would be used to judge the direct impact of a particular instrument. for example : o the effectiveness of conditional statements about the future policy rate can be judged by their impact on longer - term interest rates. as i mentioned a moment ago, we saw almost immediately the impact of our 21 april policy interest rate announcement. o the effectiveness of quantitative easing would be judged in the first instance by a change in the yield curve and more generally by movements in broader financial conditions. o that of credit easing would be judged by reductions in risky spreads and increased issuance activity. o changes in credit terms and in the conditions faced by firms can also be assessed using the bank's business outlook survey and its senior loan officer survey. o in addition, the bank has constructed measures of borrowing costs and an overall financial conditions index for the economy. β’ to enhance transparency, the bank now offers a comprehensive website that details credit conditions in canada. the link can be found on the left side of our home page. β’ the unwinding of the bank's various facilities and its acquisition of assets β or the exit strategy β would be guided by the bank's assessment of conditions in credit markets and the inflation outlook. β’ a number of exit alternatives are available, including a natural runoff through the maturing of assets, the refinancing of acquired assets, and asset sales. β’ finally, the framework also describes how the bank would communicate its use of unconventional policy measures. press releases on each fixed announcement date would remain focused on the target overnight rate and on conditional statements about the future direction of policy rates. β’ the press release would also indicate any intention to carry out purchase programs and the approximate size of purchases. the bank would explain the broad objectives of any purchases and how they are to be financed. detailed operational decisions would be communicated in separate announcements. β’ press releases on fixed announcement dates and monetary policy reports would continue to provide an ongoing assessment of the economy and the outlook for inflation. speeches and parliamentary appearances, such as this one, would | 1 |
##md will facilitate the growth of government securities by broadening significantly the investor base to retail investors. the second product is m - akiba. this is a critical government initiative, which seeks to increase the public β s participation in government securities through the existing mobile - phone bis central bankers β speeches money transfer services, and with a low minimum investment amount of us $ 30. the first m - akiba infrastructure bond will be launched shortly as the necessary arrangements are in the final stages, and is expected to mobilize ksh. 5 billion ( about us $ 50 million ). retail investors will be able to register, bid and pay for government securities through the existing mobile platforms. this will provide alternative investment options to retail investors who have long been poorly remunerated especially for their deposits held by banks. these products will be transformational β in addition to promoting financial inclusion, they will facilitate a change in the population β s savings culture, and ultimately lead to an increase in national savings. however, as the digital platforms continue to evolve, there are challenges and risks that need to be addressed. it is therefore important that countries continue to share experiences and strengthen partnerships based on best practices to address these challenges. the state of the banking sector in kenya finally, i would be remiss if i did not say a few words about the recent developments in our banking sector. in the main, concerns have been raised following the placing of three banks in receivership, since august 2015. we have underscored that the central bank β s actions were necessitated by unique circumstances in each of these banks, and that these were carried out in the interest of the depositors, creditors, and the wider public interest. we have also indicated that the weaknesses revealed by these cases are not systemic and the banking sector remains strong and stable. the capital - adequacy ratio stood at 18. 8 percent in march 2016, well above the statutory minimum of 14. 5 percent. the average liquidity ratio rose to 39. 8 percent in march 2016, above the statutory minimum of 20 percent and higher than 38. 1 percent in december 2015. nevertheless, some challenges remain. for instance, interest rates spread remain very high : the spread between the average commercial banks β lending rate and deposit rate stood at 10. 3 percent in march 2016. poor liquidity management and distribution remains a key concern, for which remedial actions are being taken. bank supervision is also being strengthened urgently. the central bank remains committed to | to divert cash and assets, often outside of our jurisdictional reach. the rbi has been clamping down on the failure to recognise asset quality as non - performing as per its norms by requiring that banks, whose β divergence β exceeds by 15 % of the true nonperforming assets as per the norms, disclose the divergence. this should restore some market discipline against such practices, especially in the case of private sector banks. however, ultimately there also needs to be a framework in place for time - bound resolution of the underlying stress in assets that limits the discretion of banks to delay the recognition of stress, ever - green β zombie β or living - dead borrowers, and poorly allocate credit. to this end, i wish to present and clarify the rationale behind rbi β s revised framework for prompt recognition and resolution of stressed assets. the framework that was released last month remains somewhat under - appreciated in terms of its importance. so let me lay it out. prompt recognition and resolution of stressed assets β revised framework 1. the banking regulation ( amendment ) act, 2017, and the subsequent authorisation given by the government of india therein, has empowered the reserve bank to issue directions to the banks for resolution of stressed assets, including referring assets to the insolvency and bankruptcy code 2016 ( ibc ). the reserve bank has taken steps over the last year in this direction, with a focus on reference to the ibc of certain large value stressed accounts, covering approximately 40 % of banking sector β s overall exposure to the stressed assets. 5 / 8 bis central bankers'speeches 2. the revised framework for resolution of stressed assets released by the reserve bank on february 12, 2018 is a step towards taking these initial steps to their natural conclusion and laying down a steady - state approach. the steady - state approach is aimed at ensuring early resolution of stressed assets in a transparent and time - bound manner so that maximum value could be realised by the lenders while also recognising the potential ongoing concern value of stressed assets. as explained below, this approach is a positive step towards strengthening the credit culture in the economy, at both borrowers and banks. 3. various special schemes for resolution, which were introduced by the rbi in the pre - ibc context, had made the resolution process driven by asset - classification consideration of lenders. in particular, the forbearance that was embedded in the schemes to make it easier for banks to resolve assets became an end | 0 |
a cyber risk test - bed ; and β’ a natural catastrophe data analytics exchange. we look forward to see more such innovation projects coming on - board. second, digital payments. bis central bankers β speeches changes in the payments scene in singapore have picked up pace in recent years : β’ our retail banks have released their own flavours of mobile wallets or mobile payment applications : β β’ dbs paylah!, uob mobile cash, ocbc pay anyone, stanchart dash, maybank mobile money with the launch of fast and secure transfers or β fast β in march 2014, we now have a ready infrastructure that allows customers of the participating banks to make domestic fund transfers to one another almost instantaneously from their computers or mobile devices. but there is a lot more we need to do on the digital payments front. first, payments at stores and restaurants. β’ β’ this is almost a uniquely singapore phenomenon β many of our stores and restaurants have multiple points - of - sale ( β pos β ) at their payment counters. β this not only clutters valuable real estate but also makes life difficult for customers and merchants. as more stores and restaurants introduce self - checkout facilities to improve productivity, we need a unified pos β a single terminal, preferably mobile β that will : β allow merchants to enhance efficiency by simplifying front - to - back integration ; and β enhance the shopping or dining experience of customers. second, reduce the use of cash and cheques. β’ it costs as much as $ 1. 50 to process each cheque. β’ the cost of cash is less obvious but just as real : in transportation, collection, delivery and protection. β’ we need to promote greater adoption of new payments technologies, including : β electronic direct debit authorisation ; and β fund transfers using mobile numbers or social networks mas and the ministry of finance have been co - leading a multi - agency effort to address these issues and guide the development of efficient digital and mobile payment systems. β’ the aim is to make payments swift, simple and secure. β’ the vision is less cash, less cheques, fewer cards. third, regulatory reporting and surveillance. as the financial system becomes increasingly complex and inter - connected, mas needs to sharpen its surveillance of the system with more timely, comprehensive and accurate information to identify and mitigate emerging risks. the vision is an interactive, technology - enabled regulatory reporting framework which will : β’ reduce ongoing reporting costs through the use of common data | and that inflation can be kept at a low and stable level also in periods with high domestic cost inflation. however, if developments in the real economy are to be satisfactory over time, real wage growth must be adapted to underlying productivity growth. a precondition for countering a possible downturn by means of monetary policy easing is slower growth in labour costs. monetary policy cannot prevent an increase in unemployment that is caused by a significantly higher rate of growth in labour costs in norway compared with other countries. nor can an expansionary fiscal policy counter a cost - driven rise in unemployment. growth in real wages is far higher than the underlying growth in productivity. if higher costs cannot be passed on to customers, earnings decline and the wage share increases. many businesses will have to adjust their workforces to maintain profitability. this leads to a fall in employment and increased productivity. for some companies, this may be a prerequisite for maintaining operations in norway. the alternative is to close down or relocate production to another country. while the wage share has risen sharply in manufacturing, it has remained fairly stable in other industries. import firms have wider margins, suggesting that the appreciation of the krone has not fully benefited customers. we also know that employment in some service industries has fallen. many companies in the service sector have adjusted their workforces to maintain profitability. to some extent, higher costs can also be passed on to customers through higher prices in this sector. manufacturing employment is declining. in the public sector, where employment growth has been strong the last few years, budgets will only allow a moderate increase in employment in 2003. overall, employment is projected to fall by Β½ per cent in 2003 and remain unchanged in 2004. employment followed a similar course in the early 1980s. at that time, employment rose markedly as a result of continued strong growth in the labour force. labour force participation in norway is currently at a record - high level, and the demographically determined supply of labour is low. at the same time, labour force growth may be lower than implied by demographic trends for various reasons. more people may choose to study until the situation in the labour market improves. some of the unemployed may exit the labour market on retirement schemes. outflows from the labour market and low labour force growth as a result of demographic trends may limit the increase in unemployment. nevertheless, unemployment is projected to rise, especially in manufacturing. the increase through 2002 primarily reflects a rise in unemployment in the service sector. manufacturing unemployment remained stable until | 0 |
potential issuers. supply chain finance ( scf ) is another route by which smaller firms can potentially get access to credit against high - quality assets. typically, this would arise when a large firm has a number of suppliers who wish to raise immediate finance against their invoices. unfortunately there was no scf market standard and so there was not a viable market that the apf could attempt to catalyse. last autumn, a working group of market participants ( borrowers, lenders, banks etc ) gathered together to develop some proposed standards and try to build a sustainable market in this space. that group is being chaired by stuart siddall, chief executive of the act, and is due to issue a report in the next few months. syndicated loans and asset backed securities a substantial part of lending to larger uk corporates is normally undertaken via syndicated loans. the bank investigated whether there was a market failure or illiquidity premium in this market which could be addressed by making apf purchases. after a thorough investigation, the bank concluded that what was needed was more large - scale bank funding, particularly to replace the foreign bank lenders who had been withdrawing from the uk market. but the appropriate way to address that was through the various schemes in place to support the banks. similarly, the bank investigated the state of securitisation markets. here, there were two problems. first, many investors were extremely wary of buying mortgage - backed securities and similar products, because the crisis had raised uncertainty over their underlying risk characteristics. at the same time there was a huge outstanding stock of such assets already issued, which would swamp any operation aimed at improving liquidity. in the united states the authorities have undertaken substantial purchases of mortgage - backed securities, and funded the purchase of other securitised assets. it is not clear yet whether those markets will be self - sustainable once official intervention comes to an end. in the united kingdom, we have made a range of abs, including mortgage backed securities, eligible collateral in the bank β s permanent liquidity insurance facilities as well as in the sls. and the bank intends to consult the market shortly on what the requirements should be in respect of loan - by - loan information for such assets to be eligible in the future. along with other monetary authorities taking similar actions, 8 standardisation of information provision may help improve investor confidence in the underlying securities. non - bank lending also during 2009, the bank used its market and corporate contacts to identify why bank | of monetary policy operations. 5 ( ii ) transactions should be at a discount to fundamental values so that the operations are unattractive to the markets in normal conditions. ( iii ) the operations should help to re - start, or energise markets rather than replace them. these principles all apply to the bank β s corporate asset purchases. in fact, when the asset purchase facility ( apf ) was first introduced, the bank was effectively operating as an agent for the government : the purchases were financed by the issue of treasury bills, not by the bank, and the government indemnified the bank against any losses. had the government wanted to, the purchases could have been designed and operated as a fiscal operation and not implemented by the bank. but the correspondence from the chancellor makes it clear that the purchase of private sector assets ( i ) was intended to improve the functioning of markets and so was consistent with a mmlr function and ( ii ) it simultaneously provided a framework for asset purchases as a monetary policy operation by the mpc and so the facility had to be designed to be compatible with that. once the programme of quantitative easing was established, the corporate purchases were funded by creating central bank reserves. but that was consistent with implementing the mpc β s monetary policy. motivating the apf schemes the bank β s initial apf interventions focussed on sterling corporate bonds and commercial paper. these markets are relatively small. at the end of 2006, before the onset of the crisis, the outstanding stock of sterling non - financial commercial paper was around Β£5bn, and sterling non - financial corporate bonds totalled around Β£70bn. that is low compared with the stock of commercial bank lending ( lending by uk resident banks to uk non - financial corporates was Β£437bn at end 2006 ). but despite their relatively small size, these markets are vitally important. commercial paper commercial paper ( cp ) is a common way for larger firms to manage their day - to - day cash needs. and insufficient cash flow is one of the key ingredients in corporate failures. at the start of 2009, commercial paper spreads were way above any estimate consistent with the risk involved : they implied default rates around 50 % higher than witnessed in the great depression. this market seemed like a prime candidate in which the apf should intervene β and so facilitate otherwise credit - worthy firms in maintaining their access to short - term finance. in trying to catalyse a market, the bank could not operate like a private | 1 |
speech by gediminas simkus at the joint webinar β investment in the baltics : from pandemic to war β 2022 - 05 - 20 joint bank of lithuania, bank of estonia, bank of latvia, and european investment bank webinar β investment in the baltics : from pandemic to war β 20 may 2022 welcome and opening remarks good morning, dear vice president ostros, governor muller, governor kazaks, dear colleagues and webinar viewers, a warm welcome to this joint webinar organised by the bank of lithuania, the bank of estonia, the bank of latvia, and the european investment bank ( eib ). 1 of 1 we are living in extraordinary times : just as the pandemic pressures started to ease, we got hit by another huge shock β the war in ukraine. let me stress that we stand in full solidarity with ukraine. to date lithuania welcomed some 51, 000 ukrainian refugees and is one of the largest donors of bilateral aid to ukraine in percentages of gdp. while we hope for a swift end to this unjustified war, currently the risks that the war in ukraine escalates remain high. we are experiencing an unprecedented degree of uncertainty. this is worrying, as numerous surveys and reports show that uncertainty is the largest barrier for private corporate investment in the baltics. fortunately, policymakers can address this. as we witnessed in the months following the outbreak of the covid - 19 pandemic, high quality and well - targeted public investment in times of high uncertainty enhances output. it also crowds in private investment, rather than crowding it out. the covid - 19 pandemic offered an opportunity for firms to become more digital. demand for electronic services rapidly increased, creating perfect conditions for expansion of electronic payment service providers. growth in electronic payments created value in the lithuanian financial sector. for instance, one of the lithuanian payments start - ups recently attracted an impressive 65 mln us dollar series a funding. the growing fintech sector also contributes towards solving the structural problem of concentration in the lithuanian financial sector. at the same time, business funding through crowdfunding platforms also gained traction. as pointed out in the eib investment survey that will be presented here shortly, total investment in lithuania rose to 5 % above pre - pandemic levels by the end of 2021. a similar pattern was observed in latvia, while in estonia investment in 2021 stood at staggering 30 to 40 % above pre - | gediminas simkus : post - pandemic economic recovery - realities and perspectives speech by mr gediminas simkus, chairman of the board of the bank of lithuania, at the highlevel conference β post - pandemic economic recovery : realities and perspectives β, organized by the national bank of moldova, 4 june 2021. * * * check against delivery dear governors, central bankers and colleagues, it is a great honour to address you on this momentous occasion. the national bank of moldova ( nbm ) is currently celebrating its 30th anniversary. over the past three decades, the nbm has achieved a great deal : from banking sector rehabilitation to delivering on price and financial sector stability β and much besides. i wish to highlight, if i may, the word β maturity β. the nbm has matured into a central bank with solid capacity and expertise, resilient governance, autonomy, policy credibility and a strong standing within the international central banking community. this maturity is reflected in the topic chosen for our first session today β the role of central banks in the post - pandemic recovery. this is a topic of strategic importance and long time horizon. it is only fitting that we are having this discussion on such a notable occasion. my brief intervention today will focus on two groups : first, advanced economy central banks, and second, central banks in the emerging markets. let me begin with the advanced world. a strong fiscal impulse, alongside a highly successful vaccination campaign, will put the us economy above its potential already this year. the euro area will continue to operate with a negative output gap. by 2022, it is very likely that the us will have caught up with its pre - pandemic growth trend. there is little chance of that happening in the euro area in the foreseeable future. a heated debate is taking place on the possibility of the us experiencing a surge of inflation. such an eventuality would not allow for synchronised tightening across the advanced economies. managing such desynchronisation may prove to be challenging. at the same time, we should not rush to conclusions. the environment in which monetary policy operates has changed in recent years. the natural real rate of interest has declined to 0 % or even lower over the past two decades in both the us and europe. phillips curves have become considerably flatter in this period. several structural factors underlie this diminished relation between inflation and economic activity. the first is globalisation, which | 0.5 |
the economy did not improve the situation. and when, in the spring of 2010, sovereign risk came to the fore, it turned into a major downside risk for recovery in bis central bankers β speeches europe. within a short period of time, fiscal problems in greece and other member states turned into an imminent danger to the stability of the financial system and the monetary union as a whole. thus, european institutions decided to implement far - reaching fiscal measures to support the countries in question. these measures were justifiable given the risks associated with inaction. nevertheless, they still placed a serious strain on the foundations of the monetary union. consequently, we now have to strengthen these foundations again and create an institutional framework that supports a stable monetary union. 4. the challenge of creating an adequate institutional framework as i have just pointed out, the crisis revealed two basic problems within the european monetary union : macroeconomic imbalances and excessive public deficits. both problems have their roots within the individual member states. consequently, it is first and foremost the responsibility of national governments to act by consolidating their budgets swiftly and ambitiously and by implementing comprehensive structural reforms. nevertheless, reforms also have to be undertaken at the level of the monetary union. as a first step, the institutional framework has to be enhanced to prevent the occurrence of harmful macroeconomic imbalances or excessive public deficits. this requires a twofold approach : first, strengthening the sgp to guarantee sustainable public finances, and, second, implementing macroeconomic surveillance to detect structural developments within member states that might be harmful for the rest of the monetary union. furthermore, as it will never be possible to prevent crises entirely, a third element should be a mechanism to solve potential crises in an orderly fashion β but without thwarting the stability - enhancing incentives set by the sgp and the surveillance mechanism. let us now take a quick look at how far we have come in turning this approach into reality. given its track record before the crisis, it can no longer be denied that there is an urgent need to strengthen the sgp : more emphasis should be given to the debt criterion, while earlier and more consistent sanctions have to be placed on any breach of the rules. the reform measures that have been agreed so far do indeed entail a number of improvements. however, the measures lack the ambition to fully redress past failings and to bring about a fundamental improvement. the major shortcoming of the envisaged reform is that relevant decisions on sanctions | s assesses the outlook for price inflation and sets interest rates. since 1997, labour costs have increased annually by between 5 and 7 per cent. in spite of this, consumer price inflation has been close to 2Β½ per cent over the past few years. the krone exchange rate has appreciated as a result of a wider interest rate differential between norway and other countries. combined with low growth abroad and increased trade with low - cost countries such as china, this led to a slower rise in import prices. in norway, voluntary export restraints on clothing have been removed and tariffs on clothing have been reduced considerably. in the eu and the us, a similar tendency has not been seen to the same extent. this may explain why prices for clothing have fallen in norway relative to the eu and the us. however, there is still a long way to go before restrictions on clothing imports to norway are entirely dismantled. for example, there is a duty today on imported children β s clothing and on shirts, suits, jackets and trousers for men and boys. as the world economy recovers, import price inflation will edge up. a rise in labour costs of more than 5 per cent will then only be consistent with the inflation target if the krone continues to appreciate. in the long run, wages must be compatible with the value added that is generated by workers, i. e. labour productivity. over time, the increase in real wages is therefore determined by developments in labour productivity. in norway, productivity growth has averaged 1Β½ - 2 per cent over the last 20 years. if this continues to be the case, an increase in nominal labour costs of around 4 - 4Β½ per cent in the long term will be consistent with the inflation target. there is an important interaction between monetary policy and fiscal policy. according to the guidelines for fiscal policy, petroleum revenues are to be phased in approximately in pace with the expected real return on the government petroleum fund. this guideline implies that fiscal policy will contribute to stimulating aggregate demand in the norwegian economy every year for many years ahead. the guideline also implies that the use of petroleum revenues will increase as long as the petroleum fund is expanding. variations in oil prices are accompanied by considerable fluctuations in government petroleum revenues from one year to the next. it is important to prevent these fluctuations from spilling over to the mainland economy. public expenditure and taxes that vary in relation to oil prices would result in an unstable economic environment. financial markets would be marked by uncertainty and turbulence, with an increase in | 0 |
stefan ingves : the crisis in the baltic β the riksbank β s measures, assessments and lessons learned speech by mr stefan ingves, governor of the sveriges riskbank, to the riksdag committee on finance, stockholm, 2 february 2010. * * * the crisis in the baltic β the riksbank β s measures, assessments and lessons learned it is not possible to provide a comprehensive reply to all of the questions discussed in connection with the crisis in the baltic in the space of 15 minutes. i shall therefore give a brief summary of the assessments made by the riksbank during the course of the crisis and something about the measures we have taken. in conclusion, i shall say a few words about the lessons that can be learned. before i discuss the role of the riksbank, i would like to point out that the responsibility for developments in the baltic countries primarily lies with their own governments with regard to economic policy, and with the banks, which have a responsibility for understanding developments in the economy and taking sustainable, long - term action. people often seem to forget in the general debate that we are talking about three different countries here. financial market participants also tend to see the baltic countries as a unit, which makes it difficult to manage the crises in these countries. of course there are many similarities between the countries, for instance, their economic expansion and decline. however, there are also important differences. swedish banks β commitments in the baltic the swedish banks β total lending to the baltic countries currently amounts to around sek 400 billion. there are mainly two swedish banks that have had a large presence in this region ; seb and swedbank. these banks, their subsidiaries and branches dominate the markets in the baltic and comprise 80 per cent of the estonian market, 55 per cent of the lithuanian market and 60 per cent of the latvian market. around 16 per cent of swedbank β s total lending is to the baltic countries. the corresponding figure for seb is 13 per cent and the figure for nordea is 3 per cent. swedbank β s loan losses for the three first quarters of 2009 total sek 19 billion, and 60 per cent of this stems from the baltic countries. seb β s loan losses total sek 9 billion, with 75 per cent stemming from the baltic region. according to the riksbank β s own estimates, the three banks β total loan losses in the baltic region will be sek 27 billion for the whole year | already described. moreover, if it is true that weak demand has reduced potential growth through hysteresis effects in the labour market, it could also be true that an acceleration in demand will support potential through the same mechanism working ecb bank lending survey, april 2015. β competitiveness and external imbalances within the euro area β, gvar handbook structure and applications of a macro model of the global economy for policy analysis, 2013. bis central bankers β speeches symmetrically β for example, as the labour market tightens firms may start hiring discouraged workers and retraining them. over the longer - term, however, monetary policy cannot increase growth. the growth rate of the economy is ultimately driven by factors such as the efficiency with which resources are allocated, the strength of incentives to innovate and invest, the ease of doing business, and the quality of public institutions β in other words, by the supply - side. and making improvements in all of these areas comes down chiefly to structural policies. importantly, our monetary policy is creating a unique window of opportunity to enact such reforms. when demand is weak structural reforms can result in higher short - term adjustment costs, as for example people losing their jobs take longer to find new ones. financial frictions can also reduce the short - term confidence effects of reforms, as people cannot rely on consumption smoothing through credit to manage labour market risks. these effects can make introducing reforms harder. with our expansionary monetary policy, however, we are supporting strengthening demand and better access to credit, and thus limiting the potential downsides of reforms in the short run. for this reason, there is every reason for national authorities to push ahead with structural reforms today. there are many channels through which structural reforms can raise potential. for example, in some countries active labour market policies aimed at retraining vulnerable groups such as the low skilled, the long - term unemployed and the inactive can play a key role in getting people back to work β which is particularly important given the drag that ageing societies will create on labour supply. another example is product market reforms that enhance competition in protected sectors, which can drive productivity gains by encouraging new innovative firms to enter the market and existing ones to improve their internal efficiency β a finding recently confirmed by the imf. 8 making use of all these channels is necessary to lift growth potential. what is particularly important for the euro area today, however, is that we focus our efforts on reforms with the greatest short - term impact on demand | 0 |
to become real game changers a. action points for the industry the following issues need to be addressed on priority basis in order to morph themselves as real game changers. bis central bankers β speeches 5. 1 customer protection issues protection of customers against unfair, deceptive or fraudulent practices has become top priority internationally after the crisis. incidentally, the bank has received and is receiving number of complaints against charging of exorbitant interest rates, raising of surrogate deposits under the garb of non - convertible debentures, various types of preference shares, tier ii bonds, etc. aggressive practices in re - possessing of automobiles in the case of auto loans and improper / opaque practices in selling the underlying gold jewellery in the case of gold loans are the two categories in which relatively more complaints are received / are being received by the reserve bank. nbfcs are often found not to practice fair practices code ( fpc ) in letter and spirit. developing a responsive and proper grievance redressal mechanism is the more important agenda in the context of this action point. 5. 2 camouflaging public deposits nbfcs have been prone to adopt variety of instruments / ways of accepting camouflaged public deposits for resource mobilisation viz., use of cumulative redeemable preference shares ( crps ) / convertible preference shares ( ccps ) / ncds / tier 2 capitals. these instruments are generally marketed as any other deposit products mostly by agents. regulators should distinguish tiny differences in a clear manner to check and control nbfcs which are raising resources through camouflaged public deposits. furthermore, complaints are received that deposit receipts issued to customers reveal that the deposits are accepted on behalf of other group companies, whose operations are neither known / are opaque. 5. 3 improving corporate governance standards to become real game changers, business transparency is inevitable for any financial entity. in the case of nbfcs, there is an imperative for adopting good corporate governance practices. rbi has already prescribed a governance code for nbfcs as part of their best practices ; these include constitution of risk management, audit and nomination committees, disclosure and transparency. when due diligence was undertaken on significant shareholders and directors at the time of registration it was observed there are no prescriptions for qualifications for directors, change in directors etc. 5. 4 capacity building nbfcs on both individual and collective basis need to work towards building a responsive ecosystem for capacity building ; since in the medium to long term, it is the | chang yong rhee : speech - 74th anniversary of the bank of korea speech by mr chang yong rhee, governor of the bank of korea, to commemorate the 74th anniversary of the bank of korea, seoul, 12 june 2024. * * * i would like to thank byungkuk kim, yeonkyo choi and youngrae kim for their help in preparing this speech. * this is an unofficial translation of the original speech released on 12 june 2024. dear fellow bank of korea colleagues, today marks the 74th anniversary of the establishment of the bank of korea. i wish to express my sincere gratitude to our predecessors who have led us to where we are today and to the esteemed members of the monetary policy board who are always striving to safeguard our national economy. i would also like to thank all our dedicated staff for their hard work in their respective roles during these challenging times. additionally, i extend my appreciation to everyone who supports and encourages us, particularly the families of our staff. today is more meaningful to me personally because it marks the first anniversary of the second half of my tenure, two years after i joined the bank. rather than looking back over the past two years, i would like to discuss the road ahead. the challenges we face now are critical, and how we handle them will influence how our past efforts are judged. turning first to the monetary policy environment, i am relieved to see signs that our economy has been recovering faster than previously expected, as gdp growth in the last quarter exceeded expectations. behind these growth indicators, however, there is a clear difference in the pace of recovery between exports and domestic demand, and even within the domestic sector, the perceived recovery varies significantly across segments. while inflation continues to decline, upside risks have increased due to stronger - than - expected growth and higher exchange rate volatility due to uncertainties in major countries'monetary policies, along with persistent geopolitical risks. i understand that many people are still suffering from high inflation and high interest rates. however, unless inflation is firmly stabilized, the vulnerable will face even greater difficulties due to decreasing real incomes and soaring living costs. moreover, if a premature pivot to a dovish stance leads back to unstable inflation and necessitates another rate hike, the policy cost at that time will be much higher. therefore, we need to remain patient and maintain our current tight monetary stance until we are confident that inflation will converge on the target level. of course, | 0 |
this area and we are monitoring the situation in the market to ensure that borrowers are enjoying a reduction in their effective lending rates. we do not want the reduction in the base lending rates to be cosmetic, but should be reflected in lower effective lending rates for measures taken so far to be meaningful. furthermore, with the reduction in the corporate tax rate for banks recently announced by the minister of finance in his 2012 budget, the expectation is for a further reduction in lending rates by commercial banks going forward. ladies and gentlemen, this initiative is positive and both bancabc and norfund should be highly commended for it. as a financing institution, i am aware that norfund financing rates are favourable. i want to encourage bancabc to pass the benefit of getting money at bis central bankers β speeches favourable norfund rates to the final borrowers so that the sme sector will experience the full benefit of this relationship. i wish to end by wishing bancabc the best and success in growing a successful sme lending portfolio. i thank you β¦ bis central bankers β speeches | caleb m fundanga : the mdg - consistent monetary policies talking notes by dr caleb m fundanga, governor of the bank of zambia, at the official opening of the undp organised workshop on macroeconomic analysis and modelling in support of millenium development goals - based planning, lusaka, 29 october 2007. * * * introduction first and foremost, i would like to thank the undp through the resident representative, mr aeneas c. chuma, for inviting me to say a few remarks at the opening of this important international workshop on β macroeconomic analysis and modelling in support of millennium development goal ( mdg ) - based planning β. let me also welcome you all, especially those who have traveled from other countries to come and attend this workshop. i understand that the aim of this workshop is to strengthen the foundation laid for mdgbased planning processes in africa on the issues of pro - poor polices and macroeconomic modelling and to explain what an mdg - consistent medium - term expenditure framework ( mtef ) is all about. the workshop is also intended to sensitise and enhance your knowledge of pro - poor policies in the context of mdg - based planning and strengthen understanding and skills in mdg - consistent macroeconomic modelling and mtef. furthermore, at the end of the workshop, participants should be able to : β’ better understand the linkages between macroeconomic programming and strategic planning ; β’ plan steps to be taken with respect to sustainable capacity development for macroeconomic modelling and strategic budgeting at various country levels ; and β’ strengthen the national ownership and leadership in mdg - based planning and implementation process. mr chairman, central banks the world over have a critical role to play in a country β s economic development. as you may all be aware, central banks β monetary and supervisory policies are implemented to ensure that there is price and financial system stability to promote macroeconomic development. in this regard, monetary policies or any other policy for that matter that are not consistent with the mdgs in the current macroeconomic dispensation should be considered irrelevant to the welfare of our countries. it is for this reason that, without exception, monetary policies in the developing countries have to be mdg - consistent. price stability the primary objective of most central banks is price stability, which is achieved through the implementation of appropriate monetary policy. high inflation is a major source of concern to any country as it poses a threat to economic development. it is in this context that a central bank β s | 0.5 |
that the firm is taking the matter seriously ; proportionate consequences for the individual, including some form of disciplinary warning and possibly some impact on remuneration ; and a wider review of lessons learned if there was any evidence that there was a systemic problem. see page 16, financial reporting council ( frc ), β corporate culture and the role of boards : report of observations β, july 2016. see footnote 7 for details. with appropriate modifications to reflect the fact that it has a very different range of functions to a commercial bank and is accountable to a different range of stakeholders, including parliament. for further details see : www. bankofengland. co. uk / about / documents / smr. pdf all speeches are available online at www. bankofengland. co. uk / speeches now consider the bank β s response to charlotte hogg β s case : she was formally warned in the strongest β and most public β of terms. there were consequences for her compensation. while she couldn β t forfeit a bonus as bank of england governors cannot receive one, she waived her salary increase this year. court reassigned her coo responsibilities. court reconfigured reporting lines and internal structures in order to improve governance, compliance and disciplinary processes, including reassigning the smr responsibility for implementing our code. and, on the basis of this one incident, the independent directors of court have initiated a widespread review that will draw on the expertise of the independent evaluation office, internal audit and the national audit office. its results will be made public. in other words, consistent with our higher standards, the bank planned a tougher response than we would expect in the private sector, but one that, in our judgement, was still proportionate to an honest mistake that was freely and transparently admitted. the treasury select committee ( tsc ) reached its own judgement, which in turn triggered charlotte hogg β s decision to resign. i fully respect both the tsc β s judgement and her decision. i wanted to speak to this, not to continue the debate about the rights and wrongs of this case, but instead to highlight some of the lessons that the bank and industry might draw from it. in particular, i want to dispel the urban myth that has developed around these events. while the prudential regulation authority ( pra ) can impose financial penalties and suspension under the smr, we do not run for our regulated entities a disproportionate | ##s has recently made headway in sustainable finance through an inaugural issuance of sustainability sukuk. the sukuk has been well received by the market, oversubscribed by more than 3 times, with the proceeds going towards supporting the government β s sustainability goals by financing smes involved in green projects identified under the green technology master plan malaysia. other dfis are also preparing to issue more sustainability sukuk which will also deepen the sustainability bond market in malaysia. this development augurs well for the creation of a vibrant fundraising market that will better support the economic recovery and financing of sustainable and impact projects. frameworks are in place to facilitate the adoption of sustainable finance by fis ( climate change and principle - based taxonomy, performance measurement framework ( pmf ) and value - based intermediation ( vbi ) ) my third point is that various frameworks are now being put in place to empower dfis in sustainable finance, and dfis can already step up efforts in this space. for example, bnm β s climate change and principle - based taxonomy facilitates all fis to be part of the driving force that promotes orderly transition towards a low - carbon future. other frameworks focus on creating incentives that would shape dfis β behaviour to be more in tune with their developmental roles. the adage β what gets measured gets managed β reflects the 3 / 5 bis central bankers'speeches importance of building a structured and holistic measurement framework for dfis. this will support dfis to pursue national economic and social well - being while simultaneously support an orderly transition of the economy towards achieving sustainability goals. in this, it is particularly pertinent for dfis to advocate accountability, transparency and efficiency since dfis are also public institutions. towards this, dfis that are part of the value based intermediation or vbi community are encouraged to apply impact - based disclosure on value - based practices and financial solutions contributing to the triple bottom line ( people, planet and prosperity ). institutions are required to disclose an optimal set of information to stakeholders with an objective to generate intended market discipline and promote stakeholder activism. similarly, the performance measurement framework or pmf is anchored on the concept of additionality creation by dfis. additionality is defined as the positive impact attributable to dfis beyond purely commercially - driven considerations, and this resonates well with the intent of sustainable finance. under the framework, an achieving dfi | 0 |
eddie yue : financial markets in asia - turning challenges into opportunities speech by mr eddie yue, deputy chief executive of the hong kong monetary authority, at the international swaps and derivatives association ( isda ) 34th annual general meeting, hong kong, 10 april 2019. * * * thank you for inviting me to speak at the isda annual general meeting. for those of you coming from overseas, let me welcome you to hong kong and the very dynamic asian region. by now, i hope you have experienced and enjoyed the vibrancy of the city. indeed, this same vibrancy runs through asia, which has got strong economic momentum with a promising outlook. but as central bankers, our job is to be on the lookout for future challenges and how to overcome them. so today i β d like to start by outlining two near - term risks on my radar screen, and then discuss two longer - term challenges for asia. i would then offer some thoughts on how financial sector developments, including a lot of the efforts that isda has been involved in, can help overcome these challenges. challenges for the asian economies asia has seen remarkable economic growth over the past several decades β its gdp, on a purchasing power - adjusted basis, now accounts for more than 44 percent of global output, up from just 30 percent in year 2000. living standards have improved dramatically, and per capital income has more than tripled over this period. behind this incredible economic momentum are globalisation, investments, and supportive government policies, factors expected to continue to drive the region for the foreseeable future. indeed, the asian region is expected to grow at 5 percent per year through 2023, easily topping all other regions of the world. robust regional economic development has benefitted hong kong, just as the services we provide as an international financial centre has benefitted the region. hong kong offers an excellent platform for global businesses and investors, governed by a well - established legal system, backed by a resilient banking sector, and supported by its geographic and cultural proximity to china. our city has become a global leader in ipo fundraising, bond issuance, asset management, and renminbi products. in addition, innovation β both financial and technological β is a key policy priority and is at the heart of the city β s future plans. but underlying this promising trend for asia is a number of challenges. the most important downside risk to our region at this juncture is the china - us trade war. some negative | banks, thereby enhancing banks β lending capacity. the above would set in motion a virtuous circle for the economy and the banking system and create the necessary conditions for investment financing and a return to sustainable growth. if consolidating confidence is a sine qua non for the above, i. e. for the increase of both domestic and total investment, greece must also take full advantage of the possibilities arising from eu and euro area membership to create a financial safety net that would convince of its ability to cope with any headwinds that could make its financing costs unsustainable, in particular in an international environment rife with financial and geopolitical challenges. ladies and gentlemen, today, greece faces the historic challenge of returning to normality and to a path of convergence with its european partners. a return to strong and sustainable growth calls for maintaining and implementing the structural reforms already legislated, as well as further crucial reforms in areas that are still lagging behind, such as the tax system, public administration, the judicial system, the link between production, research and education, the legislative and regulatory framework, especially as regards the use of land, and the goods and services markets. it is obvious that only on this condition can greece once again become a friendly place for doing business, effectively support productive investment and make a successful leap in total factor productivity. in closing, i would like to underline that, in the long run, increasing investment require an increase in private sector saving ( by households and non - financial corporations ), which, as i pointed out earlier, has declined dramatically, dropping by 11. 5 percentage points as a ratio of gdp, in ten years. the fall in saving was particularly sharp in the years 2015 β 2016, for households and businesses alike. admittedly, the capital controls combined with higher taxation led households and businesses to tap their savings, in order to meet their current needs. 5 / 6 bis central bankers'speeches however, there can be no investment without domestic saving or, alternatively, without continued foreign financing. this is why it is so important in the long run to restore the saving capacity of the private sector. in this context, the development of the second and third pillars of the social security system will not only ensure the system β s viability, but will also encourage households to increase their saving and open up a new channel for the financing of business investment. this will enable greece, in a self - reliant manner, to increase its | 0 |
to highlight some of these major accomplishments : β’ the enhancement to its life product offering through the launch of the bula prime product in 2011. β’ the re - branding of dominion house to bsp life centre, which now accommodates all of bsp life β s operations. β’ the opening of a new customer services centre on the ground floor of bsp life centre. i am told that walk - in customers are averaging 2, 000 per week, double what they were before the office opened. β’ the opening of a lautoka office, to complement the nadi branch and to provide greater service to customers in the west. β’ the rollout of new medical products earlier this year, including the introduction of an india evacuation product at very affordable premiums. i understand that bsp life has partnered with the world renowned apollo chain in india which provides a broad range of specialist medical services. access to india is now seamless via hong kong or seoul and the quality of services at apollo, i am told, is world class. in 2012 apollo treated over 60, 000 international patients at their delhi facility alone. i think these numbers provide some indication of the acknowledgement of the quality of the treatment available. bis central bankers β speeches β’ in so far as investments go, the bsp life portfolio has grown to $ 323 million. most of this money is invested in fiji, helping to provide employment for our people and helping to grow our economy. β’ i also note the strong financial standing of the business as publicly declared in the company β s recent key disclosure statement for 2012. this augurs well for future growth and ongoing returns to bsp life policy holders. i am pleased to note a significant investment in marketing by the bsp group to create awareness of the need to invest and protect our financial future. with the take - up of life insurance at less than 15 percent of our population, bsp life has taken a lead role in creating awareness of the critical need for us to have insurance and protect our loved ones. bsp life and bsp bank have also been key partners, along with other stakeholders, in the reserve bank of fiji β s ongoing efforts to promote financial inclusion and financial literacy in fiji. launch of bula elite and concluding remarks ladies and gentlemen, it is clear that bsp life has strongly established itself in life and health insurance in the fiji market over such a short period of time. tonight is another special milestone in the company β s growth as a major player in fiji β | & storage, building & construction, and the agriculture sector. most notable, however, is its dominant role in servicing private individuals β financing needs for taxis, mini - buses, carriers, tour operators and rental cars - - your typical small and medium business enterprises. these areas often cover the highest risk and are completely reliant on the successful management of the particular business. while risk management is at the forefront of ensuring the soundness of a financial institution, the competitive market in which credit institutions operate calls for continuous innovation in designing products that will be successful. the potential for increased trade by fijian entrepreneurs has long been identified and the four trade finance facilities that will be launched by merchant finance limited this evening will complement similar trade finance facilities currently offered by other financial institutions. perhaps more importantly however, they are specifically designed for small and medium enterprises ( smes ), and small farmers. i do not wish to delve into the features of these new products as we will shortly be provided with all the details, but i can congratulate merchant finance on its product development initiative and thank the company for its continued commitment to better service and innovation. bis central bankers β speeches the fijian economy ladies and gentlemen, it is somewhat of a tradition on these occasions that i say a few words on our economy. i think it is particularly pertinent at this time in view of what has been happening around us. so please bear with me. i did mention earlier this week at the vision investments limited listing that it is still too early to come up with firm numbers on the damage caused by tc winston and that we were still assessing the impact on our projected growth numbers. before the event, the fijian economy was forecast to grow 3. 5 percent this year, and possibly even a little better. what i can now say is that while we expect a number lower than 3. 5 percent, it is certainly not all doom and gloom. it is still early in the year and we are hopeful that many of our sectors will be able to bounce back quickly if given the right support. clearly we have seen through pictures and the media that enormous damage was done to our informal sector private dwellings, mainly in villages that were in the path of the storm, and these will take time to rebuild. our agriculture sector has also been severely impacted and will need special attention in order to recover. this includes our sugar industry. thankfully, in terms of the business sector which drives much of our economic activity, we have noted that | 0.5 |
ignazio visco : awards ceremony for the g20 techsprint on green and sustainable finance welcome remarks mr ignazio visco, governor of the bank of italy, at the awards ceremony for the g20 techsprint on green and sustainable finance, organized by the bank of italy and the bank for international settlements, milan, 25 october 2021. * * * i am delighted to welcome you to this awards ceremony for the second g20 techsprint on green and sustainable finance organized by the bank of italy and the bank for international settlements. i would like to thank benoit cΕure, andrew mccormack and the whole team from the singapore bis innovation hub for their invaluable cooperation in all the steps of our techsprint. techsprints are technological competitions designed to spur innovation, collaboration and creative solutions to daunting problems. our g20 techsprint had a very ambitious goal. it was designed to help financial markets in sharpening their assessment and selection tools for channeling funds towards green and sustainable finance, leveraging on the latest technologies. fintech and innovators were summoned to put forward their best solutions. i am very pleased that the improvement in the public health situation, following remarkable progress in the vaccination campaign, allows me to be here in milan to acknowledge the achievements of the 21 brilliant finalist teams who have offered valuable technological contributions in a very special area. indeed, finding ways to foster appropriate green and sustainable finance to invest in the crucial fight against climate change has been one of the key priorities of the italian presidency of the g20 this year. the urgency of acting to stop climate change and of mitigating its consequences is plain to see. the increase in the intensity and frequency of extreme weather events has obvious, and major, social, as well as economic, consequences. central banks and supervisory authorities, international institutions and market participants have therefore been paying significant and increasing attention in recent years to developing a better understanding of the implications of climate change for the financial sector and financial stability. in fact, climate change - related financial risks pose both micro - and macroprudential concerns, but analysis and research are still at an early stage. although there is broad consensus within the scientific community on the trends and causes of climate change, the timing and magnitude of future climate outcomes remain uncertain. this range of possible future physical outcomes arising from climate change is crucial to understanding β climate risks β ( or better again, β | those for sahel, horn of africa, and lake chad. we are also confident that the wbg will incorporate a thorough analysis of causes and consequences of migratory pressures in its strategic country diagnostics for these areas. we support the review of ida β s voting rights and its guiding principles. the ida executive board must define the scope of the review clearly, to ensure an efficient process. this is a prerequisite for its success. implementing the commitments of the capital package and of ida replenishment will require a renewed effort, particularly because of the difficulties of doing business in those contexts. therefore, it is important to strengthen the wbg institutions β accountability mechanisms to maximize development impact. we are cognizant that scaling up these commitments requires adequate budgetary resources. nonetheless, to preserve the recently achieved financial sustainability of all the wbg institutions, operational efficiency must be enhanced. this includes a balanced business model of presence in the field. solid income generation is critical if the wbg is to bear future needs. | 0.5 |
zeti akhtar aziz : the challenge for a global islamic capital market β strategic developments in malaysia keynote address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the sukuk summit 2007, " the challenge for a global islamic capital market β strategic developments in malaysia ", london, 20 june 2007. * * * ladies and gentlemen, distinguished guests. it gives me great pleasure to be here in london to speak at this landmark sukuk summit. the islamic bond market β the sukuk market β represents a key component of the islamic financial system. this recent decade has seen the accelerated development of this market and its significant role in strengthening the evolution of islamic finance. the global development of this market is particularly important in this more challenging financial and economic environment. it has contributed to enhancing the effectiveness and efficiency of the mobilisation and allocation of funds within national financial systems and in the international financial system. this development is also evidenced by the level of innovation and sophistication of the products and services being offered by the islamic financial institutions. the encouraging development of the islamic bonds market has also had an important role in enhancing the linkages between financial markets as it facilitates cross - border flows in the international financial system. the sukuk market as an important source of financing for large scale investment projects, has a key role in facilitating the economic development process. for investors, it provides greater potential for diversification into new asset classes. my remarks today will focus on the vast potential of the islamic bond market in the economic development process, in its role in ensuring financial stability and its role in promoting greater financial integration in the global financial system. i would also like to take this opportunity to share with you malaysia's experience in the development of this market. the malaysian sukuk market has now evolved into one of the world's largest islamic bond market. immense role of sukuk market in the economic development the financing requirements for economic development are immense. the bond market is key to meeting these funding needs for both the public and private sectors. this is particularly important for emerging market economies. in the middle east and in asia, two of the fastest growing regions in the global economy are taking place following privatisation and implementation of infrastructure projects. asia alone will be spending an estimated usd1 trillion on infrastructure over the next five years, while infrastructure requirements in the middle east are estimated to be usd500 billion over the same period. the challenge is to | and the world bank. the issuance was made possible following the liberalisation of the foreign exchange administration rules to facilitate multilateral development banks, multilateral financial institutions and multinational corporations to raise ringgit - denominated bonds in the malaysian capital market. at the end of 2005, shariah - compliant private debt securities comprised 40 % of the outstanding private debt securities issue of rm281 billion. 11. other major developments that took place in the second phase include the offering of islamic banking products and services by the conventional banking institutions on a window basis, the establishment of external credit rating agencies such as the rating agency malaysia ( ram ) and malaysian rating corporation berhad ( marc ) and the establishment of the development financial institutions and a national mortgage corporation, that is, cagamas berhad, both also offering islamic financial products. 12. the third phase of the development involves a review of the existing'window'institutional structure of the banks to create an enabling structure that can assimilate future developments in the islamic financial regulatory infrastructure over the longer term. arising from this review, a new institutional structure known as'islamic subsidiary'was introduced in 2004. with this development, the malaysian islamic financial system has evolved into a strong and comprehensive islamic financial system. 13. the comprehensive islamic financial industry in malaysia is also well supported by a conducive legal and shariah framework that began more than 20 years ago. in terms of the legal infrastructure, dedicated legislations namely the islamic banking act 1983 and takaful act 1984, were enacted to govern the conduct of the islamic banking institutions and takaful operators respectively. a dedicated high court judge has also been assigned to preside over cases relating to islamic banking and finance, complementing the mediation, arbitration and other dispute resolution mechanism already in existence for the islamic financial system. 14. great emphasis has also been given to enhance the shariah framework in malaysia. the shariah advisory council in bank negara malaysia is recognised as a sole authority on all shariah matters pertaining to islamic banking and finance. at the company level, it is a legal requirement for islamic banking and takaful operators to establish their own shariah committees as part of internal governance in order to ensure compliance with the shariah. the second focus area is that there must be efforts to have structured human talent development in the area of islamic finance. 15. the essence of a takaful system lies in the relationship between the participants and the | 0.5 |
2024 if they wish to avoid being subject to sanctions. the role of supervisors in monitoring and assessing efforts to incorporate climate risk into the management of financial institutions will be strengthened by the revised capital requirements directive ( crd ) and the requirement for banks to develop prudential transition plans. the exact content of these plans is currently being defined by the eba and eiopa. they will have to reflect both transition and physical risks, and their robustness will be assessed by the supervisor. finally, the banque de france and the acpr continue to participate in both european and international efforts, particularly to take greater account of climaterelated risks in prudential regulations, still using a risk - based approach, and more generally to improve knowledge and understanding of nature - related risks. 3. services to the economy and support for businesses in 2019, the ngfs clearly stated that climate risks are above all a societal and human risk, but also a financial risk. " as central bankers and supervisors, we therefore have a duty to concern ourselves with climate change in order to perform our monetary and financial stability mandates " ( f. villeroy de galhau ). the increasing risks associated with climate change are creating major challenges even for businesses. as such, to round out france's ecological planning strategy, the ecological transition financing committee ( cfte ) has tasked the banque de france with " devising a national climate indicator for businesses ". the aim of the climate indicator project is to provide companies with a free assessment of their transition, their exposure to climate hazards and the extent to which they are incorporating climate issues. 6 [ slide 11 ] the climate indicator, which aims to cover all aspects of climate risk, is broken down into three dimensions : 4 / 6 bis - central bankers'speeches transition ( ict ), drawing on ademe's accelerate climate transition methodology ( act ), measures alignment with a low - carbon world. 7 it compares the business's greenhouse gas emissions trajectory, projected on the basis of tangible actions in its transition plan, with its baseline trajectory, built around its activity volumes and sector baselines. 8 physical risks ( icp ) predict future trends in various climate hazards ( heatwaves, precipitation, hail, fire, drought, snow / frost ) projected under the ipcc's ssp2 - 4. 5 scenario, in the geographical areas to which the business is exposed. maturity ( icm ) reflects a more qualitative assessment of the company and | to the areas of most risk to consumers or the system. and, importantly, it will place consumer protection at the heart of day to day supervision. i firmly believe that these changes are not just important ; they are necessary β so that in a changing world we continue to deliver on our mandate in the public interest and in the interest of consumers. conclusion to conclude, the central bank and the hia are working hard to ensure that consumers get the best possible outcome. the insurance sector has an important role to play in ensuring that the products offered are clear, transparent and can be well understood. and consumers also have their own responsibilities in this regard β with increasing the level of financial literary in ireland an important objective to ensure they are equipped to act in their own best interest. and finally the financial sector is rapidly changing and becoming increasingly complex. in that regard, the central bank is changing too β so that we can continue to deliver for consumers in a more complex world. 1 see donnery " maintaining stability in the face of volatility β financial regulation in a rapidly changing world " november 2023 2 see central bank of ireland regulatory & supervisory outlook 2024 ( pdf 2. 08mb ) feb 2024 3 barry schwarz : the paradox of choice : why more is less 2004 4 see derville rowland https : / / www. centralbank. ie / news / article / speech - deputy - governor - derville - rowland - opening - remarks - for - launch - of - consultation - paper - on - reviewof - the - consumer - protection - code - 07 - mar - 2024 5 / 5 bis - central bankers'speeches | 0 |
are worth repeating. there are above all two aspects that i think make it important to maintain confidence in the inflation target of 2 per cent and which indicate that the target should not be lower. one is that, when average inflation is too low, it becomes more difficult for wage formation to distribute the resources in the economy efficiently. the reason is that it has proved difficult in practice to lower nominal wages. if inflation is low and nominal wages cannot be lowered, then it becomes difficult to adjust real wages between different professions, companies and sectors. this can ultimately lead to both higher unemployment and poorer productivity growth in the economy. a moderate level of inflation mitigates these problems. it functions as grease in the wheels of the economic machinery. another advantage with an inflation target of 2 per cent, which has come to the fore in recent years, is that it creates at least some scope for lowering the policy rate before it reaches its lower bound. if the inflation target, and hence average 4 inflation, were to be lower, then the nominal rate would also on average be lower. this would be particularly problematic in a world where real interest rates are very low, as is currently the case. the scope for lowering the rate before it reaches its lower bound would then be more limited than it is today, which would make it more difficult to counteract future recessions. therefore, if one does not like negative interest rates, one should not advocate a lower inflation target, as that would imply that the policy rate would have to be negative for longer periods. in the international debate, moreover, there are several economists who think that not even an inflation target of 2 per cent provides sufficient scope to conduct as expansive a monetary policy as is sometimes necessary. so there are sound economic arguments for an inflation target that is not lower than 2 per cent. to sum up, it is these considerations i have in my mind when i talk about the importance of keeping our eye on the ball. basically, it is a question of constantly being very clear about the guiding role of the inflation target in the design of monetary policy. the lower bound of the repo rate is less than zero regarding negative interest rates, i presented my own view on the matter in a speech around this time last year. 6 i think that the difficulties with negative rates are not so much a question of purely economic aspects, but rather of what is feasible according to social conventions and possible to create understanding for. for example, the biggest problem is probably not the one | a credible inflation target stabilises wage formation, both when inflation is unexpectedly high and when it is unexpectedly low. second, it is very unclear what might replace the inflation target as the anchor for prices and wages in the economy. one possibility is of course for sweden to revert to a fixed exchange rate. this is something i will return to shortly. my interpretation, however, is that those who think the inflation target has run its course for wage formation are not predominantly advocating a return to a fixed exchange rate. instead, they seem to be relying on the wage formation reforms themselves being sufficient. according to these reforms, which are collectively known as the industrial agreement, industry has, for over twenty years, been setting the benchmark for wage negotiations and is thereby steering wage growth in the entire economy. in this way, international competitiveness is taken into account when swedish wages are set. the industrial agreement has definitely fulfilled an important function as regards bringing about more controlled wage formation with restrained wage increases. but from a broader economic perspective, it is difficult to see how an agreement between labour market parties could constitute a sufficiently stable anchor for prices and wages in the entire economy, in order to be able to replace the inflation target. as far as i am aware, sweden would then be the first country in the world to abandon inflation targeting in order to rely on such a system instead. the ways of trying to provide an economy with a nominal anchor that are currently employed are either directly via an inflation target or indirectly via a fixed exchange rate. important to discuss the conditions for wage formation in recent years, a number of challenges with regard to the system whereby industry sets the benchmark for wage negotiations in the rest of the economy are being increasingly discussed. one aspect addressed is that this standardisation makes it more difficult to change relative wages, which might be called for from the perspective of fairness and distribution. for example, it can be an obstacle to reducing wage gaps between women and men. but the problem has also been highlighted from a macroeconomic perspective. if relative wages are not flexible enough, it could counteract an economically effective distribution of the labour force among professions and sectors. this could in turn create imbalances on the labour market. many analysts argue that, instead of the most important aim of 10 wage formation being to safeguard the international competitiveness of industry, it should be to achieve balance in the labour market as a whole. 10 another important aspect highlighted in the discussion is the extent to which this wage standard | 1 |
to be served, go for them and increase the share of the population using mobile phone financial services. ladies and gentlemen : effective and better regulation requires prudential guidelines to provide guidance in all policy and oversight activities of payment system operators and regulators. in this regard, i am gland to inform you that the bank early this year released draft regulations whose objective is to ensure that e - money issuers and payment service providers conduct their businesses prudently and in accordance with the provisions of the relevant legal provisions including the banking act, central bank of kenya act, the proceeds of crime and anti - money laundering act, the companies act, the microfinance act, and the sacco societies act. ladies and gentlemen : the public policy objective of central bank in the national payments systems is to ensure safety, efficiency and effectiveness of the payment system as a whole. in this regard, please allow me to point out that with increased use of mobile phone money transfer services by the wider general public, inherent system - wide implications are bound to arise and therefore it is prudent for all stakeholders to ensure ; bis central bankers β speeches that appropriate measures are put in place to safeguard the integrity of the systems at all times in order to protect customers against risks such as frauds, loss of money and loss of privacy. that the system will provide adequate measures to guard against money laundering among others. that the system is capable of mitigating the risks of access by non - authorized persons such as hackers and others. we have operating platforms within reach and disaster recovery sites in secure locations and tested at all times. ladies and gentlemen : in conclusion, i wish to thank airtel and its management team for the important role it is playing in the economy. with these few remarks i wish to declare airtel money transfer service brand officially launched. thank you. bis central bankers β speeches | axel a weber : developing a long - term investment perspective favouring financial stability and growth introductory remarks by professor axel a weber, president of the deutsche bundesbank, at the eurofi financial forum plenary session 16 on β defining a common regulatory and supervisory basis to achieve resilience, growth and competitiveness β, brussels, 29 september 2010. * * * ladies and gentlemen the financial crisis has painfully demonstrated vulnerabilities of our financial system. strengthening the resilience of the financial system, that is of financial markets and their players, is therefore the top priority when it comes to learning the lessons of the crisis. closing the regulatory gaps which the crisis has revealed β however important that is β would be too little. financial reform has to go beyond that and establish the necessary institutions and regulations to deal with systemic risks. financial reform will not save us from any future financial crisis but it can significantly dampen the frequency and intensity of financial crises in the future. reducing the likelihood of individual bank failures may act in this respect as a first line of defence. the most important project in this regard is the revision of basel ii. this reform will significantly increase the risk buffers of individual financial institutions by introducing stricter requirements regarding the quality and quantity of bank capital. while the new rules require banks to increase their capital, the provision of transition periods enables them to adapt to the more restrictive capital and liquidity requirements. hence, i am not afraid that the implementation of basel iii might significantly impair the lending capacity of banks or hamper economic recovery. while being subject to considerable uncertainty, recent comprehensive impact studies by the basel committee and the financial stability board suggest the economic impact during the transition period will be moderate and that the long - term net benefits will be positive. now it is up to the g20 heads of state and government to approve the package at their seoul summit in november. its global implementation afterwards is of utmost importance in order to guarantee a level playing field and to prevent regulatory arbitrage. in addition, some elements of the package require further work in the process of finalising the whole. in particular, the extent of anti - cyclicality of capital buffers might be strengthened further, and the requirements of the liquidity buffer in its currently proposed form warrant further adjustment as well : requirements for eligible assets of private issuers, for example, appear rather strict. while the new basel rules will certainly help to make the financial system of the future safer and more stable, a second line | 0 |
not forget that banking tends to be a cyclical business irrespective of regulatory requirements. nonetheless, the basel committee has begun a comprehensive review of the potential procyclicality of the basel ii framework. the objective is to promote adequate capital buffers over the credit cycle and to mitigate the risk that the minimum capital requirement magnifies the procyclicality of the financial system. under discussion are ways to promote a high quality tier 1 capital buffer that banks would increase in good times and be allowed to use in difficult times. supervisors are also reviewing the need to supplement the current risk - based approaches with simple, transparent gross measures of risk. this would constrain the amount of leverage banks could have in good times and therefore also contain the degree of deleveraging in bad times. let me now turn to lessons that can be drawn from the financial crisis with regards to supervisory arrangements. over the past one and a half years supervisory arrangements around the world have been put to the test. these real stress tests have provided us with important insights into the pros and cons of different supervisory arrangements. and, though there is no single optimal supervisory arrangement, three lessons can be drawn. first, as macroprudential supervision and microprudential supervision strongly overlap, central bankers and prudential supervisors should cooperate closely and continuously. second, financial supervisors need to step up international cooperation, simply because the financial industry is particularly internationalized. third, while prudential and conduct of business supervision are distinctly different, they are complementary and should both receive due attention. separating prudential and conduct of business supervision institutionally helps to keep both supervisory goals in clear sight. as financial sectors today are more concentrated, more integrated and more exposed to the financial markets than ever before, problems at individual institutions are increasingly likely to have systemic consequences. indeed, during the financial crisis we saw several examples, most notably the collapse of lehman brothers in september 2008 which had a truly systemic impact. these events have demonstrated that the distinction between macro - and microprudential stability is hypothetical in practice. therefore, there is an urgent need for close and continuous cooperation between macro - and microprudential supervisors, of course with due observance of the relevant legal provisions. such cooperation can be achieved in different institutional settings. also when the central bank plays no role in microprudential supervision, extensive micro - macro cooperation can be and in fact should be organized. the need for effective interplay | prudential supervisors β main concern is the safety and soundness of financial institutions, conduct of business supervisors first and foremost strive for a fair and transparent market. undeniably both types of supervision are important and in fact they are generally reinforcing. let me give an example to illustrate this. in the united states, home loans were extended to very risky borrowers, with little or no income and few, if any, assets. from a conduct of business perspective, these us consumers were not treated fairly. had this practice been stopped in time by the relevant conduct of business supervisor, we would have fewer problems now. unfortunately practice did not stop, but rather worsened. and now these us mortgages are awfully problematic from a prudential point of view. that being said, prudential and conduct of business supervision can also be conflicting. prudential supervisors work most effectively behind the scenes. this contrasts with conduct of business supervision, which benefits from being in the public eye. publicity helps to warn off consumers, investors and the industry from misconduct and wrongful practices. if both types of financial supervision are exercised by the same organization, there is the risk that an inappropriate balance is struck. therefore, in integrated supervisory authorities, arrangements can and should be made to ensure the necessary amount of resources is allocated to both types of supervision. establishing such arrangements, however, can be rather challenging in practice. indeed, a key finding of the uk fsa β s internal audit review in light of northern rock was that too many resources had been allocated to conduct of business supervision, and too few to prudential risks. in the netherlands, and also in australia, the danger that either prudential or conduct of business supervision will be overlooked has been addressed institutionally. in our objectivebased supervisory arrangement, prudential and conduct of business supervision are performed by two separate institutions. the former type of supervision is the responsibility of dnb ; the latter is the remit of the dutch conduct of business supervisor, the authority for the financial markets. consequently, our institutional set - up leads to a transparent consideration of prudential interests on the one hand and conduct of business interests on the other. let me give a clear example to illustrate this point. some years ago a dutch subsidiary of a foreign bank had neglected its duty of care. from a conduct of business perspective, the bank had to be penalized for this. it was clear, however, that this would entail the end of | 1 |
karnit flug : the conduct of economic policy, and the various functions filled by the bank of israel and the government in conducting the policy remarks by dr karnit flug, governor of the bank of israel, at the press conference marking the publication of the bank of israel β s 2015 annual report, tel aviv, 3 april 2016. * * * summary the governor of the bank of israel : β’ accommodative monetary policy helped the economy to deal with a moderate global environment. the reduction of the deficit as well as several other factors supported the continued decline in the share of public debt in gdp, the opposite of its trend in most advanced economies. β’ the success in dealing with short term challenges, and the reasonable state of the economy relative to the global environment permits an enhanced effort to reduce the gap between israel and other advanced economies in several areas and to prepare the economic infrastructure for the future. β’ the trends in the global environment and the demographic trends in israel are setting complex challenges for the future, and obligate us to act to change the trends in labor productivity, education, health, and infrastructure, so that israel β s economy can fully utilize its potential. β’ it is therefore important that the government formulate a set of priorities which will allow it to focus on dealing with fundamental problems of israel β s economy and society in the long term. β’ in order to deal with these, the government will have to improve the level of public services, to invest in infrastructures, and to support growth. today we are publishing the bank of israel β s 2015 annual report. the report presents an analysis of economic activity in israel in the past year, the economic policy that came to support it, and points of emphasis and recommendations to policy makers for future years. in my remarks today, i will focus on the conduct of economic policy, and the various functions filled by the bank of israel and the government in conducting the policy. it is important to distinguish between policy that acts in the short term, and is intended to moderate economic fluctuations β which economists call β the business cycle β β and policy that is geared toward achieving long terms goals. in the short term, policy makers use monetary policy and fiscal policy. monetary policy is focused on maintaining price stability, and on supporting economic activity and employment when there are shocks that moderate them. fiscal policy balances the need to support growth in such conditions with the need to maintain a reasonable deficit and manage the public debt burden over time to | stanley fischer : impact of the global financial crisis on israel β s economy address by professor stanley fischer, governor of the bank of israel, to the general assembly of the association of publicly traded companies, jerusalem, 8 december 2008. * * * for more than a year the world has been confronting one of the worst financial crises in over seventy years. this crisis has two phases : the first, financial, and the second, real, in other words a significant slowdown, and possibly even a global recession. both the financial and real effects of the global financial crisis on israel's economy are clearly evident. i would like to stress, however, that israel entered this period in a more favorable state than that in most other countries. on the financial side the crisis is reflected in israel mainly by the fall in prices of shares and corporate bonds, unlike in the advanced and other economies. in addition, the rate of growth declined to 2. 3 percent ( annual rate ) in the third quarter, and it is expected that the slowdown in israel's growth rate will continue, i. e., growth will remain positive, but will slow further, ( to 1. 5 percent in 2009 ), as opposed to a more significant slowdown, or even a recession, in the advanced economies. israel's relatively favorable situation is due to several factors : 1 ) the government's fiscal policy in the last few years was a responsible one. 2 ) the bank of israel β s interest rate policy supported financial stability and the ability of the economy to deal successfully with the effects of the slowdown in growth. this, without acting counter to the return of inflation to within the target range. 3 ) a surplus has been created in the current account of the balance of payments. 4 ) israel's foreign exchange reserves are high and rising, as a result of the bank of israel's plan to increase them. 5 ) the levels of growth and employment were high at the onset of the crisis. 6 ) israel's banking system is strong and stable compared with those of the advanced economies. 7 ) israel's capital market did not develop advanced, complex financial instruments whose inherent risk levels are difficult to assess. 8 ) the average debt burden of companies and households is relatively low. the challenge at present is to preserve the economy's relatively favorable position, to take advantage of it to deal with the new situation, and to introduce the measures needed to escape from the period of slowdown without harm | 0.5 |
, there has been a shift in this trend as these financial institutions have begun to actively extend credit overseas again ( chart 17 ). lending activities to emerging asia have undergone a particularly brisk expansion through both japanese - and non - japanese affiliated firms. while the presence of european banks has declined in this region, japaneseowned financial institutions have been swiftly extending credit to such countries as china, indonesia, south korea, malaysia, and thailand, thereby mitigating the adverse impact of stocks. there was a short - lived but rapid increase in investment from overseas in japanese short - term sovereign bonds from the autumn of 2011 to the beginning of 2012, when a worsening of the european sovereign debt problems aggravated strains in the global financial markets and increased demand for japanese sovereign bonds as safe assets. for example, the progress of asian economic integration annual report 2012 compiled by the boao forum for asia reports the correlation of stock market index returns between countries. from 2002 to 2006, japan was positively correlated with all other asian economies. after the global financial crisis, there has been a trend of increasing stock market synchronization in asia. in particular, china has become increasingly important as its correlations with india, japan, south korea, malaysia, the philippines, and singapore have grown. some studies indicate that singapore, india, and japan have stronger impacts on asian stock markets ( for example, see meric et al., β co - movements of and linkages between asian stock markets, β business and economics research journal, 2012 ). bis central bankers β speeches deleveraging by european banks. in an increasing number of cases, japanese financial institutions act as leading banks in arranging syndicated loans and project finance. most economies in emerging asia still lack basic infrastructure, including systems of transportation, energy supply, information and communications, and water supply and sewerage. a deficiency of adequate long - term funds hinders infrastructure development in this region. this points to the large potential demand for such long - term credit. it is estimated that the scale of this credit demand will amount to 8 trillion u. s. dollars between 2010 and 2020, according to data from the asian development bank ( adb ). public funds are insufficient to meet such credit demand, and this signifies the need for private - sector initiatives and funds in the form of long - term loans and bond finance. there are thus growing business opportunities for japanese financial institutions. at the same time, it is important for japanese financial institutions to make greater efforts to support entrepreneurial | more favorable, and their governments have begun to liberalize their financial markets, emerging economies have become increasingly capable of issuing bonds denominated in both foreign and domestic currencies. if east asia, including japan, collectively makes further progress in terms of improving each economy β s financial infrastructure β for example, in clearing and settlement institutions and securities depository institutions β as well as standardizing securities regulations, cross - border investment is likely to prosper. with regard to the stock market, the number of listed firms is rapidly increasing in emerging asia. as a result, the number of initial public offering ( ipo ) - related listed firms currently accounts for over half of the world total. in addition, the share of stock market capitalization in east asia and the pacific region now accounts for over 30 percent of the world total. the development of securities markets in emerging asia provides a revenue - enhancing opportunity for japanese investors. but as well, asia β s growing savings could be utilized on a global scale for a wide range of firms, including those of japan. given that investors in each economy generally have different investment patterns and risk attitudes, some japanese firms may be able to make use of such funds in the process of exploring new business models and strategies. over the past decade, securities markets have become increasingly synchronized at the international level. in general, securities markets among japan, the united states, and europe have shown a relatively high degree of synchronization. this is because cross - border investment has long been carried out through well - developed institutional investors and a large number of multinational firms. in addition, japan has historically enjoyed a strong economic relationship with the united states. therefore, the prices of japanese stocks and bonds tend to be highly correlated with those of the united states and europe ( chart 13 ). 6 it is well known that japan has been the world β s largest net external creditor, reflecting its considerable external assets. generally, japan β s portfolio investment is centered on medium - and long - term bonds ( such as treasury securities, agency bonds, and corporate bonds in the united states and bonds in europe ). although some investment had been made in stocks in the united states and europe, the global financial crisis has promoted a shift of japanese investors β preference from stocks to medium - and long - term bonds. meanwhile, overseas securities investment in japan is generally concentrated on medium - and long - term bonds and bis central bankers β speeches though there remains a strong one - way influence from the united states | 1 |
inflationary pressures are low and macroeconomic fundamentals continue to improve, we have decided to keep the key policy rate unchanged at 4. 25 % for the time being because of persistent uncertainties in the international commodity and financial markets. on the other hand, movements in the domestic market β most notably the continuing and significant narrowing of internal and external imbalances, are cushioning the effects of external risks. what is certain in this time of uncertainties seeping in from the international environment is that the national bank of serbia shall, as so far, rise to all the challenges and that serbia will record higher and sustainable economic growth rates led by export - oriented investment. the improved macroeconomic indicators and a brighter outlook for the period ahead have also been recognised and acknowledged by the european commission, which revised up the economic growth projection for serbia, and by rating agencies, which raised serbia β s credit rating outlook. i now give the floor to ana ivkovic who will present to you in more detail our view of serbia β s macroeconomic prospects in the period ahead. thank you for your attention. bis central bankers β speeches | see some evidence that people are borrowing from other sources to put together enough of a down payment to avoid the insurance requirement. this could be a concern, depending on the source of the borrowing. imbalances in housing markets, the second vulnerability, have also grown since december. policies aimed at cooling the greater vancouver area market appear to have had only a temporary effect, as sales and prices are rising again. similar policies have recently been implemented for the greater toronto area ( gta ). while the most recent average home sale price in the gta has declined, that followed significant price acceleration over the previous year, across dwelling types. there is a map in the fsr showing that large price increases are now being seen across the region, from niagara to peterborough. 1 / 2 bis central bankers'speeches we expect macroprudential and housing policy measures to help mitigate this vulnerability over time. and i would point out that housing market fundamentals remain very strong in the greater toronto and vancouver areas, with solid growth in population and employment. however, fundamentals alone cannot explain the price movements we have seen, and there is evidence that extrapolative expectations continue to play an important role. this is important because there is a greater chance of a correction when prices rise at a faster pace than fundamentals would imply. and where extrapolative expectations are at work, there is always a risk that expectations can turn quickly, amplifying the drop in prices. so, given the evolution of these two vulnerabilities, the bank looked at the most important risk scenarios for the canadian economy. specifically, we once again looked at a risk scenario where a severe recession triggers a correction in house prices. and we took a narrower look at a different risk scenario, where a house price correction in specific regional markets occurs on its own, rather than being caused by some external shock. under the first scenario, a severe recession would lead to widespread job losses and declining income, which would hurt highly indebted households in particular. the ensuing house price correction would worsen the impact of the recession, which could lead to widespread stress in the financial system and economy. the canadian economy has been strengthening in recent months, so the chance of this scenario happening is decreasing. however, its impact could now be more severe because the underlying vulnerabilities have grown. the second scenario we looked at involved a significant house price correction in the greater toronto and vancouver areas. such a correction would hit the british columbia and ontario | 0 |
ravi menon : asia β no room for complacency keynote address by mr ravi menon, managing director of the monetary authority of singapore, at the paris europlace financial forum, singapore, 30 november 2011. * * * mr christian noyer, governor of banque de france, distinguished guests, ladies and gentlemen, good morning. for those of you who are coming from abroad, a warm welcome to singapore. deleveraging out of a debt overhang moliere, a french playwright considered to be one of the greatest masters of comedy, once offered this sobering thought : β debts are like children ; begot with pleasure and brought forth in pain β. today, the pain he described is palpitating throughout the world and keeping many leaders in government, business, and finance awake at night. the advanced economies are awash in debt. governments, households, and banks must reduce leverage to restore economic and financial sustainability. but history tells us that deleveraging, while necessary, leads to a prolonged period of slower growth punctuated by increased financial market volatility. the gross government debt - to - gdp ratio is 80 % in the uk and in the eurozone, 100 % in the united states, and 230 % in japan. sovereign debt in aggregate is today at levels not seen since the second world war. financial markets, which had hitherto tolerated the build - up in debt, have turned merciless against the eurozone economies, driving up sovereign spreads and dragging down the ratings of those who hold sovereign paper. european governments have begun to take steps towards fiscal consolidation, and must convince markets that these steps are credible. unfortunately, the private sector is not ready to take over the slack in public demand. private sector debt - to - gdp ratios exceed 250 % in the g3 economies. in the united states, where the household debt - to - disposable income ratio reached an unprecedented 135 % in 2008, deleveraging is already underway with the recovery in private consumption well below historical rebounds. while eurozone households are less leveraged than us households, disposable income is likely to grow more slowly in the eurozone and hence be a bigger drag on consumption. a third source of deleveraging is the banking system. banks in the eurozone have to strengthen their capital adequacy position to meet new regulatory requirements as well as buffer against potential losses on their sovereign debt holdings. with uncertain prospects for raising fresh capital in equity markets | yielding asian assets. advanced economies represent half of global gdp but three - quarters of global market capitalisation in equity markets. a reallocation of just 5 % of advanced economy equity portfolios to emerging economies translates into a potential flow of us $ 2 trillion per year. so, the phenomenon of large capital inflows into asia is here to stay and we should learn how to handle it. large capital inflows pose two risks. first, these flows can potentially overwhelm asia β s ability to channel them to productive use, and create asset market bubbles β especially in real estate. residential property prices in some asian markets have increased by more than 50 % since 2009, outpacing income growth. to be sure, there are underlying structural factors supporting housing demand, such as urbanisation, growing populations, and the rise of the middle class. but surplus liquidity and rapid credit expansion fuelled by low global interest rates and large capital inflows have exacerbated asset price inflation in asia. the unwinding of asset bubbles can be rapid and extremely unpleasant. second, large capital inflows can turn into sudden outflows. sharp capital flow reversals can cause exchange rates to weaken, trigger panic in funding markets, and even result in destructive wealth effects. the unwinding of long positions in asian markets as global investors sought to de - risk their portfolios was partly responsible for the sharp selloff in many asian currencies in recent months. the most effective way to manage capital inflows is to allow interest rates or exchange rates to go up so that capital is priced appropriately. indeed, as emerging asia continues to grow, allowing the exchange rate to steadily appreciate over the medium term is vital to ensuring that capital inflows are moderated and allocated to productive investments. but interest rates and exchange rates cannot shoulder entirely the burden of adjustment to large and volatile capital flows. asian countries have been experimenting the use of so - called macroprudential tools to complement the more traditional macroeconomic tools in dealing with capital flows and asset price inflation. these include the use of loan - to - value ratios, taxes and stamp duties on asset market transactions, and minimum holding periods for assets, all of which serve to dampen demand for domestic assets. asia needs to continue refining these tools, learning from experience and adapting to different circumstances. deepening and broadening financial markets third, asia must deepen and broaden its financial markets. asia must do a better job | 1 |
jean - claude trichet : structural reforms in the euro area speech by mr jean - claude trichet, president of the european central bank, at the council on foreign relations, new york, 24 april 2006. * * * it β s a pleasure for me to be here at the invitation of the council on foreign relations to share with you my views particularly on structural reforms in the euro area. economic performance of the euro area let me start with a brief assessment of the euro area β s economic performance by recalling a few facts. over the last years the euro area witnessed an improvement in the utilisation of labour, which increased on average by 0. 2 % per year between 2000 and 2004. 1 this mainly reflects the rise in the euro area employment rate from 61. 5 % in 2000 to 63. 6 % in 2005 2, being accompanied by a significant decline in the aggregate unemployment rate from 10. 5 % to 8. 6 % 3. remarkably, employment growth in the euro area showed resilience to the economic slowdown at the beginning of this decade, with employment growing on average by 1. 1 % over the period 2000 - 2005, compared to 0. 9 % in the us. 4 however, the employment rate in the euro area remains low by international standards β for example, the employment rate was 71. 2 % in the us in 2004 5 β and the unemployment rate is still much too high β compared with, for example, the unemployment rate of about 5. 0 % in the us in 2005 6. furthermore, since the launch in 2000 of the lisbon strategy - a comprehensive agenda of structural reforms aimed at profoundly transforming the eu - the annual growth rate for the euro area has averaged 1. 8 % per year 7 ( compared to 2. 8 % in the us ), thus remaining somewhat behind its main competitors. when comparing the euro area economic performance to the us, there is evidence of increasing disparities in growth. since the beginning of the 1990s, the gap in per capita income growth between the us and the euro area has continuously widened - by 0. 8 % on average per year during the 1990s, increasing to 1. 3 % per year from 2002 onward 8. the main explanatory factor behind these developments is the diverging trend in hourly labour productivity growth between the euro area and the us. during the 1980s hourly labour productivity growth was increasing at an annual rate of 2, 5 % in europe as compared to 1, 3 % in the | risk and uncertainty in the financial markets, particularly visible during the recent financial crisis. financial market infrastructures ( fmis ) have stood the test of time by settling obligations whenever they were due and provided market participants enormous confidence to transact business without the risk of defaults and failures during periods of uncertainty and volatility. nevertheless, the need for sound risk management and governance with focus on areas like liquidity and credit risks has been realized by all the stakeholders and this has acted as the driving force behind the initiatives to review the existing standards as a part of crisis proofing exercise. principles for financial market infrastructure ( pfmi ) are part of such initiatives. pfmi is meant for the financial market infrastructure ( fmis ) like systemically important payment systems ( sips ), central securities depositories ( csds ), securities settlement systems ( ssss ), central counter parties ( ccps ) and trade repositories ( trs ) ( newly included ) which facilitate the recording, checking and settlement of financial transactions. the cpss and iosco have published new pfmi replacing their previous principles and standards viz. ( i ) core principles for systemically important payment systems ( cpsips ) ( 2001 ), ( ii ) recommendations for securities settlement systems ( rsss ) ( 2001 ) and ( iii ) recommendations for central counterparties ( rccp ) ( 2004 ). bis central bankers β speeches these 24 principles ( pfmi / 2011 ) which have come in place of the existing standards include new features like ( i ) default handling of clearing participants ; ( ii ) addressing of operational risk ; ( iii ) principles on segregation and portability ; ( iv ) tired participation and ( v ) handling of business risk. the new principles in essence reflect the learnings from the recent financial crisis. along with these principles five responsibilities have been assigned to the regulators. they are : i. fmis should be subject to appropriate regulation, supervision and oversight by the central bank, market regulator or other relevant authority ; ii. these authorities should have the powers and resources to carry out their responsibilities in regulating, supervising and overseeing fmis ; iii. authorities should clearly define and disclose their regulations, supervisory & oversight policies with respect to fmis ; iv. authorities should adopt the relevant internationally accepted principles for fmis and apply them consistently ; and v. authorities should cooperate with each other, both domestically and internationally in promoting the safety and efficiency of fmis. as we observe, the focus of the | 0 |
in the economic characteristics of members in several important areas. this would not be the first union to face that issue but others, like the united states with different conditions among its member states, like the european union and others, have mechanisms for effecting fiscal transfers to compensate for the adverse effects of a common policy on some members. in this regard, we can note as an example that the so - called β less developed countries β of caricom have always been extremely sensitive to the need to protect their populations via β special and differential treatment β. in similar vein, jamaica has always been and continues to be focused on north america and europe in its external economic relations in a way that relegates a mechanism to promote commerce with caricom to a secondary role. replacing the jamaica dollar with a caribbean dollar would be likely to enhance the predictability of its external and internal value and would offer a stronger level of commitment than an announced peg. by the same token, it would prove to be a stronger handicap where fundamental economic adjustment is required locally and where any change in parity requires unanimity among equal partners in the union. dollarisation dollarisation has returned to the discussion table periodically and has been touted as an even stronger commitment to monetary stability as it would abolish the currency entirely and replace domestic money with the us dollar β both for circulation and for accounting purposes. as in the case of the caribbean dollar, the adoption of the us dollar would offer the benefit of tying our inflation experience to that of the united states and monetary policy would flow from the federal reserve in washington. of course, there are key differences between us dollarisation and caribbean dollarisation. there would be no domestic input into policy making. there would be no right to the sharing of seigniorage β the income that accrues to the issuer of national currencies. there would be no means of supporting the financial system if liquidity shortages arose. dependence on the united states for currency for circulation could raise issues of security and sovereignty ( as is reported to have occurred in panama ). therefore, dollarisation could offer the kind of assurance that we are seeking to establish for ourselves but it would not be our doing and would say to the world β we are just not capable β. more important, it would present no guarantees as to reversibility especially when questions of security, sovereignty and independent national development issues assume centre stage in a nation β s political life. i would argue that there is a better | alternative. a strong and autonomous central bank the starting point for offering succeeding generations a much more pleasing environment for price stability, growth and development is to define for ourselves what is a tolerable rate of inflation and what is not. currently, our medium - term forecasts are built around getting inflation down to the 4 % β 5 % range which is, approximately, the collective experience of our bis central bankers β speeches trading partners. there needs to be a public consensus, involving the highest levels of leadership, academia, commerce and an informed public, about the level of inflation that the authorities should be held to. this is the first step. the second step is to deal with the perennial imbalances in public finances that are the counterpart to the imbalance in our current account. these have led to a huge overhang of debt the servicing of which consumes virtually all of the government β s tax revenue and crowds out public investment in infrastructure and social development. this is part of the story behind the slow growth and sluggish change in per capita income. it also retards growth in productivity which is the one sure way of achieving growth in gdp without inflation. the third step is to put in place the institutional arrangements that ensure that low and stable inflation becomes the key responsibility of the central bank and that measures to ensure accountability are in place. this is not as difficult as it sounds and requires only a modification to the legal and operational framework that we already have. the emerging literature on the redesign of central banks follows two strands : on the one hand, the delegation of monetary policy to a conservative central bank that then determines policy consistent with its low - inflation preferences ( the β reputational β option ) ; and, on the other hand, the formulation of strict principal - agent contracts where inflation targets are still set by elected officials but their achievement is contracted to a central bank empowered with the instruments to implement this ( the β contractual β option ). the federal reserve board of the united states is an example of the first option while new zealand β s reserve bank is often cited as an example of the second type. their relative merits are still unfolding but, given the dependence of the reputational solution on the personality of a single institution, the contractual option holds out greater promise of a credible, long - term, apolitical solution. an autonomous central bank would be one that is insulated from short - term political priorities both by its terms of reference and by its governance provisions. its focus on | 1 |
recent months may be easier for domestic public opinion to digest. but the lack of individual measures with respect to the overall size of the problem and market bis central bankers β speeches expectations may further prolong the uncertainty, as has happened in the past months. this may in turn increase the political cost of inaction. it is better at some point to take definitive measures that calm markets and convince them that the euro countries are indeed willing to do whatever is necessary to safeguard the financial stability of the area, as their governments have been claiming for months. one of the problems this crisis has shown is that the political authorities and the markets find it difficult to understand each other. on the one hand, markets do not understand why the governments of european countries are slow to adopt the necessary measures to solve problems, postponing decisions and creating uncertainty about their actual intentions. on the other hand, the political authorities often do not understand how the financial markets work ; they deeply despise them but at the same time depend on them to finance their budgets. they do not understand that announcements and good intentions are only valid in normal times, but when the crisis spreads the risk of losing credibility can only be limited with effective and timely action. they do not understand that market participants are looking for profit opportunities, and when they are offered one, they hurl themselves onto the next, in the expectation of making a similar gain. this phenomenon is the source of contagion. threatening the markets with retaliation and coercive measures often discourages the more stable, long - term investors, while it rewards speculators with short horizons. the long period the piecemeal approach followed in recent months risks losing sight of the long - term goal. the measures may not be completely coherent. we came close to it last autumn, with the franco - german proposal, endorsed by other countries, to make it easier for countries to go bankrupt. fortunately, the idea has not gained acceptance, not only because of the ecb β s dislike but also because of the devastating effect it has had on financial markets. it will take time to recover from the loss of credibility suffered by europe with that proposal. the proposal was based on the assumption that the best way to discipline governments and to ensure sounder public finances is to make it easier for a country to declare bankruptcy. as soon as a country has problems with its public finances, it should seek a restructuring of its debts or automatically extend its bond maturities as a necessary condition for receiving help | as we try to weigh the risk of an unduly sharp downturn, against the threat to inflation posed by a sharp surge in global energy prices. much will depend on developments in the rest of the world ; on whether the slump in the us housing market causes a sharp slowing in the wider us economy : and on how far this acts as a brake on demand β and inflationary pressures β in the rest of the world, especially asia and the euro area. the projections we published in last week β s inflation report were centred around a relatively mild slowdown, by historical standards β on the same scale as we experienced in 2005 β based on the assumption of a gradual and modest easing in interest rates over the next two years. but those projections are subject to a very wide margin of error β in both directions. the mpc β s monthly decisions are always grounded in a careful analysis of all the evidence. given the uncertainties we face, now is a time to pay extra attention to the emerging data. we can, and should, respond quickly and flexibly to early signs of the changing economic weather. according to most recent official economic statistics, the weather is still set fair. but we know fouler weather is brewing off shore. what is still far from clear is whether we are in for a force 6 strong breeze, or a full force 8 gale. we will need to deploy all our meteorological skills. in the inflation report we highlighted a number of early warning indicators on both output and inflation, which will help us judge the strength of the wind. these include the reports from our own agents around the country, drawing businesses such as your own. if you are one of our regular contacts, let me take this opportunity to thank you warmly on behalf of the mpc for your help. we may be making additional demands on you over the coming months. i hope my remarks tonight have helped to explain why your co operation is so necessary β and so valuable. | 0 |
new adverse shocks. credit the contraction of lending to firms intensified in the first half of this year, to an annual pace of over 5 per cent in the three months ending in may. the decline in lending to households was less severe, amounting to 1. 6 per cent. the average interest rate on new business and house purchase loans remained the same as at the start of the year, at just over 3. 5 per cent. the spread over the euro - area average did not change significantly, hovering around three quarters of a percentage point. the cyclical downswing is squeezing credit demand. it is aggravating debtors β repayment difficulties : in the first quarter the new bad debt ratio for business loans was around 4. 5 per cent, which was high in historical terms ; other impaired loans are also increasing sharply. heightened risk is weighing on banks β credit supply policies, discouraging lending and driving up interest rates. this can be seen in the surveys conducted with banks and firms alike. the bis central bankers β speeches strains will continue over the next few months ; past experience indicates that the deterioration in loan quality tends to continue beyond the start of a cyclical upturn. above all, the difficulties affect small firms, which have less opportunity to access the capital markets. the government β s recent changes to the workings of the guarantee fund for small and medium - sized enterprises are a step in the right direction. the implementing provisions should allow firms with good growth prospects to apply to the fund, even in the face of a temporary recession - induced deterioration in their accounts. the guarantees should be made conditional on the effective granting of loans, with more favourable terms provided for banks showing better overall credit growth. the availability of guarantees must translate into an actual improvement in credit terms, enabling firms themselves to apply directly to the fund. on 1 july the italian banking association and the country β s trade associations signed a new agreement allowing firms in difficulty to obtain a temporary suspension of repayments of medium - and long - term loans and an extension of loan maturities, and to be granted new loans if they increase their capital. the bank of italy will make sure that the moratorium provides support for deserving firms without concealing the actual riskiness of the loans. past experience in this regard has been positive. italian banks must guard themselves against the risk of a worsening of their funding conditions. the supply of assets eligible for use in eurosystem refinancing operations is now very substantial thanks in | prices can fluctuate wildly at any time for no or little reason, then over time investors could require higher haircuts and regulators could see a need for even more hqla. how can we protect and strengthen the structure of these markets? in tomorrow β s session, several panels will discuss market structure, including potential risks to clearing and settlement infrastructure, and ask how current structures might be adapted to provide greater liquidity and better guard against liquidity risk. i would point to four important trends that have been driving the changing structure of these markets : first, advances in computerized trading and high - speed communications and the entry of new players using these technologies ; second, the intensified prudential regulation and supervision of the systemically important banks that are the largest dealers ; third, the banks β own re - evaluation of risk in the wake of the financial crisis ; and fourth, the increasing importance of mutual funds and other asset managers. while markets will always continue to evolve, there is no reason to think these trends will suddenly reverse. in all likelihood, they are here to stay. although post - crisis regulatory changes have likely increased the costs of market making, markets were already undergoing dramatic changes well before the crisis. high - frequency and algorithmic trading firms already accounted for a large and growing share of transactions in the interdealer market, altering the speed and nature of market making. as traditional dealers have lost market share, they have sought to remain competitive by internalizing a greater share of their customer trades, finding matches between their own customers and keeping those trades off the public interdealer markets. but internalization does not eliminate the need for a public market, which is where price discovery mainly occurs. dealers need to place the orders that they cannot internalize onto that market, and at times of market stress such as on october 15, they will likely need to put most of their orders onto the public market. the current structure of the trading platforms in both the cash and futures markets is based on a central limit order book, which provides for continuous trading but also provides strong incentives to be the fastest. there may be adaptations of this market structure that could give greater emphasis to liquidity provision rather than a never - ending competition for more speed. some of the panelists we β ll hear from tomorrow argue that it may be possible to do so, for example by considering frequent batch auctions as an alternative to the central limit order book, or by placing minimum time limits on orders. ideas | 0 |
for cooperation among the educational institutions globally as well as domestically. with the technology in hand, the cooperation between different parties may be conducted more easily. 5. islamic development bank has involved in many education development project conducted in any countries. idb intervention in indonesia has been conducted in terms of the physical development of university building. i hope that further intervention may also cover the development of curriculum so that the universities offering islamic economics and finance may equip young generation with the knowledge and skills which relevant to the market requirement. distinguished guests, ladies and gentlemen, 6. in this occasion, allow me to share bank indonesia initiatives in the area of islamic economics and financial development, especially in the human capital development. in my opinion, when driving islamic economics and finance as an inclusive system in the national economy, human capital serves as the main pillar. therefore, we support the development in three components of human capital in the market that consist of academics, practitioner and society. 7. first, at academic side, bank indonesia has enhanced the collaboration and cooperation with universities, particularly in the area of research, public lecture, scholarships and research grant. in addition, bank indonesia has published a number of books on islamic economics and finance serving as academic references to the academics. the most recent book launched by bank indonesia entitled β the journey of islamic banking in indonesia : institution, policy and challenges β. beside universities, bank indonesia also allocated its resources to human capital development on earlier education including islamic boarding schools or β pesantren β. currently, bank indonesia is preparing a set of lecture bis central bankers β speeches modules which cover the area of : i ) islamic social finance, including zakat and waqf ; ii ) empowerment of micro and small enterprise ; and iii ) entrepreneurship development. expectedly, these materials are ready to launch by next july and adopted by 5 universities. moreover, in order to encourage and foster research activities in the area of islamic economics, monetary and finance, bank indonesia has launched journal of islamic monetary economics and finance. the latest volume has just been issued in february 2016. we hope that this journal will be a bridge between theory and practice in the area islamic economics, monetary and finance. 8. second, at practitioners β side, bank indonesia also continuously conducts capacity building programs to enhance the competence of human resource in islamic finance industry. we maintain good cooperation with local and international institutions, for facilitating expert visit to indonesia, conducting seminars, workshop and facilitating joint research activities on islamic economics and finance. next week | . 2 billion ( as of may 2011 ) and annual growth of 9. 3 % ( 2010 ). in the near future, i strongly believe that sukuk will grow significantly as it can be developed to have various forms of contracts with attractive features offering competitive returns and liquidity. in addition, the existences of excess liquidity from surplus savings in asia and oil revenues countries across middle east become a potential demand for sukuk. this opportunity can be used by the government or private companies to issue sukuk as an alternative financing source. the current positive trend of issuing sukuk for financing government β s infrastructure projects provides a good signal of support from the government that should be maintained. ladies and gentlemen, through this summit, where the meeting of regulators, practitioners, academics, potential investors and industry experts are possible, it is hoped that the potential of the islamic banking and finance will be maximized to further improve the current swift development of the industry. in the future, it is expected that asia will grow to be the next islamic finance hub, in addition to middle east. bridging these two potential markets for developing islamic financial industry will also contribute to the increase of economic growth in respective regions. despite all those success stories and potential growth of islamic finance, we believe that the road ahead remains challenging. i would like to point out four main issues that can be further discussed in this summit. firstly, concerning the islamic financial products. in terms of product development, islamic financial institutions should develop innovative products that can bring up the uniqueness of sharia components. instead of emulating conventional products or adopting islamic dressing to existing products, industry should move towards creating pure or genuine sharia products that seek to bridge the financial sector with real sector. bis central bankers β speeches i believe the strength as well as the uniqueness of islamic transactions lies within the profitloss sharing mechanism, provision of underlying assets and commitment to promote real sector. however, in general, the record of profit - loss sharing ( pls ) transactions in islamic banking industries across countries are still relatively low. i strongly believe that increasing portion of profit - loss sharing transactions, such as mudharabah and musyarakah, will be beneficial for both the financial sector and the real side of the economy and will eliminate decoupling or detachment effect between two sectors, a situation that was behind the recent global financial crisis. another issue related to product development is about product codification. at the moment, as you all | 0.5 |
zhou xiaochuan : financial cooperation between china and europe address by zhou xiaochuan, governor of the people β s bank of china, at the first china - europe financial services and regulation roundtable conference, shanghai, 28 october 2005. * * * ladies and gentlemen, good morning. on behalf of the people β s bank of china, i would like to take this opportunity to express my warm welcome to all the guests and delegates to attend the first china - europe financial services and regulation roundtable conference co - sponsored by the people β s bank of china and the european commission. the roundtable conference not only provides a good opportunity for china and europe to have high - level dialogue about financial services and regulation, but also creates a new platform for further cooperation in this regard. we will exchange our views sincerely about financial services and financial markets regulation, the challenges brought by globalization trend, international cooperation and other issues of our mutual interests in a very pleasant atmosphere. the conference was held in shanghai because it is the financial center of china harboring a large number of domestic and foreign financial institutions. on 10 august 2005, the people β s bank of china established the shanghai head office. the event of the first china - europe financial services and regulation roundtable conference in shanghai holds great significance for the development of shanghai as a financial center, as well as financial exchange and cooperation between china and europe. in the recent years, economic and trade relations between china and europe have been strengthened gradually. the ancient β silk road β tied china and europe closely more than 2000 years ago. since the reform and opening - up, china has registered an average annual gdp growth rate of 9. 4 percent, while on the other side of the euro - asia continent, the european union has gradually developed into an organization comprising 25 member countries. in 2004, the enlarged european union became the largest trading partner of china, china became the second largest trading partner of the european union and the bilateral trade volume reached over usd170 billion, increasing by 33. 6 percent. as of end - december 2004, the european union had nearly 20 thousand enterprises invested in china with the contractual value of capital reaching usd75. 38 billion. china has benefited much from the eu in the process of economic cooperation in terms of capital, technology and advanced management experience. at the same time, the rapid development of chinese economy also provided many chances for the eu countries. after its accession to the wto, china has stepped up reform and opening - up of | the household financial assets. the irrational financing structure not only fermented a formidable potential financial risk but also seriously hindered economic development. therefore, the financial community has reached a consensus on improving financing structure, with emphasis on developing capital market especially the bond market, which shall allow enterprises and investors to directly raise funds from or invest in the market. in addition to promoting the steady development of the stock market, developing the inter - bank bond market provides us another effective way to reform the irrational financing structure. thus, an improved financing structure is in great need and shall provide new opportunities for accelerating the inter - bank bond market development. second, improving financial macro control system and transmission mechanism calls for fostering the development of the inter - bank bond market. a well - functioned financial market is crucial for conducting indirect financial control. in recent years, the inter - bank bond market has grown rapidly and played a significant role in ensuring the effective transmission of monetary policy and improving macroeconomic control. however, the depth and breadth of the market still need to be developed, financial products and trading instruments are yet to be diversified, and the market liquidity remains low. therefore, efforts should be made to strengthen market infrastructure, increase the diversity of financial products and improve market functions so as to ensure the effective implementation and transmission of financial control policies. third, upgrading the inter - bank bond market is vital for the reform of financial institutions. the interbank bond market should provide not only investment facility for commercial banks and other financial 2 / 4 institutions but also instruments for their liability management, flexible means to adjust asset structure, and source of funds to supplement the capital base and enhance the capital adequacy ratio. moreover, it should offer more measures and various instruments for financial institutions to adjust their asset and liability structure and create a favorable market environment for their reform so as to enable them to transform their operating mechanism through market - based means and become micro financial entities commensurate with the market - oriented economy. iii. some reflections on accelerating the inter - bank bond market development in order to further develop the inter - bank bond market, under the guidance of the central government and the state council, the pbc will deepen the reform with the priority in financial product innovation by following the principles of market economy and relying on the initiatives of market participants. meanwhile, the pbc will also coordinate the development of product innovation and the market growth within the market capacity, foster the market infrastructure construction, and advance the development of the inter | 0.5 |
grant spencer : getting the best out of macro - prudential policy speech by mr grant spencer, deputy governor of the reserve bank of new zealand, to infinz, auckland, 13 march 2018. * * * introduction it is five years since we first introduced macro - prudential policy in the form of loan - to - value ratio ( lvr ) restrictions in october 2013. it is time now to take a step back and review the experience with this new policy framework. indeed we are committed to undertake such a review under the memorandum of understanding ( mou ) on macro - prudential policy that was signed with the minister of finance in 2013. the review will be undertaken jointly with treasury as part of the government β s broader review of the reserve bank of new zealand act. you will hear a wide range of views on the lvrs from a number of perspectives β some favourable and some less so. from the reserve bank β s perspective, the lvrs have assisted us in achieving our economic and financial stability objectives. the lvrs have reduced housingrelated risk in the banking system and also helped to ease housing market pressures. the policy has been particularly useful in the current environment of globally low interest rates, where domestic monetary policy has been unable to counter the strong housing cycle of recent years. but do we have the most appropriate macro - prudential framework for our circumstances in new zealand? what role could the other instruments in our toolkit play to enhance and / or complement the lvrs? should we be considering other macro - prudential instruments? is the governance structure sensible? there are diverse views on these questions. with the review of the macro - prudential framework ahead of us, my intention today is to consider the key issues that might be addressed and to offer some thoughts, based on our experience, for options to improve the policy framework. i have been closely involved in the reserve bank β s development and implementation of macro - prudential policy and i am keen to see macroprudential policy continue to develop as a credible and sustainable policy over the longer term. i will first discuss the new zealand and international experience with macro - prudential policy, and some of the lessons we have learned. i will then make some observations and suggestions aimed at putting macro - prudential policy on a more systematic and sustainable footing. these are my own views and are not a formal reserve bank position. the new zealand experience as set out in | of the gap in our per capita income compared to the oecd average. but this is not the whole story. despite our high international rankings in key areas, the latest world economic forum β s global competitiveness report ranks new zealand β s overall competitiveness at 25th out of 142 countries. besides market size, we perform poorly on our macroeconomic environment, and especially on our budget deficit and low national savings. but regulatory and performance - related factors also diminish our growth potential. many of the remedies to substantially improve our ranking lie in our own hands, and groups such as the 2025 task force, the savings working group, and the productivity commission, emphasised reforms that can raise our living standards. three areas seem particularly important. the first, is to raise our level of saving and investment, and improve the quality and productivity of our investment. in 2007, the world bank analysed the stylised characteristics of the 13 economies that had grown at an average rate of seven percent per annum or more for a 25 year period since the 1950s. eight of the countries were in asia. 1 we share many of the characteristics of these countries in terms of openness of the economy, macroeconomic stability, and market based resource allocation. one key difference however, is that all these countries had savings and investment ratios in excess of 25 percent of gdp and often over 30 percent. over the past three decades our net national savings rate averaged only three percent of gdp β almost five percentage points below the oecd median. for the past 25 years, our net household savings as a percentage of household disposable income averaged minus two and a quarter percent β the lowest in the oecd ( where data are available ), and 10 percentage points below the oecd median. our desire for such high levels of consumption was met by borrowing the savings of foreigners. as a consequence, our net foreign liability position is 73 percent of gdp, one of the highest ratios in the oecd, and not much different from some countries that have been at the centre of the financial crisis in the euro area. the build - up in external debt increases our vulnerability to economic shocks and the high propensity of new zealanders to borrow means that higher interest rates than elsewhere are required to achieve similar inflation outcomes. the growth report, strategies for sustained growth and inclusive development. bis central bankers β speeches although, our national savings ratio is low, our investment rate over the past three decades | 0.5 |
perceptions of excess employment still persist, and thus significant changes have not been observed in their efforts to reduce personnel expenses. industrial production is expected to remain on a rising trend, although the pace of increase may slow down further temporarily. this report was written based on data and information available when the bank of japan monetary policy meeting was held on december 15, 2000. the bank β s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on december 15 as the basis of monetary policy decisions. overall, the economy is likely to follow a gradual upward trend led mainly by business fixed investment, while the developments in overseas economies as well as in foreign and domestic capital markets, along with their effects on the economy, need to be carefully monitored. in addition, the favorable financial environment created partly by the bank β s sustaining easy monetary stance and the new economic stimulus package by the government are expected to underpin the economy. with regard to prices, import prices are rising, reflecting an increase in international commodity prices such as crude oil prices. domestic wholesale prices, notwithstanding the rise in prices of petroleum products reflecting the increase in crude oil prices, are declining somewhat mainly due to the decrease in prices of electrical machinery. consumer prices continue to be somewhat weak owing to the decline in prices of other imported products and their substitutes, although prices of petroleum products increased. corporate service prices are still falling slowly. as for the condition surrounding price developments, the balance between supply and demand in the domestic market is projected to be on a gradual improving trend, while an economic recovery is expected to continue moderately. on the other hand, semiconductor prices are declining reflecting softer international semiconductor prices, and crude oil prices, which had been exerting upward pressure on prices, are dropping recently. in addition to the declining trend of machinery prices due to technological innovations, the decrease in prices of consumer goods arising from the streamlining of distribution channels will exert downward pressure on prices. overall, prices are expected to be somewhat weak for the time being. in the financial market, the overnight call rate is moving around 0. 25 percent. as for interest rates on term instruments, euro - yen transactions, tb and fb rates maturing beyond the year - end are rising somewhat. the japan premium remains negligible. yields on long - term government bonds have been on a downward trend since mid - october, having decreased to around 1. 55 percent temporarily, and are recently moving around 1. 65 percent. the yield | production. and, in the financial and capital markets in and outside japan, pessimism regarding the future course of the economy and prices has been receding with the rise in stock prices. problems facing japan β s economy yet, there remain a host of long - term problems that must be overcome. though the growth of japan β s economy has been forced down at a lower rate since the bursting of the bubble, there have, in fact, been several recovery phases. however, these nascent recoveries repeatedly failed to lead to a full - fledged growth path because of recession overseas and concern about financial instability at home. one of the factors responsible is that such structural problems as debt overhang and excess labor have yet to be resolved. for example, when production and corporate earnings increased amid vibrant overseas economies, firms were forced to make, or strategically effected, the repayment of outstanding debt, and there was no expansion of business fixed investment. and, efforts on the part of the corporate sector to shed excess labor kept employment and income conditions severe, thereby restraining personal consumption. in a nutshell, pressures to correct past excesses hampered domestic demand from achieving a self - sustained recovery. but, are these sufficient reasons explaining the prolonged stagnation of japan β s economy? looking at past history a little more closely, we have come to realize that the problems are more than just the aftermath of the bursting of the bubble, such as debt overhang and excess labor. we are actually facing more deep - rooted and difficult problems. since the late 1980s, the world economy has witnessed a sea change in the form of globalization and revolution in information and communications technology. thus, before we discuss possible resolutions to the problems facing japan β s economy, it may be a useful exercise to put them in a global and historical context. on a global scale, a disinflationary trend is intensifying. for example, the average growth rate of the consumer price index in g7 countries decreased from around 7 percent in the first half of the 1980s to the 3 percent level in the second half, and to a less than 2 percent level between 1996 and 2002. this certainly shows that central banks β conduct of monetary policy has successfully contained inflation. more fundamentally, this trend may reflect the impact on price determination of globalization and the revolution in information and communications technology. the transition of emerging countries to market economies has greatly expanded global supply capacity. furthermore, firms with a dominant power in setting prices in various markets segment | 0.5 |
exchange β which let me remind you has been the best performer of asia in 2017, but will also make it accessible and desirable to a host of investors across the world. to further add, the technological improvement would be a further boost for trading within and outside the country. i am sure that the partnership of pakistan stock exchange with china will bear fruits by developing competitive and profitable securities and derivative products. the local financial institutions in this consortium have an important role to play as well. with the thorough understanding of the domestic markets and wellpoised to assist their foreign counterparts, the consortium would be instrumental in raising productive capital from both within and outside pakistan. this capital would play a critical role for the corporate sector at a time when the chinapakistan economic corridor is in full swing. this is just the tip of the iceberg, ladies and gentlemen. with proper planning and execution, such future collaborations could be game turners for all the stakeholders. not only would this help raising the economic growth of the country, but will also unlock the business - to - business and person - to - person barriers, and may be a good avenue to learn from each other in various fields such as banking, engineering, transportation, telecommunication, energy, and many more. to sum up, the possibilities are limitless. the key, ladies and gentlemen, would be to have an open mind and learn from the experiences of such co - ordinations in other parts of the world like the trans - african highway network, pan - american and pan - european corridors. our year on year lsm growth in nov 2016 is 8. 1 % compared with 4. 5 % in nov 2015. private sector credit expanded by rs. 376 billion and is broad based in state bank of pakistan july - dec fy 17 compared with rs 283 billion in corresponding period 2016. such good news will contribute to psx and the investors sentiments. in the end, i would like to thank you all for your time, and congratulate you for making this step a success. god bless! | state bank of pakistan governor β s speech share purchase agreement with the consortium of chinese exchanges january 20th, 2017 bismillah hon β ble senator muhammad ishaq dar, finance minister of pakistan mr. zafar hijazi, chairman secp mr. munir kamal, chairman, pakistan stock exchange ambassador peoples republic of china distinguished guests, ladies and gentlemen, assalam - o - alaikum and good morning! i am very thankful to pakistan stock exchange to invite me today at this historic occasion in our economic history. can a single word be used to describe the prosperity of developed countries in the past few decades? if i were to answer this question, i would say collaboration. in this global world, it is not possible for economies to grow in isolation. hence, it should not come as a surprise to anyone that the most successful countries are the one that work in tandem with their neighbors and / or trading partners. pakistan and china are taking that exact path beyond which a great future awaits! before i move any forward, please allow me to take you to a short visit down the memory lane when pakistan economy was challenged with multiple headwinds. be it war on terror that led to lower than desired security situation in the country, energy shortfalls, insufficient foreign exchange reserves, or lack of foreign investment ; we have rebounded strongly than what was anticipated of us. with adequate economic policies and the assistance of international agencies, we have firmed up our feet on the ground. however, we did not stop there ; we continued with our efforts to take our economic growth and public well - being to a higher level. to achieve those goals, pakistan required the necessary impetus in the form of capital investment and opportunities. this is where the role of our closest friend and ally china has been instrumental! state bank of pakistan it is an applaudable step of a country like china to get integrated with the rest of the world. for this purpose, the country has rightly focused on the strategic location of pakistan. the investment of china in pakistan as just one route of its corridor has now begun a string of partnerships that would further strengthen the bond between the two countries. ladies and gentlemen, one of the outcomes of those efforts is the reason that we have gathered here. the signing ceremony of share purchase agreement by the consortium of chinese exchanges and local financial institutions is a surely a landmark event for the asian capital market. the investment of the consortium will not only enhance the credibility of pakistan stock | 1 |
our continued collaboration with the industry, we hope to experiment more potential efficiency and transparency gains that can be brought about by distributed ledger technology. in turn, these gains can support the climate and transition financing needs in hong kong and also the region as a whole. we are committed to building hong kong's green and sustainable finance ecosystem. the path ahead is challenging, but i also look forward to working more closely together with stakeholders like all of you here to maximise the impact of our efforts and resources in tackling climate change, through the use of innovative solutions. in closing, let me wish today's event every success. thank you. 3 / 3 bis - central bankers'speeches | ##mi et al., 2010 for a discussion of this. bis central bankers β speeches than countries with surpluses by major falls in housing prices. 14 this shows that current account deficits were often a reflection of underlying weaknesses, for example unsound lending practices and the build - up of debt. however, the crisis itself and the subsequent recession reduced the imbalances, at least temporarily. the savings ratio increased in the united states at the same time as domestic demand increased more rapidly in china as a result of a fiscal policy stimulation package. the substantial fall in oil prices also played a role. the question is, however, whether the underlying causes of the imbalances have been corrected. the imf believes that the imbalances will remain in place in the period ahead ( see figure 2 ). the oil price has also increased considerably during the last six months, which also indicates that the imbalances will remain. this is because this boosts net exports in oil - exporting countries, which tend to have current account surpluses, but increases costs for oil importers, who tend to have current account deficits. the g20 has pointed to the global imbalances as being an important factor for development in the global economy. one aspect that has been discussed is whether to adjust the nominal exchange rates in order to reduce the imbalances. if china, for example, maintains a fixed exchange rate against the dollar, this will make it possible to adjust the real exchange rate if china has a higher rate of inflation than the united states. however, this entails either a high rate of inflation in china, which the chinese authorities are not likely to want, or to deflation in the united states, which the us authorities definitely do not want. in connection with the outbreak of the crisis, china stopped the appreciation of the renminbi that had been going on for several years and instead pegged the renminbi to the dollar until june last year. this meant that china β s currency followed the depreciation of the dollar that came when the worst of the crisis was over and investors once again began to turn to higher - risk assets, for example by investing in assets in the emerging economies ( figure 3 ). my own calculations in accordance with the method used by the imf to identify major falls in house prices in weo in october 2009 ( a fall in house prices is defined as major if a four - quarterly moving average of the annual growth in real house prices | 0 |
prepared. this is why the maastricht treaty had its fiscal policy clauses and also why the stability and growth pact was concluded. also the famous prohibition of direct central bank credit to the government, and the institutional independence of the central banks, are in effect protections against fiscal dominance. now we know that the fiscal framework as put in place before the start of the emu was not strong enough to prevent fiscal problems from emerging. some have been worried that fiscal dominance has taken hold when the central banks have used government bond purchases, both to stabilize the markets and to produce additional monetary stimulus with β quantitative easing β when the interest rate instrument has already been used to the maximum. the extended asset purchase programme of the ecb announced in the week before last is an example. as to the euro area, there is no evidence of fiscal dominance. the acid test for fiscal dominance is : does monetary policy break its price stability objective for the sake of maintaining the solvency of the government sector. this is not the case. the price stability objective has not been and will not be abandoned. the bond purchases of the eurosystem are directed to make monetary policy more effective, not less. in particular, we want to move closer to our definition of price stability, and the bond purchases are contributing to that end. we have had well known fiscal problems in some of the euro area countries. still, the traditional symptom of fiscal dominance, accelerating inflation has not materialized, nor have inflation expectations risen. inflation expectations remained well in line with the price stability objective until last summer, when they started to show signs of declining, not increasing. bis central bankers β speeches does this mean that the risk of fiscal dominance has become obsolete? certainly not. the idea that monetary policy should be able to concentrate on its primary objective is relevant also now. but it manifests itself in a slightly different way than in a high inflation environment. solvency of governments is a self - evident condition for sustainable policies. but striving for our definition of price stability now requires very accommodative monetary policy, which includes exceptionally low interest rates, and also bond purchases. there have been worries that such a policy could make it too easy for governments to engage in excessive deficits and fiscal irresponsibility. is the ecb, for its part, making life too easy for governments which should continue their consolidation efforts? it may well be that the financing of government deficits is made easier by an accommoda | , it is necessary to continue to carefully monitor developments in corporate financing. iv. conduct of monetary policy i have so far explained financial and economic conditions here and abroad. confronted with the drastic changes in economic and financial conditions, countries around the world have taken policy actions aggressively since last autumn. central banks have also taken a variety of policy measures. reflecting the nature of the current economic crisis, where the world economy faced a simultaneous and sharp downturn, policy responses of central banks including the bank of japan have become quite similar. these can be broadly categorized in three main areas. first is the reduction in the policy interest rate. as you know, the bank of japan has reduced its policy interest rate down to 0. 1 percent, and central banks in other major countries have also substantially reduced their policy interest rates. as a result, interest rates charged for overnight funds in the interbank market now stand at 0. 1 percent in japan, 0. 2 percent in the united states, 0. 25 percent in canada, and around 0. 5 percent in the euro area and the united kingdom. however, while major overseas countries have also reduced the level of interest rates down to nearly zero, they are, at the same time, aware of the side effects that extremely low interest rates may have on the functioning of money markets and the business conditions of financial institutions. they, therefore, have not adopted the zero interest rate policy which the bank had adopted in the past where the policy interest rate was brought down literally to within a hairbreadth of 0 percent. second is ensuring financial market stability through the provision of abundant liquidity. central banks have been providing abundant liquidity in their currency, while adopting measures such as lengthening the terms of funds provided. furthermore, in the current financial crisis, central banks in major countries are providing dollar liquidity in coordination with the federal reserve, and this measure seems to be making substantial contributions in stabilizing financial markets. third is restoring the proper functioning of financial intermediation. in this regard, despite their common aims, they differ in terms of where the priority is attached reflecting the differences in the structure of financial intermediation in each country. at the end of 2007, the ratio of bank lending relative to nominal gdp, which can be used as a guide to capture the differences in the structure of financial intermediation, was 63 percent in the united states, 145 percent in the euro area, and 136 percent in japan. on the other hand, the ratio of | 0 |
very important to the individuals you serve, as well as to the overall economy. | a large role to play. in these financial services, particularly in payments, the transmission of information has significant importance. thus, it is natural that recent developments in information technology are generating a number of innovations and services in the area of payments. ii. benefiting from the merits of innovation innovations in financial services have the potential to improve efficiency and enhance access to financial services. they also bring a wide range of benefits to the economy as a whole. bis central bankers β speeches this happens in several ways. first, expansion of the frontier for financial services enlarges the possibilities for new economic activities. for example, if people who lack access to financial services become able to use mobile payments, potential customer base for many businesses will expand and new businesses targeting these people might arise more easily. moreover, if payment methods are fast, inexpensive, and have ubiquity, this will expand the frontier of businesses that use them β for example, businesses that provide e - commerce, music, or software by precisely taking into account customer needs. second, new technologies arising from financial innovations will possibly be applied to other means. for example, distributed ledgers β a technology underpinning digital currencies β are receiving considerable attention as a way to secure the accuracy of ledgers through verification by their users, without relying on trusted third parties ( that is, central operators such as government and central banks ). and distributed ledgers are now under consideration for application to the recording of transfers of financial assets such as stocks as well as to the management of registry books for land and houses. to sum up, innovations in finance including payments that are backed by innovations in information technology have the potential to boost economic welfare and revitalize economic activities through interaction with a range of businesses. now, i would like to emphasize three points that i consider important in maximizing the benefits of these innovations and leading to further development of the economy. the first point is public β s great sensitivity to innovations in information technology and financial requirements. at present, information technology is developing rapidly and new types of businesses are emerging one after the other. accordingly, those involved in providing financial services β including financial institutions β are increasingly expected to pay close attention to changes in public β s requirements and development of technologies that can be applied, and to be sufficiently aggressive and flexible about using the new technology to provide concrete financial services. the second point is the importance of communication with many entities across business categories. to expand financial services by capturing diversifying needs and adapting | 0 |
to restore a path of sustainable growth, measures necessary to undertake the urgent problems created by the current pandemic crisis need to be flanked by interventions aimed at addressing the obstacles that hamper innovation. why gdp growth matters 34. as most economists do, i have focused on gdp and its determinants. this indicator has been subject, not only in recent years, to various criticisms concerning its ability to grasp all the material aspects that define the conditions of an economy and the fact that it neglects non - economic and intangible factors which, however, contribute significantly to the well - being of a country. several projects have been undertaken in the past to provide a more comprehensive measure of welfare. in the early 1970s, for example, nordhaus and tobin built a new indicator ( the β measure of economic welfare β ) which adjusted gdp by including non - market activities, reclassifying government expenditures based on their impact on households β access to key public services ( such as transport, health and education ) and calculating amenity losses due to environmental pollution. however, their conclusion was that the broad picture of secular progress, which gdp conveys, remains valid even after the correction of its deficiencies. 35. similarly, in the early 1980s amartya sen argued that a proper assessment of well - being should take into account people β s access to education, health, civil rights, freedom of opinion, as well as to economic factors, such as income and consumption. the practical implication was the construction of the so - called β human development index β, built by the united nations, which integrates per capita gdp with other indicators to measure the degree of well - being achieved in the various countries. 36. more recently, high emphasis has been placed on the social costs of income inequality, the impact of digitalisation and the environmental sustainability of production. a set of guidelines for a comprehensive measure of well - being and social progress has been recommended in the oecd report beyond gdp ( which described the results achieved by an expert group led by joseph stiglitz, jean - paul fitoussi and martine durand ). experimental indicators are currently being produced in several countries under national initiatives. in italy an β index of equitable and sustainable well - being β ( bes ), which is based on both hard and soft indicators covering twelve dimensions ( such as health, education, safety, work and leisure balance, social relationship, politics and institutions, environment ) is now computed and regularly updated. 37. | the oecd average, the south and the islands fall worryingly below ( slide 7 ). 16. these gaps translate into analogous gaps for italian adults. the programme for the international assessment of adult competencies ( piaac ) carried out by the oecd between 2013 and 2016 indicates that, at each age cluster, italian adults perform invariably worse than the average adult in the oecd ( slide 8 ). in particular, it reveals, for our country, a widespread lack of those skills β reading and understanding, applying logic and analysing β that respond to modern life and work needs. for example, in literacy proficiency, about 70 per cent of italians appear to be unable to understand long and articulated texts adequately ( a result that makes italy one of the worst performers among the oecd countries participating in the test, in which this share is, on average, about 50 per cent ). in the numeracy test, a similar share turns out to be unable to successfully carry out relatively complex reasoning about quantities and data ( against about 50 per cent in the oecd average ). 17. financial competencies are also low in the international comparison. according to the survey conducted by the bank of italy at the beginning of 2020 as part of an international programme started by the oecd, italy ranks 23rd out of 26 countries according to a synthetic score that measures three areas of financial literacy : knowledge, behaviour and attitudes. italy β s score is lower even than that of non - oecd countries with very modest levels of gdp per capita. these findings suggest that the gap in financial literacy with other countries is attributable only in part to lower levels and quality of education or to other unfavourable social or economic conditions and suggests that there is plenty of room for improvement across all the areas of financial literacy. 18. one of the reasons for the gaps that i have just described is linked to the modest level of spending in education, which is especially low at the tertiary level ( slide 9 ). in 2016 the incidence of expenditure on tertiary education on gdp was 0. 9 per cent in italy, one of the lowest shares in the oecd. more effective and, in some cases, additional spending is required in many aspects. in primary and secondary education, the preparation and motivation of teachers are essential and should be adequately nurtured. buildings and infrastructures are often obsolete and, at times, have problems with their overall security, when they should instead | 1 |
the last six months. sonia futures as a share of the overall market have increased, but stand at only a small portion of the total. however, we are yet to see a sonia based loan. there is also a need for further progress in building required infrastructure, not just to issue, but to hold, value, and risk manage sonia based instruments. this progress is a positive sign, but the pace of progress needs to accelerate. there is much more to be done. we have a positive, market - driven plan geared towards finding ways to overcome the barriers to further transition. this is led by the sterling risk free rate working group, whose objective is to catalyse a broad - based transition to using sonia. the authorities were delighted when tushar mozaria agreed to take on the chairing of this3 and today he will speak about the group β s recent initiatives and plan for the rest of the year. 4 but the efforts of the uk β s working group, and those of the others β currency groups, need to be supported by actions at individual firms. if an issue is on the fpc agenda, given they are responsible for the financial www. bankofengland. co. uk / - / media / boe / files / news / 2018 / november / boe - and - fca - appoint - new - chair - of - the - sterling - risk - free - referencerates - working - group. pdf https : / / www. bankofengland. co. uk / events / 2019 / june / last - orders - calling - time - on - libor all speeches are available online at www. bankofengland. co. uk / news / speeches system as a whole, then we would generally assume it should also be on the agenda of the senior governance committees of the firms who make up that system. to make sure this was the case, the uk regulators β the pra and fca β took a decision to send a β dear ceo β letter to our largest banks and insurers requesting sight of their board - approved plans for managing the risks around libor cessation. the bank and fca have already responded to the individual firms involved and, this morning, we published thematic findings from the exercise. i encourage all libor users whatever their size and position in the system - to look at this : the emerging themes from the exercise apply to a wide range of firms, not just those who received our letters | adding to their post 2021 libor exposures. there is a growing recognition across market participants of what transition entails. but we need to get the message to all libor users β firms need to educate their customers. there is much to welcome in sterling markets but progress needs to accelerate. the developments in the sterling frn market have demonstrated that change can be rapid once the conditions are right. but firms should not leave it to the last moment, relying on the efforts of others. firms need to invest in the necessary changes now. all speeches are available online at www. bankofengland. co. uk / news / speeches | 1 |
( iosco ), published a report on β recovery of financial market infrastructures β. also last month, the financial stability board published a report on the key attributes of effective resolution regimes for financial institutions, which includes an annex dedicated to resolution regimes for fmis. together, these two reports are important milestones in strengthening the resilience of fmis, and of the financial system more broadly. today, i will focus on the importance of ccp recovery and resolution, and the challenges faced by ccps in designing appropriate recovery tools. i will also describe the specific role played by authorities during recovery situations, and mention the work that still needs to be done in the field of ccp recovery. bis central bankers β speeches recovery as a part of ccp risk management before i explain why it is important for ccps to have recovery and resolution tools, i would like to make it clear that these tools should only be seen as a way to complement regular risk management. in fact, recovery is the last step of a ccp β s risk management. the regulatory requirements relating to the safety and efficiency of financial market infrastructures defined under the cpmi - iosco principles for financial market infrastructures ( pfmis ) ( and national laws ) are already fairly strict and conservative. their aim, inter alia, is to ensure that recovery procedures will not need to be activated. in other words, if a ccp respects the requirements for risk management set out in the pfmis ( and national regulations ) β which i should add that overseers and regulators are closely monitoring β this should, in principle, be enough to preserve the ccp and its functioning. to ensure the pfmis are properly and comprehensively applied, cpmi and iosco have set up an implementation monitoring procedure covering 28 jurisdictions. two reports on the timeliness of the implementation have already been published and another work - stream will start shortly to assess whether jurisdictions have adopted legislation or policies to implement the pfmi ( level 1 ). the first assessments of the consistency and completeness of the principles β implementation ( level 2 ) for ccps and trs in the eu, japan and us will be released in early 2015. further l2 assessments will start at the end of the first quarter next year. in parallel, we have just initiated in all 28 jurisdictions an assessment of the implementation and application of authorities β responsibilities, with reports scheduled for autumn 2015. moreover, preparatory work is now starting for a level 3 assessment. | resilience : three lessons from the financial crisis1 speech given by dave ramsden, deputy governor for markets & banking inverness chamber of commerce 30 may 2019 with thanks to tom smith for his assistance in preparing these remarks and to staff across bank, including alex baiden from the bank β s advanced analytics division and nick bate and liam crowley - reidy from the bank β s monetary analysis directorate, for their many contributions, as well as my colleagues on the mpc for their helpful comments and suggestions. all speeches are available online at www. bankofengland. co. uk / news / speeches 1 introduction it β s great to be here in inverness, and to be speaking here this morning. my talk today is going to focus on resilience. the first definition of resilience thrown up by google is β the capacity to recover quickly from difficulties ; toughness β. it seems apt that i should be focusing on this here in inverness as scotland itself is a famously resilient nation. robert the bruce was taught resilience by a spider. scotland β s mountains epitomise geological resilience and tests the physical resilience of walkers and climbers. the scottish economy has been through some tough times, but proved relatively resilient during the financial crisis, with scottish onshore gdp falling much less than overall uk gdp. even the existence of the loch ness monster has proved resilient to continued scientific investigation. and resilience is a word that you hear a lot these days ( chart 1 ). psychological resilience is lauded as a virtue as life becomes more complex and challenging. ecological resilience is becoming increasingly prominent as the world comes to terms with the threat from climate change. in my role as deputy governor for markets and banking i β ve recently talked about the importance of resilience in the bank β s operations. 2 what i want to focus on today is economic resilience, by which i mean the ability of an economy to withstand and recover from unexpected difficulties β what economists call β shocks β. this is of particular relevance to two of the bank β s policy committees that i am a member of, the monetary policy committee ( mpc ) and financial policy committee ( fpc ). economic resilience is a subject i first really got chart 1 : google searches for β resilience β interested in when i became chief economic adviser at index : 100 = maximum the treasury in 2007. at this point the uk economy had | 0 |
of his choice. β’ third, the statistician may tend to over - generalise facts and make wrong conclusions. β’ fourth, the samples used may be biased. β’ fifth, the causality outlined may be fallacious. β’ sixth, the data may have been manipulated in order to show a result favourable to some interested party. β’ seventh, data may be dredged or mined in order to find a correlation that would not be there. how to gain credibility for statistics? all these instances of the misuse of statistics make the statistics less reliable and suspicious. the governmental statistical agencies throughout the globe are criticised by public on this ground. once the organisations lose credibility regarding the compilation of statistics, it would be very hard to regain trust and confidence of users. the statistical bureaus run by former soviet union and its satellite states have been subject to this criticism. the way to avoid this criticism is to adopt global best practices with regard to compilation and dissemination of statistics. it requires countries to adopt a code of ethics and practices when it comes to dissemination of information. many member countries of the international monetary fund have adopted such a code in the form of signing for following the principles of outlined in a general data dissemination system and, at a more stringent level, a special data dissemination system. the central bank of sri lanka is a signatory to the imf β s general data dissemination system. the final message in summary, if statisticians are desirous of supporting economic development, they should necessarily produce and supply statistics to meet the requirements of the market. it is essential that they produce such statistics as a readily usable product that could be sold in the market at a price. it is now time in sri lanka for the private statistics - producers to enter the vast market of information. the universities in this sense are in an advantageous position, because they have the best human talents with them. it is unfortunate that they sit idly on this vast wealth of resources. it is time that universities in sri lanka reorient themselves to gain advantage from the market resources and become financially self supporting. in addition, the universities should train their statistics students to become entrepreneurs of statistics rather than becoming employees of agencies that may plan to hire statisticians. | w a wijewardena : the role of statistics and challenges for statisticians keynote address by mr w a wijewardena, deputy governor of the central bank of sri lanka, at the stat day, organized by university of colombo, colombo, 26 march 2009. * * * consciously or unconsciously, we use statistics in everything we do in our day to day life. when we say that it rained yesterday, we simply pronounce a fact we have observed as having happened. when we say that it is raining now, we again mention something that we have observed as happening. when we say that it will rain tomorrow, we are predicting a future event. our life is full of such statements : facts that have been experienced by us in the past, facts that are happening now and being experienced in the present and facts that we feel would happen in the future. what has happened and is happening now are our personal experiences. what will happen are our learned judgements based on our experiences. if we keep these experiences and learned judgments to ourselves, then, it would not form the subject matter of statistics. it becomes statistics only when we share them with others. hence, statistics is basically, observing, analysing, learning and sharing facts about the real world. that sharing of facts need not necessarily be in quantitative or measurable form. they can be simple expressions in verbal form so that others could form opinions on the happenings in the real world. statistics do not have a heart or a religion when we express our personal experiences, we step into a dangerous territory. our personal experiences are guided by our emotional and subjective feelings. when we share them with others, we are inviting them to accept our emotional and subjective feelings as if they too have experienced the same. this is where we run into problems. unless others too have the same emotional and subjective feelings, there is no reason for them to accept our experiences as their experiences. hence, statistics to be shared by everyone should necessarily be based on objective considerations. in other words, statistics should not have a heart. its religion should be pure objectivity. it should convey facts as has been observed by an individual free from personal biases or prejudices. only such an impersonal statistical framework has the capability of serving people intending to use them for making judgments about the real world. how economic development occurs? an economy has to play a specific role towards its members. it has to produce and supply goods and services as demanded by them | 1 |
policy affects asset prices and credit, whose developments are crucial for financial stability, borio and zhu ( 2008 ) argue that such a channel exists. altunbas, gambacorta and marques - ibanez ( 2010 ), maddaloni and peydro ( 2010 ) find empirical evidence consistent with this channel. see woodford ( 2010 ), curdia and woodford ( 2010 ), and lambertini, mendicino and punzi ( 2011 ), among others. on the contrary, it is generally accepted that a flexible inflation targeting ( fit ) approach, if sufficiently forward looking, should ( perhaps informally ) take account of the fact that β significant financial instability invariably will also have a significant impact on activity and inflation β ( bean, 2003, p. 18 ). in practice, however, in the design of monetary policy actions it might be very difficult to take account of developments that are subject to considerable uncertainty and may materialize with long lags due to cumulative and non - linear effects of financial imbalances. since β the real world is generally complex and non - linear, [ even ] within a well specified fit framework, the implicit monetary policy reaction function would then also be non - linear ( and possibly very complex, as it would not be possible to rely on certainty equivalence ) β ( visco, 2003, p. 24 ), indeed, considering a taylor rule as a description of the normal conduct of monetary policy, i argued that for some purposes a linear rule with the interest rate expressed as a function also of asset price misalignments could be a simple and linear approximation ( a taylor β approximation β, after brook taylor the mathematician, within the taylor β rule β introduced by john taylor the economist! ) of how central banks would behave ( or perhaps should have behaved ) in a non - linear and complex environment. bis central bankers β speeches and the propensity to take risks. at the same time, macroprudential policies will likely react to, and affect, credit growth and asset prices, influencing the monetary policy transmission mechanism. these interactions need to be well understood and taken into account in formulating the two policies. two research projects recently carried out at the bank of italy have focused on the interaction between monetary policy and macroprudential policy. the first study concentrates on the recent housing bubble in the united states. 9 the results indicate that a tighter monetary policy by the fed between 2002 and 2006 would have not been sufficient to | β the role of macroeconomic policies in the global crisis β, banca d β italia, occasional papers, no. 69. curdia, v., and m. woodford ( 2010 ), β credit spreads and monetary policy, β journal of money, credit and banking, 42 ( 6 supp. ). hanson, s., a. kashyap and j. stein ( 2010 ), β a macroprudential approach to financial regulation β, journal of economic perspectives, forthcoming. lambertini, l., c. mendicino and m. t. punzi ( 2011 ), β leaning against boom - bust cycles in credit and housing prices β, this conference. maddaloni, a., and j - l. peydro ( 2010 ), β bank risk - taking, securitization, supervision and low interest rates. evidence from the euro area and the u. s. lending standards β, ecb working paper, no. 1248. visco, i. ( 2003 ), β discussion of β asset prices, financial imbalances and monetary policy : are inflation targets enough? β by charles bean β, bis working papers, no. 140. woodford, m. ( 2010 ), β financial intermediation and macroeconomic analysis β, journal of economic perspectives, forthcoming. bis central bankers β speeches | 1 |
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