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to maintain financial system stability. using the metaphor, the economy after the burst of a bubble can be divided into two phases : the phase of β acute pains β arising from the malfunctioning interbank money markets and the phase of β chronic illnesses β from balance - sheet adjustments after such acute pains recede. it is very important to stave off the acute pains, which are likely to trigger a sharp contraction of economic activity and potentially produce devastating effects on the economy. in may 2010, major central banks reintroduced dollar - fund supplying operations when dollar - funding markets showed signs of tension, again reflecting increased concern over sovereign debts problems in peripheral european countries. such measure was implemented with consideration of the importance of maintaining the stability in interbank funding markets. second, we need to continue with the unprecedented easy monetary policy, given the current economic conditions. in fact, many advanced countries have maintained very accommodative monetary policy. the bank of japan ( boj ) also decided recently to implement a comprehensive monetary easing policy in order to further enhance monetary easing. that included three measures : ( i ) clarification of maintaining virtually zero interest rates ; ( ii ) clarification of the time horizon to maintain the virtually zero interest rate policy ; and ( iii ) establishment of an asset purchase program to purchase various financial assets, such as government securities, commercial paper ( cp ), corporate bonds, exchange - traded funds, and real estate investment trusts and to conduct the fixed - rate funds - supplying operation against the pooled collateral. third, we need to accept the fact that, once a country experienced a bubble, it will take fairly long to rise up from the bottom in the aftermath of the burst of a bubble, and restore the fullfledged recovery path, despite various unprecedented policy efforts. as japan β s experience shows, it is the hard fact that the economy will be unable to achieve a strong recovery without resolving β excesses β accumulated during a bubble period. the form of β excesses β varies from country to country. in japan, they were β three excesses β in the business sector : employment, production capacity, and debt ( chart 9 ). in that context, we sometimes hear an argument that β the delayed monetary policy responses caused the economic stagnation β. it is true that the boj failed to fully recognize the significant magnitude of adverse effects soon after the burst of the bubble, like other central banks. but it is also true that the boj carried out | of some products closely related to international commodities, such as those of petroleum products. consumer prices are also leveling out. on the other hand, corporate service prices continue to decline. for a while, movements of overall prices are likely to be flat, as import prices are rising and the decline in domestic commodity prices has come to a halt reflecting the progress in inventory adjustment. however, distinct narrowing in the output gap is this report was written based on data and information available when the bank of japan monetary policy meeting was held on august 13, 1999. the bank β s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on august 13 as the basis of monetary policy decisions. unlikely for the time being even though the economy has stopped deteriorating, and wages continue to decline. thus, downward pressure on prices is expected to remain. in the financial market, the overnight call rate has stayed at nearly zero, and financial institutions have been confident about the availability of overnight funds. interest rates on term instruments slightly increased from the middle of june but then fell back, and have recently been steady. however, those on instruments maturing beyond the year - end are relatively high partly due to market participants β concern over the year 2000 problem. the japan premium has continued to be nearly zero. yields on long - term government bonds fell to the level of 1. 6 percent in the middle of july, but have slightly increased to 1. 8 - 1. 9 percent. the yield spread between government bonds and private bonds, especially corporate bonds with relatively low credit ratings, has narrowed further. stock prices fell in late july against the background of the appreciation of the yen and the recent weak tone in u. s. stock prices. the current level is around 17, 000 - 17, 500 yen. the amount outstanding of funds in the call money market has remained generally stable since the middle of june. to date, this has not led to any difficulty in funds settlement, but close attention should be paid to future market developments. with regard to corporate finance, private banks have basically retained their cautious lending attitude. however, constraint that had been caused by severe fund - raising conditions and insufficient capital base has eased considerably. under these circumstances, major banks have gradually become more active than before in extending loans, while carefully evaluating the credit risks involved. however, credit demand for economic activities such as business fixed investment remains weak. in addition, firms β moves to increase their on - hand liquidity have | 0.5 |
performs a critical role in crisis containment and management, in particular, to provide liquidity, to prevent disruptions to the functioning of the financial system and to restore stability and confidence to the financial system. to avoid a piecemeal approach by any individual agency in the system and to ensure a comprehensive response to the financial crisis, the institutional arrangements for greater coordination across agencies is essential to allow for prompt action that may include a range of measures such as capital injections, debt guarantees and asset purchases in the effort to contain and manage the crisis. regional roles at the regional level, the role of the central banks in east asia has in this decade, transitioned to a new level of collaboration and cooperation. following the asian financial crisis, efforts have focused on five main areas, namely, to enhance the effectiveness of regional economic and financial surveillance, to improve the arrangements for regional crisis management that is reinforced by regional support mechanisms, to develop the regional financial infrastructure including the bond market and the payments and settlement system, to strengthen regional financial stability, and finally, to pursue capacity building collaboratively, so as to enhance the effectiveness of the central banks in the region. the priority for asia going forward is to accelerate regional financial integration. to ensure this takes place in an environment of regional stability, strengthening cooperation is also aimed at managing the risks and vulnerabilities of the region. in 2006, the east asian central banks have established a monetary and financial stability committee as a forum to discuss the risks to regional macroeconomic and financial stability. in addition, the asean + 3, a subset of this group, has already taken concrete steps to multilateralise the chiang mai initiative into a more advanced and robust framework for the effective pooling and utilisation of liquidity support in the region. while the asian region is highly diverse, in these key areas of cooperation and collaboration, the asian region has demonstrated its cohesiveness in coming together to deal with the challenges that the new environment presents to us. conclusion let me now conclude. the world has changed and will continue to change. to remain effective in the new environment and to have the capacity to respond to the new challenges, central banks also need to undertake its own transformation and modernisation. moreover, in preserving the independence of the central bank and to be able to stand our ground in performing our responsibilities, central banks need to be standing on solid ground. this requires continuous capability enhancement and capacity building so as to be well positioned to have the ability to rise to the challenges | delisle worrell : the growing relationship between china and barbados welcome remarks by dr delisle worrell, governor of the central bank of barbados, at the press launch of the fish and dragon festival, bridgetown, 29 january 2015. * * * ambassador wang ke of the embassy of the people β s republic of china in barbados other representatives of the embassy of the people β s republic of china in barbados, mr. david bulbulia, deputy permanent secretary, ministry of foreign affairs, mr. kirk ottley, president of the bcfa and other representatives, festival director, ms. tonika sealy, ladies and gentleman, members of the media and press good morning. they say that the world β s centre of gravity has shifted to the east, suddenly and dramatically. even someone like myself, with more than a passing knowledge of chinese history, culture and policy, has been astounded by the transformation. the images i see on tv daily are of an utterly different country to the one i visited in 1980. the very fact that cctv america is available in barbados, and that its global coverage is among the most dispassionate, informative and sympathetic to my sensibilities, of any international broadcaster, is something that was inconceivable back then. most barbadians are only dimly aware of the magnitude of the change that the emergence of china implies, and the myriad ways our lives might be touched by that change. we do know of chinese interest in direct investment in the caribbean ; it is substantial, and it is to be welcomed, because it benefits both sides. barbados and the caribbean benefit from the increase of our capacity to produce goods and services, and the associated employment. china, for its part, is in search of opportunities to diversify foreign investment portfolios. i have only recently been sensitized to the extent of online commerce with china, and the inbuilt features that facilitate this commerce. the chinese embassy, the annu institute, the barbados - china friendship association and other groups and individuals have provided us with glimpses into china β s rich, ancient, and modernizing culture. we see more of it on cctv. the confucius institute is about to get going. we see reports of missions to china, and articles on the experiences of barbadians living there. what all this makes us realise is that a whole new world has emerged, with china as its hub, and we are feeling the swell | 0 |
over the past 130 years or so. the credit cycle is every bit as regular as the business cycle. but it differs from the business cycle in two critical respects : its amplitude is at least twice as large and its duration at least twice as long. both are important for the design of macro - prudential policy regimes. the larger amplitude of the credit cycle is one reason why credit booms have, more often than not historically, resulted in banking crises ( table 1 ). because financial crises cause large and long - lived disruption to the economy, this suggests a strong empirical link between credit cycles and macroeconomic destabilisation. or, put differently, curbing the credit cycle appears to be an important ingredient of broadly - based macro - economic stability. in principle, monetary policy could be used to curb the credit cycle. in practice, the differing duration and synchronicity of the credit and business cycles means this is unlikely to work well. pre - crisis experience illustrates well just that point. at the same time as the wider economy was operating in cruise control, credit markets were in overdrive. hitting these two birds β one flying high, the other low β with one ( monetary policy ) stone would have defied even the most astute marksman [ king, 2013 ]. what is needed, in these instances, is a second instrument. in the language of tinbergen [ tinbergen, 1952 ], two cycles and two objectives call for two instruments. this is where macro - prudential policy comes in. one of the aims of macro - prudential policy is to act counter - cyclically on the credit cycle, constraining credit booms and cushioning busts bis central bankers β speeches [ aikman et al, 2014 ]. in this role, macro - prudential policy is complementing monetary policy in its role of stabilising the macro - economy. macro - economic policy then becomes, in effect, two - handed or ambidextrous. since the crisis, this two - handed approach to policy has been taken up actively by a number of countries internationally [ imf, 2013 ]. for example, counter - cyclical prudential policy is now baked into new international regulatory rules. the so - called basel iii reforms introduced for the first time a β counter - cyclical capital buffer β ( ccb ) to be adjusted to counteract the credit cycle [ bcbs, 2010 ]. while a small step for | a significant number of new macro - prudential frameworks have emerged internationally in the past few years. in some cases, including in the uk, central banks have been handed macroprudential responsibilities. this has enabled explicit co - ordination between the monetary and macro - prudential arms when tackling the joint needs of the economy and financial system β for example, in the uk through joint meetings of the bank β s mpc and fpc. but in a number of other countries, responsibility for macro - prudential policy has been located outside of central banks [ imf, 2013 ]. we have a mixed model. in this institutional respect, macro - prudential policy today resembles monetary policy perhaps a generation ago. it is, of course, still early days for macroprudential regimes. monetary policy took a generation, if not two, of trial and error to find its feet. for policymakers finding their feet today, doing so will be far easier using two arms than one. bis central bankers β speeches chart 1 credit and business cycles chart 2 us interest rates source : bank calculations source : thompson reuters datastream ; bank calculations chart 3 us credit gap chart 4 actual and implied capital in the us sources : bis, oecd and bank calculations sources : bis, oecd, fdic and bank calculations chart 5 policy rates in europe chart 6 credit gaps in europe bis central bankers β speeches chart 7 bank capital ratios in spain chart 8 bank capital ratios in ireland sources : bis, oecd and bank calculations sources : bis, oecd and bank calculations chart 9 policy rates in advanced economies chart 10 real long - term interest rates source : thomson reuters datastream chart 11 covenant - lite and other highyield loan issuance in the us sources : bloomberg and bank calculations. chart 12 taylor - minsky rule for the uk source : jpmorgan chase & co. ( a ) volume as of 15 november 2013. bis central bankers β speeches table 1 the credit cycle and subsequent crises total peaks 1880 β 2008 * crisis years * * within 5 % peaks with crisis years within years following a peak the following 5 years aus 67 % can 55 % deu 22 % dnk 40 % esp 63 % fra 60 % gbr 78 % ita 73 % nld 13 % nor 39 % swe 40 % usa 67 % 51 % * interwar data missing for most countries. data coverage incomplete for other countries e. g. only post - 1945 | 1 |
the directors of the bank in a foreign country for looking after the interests of creditors and other clients of the bank branch in new zealand? under existing policy, foreign banks are able to operate as branches in new zealand unless they have substantial retail deposits or are deemed by the reserve bank to be systemically important. in such cases, they must operate as locally incorporated entities. where they do operate as branches, we impose certain prudential requirements on them and require disclosure of the new zealand branch operations, but we place considerable reliance on the directors of the foreign bank to ensure that the affairs of the bank as a whole are being prudently managed. we recognise of course, that this approach has its limitations. in particular, we know that the directors of a bank, and the corporate governance and risk management structures within a bank, do not generally draw distinctions between the foreign branch of the bank and the rest of its operations. we are also mindful that the foreign branch of a bank is legally indistinguishable from the rest of the bank, and that assets and liabilities can move quite readily, sometimes at the push of a button, between the branch and the rest of the bank. in fair weather, that is fine. but in times of crisis, the distinction between the branch and the rest of the bank, and the legal location of assets and liabilities, may well become very important indeed. you might think that the problem associated with branch banks could easily be solved by simply requiring banks to operate in new zealand as locally incorporated subsidiaries. many of the banks currently in new zealand do just that. but even here there are corporate governance and related complications. increasingly, both in new zealand and elsewhere, international banks are managing their affairs as a global business, regardless of whether they operate in foreign jurisdictions as branches or subsidiaries. core functionality, such as information technology, financial accounting and risk management, is being increasingly managed on a global level. in some cases, this is being done in a banking group's head office. in other cases, core functionality is being located in developing countries to take advantage of lower cost structures. in both cases, the legal boundaries between different parts of a banking group are becoming less relevant. and all of that is probably just fine when things are going well. but when things do not go well - such as in a bank failure situation - the legal divisions within a banking group and the location of core functionality become very important indeed. and it is precisely this issue | . and, as i just said, over the first twelve years we have delivered average yearly inflation at the level of less than 2 % : it is a better result than the previous national currencies over the last 50 years, including the deutsche mark. here in aachen, i can say, the promise β stark wie die mark β has been fully respected. since the crisis we also had to cope with financial turbulences, abnormal functioning of markets and disruption of certain segments of markets. we showed our responsibility in taking monetary policy measures β we call them β non standard β decisions, strictly separated from the β standard β decisions, and aimed at restoring a better transmission of our monetary policy in these abnormal market conditions. all these β non standard β measures β whether exceptional refinancing with full allotment and longer duration, or the interventions in private or public securities markets β have been designed to be commensurate to the tensions observed on these markets and allow a better transmission of our interest rates decisions. in demonstrating both conviction and responsibility, the ecb has been, during the last four years, a reliable and solid anchor of stability to the service of our fellow citizens in the worst economic and financial circumstances since world war ii. had we not been able to present a solid anchor of stability and confidence, the recovery the euro area has experienced since may 2010 would probably have been very different. the increase in gdp of over 2. 5 % in the past 12 months would not have happened. the increase in employment by 350, 000 jobs since then might not have been there. bis central bankers β speeches in deciding on all our measures, standard and non - standard, we have the needle in the compass on our primary objective : price stability for the 331 million fellow citizens of the euro area. i wish to underline that achievements of the last 12 years have only been possible thanks to the remarkable dedication and expertise of the ecb executive board and governing council, to whom europe today, through the karspreis, is expressing its gratitude. the same gratitude goes to the 1, 400 staff members at the ecb in frankfurt. they come from all 27 countries of the eu. they are a shining example of professionalism and team spirit, of what it means to work together for europe. current challenges for governance just as the success of the euro as a currency is due to well - designed institutions, addressing emu β s difficulties requires a major strengthening of the rules and organisations that govern fiscal | 0 |
ltros in late 2011 and early 2012. in other words, banks seek less insurance against funding shocks from public sources ( the ecb ) and return to the private market place to fulfil their demand for finance. this is all welcome. and we observe with relief the consequences that this process is having for the target - 2 balances, which have dropped by 30 % since the summer of last year. with our decision to lower the rate on our main refinancing operation under forward guidance, and extend the application of the fixed - rate with full allotment policy, we will allow this process to continue without negative implications for market rates. this combination of policies will make money market conditions less dependent on excess liquidity and its uncertain evolution. institutional reform in the financial sector the challenges of conducting and implementing monetary policy in the current environment are a fitting reminder of a more general challenge. monetary policy can support a recovery by shielding it from risks. but monetary policy cannot substitute for structural reforms that tackle problems at their root. the normalisation of money market conditions goes hand in hand with unstable rates because there is more need to improve the health of the banking sector. much has already been achieved. fresh capital has been raised, problematic legacy assets have been removed and, as a result, core tier 1 ratios of the largest euro area banks now stand at 11 %, well above the new basel iii capital requirements. but more must be done and progress is on its way in the form of a european banking union. before the first element of the banking union, the single supervisory mechanism, takes up its role, a comprehensive balance sheet assessment must be undertaken. this task has recently begun. the asset quality review has three specific goals : first, to achieve transparency about the current quality of balance - sheets ; second, to repair balance sheets where necessary ; and third, as a as a result of the first two, to regain the confidence of all major stakeholders in banks. only then will banks be the financiers of the real economy. conclusion let me conclude. five years after the collapse of lehman brothers and one and a half year after the peak of the sovereign debt crisis, the worst seems over. a recovery has started, but it is still in its bis central bankers β speeches infancy and fragile. the global environment remains uncertain. structural reform and fiscal sustainability are underway, but must be pushed to completion. financial sector regulation is being thoroughly revamped. steering the economy under these conditions presents formidable | challenges. however, we have a clear mandate : to maintain price stability. our recent decision to cut rates was warranted by our mandate. to ensure the effective transmission of monetary policy we provide forward guidance and provide ample liquidity. but we can only provide an environment conducive to long - term growth. growth itself comes from a structurally sound economy. the banking union and the forthcoming asset quality review are part of structural reforms whose success is key for the economic future of europe. bis central bankers β speeches | 1 |
drawing significant advantages from it. it is up to firms to continue their action for a better balanced financial structure, all to the benefit of their ability to stay in the market. bis central bankers β speeches | been an asset to the policy making community. i have little doubt that they will be equally valuable in the future. we need, more than ever, people who can think β out of the box β and actively spur the debate. after all, concentration and correlation are as bad for ideas as they are for financial assets. the central banking community counts on andy to mitigate that risk. the records suggest that ferdinand pecora was β an astute prosecutor with a sharp wit and acerbic tongue β. 19 andy β s tongue may not be acerbic, but his wit is sharp. today you had the chance to discover that he is also an excellent speaker. β a history of notable senate investigations prepared by the united states senate historical office β, https : / / www. senate. gov / artandhistory / history / common / investigations / pdf / pecora _ investigation _ citations. pdf. designed by the printing and publishing division of the bank of italy | 0.5 |
, one thing is for sure : aging will change the canadian economic landscape. we have started to see the impact of this process and it will intensify. this will the topic of population aging in developed countries was brought to the attention of a broad audience by the first of many un studies in 1956 in β the aging of populations and its economic and social implications, population studies β, no. 26 ( united nations publication, sales no. 1956. xiii. 6 ). by 1982, the global relevance of the topic was acknowledged in the first world assembly on aging in vienna, and a call for action was put forward. see david dodge, β past adjustments and future trends in the canadian economy, β ( remarks to the london chamber of commerce, london, ontario, 8 december 2003 ) ; β canada β s competitiveness : the importance of investing in skills β ( remarks to the humber college institute of technology & advanced learning, toronto, ontario, 30 march 2005 ) ; β demographics, labour input, and economic potential : implications for monetary policy β ( remarks to the st. john β s board of trade, st. john β s, newfoundland and labrador, 13 june 2007 ). see also mark carney, β the coming thaw β ( remarks to the winnipeg chamber of commerce, winnipeg, manitoba, 4 february 2010 ) ; β the virtue of productivity in a wicked world β ( remarks to the ottawa economics association, ottawa, ontario, 24 march 2010 ) ; β growth in the age of deleveraging β ( remarks to the empire club of canada, toronto, ontario, 12 december 2011 ). bis central bankers β speeches have broad implications, including for monetary policy. this is what i would like to discuss today. current demographic situation let β s first quickly remind ourselves of the facts. when we think of population aging, we immediately think of the baby boomers who are just starting to retire. canada did indeed have the most sizable baby boom among the g - 7 countries, and it is certainly an important demographic phenomenon ( chart 2 ). but as someone who has come of age in the shadow of the baby boom, let me say this : baby boomers, this is not just about you. although the post - wwii baby boom is speeding up the transition toward an older population, it is neither the cause nor the main driver. the aging of canada β s population would have occurred, with or without the baby boom. there are two much more important and persistent drivers at | a priori grounds, the set of indicators which they routinely monitor. i thank you for your attention. i am now happy to answer your questions β that is, to the same extent as most central bankers would answer them. | 0 |
donald t brash : promoting financial stability : the new zealand approach address by dr donald t brash, governor of the reserve bank of new zealand, to the conference for commonwealth central banks on corporate governance for the banking sector, london, 6 june 2001. * * * introduction it is a great pleasure to have the opportunity to speak to you today. the theme of this conference β corporate governance in the banking sector β is a subject that has been an important element in the commonwealth secretariat's financial sector work in recent years. it has also been a notable feature of other international initiatives, including those of the international monetary fund and world bank, in their efforts to address the causes of financial crises and to promote greater financial stability. appropriately, improving corporate governance is seen as a significant way of encouraging banks to strengthen their capacity to manage risks. and it has rightly been viewed as an important element in the management of central banks. today, i want to discuss the role that corporate governance plays in the new zealand banking supervision framework and to relate this to the importance we attach to strengthening market discipline in the financial system. but before doing this, let me briefly recap the main points made in the report issued by the commonwealth secretariat last year on the causes of financial instability and the policies for promoting stable financial systems. this provides a useful context within which to discuss the new zealand approach to financial sector regulation. causes of financial instability as indicated in the commonwealth secretariat's paper corporate governance in the financial sector, financial instability is caused by a combination of factors. these include : Β· rapid financial sector liberalisation unsupported by measures to encourage prudent risk management in the financial sector ; Β· unsustainable macroeconomic policies, such as loose monetary policy and excessive fiscal spending β such policies can contribute to asset price volatility and a subsequent erosion of asset quality in the financial system ; Β· exchange rate arrangements that lack credibility, including unsustainable exchange rate pegs β this is particularly important where financial institutions and corporations have come to rely on an exchange rate peg, and fail to hedge their currency risk, only to sustain currency losses when the peg collapses ; Β· protection against imports and other policies that impede the efficient allocation of resources in the economy ; Β· poor banking supervision ; Β· inadequate financial disclosure arrangements, including poor quality accounting and auditing standards ; and Β· weak market disciplines in the banking and corporate sectors, reducing the incentives for high quality risk management by banks. policies for promoting stable financial systems | temporary shutdown of government services. but the deceleration in other countries, amid a slowdown in global trade flows, surprised many by its magnitude. the eurozone slowed from 2. 4 % in 2017 to 1. 8 % last year, as weakening exports to asia, the united kingdom ( uk ) and eastern europe took a toll on business confidence. the world bank now only expects a 1. 2 % increase in the eurozone β s gross domestic product ( gdp ) this year. china has also lost momentum, as earlier policy tightening curtailed lending by the non - bank financial sector and the tariff increases of 2018 weighed on exports. by late 2018, these negative economic surprises had reached levels ample enough to trigger a bout of risk aversion in financial markets, which particularly affected equities 1 media call on the june 2019 global economic prospects report, world bank group, washington dc, united states page 2 of 10 and corporate bonds ( although emerging market currencies and fixed - income markets were relatively sheltered ). global financial conditions tightened. this tightening, however, proved short - lived, as the continuation of benign ( and, in some cases, soft ) inflation developments allowed major central banks to pause, or delay, the start of their normalisation process. in the us, in particular, indications by the federal reserve ( fed ) that it could be patient before making any policy decisions helped equities and corporate bonds to recover their earlier losses. nonetheless, many threats to global expansion remain unresolved, and in some cases risks previously identified have begun to materialise. first and foremost among these are the trade tensions between some of the world β s major economies. in the wake of the recent increases in us tariffs on selected chinese imports, and in light of the potential for broader tariff increases, analysts are already anticipating a bigger drag on global growth from what increasingly looks like a protracted trade conflict. in its most recent surveillance note for the g20 finance ministers and central bank governors, for the meetings in fukuoka, japan, 10 days ago, the imf noted these additional tariffs would β dampen trade and weigh on confidence and financial sentiment, adversely impacting investment and productivity and growth. β separately, the uk β s parliament is struggling to agree on the terms for leaving the european union, with negative consequences for growth and investment and some spillovers to continental europe. financial markets have displayed sensitivity to these developments. at the same time, a number of geopolitical tensions | 0 |
. finally, well, we will have the discussion about a fiscal instrument in order to confront potential asymmetric shocks in the euro zone. from a political standpoint the last european council decided that we should start with this fiscal facility. i think that is a first step. normally long trips start with the first step. we have taken the first step in order to have this fiscal facility. i'm thinking that is something that should complement monetary policy in order to have all these instruments to confront shocks, to confront a crisis, because a crisis will arrive for sure. given the different approaches that the member states are having, do you feel that a two speed, a multi - speed europe is a risk, a possibility, an inevitability? i do not see it now. i think that we should work in parallel. i hope that we should create the political will in every country in order to work together and to advance and make progress together. i believe that a single speed is much better than a multi - speed euro zone or european union. 3 / 3 bis central bankers'speeches | in order to safeguard the stability of the euro area as a whole β could inject capital directly into banks, this would also help to break the bank - sovereign loop. of course, such support must come with strong conditionality and control. let me note that depending on its design, the financial union could introduce additional elements of risk - sharing among euro area countries, and as such, it should be subject to strong democratic accountability and control at national and european level. most importantly, all euro area countries need to return to sound macroeconomic and fiscal positions. this may sound obvious, but unfortunately it has threatened to slip out of focus in some of the recent discussions. there has been substantial progress towards consolidating the foundations of emu. fiscal rules are being strengthened, and almost all european governments have signed a treaty that contains the so - called fiscal compact, which mandates all contracting parties to introduce legally enforceable debt brakes in their countries. 3 the reformed governance framework also provides new tools to improve budgetary surveillance as well as to prevent and address macroeconomic imbalances β the β six - pack β reforms and the β two - pack β legislation are examples and should be forcefully implemented. looking ahead, a path towards a fiscal union, based on a principle of responsibility and with proper control and accountability, would provide a sound β fiscal pillar β on which the single currency could safely rest. some have suggested that it could provide a basis for the introduction of euro area - wide funding instruments with joint and several liabilities. such instruments could contribute to a smooth functioning of a stability - oriented monetary policy, protecting member states from temporary tensions arising in some parts of the union and offsetting the emergence of selffulfilling expectations leading to bad equilibriums. there is an important caveat, however. in his 1790 report on public credit, alexander hamilton wished β to see incorporated, as a fundamental maxim in the system of public credit of the united states, that the creation of debt should always be accompanied with the means of its extinguishment β. common funding instruments would require shared decision making on national debts and deficits and probably joint control on fiscal expenditures and taxation. they can only result from further political integration ; they cannot precede it. likewise, and importantly, a fiscal union can only come about once the participating countries have successfully restored domestic fiscal sustainability and solidified the conditions for long - term growth. joint debt issuance cannot be a substitute for putting national fiscal houses in order and | 0.5 |
yukitoshi funo : economic activity, prices, and monetary policy in japan speech by mr yukitoshi funo, member of the policy board of the bank of japan, at a meeting with business leaders, shimane, 3 october 2019. * * * i. recent economic and price developments a. overseas developments i would like to begin by talking about overseas economies, which have been growing moderately on the whole, although slowdowns have continued to be observed. in terms of the outlook, slowdowns are likely to continue for the time being ; thereafter, however, overseas economies are expected to grow moderately on the whole with their growth rates rising somewhat. according to the july 2019 world economic outlook update released by the international monetary fund ( imf ), global growth is forecast at 3. 2 percent for 2019 and 3. 5 percent for 2020. however, as downside risks concerning the global economy seem to be increasing, careful attention is warranted on the timing and pace of its pick - up. looking at developments by major region, the u. s. economy has been expanding moderately, although relatively weak developments have been observed in the manufacturing sector. the european economy has remained in its deceleration phase. the chinese economy has continued to see stable growth on the whole, but weakness has been observed in the manufacturing sector. other emerging and commodity - exporting economies have maintained their recovery trend as domestic demand has been firm on the whole. as for the outlook, the u. s. economy is expected to maintain its moderate expansion and the european economy is projected to gradually move out of its deceleration phase. the chinese economy is likely to broadly follow a stable growth path as authorities implement fiscal and monetary policies in a gradual manner. the growth rates of other emerging and commodity - exporting economies are likely to rise on the whole, mainly on the back of the effects of those economies'stimulus measures. risk factors to the overseas economic outlook are wide ranging and likely to be significant, as exemplified by ( 1 ) the u. s. macroeconomic policies and their impact on global financial markets, ( 2 ) the consequences of protectionist moves, including those observed in the u. s. - china trade friction, and their effects, ( 3 ) developments in emerging and commodity - exporting economies, the progress in global adjustments in it - related goods, ( 5 ) negotiations on the united kingdom's exit from the european union ( eu ) and their effects, and ( 6 | kazuo ueda : progress and challenges in the asia - pacific financial system keynote address by mr kazuo ueda, governor of the bank of japan, at the 18th asiapacific high - level meeting on banking supervision, tokyo, 6 march 2024. * * * introduction good morning. thank you for participating in the 18th asia - pacific high - level meeting on banking supervision today. it is a great honor to host the first in - person meeting in five years since 2019, here at the bank of japan. in recent years, we have witnessed significant shifts in the economic and financial landscape. these shifts began with the slowdown in economic activity due to the covid - 19 pandemic, followed by subsequent recoveries, heightened geopolitical tensions, and a surge in inflation. despite these challenges, the impact on the financial system in the asia - pacific ( apac ) region has been relatively contained. reflecting on the past quarter century from the year 2000 to the present, even amid the global financial crisis and the european debt crisis, the financial system in the apac region has exhibited overall stability, contributing to considerable growth in the apac economies. i would first like to touch on the characteristics and background of the stability of the financial system in the apac region during the past quarter century. following the agenda of this meeting, i will then talk about the changes in the environment that are crucial for promoting financial stability and the challenges we currently face. i. asian currency crisis and subsequent responses the asian currency crisis, which occurred just before the year 2000, stands out as the pivotal event that influenced the stability of the financial system in the apac region over the past quarter century. the crisis served as a turning point, encouraging jurisdictions affected by it to implement structural reforms with a focus on managing external debt and capital flows. these reforms included improving current account balances, accumulating foreign reserves, increasing net foreign assets, and shifting to more flexible foreign exchange systems. moreover, the lessons learned were widely shared, even among jurisdictions that did not directly experience the asian currency crisis. apac jurisdictions have enhanced the institutional frameworks of the financial system, strengthened financial supervision, and advanced major restructuring among financial institutions. there has also been notable progress in developing frameworks for financial coordination and cooperation within the apac region. with a view to ensuring stability in foreign exchange and financial markets, the chiang mai initiative multilateralisation ( cmim ) was established, a currency swap network that covers | 0.5 |
2005, and further fell to 24. 3 % in september 2007. this is consistent with government β s desire of making more funds available for priority sectors of our economy at reasonable cost, in line with the objectives the fifth national development plan, 2006 - 2010. ladies and gentlemen, testimony to this was the recent lowering of the statutory reserve ratio by the bank of zambia to 8 % from 14 % effective 1st october 2007. we expect this action, will release more funds to the commercial banks for on - ward lending to the priority sectors. availability of investible funds to sectors such as agriculture, manufacturing, tourism and mining will stimulate further growth in the economy, create more employment and incomes, and contribute to alleviation of poverty. however, it must be noted that the economy desires much lower lending rates than so far recorded to make credit affordable and effectively contribute to expansion of economic activity. the external sector has continued to score remarkable improvement as lately reflected in a the resilience of the kwacha against major foreign currencies, and the country posting in 2006, an estimated overall balance of payments surplus of us $ 696 million compared with a deficit of us $ 284 million in 2005. for instance, the kwacha appreciated by 12. 0 % against the us dollar while the local currency gained by 10. 4 % against the south african rand during the period end - december 2006 to 21st september 2007. this improvement largely occurred due to increased export, which mainly arose from continued high copper prices and complimentary higher export volumes coupled with the buoyant growth in non - traditional export earnings. the maintenance of an appropriate monetary policy, in the wake of a higher than expected inflation outcome in the first quarter of the year, also contributed to the resilience of the kwacha. the developments in the kwacha should not only enhance competitiveness of the country β s exports, particularly the non - traditional exports but should overall have a positive bearing on inflation developments in the coming months. esteemed colleagues, the financial sector has continued to enjoy stability and growth this year, characterised by improved banking services and emergence of new products. the overall financial condition and performance of the banking sector has been assessed as satisfactory. the performance of the non - bank financial institutions has todate been fair as the bank of zambia continues to implement measures aimed at maintaining and enhancing the soundness of the financial system. chairperson ; when we met last year at fringilla in chisamba, i informed the participants | a way that would not compromise the low inflation objective. at this point, your excellency, distinguished ladies and gentlemen, allow me to humbly say once again that i am deeply honoured to be invited to address you on this occasion. i thank you for your attention. | 0.5 |
and also reviews the control environment in which this information is produced. in a growing economy like ours, the need for high quality financial information is very critical. financial information provides the basis for all financial decision making at all levels of economic activity, from households to large international organizations. remember, there is no high quality information without the work of accountants and that is one reason why accountants play such a critical role in today β s global financial system and the global economy. you provide financial information that helps businesses and governments run properly. you provide investors and creditors with reliable information for decision making. you also provide assurance services founded on integrity and independence. distinguished members, the vision of this country is to become a prosperous middle income country by the year 2030. in order for us to attain this vision, we need to improve the financial infrastructure in zambia. the government intends to achieve this through the implementation of the financial sector development plan. an improved financial infrastructure will result in efficient capital and money markets which will in turn attract foreign investment into our economy. however, in order to attract and retain foreign investment, we need to have the ability to provide investors with transparent information that will result in efficient investment decisions, higher returns and greater investor confidence. without confidence, investors will simply find somewhere else to invest their money. high quality, investor oriented and transparent financial reporting attract both seekers and providers of capital. this is where accountants come in, to ensure the provision of reliable and transparent financial information to potential investors and other users of financial statements. ladies and gentlemen, i am certain that as members of zica you take pride in helping improve the financial sector in zambia. this is done through standard setting. i recognize the fact that accounting standards provide the foundation for the production of high quality financial information. i am aware that zica has adopted international financial reporting standards ( ifrs β s ) in full and that all members of zica are obliged to ensure compliance with ifrs. however, it is unfortunate that despite zica adopting ifrs, it is not a legal requirement under the securities act, the insurance act, the banking and financial services act and also at the lusaka stock exchange. nonetheless, i wish to state that efforts are underway to make ifrs a mandatory requirement for financial institutions. it is important for this provision to become a legal requirement in order to enhance the credibility of financial statements that are being produced by institutions governed by the various laws. i wish to state here that as much as it is important to follow | % recorded in 2008. almost all key sectors of the economy recorded positive growth except for restaurants and hotels which saw negative growth due to lower tourist and business travel arrivals during the financial crisis. annual overall inflation slowed down, reverting to single digit level of 9. 9 % in december 2009 from the 16. 6 % recorded in december 2008, and was in line with the original end - year target of no more than 10 %. this outturn was attributed to the decline in both annual food and non - food inflation. in the external sector, zambia β s external position showed remarkable improvement as reflected in the build - up of gross international reserves to 5. 1 months of import cover in 2009 from 2. 1 months of import cover in 2008. zambia β s overall balance of payment position is expected to remain favourable in 2010 due to the rebound of copper prices on the international market as well as the expected increase in copper production as some mines increase production to full capacity and the resumption of production at some mines. the rebound in the international price of copper in the second half of 2009 and the return of foreign portfolio flows resulted in an appreciation of the exchange rate of the kwacha by 4 % at the end of the year. however, fiscal performance in 2009 was weak, mainly due to the global economic crisis, which reduced domestic revenues. despite this, government remained within the programmed domestic financing for the year. ladies and gentlemen, the financial sector has remained resilient despite the adverse effects of the recent global financial crisis. currently, the zambian financial sector is characterised by high liquidity levels, reflecting tighter lending standards in the wake of the lessons from the global financial crisis leading to marked decline in private sector lending. as a result, the demand for the relatively risk free government securities has increased causing a decline in yield rates on government securities. the decline in government securities yield rates and relatively low inflation experienced since the beginning of the year should contribute to a decline in banks lending rates and thus stimulate borrowing by the private sector. ladies and gentlemen, the critical role the accounting profession plays in enhancing economic development cannot be over - emphasized. one of the most important role the profession plays in any organization is to provide accurate, reliable and high quality financial information which communicates an organization β s operating results, its overall health, as well as raise the transparency of its various operating activities. the other role is the audit function, both internal and external, which provides independent assurance of the information produced by accountants | 1 |
. central banks face important challenges in several areas, such as determining the timing and extent of reversing policy easing, coordinating with fiscal authorities and other central banks, and communicating their strategies to the public. a disciplined analysis of the data will test the science of central banking, whereas a good assessment of the operating environment and judgement will put the spotlight on the art of central banking. finally, i would like to congratulate all the nominees for this year β s spire awards. whether you or your team walk away with a prize or not, the fact that you were nominated is indeed already a great recognition by your clients and your peers for the contribution you have made to the south african bond market. i thank you all for your attention. | s β global savings glut β. whatever the reason, it was not long before the greenspan conundrum turned into a disaster. risks of the housing bubble bursting indeed materialised and the rest of the story you all know very well. needless to say, the conundrum that existed is no longer. as central bankers began to ease monetary policy, investors began to worry about inflation, boosting long - term interest rates and in the process mitigating the action that policymakers thought was necessary. unconventional forms of expansionary monetary policy were instituted, for fear that long - term interest rates would not remain low and therefore would dull any possible improvement in economic activity. the combined impact of quantitative and credit easing on central bank balance sheets has been extremely large. 4. the rise of emerging economies it is said that the crisis did not derail but rather accelerated the rise of emerging economies. 2 it is now just more than two years since the onset of the sub - prime crisis and it appears that the global economy is finally emerging from recession, even if significant risks remain. the imf β s latest world economic outlook shows improved prospects for global growth in 2009 and 2010 compared to previous forecasts, with a strong performance by asian economies supporting the global recovery. emerging markets, accounting for one third of global output, play an increasingly important part, and it is for this reason that the g20 has assumed a leading role as a forum for global co - ordination. after losing approximately 60 per cent of value since the collapse of lehman brothers until the low point reached in march 2009, the morgan stanley capital international index ( msci ) gained more that the 60 per cent until the end of october, led by an almost 90 per cent improvement in the msci for emerging markets. the embi plus yield had increased antoine van agtmael, ft. com. by almost 600 basis points between january 2007 and october 2008, and has since declined by a similar magnitude. emerging market currencies have also appreciated significantly, the rand being no exception. a currency remaining at non - competitive levels for too long might have adverse consequences for the real economy. some countries opted to deal with currencies perceived to be too strong through a combination of verbal and actual market intervention. brazil, in addition to previous measures, also recently imposed a 2 per cent tax on capital inflows into both equity and bond markets to contain short - term capital flows and to reduce any further upward pressure on the currency | 1 |
jean - claude trichet : the handing over of the building permit for the new european central bank premises by the city of frankfurt introductory statement by mr jean - claude trichet, president of the european central bank, at the press conference, frankfurt, 6 may 2008. * * * sehr geehrte frau oberburgermeisterin roth, sehr geehrte damen und herren, ich freue mich sehr, dass sie, frau oberburgermeisterin, mir heute personlich die baugenehmigung fur unseren neubau auf dem gelande der ehemaligen groΓmarkthalle uberreichen. fur die ezb ist es ein besonderer tag β die erteilung der baugenehmigung ist einer der wichtigsten meilensteine auf dem weg zur errichtung des neuen sitzes der europaischen zentralbank. this building permit provides us with formal approval for our architectural plans. we can now start implementing these plans, which have been under development for the past two years during the planning phase. the ecb sincerely welcomes the issuing of the permit, as it represents the culmination of all the hard work that has been done up to this point. we are very excited about the upcoming phase, that is, the start of the main construction work. as stimulating as the previous design phases were, they cannot possibly compare to the next stage, in which we will see the new ecb premises rise from the ground. i would like to take a moment now to reiterate some of the key features of our future premises. let me start with the preservation of the groΓmarkthalle. this important consideration has played a key role throughout the different stages of the project. at the ecb, we take particular pride in the fact that our efforts will enable this remarkable building β designed by the architect martin elsasser β to be preserved. in the course of the construction process, the concrete structure of the hall and the brick facades will be entirely renovated, while of course due attention will be paid to the guidelines of the monument preservation authorities. over the past two years preservation experts have spent literally thousands of hours assessing the exact state of the building β s structure and the best methods to use for its preservation. the groΓmarkthalle will not only be revitalised ; it | the basement slab, the foundation stone is scheduled to be laid. ( frau roth β we hope you will have some space for us in your diary? ) at the same time, the renovation of the groΓmarkthalle will get under way. if all goes as planned, we expect the building work to last around three years, with the building complex being finalised by the end of 2011. i would like to finish my introductory remarks by expressing my gratitude to the various authorities involved in this project. in particular, i would like to thank frau roth and all the staff of the frankfurt city planning department for their commitment and efficient collaboration in this project, especially during the application process for this building permit. i can only agree with what was mentioned a moment ago : that the guidelines we received were precise and timely and the communication with the relevant authorities was very well organised. the speed with which our application was handled is further testimony to the excellent collaboration between our new ecb premises project team and the city authorities. i thank you for your attention and am now at your disposal for questions. | 1 |
the accommodative side, with ecb interest rates moderate, money and credit growth vigorous. therefore acting in a firm and timely manner to ensure price stability in the medium term is warranted. we are totally transparent in our definition of price stability. not all central banks are as transparent as we are. we have a very clear mandate and a very clear monetary policy concept. so every observer, investor, every saver, in europe and the rest of the world, knows that we will do what is necessary to ensure price stability. by the way, they trust us. otherwise, their inflation expectations would not be in line with our definition of price stability. they also know that our policy is not to pre - commit in any respect to future action. we will do what is necessary, but we never unconditionally pre - commit. the markets interpreted your last press conference and the ecb monetary policy statement, in particular the change from β low β to β moderate β as the description for the interest rates, as meaning that a peak on the current tightening cycle is very near. would you say they are reflecting the thinking of the ecb council? a number of observers have taken notice of a change in the wording, from β low β to β moderate β and also from β accommodative β to β continues to be on the accommodative side β. it was the intention of the governing council to make these slight changes. on future decisions let me repeat : we will do what is necessary to ensure price stability. how much weight does the ecb give to measures of the output gap? does the ecb it have a target for trend growth in the eurozone? our monetary policy concept calls on us to counter inflationary risks in the medium term, and be credible in delivering price stability over time. our policy is neither commanded by calculations of an output gap, nor of a nairu [ non - accelerating - inflation - rate - of - unemployment ], or of the computation of a theoretical neutral rate. we are guided by our own judgement of the risks to price stability based on our two - pillar strategy : our economic analysis and our monetary analysis. in doing so we are not the prisoner of any kind of model, but rather we are keen on having as comprehensive as possible analysis in order to take the best decision in situations that are always very complex. at this stage the council does not think that it is the time to consider increasing the | , capital goods and intermediate goods. but since 2001, exports in all of these sectors ( including consumer goods ) have been growing more dynamically in germany than in france. if the traditional analysis explains very little in terms of the differences in export performance, what else accounts for these differences? are the worried voices right after all? no, they are not. first of all, intra - euro - area trade is more important for france than it is for germany. in france, the share of exported goods to other emu countries amounted to 48 % of all exports in 2005, whereas in germany it was 5 pp lower. consequently, france appears less dependent on the euro β s exchange rate than germany. however, the bdi ( the federation of german industries ) said last month that german industry could live with the strong euro, as long as it does not rise sharply. even more importantly, the wishful thinking behind a policy - driven weakening of the euro does not go to the core of the problem. all things considered, differences in export performance are linked to differences in competitiveness. as far as price competitiveness is concerned, it has increased in both germany and france since the start of emu. but in germany, the increase has been more pronounced. one reason for this has been wage policy moderation in germany. in addition to that β and unlike french firms β german firms have boosted their competitiveness by increasingly outsourcing their production processes to low - cost countries. so, to some extent, the recent weakness of french export performance compared to germany can be explained by stronger gains in german price competitiveness. but what is more important : overall export performance in france cannot adequately be explained by traditional factors. estimations usually contain a noteworthy residual term. what accounts for it? its reasons actually are more of a microeconomic nature, as has already been put forward by the french council of economic analysis 1. examples are product differentiation, technological progress, reputation, marketing, or the export readiness of smes. for instance, the figure for french firms that export is only 4 %, compared with 11 % in germany. moreover, french export firms are, on average, smaller than german ones. the upshot of this is that competitiveness is enhanced by firms, not in exchange rate markets. if politicians want to support domestic industries they should do so by increasing the flexibility of labour and product markets through structural reforms, not by interfering with market forces. but let me come back to my original theme | 0 |
the visayas region, the security thread of the 200piso banknote changes colors from green to blue. lastly, the 100 - piso was designed after an indigenous textile from the bicol region and with colors that shift from violet to bronze. all these banknotes also have three - dimensional and holographic features. in addition, the 1000 - piso and the 500 - piso banknotes feature design elements that use optically variable ink, which enables change in color when viewed at a different angle. the value panels of these two banknotes were added with a rolling - bar effect when tilted from left to right, and vice versa. finally, a distinct security feature will help us achieve our mission of bringing bsp closer to filipinos. we added tactile marks to the banknotes specifically intended to help the elderly and 1 / 2 bis central bankers'speeches visually impaired to quickly identify the value or denomination of the banknote. pairs of short horizontal bands are printed in intaglio or engraved at the extreme right and left sides of the note. a 1000 - piso has five pairs of this tactile mark ; the 500 - piso will have four pairs ; three pairs for the 200 - piso ; two pairs for the 100 - piso ; while a 50 - piso will have one pair of tactile marks. through this distinguishing feature, the elderly and the visually impaired will be more confident in using the banknotes for their transactions, paving the way for financial inclusion. needless to say, our banknotes are the treasure of our nation β as we always remind the filipino public, β ingatan natin ang ating salapi, salamin ito ng ating yamang lahi. β let us all do our part in preserving and safeguarding its value. maraming salamat at magandang hapon sa ating lahat! 2 / 2 bis central bankers'speeches | speech embargo 17 november 2016, 6. 30 pm financial markets and monetary policy implementation β an evolving relationship money market event andrea m. maechler member of the governing board β swiss national bank geneva, 17 november 2016 Β© swiss national bank ( speech given in french ) β the speaker would like to thank dirk faltin and martin weder for their valuable support in drafting this speech. she also extends her thanks to roman baumann, oliver gloede and marco huwiler for their helpful comments, to ramon jud for preparing the data and to the snb language services. page 1 / 8 ladies and gentlemen welcome to the snb β s money market event in geneva. it is a great pleasure for me to be able to address you here today for the second time. last year, my speech centred entirely around monetary policy itself. today, i would like to focus on its implementation in the financial markets. as you know, central banks in the advanced economies have expanded their monetary policy toolkits considerably since the peak of the global financial crisis in 2008. this has changed the way in which they act on the financial markets. traditionally, the money market interest rate has been the key monetary policy variable. in the last few years, central banks have used unconventional measures to exert a more or less direct influence on other financial market prices as well. this was and is the only way to fulfil their mandate in difficult times. as a result, central banks today focus more than they used to on developments in the financial markets. the swiss national bank, too, has deepened its understanding of the markets, refined its analytical tools and strengthened its market contacts. i will say more about that later in my speech. first, i would like to talk about the expansion of the monetary policy toolkit and what that involves. in the final part of my speech, i will offer a few thoughts on the extent to which unconventional monetary policy measures have changed the interactions between monetary policy and the financial markets. monetary policy transmission using only a single instrument in principle, monetary policy influences economic and price developments via the banking system and the financial markets, since a central bank conducts its monetary policy by using its monetary policy instruments to target certain prices on the financial markets. monetary policy stimuli are thus transmitted via the financial markets to the economy. the choice of instrument is dictated by the monetary policy framework. in the pre - crisis era, so up to about 2007, central banks were in general agreement about | 0 |
also been tightened. for example, banks have required a greater degree of verification of borrowers'information, and banks have been more cautious about lending to new business customers and to the sectors hit hardest by the pandemic. small businesses have reported difficulties accessing finance for years many of the challenges small businesses face when accessing finance have been around for many years. although i am focusing on the experience in australia, it is worth noting that these challenges are not unique to smes in australia. small businesses, particularly less established ones, tend to be riskier than large, established firms with a track record of profitability. as a result, lenders reject a greater proportion of loan applications from smaller businesses. they also charge more to take on the additional risk associated with the loans that they provide. the terms for the loans may also be more restrictive. for instance, loans to small businesses may often be small relative to the size of the business, or require collateral or personal guarantees. indeed, around 95 per cent of loans to smes are secured β compared with around 70 per cent for large business loans ( graph 4 ). and about half of small business loans are secured by residential property. many small business owners may not be well placed to provide sufficient home equity to secure a suitable loan. graph 4 lending to businesses not seasonally adjusted, break - adjusted $ b small business medium business large business $ b s d m j s d m s d m j s d m s d m j s d m 2020 2021 2019 2020 2021 2019 2020 2021 secured ( other ) secured ( residential property ) unsecured secured sources : apra ; rba small businesses generally have few viable alternatives for external finance outside of traditional intermediated finance. unlike large businesses, it is too costly for them to raise funds directly from capital markets. australian small businesses have made increasing use of non - traditional sources of finance in recent years, such as balance sheet lending and marketplace lending ( graph 5 ). [ 5 ] however, the available data suggest that non - traditional sources of finance accounted for less than 2 per cent of overall sme lending in 2018. graph 5 non - traditional finance transaction volume a $ m a $ m total 1, 500 1, 500 other * 1, 250 1, 250 marketplace consumer lending 1, 000 1, 000 balance sheet business lending * includes balance sheet consumer lending, marketplace business lending, property lending, invoice trading, crowdfunding, and other models sources : cambridge centre | such as electricity and water, as well as transport links, need ongoing investment to accommodate a rising population. this challenge has clearly been recognised and, over recent years, governments at both the state and federal level have been increasing infrastructure investment. as can be seen from this graph, public investment in communications infrastructure has increased with the rollout of the nbn. transport infrastructure β road and rail β has increased even more sharply and is back close to the share of gdp it represented in the years immediately after the global financial crisis. graph 1 https : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 06 - 15. html 4 / 8 6 / 15 / 2018 how infrastructure fits in | speeches | rba the recent federal budget foreshadowed additional infrastructure spending. more broadly, investment by the federal government is projected to increase over coming years. most of the infrastructure spend is by state governments, however. this has already increased noticeably, particularly in the south - eastern states, and according to state budgets it is projected to increase further in the next couple of years. much of this work is in urban transport projects, both road and rail. graph 2 another area of infrastructure attracting substantial investment at the moment is renewable energy. the value of renewable generation projects slated for the next year or so is similar to the average of recent years'investment in electricity generation, distribution and transmission, a much broader total set of activities. most of the investment in renewables is by the private sector. these projects have become more attractive lately as the cost of the underlying technology has fallen. at the same time, the costs of fossil - based inputs to existing generation methods has risen, and so has the price of electricity. so renewable energy projects are becoming increasingly commercially viable. as such, it is an area where the private sector can provide the infrastructure. and that is indeed what we are seeing. a range of data sources on both capital expenditure and financing show greatly increased activity recently ( graph 3 ). a few years ago, much of the https : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 06 - 15. html 5 / 8 6 / 15 / 2018 how infrastructure fits in | speeches | rba investment in renewables was in small - scale rooftop solar. more recently, as the economics of these projects has changed, we are seeing more large - scale solar and wind projects being financed and built. graph | 0.5 |
' s spread ) rose modestly from the corresponding survey week of three months earlier. of particular importance for small businesses, however, are the facts that these spreads jumped significantly both on loans originated by smaller u. s. banks and on smaller commercial loans β that is, those loans below $ 100, 000. despite tighter credit standards and loan terms, growth in the dollar amount of commercial loans at u. s. banks was quite well maintained in the first quarter of 2008. particularly noteworthy from the point of view of small businesses is the fact that after growing almost 20 percent in the fourth quarter of 2007, commercial loans at small banks continued to expand at a rate of almost 12 percent in this year's first quarter. 3 thus, although slowing somewhat, commercial loan growth has held up in recent months even though banks'terms have tightened and economic growth has slowed, the latter driving down the demand for small business and other commercial loans. on balance, this suggests that credit is generally available, albeit at a higher cost. another source of information about small business credit supply conditions is the monthly survey of the national federation of independent businesses ( nfib ). the results of the most recent nfib survey, conducted in march, suggest that credit supply conditions for small businesses have held up fairly well over the past several months. for example, over the past few quarters only about 3 percent of survey respondents have reported that financing conditions and interest rates were their main business concern, and for march that number was only 2 percent. 4 in addition, according to the nfib survey, the average short - term interest rate paid by borrowers has remained at the low end of its historical range. on a less board of governors of the federal reserve system ( 2008 ), " the january 2008 senior loan officer opinion survey on bank lending practices " ( january ). in october, a net 10 percent of banks reported tightening lending standards to smaller firms. the net percent of banks is defined as the percent tightening less the percent easing standards. the first quarter's numbers have been adjusted for some statistical anomalies in february. these levels are far below their peaks of the early 1980s, when more than one - third of respondents reported that financing conditions were their main concern. positive note, in recent months the net percentage of nfib survey respondents that reported credit was harder to obtain over the previous three months and the net percentage that expected credit conditions to tighten over the next three months have been at the upper end | greater momentum in the prospects for economic growth or to a rapid escalation in inflation, then the case for further monetary policy easing might have seemed less pressing. however, such was not the case. the federal reserve publishes a summary of economic projections ( sep ) four times a year in conjunction with the fomc minutes. as shown in the november sep, most committee participants anticipated that the economy would recover only gradually and projected that the unemployment rate would still be at around 8 percent at the end of 2012 β an outlook that is shared by most outside forecasters. similarly, committee participants generally expected inflation to rise very gradually toward levels consistent with the federal reserve β s mandate. moreover, continuing downside risks to the outlook for economic activity and inflation strengthened the case for providing additional monetary policy accommodation, thereby reducing the risk of another downturn in economic activity or a further decline in inflation. the design of the asset purchase program in weighing its policy options last autumn, the committee gave careful consideration to the question of whether further purchases of longer - term treasury securities were likely to be effective in fostering economic recovery and bringing inflation back up to levels judged to be consistent with the dual mandate. 3 in my judgment, both theoretical analysis and empirical evidence suggested that such purchases could provide effective stimulus by keeping longerterm interest rates lower than they would otherwise be. this downward trend in inflation has not been confined to any specific sectors of the economy, such as housing. for example, the federal reserve bank of dallas constructs a trimmed - mean rate of pce inflation by removing the tails of the distribution of monthly price changes for disaggregated spending categories. that measure of underlying inflation has also declined fairly steadily since mid - 2008 and dipped slightly below 1 percent last autumn. moreover, diffusion indexes of price changes β which subtract the percentage of items in the consumption basket with price increases from the percentage of items with price decreases β also fell noticeably over this period, providing further evidence that the decline in inflation has been widespread across many categories of consumer spending. as indicated in the minutes of the november fomc meeting, the committee has also considered the potential costs and benefits of setting a peg for a term interest rate. while targeting the yield on a term security could be an effective way to reduce longer - term interest rates, such an approach might require the federal reserve to make an open - ended commitment to purchasing longer - term securities. bis central bankers β speeches the underlying theory, in which asset prices | 0 |
β structural reforms : learning the right lessons from the crisis β, speech at the bank of latvia economic conference 2014, riga, 17 october 2014. 3 / 3 bis central bankers'speeches | time β just last week the world β s biggest stablecoin temporarily lost its peg to the dollar. and stablecoins do not benefit from deposit insurance, nor do they have access to central bank standing facilities. they are therefore vulnerable to runs [ 7 ], as we have just seen with the crash of another stablecoin β terrausd. the benefits of a digital euro the increasing popularity of non - cash payments and the expansion of crypto - assets reveal a growing demand for immediacy and digitalisation. if the β official sector β β central banks and supervised intermediaries β does not satisfy this demand, others will. for this reason, countries around the world are currently exploring the issuance of a central bank digital currency. [ 8 ] nine countries have now fully launched a digital currency and some large economies are quite advanced in their exploration, like china. digital money issued by the central bank would offer the possibility for everyone to use public money for digital payments. it would be a sound, reliable means of payment designed in the public interest. and it would preserve the coexistence of sovereign and private money that has served us well so far. in europe, issuing a digital euro would also allow us to protect our strategic autonomy while remaining open in a world where technology and dependencies are increasingly being weaponised. but the benefits of a digital euro would extend further than that. in particular, a digital euro would serve as an instrument to accompany the ongoing digital transition in payments. this transition is particularly visible here in ireland, where the financial landscape is undergoing drastic change, with some major incumbent banks withdrawing and fintechs making rapid inroads into the payments market. a digital euro would bring important benefits in this context. it would level the playing field by allowing intermediaries β including small ones, which are typically less able to keep pace with innovation β to offer more technologically advanced products at a competitive price. and it would enable innovative payment solutions to be quickly scaled up to cover the entire euro area. this would help narrow the gap with economies like that of the united states, where entrepreneurs can expand in a large market that is not fragmented along state lines, as it is in europe. finally, a digital euro would aim to offer a means of payment that is free, available for all digital payments, and accessible to everyone, everywhere. it would seek to support financial inclusion at a time when the vast reduction in the number of bank branches may be affecting vulnerable customers | 0.5 |
the boundary itself varies for different regulatory clusters β the focus of a banking regulator would be entirely different from that of a securities regulator, from that of an insurance regulator etc. and all of which may be different from the focus required for regulation of markets. if the entire financial system is looked as a single ecosystem, then inspite of the inherent differences between the various market players, it should be possible to identify the macro drivers of the whole system, the network flows. using this perspective, it becomes evident that just focusing only on the perimeter would be missing an integral component that may need regulatory attention. current crisis β perimeter issues as mentioned earlier, the origins of the current crisis lay within the heavily regulated institutions. the impact of the crisis, however, was exacerbated by dynamic interconnectedness between entities across regulated, unregulated and lightly regulated sectors. as some of the recent reports have pointed out, the two concerns relating to β outside perimeter β entities that contributed to the current crisis were : ( i ) maturity transformation being undertaken by these entities, which traditionally used to be a function of banks ; and ( ii ) the systemic leverage resulting out of the hugely leveraged positions of these entities, either through direct borrowing from banks or through the funding markets. the central issue in both the above is the interaction between the unregulated entities and the formal regulated funding channels, essentially banks and money markets. the maturity transformation primarily entailed heavy reliance by these entities on short term funds for funding long term assets. the prudential framework for banks placed a significant reliance on management of these alm mismatches but the unregulated entities, such as sivs didn β t have any oversight and as a business model, ran huge alm mismatches. the model just broke down when the funding markets started seizing. many of the entities, like hedge funds, were consciously left unregulated because of the fact that they managed only private capital pools where the issue of investor protection was not relevant. however, what was not appreciated was the systemic risks these entities were posing on account of the huge leverage positions these were carrying through either the formal banking channel or the funding markets, particularly repo markets. the seamless efficiency thought to be provided by close integration of the underlying asset markets and repo markets proved to be just a chimera. the disaggregated exposures of the regulated clusters at any point of time to the unregulated entities | of cancellation and re - booking of their forward contracts and booking of forward contracts under past performance criterion were also not being used in the right spirit. as you would appreciate such speculative forces tend to be self - reinforcing and often result in a situation where exporters keep on deferring their receipts and importers rush in to buy forwards, thus aggravating the situation in hand. the administrative measures undertaken by reserve bank in the month of december 2011 were aimed at curbing these speculative behaviour of such entities. the measures did achieve the intended policy objectives and also led to an immediate fall in the volumes of the markets. the actual hedging requirements of the real sector, however, were not left unattended as we subsequently relaxed some of the measures to accommodate customer needs. within the overarching prerequisite of facilitating genuine hedging needs of the customers, reserve bank would consider relaxations, in particular those relating to intra - day position limits, in a calibrated manner at appropriate time. let me assure you that reserve bank will continue with its calibrated and gradual approach towards liberalisation of the foreign exchange market in india but at the same time we will expect greater degree of responsibility and accountability from all the participants. in the bis central bankers β speeches context of our measured approach to market liberalisation, there has been a lot of debate on scope of wider usage of indian rupee both in the region / abroad, or in other words, internationalization of indian rupee. i will now briefly touch upon the issue in the third and last part of my address. challenges for internationalization of indian rupee in view of the recent crisis in the financial market which resulted in a slowdown in the world economy, some views have emerged from various quarters on whether the indian rupee could play a larger role as an international currency. this issue assumed a topical and, if i may add, patriotic significance when the symbol for indian rupee was unveiled amidst huge media publicity. proposals for use of local currencies of the emes under bilateral and multilateral arrangements including the initiatives taken by china for yuan and the recent suggestions emanating from brics nations have provided renewed focus to this. it is a known fact that wide acceptance by participants in trade and financial markets makes a currency a popular option for trade settlement and for maintenance of reserves. the characteristics which a currency needs to possess before it could become popular as a transactions currency would include free convertibility, ability to invest | 0 |
. it seems that regulators are not willing to take chances and wait for a β minsky moment β to occur on the back of technological innovation. looking from the perspective of international financial stability, this is a highly welcome and reassuring development. treating fintech as an opportunity, not as a headache so : an opportunity or a headache? adapting the regulatory framework to ever - changing financial innovations is not an easy task. yet instead of treating this as a problem, we should see it as an ideal chance. this is exactly the strategy that we are pursuing at the bank of lithuania. a couple of years ago, our institution set out on a mission to turn lithuania into a regional fintech hub. the nordic - baltic region is known for its highly digitalised economies and financial systems. yet lithuania has managed to stand out as a particularly fintech - focused and open jurisdiction. of course, this does not undermine our core mission β to ensure stability and credibility of our financial system. looking into specific fintech - supporting regulatory elements, the bank of lithuania is one of the few central banks globally providing direct access to its payments infrastructure for non - bank financial firms. this means that fintechs can provide payment services across the euro area on their own, cutting out the middleman. in other words, innovative financial institutions are placed on a truly equal footing with established banks, fostering competition in the sector. while β regulatory sandboxes β for interacting with new market entrants have become quite widespread by now, we have taken a step further. next year, we are preparing to launch a β technological sandbox β, codenamed lbchain. it will function as a service - based platform for cooperating with private actors both nationally and internationally. the platform β s central goal is developing and testing state - of - the - art solutions based on the emerging blockchain technology. being a fintech frontrunner regionally, lithuania also offers one of the most favourable regulatory environments in europe. take, for example, licensing. as we are highly speedoriented, an electronic money or payments institution licence will be ready in 3 months β compared with roughly 12 months in most other european countries. on top of this, we have introduced a unique β specialised bank β licence, which allows fintech firms to transform themselves into banks, but with lower capital requirements. and it is not just a lithuanian licence that you get. it also enables fintechs to offer their services across europe, with basically no | ##kits, aligning them with the new generation of business models and technological solutions brought about by fintech. in recent years, similar formats for regulator engagement with the industry have sprung up widely β from canada to australia. arguably, these developments mark a shift in authorities β thinking β facilitating innovation instead of aiming to restrict it. in this regard, the idea of developing a central bank digital currency has recently been gaining traction. the task of issuing a central bank digital currency is indeed complex and requires extensive long - term efforts. yet it also offers substantial gains. these include increased transparency, more efficient payment and settlement systems and enhanced instruments for financial risk monitoring. with more flexibility come new responsibilities nevertheless β and here i have to put the strongest emphasis β with more flexibility come new responsibilities. while becoming more open to innovations, we β i mean both industry and regulators β cannot turn a blind eye on the associated risks. first of all β cyber risks, which, under intensifying digitalisation processes, attract elevated regulator attention. financial institutions increasingly base their operations on novel technological solutions, such as cloud computing. this certainly brings efficiency gains. but also makes financial firms more vulnerable to hacking and malware, placing vast amounts of data and critical ict infrastructure in a potential danger zone. today this challenge is particularly relevant in europe due to the ongoing regulatory shift towards β open banking β. it is therefore no surprise that international standard setters, such as the bank for international settlements, have recently become more active in this domain. as a result, today financial institutions and regulators are offered guidance β including the recent steps taken by the european central bank β that they can implement to enhance the level of cyber resilience. to strengthen these efforts, the international monetary fund has lately been putting more emphasis 2 / 4 bis central bankers'speeches on cyber risks within its surveillance and policy advice frameworks. nevertheless, digitalisation - induced risks for the financial system stem beyond cyber threats. financial innovations also tend to create additional room for β shadow banking β to expand. it takes time to identify and fully understand these new and often obscure financial services, sometimes revealing regulatory and supervisory loopholes. through interlinkages with other financial institutions, this may eventually lead to a build - up of hidden systemic risk. in other words, in absence of adequate regulation, β shadow banking β operations risk putting the whole financial system under threat. in the last several years, we have witnessed an increase in scrutiny towards β shadow banking β activities on a global scale | 1 |
percent. according to the personal consumption expenditures index, the 12 - month change in core prices ( prices excluding the food and energy categories ) has been around 1 β 1 / 4 to 1 β 1 / 2 percent since the prior to 1999, the fomc released statements only after meetings at which the federal funds rate was changed. over time, the statements released by the fomc have become more informative about the committee β s views of the economy and policy. there are a number of additional transparency improvements that are less directly related to monetary policy communication, including detailed reports on liquidity facility and lending programs during the financial crisis, which can be found on the board β s website at www. federalreserve. gov / monetarypolicy / bst _ reports. htm. in addition, a full list of securities held in the system open market account portfolio is available on the federal reserve bank of new york β s website at www. newyorkfed. org / markets / soma / sysopen _ accholdings. html. given the benefits of transparency, central banks around the world have also greatly augmented their public communications over the past 20 years. recent papers measuring transparency across central banks include crowe and meade ( 2008 ) and dincer and eichengreen ( 2014 ). dincer and eichengreen ( 2014 ) conclude that almost all of the central banks around the world had greater transparency in 2010 than they did in 1998. see for example figure 1 in that paper. these measures of transparency cover a variety of factors, including the openness about policy objectives and economic data, disclosures about the procedures used in deliberations, the speed of such disclosures, and transparency about the operational aspects of meeting targets. bis central bankers β speeches beginning of 2013. at the september 2015 fomc meeting, participants saw inflation as very low this year but expected it to pick up notably next year and rise further in 2017. 15 although the presence of low inflation makes the traditional inflationary bias less of an immediate concern, actions that would compromise monetary policy independence would still be dangerous. the anchoring of inflation expectations has been a hard - fought product of the disinflation of the 1980s and subsequent federal reserve policy. today, even with low inflation, the balance of evidence suggests that survey - based measures of longer - term inflation expectations have likely remained fairly steady and consistent with our objective. the anchoring of these expectations is due in great part, | prudential regulation authority, as well as the council of financial regulators, whose chair is the governor of the reserve bank of australia and whose members are drawn from the central bank, the prudential authority, the australian securities and investments commission, and the treasury. these various approaches each have their own merits, but the ultimate stress test for any particular institutional structure will, of course, come as these new governance structures face the challenges of dealing with financial stress and potential financial crises. the structure of the fpc ensures that the bank of england is nearly fully independent with regard to financial stability. 25 the fed does not have that independence, even though it has been assigned the responsibility of helping to ensure financial stability. i have heard foreign central bankers argue, β you can β t be independent in one function ( monetary policy ) and not independent in another ( financial stability ), without the nonindependence with respect to financial stability seeping over to weaken the independence of monetary policy. β i do not believe this is correct β as proof, i think each of us feels and is more independent in some of the decisions we make about our lives than in others. thus, i think the fed retains its monetary policy independence despite its nonindependence with respect to financial stability policy. no doubt economists will long debate the appropriate institutional structure for financial stability authority. because financial markets and political institutions differ widely across economies and because historical accident affects the current situation in each, it seems unlikely that any single set of arrangements will be optimal in all cases. 26 in any event, as time and future potential crises go by β and may they be few and far between β there will be the use of the federal funds rate also affects particular sectors more than others β but that effect is softened by being spread over the entire economy. a few of the members β namely, the governor and deputy governors of the bank of england β are on both the monetary policy committee and the fpc, but the remaining members do not overlap. the fpc members are the governor, three of the deputy governors, the chief executive of the financial conduct authority, the bank β s executive director for financial stability strategy and risk, four external members appointed by the chancellor, and a nonvoting representative of the treasury. the current membership of the fpc is available on the bank of england β s website at www. bankofengland. co. uk / about / pages / people / fpc. aspx. the | 1 |
a case for expanding access of quality and affordable financial services and products to majority of the population. access to finance will encourage savings and credit. this will effect savings / investments cycle, allowing for capital accumulation and asset building which enables the poor to escape poverty. safe havens for savings by the poor reduce their vulnerability to periodic economic and social shocks. access to finance will expand the level of participants and so lower unit costs. ladies and gentlemen : our efforts to ensure expanded financial access have been measured by three national financial access surveys for 2006, 2009 and 2013. these surveys have clearly demonstrated that kenya β s financial landscape has considerably changed over the period 2006 β 2013. the financial system is now offering a wider range of financial services and products to more kenyans, covering a wider geographical spread, and even going beyond kenyan borders. this has strengthened the banks and created a wider market. these developments are a bis central bankers β speeches testimony to the strength and vibrancy of our banking sector it has contributed to kenya β s financial development. β’ enhancing the efficiency of the financial system has an immediate impact on the welfare of its customers and the wider real economy through the consequent reduction of costs of financial services. competition is essential in ensuring that financial institutions are incentivised to invest in improving productivity, efficiency and cost effectiveness. the cbk has acted to encourage greater transparency in pricing of financial services and products to foster effective competition and delivery of services to majority of kenyans. β’ on the financial stability front, the government has continued to implement necessary reforms designed to strengthen the legal, regulatory and supervisory framework in to ensure stability of the financial system. lessons from the 2008 β 2009 global financial crisis call for regulators to invest in better regulation. better regulations is characterised by a regulatory framework with ability to : β readily identify weaknesses and emerging vulnerabilities ; β analyse and price risks ; β provide appropriate incentives ( and penalties ) to induce prudent behaviour in the market place ; and β encourage innovations and develop strong institutions of the regulators and the regulated β strong institutions enforce the rules of the game and define appropriate incentives. ladies and gentlemen : i am delighted to note that the finaccess survey, 2013 results bears witness to the above gains made in enhancing the reach and coverage of financial services to kenyans. it shows that the proportion of the adult population using formal financial services rose to 66. 7 % in 2013 from 27. 4 % and 41. 3 % in 2006 and 2009, respectively | landscape, for instance, has a number of ostensible implications for financial inclusion and access but requires concerted efforts of all regulatory bodies, including those overseeing fintechs, techfins and telcos, so as to avoid regulatory capture and regulatory arbitrage. there is a growing interest in participating in the activities of the 2 / 4 bis - central bankers'speeches rce. it has, so far, conducted 10 workshops and trained over 2, 800 participants around the globe. my key message here, ladies and gentlemen, is that we are no longer living in a microcosmic world but in a heavily interconnected one. actions in one jurisdiction have wide - ranging and far - reaching cross - border implications for other jurisdictions. as such, regulatory excellence in a jurisdiction cannot be achieved on a stand - alone basis without being mindful of these potential cross - border externalities. that is why knowledge exchange, as well as information dissemination and collaboration between different jurisdictions become a sacrosanct exercise. to illustrate, sustaining efforts to tackle corruption and financial crimes so as to uphold the financial integrity of a jurisdiction has become a policy priority for many jurisdictions worldwide. however, as the case of mauritius illustrates when the country exited the high - risk lists of a number of international institutions, this can only be effectively discharged through a collaborative approach among all stakeholders within and across jurisdictions. i would therefore encourage regulators from the region to continue leveraging on the unique opportunity offered by the rce as the fulcrum for capacity - building, knowledge transfer and advocacy in fields that they are privy to. ladies and gentlemen, the governing board remains committed to providing the jurisdiction and the region with the appropriate human resources, expertise and guidance to improve the soundness and resilience of our financial systems. in fact, the signature ceremony is being accompanied by a two - day hybrid workshop on " promoting good corporate governance " covering inter - alia the g20 / oecd principles of corporate governance and sustainability. i am sure that each one of you present here today will agree that a sound corporate governance framework is the linchpin for the effective functioning of any organization. this is even more critical in the financial services industry dealing with massive funds. history is littered with examples of failures of institutions, including venerable ones, due to poor corporate governance practices. our governance structure needs constant adaptation to changes to ensure its continued relevance. it cannot be a one - size - fits - all approach. i am happy to see that | 0 |
coordination to common decision - making, from shared rules to 3 / 4 bis central bankers'speeches institutions, is necessary but it requires time. this should not be an excuse for inaction. many of the basic steps for this to happen need to be taken now, namely designing an ambitious reform plan and building trust among all parties. i am confident that you and the eu leaders will again play an instrumental role in moving this emu agenda forward, so that we can deliver tangible results to mark the 20th anniversary of the euro. thank you for your attention. i am now at your disposal for questions. 1 opinion on a proposal for a regulation on the establishment of a european investment stabilisation function ( con / 2018 / 51 ), 9. 11. 2018. www. ecb. europa. eu / ecb / legal / pdf / en _ con _ 2018 _ 51 _ signed. pdf 2 opinion on a proposal for a regulation on the establishment of the european monetary fund ( con / 2018 / 20 ), oj c 220, 25. 6. 2018, p. 2. www. ecb. europa. eu / ecb / legal / pdf / celex _ 52018ab0020 _ en _ txt. pdf 4 / 4 bis central bankers'speeches | ##graded recently as they are seen as overindebted. how serious negative impacts could this have on the credibility of the monetary union, given that the ecb has no fiscal power? trichet : the most recent forecast of the european commission shows that this year the budget deficit in the euro area countries will reach an average of 4 %, with 7 countries out of the 16 above the 3 % threshold. its important to emphasise that this situation should be temporary and reversed as soon as possible. it should not be forgotten that the rules of the sgp are very important for the cohesion of the euro area. these rules are also underpinned by strong financial and economic principles. governments have to take into account the fact that if their citizens consider that the fiscal policy of their government would not be sustainable in the long term, confidence would drain away. and in such a case, when confidence is lacking, additional public expenditure will not have a positive effect on growth. on the second question, following an episode in which the pricing of risks was, in general, too low, markets now have a tendency to overvalue risks. but it does not affect the euro as a currency. rather, it is clear that the single currency has proved to be an anchor of confidence and stability during this crisis. if you think back to the european currency turbulence and its consequences in 1992 and 1993, you can imagine what consequences the crisis of recent months would have had for the euro area without the euro β both on the interest rate markets and on the exchange markets. china finance : what challenges do the us quantitative easing policy pose for the euro area? what's your assessment on the need for coordination on economic and monetary policies between the major economies in bringing about an early recovery of the global economy? trichet : i believe that all central banks are doing what is necessary for the economic area they are responsible for and responding to the requirements of the specific conditions. i do not see the point in comparing one central bank β s actions with the other. as i said before, the ecb β s open market operations and collateral framework of today are already in a β nonstandard β mode and its measures can be interpreted as a way of additional β non standard risk taking β. at the same time, we have a very close co - operation with our colleagues on the other side of the atlantic, which proved to be useful precisely in the times we are living. the international meetings, in particular the global | 0.5 |
of albania has approved several regulations focusing on microfinance institutions and development. this regulatory framework, comprises the supervisory requirements to start and operate a saving and loan association, the indicators that enable their reporting and their financial analysis, and the principles based on which the on - site examination of such institutions occurs. the regulation of the bank of albania β on licensing the savings and loans associations and their unions β, is the first document issued by the bank of albania in this area, representing a big step forward into the formalization of these institutions. it defines the documentation requirements for the license application, the deadlines and the authority that should grant the license. these requirements are directed to the single associations, to the union, and to the union member association. it has been recognized the role of representing union proposed member associations in the licensing process, meant also as an important tool to induce single sla to become union members. the number of the unions is certainly not limited. the other important regulation is that of β the supervision of savings and loan associations and their unions β. in this regulation, the bank of albania has defined supervisory indicators for certain typologies of risk that are characteristic of current stage of development of the microfinance institutions in albania. counterparty risk is assessed through the requirements for a consistent process of loan portfolio analysis. these includes the ways the loans are classified, their provisioning requirements, their potential individual or group guarantees, the supervisory norms of the loan quality etc.. in addition, the counterparty risk is indirectly controlled by the requirements in capital adequacy of the institution. there are also other risks that are considered in the regulation, for which certain requirements have been defined. for the liquidity risk, there have been set up various norms for maintaining sufficient liquid assets and limiting the duration of the loans. for the concentration risk, the regulation requirements focus on the lending activity, and set out the norms for the net exposure in relation to the total assets of the institution. this regulatory framework is meant to be actively orienting the activity of the microfinance institutions, and as such, will be revised as the developments may require. besides these two regulations, the examinations manual of these institutions has been prepared. it is based on the camels system we use for banks, and is aiming at assessing the adequacy of the internal policies and procedures, the quality of the management and the identification, assessment and monitoring of risks. the accounting manual is also prepared and is based | overall financial stability. cross - border perspectives β avoid straightjacket measures thirdly, i would like to stress the importance of cross - border perspectives on macroprudential policy. the business models of financial institutions differ substantially, reflecting the different needs for financial services in each country. moreover, we should also recognize the significant differences in legal and regulatory frameworks for financial services among jurisdictions, as a consequence of the authorities β best efforts to tailor them to the people β s needs. in some jurisdictions a traditional β buy - and - hold β model is dominant, in which banks generally rely on stable household deposits in their funding and make commercial loans. in such cases it is especially important for supervisors to grasp credit risks in banks β loan portfolios. however, in other jurisdictions, where an β originate - to - distribute β model with market - based wholesale funding is more pronounced, supervisors should pay more attention to liquidity structure, the risk - profile of structured products and where the ultimate risk lies. β level - playing - field β is undoubtedly important. nonetheless, what we really need is a playingfield that should lead to fair competition among financial institutions of different types and backgrounds, both in a theoretical and a practical sense. thus, a global regulatory framework should have sufficient flexibility in order that regulators can take account of regional and functional heterogeneity. a one - size - fits - all regulation, which some institutions in a specific jurisdiction could more easily circumvent, might eventually prove rather harmful to social welfare. moreover, too rigid regulation might encourage less - transparent entities to replace banks β businesses and thereby stimulate β shadow - banking β in some countries. a one - size - fits - all approach, which would put carnivorous lions and herbivorous elephants in the same cage, can never produce good results. we need to strike the right balance between rules and discretion in financial regulation, making full use of the β three pillars β framework of the basel accords, especially pillar ii. i also reiterate that liquidity issues are critical, especially from a cross - border perspective. central banks are strongly required to monitor liquidity risk, and provide liquidity if necessary, so as to contain cross - border spillovers. in this regard, the bank of japan, through its off - site monitoring, observes closely the liquidity position of branches, subsidiaries and affiliates of overseas financial institutions. moreover, bilateral swap agreements between major central banks, such as the fed, the ecb and | 0 |
vitas vasiliauskas : investment and investment finance - lithuania welcome speech by mr vitas vasiliauskas, chairman of the board of the bank of lithuania, at the joint bank of lithuania and european investment bank webinar on investment and investment finance, 11 february 2021. * * * good morning, dear marco1, dear thomas2 colleagues, presenters and viewers, a warm welcome to this joint webinar organised by the bank of lithuania and the european investment bank ( eib ). allow me, first of all, to thank the eib for approaching us with the idea to hold this event. this is indeed a pivotal time to talk about investment. investment decisions that we make now will be crucial in both the short and the long run. let us begin with the short - term implications. according to the organisation for economic cooperation and development ( oecd ), gross fixed capital formation in the euro area fell by almost 11 % last year. this is a stark contrast to the us, where this decrease did not amount to even 2 %. in 2021, investment in the us will remain stronger as well. accordingly, gdp in the euro area is now projected to recover to the pre - pandemic level only towards the end of 2022. the us, meanwhile, is likely to make up for the lost ground already this year, whereas china β s output has not only fully bounced back β it has already returned to its prepandemic trend. europe should not be satisfied with such outlook. the euro area needs a stronger investment push to speed up our recovery and catch up with the other large economies. otherwise, painful long - term scarring effects will become unavoidable. public investment is key in this regard β especially in the current low - rate environment, characterised by historically low sovereign debt servicing costs as a share of fiscal revenue. as for the private sector, various surveys and reports show that uncertainty now stands as the largest barrier for private corporate investment. our estimations show that even in lithuania, despite its strong economic resilience displayed so far, private sector investment is likely to have fallen by almost 8 % in 2020. however, policy makers can address this issue. current research suggests that when firms grow risk - averse due to uncertainty clouding the future, public investment becomes much more effective than usual. not only does it have a higher multiplier, but it actually crowds - in private investment, rather than crowding it out | multiple areas. importantly, this includes assessing whether existing tools can be repurposed by embedding the macro - prudential perspective, which would likely lead to raising the baseline of existing requirements. second, we should focus on enhancing capabilities in the area of data availability, governance and analytical tools to adequately gauge systemic risk. in addition to a solid micro - prudential foundation, this is the key to any macro - prudential approach. it is hard to front - load macro - prudential policy in the fog. third, we should assess the need for additional macro - prudential tools, including in the hands of authorities, to address any remaining risks that are not mitigated by embedding the macro - prudential perspective in existing regulation. the approach for crypto - assets is fairly similar, in that the focus should be on building micro - prudential regulation first and making sure it is globally consistent to avoid arbitrage. we also need to close data gaps and improve our understanding of systemic risk in this sector, including the potential for spillovers to banks and more traditional asset classes. in the case of climate, the existing banking macro - prudential toolkit already provides a starting point, but needs fine - tuning to better capture climate - related risks and prevent them from building up, to build resilience in case these risks materialise, or both. let me stop here. 4 / 4 bis - central bankers'speeches | 0 |
flow freely around the globe. technology has provided the locomotive for these to reach the remote parts of the globe. so while we may say or feel in fiji that we do not need to worry to much about these activities, let me tell you today that the evidences show otherwise. fiji is not immune. recent arrests have surprised everyone that such sophisticated crimes can happen under our very noses. we are part of the global village whether we like it or not. i believe that globalization is here to stay. therefore, while the center of these international crimes is definitely not in fiji, their ramifications will reach us. to be successful, the fight against crime must be a universal one. like water which will find its way to the lowest possible level, criminal will find the easiest spot through which to operate or launder their illegal funds. fiji must take its place in this crusade. we must join the global community in taking all necessary measures to make life difficult for these criminals. the global financial system is now under immense stress. but it has evolved and matured particularly in the last 20 years and is now much harder today to hide criminally derived funds then it was before that. unfortunately, criminals are also rising to the occasion and changing money laundering methods and techniques to overcome these barriers. that is exactly why we are here today at fiji β s first national anti - money laundering conference β to protect fiji from money laundering. public awareness is an important weapon in our battle. the fiu has been busy in undertaking this public awareness. such conferences as this that bring everyone together in one room are extremely useful. i would like to acknowledge this and congratulate all of you for your participation. i thank the fiu for this initiative and the arrangements made for the conference. establishment of the fiu the financial intelligence unit is spearheading our fight against this crime. i would therefore like to say something briefly on the establishment and the current arrangement of the fiu. for many years the reserve bank of fiji has been following the progress in the international efforts to fight money laundering. it was quite obvious that every country was being asked to take the necessary measures to prevent money laundering and terrorist financing. we convinced government that fiji also needed to do the same. as the custodian of the financial system, it was quite obvious to me that the reserve bank will need to spearhead the work on anti money laundering which we did. the fiu was then temporarily set up in the reserve bank as we developed | β make it happen β. i have always said that we just love to talk. we are forever setting up committees. the only growth industry now is conferences. we study that. we review that. we review the review and so forth. what we very much lack is action. it is action that makes things happen. i believe that if we all implement 50 percent of what we say we will do, we will be far better off than where we are today. how do we get result oriented? i believe that we must have the right incentives first and foremost. money is not everything. there are many other effective ways to incentivise people than money. secondly, we must have clear goals that are measurable. you cannot achieve what you cannot measure. and lastly, monitoring of the deliverables must be timely and objective. seminar theme you have chosen productivity and ethics as the theme of your seminar. how do you link the two? are they correlated? i believe so. the climate of the work place is extremely important to our peace of mind and our motivation. high work standards and ethics set the right mood for that work environment. everyone is happy. no one is victimized or unfairly treated. in such a place, you will find that productivity is very high. and it again starts with me β not her, him or they! the most powerful way to promote ethical behavior is to set a good example and be a role model. corporate governance a buzz word nowadays is good corporate governance. we must be all accountable to someone. last week i helped launch a book β β a voice of reason β the writings of savenaca siwatibau β. mr. siwatibau was the first governor of the reserve bank of fiji. he was a strong advocate of good governance. in this book, mr. siwatibau spoke about managing subordinates, colleagues and bosses ; mainstreaming youth into development, corruption : impediment to good governance ; corporate governance : roles of directors and leadership : i recommend this book to everyone. concluding remarks there is another small book that i recommend reading β β who moved my cheese? β it is a small book that you can finish in an hour. it talked about a time when everything is rosy. we are comfortable of where we are that we do not see the small changes that are happening around us until suddenly we find out that someone has moved our cheese. when this happens to us, what do we do? | 0.5 |
david klein : coping with the challenge to reduce poverty speech by mr david klein, governor of the bank of israel, at the imf / world bank annual meeting, dubai, 23 september 2003. * * * mr. chairman, mr. kohler, managing director of the imf, mr. wolfensohn, president of the world bank group distinguished governors, delegates, ladies and gentlemen, the world recognized the need to give priority to the global poverty problem, and expressed a wide consensus on this matter in the millennium development goals. let me devote my statement today to this subject, and say a few words on the challenges facing israel in its efforts to reduce poverty. we believe that poverty cannot be tackled effectively if policy is not focusing on growth. growth is not a sufficient condition for reduction of poverty, but it is, at one and the same time, the highway to raise the living standards of those who are able to work, and the provider of resources to support those who are unable to help themselves. we also believe that in order to realize its potential growth, the israeli economy - perhaps like some other small and medium - sized economies - has to be open to free movement of goods, services and capital, and to adhere to international standards of macro - economic management, including the standards for fiscal deficit and price stability. such a framework maximizes israel β s potential contribution to science and technology as a major vehicle of growth through international trade. however, this approach also requires to make our tax regime competitive with that of other countries, which necessarily means to commensurately reduce government expenditures to keep a lid on its debt. therefore, the macro economic framework constrains the room to handle the challenge of reducing poverty by just increasing welfare payments. when we come to formulate an alternative strategy, we rely on the experience and advice of the world bank and the imf and the policies of other countries, like those adopted by the european union. one fundamental element in our strategy consists of various reforms in the labor market leading to an increase in the ratio of employed persons in the working age population. this is one dimension in which we lag behind the developed world. i need not elaborate here on the significant relation between the rate of employment and the incidence of poverty. a second key element in our strategy is targeting of the policy to reduce poverty. like some other countries, we have a history of increasing welfare payments without making a distinction between those who are able, or unable, to work, | truly universal. procyclicality strictly speaking, procyclicality is a tendency of financial systems to fluctuate around a trend with the economic cycle. by extension, procyclicality can encompass all β amplification mechanisms β through which an initial shock results in wider movements in asset prices, credit flows, market liquidity, and, possibly, the real economy. our accounting and prudential regimes have increased procyclicality in recent years. in a mark to market environment, asset prices movements quickly translate into changes in the capital base of financial institutions. this, in turn, triggers additional demand for assets and a further increase in their prices. this kind of β inverted demand curve β ; where demand increases with prices, may create the conditions for deep and lasting financial instability. addressing procyclicality caused by the regulation itself is therefore a priority. the first line of defense against procyclicality should be the accounting framework. i strongly support the current focus on changing the accounting rules. more precisely, moving from an incurred loss model to a forward looking model is essential. we need a robust, auditable and straightforward provisioning system at the accounting level based on a forward looking model that would allow provisioning efforts commensurate with credit risks through time. this framework should also be simple, bearing in mind the ultimate objective of creating synergies between prudential and accounting standards. the basel committee is working on a very comprehensive approach, which is casted in its β principles for revision of ias 39 β. accounting standard setters have also been working hard. i firmly believe that two steps are required going forward. one is that the iasb should follow the principles by the basel committee. another is that the iasb and the fasb should adopt a common methodology regarding provisioning based on expected credit losses. this is a precondition to ensure that the g20 countries have convergent accounting systems. some of the procyclicality can also be trimmed through prudential regulation. efforts to make solvency ratios potentially less procyclical are welcome and should be pursued. in particular those efforts aimed at imposing a measure of risks β through the cycle β or β downturn β are useful. other options to take some of the procyclicality off through prudential standards include a fixed buffer, which would act as a capital conservation device. i see some limitations to such an option. it is hard | 0 |
duvvuri subbarao : policy discipline and spillovers in an inter - connected global economy comments by dr duvvuri subbarao, governor of the reserve bank of india, at the highlevel conference on the international monetary system, zurich, 10 may 2011. * * * 1. the interconnected world is not new. we have been living in it for some time. for half a century, exports, international capital flows, and foreign direct investment have been growing much faster than gdp, binding economies ever more tightly together. in many ways, this process has been a tremendous force for good. my own country, india, is testament to that. integration with the world contributed to growth, lifting hundreds of millions of people out of poverty. but in the past few years, we have seen that these linkages can also have tremendous costs : developments in other countries, over which we have no control, can without warning plunge countries into difficulty or even crisis. 2. so, we need to find ways to maximize the benefits of globalization while minimizing its costs. to do this, there are two basic imperatives. first, we need to better understand the ways in which we are linked together. and then, we need to translate this understanding into coordinated policy action. that is, we need to consider ways in which countries can impose policy discipline on one another β s behaviour, to minimize the risks that their policies could pose for others. i would like to focus my brief remarks today on these two tasks : understanding the nature of linkages and doing something about them. understanding linkages 3. we cannot begin to impose policy discipline on countries until we improve our understanding of the linkages amongst economies. recent experience shows that our understanding of the nature of these linkages is seriously deficient. in fact, standard econometric models still suggest that shocks in one country have very small effects on other countries. they do that because they assume that trade is the primary channel for transmitting these shocks across countries, and trade moves in line with gdp. both these assumption are flawed. as we all know, the 2008 crisis originated in the housing sector which is a quintessentially non - traded good. 4. in addition, we saw during the crisis that the financial channel is tremendously important, in ways that are still poorly understood. for example, after lehman collapsed, interbank rates in india soared, by much more than in many other emerging markets, even though india β | duvvuri subbarao : impact of the global financial crisis on india β collateral damage and response speech by dr duvvuri subbarao, governor of the reserve bank of india, at the symposium on β the global economic crisis and challenges for the asian economy in a changing world β organized by the institute for international monetary affairs, tokyo, 18 february 2009. * * * global outlook the global economic outlook deteriorated sharply over the last quarter. in a sign of the ferocity of the down turn, the imf made a marked downward revision of its estimate for global growth in 2009 in purchasing power parity terms β from its forecast of 3. 0 per cent made in october 2008 to 0. 5 per cent in january 2009. in market exchange rate terms, the downturn is sharper β global gdp is projected to actually shrink by 0. 6 per cent. with all the advanced economies β the united states, europe and japan β having firmly gone into recession, the contagion of the crisis from the financial sector to the real sector has been unforgiving and total. recent evidence suggests that contractionary forces are strong : demand has slumped, production is plunging, job losses are rising and credit markets remain in seizure. most worryingly, world trade β the main channel through which the downturn will get transmitted on the way forward β is projected to contract by 2. 8 per cent in 2009. policy making around the world is in clearly uncharted territory. governments and central banks across countries have responded to the crisis through big, aggressive and unconventional measures. there is a contentious debate on whether these measures are adequate and appropriate, and when, if at all, they will start to show results. there has also been a separate debate on how abandoning the rule book driven by the tyranny of the shortterm, is compromising medium - term sustainability. what is clearly beyond debate though is that this great recession of 2008 / 09 is going to be deeper and the recovery longer than earlier thought. emerging economies contrary to the β decoupling theory β, emerging economies too have been hit by the crisis. the decoupling theory, which was intellectually fashionable even as late as a year ago, held that even if advanced economies went into a downturn, emerging economies will remain unscathed because of their substantial foreign exchange reserves, improved policy framework, robust corporate balance sheets and relatively healthy banking sector. in a rapidly globalizing world, the β decoupling theory | 0.5 |
are reasonable prospects that these favourable aggregate outcomes can continue for a while yet. the rba β s central forecasts, which were released last week, are for around trend growth in the economy over the next couple of years, and for underlying inflation to remain in the 2 β 3 per cent range. the unemployment rate is also expected to remain low, although some increase is possible over coming months. at the industry level, the picture is a lot more complicated. the economy is clearly going through a period of heightened structural change, and this is set to continue. some industries are expanding in relative importance, while others are contracting. given this, it is difficult to be sure how the countervailing expansionary and contractionary forces will balance out. so at the rba we are carefully examining every piece of data that comes in for insight into the net effect of these forces. we are also frequently talking to businesses and industry groups to better understand what is happening in firms at the forefront of structural change. it is the balance between these various forces that is likely to be a major influence on how the australian economy evolves over 2012 and beyond. before i conclude, i would like to say just a few additional words about the outlook for inflation. over recent quarters, headline inflation has come down as expected due to the unwinding of the large rise in fruit and vegetable prices that occurred in early 2011 ( graph 7 ). over the next few quarters further declines in the year - ended headline inflation rate are expected as the earlier increases in food prices fall out of the figures. indeed, it is likely that the headline rate will fall below 2 per cent in the middle of 2012, before increasing again to above 3 per cent. this increase is partly due to the introduction of a price on carbon, which is estimated to add 0. 7 percentage points to headline inflation in the 2013 financial year. as was the case with the introduction of the gst more than a decade ago, the bank will look through this direct effect when setting monetary policy. in underlying terms, inflation is expected to remain within the 2 β 3 per cent range over the next couple of years, with the carbon price adding around ΒΌ percentage point to underlying inflation in the 2013 financial year. one interesting aspect of the recent inflation data is the divergent trends in the prices of internationally traded items and the prices of goods and services that are not internationally traded ( graph 8 ). over recent times, the prices of non - traded goods and services have | the banking union. the supervisor has to ensure that the banking system is sound and can fulfil its function. if individual banks fail to do so, the supervisor alerts the above - mentioned authorities and works towards a sustainable solution. is italy currently the most serious risk to financial stability in europe? it must be recognised that the resilience of banks and financial systems has improved significantly in recent years. we are far too quick to forget this. the european banking sector holds significantly more capital than in 2008, and this capital is of higher quality. there are of course unresolved issues and we might be seeing a contagion effect on banks β share prices, which could be an overreaction. ultimately, a combination of different factors is at play. it β s not just brexit ; it β s also a question of the outlook for growth as well as geopolitical risks. bis central bankers β speeches the profitability problem is getting worse. a spanish banker has said that the banking sector is being killed by such low rates. low profitability is not only due to the low interest rates. fierce competition and unresolved legacy issues such as non - performing loans weigh on the profitability of banks. also, the extremely accommodative monetary policy also entails advantages for banks over the medium and long term. it drives economic growth to the benefit of citizens and companies, and ultimately the banks themselves. the banks must acknowledge and conduct their business within the prevailing macroeconomic environment. their challenge and their job is to make their business models less dependent on interest margins by increasing fees and other sources of income. efficiency, sales channels and cost - cutting also play important roles. how is the spanish banking sector doing? what advice would you give? its profitability and efficiency are better than the european average. in terms of efficiency, it β s among the best in the euro area. these are the strengths. as for the weaknesses, many european banks β and not just spanish banks β must do their homework, and think about how to cut costs to deal with the challenges of 2016 and beyond. spanish banks are dependent on interest margins and need to increase other sources of income, such as fee income. they also need to think about new sales channels and opportunities and challenges around digitalisation. will all the banks under your supervision survive the next two years? the objective of the supervisor is to ensure the functioning of the banking system. it is not our responsibility to protect individual banks | 0 |
( smp ) presently amounts to somewhat more than 60 billion euros, which again equates to 3 %. there is no evidence that asset purchases have had any significant impact on average euro - area sovereign bond yields on which euro - area monetary policy must exclusively focus as its main transmission channel. but the smp risks blurring the different responsibilities between fiscal and monetary policy. as the risks associated with the smp outweigh its benefits, these securities purchases should now be phased out permanently as part of our non - standard policy measures. 3. current and future challenges for monetary policy 3. 1 exit from exceptional policy measures the challenge facing monetary policymakers now and in the near future is to get the timing and sequencing of the exit from stimulus measures right. this applies to both the nonstandard measures as well as the monetary policy stance, and therefore, key interest rates, as the two dimensions of the exit. while we are far from declaring the crisis over, it would be unwise to postpone relevant considerations to the end of the crisis. as regards the eurosystem β s set of non - standard policy measures, these were designed with exit considerations in mind. the overwhelming majority of measures can therefore be easily withdrawn whenever we deem it necessary. as regards the two dimensions of exit consisting of phasing - out non - standard liquidity measures and normalizing our clearly expansionary policy stance, there are risks both in exiting too early and in exiting too late. i believe the latter are greater than the former. for example, maintaining the accommodative policy stance for too long may risk a de - anchoring of inflation expectations, which is costly to reign in. for the time being, however, the policy stance remains appropriate, since inflation risks remain low over the policy - relevant horizon. the two dimensions of exit are independent and separated by concept. thus, a normalization of key interest rates could in principle start before the phasing - out of nonstandard measures has been finished. the phasing - out of non - standard measures mainly depends on the situation in the financial markets and the interbank money market, in particular. while improved conditions enabled us to embark on a gradual phasing - out of exceptional policy measures at the end of 2009, renewed financial market tensions in early may forced us to reintroduce some measures that had already been phased out. looking ahead, the situation in the financial markets shows continuing signs of normalization β | despite some remaining volatility and fragility. against this background, it is necessary, from a monetary policy point of view, not to postpone the exit from non - standard measures for too long, in particular since we always emphasized it would be a state - contingent process. before i discuss the challenges of the phasing - out in more detail, let me briefly recall some key aspects of our monetary policy implementation. in the euro area, the bulk of liquidity is provided via revolving refinancing operations ( collateralized lending ) of different maturities, with the main refinancing operation, that is the one week operation, being the most important. prior to october 2008, refinancing operations were conducted as variable rate tenders, with allotment amounts closely aligned with the aggregate liquidity needs of the banking system ( often referred to as β benchmark allotment β ). conceptually, the liquidity needs of the banking system mainly result from non - banks β demand for banknotes and substantial remunerated reserve requirements. the particular tender procedure means that average short - term money market rates are normally just slightly above the minimum bid rate in the weekly main refinancing operation, which serves as the key policy rate. however, in october 2008, the variable rate tender procedure with benchmark allotment was replaced by a fixed rate full - allotment procedure, in order to ensure banks β liquidity despite the drying up of the interbank money market following the lehman collapse. the full allotment policy allowed banks to accumulate substantial amounts of surplus liquidity ( or excess reserves to use u. s. terminology ), which could be lent to other banks or placed in the eurosystem β s deposit facility β an overnight facility to deposit excess reserves. as a result, short - term money market rates usually traded only a couple of basis points above the eurosystem deposit rate throughout most of 2009 and 2010. this was by design. meanwhile, given an ongoing normalization in financial markets, money market rates have increased significantly but smoothly without any monetary policy tightening signals and the corresponding headlines. despite the overall improvements in financial market and money market conditions, some financial institutions, however, continue to rely strongly on the liquidity support measures provided by the eurosystem. in principle, the strong demand for central bank liquidity from these eurosystem counterparties could lead to elevated tender spreads after the return to a variable rate tender procedure. | 1 |
rajeshwar rao : reflections - challenges in regulations remarks by mr rajeshwar rao, deputy governor of the reserve bank of india, at the gatekeepers of governance summit, organised by " excellence enablers ", mumbai, 2 november 2023. * * * ladies, gentlemen and distinguished guests, it is indeed a pleasure to be participating in this summit, a gathering that is engaged to distill the essence of responsible stewardship in the corporate world. keeping up with the theme of this session, " the challenge of regulation ", i will reflect a bit on the dynamic landscape of regulations and regulation making, its evolving nature and on the transformation underway in the financial sector. later, i will also outline a few challenges and dilemmas encountered by the regulators in framing appropriate regulations to manage these transitions. do we need regulations? many believe that minimal regulations, is the best way to foster growth of the enterprise. but history is replete with the examples of how minimal regulation coupled with lenient supervision and restrained enforcements have often led to financial crises. in fact, we would all agree that nothing could be more damaging to sustainable growth than a misfiring banking and financial sector. while in an ideal scenario, the'invisible hand'would ensure that the system functions flawlessly for the greater good with minimal regulatory oversight, in reality it does not happen that way. as such, to control the irrational exuberance in the financial sector, there is need for a regulator who sets the boundaries and also enforces them for ensuring a sound and robust set of financial institutions and there by promotes financial stability. regulations, usually, impose restrictions on the entry and operations of the entity while controlling the what and how of the business that is undertaken. this'process'imposes opportunity cost on regulated entities to achieve the desired objectives. however, these are distributable costs to deliver a collective good. therefore, regulations ensure that the overall financial system fulfils its supportive role to the real sector through efficient financial intermediation and its remains stable, robust and responsive. moreover, financial sector and banking industry is special. the inherent ability of banks to generate leverage and the potential to trigger a domino effect in the financial system makes it unique. further, banks are not just the custodians of the customer's hardearned savings but also custodians of public trust. it is rbi's responsibility to ensure that the trust reposed by the customers and depositors on banks | at an average age of 28 years. the other major catalyst of india's progress will be the pace and quality of financial sector development, which is the theme of my address today. it is anchored by a few slides. for a high saving rate economy, like the rest of asia, a modern, efficient, and soundly functioning financial sector is essential for mobilising the resource requirements of india's developmental aspirations. a broad strand in the literature has established that financial sector development has positive multiplier effects on the real economy, 1 / 7 bis - central bankers'speeches including by conferring productivity and allocational efficiency gains. while the jury is still out on whether economic progress is finance - led or demand - following in its sequence, a wealth of empirical evidence points to asia's growth trajectory being that of the real economy leading financial development, and india is no exception. there is also stylized evidence that the composition of the financial sector across asia is changing, with hitherto bank - dominated systems giving space to alternative financial intermediaries such as non - banks and capital markets. these developments, in turn, generate impulses of growth for the rest of the economy. in india, additional dimensions have opened up exciting possibilities for leveraging our growth potential β the digital revolution ; transformation of the payment and settlement ecosystem ; and innovations in financial inclusion. more recently, india's exponential expansion of the usage of space technology is reshaping every aspect of our lives, including the financial sector. against this backdrop, i thought that i would present some aspects of india's financial sector as its poised today, the quiet metamorphosis that has been taking place over the years, and the main challenges and opportunities on the way forward. composition of india's financial sector in its broadest form, the financial system comprises of banks that account for about 60 per cent of the total flow of credit to the non - financial sector, non - banking finance companies ( nbfcs ) that provide 8 per cent, financial markets and others that account for 20 per cent and foreign sources that constitute 12 per cent. the reserve bank of india ( rbi ) is responsible for the regulation, supervision and development of banks, nbfcs ( including long - term refinancing institutions, primary dealers and housing finance companies ) and the money, gilt, foreign exchange and credit segments of the financial market spectrum. in the rest of my remarks, i shall focus on these parts of the | 0.5 |
solve this supply bottleneck. it can help foster macroeconomic stability conducive to business investment, but most of the efforts to address supply - side impediments still need to come from a broader and more balanced set of economic policies including fiscal, industrial, technology, and labor market policies. concluding remarks let me end my talk today by saying that, as a central banker, we should be ambitious in making the best use of all available policy tools and in improving our understanding of the economy as well as the shocks driving it. but setting the ambition higher than the capability of monetary policy would likely prove to be counter - productive. it is an old established wisdom that what monetary policy can best deliver is price stability. while we have learned for a great deal about other aspects of macroeconomic stability, there is little disagreement that price stability must remain the central objective of monetary policy in the long run. abandoning this objective risks de - anchoring price expectations and inducing unnecessary economic volatility. the deployment of supplementary tools can go some way to help relax its limitation, but monetary policy is no panacea. ladies and gentlemen, only by understanding both the power and limits of monetary policy, will the economy be able to reap the most benefit out of this policy lever. the bank of thailand will continue to do our utmost to strive for overall macroeconomic stability, and the long - term prosperity of thailand. thank you. bis central bankers β speeches | ##ing when the world is going through significant transformation, with unprecedented policy actions all across the globe, and with yet - to - be - known consequences of such actions and their unwinding. faced with the uncertainty and the complexity of the environment we are operating in, we need to take a broader perspective and make sure our decisions are robust under different plausible eventualities. at the same time, the bank of thailand constantly strives to expand our economic surveillance capability, by collecting up - to - date intelligence on economic and financial conditions through indirect and direct contacts with the market. the insights from direct contact, coupled with the information from surveys like our business sentiment survey sharpen the picture we get from the other available statistics. this is one reason why monetary policy cannot simply follow mechanistic and simplistic rules based solely on any single data. nonetheless, uncertainties can never be off the table. in this light, a prudent approach is to move in careful and measured steps. that kind of incremental action in what we perceive to be the right direction is likely to contribute more to economic stability than aggressive attempts to fine tune the economy. bis central bankers β speeches 3. inability to address supply - side impediments the third limitation of monetary policy i would like to emphasize today is its inability to address supply - side impediments. through interest rate adjustment, monetary policy can influence aggregate demand in the economy. but monetary policy cannot solve deeper structural problems or lift growth potential of the economy. that needs to come from real progresses that increase productivity and relax supply - side constraints. sure, demand stimulating can buy time by cushioning the economy from short - term economic shocks. but this may possibly delay necessary adjustments of the economy to longer - term challenges. for example, keeping interest rate too low for too long and keeping exchange rate undervalued, beside encouraging risk taking and storing up financial instability problems for the future, may also temper incentives for businesses to improve efficiencies, and may slow the reallocation of capital and labor to more productive uses. in the context of thailand, one of the most important structural issues facing the thai economy at the moment is that of the labor shortage. through our business contact and recent surveys, the labor shortage has scored one of the top concerns by both domestic and foreign businesses operating in thailand. underlying causes of labor shortage include the demographic change and education and skill mismatch. clearly, there is little monetary policy can do to | 1 |
liquidity risks. crucially, we have no need to await regulatory developments before formulating our expectations for the management of climate - related risks. they are firmly grounded on actual requirements and stem from the simple fact that climate - related risks are on the rise and need to be tackled seriously by the whole financial sector. incorporating climate - related risks into ongoing supervision and stress testing this is why we have already asked banks to conduct a self - assessment against the supervisory expectations outlined in our guide and draw up action plans for aligning their practices to them. the assessment covers 112 institutions, representing 99 % of total assets under our direct supervision. all banks have already handed in their self - assessments and are now finalising their action plans. we are currently assessing banks β submissions and will be challenging them in all of these areas. where we see that banks are not managing their exposures to climate - related risks in an adequate manner, we can and will draw on the full supervisory toolkit at our disposal to correct that situation. just as we do for any other material risk. we have already started work on incorporating climate - related risks into our supervisory review and evaluation process ( srep ) methodology. this year the outcomes of these assessments will not be translated into quantitative capital requirements across the board, but we may impose qualitative or quantitative requirements on a case - by - case basis. we expect that the actions we are taking in 2021 will result in banks being adequately prepared for the full supervisory review which we will conduct in 2022. currently, the ecb is also carrying out a stress test to assess the impact of climate - related risks 3 / 5 bis central bankers'speeches on the european banking sector over a 30 - year horizon. 8 we will map projections of climate patterns and expected climate developments to the location of firms β physical assets and estimate the impact that severe climate events would have on those assets and, consequently, on banks β portfolios. together with other central banks, we are developing joint climate stress test scenarios. besides allowing us to conduct an in - depth investigation into banks β internal practices around climate risk stress testing for the first time ever, the stress test will help us catalogue the resilience of banks β balance sheets to risks coming from climate change. importantly, this exercise will push banks to strengthen the climate dimension of their risk management toolbox. finally, the exercise will also dramatically increase the availability of data and shed light on our supervisory reporting needs around these types of risks. given our | yves mersch : risk management in times of non - conventional monetary policy keynote speech by mr yves mersch, member of the executive board of the european central bank, at the joint bank of portugal and european central bank conference on β risk management for central banks β, lisbon, 25 september 2017. * * * let me start by thanking you for coming to this joint ecb - banco de portugal conference, and the banco de portugal for hosting us on this occasion. i am delighted to see central bank risk managers, practitioners and academics here in lisbon to exchange views on risk management for central banks. this topic has gained such importance in recent years as central banks across the globe, including the ecb, have sharply expanded their balance sheets, even though the time for ever more of the same is behind us. like the many great maritime expeditions that started out from this country, some of our endeavours in recent years have taken us into uncharted territory. now is a good time to take stock of what we have learnt and map out what may come next. following stable principles in the eurosystem β s risk management framework the eurosystem has a clearly defined objective, enshrined in the treaty, to preserve price stability in the euro area. 1 the treaty does not speak of eligible counterparties, collateral haircuts or issue share limits for bond purchases. however, you would be mistaken in assuming that managing financial risks has no role in the eurosystem β s monetary policy implementation β especially in the light of the significant balance sheet expansion over the past few years. on the contrary, we have applied the guiding principles of our financial risk management framework in a stable manner. we established these principles long before we embarked on non - conventional policies, not least because we have a statutory obligation to lend only against adequate collateral. we continue to apply them to standard as well as non - standard policy measures. broadly speaking, these principles are protection, consistency, simplicity and transparency. this means that β if multiple monetary policy options exist to fulfil our mandate β we should select the measures that minimise our own exposure to financial risks. this idea is sometimes referred to as risk efficiency. these principles also imply that we aim to avoid undue distortions in the markets in which we operate. we trade at market prices and we adopt a risk - equivalent approach in setting our risk control measures. in addition, the principles require risk management to be an integral part of decision - making in the institution | 0.5 |
, i can mention that, in addition to the enforcement role, we have just announced the creation of new senior level positions with responsibility for markets supervision and policy and risk. supervision will be calibrated to the risks posed by the different firms in the sector and will involve applying the existing rule - book, strengthened as necessary to plug the holes revealed by the crisis. in particular, we will not be slow to implement new stronger rules, being developed as we speak, by international bodies such as the basel committee. despite the extensive powers already available to the regulatory authorities, it would be useful and appropriate to have clarity on a number of additional points ; these are being discussed at present with the department of finance with a view to their inclusion in the proposed legislation restructuring the central bank. one particular area relates to the requirements of confidentiality, which ( as they are currently being interpreted ) seem to go well beyond what is necessary or appropriate for the purpose of ensuring privacy of customers and commercial interests. as things stand, the regulatory staff can end up appearing passive and defensive when called to speak on specific issues in public. a final aspect of safety and soundness to which i would like to refer is the admission of large and complex export - oriented firms into the irish market. i welcome the participation of foreign - owned firms β both those aiming to supply the domestic market and those that are export - oriented β they provide competition and business opportunities. but the crisis has revealed the reputational risks to ireland of having a failure in such an entity. this means that we have to redouble our efforts to ensure that only sound institutions are allowed to enter and that they are comprehensively supervised to ensure that they continue to be sound. i will certainly not allow ireland to become a soft option for firms or activities that are no longer welcome elsewhere. this means more supervisory staff with the necessary skill levels ; these can be paid for by a levy on the supervised firms ( i think we should move towards a 100 % chargeback basis ). i also feel, though, that specific steps need to be taken to ensure that there is no expectation that the state would come in to take exceptional steps to rescue such entities. 3. consumer protection consumer protection cannot and will not be ignored in the regulatory structure. failures here are not as spectacular as a solvency crisis, but can be as damaging to the affected consumers. there will be no downgrading of this aspect of the regulatory work. the statutory codes of conduct for mortgage and sm | could help reduce the depth of fragmentation. we should avoid excessively weakening europe β s long - established state aid rules, as reduced foreign competition will ultimately undermine reshoring policies by giving local firms greater market power. it could also lead to demands for support in other industries, which are not the focus of reshoring initiatives. our analysis also indicates that if locally produced inputs are inferior to their imported counterparts, the economic costs of reshoring could be substantial. as such, policymakers should focus localisation policies on goods where there is already an existing comparative advantage in production. or, at least, where the distance from the technological frontier is not too large. and, with regards to friend - shoring, policymakers should seek greater ties with regions that are not potential competitors for goods. for example, many countries have similar aims to europe for increased production of semi - conductors. this competition may induce trade tensions in future. finally, perhaps the most important issue for policymakers is to understand the trade - offs and to be able to articulate them clearly when explaining their choices to the wider community. resilience, of course, matters but ultimately, interconnectedness has given the world prosperity, opportunity and stability, notwithstanding its challenges. so we all have to be vigilant and avoid turning the reasonable quest for greater autonomy into an excuse to retreat behind borders. all of us need to understand, be aware of and manage the risks posed by the quest for autonomy and having greater β or indeed taking back β control. a focus on building resilience while maintaining vigilance, understanding and awareness will help us avoid the risk of sleepwalking into a world of diminished expectations and the relative impoverishment of future generations. thank you for your attention and i look forward to an engaging discussion. [ 1 ] i would like to thank daragh clancy and robert kelly for their contribution to my remarks. [ 2 ] makhlouf, g. ( 2021 ), β birth, growth and towards maturity : macroprudential policy in ireland β, remarks at the esri, 8 november 2021. [ 3 ] antras, p. ( 2020 ), β de - globalisation? global value chains in the post - covid - 19 age β, nber working paper no. 28115. [ 4 ] cigna, s. et al. ( 2022 ), β global value chains : measurement, trends and drivers β, ecb occasional paper no. 289 | 0.5 |
s regional network contacts throughout the country report that business conditions are weakening. overall, they expect activity to fall in the coming period. at the same time, there are wide differences across industries. high investment in petroleum production is fuelling activity for companies providing goods and services to the petroleum sector. retail trade and construction activity is falling owing to the decline in consumption and low residential construction. unemployment has remained low as expected, but recruitment difficulties have eased. a looser labour market will curb wage and price inflation further out. slide : international inflation is on the way down international inflation is on the way down. most central banks have kept policy rates unchanged in recent months and according to the market's interpretation of future developments, central banks will start cutting rates in the course of spring 2024. import price inflation will slow as a result of weaker price impulses. at the same time, there are other forces that could keep inflation in norway elevated despite an easing of international price impulses. slide : wage growth is high labour costs have shown a substantial rise in recent years, and wage growth is projected to reach 5. 5 percent this year. manufacturing profitability is solid, and wage growth is set to be high next year too. the pay increases are not large compared with the rise in living costs. but businesses are facing rising costs, and we can now see that higher labour costs are increasingly driving price inflation. slide : the krone has depreciated the krone has depreciated considerably and is now markedly weaker than we projected in september. we do not have a policy target for the krone exchange rate, but the movement in the krone is of concern to us because a weaker krone means higher imported goods inflation. a weaker krone also helps improve manufacturing profitability. in today's situation, the krone depreciation could make it more challenging to bring down inflation. slide : policy rate will likely be kept on hold for some time the committee assesses that a tight monetary policy stance will likely be needed for some time ahead in order to return inflation to target within a reasonable time horizon. further out, when inflation falls back and economic conditions so warrant, the committee can start lowering the policy rate. the forecast indicates that the policy rate will continue to lie around 4. 5 % until autumn 2024 before gradually moving down. slide : inflation will recede and unemployment edge up with such a path for the policy rate, inflation is projected to slow and approach target in | data cannot be dismissed and are, on their face, concerning. other indicators have mostly suggested a slight improvement in the labour market this year, not an accelerating deterioration. the bank β s reading, which we have had for a while, is that the labour market has a degree of spare capacity, and that it will be a while before we see unemployment decline consistently. looking ahead, ideally, the non - mining part of the economy would see a further pick - up to grow a bit above trend for a while, having been below trend for a while up to recently. we may not be quite there yet, but we are i think slowly building a foundation for better performance. what can we do to help this? the main thing the reserve bank can do is run an accommodative monetary policy so as to lend support to demand in the non - mining areas of the economy. rates of interest are at very low levels, and have been steady there for over a year now. most observers expect they will be there for some time yet. the rate we actually set, the overnight rate, is as low as it has been on a consistent basis in my lifetime. rates of interest that matter more for most borrowers are similarly very low, and in fact have been declining slightly even though the reserve bank board has not changed the cash rate for bis central bankers β speeches over a year now. they are lower than in recent previous cycles, even though the economy today is nothing like as weak as it has been on most of those occasions. monetary policy doesn β t just work on the borrowers ; the savers or investors matter too ( and in fact there are more of them ). the low returns on offer on safe investments in australia, and the ultra - low returns on such assets internationally, are certainly having an effect by prompting investors to β search for yield β. not only are returns on financial instruments low, but yields on the existing stock of physical assets β houses, commercial property, infrastructure assets β are being bid down. some of that search is of course coming from offshore. that β s a big part of how accommodative monetary policy works : by prompting substitution towards higher - risk assets ; raising asset prices, which increases collateral values and makes credit extension more viable ; improving the cash flows of debtors ; and so on. all those things are quite normal parts of the so - called β monetary transmission mechanism β. in some ways that term is a misnomer | 0 |
million to ghΒ’60 million in two years is expected to remain a major challenge. to achieve the next stage of capitalization therefore, domestic banks have to seriously consider their options and consolidate their positions through mergers or open up for acquisitions. these will be necessary to enhance their competitiveness and thereby improve their ability to participate in high value transactions. mr chairman, most of our banks rely on ict platforms for the delivery of financial services. 32. following the global financial crisis, risk management has taken centre stage in bank regulation and supervision. different kinds of risk have been identified ; market, credit, operational and reputational risks. operational risk has assumed great significance, due largely to the reliance on information and communication technolgy, or ict, platforms for the delivery of financial services. 33. the rapid pace of ict usage in the banking sector requires continuous knowledge update by both operators and regulators. indeed, regulators will have to acquire special expertise in it auditing to ensure appropriate monitoring of ict - related vulnerabilities in the banking sector. the bank of ghana will also insist that stakeholders in the industry improve corporate governance systems, especially the installation of an effective internal control system. mr chairman, broadening financial sector regulation 34. one of the critical lessons that emerged from the global financial crisis is the need to tighten financial regulation. this was underscored by the inherent risks of diversifying into non - bank financial businesses. the argument for additional regulation has centred on the risk exposures and speculative activities as banks broadened their horizon to include noncore banking activities such as insurance and capital market activities financed with depositors β funds. in the global financial markets, these trends widened the boundaries of regulation beyond the banking sector and without effective oversight from other financial regulatory bodies, gave rise to what is now termed β shadow banking β. 35. as part of restructuring the global architecture therefore, steps are being taken in a number of countries to limit banks from actively engaging in proprietary trading that was not instigated by clients, referred to as the volcker rule. 36. as the financial sector continues to grow in ghana licensed universal banks have started to branch into areas such as providing bancassurance services or setting up subsidiaries to engage in capital market activities. there is need for effective collaboration between financial sector regulators ; that is the bank of ghana, the national insurance commission and the securities and exchange commission and the national pensions regulatory commission. this approach of cross - sector supervision or consolidated supervision is necessary to ensure that emerging | kwesi bekoe amissah - arthur : challenges to the ghanaian economy address by mr kwesi bekoe amissah - arthur, governor of the bank of ghana, at the annual dinner of the chartered institute of bankers, accra, 27 november 2010. * * * mr. chairman, president of the chartered institute of bankers, fellows and members of the institute, distinguished guests, ladies and gentlemen 1. thank you for inviting me to dinner again. i am, of course, delighted to be here and to share with you, members of the chartered institute of bankers, my views on topical issues on the economy generally and the particular challenges confronting the financial and banking sector. 2. forgive me if i exceed the mandate of the central bank has been assigned, but the banking sector operates within the economy and is very sensitive to developments in it. therefore it is appropriate to review some important developments in the economy and how they impact on the banking system. 3. last year, i spoke on the challenges, lessons and opportunities for the banking system and the ghanaian economy posed by the global financial crisis. i enumerated a number of challenges and systemic risks that confronted the economy and the banking system and the need to introduce measures to mitigate the impact on our economy of what were essentially external shocks. 4. having put in measures to halt the decline, the economy has witnessed an appreciable level of macroeconomic stability, reflected in stable prices, stable exchange rates and increasing foreign reserves. however a number of new challenges confront us. in the mean time, the ghana statistical service ( gss ) has undertaken a rebasing of the national accounts and many people still wonder how to interpret the results and what the implications are. 5. the fundamental dilemma of policy is how to strike a proper balance in sharing the costs of the fiscal consolidation process? how do we assure the sustainability of the gains we have made in achieving macroeconomic stability? how best do we manage the expected revenue from petroleum exports and avert the worst manifestations of the resource curse. 6. my address tonight will therefore attempt to examine the challenges confronting the ghanaian economy ; the state of the banking system and our future concerns about its progress. mr chairman, let me start with the state of the economy : 7. it really does not need repeating that at the beginning of 2009 the ghanaian economy was confronted with macroeconomic imbalances that contributed to high fiscal deficits, high inflation, high interest rates, | 1 |
large balance sheet, and thereby judge how patient it could afford to be in reducing the balance sheet to its longer - run level. 7 reducing the balance sheet β s size over the past year, as the fomc came to judge that normalization of the policy rate was well under way, with another rate increase in december 2016, and further increases in march and june 2017, fomc deliberations turned to how balance sheet normalization might best be done. as i noted earlier, for some time the fomc has underscored that the balance sheet will be reduced in a way that is gradual and predictable, so as to avoid risks of surprise, disruption, or volatility, and would be achieved primarily by not reinvesting maturing principal. the fomc β s recently initiated plan does exactly this. 8 principal reinvestment will decline in a phased manner, an approach which provides for an appropriate pace of reduction in the balance sheet, and is quite straightforward to communicate. specifically, principal maturities will be reinvested only to the extent that they exceed gradually increasing caps. 9 for treasuries, the cap initially will be $ 6 billion per month, and will increase in steps of $ 6 billion at three - month intervals over 12 months until the cap reaches $ 30 billion per month. agencies follow a similar pattern, with a cap starting at $ 4 billion and rising in three - month steps to reach $ 20 billion. the fomc also indicated that it anticipates that these caps will remain in place once they reach their respective maximums. over time, as the fed holds fewer securities, the private sector will gradually hold more. at the same time, fed liabilities held by the private sector, in particular reserve balances, will decline equivalently. panel 2, which draws on a july 2017 update to the system open market account annual report, illustrates how the caps will evolve in relation to anticipated maturities of treasuries, on the left hand side, and agency mbs on the right. as can be seen, once the caps are fully phased in, in many months the caps are not expected to be binding, and so there would be no reinvestments 3 / 7 bis central bankers'speeches in those months. however, the caps will be exceeded in months with large treasury maturities, and we would reinvest the amount above the cap. for agency mbs, a change in conditions could | might face circumstances similar to bear stearns. lehman brothers was one of these dealers. it is impossible to know what would have happened to lehman without the tslf and the pdcf, but it is safe to say that these facilities calmed markets and allowed lehman and others more time to examine available options and to seek potential solutions. as history shows, lehman had six months from the date of the bear stearns transaction to find a longterm solution to its myriad problems. of course lehman β s challenges were very serious β it suffered from capital deficiency, liquidity drain and a low level of market confidence. any of these three could potentially prove fatal to a publicly traded financial company, even in the healthiest of economies. lehman had the misfortune of trying to solve all three at once. with the introduction of the tslf and the pdcf, the new york fed sent small teams of two monitors into each of the four remaining investment banks, goldman sachs, merrill lynch, morgan stanley and lehman brothers β something it had never done before. let me again emphasize that we were not intending to conduct supervisory activities with our personnel, nor were we attempting to displace the sec, the primary regulator of the investment banks. to the contrary, we were acting as a potential lender to these potential borrowers, and we wanted to know our new borrowers better. because of concern that our monitoring role could be misunderstood or misconstrued, vice chairman donald kohn described our objectives in public testimony. he said that the on - site monitors had two narrowly tailored goals : ( 1 ) to ensure that any credit that the fed extended to the investment banks would be repaid, and ( 2 ) to ensure that the investment banks did not become too dependent upon federal reserve credit and would continue to work on improving their liquidity positions and financial strength. 2 the federal reserve monitors did not take on the broader responsibility of mary l. schapiro, chairman, u. s. securities and exchange commission, testimony concerning the lehman brothers examiner β s report, before the united states house of representatives committee on financial services, april 20, 2010. donald l. kohn, vice chairman, board of governors of the federal reserve system, risk management and its implications for systemic risk, before the subcommittee on securities, insurance, and investment, committee on banking, housing, and urban affairs, united states senate, june 19, 2008. supervising lehman. the sec continued to be the supervisor of | 0.5 |
reduce pressure on car prices. importantly, we see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy. longer - term inflation expectations have remained stable according to the indicators we monitor, such as the measure of households β longer - term expectations from the thompson reuters / university of michigan survey, the 10 - year inflation projections of professional forecasters, and the five - year - forward measure of inflation compensation derived from yields of inflation - protected treasury securities. in addition to the stability of longer - term inflation expectations, the substantial amount of resource slack that exists in u. s. labor and product markets should continue to have a moderating influence on inflationary pressures. notably, because of ongoing weakness in labor demand over the course of the recovery, nominal wage increases have been roughly offset by productivity gains, leaving the level of unit labor costs close to where it had stood at the onset of the recession. given the large share of labor costs in the production costs of most firms, subdued unit labor costs should be an important restraining influence on inflation. monetary policy although the fomc expects a moderate recovery to continue and indeed to strengthen over time, the committee has responded to recent developments β as i have already noted β by marking down its outlook for economic growth over coming quarters. the committee also continues to anticipate that inflation will moderate over time, to a rate at or below the 2 percent or a bit less that most fomc participants consider to be consistent with the committee β s dual mandate to promote maximum employment and price stability. given this outlook, the committee decided at its august meeting to provide more specific forward guidance about its expectations for the future path of the federal funds rate. in particular, the statement following the meeting indicated that economic conditions β including low rates of resource utilization and a subdued outlook for inflation over the medium run β are likely to warrant exceptionally low levels for the federal funds rate at least through mid - 2013. that is, in what the committee judges to be the most likely scenarios for resource utilization and inflation in the medium term, the target for the federal funds rate would be held at its current low level for at least two more years. in addition to refining our forward guidance, the federal reserve has a range of tools that could be used to provide additional monetary stimulus. we discussed the relative merits and costs of such tools at our august meeting. my fomc colleagues and i will continue to consider those and other pertinent issues, | ##ed. while these principles are general, we have found that they have been more acute with new and innovative firms, whose regulatory maturity and risk management capabilities 4 / 6 bis - central bankers'speeches have not always grown in line with their balance sheets ; and where the regulatory toolkit is not everywhere as developed as in other sectors. while it is not something i will focus on today, this has been particularly clear in ireland's large and growing payment and electronic money institutions sector, where at times significant deficiencies have been identified. i say this not just to criticise, but to make them better ; and indeed they must get better in order to secure their customers funds, and the integrity of the system. getting it right will also be a good for business ; and so addressing these issues should be seen as a key enabler for growth, rather than an afterthought in their commercial strategy. conclusion β innovation in the interests of us all to sum up, innovation and regulation go hand in hand. and while regulators need to adapt in the face of rapid financial innovation, innovators need to recognise that no matter how novel, innovative and ground breaking the product or initiative, the fundamental risks and their fundamental duty to manage those risks remain. and while some might say that regulators are anti - innovation β i say this couldn't be further from the truth. the job of regulators is not to be indiscriminately pro - innovation, but our mandate is to deliver in the public interest. and let me be clear that innovation done well is in the best interest of consumers and the wider economy. but not all innovation is good, and not all innovation is done well. so to protect trust in innovation and the system, risks must be managed β so that the bad doesn't drive out the good. this is in the interest of us all. 1 with thanks to cian o'laoide, steven cull, and mary - elizabeth mcmunn for their help preparing these remarks. 2 see " the travels of marco polo ", volume one chapter xxiv 3 see for example the beauty of uncertainty : the rise of insurance contracts and markets in medieval europe β botticini et al, journal of the european economic association december 2023 4 see central bank of ireland β our strategy september 2021 5 see for example perrazzelli : the visionary project of a single supervisory mechanism - where do we stand after 10 years? october 2023 6 see consultation paper 156 : | 0 |
markets in asia. currently, financial regulators are actively reviewing our payments and settlement system so that a harmonized domestic structure puts us in a viable position to be a strong node within the asean network. indeed, to the extent possible, we lend our voice in global and regional forums where market reforms are either being designed or discussed for cross - border application. to be sure, we will not forget our financial consumer. the financial consumer protection framework recently approved by the monetary board is a milestone in what can prudentially be expected by consumers and of financial service providers. the fact that a recent world bank - funded review describes our consumer protection framework as one of the best in the world is a major strength as we move forward. collaboration and cooperation ladies and gentlemen, much has already been put on our collective plate but the reality is that much more can be expected ahead of us. it is not our intention to push all of these to our supervised entities for them to deal with on their own. critical collaboration and cooperation is necessary because these are major developments that will dictate the market landscape for decades ahead. this extent of collaboration is an essential facet of how we got to this position of strength. now, we have to build upon that collaboration and that position of strength for us to move forward. the winds of change have brought both the global reforms and regional integration into their respective mature stages and it is now the challenge of execution that is before us. we may not always agree with the specific form of the global and regional changes but, perhaps, we can agree on the principles for which change is being espoused. borrowing from the website of the financial stability board, we continuously need to build resilient financial institutions, make markets safer, instill more effective supervision and institutionalize more effective resolution regimes. in other words, we need to uphold transparency, be mindful of contagion and concentration, and monitor simple risks that can subtly transform into systemic vulnerabilities. ladies and gentlemen, vigilance has been the seed for which we are now reaping the fruit of macro - financial strength. being continually cognizant of the need for such vigilance and adhering to the discipline of governance are the keys to continued resilience. these are the responsible investments we need to make and with contributions from all stakeholders, we can expect a better and stronger financial market ahead. thank you and good afternoon. bis central bankers β speeches | shift in the policy orientation from the exclusive focus on nutrition based approach towards poverty to cover broader perspectives of providing affordable housing to all. the scheme of affordable housing in partnership promotes various types of public - private partnerships β of the government sector with the private sector, the cooperative sector, the financial services sector, the state para - statals, urban local bodies, etc. it has the potential to provide a major stimulus to economic activities through affordable housing for creation of employment, especially for the construction workers and other urban poor who are likely to be amongst the most vulnerable groups in during the economic downturns. government bodies can consider single window clearance mechanism for the purpose of further simplifying the approval processes for low cost affordable housing along with reconsideration of the taxation policies. the public agencies and the state and local governments should work to bring efficiency in land market, approval processes, provision of efficient infrastructure and e - governance viz. introducing electronic record for land and bringing in more transparency in the record of land and houses, etc. it will add good value if the financing agencies can also connect into these developments and together drive the reforms at the state and local levels. in order to meet the enormous needs of the housing sector, short cuts through the subsidy approach are no longer sustainable over the long period. as subsidy based approach cannot be stretched beyond a point, a more viable and sustainable strategy has to be evolved. there is, therefore, a need for having a market oriented mechanism to meet the challenge of the affordable housing sector. source : annual report of the national housing bank source : annual report of the national housing bank bis central bankers β speeches state governments in the entire process for creating an enabling environment for affordable housing, the role of state government is extremely critical. state governments may contemplate forging public - private partnerships to ensure a fair return on investment to the private land owners / developers through guided development and availability of serviced sites for allotment to low income families at affordable prices. incentives and provision of infrastructure can induce private sector entrepreneurs to invest in housing including that for the poor. it can consider measures to control the spiralling increase of land prices and curb speculative activities for developing land and also check unregulated and environmentally damaging land development activities. another aspect which may be considered is the promotion of high density housing in selected areas in cities through appropriate amendments to zoning and land use regulations. this may obviate the necessity of costly land acquisition and avoid high infrastructure costs. state governments may | 0 |
stress this fundamental aspect. if we fail to adhere to it, we will then have all the ingredients for further crises. a number of the criticisms directed at re - regulation concern its contradictions, real or assumed. for example, some feel that the tightening of capital and liquidity ratios is too severe and risks adversely affecting the financing of economies. does this criticism strike you as justified? jean - claude trichet : in our view, the rules which have been defined for capital requirements are optimal. we reflected long and hard on them. of course, there are arguments in both directions, but considering the drama resulting from a crisis in terms of lost growth and job creation, we gain a lot more by being reasonably demanding in terms of capital. preventing further crises from occurring is a benefit that far outstrips the potential losses, if certain analyses are anything to go by. let β s be clear one more time : these decisions, debated at length by those primarily responsible, have been evaluated at governor and ministerial level and adopted at the global level by heads of state and government. they must be implemented. another criticism : this tightening of the rules runs the risk of producing a concentration in the financial sector, and on the financial markets as well, which is even stronger than it is today. jean - claude trichet : i do not believe so. we must be constantly and closely vigilant with regard to the structural changes to international finance. there are permanent risks that we must continue assessing, but i do not think the rules we have just defined, or those still being worked out, will lead to this hyper - concentration. on the contrary, i have to say that one of the main lessons of the present crisis is that there were very high risks associated with what i would call the β financial mammoths β. is too little attention being paid to the much - discussed area of β shadow finance β? β the issue of the β non - banks β, of shadow finance, and of all the institutions or market participants not under the oversight of the banking supervisors, is very important. over the last two decades we have witnessed a tremendous explosion in new financial institutions. i myself lived through a period during which all the institutions with high leverage, by the end of the 1980s, were managing capital worth something in the region of usd 100 billion. 17 years later, in 2007, the figure was usd 3, 000 billion! very significant financial services have been, and are being, rendered by these market | their earlier prudent levels of net indebtedness. these considerations further underscore the importance of quickly completing the process of banking sector rehabilitation and of attracting new sources of capital. such decisive action would allow the banking sector to again be an engine of growth, capable of offsetting the eventual withdrawal of fiscal stimulus. conclusion in closing, the recovery in asia has been impressive indeed, and owes much to the energy and hard work of its people, enlightened political leadership, and the substantial and focused efforts of policymakers to implement sound macroeconomic and financial policy. but the recovery is not yet complete and much remains to be done. while the crisis did substantial damage, it has not fundamentally affected asia β s prodigious economic strengths. but if asia is to realize its potential, it is critical that authorities attend to the unfinished business that remains while continuing to put in place longer - term measures to promote financial resilience, ensure the sustainability of public sector debt burdens, and encourage sustainable growth. asia is at an important crossroads and there is now a unique opportunity to consolidate recent reforms and implement lasting change that will pay dividends for years to come. thank you for your kind invitation and attention. i would be happy to take any questions you may have. | 0 |
is to safeguard financial stability and thus contribute to sustainable prosperity in the netherlands. financial stability is of course a key component of this mission. but financial stability is not an end goal in and of itself. financial stability is a necessary precondition which allows the societies we serve to increase its living standards and prosperity. and as public authorities we exist for the general good of the societies we serve. but as the financial crisis has shown, we should not be myopic when it comes to this issue of prosperity. the prosperity we had created in the years before the financial crisis, had been based on excessive leverage. our economies had seen too much credit growth, which was not adequately backed up by underlying strong economic and financial fundamentals of companies, households and even of governments. in short, the prosperity had turned out to not be sustainable. and so, as we updated our mission statement in 2011, we knew that the word prosperity had to be qualified with the word β sustainable β. at first, our main thinking was in relation to the economic and financial crisis. sustainable prosperity meant, for example, that banks should have sufficient buffers to absorb unexpected losses. but it soon became clear that the word sustainable, daily bread and butter stuff i would almost say, could have broader implications. if the way in which prosperity is created today results in significant ecological damage that prevents future generations from obtaining similar or higher levels of prosperity, today β s prosperity creation is not sustainable either, and runs thereby counter to our mission. and this is at the core of today β s topic. we are almost all supervisors here. we all have an obligation to ensure that the institutions we supervise are able to meet their contractual obligations. now and in the future. our pension funds and insurance companies will still need to be able to pay out their obligations 50 years from now. while we also want our banks to be safe for decades to come. this means that we and the institutions we supervise need to take long term trends and risks into account. and that means paying attention to climate risks. because couldn β t it be feasible that climate change or the energy transition could have an effect on the solidity and integrity of financial institutions or the financial system as a whole? we think yes. and this is why we have been active on this issue. and this is why we are one of the founding members of this network. and this is why we are hosting you here today. ladies and gentlemen, it β s an honor to be the | dear governors, deputy governors, executive directors, and board members, dear chairs, secretary generals and director generals, dear supervisors, regulators and market participants, and dear members of the organizing committee, dear everyone, welcome to the first ever international climate risk conference for supervisors! it is our sincere pleasure to welcome you to the beautiful city of amsterdam to discuss how climate - related risks could affect our financial institutions, and thus affect our mandate as a central bank and supervisor. this conference is organized not only by ourselves but also by the acpr and the bank of england, and the conference is an initiative of the network for greening the financial system, which was launched in paris in december of last year. this network aims to strengthen the global response required to meet the goals of the paris agreement and enhance the role of the financial system to manage risks and to mobilize capital for green and lowcarbon investments. we are very proud to have representatives with us today from over 30 countries and from more than 50 supervisory organizations. we have participants from as far away as australia, japan, and canada, and from as close to home as germany, belgium and luxembourg. in short, we have a gathered a truly international crowd here today. and while some of you may have been active on this issue for a while, i can imagine that for many others today might the first time you are engaging with this issues. we hope it will be a fruitful exchange. now, i shan β t dive into the details of how climate risks could affect our financial sector, as i β m sure we will be discussing those risks in the coming hours, with all the excellent speakers we have lined up. what i would like to share with you is why we have been active on this issue for a few years now. but it is only logical that some of you might have some scepticism about supervisors being worried about the climate. maybe you will be less puzzled after i will have told you how we as central bankers and supervisors started worrying. it all revolves around our mission. i β m sure that some of you may have heard that already before. but it β s important to highlight this mission, because it explains perfectly why it makes sense for supervisors and central banks alike to pay attention to the issue of sustainability. you see, de nederlandsche bank is the supervisor of banks, pension funds and insurance companies, but also the central bank, the resolution authority and the authority for the deposit guarantee scheme. and our mission | 1 |
with national authorities or at the request of the national supervisory authority. although aimed at revising the institutional arrangements of the euro area, the ssm is not a closed system. it is open to those national competent authorities of non - euro area member states that intend to participate by entering into a close cooperation with the ecb. once a member state enters into a close cooperation, national competent authorities will participate on equal footing as regards supervisory decisions, but will equally have to adhere to the guidelines and instructions issued by the ecb. enlarged participation in the ssm is a great opportunity for setting a level playing field in supervisory practices across the eu. at the same time, a series of conceptual questions need to be addressed. for one, it is hard to imagine that countries not participating in the european stability mechanism ( esm ) might act as a financial safety net for troubled but solvent banks, in the event that a privately financed resolution fund is not yet adequately funded. the next steps the establishment of the ssm represents a great opportunity for financial integration in europe. let me now turn to the next steps in the establishment of the ssm. first, the swift adoption of the ssm regulation is essential. definite plans are crucial in order to uphold the current momentum of the stabilisation of the euro. the general expectation is bis central bankers β speeches that the ssm will be established early this year, with an effective operational start 12 months later. second, the design of a supervisory model, including the allocation of tasks between centre and periphery is critical for the success of the ssm. in this regard, work is already under way by the ecb in cooperation with national competent authorities β subject to the final legal wording. third, the ssm will need to carry out a comprehensive review of the banks that fall under the direct supervision of the ecb. as set forth by the regulation, this exercise should include elements of an asset quality review as a basis for a thorough solvency analysis. this analysis should also be instrumental in identifying potential legacy problems. it is important that the financial clean - up of these legacy problems will be undertaken by the responsible member states and not by the esm and certainly not by the ecb. just like an insurance policy, the ssm can cover future risks. past omissions must be resolved by those who are accountable for them. this does not rule out interim solutions involving actions by the srm and ( privately financed ) resolution fund as well as by the | by capital - constrained banks. operationally, this is typically done by feeding our stress test results into some of our largescale macro models that include an active banking sector and thus can adequately capture the real - financial linkages. nonetheless, further modelling enhancements are warranted in this fourth building block, and for this purpose we will continue to closely monitor the progress in the tools developed in workstreams 1 and 3 of mars. having described the various building blocks, let me furthermore emphasise that our framework is based entirely on publicly available consolidated bank - level data ; no supervisory information is employed in our set - up. bis central bankers β speeches our analytical framework should also not be mistaken for the constrained β bottom - up β approach adopted by the eba for its annual eu - wide stress test. the eba stress testing exercise is carried out at the bank level and applying granular bank level data only available to the banks and their national supervisors. compared with supervisory stress tests carried out between banks and their home supervisors, the eba bottom - up stress test is β constrained β in the sense of using a common scenario across all banks and to a large extent also relies on common methodologies. bottom - up and top - down stress tests should not be directly juxtaposed, as a one - to - one mapping of their results is not possible. rather they should be seen as complementary tools to assess the resilience of the financial sector ; they are characterised by different strengths and weaknesses. importantly, although top - down stress tests are far from perfect and suffer from many deficiencies, they are a useful tool to challenge the more granular bottom - up approaches and especially to detect outlier responses by individual banks in the latter case. 3. the use of macro - prudential policy instruments in the single market i would like to conclude by turning to the design of policy instruments that authorities may use to address the risks identified by various analytical tools. as a consequence of the lessons learned from the crisis, the focus of financial regulation has gradually shifted towards a macro - prudential approach, a key element of which is the establishment of authorities with macro - prudential mandates at both the national and the international level. in the eu context, the esrb has been operational since the beginning of this year. the esrb is currently working on developing a macro - prudential toolkit of policy instruments that authorities can use to address systemic risks. moreover, the basel iii regulatory framework | 0.5 |
debt and the expanded role of nbfis in the region. let me talk about these vulnerabilities from an fsb perspective, with a focus on emes and the asian region. 1 / 3 bis - central bankers'speeches the global financial system is transitioning to a higher interest rate environment. financial institutions and market participants have not experienced sharply rising interest rates for a long time, making this adjustment to a world of higher rates challenging. earlier this year, amid shifting financial conditions, we witnessed the first failure of a global systemically important bank since the 2008 global financial crisis. in addition, a few medium - sized bank failures also rang alarm bells. contagion from these individual bank failures was limited, thanks to the swift and coordinated actions of authorities across the globe and to the confidence in the resilience of the broader financial system. this resilience is underpinned by the g20 reforms introduced following the global financial crisis. still, further strains in financial markets cannot be ruled out, as the dynamics associated with the transition to higher interest rates play out over time. market conditions for the larger emes have been fairly stable. but, the recent slowdown in economic growth β and rising interest rates in some jurisdictions β could make it more challenging for some economies to service high debt levels. at the same time, increasing government debt and the withdrawals of foreign investors in the wake of the pandemic have strengthened the " sovereign - bank nexus ". this may lead to speedier transmission of shocks between sovereigns and banks and threaten bank macrofinancial stability. one particular issue that could arise relates to the interaction of us dollar funding and external vulnerabilities in emes. for most of the decade prior to the covid - 19 pandemic, capital flows to emes were supported by abundant global liquidity and a hunt for yield among investors to boost their returns. these inflows provided emes with the benefits of greater access to international capital markets, but also contributed to the build - up of vulnerabilities. non - bank financial intermediaries ( nbfis ) have played an increasing role in funding eme external debt. while this development added to the diversity of eme funding sources, it also created new challenges. as the global financial system continues to digest higher interest rates, there is the possibility that this could affect capital flows to emes. in a more extreme scenario, nbfis and others might withdraw their investments in | wu xiaoling : strengthening china β s financial industry in the process of opening up speech by ms wu xiaoling, deputy governor of the people β s bank of china, at the sino - us economy and trade forum, beijing, 14 february 2006. * * * ladies and gentlemen, it is a great pleasure to join such a distinguished audience to discuss about issues related to trade and economic cooperation between china and the united states. as two large countries in the world, china and the united states maintains a friendly cooperative relationship between each other not only fits in with their respective fundamental interests, but also helps to create a favorable environment for world development. it is an independent choice of the chinese people to embark on the way transiting to the market economy and it is an internally generated force that pushes china to open to the outside world and actively integrate into the world economy. opening up has not only brought china vitality, but also deepened the reform process which helped to create a better platform for the chinese economy to integrate into the world economy. china is developing in the process of opening up while the rest of the world is benefiting from china β s development. china β s financial industry has also benefited from the opening up process. in october 1979, mr. deng xiaoping, the late architect and mastermind of china β s reform and opening up, asked mr. rong yiren to establish the china international trust and investment corporation ( citic ), a holding company with its business spreading from the financial sector to various other industries. the incorporation of citic has opened for china a window to the outside world in terms of external financing. after that, china began to introduce foreign financial institutions in the country by allowing them to set up representative offices, operational entities and even joint - equity institutions in china, turning a new chapter in the reform and opening up of the chinese financial industry. it is the financial reform and opening up that has brought china out of the rigid doctrine that confined the country to a self - pride fallacy of β a nation of no domestic and external debt β, and helped china to learn to use financial instruments and foreign capital to develop the chinese economy. in conventional chinese wisdom, borrowing debt becomes a feasible choice only when other options are exhausted. in the past, a chinese usually needs to save several months or even years before he or she could offer to buy some relatively expensive goods, and borrowing money is considered to be something shameful and reflecting one β s incapability. under | 0 |
. therefore, it is essential to establish an effective framework for macroprudential supervision that will ensure both the systematic analysis of risks and the formulation of policies to address such risks. the state of the greek economy the economic slowdown has been less severe in greece than in many other european countries. however, this outcome reflects factors that, if left untreated, will reduce growth potential in the medium term. specifically, the performance of the greek economy during the crisis reflects the relatively - low level of openness and the deterioration of public - sector balance sheets from a position that was already worrisome prior to the onset of the crisis. a factor that has, however, supported the greek economy has been the soundness of its banking system. greek banks have been free of toxic assets and their exposure to the emerging economies of south - eastern europe has remained within manageable limits. a recent stress test conducted in close cooperation with the imf has reaffirmed the soundness of the greek banking system. the relatively - high growth rates experienced by the greek economy since its entry into the euro area reflect a catching - up process. to sustain a robust growth rate in the future, greece will need to address several key challenges, reflected in persistently very large currentaccount imbalances, high fiscal deficits, and worrisome debt levels. these imbalances are the result of structural rigidities, which have undermined competitiveness over time. to restore competitiveness and remove the imbalances, a dual agenda needs to be concurrently implemented : first, a multi - year program of fiscal consolidation, which can reduce risk premia and crowd - in private investment, raising the growth potential of the economy ; second, bold and wide - ranging institutional reforms in the public sector and structural reforms in product and labor markets, which can enhance productivity and raise the employment rate. only by undertaking these reforms will the greek economy be able to become more competitive and increase its growth potential and the prosperity of its citizens. the broad support received by the newly - elected government will greatly facilitate the implementation of the reform agenda. | sir k dwight venner : the eccu economic review 2005 presentation by sir k dwight venner, governor of the eastern caribbean central bank, at the eccb headquarters, st. kitts, 12 january 2006. * * * good evening fellow citizens of the eastern caribbean currency union on behalf of the monetary council, board of directors, management and staff of the eastern caribbean central bank, i bring you greetings and best wishes for the new year. i welcome this opportunity, once again, to address you on the economic performance of the currency union during the past year, and to share with you the bank's views on the prospects for this year. the year 2006 will be one of the most defining periods in the lives of the people of the oecs and the wider english speaking caribbean. the reason for this is simple. it lies in the wide variety and great intensity of the challenges we will face as very small states in a rapidly changing regional and international environment. there will be tremendous challenges for us in how our political, economic and social institutions exercise their capacity to respond to new and unexpected circumstances in a global environment, in which each national entity places its interests before those of others. in fact, recent circumstances, most notably the negotiations on access for our bananas into the european union clearly indicate that our small size does not evoke much sympathy in international economic relations. this should make it abundantly clear to us that we need to proceed into the future with an increased sense of realism, objectivity and clarity. it is, therefore, perhaps more than symbolic that in 2006 we will be celebrating the 25th anniversary of the signing of the treaty of basseterre. this treaty of cooperation between our countries has been in very large part responsible for their survival and growth over the intervening years. it is also important to note that we have been working on revisions to the treaty, and that these will reflect our considered responses to the changes which have been taking place in the domestic and external environments. the year 2006 will witness some very specific events and circumstances which will require new and strategic responses from us as individuals, families, business firms, trade unions, civic organisations, countries and as a closely connected group of countries, that is the oecs. the major challenges in the international arena will come from the new trading regimes which are now being negotiated under what is called the doha round. the major issues involved would be liberalisation in the trading of agricultural commodities and services. these will have a major | 0 |
glenn stevens : overview of the australian economy and future challenges opening statement by mr glenn stevens, governor of the reserve bank of australia, to the house of representatives standing committee on economics, canberra, 19 february 2010. * * * since we last met the global economy has continued an expansion that started around the middle of 2009. it appears that world gdp grew at an annualised pace of about 4 per cent in the second half of last year. many forecasters now expect a similar result in 2010. international financial markets have generally continued to thaw, with most capital markets functioning again and the use by banks of exceptional support from central banks and government guarantees being wound down. these are, needless to say, very welcome developments. having said that, the situation is not without some challenges. i will mention just two. the first is the two - speed nature of the global recovery. normally after a sharp downturn, the ensuing upswing is correspondingly strong. this has been the case among a number of asia - pacific economies, which take half of australia β s exports. the strength is not confined to china : india, korea, singapore, taiwan and others have all seen a significant pick - up in production and trade. in several of these instances the term β v - shaped recovery β would be apt. around the region, secularly rising incomes, generally healthy banking systems and relatively low public debt levels allow considerable room for confidence of a sustained expansion in demand. in fact in some cases the issue of overheating is arising and the authorities in both china and india have begun to tighten their policy settings. in the large industrial countries, on the other hand, the rebound has been more tentative, and driven more by the turn in the inventory cycle and temporary policy measures than a strong pick - up in private demand. it is not unusual, at this point of the recovery, for the inventory dynamics to be playing a prominent role in pushing up output. nonetheless, the question is the extent to which a durable upswing in private final demand in the various countries will become established. most observers expect this to be a fairly gradual process, given the lingering effect of the strain on banking systems and ongoing de - leveraging, not to mention the need, at some point, to begin the process of fiscal consolidation. growth in these cases is therefore expected to remain modest and, as a result, these economies are likely to be characterised by a lot of spare capacity and ongoing high unemployment. so the historic shift | the norwegian business sector, the depreciation of the krone contributed to curbing the decline in activity and employment. there is nevertheless uncertainty as to the magnitude of the impact of short - term exchange rate fluctuations because companies engage in currency hedging. there are different ways to hedge against currency fluctuations. some enterprises buy intermediate goods in the same currency in which they sell their products. other companies raise a loan in the same currency as that of the company β s assets. in addition, companies can hedge against currency swings in the forward exchange market and options market. the large volume of international trade in currency derivatives, which is dominated by banks reduces, premiums and costs for other business sectors and thereby promote cross - border trade in goods and services. it is not a good idea to throw a spanner into the works. the impact on household consumption and housing investment has been substantial. business investment is now picking up. in norway, household debt is higher than household deposits. the decline in interest rates has thereby freed up funds. households reacted relatively rapidly, and growth in consumption picked up. the fall in interest rates pushed up house prices. turnover in the housing market has been high. higher housing wealth provides increased borrowing opportunities and thereby also boosts demand for consumer durables. household debt has risen by around 11 per cent over the past year. high resale home prices have made it more profitable to build new homes, and residential construction is rising. the fall in interest rates has also contributed to sustaining the market value of office premises and commercial property even with a high vacancy rate. with the prospect of higher occupancy rates, prices are now rising. owing to higher productivity and a drop in sickness absence, it may have taken time for the effects to become visible in the labour market. however, higher demand for labour and falling unemployment is gradually leading to a tighter labour market. high interest rates in 2002 and fiscal discipline contributed to a deceleration in wage growth to a more sustainable level. higher demand for companies β goods provides scope for increasing prices. experience shows that inflation is directly influenced by the level of capacity utilisation in the norwegian economy. some of the rise in prices for domestically produced goods and services can be attributed to higher margins in the business sector. if there is confidence in monetary policy, economic agents will expect inflation to be close to target over time. this will provide a basis for company budgets. this will then contribute to stabilising inflation. many companies change their prices | 0 |
outlook for the financial system? have the β extraordinary β measures taken had an effect and how should they be phased out? even after we have landed properly it will be necessary to keep our balance. but the road ahead may be difficult to negotiate. so how do we create a better and more sustainable structure for the financial markets both nationally and globally? i do not have the perfect answers to all of these questions. i doubt that anyone has. but i shall spend the next 20 minutes trying to answer them to the best of my ability. and i hope this will provide a good basis for the coming hearing. monetary policy and the economic situation the downturn in the world economy has been very rapid and severe β in this way the worst in many decades. sweden is an export - dependent economy and has been hit hard partly because of this. it will take time before the economy is back at the same level as prior to the crisis. but now we have come so far that the recovery has begun. one important component to which i shall also return is that the conditions on the financial markets have improved. several indicators are also showing that confidence in the future among both companies and households has become much stronger, an important factor in the economic recovery ( figure 1 ). figure 1. confidence indicators, net figures, seasonally - adjusted data - 10 - 10 - 20 - 20 househoulds - 30 - 30 total business sector - 40 - 40 source : national institute of economic research the recovery will take time but although growth will recover during the final two quarters of this year, we believe that gdp in sweden will fall by more than 4 per cent in 2009. and it will take a long time before the economy is back at the same level as prior to the crisis. 2009 will be the first year since the 1940s in which gdp falls in the world as a whole. but, all in all, there are many indications that the growth rate abroad and in sweden has bottomed out and will rise in the years ahead ( figure 2 ). figure 2. gdp level, index 2007 q4 = 100 usa euro area sweden sources : bureau of economic analysis, eurostat, statistics sweden and the riksbank. with regard to the labour market, we are assuming that it will remain weak and that unemployment will continue rising until the end of next year. employment will not increase until the beginning of 2011. historically, it is usually the case that employment recovers with some time lag after production has picked up | christine lagarde : remarks on the occasion of receiving the grand prix de l β economie 2019 from les echos speech by ms christine lagarde, president of the european central bank, at the " grand prix de l β economie des echos pour l β annee 2019 ", paris, 5 february 2020. * * * it β s a great honour to be awarded this prize, and to receive it in the presence of so many leading figures from the french business community. the environment facing european business today is characterised by both uncertainty in the short term and a changing landscape in the longer term. the short - term uncertainties are mainly related to global risks β trade, geopolitical and now the outbreak of the coronavirus and its potential effect on global growth. over the last two years, the euro area economy has been quite resilient to global shocks, with our accommodative monetary policy supporting employment and consumption. and, though gdp growth in the last quarter was weak, it was broadly in line with our expectations. but while the threat of a trade war between the united states and china appears to have receded, the coronavirus adds a new layer of uncertainty. so we β re continuing to monitor closely how these risks develop and how they feed into our central scenario for the economy. in the face of these uncertainties, the ecb β s forward guidance on interest rates and asset purchases acts as an effective automatic stabiliser. the longer - term picture is different. ambitious proposals are gathering momentum within europe today and look set to profoundly reshape the environment for business. in particular, two big ambitions are pervading many aspects of policymaking in ways that create change, but also opportunity : the goal to build real β european autonomy β ; and the aim to urgently fight the consequences of climate change. i know that, as business leaders, you naturally seek the new opportunities that emerge for your companies in such times. so i β d like today to talk about how i see these ambitions evolving, and where they intersect with the tasks and priorities of the ecb. european autonomy we all have a sense of the world around us moving more quickly. the post - war global order is fracturing, tensions between great powers are rising and technological change is transforming the way we produce, distribute and consume. this environment clearly exposes europe to new types of risk, as demonstrated today, for example, by the turn towards protectionist policies and | 0 |
more health professionals, investing in better equipment, and enhancing research and innovation. the government is also focused on the delivery of other key commitments to canadians, including : β’ high - quality early childhood development ; β’ predictable and long - term funding to municipalities for critical infrastructure needs ; β’ meaningful action on the disparities that impede opportunities for aboriginal canadians ; and β’ meeting the imperatives of national defence and national security. as minister goodale said in his economic and fiscal update presentation, meeting these priorities will require ongoing fiscal discipline. it will also require attention to improving productivity. but given the current high ratio of employment to population, and given that canada β s population will soon begin to age rapidly, we will have to rely increasingly on productivity to raise living standards in the future. to increase productivity, we canadians need to invest in human capital, physical capital and innovation - the three drivers of productivity growth. the key will be to adapt to change through policies that promote flexibility. that β s why canada is investing in the skills and knowledge of our people, and is creating a competitive environment through lower taxes that encourage investment in physical capital and reward the efforts of entrepreneurs. these flexibility - enhancing policies, along with lower barriers to trade, smart regulation and openness to international investment, are the building blocks of canada β s modern and prosperous economy. collaboration between canada and germany is part of this effort to encourage international investment. as one example, our two countries have a long - standing relationship in science and technology. the driving force behind this relationship is the bilateral s & t cooperation agreement, signed in 1971. and there is the very successful partnership between the national research council of canada ( nrc ) and the helmholtz association of german national research centres. the canadian embassy in berlin deserves real credit for encouraging this flourishing collaboration, and promoting technology - oriented partnerships. such cooperation is critical in an increasingly connected global economy. so, too, are forward - looking initiatives such as the trade and investment enhancement agreement between canada and the eu, which would allow qualified workers to move much more easily between the eu and canada and would enhance the ability of our financial sectors to seize investment opportunities. once concluded, this agreement would present germany, europe and canada with a unique opportunity to make our economies more global, more efficient and more prosperous. now let β s turn to a different issue. as you know, g - 20 finance ministers and central bank governors met in berlin over the weekend. among the themes of our discussions were the | importance of promoting flexibility in national economies to help adjustment to changing circumstances, and the need for reductions of global imbalances. the importance of a sound domestic and international financial system to facilitate the trade, savings and investment necessary to bring about a reduction of these imbalances was also discussed. so let me conclude these remarks this morning with a few thoughts on the importance of international monetary arrangements to facilitate the reduction of imbalances. most major industrialized countries and a large number of emerging market countries are operating with flexible exchange rates. the notable exceptions are china and a number of countries in southeast asia which, either explicitly or implicitly, tie their currencies to the yuan, which is in turn pegged to the u. s. dollar. with two systems operating, not everyone is playing by the same β set of rules, β and imbalances are building. the concern is two - fold : β’ first, the sense that some countries are not playing by the rules could give rise to protectionism, with potentially very serious negative consequences for the global trading system. β’ and second, a disproportionate burden of adjustment to changing economic circumstances is being borne by those of us with flexible exchange regimes, including canada and europe. so there is a real need, going forward, to think hard about these international monetary arrangements. of course, there is much more to the resolution of global imbalances than just exchange rate regimes. there are issues of savings and investment flows and of promoting strong economic growth worldwide, through strong domestic demand in each country. but the issue of international monetary arrangements deserves critical attention and debate, as we look out over the medium - and longer - term to the challenges facing the global economy. to conclude, i hope these remarks give you a good perspective on the fiscal health of the canadian economy and on some of the bilateral initiatives between our two countries. as well, i hope that i have given you some food for thought on international monetary arrangements. thank you for your attention. let β s now turn to hear your views. | 1 |
ioannis papadakis : combatting the impact of the financial crisis welcome remarks by mr ioannis papadakis, deputy governor of the bank of greece, at the european bank coordination meeting, athens, 19 march 2010. * * * it is an honor and a pleasure to welcome you to athens for the european bank coordination meeting, hosted by the bank of greece and co - organized with the european commission, the imf and the ebrd. moreover, i am very pleased to be given the opportunity to share with you some preliminary thoughts on the achievements of our efforts to support imf programs in the region through concerted private sector involvement. the financial crisis that erupted in 2007 is now in its third incarnation. having started as a crisis affecting certain marginal financial markets in the us, it subsequently spread fast with its impact being felt on the financial and the real sectors of most economies in the world. in its current incarnation, it is turning into a fiscal crisis, as markets realize the true cost of the measures implemented to minimize the damages and the impact on the macroeconomy. in addition, the crisis has brought to the fore a number of weaknesses and deficiencies in the functioning of the international financial system, putting the effectiveness of the supervisory and regulatory framework under the microscope. the discussion regarding the origins of the crisis and the work that needs to be done has created a long list of β do β s and don β ts β. it has also led to an even more lively and lengthy discussion about the appropriate means to achieve the ultimate goal and the timing of the required measures. let me briefly mention five areas of action, which i believe deserve priority : first, there is need to deal effectively with short - termism in the quest for high profits, by protecting the system from the incentives created by excessive bonuses and the irrational pricing of risks. second, the transparency of financial markets and structures needs to be enhanced by putting greater emphasis on risk disclosure by systemically important institutions, instruments and markets. third, the pro - cyclicality of the financial system needs to be mitigated by improving both the quality and quantity of bank capital and by ensuring that banks create enough prudential liquidity buffers in good times to have reliable shock - absorbers on which to depend, if and when bad times come. fourth, there is a need for a macro - prudential approach to financial supervision that takes into account not only the links between financial behaviour, economic activity and macroeconomic | and, ultimately, the international financial system. i congratulate you all for your good efforts over the last year to bring about and safeguard stability in the countries involved. i thank you for participating in today β s meeting. the bank of greece as host owes a special thanks to the european commission, the imf and the ebrd for the help they have provided us in organizing today β s event. i wish you all a fruitful meeting and a pleasant stay in athens. | 1 |
a bit since the start of this year, but there is little sign to date of a sustained improvement in construction activity. weakness in construction has been accompanied by declines in output of a range of manufactured products over the past year. 1 steel is one obvious example. mining activity in china has also been affected. indeed, a further decline in the output of unprofitable chinese mines would provide some support to commodity prices, and would benefit other producers, including in australia. the substantial appreciation of the renminbi over the past year ( 12 per cent in trade weighted terms ) may also have contributed somewhat to the weakness in the industrial sector bis central bankers β speeches although the weakness in china β s property and manufacturing sectors is clearly of concern to commodity exporters like australia, there are a number of countervailing forces supporting broader activity in china. β’ first, growth in the services sector has been resilient, and should continue to be assisted by a shift in demand toward services as incomes rise. β’ second, growth in household consumption has also been stable in recent quarters aided by the growth of new jobs. 2 of course, such outcomes cannot be taken for granted ; if the industrial weakness is sustained, it might eventually affect household incomes and spending. β’ third, chinese policymakers have responded to lower growth by easing monetary policy and approving additional infrastructure investment projects. they have scope to provide further support if needed, although they may be reticent to do too much if that compromises longer - term goals, such as placing the financial system on a more sustainable footing. there are two key implications of the slowing in china β s growth for australia. first, the substantial slowing in industrial production has contributed to a further decline in commodity prices over the course of this year. ( this is in addition to the contribution from the substantial increase in the supply of commodities, including from australia. ) we β ve detailed the effect of the decline in commodity prices on australia β s economy elsewhere. 3 i would just add that commodity prices remain relatively high. the bank β s index of commodity prices has fallen by about 50 per cent from its peak, but is still almost 80 per cent above early 2000 levels. clearly, conditions in the industrial sector in china, and asia more broadly, will have an important influence on the path of commodity prices over the near term. beyond that, the changing nature of china β s development implies that the potential for commodity prices to rise from here is somewhat limited. second, the | in any one year being 10 basis points. 6 as a result, even the holders of lower rated tranches of rmbs have not suffered any losses, as the insurance, together with the subordination embodied in the rmbs, has provided a more than adequate buffer. the effect of the financial crisis the financial crisis has had a material affect on pricing and structure in the australian mortgage market but has not had a particularly marked impact on the quantity of housing credit provided. rba ( 2006 ), β the performance of australian residential mortgage - backed securities β, financial stability review, march, pp 63 β 68. beginning around the middle of 2007, there was a widespread reappraisal of the risks associated with investing in structured credit products. securitisation started to suffer severe brand damage as primarily us rmbs incurred significant credit problems as delinquency rates began to rise. 7 initially, the problems were most evident in the sub - prime mortgage market, but they later spread to prime mortgages in the us as well. combined with the decline in house prices, these delinquency rates have led to large losses for investors in us rmbs. the australian rmbs market was significantly affected, even though ( as already discussed ) lending standards were much better in australia, and the rmbs continued to perform well. issuance dried up markedly ( graph 6 ). most of the issuance during late 2008 and the first half of 2009 was purchased by the australian government through the australian office of financial management. offshore sivs, which had been large buyers of australian rmbs prior to the financial crisis, were forced to liquidate their portfolios as they were no longer able to fund themselves. these sales into the secondary market drove spreads from about 15 basis points ( over the bank bill swap rate ) pre - crisis to a peak of over 400 basis points in early 2009. this very wide secondary market spreads also deterred new issuance. graph 6 the crisis also had a material effect on the funding costs of all providers in the mortgage market. in addition to the effect on rmbs funding described above, wholesale ( and particularly recently ) retail funding costs have risen relative to the cash rate. 8 in response to the rise in funding costs, all institutions have raised their mortgage rates relative to the cash rate. interestingly, while the standard variable rate has been increased, there is little sign of any reduction in the discounts offered on new loans. the average rate on variable rate housing loans | 0.5 |
bankperspectives - on - central - bank - digital - currencies. aspx ; jim s. cunha, β boston fed β s digital dollar research project honors 2 hamiltons, alexander and margaret, β federal reserve bank of boston, february 25, 2021, https : / / www. bostonfed. org / news - and - events / news / 2021 / 02 / how - did - the - feds - digital - dollar - project - get - its - nameproject - hamilton. aspx ; and lael brainard, β an update on digital currencies, β remarks at the federal reserve bank of san francisco innovation office hours, august 13, 2020, https : / / www. federalreserve. gov / newsevents / speech / brainard20200813a. htm. - 11 actively monitoring developments in this area, engaging with the industry and other regulators, and working to identify any regulatory, supervisory, and oversight framework gaps. given that decisions at one banking agency can have implications for the other agencies, it is important that regulators work together to develop common approaches to ensure that banks are appropriately identifying, monitoring, and managing risks associated with digital assets. public engagement in light of the growing role of digital private money in the broader migration to digital payments, the potential use of foreign cbdcs in cross - border payments, and the importance of financial inclusion, the federal reserve is stepping up its research and public engagement on a digital version of the u. s. dollar. members of congress and executive agencies are similarly exploring this important issue. as noted above, to help inform these efforts, the federal reserve plans to issue a discussion paper to solicit public comment on a range of questions related to payments, financial inclusion, data privacy, and information security, with regard to a cbdc in the u. s. context. 17 the federal reserve remains committed to ensuring a safe, inclusive, efficient, and innovative payments system that works for all americans. see jerome powell, β federal reserve chair jerome h. powell outlines the federal reserve β s response to technological advances driving rapid change in the global payments landscape, β board of governors of the federal reserve system news release, may 20, 2021, https : / / www. federalreserve. gov / newsevents / pressreleases / other20210520b. htm. | for release on delivery 9 : 00 a. m. edt may 24, 2021 private money and central bank money as payments go digital : an update on cbdcs remarks by lael brainard member board of governors of the federal reserve system at the consensus by coindesk 2021 conference washington, d. c. ( via webcast ) may 24, 2021 technology is driving dramatic change in the u. s. payments system, which is a vital infrastructure that touches everyone. 1 the pandemic accelerated the migration to contactless transactions and highlighted the importance of access to safe, timely, and low - cost payments for all. with technology platforms introducing digital private money into the u. s. payments system, and foreign authorities exploring the potential for central bank digital currencies ( cbdcs ) in cross - border payments, the federal reserve is stepping up its research and public engagement on cbdcs. as chair powell discussed last week, an important early step on public engagement is a plan to publish a discussion paper this summer to lay out the federal reserve board β s current thinking on digital payments, with a particular focus on the benefits and risks associated with cbdc in the u. s. context. 2 sharpening the focus on cbdcs four developments β the growing role of digital private money, the migration to digital payments, plans for the use of foreign cbdcs in cross - border payments, and concerns about financial exclusion β are sharpening the focus on cbdcs. first, some technology platforms are developing stablecoins for use in payments networks. 3 a stablecoin is a type of digital asset whose value is tied in some way to traditional stores of value, such as government - issued, or fiat, currencies or gold. stablecoins vary widely in the assets they are linked to, the ability of users to redeem the stablecoin claims for the i am grateful to alexandra fernandez, sonja danburg, david mills, and david pope of the federal reserve board for their assistance in preparing this text. these are my own views and do not necessarily reflect those of the federal reserve board or the federal open market committee. see jerome powell, β federal reserve chair jerome h. powell outlines the federal reserve β s response to technological advances driving rapid change in the global payments landscape, β board of governors of the federal reserve system news release, may 20, 2021, https : / / www. federalreserve. gov / newsevents | 1 |
t t mboweni : a review of economic and financial developments in south africa during 2002 address by mr t t mboweni, governor of the south african reserve bank, at the dinner for heads of foreign missions, pretoria, 10 december 2002. * * * mr el - herfi, acting dean of the diplomatic corps, ambassadors, high commissioners, heads of international organisations, senior management of the department of foreign affairs, senior management of the reserve bank and honoured guests, all protocol observed 1. introduction integrating dinner with discussions of finance is not unfamiliar to central bankers. the key ingredients are good food and brevity and relevance of the discussion. i will do my best to adhere to the latter two ingredients. the former is out of my hands. 2. the global economy in 2002 the developed countries were already experiencing a slowdown in economic activity in 2001 when the events of 11 september shocked the world. transport and tourism in particular were hit very hard, with some fallout continuing to this day. world growth in 2002 has been subdued and for the full year is expected to amount to around 2, 8 per cent, slightly better than the 2, 2 per cent recorded in 2001 but still way below the 4, 7 per cent recorded in 2000. alongside the uninspiring growth performance, however, inflation has been very low. in japan prices are in fact falling, while in the euro area the latest average inflation rate is 2, 2 per cent. in the united states, inflation is running at 2, 0 per cent. beyond the lacklustre world growth and low inflation, there were a number of key events in 2002. argentina's one - to - one peg of the peso to the american dollar, that had led to a significantly overvalued peso, collapsed. against the one - to - one rate at the end of last year, the current exchange rate is 3, 54 peso per dollar. the argentinian economy has been contracting, while their inflation rate has accelerated to more than 40 per cent. brazil experienced some problems, partly related to the country's high government debt and its linkages with troubled argentina. imf funding is helping to soften the adjustment process. in the northern reaches of the american continent, the demise of enron led to disillusionment with corporate governance and accounting practices. this has led to a greater awareness of the need for sound structures and practices, revised codes of conduct and a sharpening of regulation. and | africa at the end of 2000 exceeded r24 billion. other continents are also attracting the attention of south african companies that are leaders in their respective fields and some of these companies have sought listings on foreign exchanges. companies like the resources giants anglo american and billiton, the financial services companies investec and old mutual, the brewer sabmiller and sappi, the pulp and paper company now have global reach and are making their presence felt beyond their home market. 5. conclusion in short, then, the south african economy is in fairly good shape, with the exception of the inflationary consequences of the 2001 exchange rate depreciation. and the four interest rate increases as well as the notable appreciation of the rand in 2002 will in due course brake the inflation spiral decisively. while my address tonight focused on broad macroeconomic trends, it is worthwhile to stress that the macroeconomy is built up from the microeconomic decisions and actions of millions of participants. real life happens at the microeconomic level. as diplomats you will know that it is your individual encounter with the businessperson or potential tourist that counts - where interest in south africa or in your country is either nurtured, or nipped in the bud. a sparkling, enthusiastic, well - informed diplomat is a catalyst forging friendship and economic ties across borders. indifference or ignorance sabotages these linkages. accordingly, i would like to challenge you to continue deepening your knowledge of our country, its people, its economy, its incentives, rules and regulations, its magnificent places. true expert knowledge takes many years to build up, plus a lifetime of ongoing study to maintain. but it enables one to sparkle, to catch the attention of the key investor or potential tourist, to make things happen. i wish you well in 2003 and beyond in sparkling for your fraternal countries, forging links that are crucial to our mutual economic success and our ability to understand and appreciate one another. once again it is our honour and privilege to host you at this function which has become one of the highlights of the calendar of the south african reserve bank. may the friendships between south africa and your countries continue to go from strength to strength. thank you. | 1 |
be provided by countries only if they have the leeway granted in the sgp. china finance : in view of the increasing interests of adopting euro from non - member countries in times of financial turmoils, how do you see the need to balance between the expansion of the eurozone and maintaining its stability? trichet : as said before, the financial crisis certainly reemphasised the value of belonging to a large, single currency area. however, i do not see this as a matter of balancing β expansion can only take place while maintaining stability. the maastricht criteria will not change and this is in the interest of both the euro area as a whole and the individual candidate countries. let me only add that 2009 january did not only see the 10th anniversary of the euro, but also the joining of the 16th member state, namely slovakia, to the euro zone. if you consider that we started with 11 countries in 1999, this certainly demonstrates that the euro area is open to newcomers. china finance : how effective is monetary easing measures by the ecb in mitigating the economic recession in europe? do you see more room to maneuver in case the economic prospects continue to get worse? trichet : first, let me remind you that we have, in all circumstances, to deliver price stability in line with our definition β less than, but close to, 2 % β. secondly, the present unlimited provision of liquidity at a fixed rate and with a one - week, one - month, three - month and sixmonth duration can certainly be described as a non standard measure. the extension of eligibility in our collateral framework is also another non standard measure, particularly as it was already very broad and flexible. in particular, as a result of these decisions we have also expanded our balance sheet on a scale that would have been unthinkable before the crisis : around 55 % in the last 12 months. experience has demonstrated that we have to prepare for exceptional situations, and i would not exclude anything, and equally i will not pre - commit to anything ex ante. we'll always look at the situation on the basis of our own analysis, taking everything into account. china finance : the eu member countries have endorsed somewhat coordinated fiscal stimulating packages. what's your view on the impact of large scale fiscal stimulus on the short and medium term growth and on the soundness of government finance in view of the stability and growth pact? indeed some euro members sovereign debts have been down | at a global level is of the essence. china finance : the recent revised gdp data indicates that china has become the third largest economy in the world. what opportunities and challenges do you see posed by the increased role of china in the world? " trichet : the progress of the chinese economy is absolutely striking. i have myself the memory of the city of peking at the beginning of the 80 β s. and i can measure how difficult it is for today β s visitors to imagine what peking or any other chinese big city looked like only 25 years ago. this remarkable success of the chinese society and the chinese economy is profoundly changing china as well as it contributes to a profound change of the world. china is called to take all the global responsibilities which are the counterpart of its economic and financial global influence. | 1 |
run temporary current account deficits. the common feature in both these cases is that the current account serves to smooth consumption over time, and thereby raising welfare. thus, it has an inherent intertemporal dimension. as a result of the relationships i have just sketched, capital flows from countries with relatively large savings to countries with relatively high investment. in emu this flow of capital was increased by the introduction of the euro. there were two reasons for this. first, exchange rate risk was eliminated, making cross - border investments less risky. second, country default risks were increasingly perceived as converging towards a relatively low level. according to theory, the intra - emu capital flows should reverse once investments in deficit countries start to pay off. however, in reality, diverging current account positions might also reflect underlying distortions β this was the case in emu. 2. 2 β¦ but proved problematic in emu the main problem for member states with current account deficits was that the inflow of capital was not always allocated efficiently. in spain and ireland it went into booming real estate markets, in greece it funded high government deficits and in portugal it supported private consumption. this allocation spurred internal demand and, owing to inflexible labour markets, wages increased more than productivity. this, in turn, reduced the competitiveness of the countries in question. as a consequence, imports increased, exports dwindled and the current account deficit grew further. although these imbalances have domestic roots, the associated problems are not confined to the national level. given spill - over effects in the closely integrated euro - area financial markets, they are also a problem for other member states and for the monetary union as a whole. the debt crisis in the first half of this year was a case in point. its external effects mean the problem of divergencies and imbalances in emu has to be solved. what are the policy options? 3. policy options a major dispute regarding policy options is the question of which group of countries has to adjust. in an asymmetrical approach only the deficit countries would act while a symmetrical approach would require economic policy in both deficit and surplus countries to adjust. as i just argued, the deeper causes of the imbalances are domestic factors within the deficit countries. hence, it is mainly incumbent on them to act. a number of structural reforms are necessary to enhance the competitiveness of domestic companies by increasing productivity and keeping costs in check. at the | joachim wuermeling : international cooperation in financial regulation - between myth and reality speech by prof joachim wuermeling, member of the executive board of the deutsche bundesbank, at a reception to welcome the new chief representative of deutsche bundesbank β s new york office gabriele kabelac and to bid farewell to dr claudia stirbock, new york city, 11 september 2018. * * * 1 introduction ladies and gentlemen, it is wonderful to be back in new york city, a city so rich in american and international flair. we are here today to welcome the bundesbank β s new chief representative, gabriele kabelac. for us at the bundesbank, this event is much more than a simple changeover β it symbolises the importance of our transatlantic partnership and friendship. but tonight is also the final night of rosh hashanah, the jewish new year. rosh hashanah, i learned, is also referred to as the day of remembrance. it requires an β accounting of the soul ", a deep reflection on the past year. before coming here, i reflected not only on my personal year, but also on the political year behind us. i thought, for instance, about the still - looming trade war and its possible repercussions on economic growth throughout the world. but i also thought about the negotiations over finalising basel iii β which have been completed, thankfully, but were difficult, quite frankly β and the deregulation debate. it became clear to me that the values of international cooperation and multilateral alliances are being visibly threatened by growing political tensions within our nations as well as between them. i have reflected then on what would be necessary to enter into a healthier new year for our transatlantic friendship and for international cooperation. let me make a few remarks about what β in my opinion β won β t work and what can work. i will focus on banking and financial supervision, my main responsibility as a member of the bundesbank β s executive board. 2 the illusion of national sovereignty the first approach that won β t work is in my opinion the illusion of national sovereignty. this means the idea that β as the brexit cheerleaders led the british people to believe β if you pull your country out of the web of international agreements, you can go it alone and even be better off. unfortunately, reality has been demonstrating how much of a myth that is. regarding brexit, many people in the uk | 0.5 |
led task force at cop21. chaired by michael bloomberg, it is in the process of developing consistent, comparable, reliable and clear disclosures around climate - related financial risks. the task force has just published its phase 1 report for public consultation in advance of its final recommendations to g20 leaders over the next year. 11 improved private disclosure will also support public climate action. better information will allow policymakers to assess companies β speed of adjustment relative to countries β nationally determined contributions ( ndcs ). it will support more informed policies, including early responses if there are clear shortfalls. virtuous circles could be more quickly established. if governments build credibility by implementing their ndcs, this will raise the probability of further action to achieve 2 degrees. markets can then do what they do best and pull forward that adjustment. early awareness of the risks and opportunities associated with a low - carbon economy will attract mainstream institutional capital. that impact will be maximised if there are the right vehicles. in this regard, green bonds have the potential to align the interests of issuers and investors. to investors, green bonds offer a stable, rated and liquid investment with long duration. to issuers, they could tap the us $ 100 trillion global institutional fixed income investor base. moreover, the shift to the capital markets from banks will free up limited bank balance sheet capacity for early - stage project financing and other important infrastructure lending. at present, with less than one percent of outstanding bonds globally being β green β, the g20 is considering initiatives to catalyse this market, including : β’ developing a β term sheet β of internationally recognised standardised terms and conditions to make issuance more efficient ; β’ creating voluntary certification and validation frameworks to give certainty to issuers and investors that a project is β green β ; β’ integrating environmental risk and green certification into credit ratings ; β’ developing green bond indices to unlock the potential power of passively managed investments ; β’ standardising and harmonising principles for green bond listings to promote resilient and efficient trading and adequate liquidity ; and the ipcc estimates that additional investment of us $ 190 β 900bn is required annually in the energy sector alone if the rise in average global temperature is to be capped at 2c. www. ipcc. ch / report / ar5 / mercer estimates that additional cumulative investment in efficiency improvements, renewable energy, biofuels and nuclear, and carbon capture and storage could be in the range of us $ 3 - 5 trillion by 203 | . data is also needed to track the terms of transactions, including maturity and haircuts. one interesting idea is for regulators to run exercises in which they ask prime brokers to calculate portfolio haircuts against archetypal leveraged portfolios. the aims would be both to track any loosening in market - wide standards over time and to spot outlier dealers that require lower haircuts than their competitors. these significant regulatory reforms will have consequences for the behaviour of dealers and investors in securities financing markets. some market participants may seek ways around the new regulations : for example, there has been talking about dealers β renting β balance sheet from other market participants or establishing off - balance sheet financing vehicles. the flipsides of more resilient dealers and markets in periods of stress may well be less leverage, less maturity transformation and lower dealer inventories in more normal periods. the balance is not easy to strike ; we may need to readjust our approach as we learn. but the goal of these reforms is clear : to make securities financing markets resilient. robust securities financing markets should help to stabilise rather than destabilise the financial system in the face of shocks. the reduction in dealer inventories has attracted a lot of comment, with questions about whether they will be willing and able to provide liquidity as market makers in falling markets on the same scale as in the past. but the role of dealers in providing stable financing to leveraged investors may be equally important. those investors may be the most likely to see a market crash as a buying opportunity β but only if they are not over - leveraged and have access to borrowing from financially - sound dealers. put another http : / / www. bis. org / publ / bcbs270. pdf. http : / / www. bis. org / bcbs / publ / d295. pdf. http : / / www. bis. org / publ / bcbs238. pdf. in october 2014, the fsb published strengthening oversight and regulation of shadow banking : regulatory framework for haircuts on non - centrally cleared securities financing transactions ( http : / / www. financialstability board. org / publications / r _ 141013a. pdf ). bis central bankers β speeches way, we want dealers and leveraged investors to be providers not demanders of liquidity in a crisis. references gorton, g b, metrick, a, & xie, | 0.5 |
to support the growth process by optimally providing services to the public according to its own market share. with the adjustment in focus and business strategy of the government banks, i expect each government - owned to compete with other banks according to their vision and mission as well as their competitive strengths. for bank indonesia, this policy measure will generate significant results in terms of reinforcing the bank consolidation program, while also serving as an integral part of national bank restructuring as a whole. b. expanding operational opportunities concerning universal banking for suitable banks ladies and gentlemen, recently, bank indonesia presented a plan to the public regarding the possibility of adopting universal banking to substitute our current commercial banking approach. we have adjusted legislation to serve as a legal foundation for our banks. action to adopt this universal system is basically a response to our position amidst financial sector globalization that is becoming more real in our daily lives. in practice, to improve the banks β function and role in mobilizing public funds, current global bank development direction is innovative. this enables the integrated packaging of a bank β s products with other financial industry products. in terms of the banking industry, this is undertaken to achieve several objectives simultaneously, more specifically to hasten fund flows managed by banks, as well as expand the operational base to be capable of increasing the income margin and reducing risk exposure. from a public policy management standpoint, the adoption of universal banking into the indonesian banking system will also support financial market deepening, which will eventually contribute to financial stability and economic growth. broader bank product variety may also be instrumental in maintaining financial stability as it provides investment diversification for the public. without concentrating placements in only one or several types of product, it is expected that the economy will become more resilient when confronting shocks. in this case, a deeper financial market is often identified as a more resilient and stable financial market. financial intermediation that is required to drive an economy will also be assisted by the growing number of available financial products. integration of bank activities and products in the form of asset securitization, mutual funds, and derivative transactions will obviously increase risk exposure, not only for the institutions involved, but also the financial system as a whole. consequently, we will have to be prepared to meet the various supporting conditions to continuously maintain stability. banks involved in universal banking are required to have capable human resources, solid financial and operational power, as well as the ability to manage risk effectively before commencing such activity. in fact, it is | daniel k tarullo : monetary policy and financial stability speech by mr daniel k tarullo, member of the board of governors of the federal reserve system, at the 30th annual national association for business economics economic policy conference, arlington, virginia, 25 february 2014. * * * the financial crisis and its aftermath prompted an almost immediate call for change in financial regulation. beyond the basic reaction that prudential regulation needed to be stronger and less subject to arbitrage, considerable support grew for the formerly minority view that regulation also needed to be firmly grounded in a macroprudential perspective explicitly directed at the stability of the financial system as a whole, not just at each regulated firm individually. the crisis also prompted increased attention to the relationship between monetary policy and financial stability. here the lines of debate seem more sharply drawn than in the area of financial regulation. while few today would take the pre - crisis view common among central bankers that financial stability should not be an explicit concern of monetary policy, there is considerable disagreement over β among other things β the weight that financial stability concerns should carry compared with traditional monetary policy goals of price stability and maximum employment. this morning i will offer some comments on this ongoing debate. in part, these remarks will give my perspective on some of the familiar points of contention, such as the relative priority and role of nonmonetary, compared with monetary, policy instruments in responding to risks to financial stability. i also want to suggest that the cumulative effect over the past few decades of changes in financial technology, financial regulation, monetary policy itself, and perhaps the real economy have significantly altered the ways in which monetary instruments transmit through to the real economy. these changes may argue for refinement of monetary policy tools. they may also indicate the need for regulatory measures that are neither time varying nor limited to prudentially regulated firms, so as to provide a more stable financial foundation within which monetary policy will operate. the role of monetary policy in restoring financial stability the federal reserve, as we have been reminded by many accounts on the occasion of its centennial, was created largely in response to what we would now call financial stability concerns, as specifically revealed by the panic of 1907. when confronted with an even deeper financial panic a hundred years later, the federal reserve deployed its full range of policy tools β monetary policy, lender of last resort, and supervision β in an effort to stabilize the u. s. financial system. the federal reserve cut the federal funds rate to nearly zero by | 0 |
and will return to target within the first half of 2024. furthermore, the albanian economy is expected to continue to grow during this period, while balance sheets of enterprises and households are expected to remain - overall - sound. notwithstanding this overview, challenges to transition economies are still present. the transition report accurately emphasises that the geopolitical conflicts and tensions bring inevitable crucial structural changes. first, these conflicts are accompanied by increased migration with long - term consequences in both home and host countries. albania, a country with a rich migration history, has experienced the positive and negative sides of this 2 / 3 bis - central bankers'speeches phenomenon. in one side, this phenomenon has generated foreign exchange inflows and an overall increase of know - how and expertise, which are indispensable for the country's development. on the other side, it dampens the labour force - particularly in its most qualified segments - and harms the long - term growth prospect. for this reason, i think a better coordination at national level is needed, to take care that benefits originating from migration and the free movement of persons are divided at a fair manner between countries. second, the geopolitical tensions are reflected in an increased protectionism, production chain fragmentation and re - orientated foreign direct investment flows towards friendly countries, as well as a decelerated globalisation process. third, the geopolitical tensions reduce attention on structural reforms, which have been and remain the sole instrument for a more rapid and sustainable economic growth. in view of the above, the task of policy - makers, in both national and international level, is to know these challenges and take care for minimising their consequences. in particular, the conduction of structural reforms, which has slowed down since the outbreak of the pandemic across all regional countries, should be restored as a national strategic priority across all transition countries. the implementation of this policy would enable cancelling out the possible negative effects and achieving certain economic benefits. dear ladies and gentlemen, thank you again for your participation and i invite you to contribute in further elaborating and analysing the messages provided in this report. 3 / 3 bis - central bankers'speeches | in infrastructure, housing, retail, banking, telecoms and tourism continues to accelerate, sustaining growth rates in most sub - saharan african countries. in the year ahead global financial market conditions, in other words global liquidity, are likely to become more challenging. this should, however, be offset by improving growth prospects in the real economy. countries with sound fiscal and monetary positions and those with higher savings rates are likely to benefit from this complex interplay of rising interest rates and improving economic performance in advanced economies. in this complex milieu, south africa β s economic performance is disappointing. projected gdp growth of 1. 5 per cent this year will mark the fourth consecutive year of slowing growth. global factors, in particular falling commodity prices and declining global liquidity, are contributing to our below par performance. furthermore, lower demand for commodities from china and slow growth in europe, our major trading partner, have affected our export performance. however, in the main, the reasons for our slow growth are domestic. the five month - long strike in the platinum sector, followed by a month - long strike in the iron and steel industry, resulted in negative spill - over effects for the entire economy. these two strikes reduced manufacturing output and depressed household consumption, which negatively impacted on the performance of retailers, contributing to the downward revision to our growth forecast. strikes are not usually a macroeconomic issue. they tend to occur every few years and are generally settled peacefully and speedily. but in the past two years strikes appear to be longer and more violent, with an apparent breakdown in the tried and tested dispute resolution processes contained in our labour relations regime. without assigning blame to any party for this breakdown, a fraught labour relations environment cannot be consistent with policies aimed at growing labour intensive sectors of the economy. of particular concern are high salary settlements that are out of kilter with inflation and productivity growth. firms often adjust to such salary increases by reducing staff numbers. about 48 000 jobs have been shed in the mining sector in the past two years and more mining companies have announced plans to reduce staff numbers. similarly, in the past few months, the media have reported on planned retrenchments by mtn, telkom and ellerines. in a country with an unemployment rate of 25. 5 percent, this trend has to be of concern to policy makers. the second immediate constraint on the economy has been electricity supply. electricity production has been flat for almost six years. while energy efficiency has enabled many firms and | 0 |
jan smets : new data needs for monetary policy speech by mr jan smets, governor of the national bank of belgium, at the ninth european central bank conference on statistics, session 1 : new data needs for monetary policy, frankfurt am main, 11 july 2018. * * * reflections on the future of monetary policy may require new data needs i would like to thank the organisers for inviting me to this most interesting conference, and especially this particular session as it really is about the interactions between statistics and the future of monetary policy, a hotly debated topic. some important ( and interrelated ) things have been happening over the last decade or so in the monetary policy landscape. not only have central banks broadened their toolkit to tackle the financial crisis but also the economic world has been faced with structural changes. besides, both the use of new instruments and the availability of new data have spurred advances in monetary policy research. the interplay of these phenomena could potentially have serious implications for the way we think about monetary policy going forward, be it in terms of objectives, instruments, transmission channels or data monitoring. but β and that is the message i want to convey here β to avoid drawing overly hasty conclusions, this requires careful reflection and, in some cases, implies new data needs. only after careful investigation of the issues at stake, can lessons for the future of monetary policy be drawn. in my remarks today, i will focus more specifically on three phenomena that challenge our traditional thinking about monetary policy : first, the role played by heterogeneity β which has been clearly demonstrated by the use of new monetary policy tools ( typically more targeted ) and something which is increasingly documented in economic research and data. second, digitalisation β probably one of the most notable structural economic changes over the last few years β which also opens the door to a new world of data. third, the changing role of the financial sector. i intend to raise a number of questions to foster the debate and hopefully help to structure our thinking. β how exactly have these challenges called into question the consensus on which monetary policy has been based? how can new data help to identify whether β and to what extent β the practice of monetary policy has changed? more speculatively, can new data help shape a possible " new normal " for monetary policy? β needless to say, i do not want to provide any definite answers to these key questions ; they have far - reaching implications making it unrealistic to settle all these issues | ( of 3 to 5 years ) conduct an in depth evaluation of the vulnerabilities of a country β s financial sector and the adequacy of prudential regulation and surveillance. however, the membership could not agree, in a straightforward manner, that financial sector stability was an integral part of fund surveillance, and therefore mandatory. the technical assistance nature of fsaps was used by some countries to argue that the fund should prioritise its resources to countries less equipped to conduct sound financial sector policies. as a consequence, some major systemically important financial sectors that proved very vulnerable did not undergo a timely and sufficiently in - depth scrutiny. last tuesday, the imf board decided that the 25 countries with a systemically important financial sector will undergo at least every 5 years an in - depth assessment of their financial sector. moreover, the board has stressed that financial sector policies are important in all cases of bilateral surveillance. this is a significant progress. multilateral surveillance bilateral surveillance, understandably, focuses on how national policies must be conducted in the country β s best interest. the premise is simple : if each country achieves internal stability and a sustainable external position without manipulating exchange rates, the system as a whole will function satisfactorily. while this remains largely valid, trade and financial integration and economic interdependence are now so far advanced that national economic interests must be pursued in a shared framework of collective stability. national policies pursued in the country β s own best ( short term ) interest might not be collectively consistent. the problem of the persistent global imbalances is an important example. to complement bilateral surveillance, the fund must formulate policy - oriented advice on how to improve the coherence of national policies toward improved collective stability and sustainable global growth. a promising proposal that has been floated recently is the production of spillover reports. it is to be welcomed that the fund plans to prepare, on a trial basis over the next year, at least three spillover reports for the us, the euro area and china. these reports will focus on outward spillovers of domestic policies of these economies and would involve not only the authorities of these economies ( akin to the contact for the regular article iv consultations ) but also the authorities of the economies affected by the policies. the launch of the first mutual assessment process ( map ) by the g20, in collaboration with the imf, is a new attempt at multilateral cooperation and coordination. given the potential benefits, this objective | 0.5 |
the eurosystem for shaping monetary policy in the best interest of 320 million people in fifteen countries. this is a task which my colleagues at the bank and i approach with confidence and enthusiasm. from a national perspective, the challenge now is to maximize the benefits of participation in monetary union by making further progress on the path of reform. three conditions in particular need to be met : fiscal policy must remain supportive of macroeconomic stability ; wage increases must be justified by productivity gains ; and our product and labour markets must become more flexible and competitive. the new phase in malta β s economic history which was ushered in on 1 january, therefore, promises to be a challenging one, but it should also be an exciting time. for a country with a population of 400, 000, having a major reserve unit as its domestic currency is indeed a significant advantage. we thus have good reason to feel reassured now that we are about to reinforce our integration in europe with full economic and monetary union. for, while the eu has for fifty years brought peace and stability to the peoples of europe, the single market and emu have created a congenial environment in which economies can grow and people prosper. on another, but no less important level, the euro is also a symbol of a common identity and of shared values and, therefore, a potential instrument for bringing peoples closer together. | making the eu the most competitive and dynamic knowledge - based economy in the world. indeed, the strategy states explicitly that it is essential to exploit the potential of the euro to promote the integration of eu financial markets and also, therefore, sme growth and job creation. with this one should factor in the other elements of emu : the arrangements in place to promote fiscal discipline and economic policy co - ordination ; and the pursuit of price and financial stability by the european central bank ( ecb ). these contribute to a stable macro - economic environment which, together with the climate of greater predictability ensuing from reduced exchange rate risk, support investment and growth. it is with this perspective in mind that fellow central bankers and government officials in the other new member states have expressed their preference for an early adoption of the euro. it also constitutes the motivation for the maltese government β s commitment to implement the necessary reforms that will prepare the economy for the heightened levels of competition ensuing from the single market, while providing businesses with a favourable environment in which they should be better able to profit from malta β s entry in the euro area. new opportunities for business the benefits of the single currency for business could be substantial, and will occur along the various stages from eu entry through the erm ii period to entry in the euro area. they will, however, become more tangible when the euro is introduced as an accounting and physical currency. at that point, the value of the maltese lira in terms of the euro will be fixed and foreign exchange risk in euro will be eliminated. the need for dual accountancy systems and software will likewise be reduced. the single currency will also minimize the need for maintaining separate cash floats, a widespread practice in the local tourist sector. at the level of the individual firm, the single currency should also translate into a reduction in the risks and costs associated with managing exchange rate fluctuations. when malta adopts the euro, currency risks will be hedged automatically for a large volume of transactions, allowing businesses to focus their resources on those activities which generate real value. for locally - oriented smes in particular, the potential reduction in currency mismatches, and in the volatility in cash flows and profitability associated with them, can be substantial for whatever their dependence on foreign markets in terms of exports, they are all, in varying degrees, consumers of imports. the end result should be lower operating costs, higher levels of efficiency, improved profitability and healthier balance sheets, all of which should result | 0.5 |
/ 4 bis central bankers'speeches | a buildup of distressed assets as a result of the pandemic by selling banks β non - performing assets to asset management entities called financial institutions strategic transfer corporations. offloading these items from banks β financial statements will support the financial intermediary functions of banks and facilitate the circulation of liquidity within the system. the government financial institutions unified initiatives to distressed enterprises for economic recovery act ( guide ), on the other hand, legislates the provision of financial aid to critical industries that are affected by the pandemic. in addition, the bsp is advocating for the following measures : amendments to the agri - agra law, which will steer lending to agricultural, fisheries, and rural development in the philippines ; amendments to the credit information system act, which will improve accessibility of financial services to micro, small, and medium enterprises ; amendments to laws on secrecy of bank deposits, which will put more teeth to efforts against money laundering and tax evasion, and further promote integrity in governance ; and the financial consumer protection bill, which will better safeguard the interest of financial consumers, thereby promoting savings and investments. 2 / 4 bis central bankers'speeches reinforcing the country β s solid economic fundamentals with carefully crafted reforms is the best way to strengthen the economy β s prospects. speaking of prospects, we remain optimistic that when the dust has finally settled, the philippines β attractiveness as an investment destination will shine through. we will unceasingly pursue the build, build, build infrastructure program ( which presidential adviser vince dizon will elaborate on ). the bbb program is expected create a lot of jobs in the near term, generate economic activities in the countryside, and expand the productive capacity of the economy moving forward. besides these, we are equipping our economic sectors for the transition to the so - called β new economy β β an economy that is stronger, more technologically - savvy, and more inclusive. in the new economy, we shall harness the full growth potential of the economy. in the new economy, we shall also see a nation that is more technologically savvy. even prior to the pandemic, financial technology has already been at the forefront of bsp β s agenda. the bsp has put in place a β test and learn β environment or what we call the β regulatory sandbox β approach, which allows us and the fintech players to learn more about the operations as well as the risks that come with technology at its nascent phases | 0.5 |
it is needed. business conditions for small businesses currently, expectations about future sales seem to be more important than expectations about the availability of credit in driving business spending decisions and demand for business loans. recently, small business owners appear to have become more optimistic about their outlook for sales. for example, in recent nfib surveys, the net percentage of respondents who expected their sales to increase rose to levels not seen since mid - 2007 ( figure 3 ). more generally, small business owners surveyed by the nfib indicate that they currently expect business conditions to improve in the near future. in fact, the net percentage of small business respondents who expected business conditions to improve six months from now climbed in february to its highest level in several years ( figure 4 ). even with some backtracking in march, this barometer of business conditions remains at a level not seen since mid - 2007. other survey data collected by the nfib are also consistent with more - favorable conditions for small businesses. the percentages of small business respondents who believe it is a good time to expand, and who plan to make capital expenditures over the next three to six months, have recently risen to levels not seen since mid - 2007. the bankers β perspective on lending to small businesses mirroring small business respondents views with respect to credit conditions are bankers β views on credit standards and their terms of credit. to consider the bankers β perspective, i will draw on two other federal reserve surveys : the senior loan officer opinion survey on bank lending practices ( sloos ) and the survey of terms of business lending ( stbl ). with regard to credit standards, we found that about 5percent of banks, on net, reported in january that they had eased their bank β s lending standards on commercial and industrial loans to small firms in the fourth quarter of last year ( figure 5 ). 7 a similar net fraction of banks see alicia robb and e. j. reedy ( 2011 ), an overview of the kauffman firm survey : results from 2009 business activities ( kansas city, mo. : ewing marion kauffman foundation, march ). in this and later figures, shaded bars indicate periods of business recession as defined by the national bureau of economic research. bis central bankers β speeches reported having eased standards in the previous survey. this finding is consistent with small business owners β perceptions that credit conditions have eased somewhat. for those small business owners whose loans or credit lines were approved, the terms of credit β the | over time by borrowing today, the more so the higher the expected gains in disposable income. a process of gradual real exchange rate appreciation, supported by strong, domestically driven output growth and temporarily accompanied by relatively large current account deficits, would seem fully in line with what the theory of convergence suggests. according to mihaljek, d. and m. klau ( 2008 ), over the period from the mid - 1990s to the first quarter of 2008, the balassa - samuelson effect would explain around 24 % of the cee inflation differentials vis - a - vis the euro area. for more details, see, β catching - up an inflation in transition economies : the balassa - samuelson effect revisited β, bis working paper. bis central bankers β speeches but in several countries, the process of real convergence proved itself difficultly sustainable. during the period before the global crisis, expectations were overly optimistic, and investors and consumers engaged in economic behaviour that generated excess domestic demand, strong credit growth and inflationary pressures. as in many other markets, risk premia were squeezed, leading to asset price misalignments ( particularly in the housing market ) and over - indebtedness in a context of abundant global liquidity and a strong appetite for risk. foreign direct investment flows often focused on the non - tradable sector, for example, construction and financial sector intermediation. furthermore, foreign currency lending grew rapidly, leading to increasing balance - sheet mismatches. as a result a number of countries experienced notable departures from price stability and wide external imbalances that eroded competitiveness β developments that went over and above what could be justified by β equilibrium β catching - up. macroeconomic policies added to the risks. in countries with a fixed exchange rate, independent monetary policy was not available, resulting in monetary policy conditions that became too expansionary. in principle, this could have been compensated by very tight fiscal policy. but with the benefit of hindsight, fiscal policies were often insufficiently restrictive or even loose. the global crisis revealed these weaknesses with particular virulence. when capital flows dried up in late 2008 and trade collapsed, real output declined sharply, in some cases leading to severe recessions. with the main and remarkable exception of poland, the region was severely hit by the crisis. many observers feared then that, if the crisis were allowed to run its course, it could be near catastrophic for the region and extremely dangerous for the european banking system | 0 |
sme sector, banking institutions should explore other potential growth areas such as microcredit and agro - based financing, which are generally perceived as riskier and more costly than lending to larger firms. the challenge is for banking institutions to innovate and develop new form of financing arrangements and business models to exploit the opportunities offered by these market sectors. strategic opportunities are also available from a larger marketplace as economic integration and regional linkages of markets in the east asian region gather pace, driven by increasing regional trades and investment flows. in this regard, banking institutions should broaden their strategic outlook and expand their presence in the region to support malaysian businesses and investors as they venture into new activities and expand their geographical profiles. another strategic challenge facing banking institutions today is the growing and changing needs and expectations of consumers in tandem with increased education levels and growing wealth. consumers are becoming increasingly discerning and have become more involved in their financial decisions. for this reason, they are demanding a broader range of products and services at more competitive prices through more efficient and convenient channels. corporate customers have also become more performance - oriented and are demanding both competitively priced credit facilities and world - class financial advisory services. in this environment, the challenge is for banking institutions to anticipate and respond quickly to the differentiated demands and expectations of customers to sustain their competitive advantage. with growing customer expectations for continuous availability of services, the ability to continue to provide critical banking services at all times will also be crucial in the pursuit of building and maintaining their competitive edge. in conjunction with this, banking institutions must be able to quickly recover mission critical functions and assets during a major interruption to ensure efficient and reliable services to their customers. technological advancement, which has increased the complexity of banking business and which has led to the emergence of increasingly innovative products and distribution channels, also presents opportunities for the banking sector. with ict, financial services are being delivered to places and markets without requiring physical branch networks through a growing array of alternative delivery channels, including internet, atms, and even mobile phones. the challenge to banking institutions is to effectively leverage on the opportunities offered by technology to innovate products and services aimed at attaining greater efficiency, reliability and competitiveness. while the efficiency of electronic means of doing banking is acknowledged, banking institutions should recognise the need for them to meet customer expectations for more personalised and quality services. additionally, the potential benefits from electronic delivery channels need to be exploited without undermining the security and confidence of the banking public. the | to seamlessly integrate whatever technology they choose, with their cbs architecture. we have advised banks to adopt innovative business models and delivery channels to expand their fi efforts. there is a need for banks to develop new products and design new delivery models that are customized to the unique needs of the financially excluded population, both in the rural and urban areas. considering that financial literacy is an important adjunct for promoting financial inclusion, consumer protection and ultimately financial stability, rbi has adopted an integrated approach wherein efforts towards financial inclusion and financial literacy would go hand in hand. besides the various initiatives taken by rbi individually to encourage financial literacy, a national strategy for financial education ( nsfe ) has also been finalized under the aegis of the financial stability and development council ( fsdc ) to co - ordinate efforts of various stakeholders involved in this process. the reserve bank has been playing a supportive role in fi by creating a conducive regulatory environment and providing institutional support to banks in their fi efforts. importantly, we have provided banks the freedom and the space to determine their own strategies for rolling out fi and have encouraged them to identify their own goals and targets through their respective financial inclusion plans. robust institutional mechanism 11. our strength lies in the fact that we have created a robust institutional mechanism to support the roll out of banking services across the country. this was essential considering the enormity of the task in terms of the number of excluded people and the geographical size of the country. bis central bankers β speeches india is one country where the fsdc has a specific mandate for financial inclusion and financial literacy. there is a separate technical group on financial inclusion and financial literacy under the aegis of fsdc with representation from all the financial sector regulators. in order to spearhead efforts towards greater financial inclusion, rbi has constituted a financial inclusion advisory committee ( fiac ) under the chairmanship of a deputy governor from rbi. the fiac has few directors from the central board of rbi and experts drawn from ngo sector / other civil society representatives, etc. as members. the collective expertise and experience of the members is expected to be leveraged to explore issues such as developing viable and sustainable banking services delivery models focusing on accessible and affordable financial services, developing products and processes for rural as well as urban unbanked consumers. at the state level, we have state level bankers committees ( slbc ) in all the states. going further down, we have lead district managers in all the 659 districts, with recent inclusion of | 0 |
aig to avoid panic and financial ruin then turned out to be much more expensive for taxpayers. fortunately we avoided this in europe. let me move on to my third and last thought. it concerns the post - crisis period. the industrialised countries are emerging from the crisis poorer, more indebted and with lower prospects for growth. the process of fiscal consolidation must remain the cornerstone of economic policy and form the basis for a radical overhaul of the economies in order to create more growth. but in the current environment i see two risks facing our democracies in the coming years. the first one is the illusion that this crisis is cyclical rather than structural, that it has no impact on the long - term growth potential of our economies. we may, in this case, be deluding ourselves that traditional macroeconomic policies ( monetary and fiscal ) are per se able to restore growth to pre - crisis levels. thus there is a risk of triggering again unsustainable policies which in turn create new imbalances that sooner or later implode. the second risk is an attitude of resignation, of being resigned to not having the capacity and strength to untie the knots that restrict our growth potential, or of being resigned to economic stagnation. this state of mind is associated with the politician β s dilemma neatly articulated by the president of the eurogroup, jean - claude juncker : β we all know what to do, but we don β t know how to get re - elected once we have done it β. this type of reasoning occasionally leads some people to argue that democratic systems are not up to making our societies swallow the medicine needed in order to grow again. structural reforms in fact involve a redistribution of income to the detriment of the less efficient sectors, which are characterised by monopolistic rents and are strongly opposed to change. the idea is often floated that some emerging countries are better able to manage the current crisis because they have β stronger β regimes, which do not need to justify their actions vis - a - vis their electorates very often. these are dangerous positions in my view and are not justified by empirical evidence. juncker β s provocative remark is not in fact substantiated by the facts. he himself is one of europe β s veteran political leaders, who has brought rigour and development to his country and was re - elected three times in a row. an analysis of the correlation between economic variables and political popularity in europe reveals that, contrary to what | 46th acu board of directors meeting colombo, sri lanka / 13 july 2017 address delivered by dr. chiranjibi nepal, governor of nepal rastra bank honorable chairperson mr. indrajit coomaraswamy, fellow governors and members of the acu board of directors, acu secretary general mrs. lida borhan - azad, distinguished delegates and observers, ladies and gentlemen, 1. it gives me immense please to participate and address this 46th annual meeting of board of directors of the asian clearing union in this beautiful city of colombo. at the outset, i would like to extend my sincere appreciation to governor mr. indrajit coomaraswamy and the entire team of central bank of sri lanka for the warm hospitality extended to us and also for the excellent arrangements made for this meeting in colombo. fellow governors and distinguished delegates 2. allow me now to shed some light on some current developments of the nepalese economy. after almost 20 years, elections for the local governments concluded recently following the promulgation of constitution of federal democratic republic of nepal. the provincial and national level elections are to be held within 21 january 2018. the political uncertainty has now vanished and the economy is now ready for high growth trajectory. 3. most of the macro - financial data of the first ten months of 2016 / 17 show that the economy is gaining traction. nepal is the third fastest growing economy in the world in 2017 according to a report of the world economic forum. the economy rebounded strongly in 2016 / 17 following a good monsoon, reconstruction efforts after the 2015 earthquake and normalization of trade with india. the gdp growth estimate of 6. 9 percent demonstrates optimistic growth outlook at least in the short term. 4. the government is targeting a growth of 7. 2 percent in 2017 / 18 as economic activities are expected to expand due to increased government expenditure from the elected local governments. acceleration in reconstruction works will potentially increase trade deficit further at least in the near term. expected increase in foreign aid and foreign direct investment will, however, be instrumental in keeping the country β s balance of payments in surplus. decelerated growth in migrant workers'remittances is moderating deposit growth. going forward, bridging the gap between deposit and credit growth is the key for reducing the financial frictions. 5. the consumer price inflation has been hovering below 4 percent since the last six months. this is attributed to the previous year's base price effect and improved supply situation. 6 | 0 |
being taken over remarked that β we have seen almost no drawbacks from being junk β. another example of low implied volatilities and risk premia affecting risk taking occurs in cross border capital flows. in this case, low implied volatilities on interest rates and exchange rates can support cross - border carry trades because the yield pick up looks attractive when you can hedge the worst risks quite cheaply [ chart 11 ]. the continued smooth financing of global imbalances through these carry - trades in turn leads to low volatility. but this can of course work in reverse. foreign exchange volatility has jumped up since the us thanksgiving day holiday. if this volatility were to persist the perceived risks in the carry trade would increase. the common characteristic of these examples is that low implied volatilities reduce the apparent riskiness of portfolios and can encourage investors to take on more risk. and if implied volatilities are not a good measure of future volatility, they will end up bearing more risk than they expected. avoiding this pitfall requires diligent risk assessment by investors and other counterparties. that is what is needed for market discipline to do its work. it requires both adequate disclosure of risk - relevant information and its effective use in investment decisions. in the case of the hedge fund sector, for example, it seems likely that greater institutional investor interest will continue to raise the bar on disclosure requirements, particularly for those generating returns using complex products where traditional measures like value - at - risk ( var ) may fail to capture fully the underlying risks. conclusions to conclude, our overall assessment remains benign. the financial sector is strongly capitalised and well placed to handle even large shocks like amaranth. the rapid pace of innovation in financial markets also promises better and wider distribution of risk which is good not just for the financial sector β s stability but should support more risk taking in the real economy. greater investment could deliver stronger medium and long term growth. but there remain a number of sources of vulnerability in the world economy and in financial markets which firms need to bear in mind. volatility is low, and as time passes longer memories are needed to remember when it was high. while there have certainly been improvements in macro performance in recent years, i do not know a central banker who is not surprised at the faith that markets appear to have in us to keep the great stability going. and the risks in the wider environment are as great as ever. it | of ltcm, yet markets facilitated a smooth wind down in positions. that is reassuring though some questions remain about the capacity of markets to handle such a disturbance if the macroeconomic backdrop and the balance sheets of major institutions were less rosy. the incident may also raise some questions about how effectively market forces are acting to restrain those taking outsized risk positions, something that i will return to in a moment. taken together, these developments provide a strong baseline for financial stability. but the risks that we pointed to in july are still there. in particular, we pointed to the risk that financial firms concerned about losing market share in rapidly expanding markets might pay less attention than they should to their resilience to unexpected shocks. [ chart 1 ] gives our assessment of developments since july. it shows that a number of the vulnerabilities have edged up a little as leveraged buy - out ( lbo ) activity and commercial property lending have grown and as the number of personal insolvencies has increased. on the other hand, the slowdown in the us economy and the beginning of a narrowing in its trade balance may have reduced the risks on that side, although we didn β t judge this material enough to change our overall assessment. we know how easy and how fruitless it can be to draw up long lists of things that could go wrong without paying attention to their likelihood. so we try to take a balanced view that recognises not just what could go wrong but also recognises changes that we think have a positive impact on financial stability. for example, i have been clear that, in the long run, the growth of derivative markets and the development of new players like hedge funds should help to price risks better and spread them more widely, and thus make the financial system more resilient. however, there is no denying that financial markets are liable to overshoot. and it is particularly important to stay alive to this risk when new records are being set for leveraged bids, returns on equity and city bonuses. over - optimism in the financial system can have costs not just for the consenting counterparties but more broadly across the economy. by talking to you individually, drawing the threads together with our own analysis and feeding back a dispassionate but informed assessment of what your actions and plans add up to, we hope we can inform your decisions and thus help to head off instability. low volatility one of the main vulnerabilities on our league table is low risk premia | 1 |
over rs. 900 billion and a network of more than 1, 100 branches. given the interest of all stakeholders and a relatively high level of financial exclusion in the country, we believe this expansionary trend is likely to continue and the industry is well set to double its market share by 2020. this success could not have been possible without the leading role of the central bank in setting the direction of the industry and providing unusual support for its promotion and development. promoting islamic finance as a viable and competitive component of the financial system through an enabling legal, regulatory and supervisory environment has remained an important component of sbp β s strategic goals. considering the evolutionary stage of the industry, we are continuously engaged in refining and improving the legal and regulatory framework to ensure : a ) its responsiveness to the evolving industry dynamics and b ) its effectiveness in identifying, measuring and mitigating the risks associated with islamic finance. in the recently concluded fiscal year we issued detailed instructions for profit & loss distribution and pool management to bring standardization, improve transparency and safeguard interests of investment account holders ( the savings depositors ). the instructions developed through rigorous consultations with the industry have been well received both domestically and globally. bis central bankers β speeches similarly to further improve the shariah compliance environment in ibis, our islamic banking department has completed industry consultations on the draft shariah governance framework and will soon be issuing the same. the framework will be another key milestone achieved, which will institutionalize the shariah compliance function and crystallize the shariah compliance related roles and responsibilities of all key organs of ibis including bods, executive management and shariah boards moreover, to encourage standardization and shariah harmonization, sbp over time has issued permissible islamic modes of finance model islamic financing agreements besides adapting aaoifi shariah standards for the pakistani market in a gradual manner. the continuation of growth momentum achieved during last the 4 β 5 years is contingent on making an objective assessment of the successes, failures and future challenges and developing consensus strategies and action plans to build on the successes and address the challenges. we have accordingly developed the five year strategic plan for islamic banking industry again through a rigorous and meaningful consultation with all key stakeholders. the plan to be issued soon lays down the future road map of the industry, highlight areas of improvement in legal, regulatory and taxation environments, emphasize diversification of products and markets covering non - traditional but strategically important sectors of agriculture and smes and increasing the islamic banking market | to build mfi systems and staff capacity. it can take some years for an mfi to reach the scale and efficiency needed to cover its costs from interest income. during this period donors can support to build the capital base of efficient mfis, enabling them to grow more quickly, increase their leverage, and serve larger numbers of clients on a sustainable basis. subsidies may well be used to correct market failures ; such as, to increase efficiency, transparency in financial reporting, and supporting industry infrastructure. 13. within south asia, pakistan is actively pursuing a broad based financial inclusion strategy in conformity with the best practices through a public - private partnership model. in order to speed - up the process of financial inclusion, the state bank of pakistan has developed an ambitious plan to scale up outreach of microfinance services to 3. 0 million users by the end of 2010, scale number of small agriculture borrowers to 2. 0 million and sme borrowers 300, 000 by 2010. the dfid, and other donors, will be providing substantial financial and technical support to pakistan β s financial inclusion programs. 14. based on experience and research, critical conditions for financial sustainability of financial inclusion programs are : ( i ) economies of scale : given direct relationship between profitability and scale of operations, larger banks / mfis are able to evolve business models and growth strategies to reach out to poor clients on a sustainable basis. such institutions have inherent ability to spread fixed cost over more transactions, promote multiple sales points, adopt innovation and technology which together offer ease and efficiency in service delivery. these factors enhance ability of firms to expand and compete to stay in power. ( ii ) proper funding mechanism : sustainability requires that mfis largely rely on deposit mobilization to finance their businesses. in initial stages of development however mfis end up developing alliances with the commercial financial institutions. these arrangements offer opportunities for foreign and / or local currency funds. setting aside moral hazard of generating protracted dependency, foreign exchange risks in absence of the natural hedge raises the end pricing to clients that inadvertently results in dampening demand or magnifies probability of defaults. it is usually easier for mfis to successfully borrow from a bank than to sell a bond which involves disclosure of information to produce adequate confidence in the borrower. however, profitable mfi have successfully issued bonds sparking interest in financial markets such as compartamos bond issue in mexico. alternatively, a number of instruments and relationships can enhance the ability of m | 0.5 |
of the capital requirements directive iv. within the single supervisory mechanism ( ssm ), we will also have a single supervisory manual that will apply to all banks. this will cover issues like the methodology for the supervisory review and evaluation process ( srep ), off - site and on - site reviews, risk assessments and model validations. we are thereby ensuring that the same supervisory standards will be applied across banking union β and indeed, through harmonisation with the european banking authority, across the eu as a whole. in terms of decision - making, we are strengthening the centre by integrating the european and national levels of supervision. a particular innovation here will be the joint supervisory teams, which will contain staff from both the ecb and the national competent authorities. there will be one team for each significant banking group directly supervised by the ssm, operating under the management of a coordinator working for the ecb. this guarantees a collective approach and ensures that there will always be a european element in the decision - making. indeed, the final responsibility for decisions will rest with the ecb. this process of creating an integrated ssm is of course a major organisational challenge. we are bringing together 17 or more different national supervisors, with different operating cultures and supervisory philosophies, into a single mechanism with a single culture and philosophy. and the ecb will be directly hiring around 1, 000 new staff, of which around 750 will be involved in supervision. so it will take time to reach our cruising speed. with the ssm regulation foreseen to enter into force at the beginning of november, we are ready to publish the vacancy notice for the chair of the supervisory board, followed by those for the top management of the ssm β the four directors general of the main departments and the six deputy directors general. the vacancy notices for the middle management will follow a few weeks later, and then β in accordance with the cascade principle β the broad bis central bankers β speeches recruitment will begin. we need to be ready with the basic structure of the organisation for the asset quality review ( aqr ) towards the end of the first quarter of 2014. let me therefore briefly take this opportunity to describe how we foresee the ssm β s organisational structure. the ssm will contain four directorates general and a secretariat division. two of the directorates general ( dgs micro - prudential supervision i and ii ) will conduct the direct and day - to - day supervision over significant banks. the | low rather than too high. since the global financial crisis, the inflation rate in the euro area has on average been just 1. 2 % ( slide 2 ). in germany, it has been only slightly higher, at 1. 3 %. in the ten years before the introduction of the euro, inflation in germany had on average been more than twice as high. for most people, the dangers of too high inflation are immediately obvious. however, many do not understand why too low inflation may also pose risks to price stability. this is what i would like to briefly explain now. 3 in the past years inflation expectations in the euro area have declined markedly. this becomes clear when looking at financial markets, where such expectations are formed every day. just before the pandemic broke out, financial market participants were expecting an inflation rate of approximately just 1. 3 % in the euro area in the long term, which was significantly below our target of 2 % ( slide 6 ). lower inflation expectations largely reflected scepticism and doubts about the euro area β s longterm growth prospects, which had been gradually deteriorating in the years leading up to the pandemic. conditions in the labour market are testimony to this. some 13 years after the start of the global financial crisis, the unemployment rate in the euro area excluding germany is still higher than in 2008, before the financial crisis ( slide 7 ). a high level of structural unemployment dampens aggregate demand and leads to a situation where many firms are less profitable because they cannot pass through increased costs to their customers. this, in turn, pushes inflation down. wage increases are then lower, too, and people 2 / 9 bis central bankers'speeches spend less on goods and services, creating a vicious circle. demographic change threatens to further exacerbate these issues in the future. in germany, the labour force is expected to shrink by almost 12 % by 2035 ( slide 8 ). an ageing population weakens expected future demand and may discourage firms from investing in innovative and efficiency - boosting technologies. in the 1980s, annual productivity growth in the euro area was 2 %. it has more than halved since. these trends hurt economic growth and employment and they reduce monetary policy β s precious room for manoeuvre in a crisis. this is linked to the two key determinants of nominal interest rates : expected long - term growth and inflation expectations. if they fall, so do interest rates. this is exactly what we have | 0.5 |
the cooperative credit banks merged into cooperative credit banking groups. table 1 liquidity coverage ratio ( per cent ) 31 january 2019 30 september 2019 31 march 2020 31 may 2020 significant banks less significant banks total banking system sources : consolidated supervisory reports for banking groups and individual supervisory reports for stand - alone banks. ( 1 ) banks directly supervised by the ecb. β ( 2 ) banks supervised by the bank of italy in cooperation with the ecb. | to enhance safety and soundness. regulators must be open to innovation in the banking system. our goal should be to build and support a clear and sensible regulatory framework that anticipates ongoing and evolving innovation - one that allows the private sector to innovate while also maintaining appropriate safeguards. we must promote innovation through transparency and open communication, including demonstrating a willingness to engage during the development process. by providing clarity and consistency, we can encourage long - 9 / 12 bis - central bankers'speeches term business investment, while also continuing to support today's products and services. a clear regulatory framework would also empower supervisors to focus on safety and soundness, while ensuring a safe and efficient banking and payment system. on cybersecurity, banks often note cybersecurity and third - party risk management as areas that raise significant concerns. cyber - related events, including ransomware attacks and business email compromises, are costly in terms of expense and reputation, and are time - consuming events that pose unique challenges for community banks. the maintenance of cyber assets and technology resources required to support a successful cybersecurity program are often difficult for smaller banks. regulators can promote cybersecurity, and stronger cyber - incident " resilience " and response capabilities by identifying resources and opportunities, such as exercises, for banks to develop " muscle memory " in cyber incident response. the federal reserve plays an important role in supervising banks and supporting risk management practices. for example, the federal reserve hosts the midwest cyber workshop, with the federal reserve banks of chicago, kansas city, and st. louis. 10 over the past couple of years, this workshop has provided a forum to discuss cyber risk among community bankers, regulators, law enforcement, and other industry stakeholders. community banks can also turn to the federal financial institutions examination council ( ffiec ) website, which includes the ffiec cybersecurity resource guide and links to other external cybersecurity resources. we know well that cyber threats pose real risks to the banking system, and we recognize that community banks may have unique needs in preventing, remediating, and responding to cyber threats. regulators should, therefore, ensure that a range of resources are available to support banks and seek further opportunities to help build bank resilience against these threats. community banks are integral to rural and underserved communities. how can the federal reserve support us in maintaining our presence in these areas, particularly amid ongoing consolidation trends? as i noted earlier, it | 0 |
point is that central banks β ο¬nancial assets are, like those of ο¬nancial institutions, subject to climate - related ο¬nancial risks. so for the sake of risk management, it is in central banks β own interest that the ο¬nancial risks of climate change and climate policies should be as transparent as possible. therefore, central banks should consider only purchasing securities or accepting them as collateral for monetary policy purposes if their issuers meet certain climate - related reporting obligations. in terms of monetary policy implementation, central banks could also examine whether they should use only those credit ratings from rating agencies that appropriately include climate - related ο¬nancial risks. with such measures, central banks would help promote market transparency and standards at rating agencies and banks. so monetary policy implementation should be part of the toolbox when central banks act as catalysts for greening the ο¬nancial system. 5 conclusion ladies and gentlemen, to summarise brieο¬y : first, i am very much looking forward to pushing ahead with the ngfs agenda together with the bcb. second, an important goal will be to achieve more market transparency on climate - related risks β as a solid foundation for adequate risk management and risk pricing. and third, in their own interest, central banks have an important role to play in the mission for more market transparency. climate change is the challenge of our times. but we can succeed if we act now - responsibly, jointly and forcefully, at all levels. in closing, let me wish you all a successful webinar. footnotes : 1. english : german corporation for international cooperation. https : / / www. bundesbank. de / en / press / speeches / climate - risk - the - merits - of - transparency - and - the - role - of - central - banks - 851634 3 / 4 24 / 11 / 2020 climate risk β the merits of transparency and the role of central banks | deutsche bundesbank https : / / www. bundesbank. de / en / press / speeches / climate - risk - the - merits - of - transparency - and - the - role - of - central - banks - 851634 4 / 4 | 24 / 11 / 2020 climate risk β the merits of transparency and the role of central banks | deutsche bundesbank climate risk β the merits of transparency and the role of central banks banco central do brasil β regulatory webinar 24. 11. 2020 | virtual event | sabine mauderer 1 introduction 2 central banks of brazil and germany join forces within the ngfs 3 the merits of transparency and disclosure of climate - related risks β a focal point of the ngfs agenda 4 what central banks can do to encourage climate - related risk disclosure 5 conclusion 1 introduction ladies and gentlemen, i would like to start by thanking the bcb β banco central do brasil β and the german giz [ 1 ] for hosting this well thought out regulatory webinar. let me also applaud the bcb for its strategic β agenda bc # β. β agenda bc # β is a landmark statement on priorities of the central bank of brazil, conο¬rming its longstanding environmental commitment and shaping its dna for the future. 2 central banks of brazil and germany join forces within the ngfs bcb joined the network for greening the financial system this year. this network, also called ngfs, is a coalition of 75 central banks and supervisors to combat climate change with joint efforts globally. as a founding member, bundesbank very much welcomes bcb β s membership. https : / / www. bundesbank. de / en / press / speeches / climate - risk - the - merits - of - transparency - and - the - role - of - central - banks - 851634 1 / 4 24 / 11 / 2020 climate risk β the merits of transparency and the role of central banks | deutsche bundesbank brazil is the largest south american economy. within its boundaries lie 60 % of the amazon, a key factor for biodiversity and for the climate on our planet. germany, in turn, is the largest european economy, with annual per capita carbon emissions that are about twice as high as the global average. the rapid growth of urban areas and the amount of land covered by transport infrastructure in germany has indirect global effects, as it reduces biodiversity. so both countries, brazil and germany, have a particular responsibility to tackle the challenges of the climate crisis and declining biodiversity head - on. with regard to ο¬ghting the climate crisis, there are two key insights. key insight number one : our real economies need to transform to net zero emissions quickly. to achieve this goal, a carbon pricing system | 1 |
our ability in the efforts to the green the financial sector. 2 / 3 bis - central bankers'speeches of course, the new risks we are facing do not mean that the classic ones have just disappeared. the uncertain macro - financial environment, coupled with persistent geopolitical tensions continues to shape the outlook for the european banking sector. hopefully, the relaxed atmosphere we have created will contribute to open discussions. but before getting back to meetings tomorrow, please enjoy the evening and dinner in ljubljana together. thank you. 3 / 3 bis - central bankers'speeches | bostjan vasle : address - single supervisory mechanism ( ssm ) supervisory board's strategic retreat address by mr bostjan vasle, governor of bank of slovenia, at the official dinner of the single supervisory mechanism ( ssm ) supervisory board's strategic retreat, ljubljana, 10 october 2024. * * * members of the supervisory board, dear colleagues, ladies and gentlemen, good evening and welcome at the ljubljana castle. it is a great privilege and pleasure to welcome you here tonight for the supervisory board's strategic retreat. since banka slovenije is also hosting this year's external monetary policy meeting next week, slovenia will be the meeting place for both supervisory and monetary policy arms of the eurosystem in a short span of seven days. fittingly, this year also marks the 20th anniversary of slovenia's accession to the eu, a crucial milestone that allowed us to engage in the economic and monetary union and reap the rewards of our pan - european partnership. as many interesting β formal and informal β discussions will be taking place over the next days, let me seize this opportunity and briefly reflect on the events of recent years and challenges awaiting us in the future. a decade ago, we were navigating our way out of a major european banking crisis with dire consequences for the financial sectors and whole economies. this has also placed a heavy burden on the taxpayers. various forms of fiscal assistance to the financial sector increased the public debt in the euro area by almost 5 % of gdp, and in the most affected countries by 3 - 4 times more. in slovenia, where we have faced the deepest economic and banking crisis since independence, the fiscal burden was one of the biggest. the banking crises had farreaching consequences beyond the economic sphere and some of the legal processes still remain ongoing. with the need for better regulation and supervision of the euro area demonstrated clearly by these events, the idea of an eu's supranational bank supervisory body became a reality in 2014. this november we will commemorate the 10th anniversary of ssm and we appreciate the opportunity to acknowledge and celebrate this important occasion with you all tonight in ljubljana. by shifting from highly fragmented national banking supervision systems to a unified european approach, we greatly advanced the eu integration and also helped to strengthen the idea of the euro area. as a consequence of these developments today, the euro area banks are better positioned to absorb potential losses and weather adverse shocks then a decade ago. 1 / 3 bis - | 1 |
##ilateral commitment, while others aim to maintain the exchange rate much very close to the central parity. at the moment, however, none of the new member states has been participating in erm ii for the required minimum of two years. another challenge that might lie ahead for a number of the new member states relates to their substantial and persistent current account imbalances. although external imbalances are to some extent a natural and necessary part of the catching - up process, care needs to be taken to ensure that these imbalances remain sustainable and eventually decline. even though the balance of payments appears to be less relevant once a country has joined the monetary union, economic adjustments in response to such imbalances will take place at some point in the future. in this respect, it is possible that the current account deficit might β naturally β narrow over time as the cyclical position in the country becomes more aligned with that of the euro area countries. however, if economic policy and market structures do not facilitate the adjustment process, it is also possible that the adjustment of the economy will be abrupt and severe β another reason to emphasise real convergence and the flexibility of economic structures, as i outlined before. finally, where do we stand with regard to the fulfilment of the fiscal criteria? looking at recent fiscal developments in the new member states, the picture is very diverse ( see slides 7 and 8 ). thee two charts show the fiscal positions in the new member states and the reference values as defined in the treaty. while many of the new eu members face no major problems on that front, others exhibit large and even growing fiscal imbalances. in addressing the fiscal policy challenges faced by these countries, one aspect deserves, in my opinion, particular attention : namely that the appropriateness of the budgetary stance cannot only be judged with reference to the fulfilment of the fiscal criteria. as i pointed out earlier, fiscal policy will have to be employed as a policy instrument to help contain inflationary pressures, when other policies ( such as monetary policy ) are increasingly constrained in the run - up to euro area accession. this is especially the case in the final phase of convergence and erm ii participation, when the convergence not only of long - term interest rates, but also of short - term interest rates progressively limits the room for manoeuvre for monetary policy. moreover, as buoyant economic growth in these countries is often supported by very high credit growth, effective financial supervision | adjustments in economic structures and market institutions β can support the sustainability of nominal convergence, for example by improving competition in product markets, increasing labour market flexibility and reducing the likelihood and impact of asymmetric shocks. the experience of a number of the current euro area countries over the past few years underscores the importance of structural and institutional adjustments β that is, of real convergence to the norms of market competition and flexibility, for sustaining a high degree of price stability, maintaining competitiveness and supporting higher and durable growth. before coming to policy issues related to the fulfilment of the individual convergence criteria, i would like to briefly address two other general issues that i regard to be crucial for the examination of the economic convergence process : the reliability of the statistical base and the legal framework for central banks. the assessment of economic convergence is highly dependent on the quality and integrity of the underlying statistics supplied by the countries concerned. the ecb, therefore, has repeatedly emphasised that members states should consider the quality and integrity of their statistics as a matter of priority. to achieve the high standards required in the domain of statistics, it would be useful to reinforce the independence, integrity and accountability of national statistical institutes. the treaty also requires the examination of β legal convergence β, i. e. the compatibility of national legislation with articles 108 and 109 of the treaty and with the statute of the escb. the conditions for euro area entry in the legal domain refer, in particular, to central bank independence, the prohibition of monetary financing and privileged access to credit, and the integration of the national central bank of the country concerned into the eurosystem. in this context, i should like to emphasise that central bank independence comprises various aspects, notably functional, institutional, personal and financial independence. unfortunately, we have had to point out on a number of occasions in the recent past that all of these aspects of independence need to be respected, not only in principle, as a formality that can be satisfied by aligning national legislation, but also in practice. independence is important both for the effective performance of a national central bank β s tasks and for its participation in the eurosystem. iii. policy challenges pertaining to individual convergence criteria let me conclude by commenting on some policy challenges that the new member states may face on the road to the euro and in fulfilling the convergence criteria. i will start with the inflation criterion. where do the new member states stand in terms of inflation convergence? looking back, these countries have generally made | 1 |
linah k mohohlo : official launch of new botswana coins welcome remarks by ms linah k mohohlo, governor of the bank of botswana, at the official launch of the new coin, gaborone, 27 february 2014. * * * on behalf of the board and staff of the bank, i welcome you, sir, your excellency the president and all invited guests, first, to the bank β s impressive premises ; second, and more fittingly, to this event, the proceedings of which will culminate in the official launch of the new family of botswana coin. i wish to acknowledge the presence of your lordship the chief justice rre dibotelo, and your excellency the former president, sir ketumile. the honourable minister of finance and development planning, rre matambo, and your honourable cabinet colleagues, the honourable deputy speaker of the national assembly, members of the diplomatic corps, chief executive officers of banks and other financial institutions, distinguished ladies and gentlemen β your presence too is acknowledged. your excellency, as and when we have the opportunity to host you in the bank β s premises, as is the case this morning, we feel distinctively honoured. it is all the more so when we are privileged to host you on this particularly special day, february 27. happy birthday your excellency, and many happy returns. i take pride in paving the way for you, sir, to launch the new family of coin and declare them legal tender in botswana, so that they can be available for public use in daily transactions. indeed, the public and business community are anxiously looking forward to the new coins. i have only a few remarks to make before i make way for appropriate officiation. in line with international best practice, the bank embarked on a comprehensive review of the denominations, composition, form and design of the country β s currency some years back. once the honourable minister of finance and development planning had given the go ahead, in line with the relevant section of the bank of botswana act ( section 24 ( 2 ) ), the first step of this exercise involved a renewal of all banknotes in 2009, which resulted in the issuance of the pula banknotes currently in circulation. now we have a new set of coin, soon to be launched, the make - up and denomination of which i leave for his excellency the president to speak to. in fact, your excellency β s input and guidance | gabriel makhlouf : lessons from covid β a macroprudential framework for the market - based finance sector opening remarks by mr gabriel makhlouf, governor of the central bank of ireland, at the bank of france financial stability conference 2021 roundtable, 1 march 2021. * * * let me start by thanking the banque de france for the invitation to join today β s conference and contribute to your financial stability review. i support governor villeroy de galhau β s three areas for action that he has set out in his review article. i am in favour of strong and effective resilience frameworks that operate in individual countries, in the eu and across the globe. of course, as with so many things, we will need to consider carefully any proposals for reform to ensure they do not have any unintended consequences. for example, it may be too soon at this point to draw definitive conclusions from our experience with the pandemic. but i do think there are some clear lessons that we can already take from the past year. let us start by remembering that macroprudential frameworks are very new. arguably, they were still in their adolescence or teenage years when the shock from the pandemic hit. but benefits are now being already seen. why do i say this? our approach has been to build resilience over the last number of years, when times were good so that we could use it when we needed it. the pandemic is not over but, on the evidence so far, and despite the effects of the shock on our communities and busineses, the core of the financial system has remained resilient, both financially and operationally. we faced an unprecedented economic crisis but we did not see the banking system amplify the economic disruption. 1 so the first lesson is we must now focus on taking these frameworks from adolescence to maturity. another key lesson is the need to develop and operationalise a macroprudential framework for market - based finance. this would be beneficial for the stability of the financial system as a whole, and not just market - based finance. today β s financial system is now significantly different than before the financial crisis a decade ago. the banking system has seen a gradual decline in its share of total financial intermediation, a change accompanied by a corresponding increase in parts of the non - bank financial system. and in particular by market - based finance. for the avoidance of doubt, market | 0 |
cent, and by the mid - 1990s it had climbed to 70 per cent. increasingly, through the late 1980s and early 1990s, the growth in government spending raised concerns about whether this represented the most efficient use of the economy β s resources. from a policy perspective, the greatest concern was that persistent large deficits were pushing canada β s debt - to - gdp ratio to unsustainable levels and driving up risk premiums in our interest rates. the economic costs of canada β s rising indebtedness became very clear after 1991, when our inflation rate came down quickly, but medium - and longer - term interest rates were slow to respond. one important reason for that was the persistence of high risk premiums because of fears that governments might be tempted to reduce the debt burden through inflation β in effect, by printing more money. canada β s vulnerability to such concerns became particularly evident during the mexican currency crisis. high interest rates meant that we had to pay more of our income to foreign holders of our public and private sector debt. this made us poorer as a nation. and these high rates discouraged investment which, to some extent, relates to the third β disappointing β trend of the past quarter century β the slowdown in productivity growth. the slowdown in productivity growth productivity has been at the centre of many public discussions in canada recently. for good reason, too, since productivity is critically important to growing incomes and rising standards of living over time. unfortunately, such discussions are complicated by the fact that there is more than one measure of productivity, and there often seems to be some difficulty in distinguishing between the growth and the level of productivity. things become even more complicated as one gets into cross - country comparisons. after a strong showing from the end of the second world war to the early 1970s, our productivity growth became lacklustre. output per worker slowed from an average rate of about 3 per cent in the 1950s and 1960s to 1 per cent in the 1980s and 1990s. productivity growth also slowed in other industrial countries, including the united states, over this period. indeed, average gains in labour productivity in the canadian and u. s. business sectors have been roughly similar in the past 25 years. this means that the gap in productivity levels in favour of the united states has not really widened ; but neither has it narrowed. moreover, growth in u. s. productivity seems to have picked up strongly in the last year or so. i do not have a complete explanation for the productivity slowdown in | mr thiessen evaluates the performance of the canadian economy at the end of the 20th century address by the governor of the bank of canada, mr gordon thiessen, before the canada club in london on 2 june 1999. as the curtain comes down on the twentieth century and we move on to the next millennium, it is difficult to resist the temptation to be both retrospective and prospective. ask canadians to think back and many will tell you that the economy and they, as individuals, have been through some difficult times. those with longer memories, however, will recall the remarkably positive climate between the end of the second world war and the early 1970s. canada came out of the war with a relatively strong economy compared with the ravaged european countries. moreover, there were sizable and sustained gains in productivity through the 1950s and 1960s. these reflected the revolution in agriculture and the forced modernization and expansion of canadian industry during the war as well as the rapid changes in technology and industrial processes that followed. all this led to a substantial rise in canadian standards of living instead of the post - war depression that many had feared. and despite the exodus of workers from agriculture, the overall unemployment rate remained low. at the same time, rapid economic growth generated rising tax revenues that governments could spend on an increasingly wider social safety net without taxpayers feeling much of a pinch. compared with this post - war prosperity, our economic performance over the subsequent quarter century has been the source of some disappointment and concern. various explanations have been advanced for this less - favourable record since the early 1970s. there are four trends in particular that i would highlight in this regard : high inflation in the 1970s and 1980s ; large and rising fiscal deficits from the mid - 1970s to the mid - 1990s ; a slowdown in productivity growth ; and a decline in the prices of primary commodities. tonight, i propose to comment on these four trends and their effect on the economy over the past 25 years. much of the sense of economic disenchantment that canadians have been feeling in the 1990s has been related to the difficult process of reversing these trends or adjusting to them. fortunately, considerable progress has been made on several fronts. hence, there are grounds for optimism regarding canada β s economic future. the harmful effects of high inflation the rate of inflation which, after getting through some of the post - war bottlenecks, averaged just over 2 per cent in the period to 1972, more than tripled over the next two decades. this pickup in inflation was | 1 |
half of last year, and industrial production has declined a bit, on balance, since the turn of the year. while these developments bear watching, some of this sluggishness seems to be the result of transitory factors, including unusually severe winter weather, labor disruptions at west coast ports, and statistical noise. the available data suggest a moderate pace of gdp growth in the second quarter as these influences dissipate. notably, consumer spending has picked up, and sales of motor vehicles in may and june were strong, suggesting that many households have both the wherewithal and the confidence to purchase big - ticket items. in addition, homebuilding has picked up somewhat lately, although the demand for housing is still being restrained by limited availability of mortgage loans to many potential homebuyers. business investment has been soft this year, partly reflecting the plunge in oil drilling. and net exports are being held down by weak economic growth in several of our major trading partners and the appreciation of the dollar. looking forward, prospects are favorable for further improvement in the u. s. labor market and the economy more broadly. low oil prices and ongoing employment gains should continue to bolster consumer spending, financial conditions generally remain supportive of growth, and the highly accommodative monetary policies abroad should work to strengthen bis central bankers β speeches global growth. in addition, some of the headwinds restraining economic growth, including the effects of dollar appreciation on net exports and the effect of lower oil prices on capital spending, should diminish over time. as a result, the fomc expects u. s. gdp growth to strengthen over the remainder of this year and the unemployment rate to decline gradually. as always, however, there are some uncertainties in the economic outlook. foreign developments, in particular, pose some risks to u. s. growth. most notably, although the recovery in the euro area appears to have gained a firmer footing, the situation in greece remains difficult. and china continues to grapple with the challenges posed by high debt, weak property markets, and volatile financial conditions. but economic growth abroad could also pick up more quickly than observers generally anticipate, providing additional support for u. s. economic activity. the u. s. economy also might snap back more quickly as the transitory influences holding down first - half growth fade and the boost to consumer spending from low oil prices shows through more definitively. as i noted earlier, inflation continues to run below the committee | β s 2 percent objective, with the personal consumption expenditures ( pce ) price index up only 1 / 4 percent over the 12 months ending in may and the core index, which excludes the volatile food and energy components, up only 1 - 1 / 4 percent over the same period. to a significant extent, the recent low readings on total pce inflation reflect influences that are likely to be transitory, particularly the earlier steep declines in oil prices and in the prices of non - energy imported goods. indeed, energy prices appear to have stabilized recently. although monthly inflation readings have firmed lately, the 12 - month change in the pce price index is likely to remain near its recent low level in the near term. my colleagues and i continue to expect that as the effects of these transitory factors dissipate and as the labor market improves further, inflation will move gradually back toward our 2 percent objective over the medium term. market - based measures of inflation compensation remain low β although they have risen some from their levels earlier this year β and survey - based measures of longer - term inflation expectations have remained stable. the committee will continue to monitor inflation developments carefully. monetary policy regarding monetary policy, the fomc conducts policy to promote maximum employment and price stability, as required by our statutory mandate from the congress. given the economic situation that i just described, the committee has judged that a high degree of monetary policy accommodation remains appropriate. consistent with that assessment, we have continued to maintain the target range for the federal funds rate at 0 to 1 / 4 percent and have kept the federal reserve β s holdings of longer - term securities at their current elevated level to help maintain accommodative financial conditions. in its most recent statement, the fomc again noted that it judged it would be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. the committee will determine the timing of the initial increase in the federal funds rate on a meeting - by - meeting basis, depending on its assessment of realized and expected progress toward its objectives of maximum employment and 2 percent inflation. if the economy evolves as we expect, economic conditions likely would make it appropriate at some point this year to raise the federal funds rate target, thereby beginning to normalize the stance of monetary policy. indeed, most participants in june projected that an increase in the federal funds target | 1 |
and transfers β which may add to inflationary pressures β or on public investment and debt sustainability. as many of the sources of inflation today are on the supply side, government policies that lift supply and redirect investment to where it is needed are necessary to support sustainable growth. the pace of rate increases the second consideration in responding to current inflation is the pace of rate increases. when inflation is high for a long period of time, an important role for monetary policy is to ensure that inflation expectations remain anchored as the shocks work their way through the economy. if expectations become de - anchored and trigger a wage - price spiral, it can lead to inflation becoming persistent even after the shocks disappear. raising interest rates has a mechanical effect on demand and inflation, and thereby on inflation expectations. but when interest rates are starting from unusually low levels, rate hikes are more powerful if they also create signalling effects that influence expectations directly. in this context, especially compared with the traditional focus on 25 basis - point increments, adjusting the pace of rate hikes is a key tool to signal our determination to fulfil our mandate and keep inflation expectations contained. and moving faster at the start of the hiking cycle clearly conveys our commitment to bring down inflation to our medium - term target. at present, inflation expectations remain relatively well anchored across a range of measures. but there are two reasons why it would be unwise to take this for granted. first, the shock is severely affecting the prices of those consumption items, such as groceries and petrol, that have the greatest influence on households β inflation expectations. [ 15 ] the ecb β s consumer expectations survey shows that, since february this year, both mean and median expectations for inflation three years ahead have risen by around 1 percentage point. second, we are seeing a rapid change in the economic environment, with inflation switching from being very low to being extremely high. history suggests this can leave a scar on expectations. for example, research finds that differences in inflation expectations between people from the former east and west germany can largely be explained by the lasting effect of the inflation shock after reunification. this contrasted strongly with the perceived norm of zero inflation in the german democratic republic and seems to have led former east germans to over - adjust to an environment of rising prices. this imperative to anchor inflation expectations helps explain why, over the last two policy meetings of the ecb β s governing council, we raised our key interest rates by 125 basis points in total. this is the fastest | mario draghi : addressing the causes of low interest rates introductory speech by mr mario draghi, president of the european central bank, at a panel on β the future of financial markets : a changing view of asia β at the annual meeting of the asian development bank, frankfurt am main, 2 may 2016. * * * the mandate of each central bank is phrased in strictly domestic terms. but in an open and integrated international economy, the challenges we face are often fairly similar across jurisdictions. over the past few years, one particular challenge has arisen across a large part of the world. that is the extremely low level of nominal interest rates. today, 18 % of the global economy, weighted by gdp, operates in an environment of negative central bank policy rates, and the proportion rises to 40 % if we include countries with zero to 1 % rates. very low rates are not innocuous. they put pressure on the business model of financial institutions β banks, pension funds and insurance companies β by squeezing interest income. and this comes at a time when profitability is already weak, when the sector has to adjust to post - crisis deleveraging in the economy, and when rapid changes are taking place in regulation. low real returns also affect the income of pensioners, who are a growing constituency in most advanced economies. their consumption in retirement depends precisely on the return they get on their savings. likewise low rates slow the rate of accumulation of pension assets of those not yet retired, which is again relevant as a larger cohort moves towards retirement. there is a temptation to conclude that since very low rates generate these challenges, they are the problem. but they are not the problem. they are the symptom of an underlying problem, which is insufficient investment demand, across the world, to absorb all the savings available in the economy. it is this phenomenon β the global excess of savings over profitable investments β that is driving interest rates down to very low levels. and so the right way to address the challenges raised by low rates is not to try and suppress the symptoms, but to address the underlying cause. this requires that we tackle both the long - and short - term drivers of lack of demand, and that we draw for that purpose on both monetary policy and other types of policy. the long - term perspective from a long - term perspective, nominal bond yields have been on a declining trend in all major economies since the 1980s. this is in part a welcome development, as it reflects the success | 0.5 |
the challenge is to provide programmes which keep pace with changes in financial innovation and technology. meeting this need requires rigorous, extended programmes such as the post - graduate programmes in islamic finance and financial engineering with emphasis on islamic banking principles. at the same time, relevant organizations can support such programmes by creating funds to sponsor promising students to pursue formal education, ranging from modular courses in islamic finance to full post - graduate programmes. there is also a need to increase programmes and initiatives that provide education and training in shariah. islamic research organizations and financial institutions need to work towards developing a sufficient number of competent shariah scholars who are equipped with sound knowledge and expertise in both islamic jurisprudence and islamic commercial laws to deal with innovative and cutting - edge products. there is also the need for extensive education of the consumer and business community. this would increase the outreach resulting in increased demand for new and innovative products and approaches. malaysia has implemented a 10 - year structured consumer education programme to increase the level of consumer awareness on the unique characteristics of islamic financial products and the product choices offered by islamic financial service providers. increased awareness will drive the demand for a broader range of islamic products and services customized to their requirements at more competitive prices and through more convenient channels. the outreach has also been targeted at small and medium sized businesses. this process will also prompt the financial industry to increase innovation to strengthen their competitive position. this can be reinforced by market research to enhance the understanding of customers β distinct financial needs and their risk tolerance and therefore enable the design of islamic financial instruments that offer tangible benefits and value to customers. in addition, with increased disclosure and transparency on the manner in which islamic financial transactions are being conducted and on how islamic financial contracts are being executed as well as on the risk and return profiles of financial products, this will further strengthen the role of competition. in conclusion, the investment in the future needs to be undertaken by all the relevant entities in the islamic financial sector - the industry, the regulators, the market participants, the academia and the international community. as a co - ordinated and concerted effort it will be mutually reinforcing in elevating the performance of islamic finance. while the increasingly more competitive prevailing environment raises the pressures to produce immediate - term results, it is the investment in human capital and in research and development that will secure the long - term sustainability of the industry. it is these investments that will be the defining element of the future development of islamic finance and its long - term success. | from islamic finance. the combined efforts and collaborative alliances will pave the way for mutually reinforcing developments that will contribute to the overall international finance system and global economic prosperity. | 0.5 |
zealanders, but these banks also it is also useful to recall that in 1989, the development finance corporation, which was new zealand β s seventh largest financial institution at the time ( but not a bank ), was placed into statutory management and ultimately liquidated. new zealand also suffered from widespread finance company failures in the mid - late 2000s, devastating the savings of many new zealanders and damaging confidence in the financial system. 4 under the reserve bank of new zealand act, the governor general, on the advice of the minister of finance, may appoint a statutory manager to carry out the resolution of a registered bank. the reserve bank can also issue directions to the statutory manager. 5 the review of the reserve bank act is considering whether increased protection of deposits, perhaps through a deposit insurance framework, would be beneficial. provide the vast majority of financing for individuals and businesses in new zealand. and because bank failures, and even β near failures β, usually result in significant credit tightening ( as banks begin to strengthen their balance sheet by restricting credit to only the most creditworthy borrowers ), it could be expected that some new zealanders and new zealand businesses would not have access to the same level of credit as before. this could mean that it may be more difficult for individuals to borrow to buy a car or home or pursue further education, and businesses may have trouble borrowing to meet their short - term cash flow needs. the decrease in available credit could have disastrous impacts on new zealand β s economy. while it is likely that the reserve bank would intervene to resolve a failing bank before it is in a negative capital position ( i. e., the reserve bank would begin the resolution process when the value of assets exceeds liabilities ), it is difficult to determine exactly how the bank β s remaining value ( and losses ) would be allocated among creditors ( including depositors ) and shareholders. however, what is known with greater certainty is that creditors ( including depositors ) will realise more value in the failed bank if the bank has a greater proportion of shareholder capital. social costs of bank failures international agencies like the world bank, the world health organization, and the united nations have investigated the economic and social impacts of financial crises. they report that banking crises almost always lead to a general downturn in the economy, associated with rising unemployment and lost output, with consequential societal effects. 6 these impacts go beyond the financial realm as they affect the health and quality of life, often of people who had little involvement in | timelines and the costs of the existing insolvency proceedings. conclusion to sum up, our duty, as economic and supervisory authorities, is to continue our close monitoring of financial institutions and markets, to ensure that they continue to provide the necessary flow of credit to the economy, and of financial stability risks stemming from this crisis. we must continue to adopt measures to mitigate those risks and, naturally, stand ready to provide an appropriate european response should such risks materialise. thank you for your attention. | 0 |
jose manuel gonzalez - paramo : the ecb and the sovereign debt crisis speech by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, at the xxiv moneda y credito symposium, madrid, 4 november 2011. * 1. * * introduction it is a great pleasure and honour for me to contribute to this year β s 24th edition of the moneda y credito symposium. there is no doubt that advanced economies, not just the euro area, are currently facing a period of exceptional economic and financial instability that requires swift, decisive and credible action by all concerned institutions, each with its own responsibilities. on 26 october the heads of state and government of the euro area agreed on a comprehensive set of measures to restore confidence and address the current tensions in financial markets. these measures include : first, an agreement to secure the decline of greek debt to a level equivalent to 120 % of gdp by 2020. this reduction will be partly achieved via a voluntary bond exchange involving a 50 % nominal discount on notional greek debt held by private investors. euro area member states will also contribute up to 30 bn euro to the psi package. second, a new eu - imf multiannual programme financing up to 100 bn euro will be put in place by the end of the year. third, a significant leveraging of existing efsf resources via two different schemes in order to increase the fund β s ability to extend loans, finance bank recapitalisations and conduct bond purchases in the primary and secondary markets. i will describe these schemes in a bit more detail later on. fourth, a commitment to increase the capital position of banks to 9 % of core tier 1 by the end of june 2012 and to facilitate access to term - funding through a coordinated approach to bank liability guarantees at the eu level. fifth, a strengthening of economic and fiscal coordination and surveillance and a commitment to put in place a set of measures, going beyond and above the recently adopted package on economic governance. in the period ahead, it is of paramount importance that this agreement is applied rigorously and quickly in all its dimensions. against this background, i would like to focus my intervention today β from my perspective as a central banker β on the challenging environment for monetary policy created by the ongoing euro area financial and sovereign debt crisis. in the first part of my speech i would like to recall some of the main policy β failures β leading up to the present crisis and briefly review the more recent policy | and limited exit route for investors due to lack of secondary market trading. 12. to address these issues some of the measures which could be considered, are strengthening the governance structure of the municipal issuers by ring fencing the municipal bond funds ; providing partial or full guarantee by the central / state government ; mandating escrow account for debt servicing of bond proceeds, etc. sebi has since issued the regulations for issue and listing of securities by municipalities. investor liberalising the investment guidelines for long term players 13. in order to encourage demand, investment norms for regulated entities may be reviewed to facilitate their active participation in corporate debt market. the current investment guidelines for pension and other retirement benefit funds may be reviewed from ownership criteria ( public sector / private sector ) to ratings based criteria. they may also be permitted to use interest rate swaps, repos and credit default swaps. encouraging retail participation 14. participation of retail investors in corporate bonds continues to be limited. in order to increase retail investors β participation in corporate bonds, we need to encourage issuance of zero coupon bonds, provide clarity on taxation issues, include provision of special quota for retail investors in debt issues and provide reduced transactions costs for retail investors. intermediaries introduction of a market making scheme 15. a market making scheme in corporate bond could potentially improve market liquidity. but market making in an illiquid market is challenging and not many intermediaries will be ready to take on the risks of making two - way quotes. a viable market making scheme may have to be formulated with suitable incentives to encourage market participants to provide two way quotes. stock exchanges may have to come out with market making scheme in consultation with the regulators. perhaps the role of debenture trustees in this regard may also need to be explored. infrastructure efficient trading platforms for corporate bonds 16. nse has developed a dedicated trading platform for privately placed corporate bonds. there is, however, negligible activity on the trading platform. although the system provides bis central bankers β speeches for dvp - iii guaranteed settlement, it is learnt that the system has some issues, viz. high margin, high penalty for default, non - availability of all the issued bonds on the platform, etc. according to some market participants, there is a need for combined settlement for corporate bond repo and outright market under dvp - iii mechanism at par with the g - sec market in order to increase the traders β participation. 17. stock exchanges could discuss with the market participants | 0 |
yves mersch : oral hearing of the federal constitutional court 16 february 2016 in the omt proceedings introductory statement of the european central bank by mr yves mersch, member of the executive board of the european central bank, at the oral hearing of the federal constitutional court in the omt proceedings, karlsruhe, 16 february 2016. * * * mr chairman, distinguished members of the second senate, introduction you have once again invited the european central bank to provide its opinion, as an expert third party, on the decision of the governing council of the european central bank of 6 september 2012, whose compatibility with national constitutional law you are reviewing in these proceedings. this is the decision that approves the main parameters of the eurosystem β s outright monetary transactions on the secondary market for government bonds β so - called omts. i am happy to accept this invitation. what has changed since the last oral hearing on 11 june 2013? the court of justice of the european union has, on the basis of the facts provided by you, responded to the questions submitted to it for a preliminary ruling. the court of justice of the european union, which is competent under the treaties to interpret union law and the validity of the acts of the union β s institutions, including the european central bank, found omts to be compatible with union law : the european central bank did not exceed its monetary policy mandate either as regards the conditionality, the selectivity or the parallelism of omts nor as a circumvention of the limits and conditions laid down by the assistance programmes of the european stability mechanism β the so - called esm. the court of justice of the european union followed the arguments put forward by the european central bank and confirmed that omts in view of their objectives and the instruments provided for achieving them, fall within the area of monetary policy and therefore within the powers of the eurosystem. monetary policy measures, such as omts, may have indirect effects on the stability of the euro area, without this leading to monetary policy measures being treated as equivalent to economic policy measures. the fact that the european central bank will take an independent monetary policy decision on the implementation of omts also excludes the possibility that the esm β s assistance programmes were circumvented. the court of justice of the european union also confirmed that omts are proportional and that the european central bank, as regards the judicial review of these conditions, should be granted a broad discretion. as a result the european central bank was | the failure of other intermediaries. the second one emerges from imbalances that build up over time, such as credit booms or concentrations of lending in certain regions or sectors. these β bubbles β can go on profitably for most participants who β ride β them for quite a while. then relatively small events or changes in expectations can lead to their breakdown, simultaneously bringing down a wide range of intermediaries and markets. 8 the third way in which systemic risk can materialise relates to economic downturns or other aggregate shocks that cause the collapse of a wide range of intermediaries and markets simultaneously. 9 other important elements in systemic risk include the strong information intensity of financial contracts and transactions, and a high degree of connectedness between financial intermediaries and markets as well as a strong reliance on debt financing ( leverage ) and on maturity mismatches between assets and liabilities. these factors imply feedback mechanisms that amplify shocks and can lead to non - linearities in the financial system that then are easily transmitted to the real economy. systemic stability, or the absence of systemic risk, can be seen as a public good, thereby legitimising the role of governments and other authorities in addressing it. 10 like pollution, systemic risk involves externalities, in the sense that each financial intermediary manages its own risks but does not consider its impact on the risk of the system as a whole. the financial crisis contributed considerably to a better understanding of the phenomenon of systemic risk, which is also reflected in aspects of regulatory reforms. in particular, the possibility of aligning capital requirements to a measure of firms β systemic risk contribution is being contemplated by regulators, e. g. the basel committee on banking supervision. 11 how could the esrb then structure its supervisory work on systemic risk? in broad terms, systemic risk analysis can be broken down into two core components : i ) surveillance, or risk detection, and ii ) risk assessment, each of which i will address in turn. risk detection financial stability surveillance concerns risk identification. this kind of surveillance mainly aims to detect potential sources of risk, especially financial vulnerabilities β that is weaknesses which, if unearthed, could lead to a disruption or failure in part of the financial de bandt, hartmann and peydro - alcalde ( 2009 ), β systemic risk in banking : an update β, forthcoming in the ecb working paper series, and berger, molyneux and wilson ( eds. ), oxford | 0.5 |
but that impetus to activity will be short lived unless the demand for goods and services itself starts to rise. on that score, despite a number of encouraging signs of stabilization, it is still premature to conclude that the forces restraining economic activity here and abroad have abated enough to allow a steady recovery to take hold. for that to happen, sustained growth of final demand must kick in before the positive effects of the swing from inventory liquidation to accumulation dissipate. for the household sector, which had been a major stabilizing force through most of last year's slowdown, the outlook for demand is mixed. low mortgage interest rates and favorable weather have provided considerable support to homebuilding in recent months. moreover, attractive mortgage rates have bolstered both the sales of existing homes and the realized capital gains that those sales engender. they have also spurred refinancing of existing homes and the associated liquification of increases in house values. these gains have been important to the ongoing extraction of home equity for consumption and home modernization. the recent rise in home mortgage rates, however, is likely to damp housing activity and equity extraction. it is already having an effect on cash - outs from refinancing. cash - outs rose from an estimated annual rate of about $ 20 billion in early 2000 to a rate of roughly $ 75 billion in the third quarter of last year. but the pace of cash - outs has likely dropped noticeably in response to the recent decline in refinancing activity that has followed the backup in mortgage rates since early november. consumer spending received a considerable spur from the sales of new motor vehicles, which were remarkably strong in october and november owing to major financing incentives. sales dropped last month when the incentives were scaled back, but have remained surprisingly resilient. other consumer spending appears to have advanced in recent months, though at a subdued pace. the substantial declines in the prices of natural gas, fuel oil, and gasoline have clearly provided some support to real disposable income and spending. these price declines added more than $ 50 billion at an annual rate to household purchasing power in the second half of last year. however, a decline in energy prices provides, in effect, only a one - shot boost to consumption, albeit one that is likely to take place over time. to have a more persistent effect on the ongoing growth of total personal consumption expenditures, energy prices would need to continue to decline. futures prices do not suggest that such a decline is in the | , often resulting in differences in the speed and magnitude of their responses to changing business conditions. in contrast to the situation that prevails today, businesses did not have real - time data systems that enabled decisionmakers in different enterprises to work from essentially the same set of information. in those earlier years, imbalances were inadvertently allowed to build to such an extent that their inevitable correction engendered significant economic stress. that process of correction and the accompanying economic and financial disruptions too often led to deep and prolonged recessions. today, businesses have large quantities of data available virtually in real time. as a consequence, they address and resolve economic imbalances more rapidly than in the past. at the same time, firms are largely operating with the same information set, and thus resolution of imbalances induces parallel movements in activity. contractions initially may be steeper, but because imbalances are more readily contained, cyclical episodes overall should be less severe than would be the case otherwise. in the current situation, inventories, especially among producers and purchasers of high - tech products, did run to excess over the past year, as sales forecasts went badly astray ; alas, technology has not allowed us to see into the future any more clearly than we could previously. but, technology did facilitate the quick recognition of the weakening in sales and backup of inventories. this enabled producers to respond forcefully, as evidenced by output adjustments that have resulted in the extraordinary rate of inventory liquidation currently under way. inventories in many industries have been drawn down to levels at which firms will soon need to taper off their rate of liquidation, if they have not already done so. indeed, in recent months, there have been fewer reports from industrial purchasing managers that their customers'inventories are too high. moreover, the relative stability of industrial commodity prices in recent weeks, and especially the recent firmness in the prices of semiconductors, could be hinting at less intense stock drawdowns. a slowing in the rate of inventory liquidation will induce a rise in industrial production if demand for those products is stable or is falling only moderately. that rise in production will, other things being equal, increase household income and spending. the runoff of inventories, even apart from the large reduction in motor vehicle stocks, remained sizable in the fourth quarter. hence, with production running well below sales, the potential positive effect of the inevitable cessation of inventory liquidation on income and spending could be significant. | 1 |
challenges. i would say that we have seen clear examples of this conflict in recent years : in june 2018, analysts at handelsbanken capital markets considered it necessary to deny that the riksbank had changed its target variable in a newsletter. 28 the riksbank's focus on cpifxe in connection with the april meeting resulted in questions on whether the riksbank was changing target variable or rudder once again. this is not the case. another example is from september 2018. nyhetsbyran direkt writes : 29 cpifxe inflation ( the cpif excluding energy ), the measure on which the riksbank is currently focusing a lot on, β¦ i have quoted two examples here but there are more. the measure that was intended to make it easier for us to understand and to help us in our monetary policy decision - making has instead come to be perceived as the actual target for monetary policy. for my part, i handle the trade - off between taking in other measures than actual inflation in the assessment and being clear that cpif inflation is the target for monetary policy as follows. the desirable properties for an underlying measure as i described earlier in my speech are very important to me. the underlying measures i analyse are of decisive significance when assessing the development of inflation. and i can say here that cpif excluding energy does not fare well in the competition. handelsbanken capital markets, ranterullen 25 june 2018. 29 19 october 2018. 15 in my speeches and presentations on monetary policy, i have in principle always referred to cpif inflation. when i have included underlying measures, they have never been alone. this has been my way of emphasising that it is cpif inflation β nothing else β that is the target for monetary policy. when speaking at the monetary policy meetings i have gone a stage further. on these occasions i have in principle never discussed underlying measures, but focused entirely on cpif inflation. what have we learnt? there can be a lot of white noise in the time series data used for economic analysis. this applies in particular to monthly data. one therefore needs to adjust the data for white noise and seasonal variations. if one wants to analyse the development of inflation, for instance, one must make these adjustments. the purpose is to calculate the underlying rate of inflation, or, in other words, core inflation. there are largely two different ways of doing this. one is to use more or less advanced statistical methods to adjust for | lost. 1990s crisis : β things abroad were quite ok, but sweden was not ok β i hope that it is clear from what i have described so far that the 1990s crisis was in many ways domestically generated. inflation was far too high in relation to other countries, and the deregulation of the credit market and the too expansionary economic policy created an overheating that ended in disaster : the banking crisis, a currency crisis and also a public finances crisis. in somewhat simplified terms, i usually describe the crisis of the 1990s like this : β things were quite ok abroad, but sweden was not ok β. there were thus many lessons to be learned with regard to domestic economic policy and not least monetary policy. important lesson β increased elements of β norm - based thinking β give credibility to the nominal anchor perhaps the most important individual lesson learnt from the 1990s crisis was the importance of β norm - based thinking β and long - term game rules for economic policy. 5 this came to mark the thinking behind the new monetary policy regime. see englund, p., β the swedish banking crisis : roots and consequences β, oxford review of economic policy, no. 3, 1999. this way of thinking had been brought up earlier in the debate in sweden, particularly by the swedish centre for business and policy studies β economic policy group, but did not have a broad impact on practical economic policy until the 1990s. see, for instance, β vagen till ett stabilare sverige β ( the road to a more stable sweden ), economic policy group report 1985, center for business and policy studies ( sns ). a retrospective bis central bankers β speeches almost at once, the question arose of what would guide monetary policy in sweden, now that the fixed exchange rate had been abandoned. 6 by this time, some countries had already introduced inflation targets : new zealand was the first in 1990, followed by canada in 1991 and the united kingdom in 1992. in january 1993 the riksbank decided to introduce the inflation target we have now : the annual rate of increase in consumer prices shall be 2 per cent a year. 7 as we saw earlier, it is extremely important that the nominal anchor is credible. the results of academic research indicated that the conditions for attaining low inflation increased if one delegated monetary policy to an independent central bank, which focused on a clearly quantified target. this increased the element of β norm - based thinking β in monetary policy. the motives for short - term deviation | 0.5 |
particularly for the u. s. economy, is also accompanied by various uncertain factors. amid the persisting fragility and uncertainty of the economy, it should continue to be borne in mind that unstable movements in the foreign exchange and financial markets at home and abroad would easily exert a negative influence on the economy. on the price front, import prices become almost unchanged because the continued upward pressure from the rise in crude oil prices around early spring is offset by the recent appreciation of the yen. domestic wholesale prices are also almost flat since the decline in machinery prices and the reduction in electricity charges are offset by the effects of the increase in import prices in the past and of the progress in inventory adjustment. however, consumer prices and corporate service prices continue to decline. as for the conditions surrounding price developments, the balance between supply and demand is expected to still keep exerting downward pressure on prices amid persistently weak domestic demand for a while, although the progress in inventory adjustment will support prices to some degree. moreover, factors such as the ongoing technological innovations in machinery, deregulation, and the this report is based on data and information available at the time of the bank of japan monetary policy meeting held on june 11 and 12, 2002. the bank β s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on june 11 and 12 as the basis for monetary policy decisions. streamlining of distribution channels will continue to restrain prices. under these circumstances, as import prices are likely to turn down, domestic wholesale prices, which are sensitive to import prices, will edge down after remaining flat a little further. on the other hand, consumer prices are expected to stay on a declining trend for the time being at the current gradual pace. this is partly because while the slower growth in imports of consumer goods is expected to alleviate the downward pressure on prices to some extent, the faster pace of decline in wages may possibly reinforce the ongoing decline in prices, especially for services prices. as for the financial market, in the short - term money markets, the outstanding balance of the current accounts at the bank of japan is recently moving around 15 trillion yen as the bank continues to provide ample liquidity to the money market. in these circumstances, the overnight call rate continues to move around zero percent. moreover, interest rates on term instruments remain steady. yields on long - term government bonds are mainly moving in the range of 1. 3 - 1. 4 percent recently. yield spreads between private | . 8 percent, which shows that prices other than those of energy have also been rising. in terms of price hikes for items other than energy and related goods, i am focusing on the price changes in digital appliances ( chart 5 ). 1 digital appliances refer to the following cpi items : tv sets, mobile audio players, electronic dictionaries, video recorders, personal computers ( desktop type ), personal computers ( note type ), pc printers, digital cameras, and video cameras. bis central bankers β speeches the cpi for digital appliances has risen by around 30 percentage points, from the range of minus 22 β 23 percent for february 2012 to the range of 6 β 7 percent for february 2014 on a year - on - year basis. this had an indispensable effect on the rise in the core - core cpi. as the background to this, it can be pointed out that prices of digital appliances had fallen to the bottom and fierce price competition in the household electrical appliances industry came to an end. it should not be overlooked that the halt in the price decline of digital appliances is attributable to the fact that prices of these products had become more susceptible to the effects of the yen β s depreciation with the increased import penetration ratio. a decline in competitiveness and pricing power in the industry in japan can be pointed out as a reason behind such susceptibility. however, the cpi for digital appliances became more or less flat on a year - on - year basis in the march - april period of 2014 excluding the effects of the consumption tax hike as the yen β s depreciation paused, and the core - core cpi for the kuarea of tokyo in may declined by 0. 2 percentage point from the previous month on the same basis. the effects of the halt to the yen β s depreciation trend on future developments in prices should be monitored carefully. c. overseas economic and financial developments as i just mentioned, japan β s economy is expected to continue growing at a pace above its potential as a trend due to the ongoing firm domestic demand, while it will be affected by the front - loaded increase and subsequent decline in demand prior to and after the consumption tax hike. the probability of this scenario will be enhanced by the moderate increase in exports led by the recovery of overseas economies, particularly advanced economies. in this regard, recent developments in overseas economies will support japan β s economy through exports ; for example, the u. s. economy has been recovering moderately | 0.5 |
huge budget ), as it has been suggested by former ecb president jean - claude trichet. but in any case, the institutional vacuum that currently exists must be filled in the long term. ladies and gentlemen, thank you for your attention. bis central bankers β speeches | has conducted a wide - ranging communication campaign, aiming to reach its audiences via multiple channels. this has given our stakeholders the necessary information about the banknote and its security features. but there is also another reason why banknotes are a fundamental part of what we do β one which is more significant for the euro area than for others. in a multi - country union such as ours, it is inevitably harder to create a shared identity than in a single nation state with its own culture and history. the euro is something we all have in common β it is a tangible symbol of european unity. holding a euro banknote and knowing that it can be used in 19 countries is a reminder of the deep integration europe has attained. indeed, when asked about the most important elements of european identity, the single currency is the one most frequently quoted by euro area citizens after democracy and freedom. and in spite of the difficulties in recent years, support for the single currency now stands at 70 %, equalling the highs recorded in the pre - crisis period. with the collaboration of the national central banks, credit institutions and banknote equipment manufacturers, hundreds of thousands of machines and devices have been updated during the last nine months, meaning that β starting today β the new β¬50 banknote is available. 1 / 1 bis central bankers'speeches | 0 |
action to be taken had not been laid down on beforehand, and denmark clearly lacked the tools to manage the situation. although the size of roskilde bank was not in itself sufficient to make it systemic, the turmoil in the financial markets meant that there was, in danmarks nationalbank β s assessment, a considerable risk of a knock - on effect on other banks. in the end, danmarks nationalbank and the rest of the banking sector purchased roskilde bank for zero kroner. in other words, the subordinated capital had been lost, and the private banks provided a guarantee of kr. 750 million to cover further losses. but as it turned out the losses were in fact far greater. a large number of danish banks became distressed in the period around the autumn of 2008. from the beginning of 2008 to the beginning of 2009, 18 danish banks were wound up, acquired or merged with other banks. all of these were small banks. with bank rescue package 3 of september 2010, a bank resolution scheme was established in denmark. the government - owned financial stability company was put in bis central bankers β speeches charge of the resolution of distressed banks, thereby assuming the role that danmarks nationalbank had had in connection with roskilde bank. under bank rescue package 3, not only shareholders, but also unsecured and subordinated creditors could lose their money if a bank failed. this was in accordance with international recommendations, but nevertheless caused a bit of a stir internationally, and led to a general downgrading of danish banks. the first bank to be wound up under bank rescue package 3 was amagerbanken β a regional bank based in the copenhagen area. i will not go into detail, but merely note that we now have a mechanism for handling distressed banks which works and which ensures, that taxpayers will not ultimately pay for a distressed bank. denmark was among the first countries to introduce a bank resolution scheme under which those who had lent money to the distressed bank could also lose their investment. this has made headlines, and i am surprised to note that even very small danish banks in distress still find their way to the pages of the financial times. recently it was a very small bank in the south of jutland, tΓΈnder bank. in my opinion that is out of proportion. over the weekend another local bank, sparekassen lolland, has been taken over by the larger jyske bank along the same lines, i. e. a private solution. it | bankers, bank supervisors, and policymakers, we should strive to work together to ensure that those risk - management processes are sufficiently robust and that they have been tested to ensure their effectiveness. a final word may be in order after so much discussion of the need to adopt more - sophisticated risk management at community banks. you have no doubt heard about the changes in capital processes being discussed in basel by the supervisors of the major industrial countries. these changes are being proposed mainly for the large, complex, internationally active banking organizations of the world, whose operations and business needs have developed beyond the intended reach of the current capital requirements. however, the capital and regulatory structures being developed in basel will not affect the rules under which most, if not all, of the banks in this room will operate. indeed, for most banks in this country, basel ii will have virtually no effect. i want to thank the north carolina bankers β association for the opportunity to speak to you today. | 0 |
to small institutions, where the ultimate aim should not be their survival in order to avoid a serious interruption in the flow of credit, but rather their removal as soon as possible at as little cost as possible. indeed, some of the biggest developed economies witnessed, at the onset of the financial crisis, how several of their leading banks were collapsing. this was because, in addition to bis central bankers β speeches the sudden downturn in the value of their assets, they saw the short - term funding channels on which they relied so heavily disappear. given this scenario, the logical and no doubt inevitable reaction was to swiftly inject huge amounts of public money. yet in spain β s case, there was overall excess capacity in the sector and the problems were at a group of small or medium - sized institutions with a reasonably long - term financing structure. all told, the advisability of earmarking public funds to these institutions immediately was much less evident. on one hand, it is not surprising that ailing institutions should apply for public aid, if possible without conditions. but the mission of the authorities is to look out for the general interest, setting conditions for this aid that ensure the adjustment and restructuring of the sector and the creation of new, stronger and better managed institutions, of a sufficient size to gain access to wholesale funding, thus enabling them to channel funds appropriately to the economy as a whole. conversely, it is not surprising that those institutions in a better position should call for the swift winding up of the institutions facing problems. yet as one of the articles in the book being presented today clearly explains, bank - resolution processes can entail enormous costs for taxpayers, which must be set against the unquestionable benefits of shortening restructuring time. moreover, insofar as these costs may affect sovereign risk, the cure might prove worse than the illness. but let us talk about the present, about what we should do now. evidently, not only have we not exited the crisis, but the information reaching us shows that the crisis may worsen in the coming months. exit will depend on what the reaction is on the domestic, european and global fronts. at present, the key to our future lies in the capacity of the european institutions, the european council, the eurogroup and the ecb, and the national governments, to act in unison, each in its own area of responsibility, with a single, shared objective : to halt the dangerous current market dynamic. in the absence of joint action, any | sunil mendis : a brief look at financial information technology keynote address by mr sunil mendis, governor of the central bank of sri lanka, for the financial information systems seminar, colombo, 8 september 2004. * * * his excellency akio suda, the ambassador for japan in sri lanka, mr yoshihisa onishi, executive director, fisc, other officers from the fisc in japan, ladies and gentlemen, the central bank of sri lanka is happy to co - sponsor this programme together with the fisc of japan ( center for financial industry information systems ), in view of the importance of financial information technology in the financial services industry. sri lanka is no exception to continuous changes in the technology used by its financial services industry. in a market driven financial system, for information to be effective, there should be two vital ingredients, that is system integrity and timeliness - both of which are crucial. the more dependable your information systems are, the more efficient and competitive banks can be as a player in the financial services industry. that is why we see banks investing heavily in it. globally too, with the interdependence of markets their integration is facilitated through information systems which link these markets which make the world a very small place indeed on a pc monitor where the whole world is virtually at your doorstep. the fisc, therefore, has contributed significantly, over the last 20 years, to making information systems more efficient and dependable through their research activities and technical co - operation programmes which have been extended to asian countries such as sri lanka. of particular interest to banks would be the security guidelines on computer systems and audit guidelines for information systems of financial institutions, which they have issued. some of these can be used as guidelines by our banking industry. government and the people of japan have contributed immensely to the development of this country for many decades in the past in different fields and their support in sharing their knowledge on financial information system with the sri lankan financial sector is greatly appreciated. in this connection i wish to thank the fisc who has devoted so much of its time and effort to bring in expertise in this area to market participants in sri lankaaβ¬β’s financial system. this would also provide a good forum for our banks to exchange ideas on specific security features adopted by the fisc. i have no doubt that this seminar will provide an excellent opportunity for useful interaction amongst participants, and i would like to convey my best wishes. | 0 |
domestic demand is expected to remain the key driver of euro area growth. at the same time, uncertainties related to protectionism, financial market volatility and vulnerabilities in emerging markets have overall weighed on business confidence and contributed to weaker external demand. the underlying strength of the euro area economy continues to support our confidence that the sustained convergence of inflation to our aim will proceed. euro area annual hicp inflation has continued to increase, and preliminary estimates put it at 2. 2 % in october 2018, mainly reflecting higher energy price inflation. on the basis of current futures prices for oil, headline inflation is likely to hover around current levels in coming months. while measures of underlying inflation remain generally muted, they have been increasing from earlier lows, amid high levels of capacity utilisation and tightening labour markets. looking ahead, underlying inflation is expected 5 / 11 bis central bankers'speeches to increase further over the medium term, supported by our monetary policy measures, the ongoing economic expansion and rising wage growth. overall, though, significant monetary policy stimulus is still needed to support the build - up of domestic price pressures and headline inflation developments over the medium term. the rotation from the asset purchase programme to forward guidance on rates at our june monetary policy meeting, we initiated a rotation of our policy instruments from the asset purchase programme ( app ) towards more conventional instruments of monetary policy β the policy interest rates and forward guidance on their likely future evolution. we expressed our anticipation of a gradual winding - down of net asset purchases, subject to incoming data confirming our outlook for inflation. and we updated and enhanced our forward guidance on the path for interest rates, which is now expressed in terms of the expectation that key ecb interest rates will remain at their present levels β at least through the summer of 2019 and, in any case, for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term β. in addition, we re - affirmed our intention to reinvest principal payments from maturing securities purchased under the app β for an extended period of time after the end of our net asset purchases and, in any case, for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation β. this combination of policy measures aimed to preserve the degree of monetary accommodation that is necessary to ensure sustained convergence of inflation towards our aim. clearly, the end of net asset purchases is not tantamount to a | peter praet : preserving monetary accommodation in times of normalisation speech by mr peter praet, member of the executive board of the european central bank, at the ubs conference, london, 13 november 2018. * * * introduction in the aftermath of the global financial crisis, central banks have successfully fended off deflationary forces and supported economic recovery. they have brought down policy rates to their effective lower bound and, importantly, have made use of a broad set of unconventional monetary policy measures in pursuit of their statutory objectives. in advanced economies, monetary policies have borne fruit, but their monetary policy cycles clearly differ substantially, reflecting different stages of recovery and degrees of progress towards achieving the central bank β s statutory objectives. in a number of places, central banks have already tightened their monetary policy stance ; unconventional monetary policy measures have been wound down and policy rates have been gradually increased. in the euro area, however, significant monetary policy stimulus is still needed to support the further build - up of inflationary pressures and headline inflation developments over the medium term. at the meeting of the ecb β s governing council in june, we gave an important signal of a normalisation of our policy instruments. we communicated our anticipation that, subject to incoming data confirming our medium term inflation, we would end net purchases under our asset purchase programme ( app ) after december 2018. today i would like to address our key challenge in normalising our monetary policy instruments : preserving monetary accommodation while switching back from net asset purchases to forward guidance on policy rates as the main instrument to steer our monetary policy stance. while this rotation proceeds, we will continue to operate with multiple, complementary instruments, including our policy of reinvesting the principal payment of securities purchased under the app. the state of the euro area economy following more than five years of increasingly broad - based economic expansion in the euro area, recent developments point to some slowdown in the pace of economic growth. preliminary data show that euro area real gdp expanded by 1. 7 % year on year in the third quarter of 2018, down from 2. 2 % in the second quarter. the slowdown in euro area economic growth since the start of the year primarily reflects a loss of momentum in global activity, amid heightened policy uncertainty and tighter financial conditions globally. while some retreat from the strong growth of 2017 was to be expected, it was compounded by short - term country - specific or sector - specific factors in the euro area. euro area domestic demand has however remained resili | 1 |
andreas dombret : international challenges in financial regulation β the view from europe speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the japanese bankers association, tokyo, 29 march 2018. * * * 1. introduction ladies and gentlemen thank you very much for the kind introduction. on my flight here i realised that late march to early april is actually the perfect time of the year to visit tokyo. after all, it is sakura β or cherry blossom season, which started a little early this year. i will make sure i find some spare time tomorrow to take a walk and cherish this unique natural spectacle. i have already had some very productive meetings here in tokyo, and i am looking forward to my discussion with you today. thank you for the invitation, mr misawa. we are here to talk about international challenges in financial regulation. to kick - start our discussion, i would like to give you my view from a european perspective. i was asked to talk about quite a few topics, so i decided i would start at the global level in the first part of my talk and then switch to the european level. at the global level, i will talk about basel iii and its implementation. at the european level, i will focus on the european banking union and its future development. 2. regulation at the global level : basel iii and its implementation let β s get straight down to business. what β s the global state of play in matters of banking regulation? not long ago, we reached a remarkable milestone. the basel committee on banking supervision β a body made up of supervisory authorities from 28 jurisdictions β worked since the onset of the financial crisis to find a global solution to the problems that brought about the crisis. in december of last year, the committee finalised basel iii β the global minimum standard that imposes limits on the risks that internationally active banks can take. important and far - reaching standards like that aren β t agreed upon every day β and luckily enough, many of you might be thinking. so we can rightly say that the finalisation of basel iii was a major achievement. however, we can β t rest on our laurels. good rules have little value if they β re not implemented properly. therefore, we must now take the next step and master the implementation of basel iii. i am a strong supporter of swiftly implementing the standard in the european union to make it a binding reality. and i very much expect all the members of | npl ratio in 2016 stood at roughly 1. 5 per cent on average. so the fundamental problem β the very heterogeneous distribution of npls across eu member countries β remains unsolved. therefore, we need to make further progress on this front before we can establish a european deposit insurance system. and our efforts need to go beyond preventing risks from building up in the future. we also have to cleanse balance sheets of existing stocks of npls. so far, the european central bank and the european commission have both only presented measures 3 / 4 bis central bankers'speeches aimed at improving risk provisioning for future npl flows. high and heterogeneous levels of npls are one key impediment to taking further steps towards a common deposit insurance scheme. another stumbling block is related to sovereign exposures on banks β balance sheets. due to regulatory privileges, sovereign exposures are not β or only thinly β backed by regulatory capital. furthermore, unlike other asset classes, there is no limit to the volume of sovereign bonds a bank can hold from its home country. this has forged a close link between the solvency of countries and the solvency of their domestic banking sectors. and this link is even closer today than it was before the financial crisis in 2008. regulatory reforms introduced since the crisis have focused on one side of this contagion channel : measures were introduced to reduce the risk that distress in the banking sector will spread to the public sector. contagion in the other direction β from sovereigns to banks β has not been addressed so far. as long as this remains the case, a european deposit insurance system should not be established, since it would indirectly insure sovereign default risks. it is thus all the more important to move forward at the european level and kick - start a paradigm shift to end the regulatory privilege that sovereign exposures enjoy there. the sooner we get this done, the sooner we can take the next step towards a common deposit insurance system in europe. but to reiterate once more : risk reduction needs to come first if we want to take the steps in the right order. we should not forget that we already have a system of national deposit insurance schemes in the eu which guarantees deposits up to 100, 000 euro. so there is no reason to take hasty decisions now that we might regret in the future. i have named four areas that we need to address : npls, sovereign exposures, insolvency regimes, and resolution | 1 |
##s are an important driver of product market reforms. 13 correct sequencing of reforms can also help β product market reforms can facilitate the subsequent implementation of labour market reforms. by eliminating barriers to entry, procompetition product market reforms can eliminate inefficiencies, in turn promoting higher economic activity and employment, and thereby offsetting possible short - term costs of later labour market reforms. but what about monetary policy? as it turns out, the literature says little about how monetary policy drives the reform process. one view is that an accommodative monetary policy stance may increase the room for manoeuvre of governments, allowing measures to offset some of the short - term costs of reforms. 14 but there are certainly some commentators who at present believe that the ecb β s unconventional measures are stifling incentives for reform. to answer this question, preliminary internal research at the ecb investigates the drivers of structural reform in 40 oecd countries over the past three decades. this research supports previous findings in the literature on the drivers of reform. on monetary policy, it finds that lower interest rates, if at all, tend to support rather than hinder the implementation of reforms. we also see this confirmed by anecdotal evidence in some larger euro area countries, which recently implemented some important labour market reforms. it seems, then, that we should put more weight on the former view. by acting in accordance with our mandate, namely to support activity to bring inflation back in line with our medium - term objective, the ecb is in fact also providing space for euro area governments to carry out the necessary structural reforms. it is a window of opportunity they should seize. conclusion let me conclude. the euro area faces a significant demographic challenge in the coming decades. reversing the decline in productivity growth and improving labour market outcomes are both required to meet 6 / 7 bis central bankers'speeches this challenge. without concerted effort on structural reforms, per capita income growth in the euro area is likely to stagnate, and may even decline. the welfare benefits of structural reforms extend beyond just protecting income per capita. the distributional impacts of lower unemployment and higher participation are positive. increasing potential output growth provides both monetary and fiscal policy more space to operate in. by breaking down barriers, reforms allow the full benefits of the single market to be realised, increasing economic cohesion and strengthening the monetary union. the ecb β s current monetary policy settings are designed to support activity to bring inflation | the disinflationary trend is also evident in both market and survey - based measures of inflation expectations, which have come down markedly at shorter horizons and are consistent with our target at longer horizons. the recent shocks not only drove inflation to record highs but also made macroeconomic forecasting especially challenging. looking at the euro area inflation 1 / 5 bis - central bankers'speeches forecast errors, we have observed two things. first, the absolute size of the errors has declined. and second, the errors have switched sign : inflation is now coming in somewhat below, rather than above, the projections. on the one hand, these developments highlight the lack of bias in the projections. on the other, they reveal a large uncertainty around the baseline projections. it is therefore essential that we do not look at the projections in isolation, but rather alongside incoming data. let me now turn to the second criterion. almost all indicators of underlying inflation are continuing to decline while the range has been narrowing. this confirms that the disinflationary process is under way. some of the measures are still high, however, as it takes time for the impact of past shocks to fully fade. domestic inflation β which is more wage - sensitive β has also been moderating but remains elevated and is now at the top of the range amid falling labour productivity and elevated wage growth in the context of a robust labour market. indeed, the unemployment rate is at its lowest level since the introduction of the euro β despite slowing labour demand and fewer vacancies being advertised more recently. but the impact of higher unit labour costs on inflation is being cushioned by lower unit profits. moving to the third criterion, our past policy rate increases continue to be transmitted forcefully into financing conditions. in the course of our current hiking cycle, the increase in bank lending rates has reached levels not seen since the launch of the euro. meanwhile, the weakening in credit has been stronger and faster than in past hiking cycles. bank lending conditions remain tight and lending flows are still weak, although the latest bank lending survey showed first signs that the net tightening of credit standards and a decline in loan demand are moderating. tighter financing conditions are also making their way through the economy by dampening demand, helping to push down inflation. and given the typical lags in monetary transmission, much of the economic impact of our past policy rate hikes will continue to materialise over time. financial stability the pass - through to economic activity poses challenges for vulnerable sectors. higher interest rates | 0.5 |
programmes of gear, for example to increase total saving in the economy, are being implemented with greater effect, the way will be paved for lower interest rates on a more durable basis. the contribution that monetary policy can make towards the attainment of maximum economic development and the creation of more employment opportunities is, after all, limited to the intermediate goal of maintaining a stable financial environment. attempts to use monetary policy for wider purposes or, more directly, to solve problems in the real economic sphere are bound to lead to an inflationary dead end. however sincere intentions might be, the inevitable result will eventually be lower growth and even less employment. - 13 - the policy of persisting with essential monetary disciplines in south africa at this difficult stage of general transformation is understandably being opposed in some circles, due to adjustment fatigue and frustrated expectations. it is imperative, however, for the sake of attaining higher economic growth of a more durable nature, to ensure overall financial stability that will also make access to the world financial markets easier for south african borrowers. this task demands the continuous implementation of monetary policies that will create a financial environment with low inflation, a sound banking system, and well - functioning financial markets. i wish to place on record my appreciation to minister trevor manuel, deputy minister gill marcus, ms. maria ramos, director - general of finance, and also all the officials in the department of finance, for their continued support and close co - operation over the past year. i thank my colleagues on the board of the bank for their undivided loyalty during difficult times. finally, thanks are also due to the three deputy governors and staff of the bank for keeping the many activities of the south african reserve bank at a level where the bank has come to be respected as one of the most efficient institutions of its kind in the world today. | rates with the international markets more difficult. at the long end of the spectrum, the yield on long - term government bonds in south africa seems to be on the low side in real terms. short - term interest rates, and particularly bank lending rates at the other end of the yield curve, seem to be high in south africa, reflecting negative expectations on inflation, high risks involved in more short - term lending to an already overborrowed community, and a relatively high demand for funds. the conservative monetary policy measures applied by the reserve bank over the past eighteen months have paid off by containing the increase in inflation to below 10 per cent, despite the pressures arising from the depreciation of the rand last year. measured over a period of twelve months, the rate of increase in the overall production price index rose from 5. 3 per cent in april 1996 to 9. 6 per cent in march 1997, but then declined to 7. 5 per cent in june 1997. movements in the consumer price index followed a similar path and the increase in consumer prices, measured over twelve months, rose from 5. 5 per cent in april 1996 to 9. 9 per cent in april 1997, before declining to 8. 8 per cent in june 1997. at the time of the depreciation of the rand in 1996, a much higher rate of inflation was predicted on the basis of previous experience. there is, however, no reason for complacency. as long as the south african rate of inflation remains significantly higher than that in the major countries of the world, the integration of south africa into the global financial markets will be slow and turbulent. in view of the complex interaction between the level of interest rates, the rate of inflation, and the exchange rate in the process of financial globalisation, disruptive adjustments will be demanded from time to time. this will continue to complicate decisions for investors and cross - border traders. participation in the process of financial globalisation ultimately requires a high degree of convergence between countries in these basic financial aggregates. the domestic levels for interest and exchange rates can no longer be determined by governments or central banks in isolation. these financial prices will indeed increasingly be driven by international market consensus. at this stage, the international market imperative requires of south africa to bring its rate of inflation gradually in line with the rest of the world. alternatively, the country β s drive towards greater participation as an important borrower of funds in the world financial markets will be constrained. furthermore, what | 1 |
to counteract this risk, but it is not possible to fully manage it away. thus, the fortunes of communities and their banks tend to rise and fall together. community banks must also manage concentration risks arising from their specialization in certain categories of lending. for example, larger banks have used their scale to gain a pricing advantage over community banks in volume - driven businesses such as consumer lending. this strategy, in turn, has exacerbated a long - standing trend toward a greater concentration of community bank lending in certain areas less dependent on volume, such as loans secured by commercial real estate. community banks will need to continue their ongoing efforts to prudently diversify their revenue sources. for purposes of these remarks, the terms β community bank β and β community banking organization β will be used interchangeably to refer to both banks and bank holding companies with total consolidated assets of $ 10 billion or less. bis central bankers β speeches like larger banks, community banks are also being affected by the state of the national economy. despite some recent signs of improvement, the recovery has been frustratingly slow, constraining opportunities for profitable lending. as i will discuss later, actual and prospective changes in the regulatory landscape have also raised concerns among community bankers. these headwinds notwithstanding, measures of the financial condition of community banks appear to have strengthened somewhat, suggesting that, for the most part, the industry is meeting its challenges. profits of smaller banks have risen for the past several quarters. although the ratios of nonperforming assets remain high in many cases, asset quality appears to be stabilizing, and bank provisions for loan losses are decreasing. in addition, capital ratios are steadily improving at community banks, in part due to increases in retained earnings and a greater ability to raise new capital. let me take this opportunity to mention one concern that is of particular relevance to the federal reserve : a common complaint on the part of some community bankers is that very low interest rates hurt their profitability by squeezing net interest margins. since the onset of the financial crisis, the federal reserve β s monetary policy has been accommodative, as you know. in particular, the federal funds target rate, which stood at 5 - 1 / 4 percent in mid - 2007, was lowered to a range of 0 to 1 / 4 percent by the end of 2008 and has since remained at that level. although these policies do not seem to have led to much change in aggregate measures of net interest margins, at least thus | ben s bernanke : community banking speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the future of community banking conference, sponsored by the federal deposit insurance corporation, arlington, virginia, 16 february 2012. * * * it is a pleasure to speak at the federal deposit insurance corporation β s ( fdic ) conference on the future of community banking. this conference is indeed an important and timely one. community banks make a critical contribution to the prosperity of both their localities and the nation as a whole, which is why we at the federal reserve and the other banking agencies are acutely interested in their long - term strength and viability. 1 today i will discuss the role community banking organizations play in supporting the health of our economy, as well as some of the challenges they face. because we greatly value our ongoing dialogue with community banks, i will also speak about the federal reserve β s efforts to improve our understanding of the pressures affecting community banks and to foster constructive supervisory relationships. the role of community banks in a challenging economy although community banks provide a wide range of services for their customers, their primary activities revolve around the traditional banking model β specifically, taking shortterm deposits to fund longer - term investments, such as small business, agricultural, or commercial real estate loans. accordingly, risks at community banks tend to arise from their lending, in the form of credit risk, interest rate risk, or concentration risk, rather than from the trading, market - making, and investment banking activities associated with the largest banks. however, by taking on and managing the risks of local lending, which larger banks may be unwilling or unable to do, community banks help keep their local economies vibrant and growing. importantly, community banks are well positioned to go beyond the standardized credit models used by larger banks and consider a range of factors when making credit decisions. in particular, they often respond with greater agility to lending requests than their national competitors because of their detailed knowledge of the needs of their customers and their close ties to the communities they serve. while community banks have certain natural advantages, they also face an array of challenges, stemming from both the current economy and, to some extent, from their business model. the close ties of community banks to local economies is a source of strength, as i mentioned, but those close linkages have drawbacks as well, most notably the resulting concentration of exposures to those same local economies. strong community banks take measures | 1 |
from atty. william villareal and director paul de jesus of pnas on numismatic pieces and counter - stamped coins. lastly, the bsp β s currency policy and integrity department will share reminders on the proper handling of banknotes and coins. on its part, the bsp has been working closely with partners like pnas to promote, protect, and preserve the country β s rich numismatic heritage through educational, cultural preservation, information sharing, and collections management initiatives. with more than 10, 000 numismatic pieces in our collection that date as far back as the prehispanic area, the bsp money museum serves as the main repository of the country β s rich numismatic history and heritage. built in january 1974 with the bank β s own currency holdings and donations from various 1 / 2 bis central bankers'speeches collectors, the museum is now nearing 50 years old and chronicles the rich and evolving national story in our banknotes and coins. before i end, i would like to invite the public to look into commemorative notes and coins for sale at the bsp store. these commemorative coins are minted in honor of a specific person or historical event β from the anniversaries of our national heroes to pope john paul ii β s visit to the philippines. just a few weeks ago, we released commemorative coins featuring general emilio aguinaldo, teresa magbanua, and mariano ponce. you can check the bsp website or browse through social media channels for available commemorative offerings. in closing, while the bsp is pushing for the transition to a digital - first and cash - lite economy, we will always look to our coins and banknotes as timeless reminders of our past and aspirations as a nation. they will remain curators of our history and custodians of our national identity. for it is only through an understanding of the past that we gain a deeper appreciation of how far we β ve come as a nation and craft a better path ahead. at this juncture, i now turn the floor over to professor ambeth. thank you and i wish everyone an insightful and productive session ahead. 2 / 2 bis central bankers'speeches | benjamin e diokno : opening remarks β β money talks - what every filipino should know about the history of philippine money β opening remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the virtual numismatic event, 11 november 2021. * * * to the philippine numismatic and antiquarian society ( pnas ), colleagues from the bsp, learners from state universities and colleges, fellows from knowledge resource networks and museums all over the country, friends from the media, and those who are watching us live from facebook, good afternoon. i am pleased to welcome you all to β money talks : what every filipino should know about the history of philippine money, β the first virtual numismatic event organized by the bangko sentral ng pilipinas in partnership with the philippine numismatic and antiquarian society. no less than proclamation no. 1486 series of 1975 declares november 17 β 23 of every year as national numismatic week and designates pnas to take charge of this national observance. but for too many of us, the coins and banknotes in our pockets are but a means to an end. we do not bother to look or even appreciate the intricate designs, security features, nor the vital historical moments captured in our money every time we take out our wallets to pay. but money plays an unquantifiable function outside of its textbook definition as a medium of exchange, unit of account, and store of value. over time, our coins and banknotes have served as a silent witness to history and human development β all the while it has changed hands and enabled transactions on a global scale. from exchanging physical goods through barter to the rise of gold and silver which gave way to paper and the modern - day new generation currency, philippine money has changed form and shape countless times throughout different historical periods. but in each of these transitions, our coins and banknotes never failed to capture and reflect vital historical scenes and figures. historian ambeth ocampo chronicles this storied journey in our coffee table book, yaman : history and heritage in philippine money, where he emphasizes, β filipinos have to be reminded that they carry history in their pockets. β today, professor ambeth will walk us through the history of money and how it plays into our unfolding story as a nation. we will also get to hear | 1 |
##el ; this makes no sense when resolution is carried out at parent company level. as regards the measures still needed to finalise the banking union, completing the resolution framework is, in my opinion, the first priority, even more so than deposit insurance, the third pillar of the banking union. mario draghi was most insistent on this in his florence speech of 11 may. i in most large jurisdictions β the united states, the united kingdom and japan β the intervention capabilities of resolution funds are not capped because they are backstopped by the fiscal authorities, without being a burden on public finances, since any public outlays are generally reimbursed by the private sector. during the last financial crisis, market and depositor confidence resulting from a credit line backstopped by the us treasury enabled the federal deposit insurance corporation ( fdic ) to resolve 500 banks without tapping into the resources of the safety net. ii today, in the event of a severe crisis in the european banking union, the resources of the single resolution fund ( srf ) could be depleted. this is why a common backstop for the single resolution fund is urgently needed. let me emphasise that the aim of a common backstop is not to bail out banks or draw on government budgets. such a step would only be taken in accordance with the principle of subsidiarity, and all the sums borrowed would page 5 of 6 be gradually repaid by the banking sector. rather, it is about building confidence in bank resolution in europe by showing that it will always be able to intervene effectively in the event of a crisis. such a system will also encourage the lifting of the constraints imposed by certain national authorities on capital and liquidity flows. i regard the european commission's proposal to set up a backstop through a credit line provided by the european stability mechanism ( esm ) as a top priority. we also need a common scheme for providing liquidity to financially sound banks after resolution which is in line with euro area monetary policy rules. of course, a compromise will have to be found in order to make headway on the third pillar of the banking union, deposit insurance. once we have completed the resolution framework, we will be less in need of a shared european scheme. a pragmatic approach could be to introduce a system of loans between national deposit guarantee schemes ( dgs ), with guarantee mechanisms to ensure that liquidity advances do not lead to losses for the lending dgs. this would lead to a sharing | . the acpr has since then actively participated in the work of the technical market risk group of the basel committee. the new rules proposed in the document currently submitted for consultation should permit a return to the impacts initially sought ex ante, i. e. an average increase of 20 % to 30 % in the minimum capital requirement for market risks. beside regulation β thus clarified β and microprudential supervision, macroprudential policies now round off in many countries the financial stability trifecta. in france, the acpr contributes actively to the discussions of the haut conseil de stabilite financiere ( high council for financial stability β hcsf ) chaired by the minister for the economy and finance. in the face of rapid and excessive growth in the debt of several large corporations, the hcsf has adopted a measure which comes into force on 1 july ; it imposes on french systemic banks a limit to their exposures to the most leveraged large non - financial resident corporations. the hcsf nevertheless remains vigilant in the face of the rapid increase in bank lending to the private sector, which stood at + 5. 5 % in the first quarter of 2018. french private debt reached 130 % of gdp at end - 2017, the highest of the large countries in the euro area. since 2014, it has risen by more than 9 % of gdp, while it has declined by 5. 4 % of gdp on average for the euro area. the hcsf stated on 29 march that it stands ready to act. in particular, if we have to decide, at our next meeting, on a countercyclical capital buffer, that would evidently not be in order to stop the lending today : it would be β as the name suggests β to avoid a credit crunch tomorrow when there is a cyclical downturn in the economy, particularly for small and medium - sized enterprises. should banks lack sufficient capital, they could manage the heightened risks thus materialising in their balance sheets by restricting new lending. it is this excessive credit cycle β the risk of β go and stop β seen during financial crises β that a moderate capital buffer must seek to smooth out. it should be noted in passing that a clear majority of member states of the european union have adopted other macroprudential measures page 3 of 6 to specifically limit residential lending, constraining households : in my view it is out of the question in france. ii. to reduce fragmentation and improve private risk sharing in | 1 |
nri. besides the other buzz - words of transparency, independence and integrity, what do these words entail? you may also ask why i continue to speak on this particular topic, as in my previous speeches. this is because i have seen in practice what good governance and accountability can do to an individual, an organisation and society as a whole. it is an important issue which should be given more prominence in our various training programmes and courses. i am glad that the β governance β topic in your course took up about 9 hours of your course programme and contributed 5 percent to your overall grade. this is a clear reflection of the importance of this issue in public policy and management. you can have the best policies and strategies but these may not work if good governance is missing in their implementation. and in png, we have had a poor record - but it is improving. the lack of corporate governance and accountability in many of our institutions has been an area of concern. our past history and record of management in papua new guinea, especially in public institutions which are guardians of the nation β s interests and wealth, has given rise to the need to reestablish proper procedures and order. the on - going work of the parliamentary public accounts committee, which is an attempt to instill accountability on the use and management of public resources, is commendable. so are the efforts of the ombudsman commission, the institute of directors, inc., transparency international and other organisations that aim to promote good governance and accountability. these institutions not only advocate the use of proper rules and guidelines in conducting business, but also the use of one β s good sense and due diligence. whilst it is one thing to have in place the best rules and regulations, it is another thing to practice them using common sense. the collapses of large companies abroad, some due to accounting fraud but others due to carelessness and neglect, highlight the need for diligence. closer to home, the turn around of the former png banking corporation, prior to its sale, other financial institutions that we supervise and pension funds ( case of npf ) from loss - making institutions to profitable ones in a short space of time was based on one thing alone ; the newly appointed board and management of these institutions ensured that everyone was diligent and followed the established rules and guidelines re - sounding good governance. the important lesson here is, do not take short cuts. as you all return to your workplace, it is | crawling peg or an exchange rate managed by a currency board - mostly peg their currency to the euro only or to a basket in which the euro predominates. 1 the trend to use the euro as an anchor currency is becoming ever stronger, as hungary β s recent move from a euro / us - dollar basket to a clean euro link within the framework of the country β s crawling peg regime shows, and will continue to strengthen further in the upcoming years. as a result, the euro will also gain importance as an intervention and reserve currency in the region. ladies and gentlemen, the central and eastern european countries which are involved in accession negotiations with the european union are confronted with the basic question of how economic and monetary union features in the overall context of enlargement. as far as we can judge today, we see the economic and monetary policy integration of the candidate countries proceeding in three steps. in a first step, the candidates will accede to the european union, then they will participate in the erm ii, the exchange rate mechanism of the union, and finally, they will introduce the euro as their national currency. let me concentrate primarily upon the first of these three steps, thereby focusing upon those tasks the candidate countries are facing today and will face in the near future. in the period leading up to accession, the applicant countries will be confronted with two challenges. first, the accession candidates will have to fulfill the economic conditions for membership in the european union, as defined by the european council in copenhagen back in 1993. these conditions consist in establishing a functioning market economy and attaining sufficient competitiveness to participate in the single market. fulfillment of these conditions will allow the accession countries to integrate successfully into the economic and monetary cooperation within the union just like those incumbent eu member states which have not yet entered the euro area for the time being. let me make very clear that fulfillment of the maastricht convergence criteria is not a prerequisite for membership in the european union. still, a reasonable degree of macroeconomic prudence is essential in the run - up to eu accession, as stability - oriented policies facilitate structural change and foster the catching - up process in central and eastern europe. in this context, it is important to underline that there are no institutional constraints on exchange rate policies during the preaccession period. any exchange rate regime is feasible during this stage, provided that it contributes to and is embedded in an overall set of policies that is sound and effectively geared toward stability. coming from austria | 0 |
of institutional investors from the long - term and / or illiquid segment of the credit market could reduce private and social benefits of long - term investing, and reduce the extent to which the industry mitigates the procyclicality of the financial system. these possible evolutions will have to be closely monitored. thank you for your attention. bis central bankers β speeches | tightening of monetary policy globally, both the extent and pace, has been unprecedented. without doubt, the ecb's rate increases are being transmitted forcefully to euro area financing and monetary conditions. however, the lags and the strength of transmission to the real economy remain uncertain. slide 2 recent events in the financial markets have heightened uncertainty, which may influence the transmission of monetary policy in the euro area, too. however, the euro area banking sector is resilient. the banks have strong capital and liquidity positions, well above the minimum requirements, and far above the levels prevailing before the global financial crisis. but of course we must remain vigilant to identify risks. my final point is on communication and forward guidance. i draw from research suggesting that central banks should never tire of communicating their objectives and outlining the elements of their monetary policy reaction functions. for the bank of japan, the recent decision to do a broad - perspective review of monetary policy will provide an excellent opportunity for such communication. when it comes to the ecb governing council, our communication guidance reflects the prevailing uncertainty. since march we have been providing information on the critical elements that we monitor in determining our data - dependent approach on policy rate decisions going forward. these elements are, firstly, an assessment of the inflation outlook in the light of incoming economic and financial data ; secondly, the dynamics of underlying inflation ; and thirdly, the strength of our monetary policy transmission. in our monetary policy stance, we have recently reached a point where rates are in restrictive territory. in my view, it is essential that we see a steady and sustained decline in underlying inflation before we start considering easing the policy again. the governing council has already made it clear that we will continue to follow this data - dependent approach to determining the appropriate monetary policy stance. the journey is not over yet. on that note, i shall conclude my remarks. i would just β finally β like to express my thanks for this opportunity to share my views with such distinguished fellow panelists. i look forward to our discussion. 2 / 2 bis - central bankers'speeches | 0 |
word of welcome by klaas knot, guug - cpmi - iosco hg workshop β de nederlandsche bank, 25 april 2017 welcome to you all here at de nederlandsche bank. welcome to this highly relevant workshop. today you β ll be paving the way for an optimal governance model for the unique transaction identifier, the uti. that β s quite a challenge. for without an effective and efficient governance we cannot ensure a globally consistent high quality of the data used in the industry. and high - quality data are just what the industry and regulators alike urgently need. since being a member of the financial stability board, i have become increasingly aware of this. for both the public and private partners attending today, i won β t need to stress the great benefit that high - quality data will bring. ever since the 2008 crisis, otc derivative counterparties have been facing a rise in the burden, and consequently, cost of mandatory reporting. a trend that is the effect of bad quality data. this trend can be reversed once we have utis in place, along with unique product identifiers, which will be briefly discussed as well today. for then a trade report will be suitable for use by various regulators as well as for micro - and macroprudential analyses. high quality data are independent of jurisdictions. if designed and implemented well, we can finally match transactions between counterparties on either side of the atlantic. supervisors with a microeconomic scope need high - quality granular data. and international regulators want the full picture, based on high - quality aggregated data. evidently, regulators and the industry both need financial data that are comprehensive in scope on the one hand and detailed enough, on the other. detailed enough for assessing and monitoring risks and vulnerabilities on the part of counterparties and on that of the financial system. high - quality granular data fit for aggregations can provide the analytical input policymakers require to make informed decisions. in order to serve this purpose, the data must have the right scope, be easily accessible and meet the highest quality standards. the legal entity identifier project is a case in point. finally, here β s a global register for identifying all counterparties active on the otc markets ; a register that can be used by both the industry and all regulators. so, ideally, the governance structure you are building today, should ensure we can continue to have usable and reusable high quality data. and once the | klaas knot : the outlook for inflation and monetary policy in the euro area speech by mr klaas knot, president of the netherlands bank, at the ubs european conference, 9 november 2021. * * * the outlook for euro area inflation has clearly improved over the past few months. after years of low inflation, the headline number has passed 4 % in october, for the first time in thirteen years. euro area inflation came from a lower pre - pandemic level than in the us, so this is a significant change. and in fact, after a prolonged period of deflation risks, the increase in inflationary pressures in the euro area is rather welcome. inflation will stay at current levels at least until the end of this year. my baseline view is that current levels of euro area inflation are largely transitory, and that inflation will fall below 2 % towards the end of next year. but upside risks to this baseline dominate. and we need to prepare for upside scenarios as well. let me elaborate a bit on this. there are three factors relevant for inflation in the future : transitory factors that we know will end at a specific date, transitory factors of uncertain length, and factors that affect inflation durably. an important example of the first type is the temporary reduction of the german vat - rate that ended in january of this year. it will drop from the inflation rate in january next year. this will lower core inflation in the euro area significantly from then onward. another example comes from oil prices, where past increases will filter out of the data after 12 months. oil prices were quite low one year ago and started rising almost continuously from there. this base effect will have a moderating effect on inflation in the months to come as well. this is the easy part. less easy are transitory factors of uncertain length. important in this category are the inflationary pressures from supply chain bottlenecks and future developments in energy prices. they both have a strong but transitory impact on headline inflation. at some point in time, bottlenecks will stabilize or even unwind. and energy prices will stop rising. but these transitory pressures are not necessarily short - lived. in fact, we have come to realize that the inflationary pressures from these sources last longer than initially thought. thirdly, for our assessment of durable inflation, future wage developments are crucial. the average unemployment rate in the euro area is at the same level as before the start of the pande | 0.5 |
an example of such a vote of confidence in doing business in fiji. bis central bankers β speeches i feel it would be pertinent at this stage to say a few words about credit corporation ( fiji ) limited or ccfl as we refer to it in the reserve bank. credit corporation ( fiji ) limited ccfl is a subsidiary of credit corporation ( png ) ltd and has been licensed here in fiji as a credit institution under supervision of the reserve bank, having started its operations in fiji in 1992, at gorrie street in suva. it has been serving the fiji market for over 21 years now, with a network of 4 branches, all located in the popular business centres around the country. the company now employs 44 staff with a customer base of more than 4000. ccfl has not only grown in presence, but also in size, from its initial investment of $ 1. 0 million, to an asset base of just over $ 101 million as at december 2012. while its asset size is smaller relative to other licensed credit institutions in the market, its performance has been remarkable, reporting one of the most favourable returns on assets and efficiency in the industry, during the 2012 financial year. the institution has had its share of operational challenges in the past, but somehow continues to show resilience in ensuring its fiji operations remain prudent and sound. we noted that in 2012, ccfl made a strategic decision to have additional provisions, resulting in a higher than normal provisioning charge against its profit. there is no better indicator of soundness for financial system supervisors like the reserve bank than seeing our licensed financial institutions taking their own initiative to be adequately provisioned and having a satisfactory buffer against any deterioration in the quality of their loan portfolio. such prudent measures are effective in meeting unexpected losses in times of crisis, such as in the aftermath of natural disasters, which remain a significant risk for all our lending institutions. fiji had experienced colossal losses of around $ 146 million attributed to natural disasters in 2012 ; with $ 71 million caused by the two major floods and an even greater loss of $ 75 million caused by cyclone evan. ccfl β s own namaka branch, along with other financial institutions in the area, were severely affected by these events. while all of them have undertaken refurbishment incurring significant costs in the process, the operational risk of being affected by floods in future remains. i have been told that it was this that initially prompted ccfl to purchase this piece of land in 2011. | the construction of this completed commercial property, which will now house the nadi branch, is indeed a mission accomplished. i understand that this is a non - flood prone area, but even so ccfl has taken the necessary steps to meet challenges faced during times of natural disasters equipping the site with backup water supply and power generators and improving safety for staff and tenants. the building has been designed with a modern, functional and efficient concept ; and the significantly larger floor space also intends to provide comfort to both customers and staff. with these state of the art features, we can definitely expect to see a lift in ccfl β s profile and visibility in the west. concluding remarks ladies and gentlemen, the opening of this new building is testament to the commitment of the institution to its customers and to the country, as it seeks to increase its facilitation of financial intermediation, and grow its investment in fiji. my warmest congratulations to the credit corporation team on the opening of this new building, and i wish you all the very best in your future endeavours. bis central bankers β speeches official opening i thank the board and management again for the invitation to be here today, and now have much pleasure in declaring credit corporation ( fiji ) limited β s new namaka building, open. vinaka vakalevu. bis central bankers β speeches | 1 |
bank measures announced ( 12th jan source : dealogic. data to end - december 2007 dec 2007 ). chart 5 : mortgage arrears and possessions rates chart 6 : household secured and corporate credit availability net percentage balances ( a ) easier credit corporate percentage greater than 3 months in arrears percent household secured 0. 9 0. 8 0. 7 0. 6 0. 5 0. 4 - 10 - 20 possessions ( lhs ) - 30 0. 3 0. 2 arrears ( rhs ) 0. 1 - 40 - 50 - 60 source : cml back cast data before 1994 tighter credit q2 q3 q4 q1 q2 q3 q4 q1 reported change, past three months expected change, next three months source : bank of england credit conditions survey chart 7 : quoted mortgage spreads chart 8 : mortgage product availability ( a ) thousands basis point spread to funding rate svr credit impaired prime bank rate tracker 5 yr fixed 2 yr fixed - 50 source : bank of england. ( a ) svr mortgages spread over one month lag of bank rate ; tracker mortgages spread over bank rate ; 2 yr, and 5 yr fixed rate mortgages spread over one month lag of 2 and 5 year swap rates. feb mar aprmay jun jul aug sep oct nov dec end dec source : moneyfacts. chart 9 : household saving ratio chart 10 : correlation between growth in house prices and consumption rolling ten - year correlation coefficient between real annual house price inflation and consumption growth 16 % 14 % 1. 0 0. 9 0. 8 12 % 0. 7 10 % 0. 6 8 % 0. 5 0. 4 6 % 0. 3 0. 2 4 % 0. 1 2 % 0. 0 0 % 1970 1975 1966 1971 1976 1981 1986 1991 1996 2001 2006 1980 1985 1990 1995 2000 2005 source : ons source : bank calculations. chart 11 : commodity prices chart 12 : general public inflation expectations us dollars per barrel index, 2000 = 100 economist food index ( rhs ) economist metals index ( rhs ) brent oil spot prices ( lhs ) 3. 2 bank / nop 3. 0 2. 8 2. 6 2. 4 2. 2 2. 0 1. 8 2000 2001 2002 2003 2004 2005 2006 2007 2008 source : datastream and bank calculations 1. 6 feb00 feb01 feb02 feb - feb03 feb05 feb06 feb07 source : bank | when the major banks wrote off about 2. 5 % of their domestic loan book and tightened credit conditions, thus exacerbating the fall in property prices and in confidence. it has been estimated that the effect of the tightening of credit conditions was to reduce uk output in 1991 by almost 2 % relative to what it would otherwise have been. 4 of course, there was little monetary policy could do at that time to offset these effects because of sterling β s erm membership. but the current crisis does not follow that pattern. it has come at a time when the performance of the uk economy has been unusually good. over the past fifteen years the economy has experienced the most stable macroeconomic conditions on record with steady growth, low inflation and a declining trend in unemployment. 5 for the most part the underlying balance sheet position of households and firms is robust and most indicators of financial fragility such as mortgage arrears, repossessions and corporate insolvencies are at low levels ( chart 5 ). so the question is whether we can reverse into macroeconomic trouble starting from a banking crisis with its origins in the us housing market. of course a marked slowdown in the us will diminish directly part of our exports. but two domestic transmission channels to consumption and investment will determine the size of the overall impact on our economy : β’ the effects of credit constraints ; and β’ impact on expectations and confidence. credit constraints with their own funding rates increasing and a reduction in their ability to distribute risk through securitisation, there is now clear evidence that uk lenders have begun to tighten lending conditions for households and firms. the bank β s credit conditions survey ( ccs ) of major uk lenders has identified a change in behaviour since the summer. 6 contrary to earlier expectations, lenders reported that the availability of secured credit to households had reduced noticeably over the three months to mid - december ( chart 6 ). corporate credit availability was also reported to have been reduced significantly over the same period. a further reduction in the general availability of credit was expected over the next three months. the survey suggests that lenders are both raising the price of borrowing and reducing the range of people and firms they are prepared to lend to. there has been a pick up in the average spread of quoted mortgage rates over the appropriate funding rate in recent months ( chart 7 ). there has also been a fall in the number of mortgage products available for creditimpaired borrowers ( chart 8 ). the | 1 |
making it easier for retirees to earn additional income and thus encouraging them to keep working. yet another area offering potential is the participation of women in the labour force, where improved conditions for balancing work and family commitments have already sent participation levels sharply higher. the difference between the ratios of women and men in employment has more than halved within the space of two decades, and the higher the level of education, the narrower the gap between women and men. however, there continues to be a much higher proportion of women who work part - time compared to men. almost half of all women work part - time, compared with just one in ten men. because age cohorts with a stronger tendency to work part - time will be larger, the average weekly working hours per employed person are likely to decline slightly by 2025. the potential number of hours worked, then, is likely to be somewhat lower, and this will likewise drag on potential growth in the german economy. the projected potential growth rate of just over ΒΎ % will originate primarily from productivity growth, where it is assumed that labour productivity will move at a less dynamic pace as demographic change makes itself felt. this means that productivity growth will mainly be propelled by technological progress. 5 / 7 bis central bankers'speeches one factor to be considered when it comes to labour productivity is that physical and cognitive capacities deteriorate after a certain age, though this can be offset by experience. as the saying goes : young people run faster, but seniors know the shortcuts. another factor is that as society ages, parts of the value added chain will shift from goods production to the services sector, moving chiefly into the long - term care sector. this also tends to dampen productivity growth, however, because experience has shown that service providers are less productive than the production sector. of course, potential output depends not just on the number of hours worked and labour productivity, but also on capital investment, and at the end of the day, demographic trends also impact on fixed capital formation. so the investment restraint observed in recent years might have something to do with the impending demographic change. put more simply : why should a company invest in new machinery if, looking ahead, it won β t have the employees it needs to operate this machinery? and wouldn β t it make more sense to invest in regions with more vibrant economies where the relevant end customers can also be found? it β s also worth considering the german economy β s high current account surplus in a demographic context. | , and this is mainly down to the demographically - induced decline in the number of hours worked. per capita growth looks somewhat better because of the shrinking population, but here again, germany ranks no better than mid - table compared with its european peers, according to the oecd. our economists β estimate of potential output i mentioned just now is based, then, on the best possible forecast of how the labour supply will develop in the years ahead. 4 / 7 bis central bankers'speeches notable shifts in the composition of the labour supply will be evident within the space of just a few years. the working - age population is a relevant factor for determining potential output. this labour force potential is defined relatively broadly, with ages ranging between 15 and 74. depending on which net immigration flows one assumes, this potential will pass its peak between 2020 and 2023. given cumulative net immigration of 2. 5 million people, the labour force potential in 2025 will be roughly as high as today β s. the age structure will have changed considerably, however. the number of people aged between 60 and 74 will have risen by more than three million, but the number of employed people will have increased by just one million, assuming that labour force participation in this age cohort remains unchanged. by contrast, the 45 to 54 age cohort will have fallen by 3Β½ million. because labour force participation is very high in this age group, the decrease will push down the labour force to almost the same degree. this can be blamed on the decline in the birth rate in the 1960s that i mentioned earlier, so it has long been expected. another population decline has been forecast, this time in the under - 35 age cohort, though much of this particular effect will be offset by immigration. migrants tend, on average, to be far younger than the existing population. one out of two migrants since 2010 has been aged between 20 and 30 years old. the strong influx of refugees to germany in 2015 even caused the average age of the population in germany to fall for the first time since reunification : from 44 years and four months to 44 years and three months. labour force participation will presumably continue to rise in certain age groups. increasing the statutory retirement age should therefore see to it that the actual age when people retire goes up as well. the proportion of physically demanding jobs is also on the wane, so older people will be able to stay in work for longer. the β flexi retirement β scheme launched this year is also | 1 |
overall economic climate, impacting on the improvement of the global economic activity, reduction of risk premiums and stability of global financial markets. however, the global economy and the european one continue to reflect economic vulnerabilities, which are transmitted to low inflationary pressures. this situation conditions also the pursuit of a stimulating monetary and fiscal policy by keeping interest rates at the historical low and by high liquidity injections. back to the domestic economy, we should state that the new economic data were insufficient during october. performance of inflation and of monetary and fiscal indicators, external trade data and consumer and business indices confirm that the albanian economy continues to record positive growth rates. this growth is sustained by maintaining steady levels of the consumer demand and fiscal stimulus given during 2009. however, available data from the economy speak for an economic activity slowdown during the current year. foreign demand for albanian products has decreased, being illustrated by export slowdown along this period, while investments have declined. the steady trend of core inflation and low non - traded inflation rate also indicate the presence of low aggregate demand - induced inflationary pressures in the country β s economy during january β october 2009. this performance has contributed to absorption of shocks generated from traded inflation, due to weakening of national currency β s position in the domestic foreign - exchange market. inflation during 2009 has fluctuated around the lower limit of the bank of albania β s target. headline inflation in october was 2. 3 percent, recording a slight rise in comparison to september, but resting below the record of the previous year. average annual inflation recorded 2. 1 percent, resting at the same level with that of september. parallel to demand factors, inflation performance is influenced even from the development of several supply factors, such as slight downward trend in the labour cost per unit, reduced import and producer prices, statistical effect of administered prices, thus creating an overall environment with reduced inflationary pressures. fiscal policy during the third quarter of 2009 has revealed signs of mitigating its expansionary nature. revenues have recorded a slight rise related to the previous months, while there is noticed a reduction in realised expenditure pace. in annual terms, during the first nine months of the year the budget revenues have recorded a growth of 6 percent, whereas the budget spending has increased by 22 percent. the budget deficit remains at comparably high historical levels, but within the budget limits reviewed lately. to a great extent, this deficit reflects the high level of public capital expenditures during 2009. public expenditures and fiscal policy | . this is a child & youth finance international ( cyfi ) initiative, with the support of the organisation for economic co - operation and development ( oecd ), and over 53 thousand institutions and organisations and over 32 million children and young people participate in this year β s edition. the slogan for this year is β learn. save. earn. β around this slogan, partner institutions organise awareness - raising and educational activities. as active participants in the money week activities, we have chosen to focus on educating the young people and encouraging them not to use the 1 / 2 bis central bankers'speeches outdated terms β new lek β β β old lek β in our day - to - day financial interactions. our slogan for this year is β too young to speak in old lek β this is the overarching theme for most of our contest categories. i take this opportunity to thank, on behalf of the bank of albania, all the participants and i exhort them to be an active part in the efforts for eliminating such outdated terminology. the bank of albania, with long - standing support from the albanian association of banks, and the precious support from the ministry of education, sports and youth, will organise a series of awareness - raising activities for children and young people on such topics. thus, during the week, a number of activities will be organised such as lectures, contests, visits to commercial banks and the museum of the bank of albania, aimed at involving as many students as possible. in all educational activities of the bank of albania, including these contests, we appreciate and encourage inspiration, originality and proactive thinking. the submitted projects for all the categories, whose winners are present today, feature all these elements. i take this opportunity to personally congratulate all of them for their qualitative works presented during the submission phase. their work and engagement are a source of constant inspiration for the bank of albania to introduce increasingly ambitious projects. the projects category targeted sixth graders, the photomontage category targeted ninth graders and the videos category targeted high - school students. the participation rate was very high, with around 340 students from 40 schools. i would like to extend my special thanks to the teachers and professors, whose commitment and passion is a key and necessary element for the realisation of these educational projects. lastly, i would like to thank you all for the insofar commitment, and invite all the participating institutions to continue the cooperation in the future, with a view to advancing our financial | 0.5 |
financial conditions take longer to normalize. the bank judges that these risks are roughly balanced. against this background, the bank lowered its policy rate by 50 basis points on tuesday to 1 per cent, bringing the cumulative monetary policy easing to 350 basis points since december 2007. guided by canada's inflation - targeting framework, we will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve the 2 per cent target over the medium term. low, stable, and predictable inflation is the best contribution monetary policy can make to long - term economic growth and financial stability. | mark carney : summary of the latest monetary policy report update opening statement by mr mark carney, governor of the bank of canada, at a press conference following the release of the monetary policy report update, ottawa, 22 january 2009. * * * good morning. we are pleased to be here with you today to discuss the january monetary policy report update, which we published this morning. the outlook for the global economy has deteriorated since the october monetary policy report, with the intensifying financial crisis spilling over into real economic activity. heightened uncertainty is undermining business and household confidence worldwide and further eroding domestic demand. major advanced economies, including canada's, are now in recession, and emerging - market economies are increasingly affected. commodity prices β especially energy prices β have fallen as a result of substantially weaker global demand. stabilization of the global financial system is a precondition for economic recovery. to that end, governments and central banks are taking bold and concerted policy actions. there are signs that these extraordinary measures are starting to gain traction, although it will take some time for financial conditions to normalize. in addition, considerable monetary and fiscal policy stimulus is being provided worldwide. canadian exports are down sharply, and domestic demand is shrinking as a result of declines in real income, household wealth, and confidence. canada's economy is projected to contract through mid - 2009, with real gdp dropping by 1. 2 per cent this year on an annual average basis. as policy actions begin to take hold in canada and globally, and with support from the past depreciation of the canadian dollar, real gdp is expected to rebound, growing by 3. 8 per cent in 2010. a wider output gap through 2009 and modest decreases in housing prices should cause core cpi inflation to ease, bottoming at 1. 1 per cent in the fourth quarter. total cpi inflation is expected to dip below zero for two quarters in 2009, reflecting year - on - year drops in energy prices. with inflation expectations well - anchored, total and core inflation should return to the 2 per cent target in the first half of 2011 as the economy returns to potential. global developments pose significant upside and downside risks to the inflation projection. on the upside, the global economy could be stronger, if global fiscal stimulus turns out to be more expansionary than expected, or if aggressive policy actions taken across major economies restore confidence more quickly than projected. on the downside, the global recession could be deeper and more protracted because | 1 |
##elerate gradually because the outlook factors in the government's economic measures and their waning effects, in addition to a weakening contribution from pent - up demand. there are extremely high uncertainties regarding the outlook. those that especially warrant attention are ( 1 ) developments in overseas economic activity and prices and in global financial and capital markets, ( 2 ) developments in the situation surrounding ukraine and their effects on the price of commodities, including grain, and ( 3 ) the impact of covid - 19 on the economy. in view of these factors, while there are upside and downside risks to the outlook, the bank assesses that risks are skewed to the downside for the time being. b. price developments turning to japan's price developments, the year - on - year rate of increase in the consumer price index ( cpi ) for all items less fresh food was 4 percent for december 2022 ( chart 8 ). in addition to higher energy prices, for goods, the pass - through of cost increases to selling prices has intensified for a wide range of items, especially food, daily necessities, and durable goods. the rate of increase in general services prices has also accelerated against the backdrop of an intensified pass - through of raw material costs, mainly for housework - related services, including services related to housing repairs and maintenance, as well as dining - out. such price increases have been triggered by a rise in import prices, reflecting high commodity prices and the yen's depreciation. however, what is distinctive about the current phase is the change in firms'price - setting stance. in japan, it had been difficult for firms to pass on cost increases to selling prices even when faced with a rise in input prices. however, this situation has started to change : firms - - even those that had taken a cautious stance toward changing their selling prices - - have sought price hikes, while their pricing decisions have been made in consideration of price setting by competitors ( chart 9 ). furthermore, according to the tankan ( short - term economic survey of enterprises in japan ), firms'outlook for output prices of their products for one year ahead has been higher than that for general prices in the most recent surveys. these mark the first time this has been observed since the launch of the survey in 2014, which can be viewed as indicating that firms'stance has shifted toward actively raising their selling prices. the rate of increase in the cpi is expected to decelerate toward the | ., % output gap ( left scale ) cpi ( less fresh food and energy, right scale ) - 2 - 1 - 4 - 2 - 6 - 3 - 8 cy07 - 4 s. a., % unemployment rate ( left scale ) labor force participation rate ( right scale ) cy07 note : in the left - hand chart, cpi figures are bank staff estimates and exclude mobile phone charges and the effects of the consumption tax hikes, policies concerning the provision of free education, and travel subsidy programs. figures for the output gap are bank staff estimates. sources : ministry of internal affairs and communications ; bank of japan. chart 14 prices and labor - management wage negotiations y / y % chg. actual base pay increase base pay increase demanded by labor unions cpi inflation - 1 - 2 cy 91 notes : 1. figures for cpi inflation are for all items less fresh food, excluding the effects of the consumption tax hikes, etc. 2. figures for actual base pay increase from 1991 to 2013 are those published by the central labour relations commission, while those from 2014 to 2022 are figures released by rengo. figures for the base pay increase demanded by labor unions before 2023 are calculated by subtracting seniority - related wage increases from the total increase in wages demanded. the figure for 2023 is from rengo's policy for the spring 2023 wage negotiations. sources : central labour relations commission ; japanese trade union confederation ( rengo ) ; ministry of internal affairs and communications. chart 15 modification of the conduct of yield curve control ( ycc ) impact of increased volatility in overseas markets deterioration in japan's bond market functioning relative relationships among interest rates of bonds with different maturities arbitrage relationships between spot and futures markets possibility of a negative impact on financial conditions yields on jgbs are reference rates for corporate bond yields, bank lending rates, and other funding rates. jgb yield curve ( before the december 2022 mpm ) 1. 6 % 1. 4 measures decided by the bank of japan conduct of ycc encourage a smoother formation of the entire yield curve significant increase in the amount of jgb purchases : from 7. 3 trillion yen per month to about 9 trillion yen per month expansion of the range of 10 - year jgb yield fluctuations from the target level : from around [UNK]. 25 % pts to around [UNK]. 5 % pts nimble responses for each maturity : - offer to purchase 10 - year jgbs at 0 | 1 |
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