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term, as money and credit growth continues to slow down. against this background, we expect price stability to be maintained over the medium term, thereby supporting the purchasing power of euro area households. as the transmission of monetary policy works with lags, we expect that our policy action will progressively feed through to the economy. hence, with all the measures we have taken, monetary policy has been supporting the availability of liquidity and the recovery of the euro area economy. looking ahead, and taking into account the improved conditions in financial markets, not all our liquidity measures will be needed to the same extent as in the past. accordingly, the governing council will make sure that the extraordinary liquidity measures taken are phased out in a timely and gradual fashion and that the liquidity provided is absorbed in order to counter effectively any threat to price stability over the medium to longer term. by so doing, the governing council will continue to ensure a firm anchoring of mediumterm inflation expectations. such anchoring is indispensable to supporting sustainable growth and employment and contributing to financial stability. accordingly, we will continue to monitor very closely all developments over the period ahead. as regards fiscal policies, many euro area governments are faced with high and sharply rising fiscal imbalances. if not addressed by a clear and credible exit strategy, this could seriously risk undermining public confidence in the sustainability of public finances and the economic recovery. the very large government borrowing requirements carry the risk of triggering rapid changes in market sentiment, leading to less favourable medium and longterm interest rates. this in turn would dampen private investment and thereby weaken the foundations for a return to sustained growth. moreover, high public deficits and debts may complicate the task of the single monetary policy to maintain price stability. the governing council therefore calls upon governments to communicate and implement in a timely fashion ambitious fiscal exit and consolidation strategies based on realistic growth assumptions, with a strong focus on expenditure reforms. tax cuts should only be considered over the medium term, when countries have regained sufficient room for budgetary manoeuvre. in this regard, the recent ecofin council conclusions, which call for consolidation to start in 2011 at the latest and to go well beyond the structural benchmark of 0. 5 % of gdp per annum, represent the minimum requirement for all euro area countries. the success of fiscal adjustment strategies will also depend crucially on the transparency of the budgetary procedures and the reliability and completeness of government finance statistics. this is an | benoit cΕure : central banking, insurance and incentives speech by mr benoit cΕure, member of the executive board of the european central bank, at the ecb conference : β debt, growth and macroeconomic policies β, frankfurt, 6 december 2012. * * * i wish to thank florian heider and oreste tristani for their contribution to this speech. i remain solely responsible for the opinions contained herein. ladies and gentlemen, it is a pleasure to be here with you tonight. the underlying theme of this conference is the aftermath of the financial crisis. papers on the implications of debt overhang, on the interaction between private and public indebtedness and on the sovereign debt crisis feature prominently in the conference programme. the aftermath of the financial crisis, which i will focus on tonight, however, has to do with the changes in the nature of monetary policy operations. central bank liquidity has increased dramatically over the past few years. β unconventional β or β non - standard β measures have been deployed in all the main industrial countries. at the ecb, such measures have always aimed at improving the transmission of standard policy decisions, but they have assumed different forms over time. in the first phase of the crisis, they were mainly aimed at banks with the objective of preventing a collapse of the interbank market. as the financial crisis has evolved into a sovereign debt crisis, we have stepped up the size of our operations with banks, and we have also aimed at removing redenomination risk from government bond markets through the decision on outright monetary transactions ( omts ). as a monetary policy - maker, i am convinced that these measures were necessary to prevent the financial crisis from having further adverse consequences on both the financial system and on the macro economy and therefore, ultimately, on medium term price stability. a freezing - up of the interbank market could have caused a credit crunch and a downward spiral in asset prices. the money supply would have shrunk. the ensuing collapse in aggregate demand would have put downward pressure on prices. a great depression scenario could have occurred. the same scenario could materialise at local level in case of fear that countries could leave the euro, and severely hamper our ability to deliver price - stability. thanks to our non - standard measures, central bank liquidity has proved to be an effective insurance mechanism against the risk of an economic disaster. providing insurance can, however, generate perverse incentives. knowledge of the existence of a safety net can encourage imprud | 0 |
at national level more complex and sometimes open to question. it is likely that the expansion of the committee to the leading emerging economies, which was also inevitable, had a similar effect. today there are about 30 member countries, and they differ from each other much more than the initial group of countries did. 2 / 8 bis central bankers'speeches the first agreement, implemented in the main jurisdictions in 1992, marked a shift from β structural β supervision, in many countries ( including italy ) based on authorisations and administrative controls, to the β prudential β kind. since then, the aim of ensuring the sound and prudent management of banks has mainly been pursued by requiring bank to maintain a minimum ratio of capital to risk - weighted exposures, rather than through direct and discretionary action by the authority. basel i divided credit exposures into four broad classes, with coefficients increasing as the counterparty β s theoretical riskiness rose. this was meant to provide banks with sufficient resources to withstand unexpected losses, and discourage excessive risk - taking. in italy, the transition from structural to prudential supervision was marked by the new consolidated law on banking. there were two main shortcomings to basel i : ( i ) it only covered credit risk ; and ( ii ) the weighting scheme was insufficiently granular, as it was based merely on the legal nature of the counterparty and made no attempt at approximating borrowers β risk at the individual level. in order to surmount the first shortcoming, the market risk amendment was adopted in 1996. it introduced minimum requirements for market risks and included a new class of capital instruments for coverage ( β tier 3 β ). the mra also marked a conceptual turning point : faced with the variety and complexity of the statistical and mathematical tools needed to assess market risk, banks were allowed for the first time to use their own internal models to calculate their capital requirements, subject to validation by the supervisory authority. basel ii sought to remedy the second shortcoming by introducing the three - pillar framework of rules that is still in place. the first pillar provides for quantitative capital requirements in relation to three risk categories ( credit, market and operational risk ) ; banks can compute the requirements using either a standardised approach or their own internal models. the second pillar, which is of a more qualitative nature, requires banks to have their own risk assessment and capital adequacy control process, and entrusts the supervisory authority with the task of verifying | of the european continent. a small island with a part of it under occupation, thrives thanks to its extroversion and its people, who despite having been put to the test so many times in the past, have never stopped creating, evolving and moving forward. i have no doubt that together with our european partners we will take all the necessary actions to overcome this challenge as well, guided by our common core values and principles. as the great french novelist victor hugo said, " changez vos opinions, gardez vos principes ; changez vos feuilles, gardez intactes vos raciness " " change your opinions, keep to your principles ; change your leaves, keep intact your roots ". here in cyprus we often say that " a captain is proven capable when she is in a storm ". and hence, i consider ourselves lucky since our ecb captain steering us through both the covid and geopolitical storms is christine lagarde, a leader of undoubted capacity and experience, whom i thank again for being with us today and would like to invite her to the podium to share her thoughts with us. 3 / 3 bis - central bankers'speeches | 0 |
had anticipated in the years before the recession. implications for our thinking about the macroeconomy i have focused most of my remarks on the experiences of households at the lower ends of the income and wealth distributions, those households whose incomes improved the least in the years prior to the financial crisis and that suffered disproportionately as a result of the crisis and ensuing recession. to be clear, my approach of starting with inequality and differences across households is not a feature of most analyses of the macroeconomy, and the channels i have emphasized generally do not play key roles in most macro models. the typical macroeconomic analysis focuses on the general equilibrium behavior of β representative β households and firms, thereby abstracting from the consequences of inequality and other heterogeneity across households and instead focusing on the aggregate measures of spending determinants, including current income, wealth, interest rates, credit supply, and confidence or pessimism. in certain circumstances, this abstraction might be a reasonable simplification. for example, if the changes in the distribution of income or wealth, and the implications of those changes for the overall economy, are regular features of business cycles, then even an aggregate model without an explicit focus on distributional issues would capture those historical regularities. however, the narrative i have emphasized places economic inequality and the differential experiences of american families, particularly the highly adverse experiences of those least well positioned to absorb their β realized shocks, β closer to the front and center of the macroeconomic adjustment process. the effects of increasing income and wealth disparities β specifically, the stagnating wages and sharp increase in household debt in the years leading up to the crisis, combined with the rapid decline in house prices and contraction in credit that followed β may have resulted in dynamics that differ from historical experience and which are therefore not well captured by aggregate models. how these factors have interacted and the implications for the aggregate economy are subject to debate, but i have laid out some possible channels through which there could be effects and that i believe represent some particularly fruitful areas for continued research. see steven j. davis and till von wachter ( 2011 ), β recessions and the costs of job loss, β brookings papers on economic activity, fall, pp. 1 β 55. see jesse rothstein ( 2012 ), β the labor market four years into the crisis : assessing structural explanations, β ilrreview, vol. 65 ( july ), figure 11, p. | for the median income family. this less rosy perspective on the current state of the economy was suggested by several members of congress during the recent oversight hearings on monetary policy. i think the point is an important one and i agree that we should not let the recent favorable performance of inflation, unemployment and equity prices distract our attention from the importance of confronting a slow average rate of increase in living standards and lingering social problems that both reflect and are exacerbated by a widening in income inequality. however, other than through its pursuit of its legislative mandates of price stability and maximum sustainable employment, monetary policy cannot make a major contribution to the resolution of these problems. monetary policy, in particular cannot remedy increases in income inequality, raise the trend rate of increase in living standards, or combat inadequate opportunities for upward mobility out of poverty. it is, as always, important that we carry out our traditional responsibilities well, accommodating the maximum sustainable growth and achieving the maximum sustainable level of employment. but we cannot do more. regularities the second challenge is to explain why performance has been so favorable, at least in terms of inflation and unemployment. before exploring explanations of the puzzle, i want to focus on common features of cyclical expansions. in doing so, i will focus on cyclical expansions that have not been dominated by dramatic external shocks, such as the two episodes that were marked by steeply rising world oil prices - - first in the early 1970s and again in the late 1970s and early 1980s. while even these expansions share many of the patterns i emphasize later, their endings are dominated by the effects of the powerful supply shocks and policy responses to the shocks. expansions, by definition, begin with considerable economic slack, inherited from the previous recession. the economy typically makes a rapid transition from declining output ( the definition of recession ) to above - trend growth. in a loose way, trend growth refers to the growth in the economy β s productive capacity. when growth is above trend, production is expanding faster than the economy β s - 4productive capacity and, as a result, resource utilization rates rise. rising capacity utilization rates and falling unemployment rates are thus a typical feature of an expansion period. the natural dynamic of an expansion is for above - trend growth to continue until demand overtakes capacity, despite the best efforts of policy to avoid cyclical excesses. the end of the story is particularly important. expansions do not die of old age or lethargy, a spontaneous weakening | 0.5 |
mark carney : summary of the latest monetary policy report opening statement by mr mark carney, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, 19 january 2011. * * * good morning. tiff and i are pleased to be here with you today to discuss the january monetary policy report, which the bank published this morning. the global economic recovery is proceeding at a somewhat faster pace than the bank had anticipated, although risks remain elevated. private domestic demand in the united states has picked up and will be reinforced by recently announced monetary and fiscal stimulus. european growth has also been slightly stronger than anticipated. however, ongoing challenges associated with sovereign and bank balance sheets will limit the pace of the european recovery and are a significant source of uncertainty to the global outlook. some emerging markets have begun to implement more restrictive policy measures in response to overheating in their economies. the effectiveness of these policies will influence the path of commodity prices, which have increased significantly since october. the recovery in canada is proceeding broadly as anticipated, with a period of more modest growth and the beginning of the expected rebalancing of demand. the contribution of government spending is expected to wind down this year, consistent with announced fiscal plans. stretched household balance sheets are expected to restrain the pace of consumption growth and residential investment. in contrast, business investment will likely continue to rebound strongly, owing to stimulative financial conditions and competitive imperatives. net exports are projected to contribute more to growth going forward, supported by stronger u. s. activity and global demand for commodities. however, the cumulative effects of the persistent strength in the canadian dollar and canada β s poor relative productivity performance are restraining this recovery in net exports and contributing to a widening of canada β s current account deficit to a 20 - year high. overall, the bank projects the economy will expand by 2. 4 per cent in 2011 and 2. 8 per cent in 2012 β a slightly firmer profile than had been anticipated in october. the bank continues to expect that the economy will return to full capacity by the end of 2012. underlying inflationary pressures remain subdued, reflecting the considerable slack in the canadian economy. core inflation is projected to edge gradually up to 2 per cent by the end of 2012, as excess supply in the economy is slowly absorbed. inflation expectations remain well - anchored. total cpi inflation is being boosted temporarily by the effects of provincial indirect taxes, but is expected to converge to the 2 per | and risks. it is not enough to look at individual business lines or products, but we should continue to focus on enterprise risk management that reflects each business and the interdependencies among them. moreover, supervisors should be dynamic and continue to evolve as the supervised firms do. finally, supervisors should continue to develop an industrywide, macroprudential perspective to understand the impact of the continuing evolution of the u. s. financial industry. to do this, supervisors need to continue to leverage our cross - firm, horizontal perspective to better understand how the industry is evolving and what it might mean for our objectives around safety and soundness of individual firms and the efficient provision of financial services for the economy as whole. 1 i would like to thank nicola cetorelli, bev hirtle, michael holscher, anna kovner, paul licari, jackie mccormack, siobhan sanders, joao santos, katherine tilghmanhill, and james vickery for helpful discussions and analytical work. 2 see getting it right : factors for tailoring supervision and regulation of large financial institutions, randal k. quarles, july 18, 2018. 3 see lessons from the financial crisis, william c. dudley, november 6, 2017, for reviews from a regulatory perspective ; early observations on improving the effectiveness of post - crisis regulation, randal k. quarles, january 19, 2018. federal reserve board, consolidated supervision framework for large financial institutions, december 17, 2012. 5 the latest ccar results can be found at www. federalreserve. gov / supervisionreg / ccar. htm. see dong choi, michael r. holcomb, and donald p. morgan, bank leverage limits and regulatory arbitrage : new evidence on a recurring question, federal reserve bank of new york staff report # 856 for evidence of risks - shifting in response to the imposition of the supplementary leverage ratio in the u. s. 7 see andrew g. haldane, β multi - polar regulation, β international journal of central banking, june 2015, 11 ( 3 ), 385 β 401 ; β strengthening and streamlining bank capital regulation, β robin greenwood, sam hanson, jeremy stein, and adi sunderam, brookings papers on economic activity, 479 β 565, fall 2017 ; β bank capital allocation under multiple constraints, β tirupam goel, ulf lewrick, and nikola tarashev | 0 |
sabine lautenschlager : banking regulation and supervision β you can't have one without the other speech by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, at the 9th annual efr stakeholder round table on & quot ; financial fragmentation or integration & quot ;, brussels, 22 march 2018. * * * the financial crisis showed what can happen when banks are not safe and sound. so the goal is to make banks safe and sound, and avoid future crises. to that end, we have revamped regulation, and we have strengthened supervision. it β s indeed vital to work on both fronts. without supervisors, rules would have little effect ; without rules, supervisors would have no job β or at least no firm basis for doing their job. you can β t have one without the other : regulation and supervision need to be aligned. but are they? let us take a look at the euro area. in 2014, banking supervision was transferred from national to european level. and since then, we β ve achieved a lot. however, we could do more, and that brings me to regulation. how european is regulation? well, it β s true, of course, that there is a single rulebook. but by and large, regulation in europe remains fragmented to a degree that makes it hard to reap the full benefits of european banking supervision. and the problem starts with the scope of that supervision. large investment firms and thirdcountry branches are still not covered by it. this situation should be changed to restrict regulatory and supervisory arbitrage. then there are the options and national discretions contained in european regulation. some of them are still exercised differently across the euro area. it β s up to legislators to harmonise them. the same is true for fit and proper assessments. the rules here are also very diverse. and finally there are the tools for crisis management. we still have no common approach to such things as insolvency laws and moratoriums. this too needs to change. likewise, the rules for early intervention measures need to be streamlined. all this begs the question : is the banking union living up to its full potential? i would say : it β s not, at least not yet. but it could if the rules were further harmonised. now let β s turn to the global level. with basel iii finalised, | . financial services are rapidly expanding over years due to the financialization of economic activities, larger global economic integration, extended use of information technology, and liberalization of foreign exchange regimes. although this industry is highly regulated, ethical lapses do occur, and there are reasons why these misdeeds may happen. first, self - interest sometimes translates into greed and selfishness. this greed becomes a kind of accumulation fever and if accumulation becomes the addiction, there β s no end of it. second, we too often reduce everything to an economic entity and say that the fundamental purpose of a business is to make money, maximize profit, or β maximize shareholder value β, or something like that. the recent financial crises have revealed that the elements of greed, followed by unethical practices, and excessive risk taking unobserved by the regulators have been instrumental to destabilize the global financial system and a lot of question has been raised on the efficiency, rationality, and morality of those involved in financial services. the professional ethics of the board members, senior executives, supervisors, valuators, surveyors, auditors, rating agencies, brokers, and market makers relating to financial institutions and services has often come to question following the systemic failure of the financial service industry in the recent past. as legal provisions are never enough in order to fully address unethical practices, professional ethics has to be maintained if a socially responsible financial industry is to foster. distinguished participants, ladies and gentlemen, while we are talking about business ethics for a prosperous nepal, we have to think of happiness, dignity, wellbeing, and an enlightened citizenry. prosperity necessitates economic development which comes from economic growth and a fair distribution of income, assets, and opportunities. high economic growth requires investment ; and in a country like ours, we need a lot of foreign investment. if there is an unethical practice in the judiciary, in the government, and in the professional jobs like project appraising, accounting, auditing, rating, valuating, surveying or agency functioning, it would be difficult to mobilize foreign resources for higher economic growth. even international trade can be adversely affected if unethical means are applied to produce goods and services meant for exports. overall, prosperity earned by unethical means would fall short of happiness and social justice. let me conclude by saying that doing socially responsible business leads toward ethical business practices. doing things legally is necessary but not sufficient for | 0 |
the time. helo had been appointed ambassador in the new wave after the war as one of the so - called six. 2 helo's relations with the foreign minister were difficult, but paasikivi protected helo right until the end of his period of office. according to brotherus, the foreign minister even went as far as asking the french ambassador in helsinki to cancel schuman's planned visit to finland. paasikivi does state in his diaries that the foreign minister, torngren, said on 24 march, in connection with his weekly visit, that the foreign trade association wanted to make a big event out of schuman's visit, but that the government was not interested in organizing any dinner reception or in devoting any other particular attention to schuman. despite the awkwardness of the arrangements, schuman came to finland on a visit in april, three months after he had left the government. schuman's visit was given enormous coverage in the press. in his presentation schuman stressed that all wars had had their beginnings in precisely six states. " by defusing this hotbed of war, we have done something really fundamental for peace in europe, " he stated. the government did not in fact organize a dinner or devote any particular attention to schuman, unless one counts the supper invitation by social affairs minister, vaino leskinen, at the helsinki community hall, where schuman was to meet some trade union people. president paasikivi was, however, present at schuman's presentation and also had an audience with him. paasikivi wrote in his diaries about the pleasant impression schuman had made on him. schuman believed that the antagonism between france and germany would gradually be removed and that the coal and steel community would be a step towards this. paasikivi went on : " i explained the six is the name given to an opposition group of social democrats who left the party and allied themselves with the communists in the elections after the war. my own view and the position of finland. he understood it well. schuman is indeed an intelligent and charming man ". it was typical of the period that pravda reported on the visit a week later. according to pravda, schuman's visit was undeniably connected with the discussions, which the right - wing socialists had launched, against stepping up trade between finland and the | fund greater future pension expenditures. this last would require both an increase in public saving ( reducing budget deficits and raising the share of capital expenditure ) and an expansion of the private pillar. some of these options have the normative appeal that the current workforce shares part of the burden with future taxpayers. in particular, policies to raise the age at retirement and increase current savings seem preferable, at least for italy, given that in the future people will not only live longer but will also be active and healthy longer. 7 moreover, such policies are likely to increase potential gdp and this will help to alleviate the financial consequences of ageing. morcaldo ( 2007 ). the often overlooked fact that the returns achieved in a funded system depend on demographic developments has been highlighted among others by mirrlees ( 1997 ) and the pension commission ( 2004 ). see also visco ( 2002 ). unfortunately, this does not mean that health - related expenditures will be less burdensome. on one hand, scientific and technological progress in the medical field will probably make more disease curable and lead to higher overall expenditures. on the other hand, a large part of medical expenditures is in any case incurred in the very last years of one β s life. all in all, there is a growing consensus among experts and policy - makers that lengthening the average working life and increasing pre - funding are essential to any credible strategy to meet the challenges of ageing. to increase the effective age of retirement, it is important to reduce the disincentives to work embedded in social security rules. payg systems are often not neutral with respect to the retirement decision. indeed, in many social security systems workers β pension wealth ( i. e. the discounted value of future pension payments ) decreases with age at retirement, generally because of the weak linkage of benefits to lifetime contributions. the ndc system introduced in italy in 1995 should offset this distortion, as benefits depend on past contributions and on expected longevity at retirement. however, the new system is being phased - in very slowly. other potential interventions relate to the labour market, for example offering broader training opportunities to older employees, increasing flexibility in age - earnings profiles and improving on employment arrangements. if we enlarge our framework to account for uncertainty and move beyond the distinction between funded and unfunded pension schemes, a second distinction comes to the fore, namely that between defined contribution ( dc ) and defined benefit ( db ) systems. the two distinctions are independent of one | 0 |
they assume risk by choice and not by chance is value enhancing. however, hedging through market instruments results in a redistribution of risks. ideally, if this redistribution is done on the basis of a scientific appraisal of the optimal level and combination of risks for each entity it may result in an overall reduction of risks at the macro level. but the economy as a whole would still be exposed to risks. also, for proper functioning of hedging products it is essential that expectations about the risk variable should be heterogeneous. if price movements are unidirectional for a long time, protection sellers demand large premium from protection buyers. apart from the above, there are more subtle issues concerning risk management. it is well - known that markets flagrantly violate some of the postulates and assumptions of traditional mathematical finance. the volatility of financial prices and the tendency of this volatility to occur sometimes in episodes generally unrelated to any clearly exogenous news about fundamentals has been a subject of research for a long time in behavioural finance. the behavioral dimensions of risk management and hedging have attracted much attention in the recent years among academics and researchers. among other things, hedging decisions of any entity are influenced by two important factors : ( a ) stance of the competitors in this regard ; and ( b ) anomalies of human behaviour. the latter - mentioned aspect is significant : most often entities do not always have the intellectual or emotional impulse to take on risks and deal with them before they impinge on performance and it is too late. many do not feel the same way when they buy a luxury car and when they buy insurance for the same car. when we are educated to risk management possibilities, we become aware of the rich potential that finance has for improving human welfare, but we do not find it emotionally easy always to take advantage of this potential. experienced traders know it too well how difficult it is at times to quit a loss - making position. the field of risk management needs to design its methods to minimize the human weakness in risk management. finally, have adoption of risk management and use of risk mitigation products made the financial markets a safer place than before? it is a tough call to take. in a recent interview, professor robert merton, who along with myron scholes and fischer black invented the famous option pricing formula in the early 1970s, reportedly said, β the real story is not what happened to ltcm in 1998 but | β risk engines β ; they take risks, they transform them and they embed them in their products and services. there are powerful motives for banks to implement risk - based practices ; to provide a balanced view of risk and return from a management point of view, to develop competitive advantages and to comply with regulatory requirements. as is the case globally, banks in india have a very special role to play in promoting better risk management standards and practices. being the chief repositories of credit risk, the quality of their loan assets depends critically on how effective the risk management policies, processes and procedures of their borrowers are. among their borrowing clients themselves, there would be differentiated risk - bearing expertise and hence banks are expected to provide professional advice to their clients on risk management. thus, banks have good business reasons for acquiring specialization and professional expertise in risk management. this would, however, be possible only if banks themselves are good managers of their own risks. there is another related issue, albeit a slightly deeper one. in contrast to the capital market, banks are privy to much more wide and rich information in respect of their clients. while the comparative advantage of banks in intermediating financial resources hinges on their being able to enjoy economies of scale and scope in acquiring and processing information in the first place, a relevant issue in this context is whether this information is being put to optimal use for managing risks, both at the level of individual banks and also at the aggregate level. although it is early days to assess the effectiveness of the institutional mechanism provided by credit information bureaus for the pooling of critical borrower information for common use within certain important safeguards, the importance of more intensive and extensive use of information hardly needs to be overemphasized. further, as the economy grows and new types of activities and enterprises appear on the scene, it would be an imperative for banks to be able to assess the risks associated with such activities and enterprises. as is the case elsewhere, this will also critically depend on collection and analysis of all relevant information. business approach to risk management risk management is an integral part of the overall business planning and management and not something on the fringes or β add on β. when rbi introduced the asset liability management ( alm ) framework in 1999, it was viewed by some banks initially as an exercise for finding out maturity mismatches or re - pricing mismatches. it was only when banks began compiling alm statements that they realized the benefits of pursuing pro - active | 1 |
stability for the australian economy overall. we can β t know whether this scenario of higher but more variable income growth will come to pass. but if it did, how should we respond? we could simply accept higher variability, if that comes, as the price of higher average income growth. that would see higher variability in demand in the economy, which would have its own implications, not least that it could make it harder for macroeconomic policies to foster stability. another approach would be to reflect the higher income variability in our saving and portfolio behaviour rather than our spending behaviour. we could seek to smooth our consumption β responding less to rises or falls in income with changes in spending and allowing the effects to be reflected in fluctuations in saving. in the most ambitious version of this approach, we could seek to hold those savings in assets that provided some sort of natural hedge against the variability of trading partners, or whose returns were at least were uncorrelated with them. of course, such assets might be hard to find β the international choice of quality assets with reasonable returns these days is a good deal more limited than it used to be. it is possible that this behaviour might be managed through the decisions of private savers. there might also be a case for some of it occurring through the public finances. that would mean accepting considerably larger cyclical variation in the budget position, and especially considerably larger surpluses in the upswings of future cycles, than those to which we have been accustomed in the past. there would also be issues of governance and management of any net asset positions accumulated by the government as part of such an approach, including whether it should be, as some have suggested, in a stabilisation fund of some sort. these are pretty big questions and addressing them would not be straightforward, so i am not going to attempt that tonight. the point simply is that, in the face of what appears to be a very big event in our terms of trade, these issues are deserving of consideration β perhaps by ceda, among others, as you enter your sixth decade. conclusion as i said at the outset, we have grounds for confidence in the future of our country, just as at ceda β s beginning 50 years ago. recent performance, not to mention the economic opportunities in our time zone, has helped to strengthen our confidence. but it would be a mistake to rest on recent achievements, as significant as they have been, and to fail to press on in our efforts to do better. | around that outcome, with an increase in the frequency of extreme temperatures. this volatility is highlighted in the first graph in the recent bureau of meteorology ( bom ) and csiro report,. the report states that β australia β s climate has warmed by just over 1 degree c since 1910, ', and expects further warming over the next decade. [ 3 ] these extreme events may well have a disproportionately large physical impact. heat events state of the climate leading to an increase in the frequency of extreme https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 03 - 12. html 2 / 10 3 / 13 / 2019 climate change and the economy | speeches | rba there is also a greater possibility of compound events, where two ( or more ) climatic events combine to produce an outcome that is worse than the effect of one of them occurring individually. combined with the increased volatility, this increases the likelihood of non - linear impacts on the economy. both the ipcc and the bom / csiro reports highlight the changed environment that the economy will need to adapt to. they also provide evidence on what change is predetermined and what can be affected by actions to strengthen the global response to the threat of climate change. these issues are central to businesses, households and government. the policy environment has a key effect as well as the climatic environment. it is worth noting that the effect on the australian economy is not just a function of the domestic political environment, but also that of other countries, most notably our trading partners. i will return to this later. climate change, economic models and monetary policy the economics profession has examined the effects of climate change at least since nobel prize winner william nordhaus in 1977. since then, it has become an area of considerably more active research in the profession. [ 4 ] there has been a large body of research around the appropriate design of policies to address climate change ( such as the design of carbon pricing mechanisms ), but not that much in terms of what it might imply for macroeconomic policies, with one notable exception being the work of warwick mckibbin and co - authors. how does climate affect monetary policy? monetary policy's objectives in australia are full employment / output and inflation. hence the effect of climate on these variables is an appropriate way to consider the effect of climate change on the economy and the implications for monetary policy. the economy | 0.5 |
alan greenspan : the euro as an international currency remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, before the euro 50 group roundtable, washington, 30 november 2001. * * * today i would like to address some of the basic considerations that confront the euro in its emergence as a key international currency. i know i follow a number of contributions on this and related subjects and trust my comments will not overlap too much with what has already been said. an international currency emerges because it is a solution to an economic problem. in a world of multiple currencies and multilateral trade, those engaged in cross - border transactions face a problem of coordinating purchases and sales of currencies. because a sale of a given currency to a customer is unlikely to be matched by a nearly simultaneous purchase of the same currency from another customer, foreign exchange traders must make their customers wait or must hold costly inventories of currencies. when the volume of transactions in a given currency is large, however, the waiting time between buy and sell orders for the currency will typically be shorter, and smaller stocks of the currency can be held. thus, there are efficiency gains to channeling international transactions through a single currency, passing demands and supplies for other currencies through trades involving a so - called vehicle. in addition, as more and more transactions work through the vehicle currency, the currency becomes increasingly acceptable in international transactions because bid - ask spreads narrow and liquidity increases. because the attractiveness of any vehicle currency grows as its liquidity increases, an international currency has a tendency to become a natural monopoly. if the underlying demand for one of two competing vehicle currencies falters for a reason not clearly perceived to be transitory, and its bid - ask spreads, accordingly, increase relative to its competition, demand will shift to that competitor. but that shift, in turn, will widen the bid - ask spread of the faltering competitor still more, inducing a further shift of transactions to the alternative currency. this process ends with the demise of the weaker currency as a competing vehicle and the stronger of the two becoming the sole surviving vehicle. however, even when an emerging international currency is displacing another, the transition can be drawn out, resulting in two vehicle currencies existing side by side for a protracted period. between the two world wars, for example, sterling and the dollar were both active as international currencies. this period | ##ed to forecast exchange rates for more than half a century, i have understandably developed significant humility about my ability in this area, a sentiment that i suspect many in this room share. with that caveat in mind, i agree with those who have hypothesized that the evident strengthened demand for the dollar, relative to the euro, has reflected a market expectation that productivity growth in the united states is likely to be greater than that in continental europe in the years ahead. the steady flow of capital from europe to the united states in recent years is, presumably, the consequence of europeans finding many investments in the united states persistently more attractive than those at home. as i have argued in other forums, this outcome may well have resulted to an important degree from the particular legal structures and customs that govern labor relations in much of europe. for example, over the decades, europe has sought to protect its workers from some of the presumed harsher aspects of free - market competition. to discourage layoffs, discharging employees was made difficult and costly compared with doing so in the united states. by law and by custom, american employers have faced far fewer impediments in recent years to releasing employees. this difference is important in our new high - tech world because much, if not most, of the rate of return from the newer technologies results from cost reduction, which on a consolidated basis largely means the reduction of labor costs. consequently, legal restraints on the ability of firms to readily implement such cost reductions lower the prospective rates of return on the newer technologies and, thus, the incentives to apply them. as a result, even though these technologies are available to all, the intensity of their application has been more clearly evident in the united states and other countries with fewer impediments to implementation. as a dividend, the level of employment in the united states has turned out to be higher as firms find hiring less risky and, hence, are more willing to add employees to their rosters. the persistent strength of the dollar in the face of the united states β unsustainable current account deficit underscores this impressive propensity to accumulate dollar investments, relative to those denominated in euros. i assume previous speakers have addressed the as - yet - unfulfilled expectation of a substantial diversification of the large holdings of international portfolios of dollars. some analysts predicted, before its introduction in january 1999, that the euro would rapidly displace part of the dollar | 1 |
ewald nowotny : catching - up strategies after the crisis opening remarks by mr ewald nowotny, governor of the central bank of the republic of austria, at the conference on european economic integration ( ceei ) 2010, vienna, 15 november 2010. * * * ladies and gentlemen! it is a great pleasure for me to welcome you to our annual conference on european economic integration. the oesterreichische nationalbank ( oenb ) has been hosting this event for many years, offering a forum for lively debates between distinguished panelists from national and international institutions, politics, banking and academia. i am glad that such a sizeable number of participants and speakers show an interest in this year β s conference theme. implications of the financial crisis for cesee countries as you all know, the last two years have been characterized by the global financial crisis. in its early stage, the crisis had been confined to advanced economies. local and foreign banks in central, eastern and southeastern european ( cesee ) economies held only a negligible amount of so - called toxic assets. nevertheless, excessive risk - taking put the global financial system under serious stress, which had an adverse impact on the world economy. the cesee economies were particularly affected by output declines. these were also caused by accumulated vulnerabilities in the region, especially the credit boom ( backe and wojcik, 2008, fidrmuc and hainz, 2010 ) and foreign currency lending ( dvorsky et al., 2010 ). the output loss, with average gdp decline amounting to β 3 % in new eu member states and to β 6 % in all cesee countries in 2009 ( imf, 2010 ), was deeper than we expected. in turn, we can see slight improvements in this region this year. therefore, as reflected in its title, this year β s conference is forward looking, dealing with catching - up strategies after the crisis. the beginning of 2010 actually featured developments which were better than expected and fueled the hope that the crisis was already passing away. nearly all cesee countries ( with the exception of bulgaria and romania ) are expected to grow during this year ( schreiner et al., 2010 ). however, the growth is fueled mainly by restocking and external demand. moreover, the forecasts for 2011 and 2012 remain modest. the growth prospects are still fragile and there are significant downsize risks. the growth path will remain below the precrisi | keynote address by ms caroline abel governor of the central bank of seychelles at the launch of the financial markets index 12 april 2018 venue : eden bleu hotel distinguished guests, ladies and gentleman, good afternoon. it is an honour and indeed, a great pleasure for me to be afforded the opportunity to address this forum, which is launching the barclays africa group financial markets index 2017. the development of financial markets is of the utmost importance for the development of the economy. i am not the first to make this statement, nor will i be the last. it is a fact that cannot be over - emphasised, as a stable and well developed financial market is a key part of the foundation for a healthy economy. the index that is being launched today, provides us with a good analysis of the state of affairs of the financial markets in africa. most importantly for seychelles, it provides us with a marker of where we are and the areas which we need to focus on in order to increase the level and efficiency of our financial market. out of the 17 african countries that feature in this index, seychelles has scored 22 out of a possible 100 across the pillars that were assessed, with an overall ranking of 16. the question we need to ask ourselves is this : how can we get the seychelles economy to mature and strive for continued improvement in our financial market? the indication of the way forward is clear. as per the analysis, we need to improve on the depth and breadth of our financial market, increase our access to foreign exchange and bring our regulatory environment on par with international norms. however, the challenge is to get on that path and stay the course. small economies like ours do not necessarily have big opportunities for trade in financial assets and what little opportunities we have, there is a lack of diversity of assets that are traded. nevertheless, our placement on the index is one that should spur us to move forward. with the recent developments in our financial sector, combined with our efforts in improving transparency and developing tighter and sounder regulations, i firmly believe that there is much hope for the development of the financial market in seychelles, which will allow us to contribute towards the greater development of not just our own economy, but also the economy of the african continent. one area that we are already working on is the development of the foreign exchange market. i anticipate that the 2 - day workshop currently underway on foreign exchange trading, being facilitated by barclays bank seychelles with the participation of the local banks and the central bank | 0 |
arthur yuen : regional approaches to global aml challenges speech by mr arthur yuen, deputy chief executive of the hong kong monetary authority, at the association of certified anti - money laundering specialists ( acams ) 10th annual aml & amp ; financial crime conference, hong kong, 23 april 2018. * * * good morning ladies and gentlemen, 1. i am very honoured to be here today addressing such a distinguished audience. i would like to in particular thank acams for your kind invitation, and for arranging this great event in hong kong. the topic for this event is very dear to my heart, since i have been closely involved in work that aims at enhancing the framework for countering money laundering and the financing of terrorism for almost 20 years as a banking supervisor. indeed, tackling ml / tf is a core supervisory priority for the hong kong monetary authority ( hkma ) in recent years, and so i am very delighted to have this opportunity to open the conference and meet so many professionals here to discuss how best to respond to some of the challenges posed to us by those who seek to abuse our highly efficient and international banking and payment systems. 2. from my perspective as a banking supervisor, everyone here - irrespective of your sector, experience and the jurisdiction that you work in - we all have an important role in combatting financial crime. governments need your support in so many ways - in implementing relevant policies, in submitting suspicious transaction reports and sharing intelligence, to name just a few. and these are all important elements in achieving our objectives. 3. and talking about objectives, this is definitely something worth reiterating and reinforcing at the start of this conference. this is because there β s always a danger, when we β re up to our neck in discussions around compliance, policy developments and technology, so much so that we may tend to forget what aml is all about basically. so let β s be clear about this upfront. ml and tf are crimes. and they facilitate other crimes - fraud, tax evasion, trafficking in drugs and people, and of course, terrorism. these crimes have economic and social effects that are far - reaching and often very nasty ones. they also generate financial flows β in fact significant financial flows - that divert resources away from economically and socially - productive uses. but more importantly, people get hurt. victims, who are often from the more vulnerable segments in our societies, have their life savings stolen by fraudsters, | different supermarkets, and their value. 11. with the data, the banks understood chu kee β s latest operating conditions better and made credit decisions speedily. needless to say, before the data was used and shared, prior consent from chu kee was obtained. in the end, mr chu secured a substantial loan at a competitive interest rate, and was very pleased with the hassle - free experience. 12. now, what if i tell you that the above is based on a true story? 2 yes, during the technical exploration stage, cdi has already, in real life, helped smes in hong kong take more control of their own digital footprint, and use their own data to improve their access to financial services. importers of chilled food and sneakers, and manufacturers of phone accessories have already enjoyed the benefits of cdi firsthand. as more and more banks and data providers join cdi, we expect that an increasing number of smes will benefit from the platform. 13. for cdi to reach its full potential and successfully connect the digital islands, your active participation is crucial. cdi is definitely a team sport, and we all have a role to play as members of team hong kong. 14. the hkma, as a regulator, will facilitate a conducive environment, and we are doing that by building the infrastructure and offering guidance. to banks, we urge you to embrace fintech, and join the cdi platform. to data providers, we invite you to contribute meaningful data, such as logistics data and procurement data between buyers and suppliers, to enrich the types of data available. to sme owners, we encourage you to contact your bank and understand more about cdi. together, we can take hong kong β s data ecosystem to new heights, and ultimately contribute to bridging the global trade financing gap. 15. the benefits of a more digitally integrated trade finance system are plentiful, that much is certain ; and the hkma strives to help bring about an enhanced system in collaboration with different stakeholders. we look forward to working with the international chamber of commerce ( icc ) and the fung group in this regard so that the needs of the underserved segments can be better catered for. 16. before i close, i β d like to take this opportunity to offer you a glimpse of the hkma β s vision of digitalising cross - border trade. for those of you who have been following our cbdc developments | 0.5 |
##ing also that the high unemployment rates in these countries has not been a persistent problem but rather owing to the severe debt crisis facing europe. it is worth noting that social grants constitute as much as 70 per cent of the income of the poorest 20 per cent of this country β s citizens. had it not been for these grants, around 40 per cent of south africans would have seen a decline in their income in the new south africa during the first decade post 1994. to reduce inequality to more reasonable levels over the long run, social assistance is clearly not enough and should be complemented by other initiatives. these levels of social assistance are not sustainable over the long run and may be somewhat counter - productive in the end. statistics south africa bis central bankers β speeches focussing on the development of human capital, particularly among the youth, given our youth unemployment level which stands at 50 per cent, is paramount. similar opportunities have to be created for all, regardless of personal background and circumstances, race, gender or geography - this should be our uncompromising goal. access to a basic set of goods and services during childhood could be an important predictor of future outcomes, including educational achievements and earnings. these basic services comprise education, health care, essential infrastructure such as water, sanitation and electricity, and early childhood development programmes. in south africa, access to these services is affected by factors such as ethnicity, including gender, the composition of households, taking account of the number of children in the household, the education level of parents, the gender and age of the person heading the household, orphan status, and where the household resides. encouragingly, near universal access to schooling for those under the age of 16 has been achieved in south africa, but access to certain other services is found to be lacking. the services that are not that universally readily available include health insurance, safe water supply, improved sanitation, adequate space without overcrowding. opportunities such as early childhood development programmes, neighbourhood safety and access to electricity are found to be somewhat less problematic. following from the assessment that the world bank has done on south africa, despite it being found that school attendance is comparable to other countries, the school completion rate falls short of that of our peers. children β s inequality is mainly shaped by circumstance, and inequitable access to opportunities also affects the labour market. the causes of unequal access to available jobs have changed in recent years with education and location becoming more prominent. education deficiencies now account for more than 50 | andreas dombret : financial stability β challenges from a european perspective luncheon speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the american council on germany in new york, new york, 13 april 2011. * 1. * * welcome address ladies and gentlemen leaving frankfurt heading south on the autobahn, on the right - hand side you suddenly come upon two old planes framing a rampant arch. neither of the two planes is a beauty. nevertheless, the monument is a major attraction. the aircrafts are a douglas c - 47 and a douglas c - 55, which were two of the airplanes deployed by the united states air force during the famous airlift of 1948 to 1949. the arch in the middle of the triptych symbolises that airlift. to this day, germany remembers that crucial moment in time. a living friendship needs the sound foundation of common values and it also needs institutions that cultivate an intellectual and cultural exchange. the american council on germany plays an important role in bringing together leaders from both our countries. i was therefore honored to receive an invitation from you, the american council on germany, to speak to you today. 2. introduction let me start by stating four propositions. with reference to the title of my speech, these propositions should constitute a current european perspective on financial stability. it goes without saying that they are far from being exclusively european. my first proposition is that we have been living with the crisis for four years now. it is too early to announce the advent of a post - crisis economy or a post - crisis financial system. my second proposition is that sovereign risk should be considered the main overarching risk to financial stability in germany and in europe as a whole. nevertheless, my third proposition is that the risk outlook for the german banking system has been improving. my fourth and final proposition is that financial stability constitutes a long - term strategy for forestalling the build - up of cyclical and structural excesses in financial markets. even when acute threats to financial stability may warrant extraordinary measures, policymakers have to keep in mind the longer - term costs of prolonged ad hoc measures if they distort incentives and undermine market discipline. 3. in the fourth year of the crisis let me expand on my first proposition. we have not left the crisis behind us, although the nature of the crisis has obviously changed over the past four years. the crisis that erupted in 2007 had its origins in a set of problems that | 0 |
, too, there is also strong political resistance in many countries, including notably the united states, to the idea that public - taxpayers β - money should be used to bail out private creditors, especially foreign creditors. alternative external financing need not come solely from the public sector. private finance would, in principle, serve the same purpose, and in many situations market price adjustments may be sufficient to stem the capital outflow. but given the extent of the loss of confidence in the present case it would be optimistic to think that other private lenders were queuing up to volunteer to stand in place of those that are rushing for the exit. in practice in the present situation private support means persuading existing creditors that their assets will be better protected if they are prepared to leave them in place. and they may be prepared to do so, if all other major creditors agree to do the same, especially if official support is being made available in parallel. but in this case, too, difficult judgments have to be made. there is a danger that, if private creditors have to be in effect coerced into staying put, they will immediately cut their positions elsewhere, while they can, adding to the international contagion. achieving a reasonable balance between market and macro - economic policy adjustment and official and private financing was never going to be easy. it depends upon the good sense and judgment of key players all around the world - the governments and central banks as well as major market participants in both the major creditor and the debtor countries, as well as the international organisations. my impression is that after the initial shocks, in which market adjustments have been massively overdone, the key players are now co - operating more effectively to bring about stabilisation. within the constraints imposed upon it, the imf in particular is playing a very positive leading role. and i particularly welcome the constructive part which the major commercial banks, from all the main creditor countries, are now playing in rolling over their loans to korea. this has already helped to begin to stabilise the situation there, and it has provided a breathing space while new market financing is organised. together with the availability of the further official support already committed, this, i am reasonably confident, will enable korea to regain control of its external position, and go on to rebuild confidence on the back of the underlying strengths of its economy and an already rapidly improving current account. that, in turn, would do more than anything to help to re - | christine lagarde : ecb press conference - introductory statement introductory statement by ms christine lagarde, president of the european central bank, and mr luis de guindos, vice - president of the european central bank, frankfurt am main, 11 april 2024. * * * good afternoon, the vice - president and i welcome you to our press conference. the governing council today decided to keep the three key ecb interest rates unchanged. the incoming information has broadly confirmed our previous assessment of the medium - term inflation outlook. inflation has continued to fall, led by lower food and goods price inflation. most measures of underlying inflation are easing, wage growth is gradually moderating, and firms are absorbing part of the rise in labour costs in their profits. financing conditions remain restrictive and our past interest rate increases continue to weigh on demand, which is helping to push down inflation. but domestic price pressures are strong and are keeping services price inflation high. we are determined to ensure that inflation returns to our two per cent medium - term target in a timely manner. we consider that the key ecb interest rates are at levels that are making a substantial contribution to the ongoing disinflation process. our future decisions will ensure that our policy rates will stay sufficiently restrictive for as long as necessary. if our updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase our confidence that inflation is converging to our target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction. in any event, we will continue to follow a data - dependent and meeting - by - meeting approach to determining the appropriate level and duration of restriction, and we are not precommitting to a particular rate path. the decisions taken today are set out in a press release available on our website. i will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions. economic activity the economy remained weak in the first quarter. while spending on services is resilient, manufacturing firms are facing weak demand and production is still subdued, especially in energy - intensive sectors. surveys point to a gradual recovery over the course of this year, led by services. this recovery is expected to be supported by rising real incomes, resulting from lower inflation, increased wages and improved terms of trade. in addition, the growth of euro area exports should pick up over the coming quarters, as the global | 0 |
, the central bank has, in consultation with the kenya bankers association, prepared relevant regulations, which will soon be gazetted in order to provide a framework for the licensing and operation of credit reference bureaus under the banking act. we will expect banks to make effective use of this mechanism as a credit analysis tool before extending any credit. 8. the central bank recognises the need to bring the legal framework for regulating the banking sector up to speed with international developments. in consultation with the ministry of finance and the kenya bankers association, the central has undertaken a comprehensive review of the banking act in order to align it to the best international practices and address some of the weaknesses which have been identified over time. we anticipate that once enacted, the legal framework will provide a conducive environment for a more robust banking sector. 9. allow me to conclude my remarks by appealing to banks to explore ways of enhancing the efficiency in service delivery. by enhancing efficiency banks are capable of offering more affordable banking services. this has the potential of drawing a larger number of kenyans to the financial system resulting in an expanded banking clientele. following the recent study on cost of banking services, the central bank will soon be launching the results of the survey and a sensitisation program to educate the public for more effective market discipline. we believe that these measures will encourage efficiency in the banking sector and resultant lowering of bank costs for the benefit of both the banks and the economy. 10. finally, let me extend my gratitude to the board of directors for inviting me to be with you on this auspicious occasion of the opening of the nakuru branch of fina bank. 11. it now gives me great pleasure and honour to declare the nakuru branch of fina bank officially open. thank you all for your attention. | concerted efforts are underway to recover stolen assets under the star initiative, i would like to urge the participants to this seminar to undertake a comprehensive analysis of the expected benefits of capital flight repatriation, but also the potential risks and risk mitigation strategies associated with such an effort. additionally, i welcome the emphasis of the seminar on the possible causes of capital flight. over the past few years, a number of economists have singled out portfolio diversification motives, political and macroeconomic instability, particularly conflicts and macroeconomic volatility, fiscal deficits and expected devaluation of local currencies as some of the main causes of capital flight. however, recent data which suggest that capital flight has continued to grow unabated even in recent years, where fiscal deficits and macroeconomic volatility have been jugulated, suggesting that there may be other determining factors, particularly, corruption and poor governance. let me illustrate this point further by taking you all the way to the america, to haiti, the first black republic in the world. prior to its independence in 1804, william pitt, the uk prime minister, referred to haiti as the β eden of the western world β for its wealth and production. then, haiti β s production accounted for more than one third of france β s foreign trade, and its own foreign trade equaled that of the newly born united states. the haiti that was so much coveted a couple of centuries ago is certainly not the one we all know today. why? it has become a country saddled with external debt burden, excess capital flight and recurrence of conflicts. β the haitian debt was accumulated not to finance productive investments, but to finance the government β s patronage employment and large military and police forces. corruption has been endemic, so there is a suspicion that some of the proceeds of foreign loans found their way into the pockets of the rulers and foreign bank accounts. this is a description of haiti β s experience in the 90s. β however, the 90s to which these facts refer are not the 1990s, but the 1890s. i do not believe that there is a fatality in the path to underdevelopment or poverty trap for countries located below the tropics as a number of economists have alluded to in the literature on post - conflict and economic geography. many countries in the developing world, including africa, have gone through the cycle of external indebtedness, corruption and capital flight, and external debt in a continuing loop. however, | 0.5 |
2 it drew about 300 people - an 1 / 4 bis - central bankers'speeches impressive figure for the first year. i know that some who participated in that conference are here again today. the organizers recognized that it would be important to have a regular forum to address developments in the treasury market and adjacent markets, in order to continue to study structural issues and explore ongoing developments as a way to prevent disruptions to the system. to be clear, attention on the function of the treasury market didn't start in 2015. in fact, if you read fed history - a genre of literature that i particularly enjoy - it's clear that the importance of treasury market functioning was central to the federal reserve and the new york fed for a long time. but what became apparent in more recent times was that as the markets evolved, the need for formal joint - agency collaboration and engagement with the private sector became more pressing. when the levee breaks what drives all of our efforts - from staff reports, to conferences, to actions, and all the communication in between - is that liquid, well - functioning markets for treasury and related securities are absolutely essential for credit to flow and the economy to prosper. 3 it's not an overstatement that a well - functioning u. s. treasury market is critical to our economy, and, in fact, to the entire world. 4 the song remains the same what are some of the themes that we've discussed at these conferences, and what's been the impact on our financial system? let's take a look back at that first joint staff report. it made the case on two notable fronts. first, it highlighted that principal trading firms played a much larger role in the electronic trading market than was previously understood. second, it highlighted the need for improved transparency and increased availability of treasury market data. ten years gone, the song remains the same. those themes are still at the forefront of our conversations. for example, while principal trading firms still continue to be a big presence in the treasury market, hedge funds now also play an important role. the work monitoring the changing investor base and participant types continues through this forum and the work of the inter - agency working group on treasury market surveillance and the financial stability oversight council. on the data side, we've made tremendous progress toward increased data transparency with the trade reporting and compliance engine ( trace ) data initiative. and we've seen efforts to further increase the transparency of this data to the public. | in march of this year, trace began publishing daily transaction data on on - the - run securities at the end of the day. in fact, at this very podium last year, i said that we must continue to prioritize transparency and clarity in financial data, especially in the age of ai, when the sources of data are harder to ascertain. 5 2 / 4 bis - central bankers'speeches i'd be remiss if i did not mention expanded central clearing as another key theme that has emerged over the years. this is a major shift that is an outgrowth of our work. we'll hear more about that in a panel discussion later today, and i look forward to the continued progress the market will make on this front as we move toward the implementation deadlines of the sec's clearing rule. what is and what should never be before i cede the stage, i will end on a topic that is at the core of the financial system and closely connected to the treasury market : reference rates. thankfully, we have said good riddance to libor, and our financial system is now resting on a safe and solid foundation. i know i promised not to bring up libor again at this conference. but the libor saga taught us all two important lessons. first, enormous systemic risk can build in the global financial system gradually over time, and second, it took a complex, expensive, decadelong effort to fix that problem. we must not repeat that experience. to that end, i am pleased to announce that today, the federal reserve bank of new york is launching the reference rate use committee, or rruc. it will convene private market participants to support integrity, efficiency, and resiliency in the use of interest rate benchmarks - or reference rates - across financial markets, including the rates published by the new york fed. its first meeting will occur in october. the rruc will focus on key issues regarding reference rates, including how their use is evolving and how the markets underpinning them may be changing too. it will promote best practices related to the use of reference rates, including the recommendations set out by the alternative reference rates committee ( arrc ) during the transition away from libor. 6 in this way, the rruc will serve as an essential partnership that builds upon the work and accomplishments of the arrc, by helping to preserve a robust system of reference rates. this work will complement international efforts at the bank for international | 1 |
at the current juncture. those uncertainties include not only the spending of households and businesses here in the united kingdom, but also the evolution of demand abroad. in particular, while the euro area overall has exhibited decent growth in recent quarters, the countries of the periphery are struggling with a mixture of fiscal, banking and competitiveness problems. there is a risk that this could lead to imports of aircraft were temporarily high in 2010 q4 reflecting the forthcoming change in vat treatment, but the data were still encouraging even after allowing for the resulting distortion to import growth in 2011 q1. bis central bankers β speeches renewed banking sector turbulence and a hit to confidence more generally, with adverse consequences for us. even though our central projection has growth returning to around its historical average rate, that would still leave the level of activity well below a continuation of its pre - crisis trajectory ( chart 5 ). that makes it unlike normal downturns, in which the economy usually experiences a period of above - average output growth during the recovery period, thus making up much of the lost ground. the tendency for economies to suffer substantial persistent losses relative to a continuation of their pre - crisis trajectory is a common feature of downturns after banking crises. that is illustrated in chart 6, which shows the spread of outcomes for the shortfall of output relative to a continuation of its pre - crisis trajectory across 88 past banking crises in different countries3 ; the blue swathe covers the central 50 % of cases, while the grey swathes take in the central 80 % of cases. there is a considerable diversity of experience, but the average outcome β given by the purple line in the middle of the swathe β shows a persistent output shortfall of about 10 %, even seven years after start of the crisis. in other words, the typical banking crisis results in a substantial persistent depression in activity relative to what might otherwise have taken place. the red line shows the central path for the level of output, relative to a continuation of its pre - crisis trend, from our most recent projections ( the dash denotes the forecast period up to and including 2013 ). as you can see, that path lies quite close to the average experience from this sample of past banking crises. there are a number of reasons why output losses after banking crises have tended to be much more persistent than after normal economic downturns. first, banks and highlyindebted households and businesses need to get their balance sheets back in order, typically resulting in a period of | persistent, factor is the pace of technological change. related to that, we are seeing a trend towards consolidation β at first nationally, but now also internationally β amongst financial services providers. so i also want to make a few remarks about these factors. before i go into these issues in more detail, i just want to sketch out how the bank stands in relation to uk financial services. obviously the changes in the bank β s remit announced in may 1997 by the incoming labour government, and largely enshrined in the 1998 bank of england act, were profound ones. the arrival of monetary independence meant that the work of the mpc β of which i am one of the nine members β has scarcely been out of the news. less obtrusively, the departure of banking supervision to the new fsa meant the end of one substantial β though actually comparatively recently acquired β function ; and the shift of debt management to the dmo brought to an end another, much older one. so does the β new β bank have a new relationship with the financial services sector? let me first say that, though the bank has been through a period of profound change, its core purposes remain the same. one is obviously to promote monetary stability ; and there our role is now much more substantial and overt. but the bank has two more core purposes, and both relate directly to the financial services sector. the first is to promote the overall stability of the uk financial system. this role is not new, though it has recently been set out explicitly in the memorandum of understanding between the bank, hmt and the fsa. broadly, promoting systemic stability means working to ensure that the financial system continues to perform its key roles in support of the wider economy β settling transactions, providing liquidity and allocating savings. in pursuit of this we look at factors affecting the underlying robustness of the financial system, as well as potential β triggers β which, especially at times of structural weakness, could bring on a crisis. our remit is of course in relation to the uk financial system β but this work has a substantial international dimension, given the openness of the uk economy, and the international character of much of the city. what does this mean in practice? the bank β s financial stability work include such things as overseeing the uk payments systems ; analysing broader developments in the banking, securities and insurance sectors, and the evolving strategies of london β s securities exchanges ; looking at developments in emerging market economies ; and | 0 |
, insofar as this does not interfere with the eurosystem β s primary objective, which is price stability. indeed, in the eurosystem we have embarked upon a strategic revision of our monetary policy. as part of this we intend to reflect on the way in which we can incorporate climate risks and promote the sustainability of the economy. for this purpose, we need, first, to improve our understanding of the implications of climate change and economic policies designed to mitigate this phenomenon for the economy as a whole and, in particular, for price stability. the overriding aim should be to incorporate these implications into the economic analysis and forecasting tools on which the decision - making process is based. 16 in addition, climate risks ( both physical and counterparty risks ) may affect other elements of monetary policy instruments and operations. in these areas, the main objective of central banks should be to ensure, along with other public authorities, that markets correctly address climate risk. once this objective has been achieved, our monetary policy collateral policies would immediately lead to an adjustment in the amounts that counterparties can obtain. these and other considerations must be analysed in the eurosystem monetary policy strategy review. however, while this review is carried out, we in the governing council of the ecb are aware, to paraphrase president lagarde that trickles become oceans if cared for. in this respect, the banco de espana has already approved the incorporation of sustainability and responsibility criteria into its investment policy for the reserve portfolio it manages. as a result, and taking into account our mandate obligations, we are progressively increasing our holdings of green bonds and, for example, we are one of the founder members of the green investment fund set up by the bank for international settlements. conclusions in conclusion, the challenges associated with climate change require coordinated action, both at international level and at the level of the various different economic policies. allow me to stress that it is governments who have the legitimacy and are best prepared to lead the process of transformation to a more sustainable economy. thus, fiscal policy should play a leading role in this process, and also in the measures needed to mitigate the social costs of the transition. in any event, the importance of the financial sector in channelling the enormous funds needed to make the investments required by this transition and to identify the opportunities that may arise in this process is unquestionable. we supervisors and https : / / www. ecb. europa. eu / press / press | in order to avoid term mismatches in portfolios. a proper cushion needs to be kept by way of capital reserves against market exposure and capital size should set a limit for the risk exposure of an individual financial institution. apart from capital adequacy standards, the new international norms of banking regulation and supervision require a more proactive role for the regulator in enforcing an effective mechanism for evaluating, monitoring and managing risks in the financial system. this in turn would need stricter accounting, valuation and reporting norms on the part of banks. the basle core principles have also identified a number of challenging areas for regulators and supervisors, which must be satisfied to ensure orderly conduct of financial system and to promote its soundness and stability. transparency in banking operation is also something which has to receive top priority given the current nature of capital markets. transparency and accountability demand realistic valuation of assets, public disclosure norms and prudential reporting by banks to help depositors and investors form an informed opinion about the state of the financial system, thereby enabling them to react in an orderly fashion to asset price changes. moreover, public intervention policies in the form of explicit or implicit guarantees may have to be such that they do not lead to β moral hazard β in the form of undue risk - taking by banks and laxity in observing market disciplines. india must remain in the forefront of the movement for ensuring soundness of the banking system by adopting best practices and best international standards of performance and prudence. actions have already been initiated in this direction. the challenge now is to accelerate this process so that the banking and the financial system in our country can contribute to the sustained growth of the real economy with price stability. role of bank economists before i conclude, let me say a word about the role of bank economists in facilitating the reform process. this annual conference is a testimony to the economic talent that our banking system has developed over the years. almost all our banks have economic research departments or economic cells which are staffed by highly qualified economists with long experience in banking and the financial sector. the issue that i would like to pose before this conference is : are we making the best and most effective use of economists working in the banking sector to improve the functioning of banks, and for that matter, the operational efficiency of the financial sector as a whole? in commercial organisations like banks, economics departments have the advantage of not being excessively burdened with day - to - day problems of running the banks or ensuring the safety and profitability of individual | 0 |
riders. 12 it would, however, be rash to conclude that the market is now unambiguously healthy in all respects. there are still several factors which will continue to pose challenges to the investment, banking and valuing communities. for example, while lease lengths may have temporarily stabilised, break clauses exercisable by tenants are becoming more common. and despite the positive tone of the recent cbi / grimley survey, it is clear too that many occupiers will continue over the long - term to reduce their needs for space and to demand greater flexibility. privity of contract has disappeared on new leases. all of these factors are making it less straightforward to form a view of the quality of cashflow likely to stem from a particular building. 13 there is a sizeable overhang of unlet secondary property. the pool of such property increases every time that a major user of space moves into new offices and releases its former premises. while some of the better quality secondary property can be refurbished at an economic price and relet, much of this stock may never again be relet for its present use and may not lend itself readily to conversion for alternative uses. this will continue to exert a dampening influence on the market, and imaginative solutions will be needed. the future 14 so, the market may be improving but it is still not easy. how is the market likely to develop over the next eight years? what will i be saying if you invite me back in the year 2005? 15 as we all know, the property market has, historically, moved in cycles. some, notably rics, have done work to develop our understanding of these cycles. the economic cycle itself is clearly one of the driving factors, though it is clear too that property is subject to its own fluctuations and its own step changes. contributing factors include the strength of tenant demand, the activities of developers and the willingness of lenders to finance investment and development. 16 my story in the future could be similar - perhaps depressingly similar - to my review of the recent past. many of the β ingredients β that contributed to the last cycle are certainly present now. institutional investors are attracted to the sector in the short - term but they could easily resume their longer - term departure from property in a couple of years. this could happen if property β s performance runs out of steam as the economic cycle progresses and other asset classes begin to look more attractive. it is conceivable that the banks might | the regime called the β matching adjustment β ( or β ma β for short ). it β s usually at this point in any speech about insurance regulation that most people switch off, but bear with me while i try to bring the issue to life. first, what is this β ma β and what does it do? it allows insurance companies to recognise as capital up - front a part of the income they expect to earn on their assets in the future, but only as long as they can show that the cashflows they expect to receive from those assets closely match the payments they have undertaken to make to their insurance policyholders ( hence β matching β adjustment ). this is therefore most relevant for the annuity business, where insurance companies promise to pay individuals β pensions far into the future. you might ask why the regulator favours such an arrangement, which is not common in other bits of regulation, when perhaps it would be more prudent to make insurance companies wait until those returns ( for instance, interest payments on corporate bonds ) are actually paid to them before recognising them as capital which could be paid out to shareholders. the reason is that we think it protects policyholders if insurance companies are incentivised to invest in assets which will produce cash at the right time, so that insurance companies are not scrabbling around for the right assets when they have to make payments to pensioners in the future. [ 2 ] however, you would be right to think that if we allow such an arrangement we must operate it with a very high degree of confidence that those future returns will in fact materialise β in other words that insurance companies do not recognise up - front returns which then later don β t show up. second, why does the ma matter? for me there are two reasons. first, the nature of the business for which it is primarily used : pensions provided by insurance companies. when an individual puts their life savings into an insurance company in return for a promise that the company will pay their pension right up until their death ( potentially decades later ), we need to be very confident that the company is going to be able to make good on that promise. the same is true when companies of all sorts pass their pension liabilities over to an insurance company, which is happening in very high volumes β for those pensioners too we need take care that the foundations of that insurer are robust. we estimate that over 8 million policyholders are served by this sector. and second | 0.5 |
, turned into overpessimistic forecasts under the 3rd mou, etc. and the most recent ones, like e. g. that the greek banks will need at least β¬10 billion capital injection as a result of the 2018 stress tests, will be β all forgiven and forgotten β, as they say. of course, a key prerequisite for a permanent return to the capital markets is the sustainable recovery of the greek economy with growth levels of above 2 %. on top of that and from my point of view, the following four proposals are also required : proposal # 1 : further increasing the cash buffer the government β s strategy - agreed with our lenders - makes sense : to fully cover the country β s financing needs for the first post - mou period. this is after all what all the other three countries did. for instance, in the case of ireland, it was a cash buffer of β¬25 billion, in portugal it was around β¬20 billion, in both cases around 13 % of their gdp. greece β s gross financing needs for the next two years amount to β¬45 billion, of which β¬18 billion will be covered by the primary surplus and the privatisation agenda, and there is an existing cash buffer already from the 2018 debt issues and from repos. my personal view is that due to : a ) adverse capital market conditions globally, the return of volatility and higher oil prices, inverted us yield curves as a result of monetary policy tightening, the widening libor - ois spreads, which exert pressure on the us dollar money market, the recent us dollar strength vis - a - vis other main currencies. all the above might have a greater impact on vulnerable countries with low credit ratings and weaker economies. name it, italy as described above or trump β s trade war with china and other major economies, the fog of uncertainty has thickened. b ) also due to political developments in greece as next year will be the year of european elections and also national and regional elections. plus there are also geopolitical risks in our neighbourhood ( our unpredictable eastern neighbour in connection with the drilling of gas in the aegean and cyprus ). all the above make a strong case for increasing the buffer as much as possible for shielding the economy. large cash buffers boosted investor confidence and have aided market re - entry in ireland, portugal and cyprus. the extra money could come from either the bank recapitalisation amount remaining from the 3rd programme, | soon, ultimately reaching a flat tax rate of 15 % and remain locked at the same level for another five years. the drastic reduction in corporate tax rates and the commitment to leave them unchanged for a period of five years will be the best signal to greek and foreign investors that the greek authorities are now seeking to change the country β s growth paradigm and move towards a dynamic economy based on private investment and exports. this drop in taxes could be financed by the fiscal space achieved through a decrease in primary surpluses, say, to 2. 5 % from 2020 onwards, bringing effectively forward a year or two the agreed - with - our - lenders lower primary surpluses, or from a persistent overshooting of agreed surplus targets of 3. 5 % of gdp until 2022. much to my delight, the above proposal that links lower corporate taxes to lower primary surpluses has been adopted by the bank of greece in may 2016 and by the main opposition leader at deth in thessaloniki in september 2016. c. the role of the ecb in countries under adjustment programmes as the euro area crisis was triggered by either a weak fiscal position in some cases or a weak banking system in others, it led to the β negative feedback loop β between banks and sovereigns, which the ecb emerged as the institution best equipped to tackle. it has used all the appropriate instruments at its disposal in order to ensure its primary priorities : price and financial stability across the euro area. c. 1 the role of the ecb on price stability 1. reducing base rates first of all, and since the emerging of the financial crisis in 2008, the ecb has reduced its main refinancing rate from 4. 25 % to 0 %, the largest cut ever decided over such a short period in europe, and also brought the interest rate paid on banks β deposits of excess reserves with the eurosystem to negative territory, - 0. 40 % today. 2. smp programme furthermore, as sovereign bond markets in some euro area jurisdictions were becoming increasingly dysfunctional, in may 2010 the ecb approved the securities market programme ( smp ) worth β¬210 billion. its main effect was to cut refinancing costs for countries whose bonds were sold at unsustainable interest rates on international markets, leaving at the same time the money supply unchanged through sterilisation. 3. ltros and tltros in december 2011, the ecb revived the longer - term refinancing instrument making the central | 1 |
of the esfs. this is, after all, the most significant development in financial supervision in the history of the european union. however, i am confident that the changes brought by the ssm will strengthen the esfs, and will overall enhance the quality and consistency of supervisory and regulatory practices across europe. the more member states that are involved in banking union, the greater these positive effects will be. thank you for your attention. bis central bankers β speeches | vitor constancio : implications of the single supervisory mechanism ( ssm ) on the european system of financial supervision ( esfs ) speech by mr vitor constancio, vice - president of the european central bank, at a public hearing on financial supervision in the eu, brussels, 24 may 2013. * * * ladies and gentlemen, thank you very much for inviting me to open this session on the implications of the single supervisory mechanism ( ssm ) on the european system of financial supervision ( esfs ). at present, the only answer that can really be given on this issue is, β it depends β. while the ssm will in principle be just another supervisor around the table, its impact on the esfs will clearly depend on how many member states eventually decide to join. in our view, the more member states take part, the better it will be for the functioning of the esfs and the single market more generally. first, having as many as possible countries in the ssm will reduce the scope for coordination failures. this will in turn facilitate the coordination function of the european banking authority. second, a larger ssm is the best way to safeguard the single market in financial services. the more membership overlaps between the eu and the ssm, the more consistent will be the application of supervisory and regulatory practices. third, broad ssm membership could diminish the distortions to the single financial market caused by the divergent fiscal positions of sovereigns, as member states that are part of the ssm will also have access to the single resolution mechanism ( srm ). this presupposes, however, that the srm is set up with strong powers, which i consider essential. at this stage, we expect several non - euro area member states to join the ssm. the negotiations on the ssm regulation have satisfactorily addressed most of their concerns. however, some countries seem to require that more clarity on the functioning of the srm is provided before they reach their final decision, in particular on the issue of a common fiscal backstop and how β out β member states could contribute to or benefit from it. in my view, this should not be an obstacle to a positive decision because any participant country in the ssm will also participate in the srm and benefit from it. from the ecb β s perspective, it is essential that the srm comprises a single resolution authority and single fund financed by ex - ante and risk | 1 |
keeping inflation under control ), not an external aim ( devaluing the exchange rate, which could trigger negative chain reactions ). why 2 % and not 0 %? in order to keep a safety margin, as inflation that is too low is as bad as inflation that is too high : it creates the risk of deflation, i. e. a general and lasting downward spiral of prices, which generates a fall in economic activity and a rise in unemployment. furthermore, slightly positive inflation oils the wheels of the economy, for example when there are labour market rigidities or differences between regions of the euro area. the stability of financing via the decline in interest rates controlled inflation results in a fall in market risk premia : this leads to lower interest rates in the euro area, and especially narrower spreads between countries. let us take the example of our respective countries.. before maastricht, between 1986 and 1992, the spread between italy and germany was 5. 1 % on average, while it was just 1. 4 % in 2016. admittedly there were pressures in 2011 β 2012, stemming directly from temporary doubts over the sustainability of the euro area. for france, the spread has also narrowed, from 1. 9 % between 1986 and 1992 to 0. 3 % in 2016. the french spread may also temporarily react to political uncertainties, but remaining in the euro over the long term continues to be our best protection. all economic players are benefiting from lower interest rates : households β when they purchase a property β and companies that invest, as well as governments and hence taxpayers. some critics would like to leave the euro to let deficits rise without being constrained by european rules. but that is wishful thinking : the financing of deficits would be much more costly for euro area countries leaving the single currency, if we were to return to the spreads before the euro. exchange rate stability and the strength of the single market the euro also helps consolidate the single market, which the european member states have constructed step by step since the treaty of rome in 1957, 60 years ago. in order to achieve greater trade integration, it was necessary to reduce currency fluctuations : europe first attempted this, as of 1979, with the european monetary system, built on a common currency, the ecu. but this mechanism was insufficient to ward off speculative attacks : remember the severe crisis of september 1992 which forced the italian lira out, making it lose 21 % of its value, and which destabilised the | european economy. the single currency put an end to these serious disruptions. it also considerably simplifies day - to - day life : there are no longer any conversion fees for individuals, or any more uncertainties relating to exchange rate volatility for companies. for many firms, including italian imprenditori, their market naturally expanded from their domestic market to the whole of the euro area. according to empirical studies, the euro has thus led to a 5 to 15 % increase in trade between member states. an internationally recognised currency the economic size of the euro area and the stability of its currency allow the euro to play an international role. before the euro, in 1995, only the deutsche mark was an international reserve 2 / 6 bis central bankers'speeches currency, with a share of 15 % of global reserves. today, our shared currency accounts for 20 % of international reserves, in second place behind the dollar. an internationally recognised currency generates economic gains : the financial markets are more attractive for foreign investors, more liquid, and therefore more efficient. but it also carries a political weight : i know that when mario draghi speaks at the g7 or at the g20, the whole world listens to europe attentively. in the global financial arena, which has become turbulent, this union is our greatest chance ; none of our countries would have such clout in insolation. our sovereignty relies necessarily on european sovereignty. * * * the euro makes us more robust, and gives us more confidence in our currency : this is a considerable asset amidst so much uncertainty. the euro has naturally also provided us with a strong symbol of unity among european nations. moreover, from 12 at the start, the number of participating countries has risen to 19 today : 7 countries decided democratically to join the euro, and none has wanted to leave it. these are the concrete economic benefits that make the 340 million citizens of the euro area attached to their currency, to our currency. this attachment, which has been measured since the outset, has remained strong throughout the crisis. 70 % support the euro today, i. e. the highest level since 2008 ; a large majority of french citizens support the euro ( 68 % ). support remains strong in italy, albeit at a lower level ( 53 % ). the euro is not a technocratic utopia : it is a political and democratic decision, supported 25 years on β with hindsight β by a clear majority of citizens. ii. however, there are four | 1 |
, in order to make the global financial system much less vulnerable, much more robust, the measures proposed by the basel committee and adopted by the g20 will necessarily take time to implement, given their scale. this applies in particular to a very considerable increase in banks β capital requirements at the global level. we foresee a transition period that will last until the end of 2018. are you still worried about the capacity of certain countries, such as ireland and greece, to reduce their public debt levels? what is certain is that it is very important for all countries, and not just ireland and greece, to take measures to ensure medium - term fiscal stability. this is necessary in advanced economies, in the european union in general and, of course, in the euro area in particular. a feature that is shared by the industrialised countries after the very significant recession triggered by the financial crisis is that they find themselves in a vulnerable fiscal position. the european central bank has always defended the stability and growth pact, even when large countries such as france and germany wanted to relax its rules. the federal reserve system decided last week to inject massive amounts of dollar liquidity into the economic system, a decision which has the effect of reducing the value of the us currency. has the currency war started? that is, of course, a totally inappropriate expression to use. there are two main topics that need to be tackled seriously. on the one hand, there is the relationship between the major floating convertible currencies of the industrialised countries, such as the dollar, the euro, the yen and the pound sterling. these currencies β or, in the case of the euro, the currencies that preceded it β have been floating since the collapse of the bretton woods system at the beginning of the 1970s. the us secretary of the treasury and the chairman of the federal reserve system say that a strong dollar vis - a - vis other major convertible currencies is in the interests of the united states. i share this view entirely. a dollar that is strong and credible among the major currencies of the industrialised countries is in the interests of the united states, it is in the interests of europe and it is in the interests of the entire international community. on the other hand, the second topic is that of emerging market economies which have considerable current account surpluses and exchange rates that are not sufficiently flexible. on this issue, commitments have been made by the g20. a move towards more flexible exchange | jean - claude trichet : conclusions of the g20 in seoul β interview in le progres interview with mr jean - claude trichet, president of the european central bank, in le progres, france, conducted by mr vincent rocken and published on 13 november 2010. * * * are you satisfied with the conclusions of the g20 in seoul? let me first of all say how delighted i am to be here in lyon, breathing my native air and soaking up the beauty of the city and its way of life. with regard to the g20, i took note of the communique stating that risks remain for the global economy and that there is a need for extreme vigilance. i share this view entirely with the heads of state and government. four further conclusions are particularly important to my mind. first, a commitment to pursue macroeconomic policies aimed at ensuring sustainable growth, including rigorous fiscal measures in countries where these are necessary. second, the need to implement ambitious structural reforms to foster growth and employment. third, the approval of the banking supervision reforms prepared by the basel committee. and fourth, a commitment to enhance the flexibility of the exchange rates of certain currencies which are not sufficiently flexible. when france takes over the presidency of the g20 for a year, what guidelines and actions should it focus on at the financial level? the global governance of the g20 is a long - term undertaking. nothing is settled, and the french presidency will need to deepen and strengthen the main avenues that are currently the subject of global consensus. this is already a huge task. but the greatest responsibility that i see for the future presidency is the correction of large external imbalances at the global level ; such a correction is crucial if we are to avoid another major crisis in the future. and in seoul the g20 explicitly asked the french presidency to work on criteria for measuring these external deficits and surpluses. the financial crisis is over, but its effects can now be felt in terms of the economy. do you believe that all the necessary lessons have been learned in order to avoid a new global crisis when one sees measures here and there that are perceived as protectionist, in particular in the united states and china? we are in the midst of reflecting at the international level on the lessons to be learned from the crisis. this is a considerable task and it is being undertaken by the whole of the international community, including emerging market economies. it will take some time. for example | 1 |
may 29, 2019 ba n k o f j a p a n opening remarks at the 2019 boj - imes conference hosted by the institute for monetary and economic studies, bank of japan haruhiko kuroda governor of the bank of japan i. introduction good morning. i am honored to welcome such distinguished guests from around the globe to the 25th boj - imes conference. on behalf of the conference organizers, i thank all the guests in this room. this year β s conference is titled β central bank design under a continued low inflation and interest rate environment. β the current theoretical framework for monetary policy was developed before the global financial crisis. at that time, inflation and interest rates in most advanced economies β with japan being the notable exception β were high enough to make conventional monetary policy effective. to stimulate the economy, central banks had sufficient safety margins to reduce short - term nominal interest rates. after the global financial crisis, however, this situation changed significantly. both inflation and nominal interest rates have remained far below their pre - crisis levels for more than a decade. in my opening remarks, i will briefly review the policy agenda for central banks at the moment under a continued low inflation and interest rate environment. ii. policy agenda under a continued low inflation and interest rate environment this year β s conference focuses on four topics : the monetary policy framework, monetary policy instruments, the relationship between price stability and financial stability, and spillovers to emerging and developing economies. a. monetary policy framework regarding the monetary policy framework, textbook new keynesian models assume that long - term inflation expectations are anchored around the inflation target and the central bank sets the policy rate mechanically referring to the natural rate of interest. when these assumptions hold, all that the central bank needs to do to stimulate the economy is to keep real interest rates below the natural rate of interest. however, this conventional policy framework currently faces two major challenges. the first challenge concerns the question to what extent policy makers should rely on the natural rate as a benchmark for monetary policy conduct. this problem is partly associated with the difficulty of measuring the natural rate of interest. 1 of course, this problem can be overcome to some extent by looking at common trends in a range of estimates of the natural interest rate. in fact, various recent estimates of the natural rate of interest suggest that the current level appears to be much lower than before, giving rise to concerns about a secular decline in the natural rate of interest. the other major challenge is related to the stability | , professor carl walsh of the university of california, santa cruz, the new honorary adviser to imes, will share his views on monetary policy frameworks under a low inflation and interest rate environment from an academic perspective. as the author of the textbook monetary theory and policy, which is a must - read for central bank economists, and of various other significant contributions to the literature, he is one of the most influential academics in this field. next, the paper presentations will focus on the following four topics : first, optimal monetary policy taking international capital inflows into account ; second, the reversal interest rate ; third, the tinbergen rule for financial stability and price stability ; and fourth, the impact of prolonged low nominal interest rates on banking stability. the final and concluding session will be the policy panel discussion, moderated by see powell ( 2018a ) for the current view of the federal reserve board. see rajan ( 2015 ) for a discussion of the spillover. professor athanasios orphanides of the massachusetts institute of technology, another honorary adviser to imes. as panelists, we will have mr. christian hawkesby, assistant governor of the reserve bank of new zealand ; mr. klaus masuch, principal adviser to the director general economics of the european central bank ; and mr. masazumi wakatabe, deputy governor of the bank of japan. i hope that the theoretical and practical discussions in this conference will deepen our understanding of central bank design under a continued low inflation and interest rate environment. thank you for your attention. references borio, claudio e. v., and philip william lowe, β asset prices, financial and monetary stability : exploring the nexus, β bis working paper no. 114, bank for international settlements, 2002. heider, florian, farzad saidi, and glenn schepens, β life below zero : bank lending under negative policy rates, β ecb working paper series no. 2173, european central bank, 2018. maddaloni, angela, and jose - luis peydro, β bank risk - taking, securitization, supervision, and low interest rates : evidence from the euro - area and the u. s. lending standards, β review of financial studies, 24 ( 6 ), 2011, pp. 2121 β 2165. powell, jerome h., β monetary policy influences on global financial conditions and international capital flows, β speech at β challenges for monetary policy and the g | 1 |
ward off money laundering, terrorist financing and proliferation financing risks. in this regard, mauritius has obtained technical assistance from the eu funded aml / cft global facility and the german government through the german development agency, the giz to support the implementation of the fatf action plan. on its part, the bank of mauritius conducted outreach for the industry on various aml / cft topics. as at date, we have already hosted 7 training sessions for the industry and aml / cft supervisors. all of them were facilitated by international experts on aml / cft. on 28 july this year, the bank hosted a virtual training delivered by the office of financial sanctions implementation of the uk hm treasury on the implementation of financial sanctions 4 / 7 bis central bankers'speeches for the mauritius authorities involved in the implementation of the united nations ( financial prohibitions, arms embargo and travel ban ) sanctions act. the virtual training saw the participation of more than 100 representatives from the various agencies and authorities. i β m pleased to inform you that 7 additional training programs are scheduled until the end of this very month. ladies and gentlemen, within one year of the publication of the mutual evaluation report, mauritius demonstrated positive and tangible progress on 53 of the 58 recommended actions in the report β which is indeed a monumental task within such a short span of time. mauritius was placed on the fatf list of jurisdictions under increased monitoring, in february 2020, with respect to the remaining 5 recommended actions for which the fatf has, in consultation with mauritius, devised a detailed plan of action with specific deadlines to remedy the identified shortcomings. mauritius has, in february 2020, given a high level political commitment to the fatf to implement the action plan within agreed timelines. i must here say that there is a concerted effort at all levels among respective ministries, regulatory bodies, law enforcement agencies and other competent authorities in view of implementing the action plan. this concerted effort is another tangible proof of our commitment to deliver on the action plan by september 2020, which is well before the agreed timeline of the fatf. the seriousness of mauritius to implement all actions is also testified by the fact that a high level committee placed under the chairmanship of the honourable prime minister has been set up to monitor progress made on the said action plan. there is also a dedicated core group which has been established to monitor the implementation of the recommendations of the mutual evaluation report. much has happened in terms of effectiveness since the february 2020 fat | forward to interactive discussions from ceos of all banks present in this room. i have also taken note with satisfaction that the entire banking industry is following this discussion today through virtual means. for our first edition of the bank of mauritius thought leadership series, i would like to thank our panellists also. we are indeed privileged to have with us professor the lord mervyn king, dr vera songwe, dr natacha valla, dr robert wardrop and mr daniel essoo. i also thank mr david marsh, chairman of the omfif who has kindly accepted to moderate today β s panel discussion. on this note, i wish you all successful deliberations. ladies and gentlemen, thank you for your attention. 3 / 3 bis central bankers'speeches | 0.5 |
maintained to restore sound fiscal positions, in line with the commitments under the stability and growth pact and the 2012 european semester recommendations. a rapid implementation of the fiscal compact will also play a major role in strengthening confidence in the soundness of public finances. at the same time, structural reforms are as essential as fiscal consolidation efforts and measures to improve the functioning of the financial sector. in the countries most strongly affected by the crisis, noticeable progress is being made in the correction of unit labour cost and current account developments. decisive product and labour bis central bankers β speeches market reforms will further improve the competitiveness of these countries and their capacity to adjust. finally, it is essential to push ahead with european institution - building. the ecb welcomes the commission proposal of 12 september 2012 for a single supervisory mechanism ( ssm ) involving the ecb, to be established through a council regulation on the basis of article 127 ( 6 ) of the treaty. the governing council considers an ssm to be one of the fundamental pillars of a financial union and one of the main building blocks towards a genuine economic and monetary union. we will formally issue a legal opinion in which we will, in particular, take into account the following principles : a clear and robust separation between supervisory decision - making and monetary policy ; appropriate accountability channels ; a decentralisation of tasks within the ssm ; an effective supervisory framework ensuring coherent oversight of the euro area banking system ; and full compatibility with the single market framework, including the role and prerogatives of the european banking authority. as the commission proposal sets out an ambitious transition schedule towards the ssm, the ecb has started preparatory work so as to be able to implement the provisions of the council regulation as soon as it enters into force. we are now at your disposal for questions. bis central bankers β speeches | longer - term refinancing operations ( ltros ) to be allotted on 27 july, 31 august and 28 september 2011 as fixed rate tender procedures with full allotment. the rates in these three - month operations will be fixed at the average rate of the mros over the life of the respective ltro. as stated on previous occasions, the provision of liquidity and the allotment modes for refinancing operations will be adjusted when appropriate, taking into account the fact that all the non - standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature. let me now explain our assessment in greater detail, starting with the economic analysis. in the first quarter of 2011, the euro area recorded strong real gdp growth of 0. 8 % quarteron - quarter, following the 0. 3 % increase of the fourth quarter of 2010. recent statistical releases and survey - based indicators point towards a continued expansion of economic activity in the euro area in the second quarter of this year, albeit at a slower pace. this easing reflects the fact that the strong growth in the first quarter was partly due to special factors, which will cease to play a role in the second quarter. hence, it is appropriate to look through such short - term volatility and to emphasise the positive underlying momentum of economic activity in the euro area. looking ahead, euro area exports should be supported by the ongoing expansion in the world economy. at the same time, taking into account the bis central bankers β speeches favourable level of business confidence in the euro area, private sector domestic demand should contribute increasingly to economic growth, benefiting from the still accommodative monetary policy stance and the measures adopted to improve the functioning of the financial system. however, activity is expected to continue to be dampened somewhat by the process of balance sheet adjustment in various sectors. this assessment is also reflected in the june 2011 eurosystem staff macroeconomic projections for the euro area, which foresee annual real gdp growth in a range between 1. 5 % and 2. 3 % in 2011 and between 0. 6 % and 2. 8 % in 2012. compared with the march 2011 ecb staff macroeconomic projections, the range for 2011 has been revised upwards, while the range for 2012 remains broadly unchanged. the june 2011 eurosystem staff projections are broadly in line with recent forecasts by international organisations. in the governing council β s assessment, the risks to this economic outlook remain broadly | 0.5 |
offer an explanation for this puzzle and apply it to two of the ongoing debates on how to resolve the crisis. 2. the fault line : equity versus efficiency my starting point is one of the classic fault lines in economic theory : the fault line between equity and efficiency. equity is mostly about redistributing resources among members of society ; efficiency is mostly about allocating resources to their most productive use. together, equity and efficiency are the yin and yang of economics. and as in chinese philosophy, the economic versions of yin and yang are not opposing forces but interrelated concepts. in the end, it is not a matter of β either / or β but a matter of degree. and this is at the core of the debate on how to resolve the sovereign debt crisis. some analysts tend more towards equity or, more specifically, towards burden sharing. other analysts tend more towards efficiency, that is, towards setting the right incentives to ensure a stable monetary union in the future. bis central bankers β speeches this tug of war between burden sharing and efficiency defines nearly all debates on how to resolve the european sovereign debt crisis. it is present in the debate on how the rescue mechanisms should be constructed ; it is present in the debate on a banking union, it is present in the debate on a fiscal union, in the debate on monetary policy, in the debate on how to rebalance current accounts and in the debate on the introduction of eurobonds. in order to illustrate my point, i would like to address the last two issues. let us begin with the debate on how to rebalance current accounts in the euro area. 3. the case of current account imbalances 3. 1 the problem before the crisis, there were large imbalances in the current accounts of euro - area countries. some countries, such as germany, the netherlands and austria, ran persistent current account surpluses. other countries, such as greece, ireland and spain, ran persistent current account deficits. in principle, current account surpluses or deficits are not a problem in themselves. however, those we observed prior to the crisis were an expression of underlying barriers to sustainable growth. at the same time, they added an element of instability to monetary union. hence the need to β rebalance europe β. one channel through which unsustainable current account positions can be rebalanced is the exchange rate. in a monetary union, however, using the exchange rate is obviously no longer an option. the only option | ecb governing council meeting reveals a few interesting details. the governing council considers that risks to the growth outlook are now broadly balanced. it also removed the easing bias on rates for now. some observers interpreted this statement as a further step towards monetary policy normalisation β and market participants should be prepared for these new challenges. thank you for your attention. 7 / 7 bis central bankers'speeches | 0.5 |
it, unless a central bank is prepared to exchange it a fixed rate against a banknote. the monetary history of the united states in the 19 th century illustrates this point quite nicely ( gorton, 1996 ). 5 / 9 bis - central bankers'speeches absent banknotes, the central bank would need to provide this anchor in another way. hence the retail central bank digital currency, which would allow households to hold small accounts with the central bank. but then comes the question of the impact of retail cbdcs on bank deposits, hence on bank stability, also hotly debated ( slide 14 ). the worry of the banks is twofold : ( i ) a permanent reduction in deposits, reducing their intermediation capacity ( fernandez - villaverde et al, 2021 ; tenner et al. 2023 ), and / or ( ii ) higher risks of bank runs in crisis times due to high substitutability of deposits with cbdc ( kumhof and noone 2018, european banking federation 2021, angeloni 2023 ). the first risk ( reduced deposits ) can be mitigated by holding limits, zero remuneration, waterfalls ( automatic transfers from cbdc to linked bank accounts, when ceiling is reached ) and reverse waterfalls ( i. e. automatic transfers from linked bank deposits to cbdc accounts, when needed ). at the limit, there could be no need to hold a positive cash balance on cbdc accounts ( and this is what is envisaged in the euro area for corporations ). like banknotes, retail cbdc will be a means of payment rather than a store of value ( caccia, tapking and vlassopoulos, ecb 2024 ). but unlike for banknotes, there will be holding limits. hence it is far from granted that household will hold more cbdc balances tomorrow than they held banknotes yesterday. the second risk ( volatile deposits ) can also be mitigated by cbdc holdings limits ( bindseil 2020 ; cipollone, 2024 ). as i said, there is currently no holding limit for banknotes, which in theory involves larger potential for a bank run. in fact, recent bank liquidity crises were driven by large, unsecured depositors runs ( svb ), or wholesale market freeze ( 2008 crisis ), or money market outflows ( credit suisse ), rather than by small depositors ( see, e. g., jiang et al | ben s bernanke : challenges for the economy and state governments speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the annual meeting of the southern legislative conference of the council of state governments, charleston, 2 august 2010. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system β s website. * * * it is a pleasure to be able to address this conference of southern leaders and legislators. as some of you may know, i was raised only about 150 miles from here in dillon, south carolina, and remain connected to this area through family ties. our nation has endured a deep recession that in turn was triggered by the most severe financial crisis since the great depression. today, the financial crisis appears to be mostly behind us, and the economy seems to have stabilized and is expanding again. but we have a considerable way to go to achieve a full recovery in our economy, and many americans are still grappling with unemployment, foreclosure, and lost savings. the recession β as all of you know too well β has also battered the budgets of state and local governments, primarily because tax revenues have declined sharply. many states and localities continue to face difficulties in maintaining essential services and have significantly cut their programs and work forces. these cuts have imposed hardships in local jurisdictions around the country and are also part of the reason for the sluggishness of the national recovery. today, i will touch on current economic and financial conditions and then turn to some nearterm and longer - term challenges β fiscal and otherwise β facing state governments. the economic outlook after a precipitous decline in late 2008 and early 2009, the u. s. economy stabilized in the middle of last year and is now expanding at a moderate pace. while the support to economic activity from stimulative fiscal policies and firms β restocking of their inventories will diminish over time, rising demand from households and businesses should help sustain growth. in particular, in the household sector, growth in real consumer spending seems likely to pick up in coming quarters from its recent modest pace, supported by gains in income and improving credit conditions. in the business sector, investment in equipment and software has been increasing rapidly, in part as a result of the deferral of capital outlays during the downturn and the need of many businesses to replace aging equipment. at the same time, | 0 |
lawrence schembri : the merits of a floating exchange rate remarks by mr lawrence schembri, deputy governor of the bank of canada, to the economics society of northern alberta ( esna ), edmonton, alberta, 17 june 2019. * * * introduction it is a pleasure to be in alberta for my speech today, given the importance of commodities, including oil, and their prices to the albertan and canadian economies. while it may seem that many of us think about the value of the canadian dollar only when we are about to travel, at the bank of canada, we view it as the most important price facing our economy because it directly affects much of what we produce, consume and trade. that β s why this is the right place to explore the critical role our flexible exchange rate plays in canada β s economy. and the time is right as well. canada has just entered its 50 th consecutive year with a floating currency, the longest of any country, dating from when it was last unpegged from the greenback in may 1970. this is my second speech in our public engagement campaign called β toward 2021. β we call it that because 2021 is the next renewal date for our five - year inflation - control agreement with the government of canada, first adopted in 1991. for the renewal, we β ve committed to a wideranging review of our monetary policy framework to ensure it best achieves our mandated goal of price stability and thereby promotes strong and sustainable output and employment growth for the benefit of all canadians. the framework has two components : our 2 per cent inflation target and our flexible exchange rate. the inflation target normally gets most of the attention, so the value of our floating dollar risks being overlooked at a time when the performance of flexible exchange rates is coming under greater scrutiny in international policy circles. my purpose today is to review the evidence and make the case that canada and many other open economies have been well - served by a market - determined flexible exchange rate. in particular, canada β s experience with inflation targeting underpinned by a floating currency is an instructive example of the most durable monetary policy framework in the post - war period. 1 the flexible exchange rate has helped our economy adjust to external shocks, primarily changes in commodity prices. although our floating currency does not completely offset the impact of all of these shocks, it has complemented the bank β s inflation target to help achieve low and stable inflation and keep our economy functioning well. while we β re not going to | rates unchanged and gathering more information to confirm the need to raise the policy rate. on balance, our assessment was that the cost of delaying action was larger than the benefit of waiting. elevated inflation is a burden on canadians, especially for the most vulnerable. we are also acutely aware that higher rates are making life more difficult for many canadians. and we know many canadians are asking : is the bank done raising interest rates, or will rates need to go higher still to relieve price pressures? the short answer is we will be taking each decision based on the information available at the time. 2 / 3 bis - central bankers'speeches what we can say is that monetary policy is working, and we know it will take more time for the full effects of past interest rate increases to work their way through the economy. with the increases in our policy rate in june and july, our outlook has inflation going gradually back to the 2 % target. but several things need to happen for inflation to continue easing. and we are particularly concerned about two upside risks to the outlook. first, we have been surprised by the persistence of excess demand and underlying inflation in canada and globally. we know that higher rates are having an impact, but how big their impact will be is uncertain. second, with the downward momentum in inflation waning and our forecast suggesting inflation will be around 3 % for the next year, we are concerned that the progress to price stability could stall, and inflation could even rise again if there are upside surprises. as i said, we are trying to balance the risks of over - and under - tightening. if new information suggests we need to do more, we are prepared to increase our policy rate further. but we don't want to do more than we have to. these decisions will be guided by our assessment of incoming data and the outlook for inflation. we need to see demand growth slow, wage pressures moderate and corporate pricing behaviour normalize. we will also need to see near - term inflation expectations and measures of core inflation come down further. let me conclude. the substantial drop in inflation over the past year is welcome news for all canadians. but monetary policy still has work to do - our job is not done until inflation is centred on our 2 % target. that is the level that helps the economy grow sustainably, restores competitive forces in the economy and gives canadians the price stability they need to budget and invest with confidence. with that summary, the senior deputy governor and i would be pleased to | 0.5 |
sector and monetary policy. third, the central bank has the function of lender of last resort. therefore, the central bank must utilise its resources to supply short - term emergency funds during a crisis. bankers are expected the shift their business strategy away from merely surviving the crisis to exploiting the opportunities presented by the global economic recovery. strengthening the banking industry does not imply that its soundness is in doubt, however, it will lead to more efficient banks and a more optimal intermediation function. | . β’ and lastly, and perhaps more importantly, innovation has reduced costs, so the barriers to saving and investment, and to changing portfolio structures, have diminished. what does the increase in financial activity mean? let me now move to the second question. financial market activity is, of course, not an end in itself β at least for those people not employed in the finance sector β so the important question most people want to know is what this increase in financial activity means for the real economy. here, i think, the answer is a very positive one. vibrant, competitive and innovative financial markets work to increase the availability, and reduce the cost, of finance. there are some obvious examples of how this affects our day - to - day lives. take the housing market. the development of wholesale capital markets provided funding for non - bank lenders and allowed them to compete with deposit - taking institutions in housing lending. this led to a substantial reduction in interest margins on housing lending, from about 400 basis points 15 years ago to a little over 100 basis points today. this has been a very material benefit to australian households. the benefits of financial market development have not been restricted to households. interest margins and the cost of borrowing have also come down for businesses, as financial intermediaries have competed with capital markets in meeting businesses β funding needs. fifteen years ago, the average interest margin on business loans was 570 basis points ; today it is only 135 points. in short, the trading and innovation that we see in financial markets eventually flows through to reduced costs for the users of financial services. this has meant that the amount spent by households and businesses on financial services has grown much less than financial activity. for example, even though financial activity has risen by a factor of several times gdp over the past decade, the finance and insurance sector β s share of national income has risen only slightly, from around 5Β½ per cent to around 7 per cent. financial innovation has also allowed households and businesses to reduce risks. firms have been better able to structure their financing to suit the characteristics of their businesses and to manage the risks associated with their revenue flows. foreign exchange and commodity derivatives are good examples of innovations that have helped many australian companies in this regard. the overall effect of all this has been to make the economy more resilient and stable. the ability of the australian economy to come through the asian financial crisis largely unscathed owed importantly to the fact that australian firms and financial institutions had been able to hedge a lot | 0 |
see janet l. yellen ( 2012 ), β revolution and evolution in central bank communications, β speech delivered at the haas school of business, university of california, berkeley, november 13. bis central bankers β speeches it is hard to imagine now, but only two decades ago, the federal reserve and other central banks provided the public with very little information about such monetary policy moves β the spirit of β never explain β was very much alive. there were a number of different justifications for this approach. one view was that less disclosure would reduce the risk and tamp down suspicions that some could take advantage of disclosures more readily than others. some believed that markets would overreact to details about monetary policy decisions. and there was a widespread belief that communicating about how the fomc might act in the future could limit the committee β s discretion to change policy in response to future developments. in sum, the conventional wisdom among central bankers was that transparency was of little benefit for monetary policy and, in some cases, could cause problems that would make policy less effective. while communication and transparency steadily increased elsewhere in government and society, change came slowly to the fomc. it wasn β t until february 1994 that the committee issued a postmeeting statement disclosing a change in monetary policy. even then, it only alerted the public that the committee had changed its policy stance, with scant explanation. 4 something big was changing, however, and it would soon be the force driving major enhancements in the fomc β s communication. by the early 1990s, a growing body of research challenged widespread assumptions about the how central banks, such as the federal reserve, affected the economy. the reevaluation starts with a question that puzzled many of my students when i was a professor : how is it that the federal reserve manages to move a vast economy just by raising or lowering the interest rate on overnight loans by 1 / 4 of a percentage point? the question arises because significant spending decisions β expanding a business, buying a house, or choosing how much to spend on consumer goods over the year β depend on expectations of income, employment, and other economic conditions over the longer term, as well as longer - term interest rates. the crucial insight of that research was that what happens to the federal funds rate today or over the six weeks until the next fomc meeting is relatively unimportant. what is important is the public β s expectation of how the fomc will use | rates β which softened the blow of higher fuel costs on households and businesses β because of the credibility the federal reserve had built since the 1980s. if the public β s expectations have always been important, you might wonder how monetary policy had any effect prior to the transparency revolution. as it turns out, with the notable exception of the late 1960s and 1970s, the fomc usually responded in a systematic way to economic conditions. in 1993, economist john taylor documented that fomc policy changes since the mid - 1980s had fairly reliably followed a simple rule based on inflation and output. changes in the federal funds rate were usually made in several small steps over a number of months. in practice, the federal reserve β s approach was β never explain, but behave predictably. β a close analysis of the fomc β s past behavior was a good guide to future policy, but it had two shortcomings as a substitute for transparency : first, it gave an advantage to sophisticated players who studied the fomc β s behavior β something that is arguably inappropriate for a government institution. second, while a policy rule such as the one developed by john taylor explained the course of the federal funds rate much of the time, there were cases when it didn β t and when even the experts failed to correctly anticipate the fomc β s actions. the trend toward greater transparency accelerated during the early 2000s. starting in 2000, the fomc issued information after every meeting about its economic outlook. it also provided an assessment of the balance of risks to the economy and whether it was leaning toward increasing or decreasing the federal funds rate in the future. such information about intentions and expectations for the future, known as forward guidance, became crucial in 2003, when the committee was faced with a stubbornly weak recovery from the 2001 recession. it had cut the federal funds rate to the very low level of 1 percent, but unemployment remained elevated, and the fomc sought some further way to stimulate the economy. in this situation, it told the public that it intended to keep the federal funds rate low for longer than might have been expected by adding to its statement that β [ i ] n these circumstances, the committee believes that policy accommodation can be maintained for a considerable period. β 6 let β s pause here and note what this moment represented. for the first time, the committee was using communication β mere words β as its primary monetary policy tool. until then, it was probably common to think of | 1 |
adnan zaylani mohamad zahid : sustainability and the challenges ahead speech by mr adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the ifn green and sustainable finance forum, kuala lumpur, 3 december 2019. * * * it is a pleasure to be here this afternoon. i would like to thank the organisers for once again inviting me to speak at their conference. i hope that i can further add to the valuable discourse that undoubtedly takes place at such events. we must now acknowledge, that the sustainability agenda has gained increasing importance and a momentum of its own. everywhere, there is a sense of urgency and call for action. consumers are making their purchasing decisions with the environment in mind. investors and shareholders are making demands for their companies and corporations to adopt environmental, social and governance or esg standards. corporate managers, emboldened with such mandates by their shareholders are reshaping their organisations into new corporate citizens, responsible, responsive and socially aware. governments are certainly not left behind. globally, societies are seeking ways to create sustainable solutions for their communities. achieving the sustainability goals will not be an easy journey. the global environment itself is more challenging than before with increasing volatilities and uncertainties arising from the global trade war, geopolitical developments and a multitude of factors. many of these could derail or delay our efforts. how do we then stay on course to keep sustainability and responsible finance a prime focus of business in the financial sector? in my view, islamic finance is primed to advance the sustainability agenda. islamic finance is developed with a higher overarching objective that emphasises maximising positive value creation and prevention of negative impact. the maqasid shariah first articulated by al - ghazali in the 12th century outlines the goals of preservation of religion, life, family, mind and property with the ultimate aim of prevention of harm and attainment of benefits. many scholars have developed this further, describing the maqasid shariah as the attainment of good, welfare, advantage, benefits and warding off evil, injury, loss. modern scholars have also weighed in, touching on nurturing righteousness and establishing justice. contemporary scholarship in islamic law also recognises human development to be a prime expression of maslahah ( public interest ) pertaining to all economic activities. these guiding principles for islamic finance stands in contrast to the secular philosophy of | of infrastructure development is estimated to be usd35 trillion over the next 20 years. for the asian region alone, a study done by the asian development bank ( adb ) reveals that the region needs usd750 billion per year over the year 2010 β 2020 to meet the rising needs of infrastructure development. out of this, the needs for the asean region have been estimated to be over usd60 billion per year. considering the vast opportunities of infrastructure projects regionally and globally, malaysian contractors should seize the opportunity for further expansion of their business. i am pleased to note that many malaysian companies have already established their presence in the global construction industry with commendable achievements. the number of overseas projects awarded to malaysian contractors has increased by 43 % to 40 in 2008 valued at rm8. 5 billion, from just 28 projects valued at rm2. 9 billion in 2004. in 2008, the middle east region being the major end - users of the projects undertaken by malaysian contractors, accounted for nearly rm6 billion or 68 % of the total value of the projects comprising various sectors including energy and transportation. indeed, the achievement signifies that our local contractors do have competitive advantage to reap the vast opportunities in the global market. in complementing the efforts of local contractors to strengthen their international presence, relevant authorities and institutions should be continued to enhance and improve the enabling environment. in this regard, i am pleased to note that the cidb has effectively played a key role in promoting the capabilities and strength of malaysian contractors to the relevant parties in the global market. apart from having well established companies with excellent track record to undertake infrastructure projects, the other critical component in ensuring the success of infrastructure development is the availability and accessibility to financing. bank negara malaysia has always accorded and will continue to accord high priority to ensure that financing continues to be available to support the needs of the economy. i am pleased to note the vital role played by the exim bank in providing the financing facilities for the construction sector to undertake projects abroad. in today β s seminar, we have the opportunity to hear from the exim bank on the various available financing facilities to contractors with overseas projects. similarly, we will also be enlightened on the role of the icd in promoting economic development among oic member countries, particularly on private sector project, by providing financial as well as advisory services for a range of client requirements. malaysia β s islamic financial industry, as we are all aware, distinguishes itself a proven platform for conducting islamic finance activities. | 0.5 |
services industry in austria. by way of conclusion, however, let me say that i am convinced that, based on its solid background, the austrian financial sector is in an excellent position to meet both current and future challenges. thank you very much for your attention. | the major question in this context is about the optimal level of capital banks need to hold. so what is a sufficient capital basis for banks in the long run? i would like to see that from a functional perspective : a bank is sufficiently capitalized, when β even after a major external shock has materialized β the bank is still able to refinance itself on the market at reasonable spreads. banks on their own define what reasonable spreads are from their perspective as spreads differ depending on size, business model and region. hence, investors that fund european banks rather than regulators or supervisors define the longterm optimal level of capitalization. this means also that there is an upper limit for bank capitalization. above a certain level you will not find anybody to invest in bank shares. similar and connected to the issue of optimal capital level is the introduction of mrel ( the minimum requirement for own funds and eligible liabilities ) and therefore the question on how much mrel is needed? the mrel requirement is designed to ensure a β bail - in β of shareholders and creditors in the case of a failing bank. it safeguards that a bank has sufficient shares and debt instruments issued to absorb losses or to convert into new shares to recapitalize systemic functions. in particular, it is questionable how capital buffers are linked to the amount of mrel needed. in my opinion, it strongly depends on the bank β s individual resolution strategy. if a bank is not recapitalized in a resolution it does not need to mirror its capital buffers in the mrel amount. moreover, if a bank in resolution is fully or close to 100 % recapitalized it will also not need to include its capital buffers fully in the mrel amount as capital buffers shall absorb losses in times of stressed periods. however, the right balance of mrel has to be found to ensure that the recapitalized institute has sufficient capital to access funding markets. let me come to another often quoted assumption in the context of financial regulation : higher capital requirements restrict bank credit supply. what do we observe? higher capital requirements cause deleveraging but without hampering credit to private sector7 : capital has contributed the lion β s share to the leverage reduction in the euro area ( 88 % ) and austria ( 73 % ) between oct. 2008 and feb. 2014. contrary to popular opinion, bank funding for the real economy and for governments has increased even after the crisis, despite substantial deleveraging both in | 0.5 |
key global financial markets, risk linked to activities of the internationally - important financial institutions, and the economic conditions and policies of the systemically - important economies. these are the areas of risk that have global - wide implications but are not being monitored sufficiently relative to their importance. third, the focus of the ewe at the country - level also needs to expand beyond detecting and avoiding local macro - misalignments, and to include assessment of the resiliency and robustness of the domestic economy and financial system to withstand large external shocks. the key point here is that, even with good policies, crisis can happen to an economy if the externally - induced factors overwhelm the abilities and the robustness of the domestic economy to cope with. and forth, the value of early warning is that warning leads to the needed actions being taken in advance. this means the ewe process should serve to facilitate actions to deal with the important risk and issues by the relevant parties. to serve this end, credibility and effectiveness of the ewe depends on appropriate degree of transparency of the structural models and its appropriateness to the context, whether national or markets, as much as its track record. in closing, let me summarize my points in the form of suggestions for the current efforts on the ewe. first, the focus of ewe should expand beyond detecting misalignments to include assessing vulnerabilities and robustness of the global markets, system, and institutions. second, ewe should be a two - level process. the global level process focuses on the systemically important markets, institutions, and economies. at this level, the fsb can play a role in ensuring consistent implementation of regulatory standards, as well as undertaking stress - testing to check the robustness and the resilience of the key markets, institutions, and system. likewise, ewe at the country - level, which can be a part of the normal article iv cycle, should have an additional focus on stress - testing the resiliency of the economy and domestic financial system to large external shocks. the shock scenario can be a common set of assumptions provided by the imf for all countries and draws on ewe findings at the global level. this will provide a good connection between the perceived global systemic risk and the abilities of the individual economies to handle them. lastly, ewe must be part of a global policy process, in that information of ewe must be used and if needed leads to timely policy action. | william j mcdonough : toward greater financial stability remarks by mr william j mcdonough, president and chief executive officer of the federal reserve bank of new york, at the bank of thailand, bangkok, 5 february 2001. * * * it is my pleasure to accept the invitation of the bank of thailand to speak to you tonight on how we can promote greater financial stability. in the wake of the asian crisis, authorities in the region have done much to promote increased financial stability, through a variety of measures to strengthen domestic banking systems and corporate sectors, and institute broader improvement in accounting, legal, and supervisory systems. thailand has taken a number of such actions, including efforts, among others, to close troubled financial institutions, attract significant private sector capital ( including foreign capital ) into the banking system, and improve the legal framework. macroeconomic policy adjustments, including the move to flexible exchange rates, have also furthered greater stability. these actions have helped countries recover from large - scale banking crises, and restore solid growth generally. that said, in thailand and elsewhere, the recovery is not yet complete, and much remains to be done. moreover, the restructuring and reform agenda will be challenged by slowing global and regional growth, which may contribute to already apparent signs of increasing reform fatigue within the region. in my view, asia stands at an important policy crossroads, involving a choice between pushing forward market - based reforms that are the only way toward long - term financial stability, or pursuing actions that provide short - term relief at the risk of threatening the hard - won gains of the last three years. the recognition that we have entered a new international financial environment has set in motion a range of efforts dedicated to strengthening the new international financial architecture. my remarks today will focus on what i believe can be done, from my perspective, to enhance domestic financial resiliency, within the context of these international efforts, and particularly on two essential building blocks : a strong financial system and a sound and stable macroeconomic environment. my comments reference the experience of east asia, but reflect lessons that are more broadly applicable. overview of recent recovery given the depth of the problem a little more than three years ago, the asian recovery on the whole has been remarkable, and has largely defied initial expectations that the crisis would cast a long shadow over regional growth prospects. the regional recovery has exhibited a solid " v " shaped trajectory supported by strong performance in the external accounts, and a pickup in domestic demand. banking sectors β faced with unprecedented crisis | 0 |
at the centre of the irish pharmaceuticals industry and has a vibrant it sector, as well as having significant indigenous business and tourism sectors. given its diversified economic structure, it is likely that the outlook for the region will be subject to the same risk factors as for the rest of the country. external risk factors looking ahead, the central forecast is for economic activity to continue to grow at a healthy pace, with the main impetus to growth expected to come from domestic factors. however, the outlook is characterised by uncertainty about the external environment such that risks to economic forecasts are to the downside. one obvious risk factor relates to brexit. looking at the wider international picture, given the strong presence of multinationals in the economy, there are also risks related to the potential for changes to broader international taxation and trade arrangements. 1 / 4 bis central bankers'speeches both in the short term and the longer term, the economic impact of brexit on ireland is set to be negative. reflecting this, the central bank revised down its economic forecasts in the wake of the uk referendum. to date, in the absence of any weakening in the uk economy, the impact of brexit has mainly been experienced through the sizeable depreciation of sterling against the euro. in addition, however, those sectors with a high dependency on exports to the uk remain exposed to any future adverse uk economic developments and also the threat of new barriers to trade. even for those parts of the economy not directly dependent on the uk market, there are potential indirect effects via competition from uk imports, supply - chain linkages and increased crossborder shopping. while exporters selling to the uk are most immediately affected, there are additional channels by which shifts in the sterling - euro exchange rate affects the economy. first, in many domestic sectors, the market share of domestic firms will be affected by import competition from the uk. second, many domestically - orientated firms are suppliers to exporters or rely on employees in exporting firms as customers. third, sterling depreciation is associated with an increase in cross - border shopping, including a greater volume of online purchases from uk websites. while these are adverse forces, it is also important to point out that a weaker sterling may benefit some firms that rely on imported inputs from the uk and that real income gains to households due to cheaper imports from the uk may in part be recycled into higher spending on domestically - produced goods and services. over the longer term, irish firms will have to | more. i thank you. 4 / 5 bis - central bankers'speeches 5 / 5 bis - central bankers'speeches | 0 |
uk β s contribution to the bilateral support for korea. but such official financial help cannot be unlimited and it cannot be provided without strings. it, too, has real dangers. if it were too readily forthcoming it could encourage β moral hazard β, especially by encouraging commercial lenders - particularly foreign currency creditors - in the belief that they will be bailed out if things go wrong. that would be likely to add to the problem of potentially volatile capital inflows next time around. not surprisingly, too, there is strong political resistance in many countries, including notably the united states, to the idea that public - taxpayers β money should be used to bail out private creditors, especially foreign creditors. external financing need not come solely from the public sector. private finance would serve the same purpose, and in many situations market price adjustments may be sufficient to stem the capital outflow. but, given the extent of the loss of confidence in the asian case, organising private financial support meant in practice persuading existing creditors that their assets would be better protected if they were prepared to leave them in place, especially if other major private creditors agreed to do the same, and if official support were made available in parallel. but in this case, too, difficult judgements have to be made. there is a danger that, if private creditors have in effect to be coerced into staying put, they will immediately cut their positions elsewhere, while they still could, thereby adding to the international contagion. in fact, in the critically important case - because of its size - of korea, the promise of massive official support failed to restore market confidence. and when it became apparent that the official bilateral financing was in practice available only as the very last resort we - again with the central banks as the immediate intermediaries - had to turn to the commercial bank lenders in the major creditor countries and persuade them to extend the maturity of their loans. like most u - turns, it was a dangerous moment. but the banks β constructive response went a long way to stabilising the immediate situation in relation to korea - and thereby to the region as a whole. the creditor banks are also now in negotiation with indonesia β s bank and commercial non - bank debtors. i can β t pretend that we are completely out of the wood in terms of the external financial crisis in asia, but there is now at least a good deal more light between the trees. international attention is now extending to managing the economic fall | is hence particularly important. it is critical, for instance, to couple the internal separation between supervisory and monetary functions with an external dimension, reinforcing the outside perception of clear separation in terms of operations and accountability. these risks might be contained successfully with the appropriate institutional and organisational set - up. more caution is warranted amid the legal risks stemming from the draft regulation that is currently on the table. let me give some examples : under the trialogue compromise, the appointment of the vicechair of the supervisory board requires approval by the european parliament as well as an bis central bankers β speeches implementing decision by the european council. while the chair of the supervisory board does not necessarily belong to an independent eu body, the ssm draft regulation provides for the selection of the vice - chair by the governing council from among the members of the ecb β s executive board. the same applies to the dismissal procedures for the chair and vice - chair of the supervisory board. as this provision may be beyond the red line of the ecb β s statutory independence, and that of the executive board and of its members, it might be legally challenged and create a reputational risk should the ssm become subject to litigation. the foreseen de facto veto right of the european parliament to a nomination proposal of an ecb executive board member seems inappropriate, as a veto could be based on the following considerations. 1. the member β s past track - record on monetary policy or on other ecb basic tasks. this would be tantamount to a political interference on exclusive and independent ecb tasks. 2. the member β s prospective supervisory policy views. this would condition the member β s use of discretion in his or her supervisory activity, against the principle of supervisory operational independence. 3. any reason entailing a discrimination prohibited under the treaty and the eu charter of fundamental rights. moreover, there is already an institutional balance in the appointment procedure for executive board members, in which the european parliament opines on nominated candidates. such an institutional balance could be disturbed by the new veto right. strangely enough, for the primary ecb tasks the parliament β merely β opines, while it has a veto power for the secondary task β relating to a person already scrutinised by the parliament when appointed to the board ( and thus to the governing council ) and who is nominated by the governing council to an additional position in an internal ecb body. in addition, a parliamentary rejection or dismissal of an ec | 0 |
central bankers to have candid discussions on the best approaches to be adopted. true it is that the implementation of cbdcs touches the core of central bank mandates of monetary and financial stability and that each country should consider its own requirements and subsequently adapt the design features of its cbdc to ensure the intended policy objectives and specificities are met, while mitigating associated risks. in the new post - covid global financial architecture that is currently taking shape around us, the potential of the use of cbdcs is, and will be, prominent. it is therefore vital that we are able to adapt ourselves and be ready to act in the most appropriate manner in this new financial architecture. at the bank of mauritius, we are already gearing up for this. i have noted that the agenda across the 3 days is a very packed one. but i am certain that what participants will reap in terms of knowledge, experience and sharing will be simply priceless. we are fortunate that eminent subject matter experts from all continents have willingly accepted to put their expertise at the disposal of the central banking community. 4 / 5 bis - central bankers'speeches we are very eager to hear about the participants'experiences on their respective cbdc journeys, not only on the payment system side, but also on the monetary and financial stability sides. the lessons on consumer experience, including challenges and solutions for service delivery will benefit the greater number. pertinent questions from market players and consumers will keep rising and, as central bankers, it is our duty to reflect on them, and provide meaningful answers. ensuring strong privacy safeguards while meeting financial compliance rules, who will be able to access sensitive cbdc payments data and for what purpose, are some of the questions which we currently face and need concrete answers to. my call to all participants is to make the most of this opportunity for interacting with peers, sharing experiences and working together to devise the best possible approach for the elaboration and roll out of cbdcs. before i end, i would like to reiterate the need for close collaboration between participants, stakeholders and the public in general. next month, the bank of mauritius will be issuing a document for public consultation on cbdc. i encourage all stakeholders concerned to be fully involved in the discussions and share their views. i wish you all a fruitful workshop. ladies and gentlemen, i thank you for your attention. 5 / 5 bis - central bankers'speeches | said that monetary union was only feasible if the prevailing principle of each member state bearing individual responsibility for its own fiscal policy was not undermined by collective liability. ladies and gentlemen in a monetary union, there are negative repercussions for all other member states if one country has excessive debt β even if they are responsible for their own budgets. a monetary union therefore requires fiscal guidelines. that is why the decision, taken in connection with the euro rescue measures, to tighten fiscal rules in a bid to promote individual responsibility was a step in the right direction. ultimately, however, applying the rules is what counts, or, to put it in the words of a footballer ahead of tomorrow β s important world cup match : β it β s what happens on the pitch that matters. β you cannot put it more succinctly than germany β s football legend adi preissler. as regards the proper application of the rules, some doubts are justified, as is evident from the current debate surrounding a flexible interpretation of the stability and growth pact. the pact, which was reformed less than three years ago, allows much scope for discretion. moreover, there is a risk that last week β s decisions of the european council will provide even more of a pretext for a lax interpretation. however, an excessively generous interpretation of this leeway would certainly undermine the credibility of the stability and growth pact. and let us not forget : in the medium term, the pact stipulates balanced or close to balance budgets. the 3 % mark that is frequently used as a yardstick is therefore a ceiling and is not intended as a regular target. this is, incidentally, also true of the 60 % debt ratio that almost all euro countries breach. the commission should therefore apply a narrow interpretation to the rules, and the german government should lend it its decisive support. that, too, is part and parcel of being a role model. nor is consolidation a growth brake, but rather a precondition for sustainable growth. more debt is no precondition for successful structural reform. binding debt rules are a necessary, but by no means sufficient, condition for strengthening the principle of individual responsibility in a monetary union. to this end, the no bail - out principle would have to be more credible, amongst other things. ultimately, that would mean allowing governments to become insolvent. that, in turn, requires robust banks : going forward, neither a sovereign default nor the insolvency of a major bank must threaten | 0 |
. ecb. int / stats / money / surveys / lend / html / index. en. html bis central bankers β speeches for banks, this would reduce their ability to provide loans to the economy. third, interest rates on government bonds influence the level of interest rates that firms have to pay when issuing their bonds and that banks use to price their loans. government bond yields are the basis for the pricing of all assets, from fixed - income instruments to equity. the decision to intervene was a decision to support the discovery of prices in markets which are key to transmitting our policy intentions and which had become highly dysfunctional. as tensions grew in the summer and autumn of 2011, we strengthened our response further. ( see slide 20 ). in our first three - year longer - term refinancing operation in december last year we provided around β¬489 billion of stable funding to 523 banks in the euro area. in the second one β conducted on 29 february this year β we supplied β¬530 billion to 800 banks. both long - term credit operations aimed to break a vicious circle in which sovereign funding stress impedes bank access to longer - term financing and ultimately disrupts the flow of credit to households and companies. it β s worth noting that the second operation reached a much wider group of banks β among them many small banks providing funds specifically to small and medium - sized enterprises. its effect was heightened by an expanded range of collateral, which particularly facilitated the participation of small and medium - sized banks. importantly, risks related to the expansion of collateral have been mitigated by stringent risk control measures. for instance, the haircuts on additional credit claims are very high so as to make the riskiness of these additional credit claims about the same as that of the rest of the collateral, for which the haircuts are lower. we are confident that wider participation by banks can lead to a broader dissemination of credit to small and medium - sized borrowers. the right half of this picture shows the impact of the new measures on the eurosystem β s balance sheet. ( see slide 21 ). at present, we are seeing some encouraging, albeit early, signs of normalisation across financial market segments. broad money growth increased in january, as did loan growth to private sectors. we are also seeing lower stock market volatility ( slide 22, left - hand chart ). money market credit spreads have edged lower recently ( slide 22, right - hand chart ). similarly, | the other hand, is the stage in which the bank offers customized products and services targeted at a niche customer segment, the high net worth individuals. retail banking focused solely at a niche customer segment may also be termed as private banking. 10. a graphical representation of the positioning of mass retail banking vis - a - vis other segments of banking is as under : bis central bankers β speeches 11. as i mentioned earlier, there is a lot of confusion around the ambit of retail banking. this is not really confined only to emerging markets but is a global phenomenon. the confusion primary emanates from whether the banking services offered for entrepreneurial purposes should be considered as part of retail banking or not. many of the banks include the banking services extended to small borrowers and sme clients also as part of mass retail banking. in my view, the retail banking in its most basic form is only about servicing the individuals ( mostly the masses ) for non - entrepreneurial purposes. the retail banking over a period of time can make a transition to class banking and banking for entrepreneurial purposes for the individuals, for agriculture or for small businesses ( smes ). this is particularly so as many aspects of retail banking in terms of delivery of services ( large number of small value transactions ) and risk management practices ( scoring model, model based capital assessment ) are also applicable to small businesses run by individual entrepreneurs. characteristics of retail ( mass ) banking 12. let me now turn to the major characteristics of the retail banking. the products and services under retail banking are supposed to be standardized. in other words, they are β offthe - shelf β products without any customization for individuals. for comparison sake, i would equate them to products offered at a branded retail store. at retail stores, you pay for what you see and what is mentioned on the price tag. there is uniformity, transparency and nondiscrimination about the products and services offered. hence, the products offered by retail banks also should have similar characteristics. further, retail banking products are offered across multiple channels and at multiple places ( branch, internet, atm, telephone ). the banks have to aim at delivering these services in the most efficient manner. as the retail ( mass ) banking involves reaching out to a group of individuals, the banks also need to have appropriate systems, structure, manpower and processes in place to deal with the group, group characteristics, group behaviour and group dynamics for the target clientele. pre - conditions for success | 0 |
european central bank : press conference - introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, and mr lucas papademos, vice - president of the european central bank, frankfurt, 2 september 2004. * * * ladies and gentlemen, the vice - president and i will now report on the outcome of today β s meeting of the governing council of the ecb, which was also attended by the president of the ecofin council, mr zalm, and commissioner almunia. we noted that the information which has become available in recent months indicates that the economic recovery in the euro area has maintained its momentum and should remain firm in the coming quarters. we have also witnessed somewhat higher inflation rates, mainly due to developments in oil prices. at present, our judgement is that although some upside risks to price stability exist, the overall prospects remain in line with price stability over the medium term. accordingly, we have retained our monetary policy stance and left the key ecb interest rates unchanged. the level of interest rates is very low by historical standards, both in nominal and in real terms, lending support to economic activity. we will remain vigilant with regard to all developments which could imply risks to price stability over the medium term. i shall now explain our assessment in more detail, turning first to the economic analysis. the latest data releases confirm that the economic recovery in the euro area is continuing. according to eurostat β s flash estimate, real gdp grew by 0. 5 % quarter on quarter in the second quarter of this year, having recorded a 0. 6 % increase in the first quarter. these growth rates are the strongest in the euro area for some time. the latest indicators of output and demand remain consistent with ongoing growth in real activity, increasingly supported by domestic demand, also in the third quarter of 2004. looking ahead, the conditions for a continuation of the recovery remain in place. economic growth outside the euro area continues to be robust overall, even if subject to temporary fluctuations, and should continue to support euro area export growth. on the domestic side, investment should benefit from the positive global environment and the very favourable financing conditions. improvements in corporate efficiency and higher profits are also supporting business investment. moreover, private consumption should continue its gradual recovery, broadly in line with growth in real disposable income which, with the usual lag, should be further underpinned by an increase in employment growth later on. against this background, we expect the | banks β bidding behaviour. overall, while the need for enhanced interaction between central banks and supervisory authorities is widely acknowledged, recent events have called into question whether improved interaction in cooperation suffices. in this context, the debate has recently turned towards the future supervisory architecture. in particular, the financial crisis has underscored the urgency of reviewing the eu supervisory framework, which is still based on national responsibilities against the background of increased financial market integration and the growing role of large cross - border financial institutions. in response to these concerns, a high level group was set up under the chairmanship of mr jacques de larosiere with the mandate to examine the allocation of tasks between the national and the european level. the final report of the group, published last february, includes a number of proposals to strengthen both macro - and micro - supervisory arrangements in europe. as regards the arrangements for macro - prudential supervision, the de larosiere report proposes to establish a european systemic risk board under the auspices of the ecb, which should substantially improve the assessment of systemic risks to financial stability at the eu level. by assigning a strong role to central banks, and particularly to the ecb, the report recognises that these institutions should play a leading role in macro - prudential supervision. however, in order for the new board to perform its tasks in an optimal manner, it is important that three key requirements are fulfilled : β’ first, the ecb must have timely access to all relevant information, including that concerning individual institutions ; β’ second, risk warnings from the new council should be translated into effective policy action ; β’ and third, the new council must have a solid institutional and legal basis in order to ensure independence and effectiveness of its decision - making processes. 3. concluding remarks the financial turmoil, which began in the summer of 2007, has developed over time into one of the most disruptive crises that the world has experienced in many decades. this is why from the start of the turmoil public authorities have undertaken interventions in key policy fields, including liquidity management, monetary policy and fiscal policy, which are unprecedented by number and scale. in addition, many initiatives have been undertaken to address weaknesses in the regulatory and supervisory framework in order to provide sounder foundations to our financial systems. despite our best efforts, we cannot yet see the light at the end of the tunnel and key financial markets and economic sectors remain under stress. it would be very difficult to predict when exactly our economies will return to normality, | 0.5 |
central bankers'speeches and once again, thank you everyone for participating in this forum. let's also give ourselves a round of applause. maraming salamat po! see you all in 2024. 2 / 2 bis - central bankers'speeches | eli m remolona : closing remarks - 2023 alliance for financial inclusion global policy forum closing remarks by mr eli m remolona, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 2023 alliance for financial inclusion global policy forum " stability, sustainability, and inclusivity for shared prosperity ", manila, 15 september 2023. * * * fellow members of the alliance for financial inclusion ( afi ), esteemed colleagues, special guests, ladies and gentlemen. good afternoon. we have come to the conclusion of the 2023 afi global policy forum. the active participation of the delegates and resource persons in this event has made our forum a roaring success. on behalf of the bangko sentral ng pilipinas, i thank you all for your contributions to our common goal of financial inclusion toward shared prosperity. over the last two days, we had the opportunity to exchange knowledge, insights, and experiences. we examined how the twin goals of financial inclusion and sustainable development are vital to stability. we recognized how the continued introduction of new technology, such as artificial intelligence, presents both opportunities and risks. and how we must prioritize responsible innovation. we have identified the hurdles to driving financial inclusion in a dynamic environment. we have also taken a closer look at the unique challenges in serving various sectors. this entails a nuanced approach to adequately serve displaced persons, women, the youth, and small enterprises. the insights we have gained from fellow regulators and partners in the academe, government, and industry will inform us on how to address these challenges. the initiatives and commitments shared in the last few days will help us sharpen our tools and strengthen our resolve in building a global financial ecosystem that is stable, sustainable, and inclusive. the afi research initiative that was presented this morning reminds us of the importance of evidence - based policymaking. the manila manifesto urges us to apply global regulatory standards without hindering financial inclusion. may the collective commitment serve as a powerful impetus for regulations that are responsive and relevant to our country contexts and shared goals. all these will build on our maya declaration commitments. ladies and gentlemen. we have come so far, and farther, we will go. let us work together to focus on building a more inclusive world where no one is left behind. once again, the bsp thanks afi for this opportunity to host this forum. thank you, afi. 1 / 2 bis - | 1 |
become insolvent. thus, household leverage and financial institution leverage render the financial sector more sensitive to downward movements in the price of land. this kind of sensitivity decreases the stability of the financial system and so increases the potential for the kind of crisis we endured in 2007 - 09. on to my final point : the u. s. tax system encourages household leverage and bank leverage, even though both are potentially destabilizing. let β s start with household leverage. think about a family that wants to buy a $ 300, 000 house. it has sufficient financial assets in stocks and bonds to cover half of the cost. will it use these assets to fund half of the house price and take out a mortgage of $ 150, 000? or will it take a more levered position : make a $ 60, 000 down payment, and borrow the remaining $ 240, 000? it β s not possible to answer this question with certainty for any given household. but we know that the tax system provides an extra incentive for any given household to take out the larger loan. under the current tax code, the household can deduct from its gross income any interest payments it makes on the extra $ 90, 000 of mortgage debt. this means that the household β s after - tax interest rate on its mortgage is lower than it would otherwise be, making mortgage financing more attractive. it is in this sense that the mortgage interest tax deduction undercuts financial stability. bis central bankers β speeches in making this argument, i should note that only about one - third of u. s. tax returns itemize deductions and are therefore affected by the tax code β s leverage inducement. however, over 60 percent of those households that make over $ 50, 000 do itemize, as do over threequarters of those households that make over $ 75, 000. 5 and β contrary to some misconceptions β the mortgages of these relatively upper - income households are certainly relevant as we think about the impact of the fall in land prices. according to a recent online survey, just over 20 percent of mortgage - holding adults with incomes over $ 50, 000 β and a similar fraction of those with incomes over $ 75, 000 β believe that they are β underwater β on those mortgages. 6 this fraction is pretty much the same as the percentage for all households. 7 next, i turn to financial institution leverage. consider a financial institution that needs to raise an extra million dollars. | is with this in mind that i β d like to offer the following contributions. of course, many fed leaders have made these kinds of suggestions in the past, and i β m sure that they will do so in the future. in minneapolis, my predecessor, gary stern, and my current head of supervision, ron feldman, did their part by writing a book in 2004 called too big to fail. the book identified a host of incentives within the u. s. financial system that encouraged large banks to take on risks that could prove destabilizing. their book has proven to be distressingly prescient. i will follow in stern and feldman β s footsteps by focusing on ways in which our current tax system provides incentives for financial institutions to make destabilizing choices. my focus today is on the use of debt as a form of financing β that is to say β on leverage. i will be making three points. β’ first, the sharp and largely unanticipated fall in u. s. residential land prices after 2006 was the main cause of the financial crisis of 2007 - 09. for example, section 1074 of the act mandates that the secretary of the treasury submit recommendations to congress about possible changes to government - sponsored housing finance. earlier this year, the secretary fulfilled that mandate. bis central bankers β speeches β’ second, household and financial institution leverage exacerbate the sensitivity of the financial system to declines in land prices and so reduce financial stability. β’ third, the u. s. tax system promotes leverage on the part of households and financial institutions. my conclusion is that congress should modify the u. s. tax system to reduce the incentives for destabilizing activities by banks and households. as i have already indicated, my arguments will hinge throughout on what economists call incentive effects. one of my big surprises since taking this job is that there is a lot more scepticism among policymakers about the relevance of incentive effects than i would have thought. basically, my point today about tax incentives is that if the tax system reduces the cost of one activity versus another, then people will do more of the first. i can restate this idea even more prosaically by saying that if apples fall in price relative to bananas, people will buy more apples, and fewer bananas, than previously. this proposition about choices is entirely obvious if one is willing to assume β as i generally do β that people behave in a purposive, goal - | 1 |
could permit an appropriate reaction to potential excesses in asset markets, for example. using interest rates to counter such developments is not appropriate, warned lautenschlager, because it could jeopardise the primary objective of price stability. it is thus all the more important that the ecb β s governing council should have more tools at its disposal to counter imbalances. * * * my speech today is devoted to a relationship β to be precise, a triangular relationship. it β s about what makes a complex, yet successful relationship which does justice to the common and different goals and interests of the three parties. starting this year, a triangular relationship, and in particular the workflows and decisionmaking processes within it, is playing a specific role for the ecb, because in less than two months the single supervisory mechanism ( ssm ) officially begins its operations β and then three policy areas will come under the umbrella of the ecb. monetary policy will remain, of course, our main task. the ecb will additionally take on responsibility for banking supervision in the euro area. and we will play an important role in calibrating and implementing macro - prudential supervision, even though national authorities will continue to be primarily responsible. bis central bankers β speeches each of these policy areas has its mandate, goal and instruments. the task of monetary policy is to ensure price stability. in this respect, interest rate policy is the standard instrument ( although there are now quite a number of measures that are non - standard ). the supervisory objectives are to ensure the safety and stability of the banking system as a whole. the supervisory authorities have had, since the crisis, a veritable arsenal of instruments which mainly concern the risk - bearing capacity of individual banks. the objective of macro - prudential policy is the stability of the financial system as a whole. even though the ecb has of course exerted influence on financial stability via its monetary policy, starting in november it will additionally use capital - based and liquidity - based instruments β in respect of the institutions it directly or indirectly supervises. despite their differences, the three policy areas of monetary policy, banking supervision and financial stability plus macro - prudential supervision are closely linked. one could even argue they are in a triangular relationship : they influence comparable variables ( such as consumption and investment ) and operate via the same transmission channels ( such as bank lending ). instruments which are used in one of the three policy areas inevitably affect the other | exception and the bank of japan law sets its objective as " contributing to the sound development of the national economy through the pursuit of price stability. " although many central banks carry price stability as their primary objective of monetary policy, whether such an objective is defined in the form of a specific numerical target depends on each country. the federal reserve and the european central bank do not employ inflation targeting. on the other hand, in the case of the united kingdom, inflation target was set at 2. 5 percent by the government in 1997 and has been maintained thereafter. even in this case, however, the bank of england does not conduct monetary policy mechanically but rather in a flexible manner : it has sometimes lowered the policy interest rate when inflation was above the target and tightened when inflation was below the target. what is important here is that the uk government itself assumes significant responsibility in setting the inflation target. the mandates of the uk treasury require fiscal policy to ensure sound public finances over the medium term and, at the same time, to support monetary policy over the short term. in the case of japan, to discuss the issue of whether the government should decide the objective of monetary policy beyond those stipulated in the bank of japan law, we believe that the following points should be examined : the objective itself ; consistency between the target and necessary policies to achieve it ; cooperation from the government, including fiscal policy, to achieve the target. 7. conclusion i have covered various issues today. before finishing my remarks, as a conclusion, i would like to briefly summarize my view on what the government and the bank of japan should do in order to overcome the current severe economic situation. the first point i would like to make here is that the government and the bank of japan completely share the policy objective : needs to prevent a continuous decline in prices and to bring the economy back to a sustainable growth path as soon as possible. the bank of japan commits itself that the current procedures for monetary operations will be maintained until the annual cpi inflation rate restores the level at or above zero percent in a stable manner. second, the bank of japan has already established a framework to provide sufficient liquidity to the economy. under the framework, the bank provides far more current account balance than required to achieve zero short rates. therefore, lack of liquidity should not be a cause for difficulties in financing economic activity as a whole. although it is rarely pointed out, the current pace of growth in the monetary base is significantly exceeding that in the period after the | 0 |
, which is likely to be a long and slow process. thus, while i expect a moderate recovery to continue and to strengthen over time, i expect to see only modest declines in the unemployment rate, with probably little change over the rest of this year, and then gradually falling to a range of 8 to 8Β½ percent by the end of 2012. inflation let me now turn to my outlook for inflation. just as growth has been weaker this year than many forecasters had anticipated, inflation has been higher than expected. monthly changes in inflation have moderated slightly from those seen earlier in the year as the prices of oil and other commodities have come down. however, measured on a year - over - year basis, both total inflation and core inflation continue to advance. i do anticipate that with many commodity prices now leveling off or falling, and inflation expectations relatively stable, inflation will moderate in the near term. our focus should not be so much on the near term as on the medium term. looking further ahead, we must continue to monitor this situation very carefully, particularly in this environment of very accommodative monetary policy. inflation most often develops gradually, and if monetary policy waits too long to respond, it can be very costly to correct. indeed, it is good to remember that the current inflationary environment is quite different from the one we faced a year ago when we embarked on the so - called qe2 policy to purchase $ 600 billion of long - term u. s. treasuries. at the time, inflation was falling and there were concerns about deflation β year over year, pce inflation was running about 1. 2 percent and core pce inflation ( excluding food and energy ) was under 1 percent. today, pce inflation is 2. 9 percent and core pce is running nearly 1. 7 percent. i would also note that unemployment was 9. 8 percent last fall compared to 9. 1 percent today. thus, with inflation higher and unemployment lower, it is not so surprising that some might question the need for the additional accommodation the fomc undertook in august and september β a point i will return to shortly. in this environment, i think it is very important that we refrain from actions that risk fueling a steady rise in inflation or inflation expectations over the medium term. we must not become too sanguine that high unemployment will lead to low inflation. the lesson of the 1970s is clear β high unemployment or low resource utilization is | in financial markets, where investment decisions and the valuation of securities depend on assessments of future economic outcomes. but this is also true for individuals buying homes and businesses making capital investments. when businesses and households have a better understanding of how monetary policy is likely to evolve, they can make more informed spending and financial decisions. if policymakers can reduce uncertainty about the course of monetary policy, the economy is likely to perform more efficiently. thus, monetary policy that is more systematic and predictable can reduce expectational errors and contribute to a more stable and efficiently functioning economy. this recognition of the important role played by expectations has led many academics and policymakers to stress the importance of credibility and commitment to well - articulated monetary policy objectives. it has also led to extensive research on monetary policy rules that can enhance the predictability of policy. in fact, virtually all of the mainstream macroeconomic models are built upon the presumption that monetary policy is conducted in a rule - like manner that is well understood by all agents in the economy. in their nobel prize - winning work, finn kydland and ed prescott demonstrated that a credible commitment by policymakers to behave in a systematic, rule - like manner over time leads to better outcomes than discretion. 2 in monetary policy, less discretionary behavior and a commitment to a more systematic approach have been shown to lead to more economic stability β lower and less volatile inflation and less volatile output. yet, the science of monetary policy has not progressed to the point where we can specify the optimal rule for setting monetary policy and turn decisions over to a computer. judgment is see the federal reserve bank of philadelphia, β timeline to transparency. β finn e. kydland and edward c. prescott, β rules rather than discretion : the inconsistency of optimal plans, β journal of political economy, 85 ( january 1977 ), pp 473 β 91. bis central bankers β speeches still required. moreover, optimal rules, that is, those that maximize economic welfare, are highly dependent on the particular model from which they are derived. for example, the optimal rule for one model can produce very bad outcomes in another model. in addition, optimal rules can often be quite complex, thus making them difficult to implement and to communicate to the public. in other words, they may not be very transparent. however, these limitations to implementing optimal policy rules should not prevent us from adopting a systematic approach to the conduct of policy. there has been a great deal of progress in identifying simple, robust rules | 0.5 |
mojmir hampl : czechs and austrians β even closer than they appear speech by mr mojmir hampl, vice governor of the czech national bank, at the wirtschaftskammer osterreich, vienna, 14 november 2012. * * * ladies and gentlemen, dear guests, it is a great honour and utmost pleasure for me to speak here today. and believe me, these are not just standard nice opening words. i really mean it. as if there is anywhere i particularly enjoy visiting, it is vienna and also austria as a whole. and as the statistics show, the same goes for many czechs. more than two million of us visit austria annually, and the number is going up every year, regardless economic circumstances ( not the other way around ). this is not due solely to the typical and widespread enthusiasm among czechs for skiing. many czechs simply like austria as a country. it would be hard for me to find a czech who does not feel good, safe and comfortable here. and it is no accident. so, please forgive me if i do not discuss today macroeconomic trends, the extraordinary synchronisation of economic cycles in our two countries, and factors behind continually rising mutual trade. much of this will be surely covered in the discussion. there is something else i would like to talk about. i would like to make a personal comment about the closeness of our two countries. after several years spent within the austrian financial group erste and its czech daughter bank, after many visits to austria on business and on pleasure, and after many working meetings with austrian partners on various occasions, i have become convinced that czechs and austrians have a very similar mentality and share many habits and customs. i would even go so far as to say that hardly any other nation is so similar to the czechs than austrians β maybe not even the slovaks. there are many on either side who will not like this thesis, but i believe there is a lot of truth in it. not only are czechs and austrians typical small savers with a conservative approach to money and debt, and not only do they have similar cultural attitudes to those many petty things important for our lives, from the culture of alcohol drinking to obsession with academic titles, from very similar attitude to clothing to shared mania with sometimes overly bureaucratic procedures here and there. and from comparable attitude to what we deem as the so - called status products in our lives to similar phenomenons and problems | been able to widen their margins. the government has helped to sustain that competition by putting in place arrangements to encourage the continued securitisation of housing loans. the australian office of financial management ( aofm ) has been buying mortgage - backed securities from these lenders at yields that, during the crisis, were well below those in the secondary market ( though still very attractive in absolute terms ). this helped keep the cost of funds to these firms at levels that allowed them to continue lending, albeit at a much reduced rate from that of earlier years. the government has recently announced an expansion in the aofm program. at the same time, issuers of mortgage - backed securities are finding that, with market spreads having narrowed substantially in recent months, it is again becoming economic to issue securities into the market. as my colleague, guy debelle, said last week, the australian securitisation market, like securitisation markets everywhere, has suffered reputational damage from the events in the united states. however, australian mortgage - backed securities have not experienced credit problems. i am confident that this fundamental point will eventually see the local securitisation market return to being an important source of funding for housing loans. in the meantime, increased lending by banks means that total new loan approvals are relatively high. in fact, new loan approvals are at levels which indicate a degree of homebuyer activity that has typically been associated with rising house prices ( graph 7 ). at the same time, however, existing borrowers are continuing to take advantage of the low level of interest rates to make accelerated loan repayments, which is restraining the overall growth of housing credit. even so, housing credit is growing at an annual rate of 7 β 8 per cent, a pace which is more than adequate to fund the new investment in housing that is needed. graph 7 housing loan approvals and prices % % year - ended housing price growth ( lhs ) 2. 0 1. 8 1. 6 1. 4 1. 2 housing loan approvals * ( rhs ) - 5 - 10 1. 0 0. 8 * as a share of the value of the dwelling stock ; excludes owner - occupier refinancing and investor approvals for new construction and by β others β sources : abs ; apm ; rba why are dwelling prices high in australia relative to income? there is a common perception that house prices relative to household income in australia are high both compared with | 0 |
true market is and their responsibility to act in a way that is consistent with maintaining true markets. in terms of a perception of a lack of client focus, i took away two gaps that were raised. the first is a financing gap, which i felt came out during the first panel, and which some economic historians in the room compared to the β macmillan gap β β the distance between finance and industry being too great. people talk today about an excess of savings not finding a home. in this country, it is felt most in terms of sme and mid - cap finance. many were struck by the potential ability of financial technology β fintech β to help bridge this financing gap, but i would emphasise that there was also bit of a caution, as i believe reverend giles fraser noted in the last panel. we should not get too far ahead of ourselves, but look to further evidence that it can bridge the gap. i think the chancellor is absolutely right that fintech has potential both in terms of expertise in finance and capability in technology. if these can be married effectively, we have an opportunity. there were a few specific examples that were mentioned that i would just like to reinforce. first, and as alex brummer very rightly emphasised, the opportunities that come from big data and a greater open architecture that is already there. as our chief operating officer charlotte hogg would note, the bank of england is one of the biggest repositories of big data. there is always a question about to what extent that can be leveraged more broadly into the system, and though it is still early days, the bank may want to consider taking this on as a challenge. jon cunliffe raised a separate and important issue with receivables finance, where fintech could make a real difference. following the crisis, payment terms for companies increased to 120 days and have not come back. we know there are effective fintech solutions to this which leverage off the credit of the payer. in such circumstances, and more broadly where fintech moves further into more traditional banking areas such as peer to peer and other lending, the bank recognises that we need to think about and take forward a proportionate, activity - based regulatory response. let me turn to the second gap in relation to a lack of client focus : an engagement gap, if i can put it that way. this manifests itself in a number of ways, as noted during the many insightful interventions during our panel | the overnight interest rate is the nominal overnight uncollateralised call rate. source : thomson financial datastream. ( iii ) aversion to long - term contracts and excessive resources devoted to hedging inflation risks. as we have seen, high inflation goes hand in hand with greater uncertainty about future inflation. inflation is, therefore, associated with a positive risk premium to compensate investors for that uncertainty. the longer the time horizon, the greater the risk premium is likely to be. that discourages long - term contracts and interest rates in such contracts will often depend upon future spot interest rates. floating - rate mortgages are a good example. with a floating - rate mortgage the borrower is exposed to the risk of sharp fluctuations in the proportion of income that is devoted to debt service, as many households in britain still remember from the late 1980s when interest rates doubled to 15 %. fixed - rate mortgages eliminate that risk, but at the cost of introducing a new risk : the real value of the outstanding debt may change relative to the value of the house. john campbell and joao cocco ( 2002 ) have suggested that a superior contract would be a fixed - rate mortgage where the principal was index - linked. that would reduce both income and capital risk. for whatever reason the market has not generated many private - sector index - linked contracts, despite the encouragement of high inflation in the past. perhaps that is because the risks are generated not by some exogenous process, but by policy decisions. in any event, price stability is a good alternative to indexation. the move from a regime of high inflation to one of price stability can have consequences which again are best illustrated by the housing market. a credible move to inflation targeting can bring down inflation expectations relatively quickly, even if with a lag. chart 7 shows that inflation expectations, as measured by surveys, fell steadily following the introduction of inflation targeting, and are now anchored on the 2. 5 % target. but a move to low inflation has other consequences that may be less easily understood. price stability means lower nominal interest rates, and lower mortgage interest payments. it may also mean lower real interest rates if the inflation risk premium falls. but the fall in nominal rates is likely to be much larger than the fall in real rates. the lower mortgage payment largely reflects a rise in the effective duration of the loan because inflation no longer erodes the real value of the debt as quickly as before. in a low inflation world, nominal incomes rise more | 0.5 |
and march 2023, russia launched 875 missiles and hundreds of drones targeting critical energy infrastructure. cities and villages suffered many hours and even days without electricity and communication, and the looming threat of week - long blackouts became a reality. what did it mean for us as a central bank? a new task emerged : to ensure seamless operation of the banking system and uninterrupted access to banking services under any conditions. a wide - scale project power banking, implemented in cooperation with ukrainian banks, provided a solution. it consolidated over two thousands branches of different banks into a single network. these branches were equipped with alternative power sources, backup communication channels, had enhanced cash collection capacity, additional staff, and a shared system of continuous operation protocols. even during the darkest and coldest winter days, people could conduct cash transactions or just charge their phones and find warmth in these bank branches. but power banking is more than a mere response to missile attacks. once again, we adopt a broader perspective, since a blackout may be caused by a cyber - attack or a natural disaster. our power banking protocols comprehensively address these scenarios, and you will agree that they can happen anywhere. therefore, my second insight is this : a central bank must execute its mandate under any conditions. the nbu has ingrained this principle into its dna. in may 2023, we updated the nbu strategy, broadening our mission statement. same as before, the nbu should ensure price and financial stability. however, we have now made a commitment to fulfill this mandate under all conditions. third, spotlighting the sanction track became one of the survival conditions. the matter of resources is essentially the matter of opportunities. for ukraine it signifies the ability to endure and eventually win. for russia it represents the means to continue its aggression and the global order destruction. sanctions help change the balance of power. thus, their enhancement and ongoing monitoring have been added to our list of tasks since financial companies are always a part of this " supply chain ". we are taking all the necessary steps domestically, severing any connections of our financial sector with russia. we successfully nationalized russian banking assets in order to ensure financial stability. these actions mitigate the risks related to terrorist attempts of russia to target our financial system and to undermine our defense. additionally, we cooperate with our partners to strengthen international sanctions pressure. it is unacceptable to turn a blind eye to the global impact of russian war against ukraine. here is my third insight : | policy and documents on cooperation with our partners. while the first stage of our program with the imf defined the key task as " maintain macroeconomic, external, and financial stability, in order to strengthen 3 / 4 bis - central bankers'speeches ukraine's capacity on its way to victory ", the second stage focuses on recovery and reconstruction. these words are mentioned in the memorandum with the imf more than 80 times. to achieve this, it is important to switch from anti - crisis measures to forward - looking and balanced policy. for this purpose, we moved from the fixed rate to er managed flexibility. we are cutting our policy rate. gradually, we are easing the fx market restrictions and moving towards our strategic objective : return to inflation targeting. we are returning to normality, and i remain hopeful that we will continue on this path, despite the ongoing war. strong economic recovery requires revival of lending. this is why we prepare our lending revival strategy taking into account war realities, including the need to boost the defense of the country. in conclusion, i would like to emphasize that ukrainian experience shows, that despite the fact that the mandate of a central bank is clearly defined, new challenges make us look for the new ways to fulfill it, and these ways may vary. and the most important insight from the two years of the full - scale war is that we, as central bankers, should learn to take a broader perspective. today it is the 716th day of war in ukraine. during this time, there were 978 air raid alerts in kyiv alone. the number and magnitude of challenges have grown, and their impact extends beyond ukraine. i am convinced, that everyone present at this conference would agree. full - scale, cruel, destructive war of russia against ukraine aggravated the risks of global war, geopolitical fragmentation and deglobalization. it has disrupted the " metabolism " of the financial system. this challenge is global, and a risk to global security and global macrofinancial stability, now and in the future. 4 / 4 bis - central bankers'speeches | 1 |
to secure the fledgling recovery, to allow it to develop into a period of sustained and robust growth. we aim to get there in part by reducing the uncertainty that has held back growth. and we are using our full suite of policy tools to help rebuild confidence so that we all can move forward in a sustainable manner. first, we are giving confidence that interest rates won β t go up until jobs, incomes and spending are recovering at a sustainable pace. in particular, we will have to see the rate of unemployment, currently 7. 8 %, fall at least to a threshold of 7 % before even beginning to consider whether to raise bank rate. second, we are building confidence in banks so they can serve the needs of the real economy by providing credit to those who can put it to work. in particular, we have required banks to repair their balance sheets so that their capital ratios at least reach a threshold of 7 % by the turn of the year. crossing these two 7 % thresholds is necessary to ensure that our economy can withstand the inevitable bumps along the road to full recovery. bis central bankers β speeches we must meet the thresholds in a disciplined way. we will ensure that we bring inflation down as the recovery progresses. and we will use our considerable policy tools to prevent new vulnerabilities, whether in the housing sector or financial sector, from arising during this critical transition period. today i want to say more about how the bank will help bring the british economy over the threshold into a sustainable recovery and what that means for you. guidance about monetary policy three weeks ago the monetary policy committee ( mpc ) did something it has never done before : we gave clear, quantitative guidance about the future path of monetary policy. specifically, we announced that we do not intend to raise bank rate at least until the unemployment rate falls to 7 %, provided there are no material threats to either price or financial stability. 1 all nine mpc members agreed to set monetary policy in future according to this framework of forward guidance. that does not mean bank rate will automatically rise when unemployment falls to 7 %. nor is 7 % a target for the unemployment rate β it should ultimately fall well below that level. before the great recession, the uk β s unemployment rate stood at just over 5 %. the 7 % threshold is instead a staging post along the road to recovery. when unemployment reaches 7 % the mpc will reassess the state of the economy and the appropriate stance of monetary policy. our forward | ##onfirmed in our remit from the chancellor in march. the mpc β s guidance is fully consistent with price stability. i can also assure you of my personal commitment to price stability. i certainly have no hesitation in raising interest rates when required β when i was governor of the bank of canada, we raised interest rates as the recovery there gathered pace. but that was the appropriate policy for canada at that time. the challenges in the uk today are different, and policy must be tailored accordingly. the bank of england β s remit recognises that, at times, it is appropriate to bring inflation back to target more slowly in order to avoid unnecessary volatility in output. with a depressed level of output and inflation above target due to temporary factors rather than demand the trend is adjusted for the secular decline in north sea oil and gas production. bis central bankers β speeches pressures, this is such a time. the mpc is charting the right path back to its 2 % inflation target. cpi inflation is currently being pushed up by rises in utility prices and tuition fees that do not reflect the underlying pressure of demand on supply, along with the effect of past increases in import prices. underlying domestic inflationary pressure is subdued, with wages growing at only around 1 % per year. although there will be bumps in the road, inflation is set to fall back over the next two years. in these circumstances it would not make sense to choke off the recovery by raising interest rates prematurely. given that β administered and regulated β price increases will continue to push up on inflation over the next two years, the mpc is prepared to bring inflation back to the target over two years or a little longer. rest assured, however, that we will bring inflation back to target β and at each point we will ensure that risks to price stability are contained. our forward guidance builds in important safeguards of price stability. if there are any signs of underlying inflation pressures building such that it seems inflation 18 β 24 months ahead will be 2. 5 % or more, or if medium term inflation expectations are no longer sufficiently well anchored, then the guidance on interest rates no longer applies. these safeguards give ample flexibility to bring inflation back to target at the appropriate pace, while ensuring that risks to price stability are contained. market reaction to forward guidance much has been made of the upward movements in market interest rates since our announcement of forward guidance. let me give you my perspective. there has been a generalised upward move in long - term | 1 |
city was once an epicenter of the pandemic : we were hit early, and we were hit hard. the virus spread rapidly, leading to widespread hospitalizations and a devastating death toll. during the initial months of the pandemic, one out of five jobs in the city disappeared. in the restaurant industry in particular, 70 percent of jobs were lost. other industries, such as retail and even health care, experienced outsized losses as well. 1 / 2 bis - central bankers'speeches two years later, we've seen great progress toward a recovery. the most recent data show that well over two - thirds of new york city's job losses have been reversed. still, areas of the new york city economy, especially those dependent on visitors and office workers, continue to struggle and are lagging the nation in recovery. despite the challenges, there is palpable energy and momentum propelling us into the future. now that our focus is on the recovery, we must create an equitable future for all residents of this city. we must make sure that all of the people who live, work, or own a business here have a chance to succeed. it is essential that we build a stronger foundation so that everyone can fulfill their economic potential, both here in new york and around the nation. that's why it's critical that we prioritize tackling some of the city's biggest problems, including poverty and inequality, and issues in areas such as infrastructure and transportation. these issues are not new ; they existed long before the pandemic. and there is no simple or single solution to solve them. but as we plan for a better future, we must understand how new york's challenges have evolved since march 2020 and how they are playing out in the current environment. with that knowledge and awareness in mind, we can chart the path forward. the new york fed's role this brings me to our conference today. the new york fed is proud to play a role in connecting and convening leading policy influencers, stakeholders, and thinkers from across the city and around the country. our goal in hosting events like these is to be a catalyst for collaboration and creative solutions. the panelists we'll hear from today will help us accomplish just that. they each have a deep understanding of the issues, a familiarity with the communities, and many innovative ideas to share. the topics on the agenda complement the work that many people do in this very building | benjamin e diokno : financial inclusion - a social mandate speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 2019 finex conference, manila, 11 october 2019. * * * esteemed members of the financial community, it is my pleasure to give this keynote address at your 2019 conference. your theme β riding on the opportunities of the next digital wave β is very timely as we are in fact in this wave. it is also very relevant to the topic of this keynote address which is β financial inclusion as a social mandate. β the fourth industrial revolution is upon us. this advent of β cyber - physical systems β represents new ways in which technology has embedded itself within societies and even our human bodies. it affects many aspects of business, society, and even day - to - day life in a significant way. in fact, technology is now in the hands of everyone. who among you remember the car - based mobile phone service of pldt in the mid - 80s? this technology, which was available to only a few in the 80s, has now grown to 124. 2 million mobile connections in the philippines. today β because of digitalization β anyone with a smartphone and internet connection can easily access information about almost anything under the sun in a matter of seconds. many of these technological advancements are now part of our day - to - day reality such as online streaming, electric vehicles, emv chip cards, and social media. however, despite favorable developments due to technology, many challenges persist. there is uneven access and the people who should benefit the most from new technologies are the ones who are still left behind. we see a similar gap in terms of the state of financial inclusion in the country. those who are in most need of financial products and services are the ones who are mainly unserved and underserved. based on the 2017 financial inclusion survey, only 23 % of filipino adults have a formal account. only 48 % of adults save, but 7 in 10 savers keep their savings at home. of the 22 % of filipino adults who avail loans, 4 in 10 do so through informal sources. as such, it is necessary to bring the unserved and underserved into the national economy. the signing into law of republic act ( ra ) no. 11211 of 2019 amending the bsp charter elevates financial inclusion and its complementary objectives of financial | 0 |
single market as much as germany. were it not for an open europe and the creation of the single market, the robust economic growth of the post - war era would have levelled off over time. the free movement of goods, in other words, the abolishment of customs barriers and other obstacles, has created a large european market which promotes trade and growth. likewise, the freedom of services has enabled people to offer their services in all eu countries. and the free movement of capital and payments created the conditions for the euro and a common financial market. free movement of goods, capital and payments and freedom of services have allowed europe to grow more closely together, have advanced the german economy and have brought prosperity to us all. german firms last year exported goods to the value of almost β¬780 billion to other eu member states. without trade barriers, without exchange rate risk. that accounts for almost two - thirds of all german exports. the single market creates and secures highquality jobs in germany. according to the bertelsmann foundation, the single market contributes β¬37 billion a year to german real gdp growth. that represents additional income of β¬450 per person and year. we also owe these advantages to the euro, as the bulk of trade is invoiced in euro. the euro cements the single market ; our common currency prevents exchange rate fluctuations and competetive devaluations between the member states. the euro has thus provided stability and prosperity. without the euro, open markets in europe would not have lasted long. and all this has not only benefited enterprises, but first and foremost consumers too. the inflation rate has been stable for many years. for the euro it has averaged 1. 7 % since its introduction, compared with 2. 8 % for the d - mark. i have now spoken about the past advantages of a united europe. let β s now take a look at the future. here, too, i am convinced that all of us, germany too, will be able to master the challenges of the future in a united europe. 2. the advantages of europe for future challenges all countries in europe face major, predominantly global, challenges, such as increasing worldwide competition, climate change and technological progress. a. global competition no country, germany included, can turn its back on globalisation if it wishes to secure future prosperity and distribute it evenly. and we need the eu in order to retain our capacity to act and to shape global developments. the economic weight | with the federal reserve system of the us. - in general, what piece of advice can you give to your russian colleagues? we are conducting a confident and friendly dialogue. this dialogue is beneficial for both sides as we live in an increasingly globalised world, not only, but in particular, with regard to financial markets. at the same time, russia and the eu are neighbours, and real and financial integration between the eu and russia is advancing rapidly, also reflecting the growth we have seen in both economic areas. clearly, there is a need to discuss and exchange views on the central banking dimension of these economic and financial links. thus, it is not a matter of giving advice but to engage in a confident and candid exchange of views as central bankers on the various issues which are at the core of our task. - quite recently french president nicolas sarkozy was visiting russia and this visit raised questions on bilateral relations between the russian federation and the euro area. what would be your opinion in this respect? i am personally impressed by the developments in russia and certainly the trade relations between russia and the european union are very intense, supported by the impetus of robust economic growth in both the euro area and russia. let me also say that i am impressed by the importance of our relationship as regards foreign direct investment between the two economies, and particularly by the significant augmentation of this investment during the first half of 2007. three - quarters of the foreign direct investment in russia comes from the european union. so we have a very important relationship not only in trade, but also in direct investment. and this is exactly what we want ; we want to embark on a really strategic relationship. i think that the relationship demonstrated during our seminar is a good example in this respect and i am sure that this relationship will also intensify in other areas. - how do you assess the cooperation between the ecb and the bank of russia? the high - level eurosystem β bank of russia seminar which has just taken place here in moscow demonstrates that cooperation between our institutions is excellent. moreover, while this has been the fourth event of its kind, i would like to stress that our cooperation goes deeper as there have been various forms of cooperation between our institutions at all levels. our partnership has the full legacy of the bilateral relations that several national central banks of the eurosystem and the bank of russia have been developing since the 1990s. with regard to technical cooperation, we are currently holding discussions among our staff and with the | 0.5 |
news conference berne, 14 december 2017 thomas jordan introductory remarks by thomas jordan ladies and gentlemen it is a pleasure for me to welcome you to the swiss national bank β s news conference. i will begin by explaining our monetary policy decision and our assessment of the economic situation. i will then hand over to fritz zurbrugg, who will speak about current developments in the area of financial stability. after that, andrea maechler will review the situation on the financial markets and the progress in reference interest rate reform. finally, we will β as ever β be pleased to take your questions. monetary policy decision let me begin with our monetary policy decision and the inflation forecast. we are maintaining our expansionary monetary policy in order to stabilise price developments and support economic activity. interest on sight deposits at the snb is to remain at β 0. 75 % and the target range for the three - month libor is unchanged at between β 1. 25 % and β 0. 25 %. we will remain active in the foreign exchange market as necessary, while taking the overall currency situation into consideration. the swiss franc has depreciated in recent months. the overvaluation has thereby decreased, yet overall the franc remains highly valued. the depreciation of the franc reflects the fact that safe havens are currently less sought after. however, this development is still fragile. therefore, despite the easing of the situation, the negative interest rate and our willingness to intervene in the foreign exchange market as necessary remain essential. these measures keep the attractiveness of swiss franc investments low and thus ease pressure on the currency. a renewed appreciation would still be a threat to price and economic developments. the new conditional inflation forecast for the coming quarters is higher than it was in september. this is mainly due to increased oil prices and the further weakening of the swiss page 1 / 4 berne, 14 december 2017 thomas jordan news conference franc. the longer - term inflation forecast is virtually unchanged. for the current year, it has risen marginally to 0. 5 %, from 0. 4 % in the previous quarter. for 2018, we anticipate an inflation rate of 0. 7 %, compared to 0. 4 % in september. for 2019, we continue to expect inflation of 1. 1 %. the conditional inflation forecast is based on the assumption that the threemonth libor remains at β 0. 75 % over the entire forecast horizon. global economic outlook i would now | like to turn to economic developments abroad, as these have a considerable bearing on the inflation and economic outlook in switzerland. the past few months have seen further improvements in the international environment. the global economy exhibited strong, broad - based growth in the third quarter. international trade, in particular, remained very dynamic. in view of companies β improved capacity utilisation and growing confidence, investment continued to recover. developments in employment remained positive, which helped to raise household confidence, too. in most countries, inflation moved sideways. economic signals for the coming months are positive, as well. we expect the global economy to continue developing favourably. for the euro area and the us, we have revised our growth forecasts slightly upwards. economic recovery and convergence with the inflation target are most advanced in the us. this prompted the us federal reserve to carry out a number of interest rate adjustments and to initiate the reduction of the balance sheet this year. the coming quarters are likely to see a gradual continuation of monetary policy normalisation in the us. by contrast, the european central bank intends to pursue its asset purchase programme until at least september 2018, and to leave its key rates unchanged beyond that horizon. in japan, too, monetary policy is expected to remain expansionary. alongside the global economic baseline scenario, the risks also need to be taken into consideration. in the short term, global growth could be stronger than projected in the baseline scenario, due to the significant upturn in household and business confidence. in the medium term, however, risks for the international economy are still to the downside. these risks include ongoing structural weaknesses, political developments in certain countries, and potential international tensions. furthermore, the normalisation of monetary policy in the advanced economies presents challenges. an abrupt rise in the currently very low capital market interest rates and risk premia, in particular, could negatively impact the global economy. swiss economic outlook i shall now turn to the economic outlook for switzerland. gdp grew in the third quarter at an annualised 2. 5 %, lending further momentum to the economic recovery. growth was primarily driven by manufacturing, which benefited from page 2 / 4 berne, 14 december 2017 thomas jordan news conference dynamic global economic developments and the weaker swiss franc. accordingly, exports recorded marked gains. investment in equipment also grew noticeably. in the wake of this development, capacity utilisation in manufacturing increased further. the overall economic situation improved, too. higher capacity utilisation, a more robust earnings situation and favourable global economic | 1 |
cara ) of 4 % and above. the revival package also helped in this regard. i am happy to share with you that within a period of last five months, we have issued license to 8 stcbs and 105 ccbs. however, 9 state co - operative banks and 191 central co - operative banks still remain unlicensed. with recapitalization of these institutions, many of them would be eligible for a license. all co - operative banks should endeavour to become eligible to get a license before march 2012. financial inclusion and co - operatives 9. the financial inclusion agenda being pursued vigorously by the government of india and reserve bank of india cannot be accomplished without the involvement of rural cooperative institutions. rather, they have the biggest role to play in this regard. leveraging information technology is a must for achieving financial inclusion and delivering efficient service to the people. full computerization of all tiers of the co - operative institutions along with use of information and communication technology and issue of biometric cards to members has to be achieved to enable to serve the people. way forward 10. you all are aware that all conceivable reform measures have been embedded in the proposed amendments to the co - operative societies acts. however, i want to highlight certain issues, which need to be addressed with urgency. i. pacs are at the base of the entire short - term co - operative credit structure and their health affects the higher tiers. efforts to be made to make them efficient and profitable. ii. we have to go back to good old days of making pacs thrift oriented institutions. pacs generally do not make an effort to mobilize deposits but act as a channel for disbursement of loans by availing refinance. they should make efforts to mobilize deposits from members in order to become self - sustaining. this would also promote savings habit among members. increasing member stake through savings in pacs will result in better involvement of members and a much more alert membership and much better performance of pacs including higher loan recovery. iii. co - operatives should function in the true spirit of co - operation and managed by duly elected members. elections should be held regularly. in order to improve the quality of management, directors and ceos should be appointed on the basis of professional competence, integrity and merit. administrative interference in day - today management should be stopped. iv. the reform package envisages freedom to all tiers of the structure to avail loan from any | of the rbi regulated entities at competitive rates of interest. i am not sure, if any effort has been made in this regard. this must be tried to derive the cost benefit and profitability. freedom should be given for pricing in a fair and transparent manner. v. audits should be done timely and audited statements should be presented to the general body at the agm. vi. full computerization of all the institutions under the three tier structure should be achieved quickly. this will improve the efficiency, internal control system and management information system. vii. training and capacity building of the personnel should be a focus area. nabard and college of agricultural banking have to revamp the training system to prepare the co - operative personnel to meet new challenges and take forward financial inclusion agenda. 11. it is an accepted fact that the rural co - operative credit institutions with vast network of pacs have a great potential to increase flow of credit to agriculture especially to small and marginal farmers. total financial inclusion is not possible without the involvement of cooperatives. in the past, they failed to deliver due to various weaknesses. it is the opportune time now make them vibrant medium to serve credit needs of rural india and at the same time mobilize deposits from rural people to become self - reliant. these institutions should run like banks with professional management and governance. rbi has already prescribed fit and proper criteria for the directors and chief executive officers, which need to be followed. over a period of time, all co - operative banks would be at par with commercial banks as far as regulatory norms are concerned and all prudential norms would be made applicable to them. a beginning has already been made in this regard by way of issuing licenses only those state and central co - operative banks, which have capital to risk weighted assets ratio ( crar ) of 4 % and above. i hope, a new chapter will begin for the rural co - operatives and they will serve the people in the true spirit of co - operation. thank you. | 1 |
other extreme, maintaining workers β full purchasing power would pose a threat to firms β capacity to generate sufficient funds to conduct their investments and, ultimately, would jeopardise their survival, to the detriment of employment and welfare. the information available to date suggests that such cost sharing across firms and workers is already taking place on a tacit basis. specifically, in the collective bargaining agreements registered to march the wage increases for 2022 stood at 2. 4 %, well below the recent increase in consumer prices and that expected for 2022 as a whole. therefore, in practice workers are losing purchasing power. that said, in large part, this increase essentially reflects the deals struck by the social partners in the multi - year collective bargaining agreements negotiated over the past two years in an inflationary setting that bears little resemblance to the current one. there are therefore signs that this stabilisation mechanism is running out of road. with this in mind, i believe that concrete action is needed. similarly, in the case of businesses, recent data reveals that they have not fully passed on their rising costs to their customers, and their margins are therefore likely to have been squeezed. this can be inferred, for instance, from the feedback from spanish firms in the latest edition of the ebae for the first quarter of 2022. according to the survey, around 82 % of businesses saw their costs rise as a result of higher input prices, whereas just over 40 % raised their selling prices. second, the asymmetric impact of the current shocks on workers, firms and sectors must be borne in mind when determining the specific features of the incomes agreement. the necessary coordination at national level must therefore be combined with mechanisms to ensure the agreement is able to cater to the existing productivity and activity - related differences across firms and sectors. 8 equally, where the standard of living of certain segments of households is hit particularly hard by rising energy costs, the incomes agreement should naturally seek to mitigate their straitened circumstances. in short, these considerations reveal the need to avoid overly sweeping measures to implement a potential incomes agreement that might prove too rigid for certain groups of agents. third, any approaches that automatically link wages to past inflation or indexation clauses are also to be avoided9. the aim is precisely to reduce the risk of triggering a wage - price feedback loop. in this regard, workers with collective bargaining agreements registered up to march this year that provide for any form of wage guarantee clause linking the final wage increases agreed in | on russia, but clearly this is not something that can be achieved in the short term. the surge in inflationary pressures apparent in the march data partly reflects the increase in commodity prices associated with the war, but also the delayed effects of the acceleration in intermediate costs in the preceding months on the prices of other goods and services, and the scarcity of certain products as a result of the road hauliers β strike. the impact of the increase in energy costs is highly uneven across groups of agents. in the case of households, those with low incomes are most affected. in the case of productive sectors, the impact is naturally greater on the more energy - intensive ones. a second channel, that is also very significant, is the impact of the war on household and business confidence, given the extraordinary uncertainty surrounding the duration and course of the war. this, in turn, introduces uncertainty over the behaviour of the incomes of these agents, which means they tend to postpone their consumption and investment decisions. the sharp decline in the consumer confidence indicator in march ( the largest decrease in the historic time series, which goes back to july 1986 ) gives an indication of the magnitude of these effects. this fall suggests that the increase in uncertainty may have begun to adversely affect household spending decisions. the results of the latest edition of the banco de espana business activity survey ( ebae ) suggest that the war has begun to worsen the expectations of non - financial corporations regarding their turnover and also the duration of the global supply chain problems, which is now estimated to be longer. third, the invasion of ukraine will affect the spanish economy through the trade channel, the direct impact of which is assumed to be moderate, as bilateral trade flows with the countries at war are relatively limited. in 2019, the last year before the pandemic, spanish goods exports to russia and ukraine represented only 1. 6 % and 0. 3 % of the total, respectively. russian tourism, meanwhile, accounted for 2. 2 % of total spending by foreign tourists. however, the indirect effects on spanish trade flows may be significant. the war will particularly affect central and eastern european countries, which are more exposed to ukraine and russia, and, therefore, the growth of spanish export markets. further, the invasion is having a negative impact on the global supply chains for certain productive processes, with signs of a worsening of bottlenecks, after the partial improvement in the fourth quarter of 2021, although the lockdowns in china to check the | 1 |
industry, liberalized the power sector, privatized the water services, and acceded to the world trade organization. these are just some of the reforms implemented in the 1990s that have been followed through in the succeeding decades and β if i may stress β more aggressively so in the last three ( 3 ) years under the duterte administration. key reforms from 2016 onwards are expected to unleash more growth potentials for the philippines. among these positive game changers have involved tax reforms, liberalization of rice importation, the national id system, universal healthcare, universal access to tertiary education, ease of doing business law, relaxation of the foreign investments negative list ( finl ), and the revised corporation code β just to name a few. the newly amended bsp charter in 2019 has also strengthened the bsp β s capacity to better safeguard price and financial stability, and to promote an efficient payments and settlements 1 / 4 bis central bankers'speeches system amidst a growing economy and the increasing sophistication of the financial system. all these reforms should support and sustain the currently favorable conditions of the economy, summarized by the four key observations i mentioned earlier. let me expound of these at this point. philippine macroeconomic performance first, solid and sustainable economic growth. the philippines recorded its 82nd consecutive quarter or roughly more than twenty years of uninterrupted economic growth in the second quarter of 2019. this shows that we have managed to sail through the toughest external challenges from the asian financial crisis to the global financial crisis. on the production side, economic growth was propelled mainly by the robust performance of the services sector. meanwhile, broad - based expansion in household consumption and government spending reinforced growth on the demand side. the build, build, build program ushers in the country β s golden age of infrastructure, giving additional solid push for the economy β s productive capacity to expand further. second, domestic inflation is within - target. after posting successive multi - year highs that culminated in a 6. 7 percent nine - year peak in september and october, inflation has slowed considerably and reverted to within the target range of 2. 0 to 4. 0 percent. this is credited to a series of monetary actions by the bsp that addressed brewing second - round effects combined with and non - monetary actions by the government that addressed bottlenecks to food supply. the decelerating trend in inflation, which fell to 0. 9 percent in september, has allowed us to reduce the interest rate | new generation of filipinos who are adept in managing their own resources and in strengthening the country β s financial system. let us cooperate therefore in implementing this breakthrough program. indeed, it should be another busy year for all of us. i therefore call on the officers and members of bmap to assist the bangko sentral in ensuring the successful implementation of these reforms and advocacies. we will again count on your support and commitment to these programs. together, let us forge an even stronger partnership as we continue to foster stability in the financial system and secure more sustainable and higher growth path for our economy. finally, i thank your outgoing officers β led by bobby banaag β for a job well done and congratulate the new set of bmap officers β headed by mike villareal β on the successive breakthroughs they will set during their term. mabuhay ang bmap! mabuhay ang pilipinas! maraming salamat sa inyong lahat! | 0.5 |
it has been observed that in some arcs, there were long vacancies in the post of chairperson along with instances of chair of the audit committee ( acb ) also chairing the board meetings as well as a non - independent director chairing the board meetings, contrary to the extant framework. these things only go to show that the governance has not been receiving the required attention. diverse expertise coupled with independence is necessary for a competent board. a board equipped with independent directors with varied backgrounds, skills and experience allows for richer discussions leading to informed decision making. while non - independent directors may take care of certain interests, independent directors 2 / 4 bis - central bankers'speeches bring an unbiased perspective and play a key role in safeguarding from conflicts of interest. however, we have come across instances where there were not enough independent directors on the board or a sufficient number of independent directors did not attend board meetings. clarity of roles and responsibilities between the board and management is essential in ensuring the smooth functioning of the organisation and avoiding dysfunction. while the board is intended to give a strategic perspective and exercise broad oversight over the management, the executive management is responsible for running the day - to - day operations. the md & ceo is expected to function under the overall supervision, direction and guidance of the board and at the same time, maintain independence in performance of his or her duties. it is also important that the sub - committees such as the audit committee, nomination and remuneration committee, etc. are duly constituted and function in accordance with the statutory and regulatory requirements. prior preparation and diligence by board members is a sine qua non for effective governance and decision making by the board. i would urge board members to insist on receiving the agenda papers well in advance and thoroughly reviewing them. rather than merely going through summaries or presentations made by the management, i would request directors to meticulously review rbi supervisory letters and inspection reports, external audit reports as well as the reports provided by the internal assurance functions as they would provide valuable insights into the management's performance. business model of arcs the arc framework was intended to allow loan originators to focus on their core function of lending by removing the sticky stressed assets from their books. it also envisioned the revival of businesses through resolution of viable and productive assets. a review of the data indicates that one - time settlements and rescheduling of debt are the predominant measures of reconstruction employed by arcs. arguably, these measures could have been taken | of all the lands to be blown about my house as freely as possible. but i refuse to be blown off my feet by any β. [ unquote ] the mahatma β s exhortation is even more true today than when he said it. 19. we need to learn from the best in the world, but adapt our learning to the demands and culture of a maturing and emerging economy. we need to be constantly pushing the envelope, be at the frontiers of domain knowledge, oftentimes reinvent it, but all the time remain sensitive to the core concerns of an emerging market economy, one which is still home to hundreds of millions of poor people. 20. that takes me to the third big challenge for the reserve bank β to widen and deepen financial inclusion. we all know from personal experience that economic opportunity is strongly inter - twined with financial access. such access is especially powerful for the poor as it provides them opportunities to build savings, make investments, avail credit, and above all, insure themselves against income shocks. at the aggregate level, financial inclusion provides an avenue for bringing the huge savings of the poor into the formal financial intermediation system, and for channelling them into much needed investment. one of the big take - aways from our outreach programme is that financial inclusion is not just a public good ; it is also a merit good. it empowers poor people in diverse ways. if there is to be β inclusive growth β, financial inclusion is the next big idea, as it will at once promote both growth and equity. 21. the final challenge for the reserve bank is to become a more transparent and sensitive institution. we are a public institution, and have an obligation to deliver quality service at the cutting edge level. we need to listen to people, be sensitive to their concerns, and redress their grievances. we also need to communicate effectively, and credibly and explain the logic of our decisions and actions at both technical and non - technical levels. being able to communicate clearly is non - trivial in many ways. β centralbankspeak β, the language that central bankers speak, can get counterproductive, if not used wisely. we all know of alan greenspan, the iconic chairman of the fed. he had to propose to his future wife seven times before she finally understood that he was actually proposing to her! the idea of india 22. a final thought before i close. a powerful lesson from the | 0.5 |
from other institutions and pressure groups is crucial in ensuring its credibility, and therefore in creating the conditions for inflation expectations firmly anchored upon the announced definition of price stability. the importance of independence for sheltering the decision - making body of a central bank from all forms of interference has proven key in securing the trust of the public and in anchoring inflation expectations in the long run. as a counterpart to its independence, and to foster and maintain a broad constituency for stability and monetary prudence in europe, the ecb was made accountable to the european people. this requirement is met in particular through the regular and frequent appearances - at least five per year of the ecb β s president and members of the executive board before the european parliament. accountability is not just a vital democratic requirement, it is also crucial in ensuring that the central bank operates according to the provisions set out by the treaty. furthermore, it creates and maintains a line of trust between the central bank and its public ; this trust is also enhanced by a transparent communication, an issue which i will also come back to. by comparing actual euro area inflation with the stated objective of price stability, european citizens provide a powerful incentive to policy - makers. in political democracies, which are also vivid opinion democracies an independent institution is ultimately responsible vis a vis the public at large. fiscal governance third, monetary policy is supported by clear rules on fiscal governance. european citizens took a bold step in creating a single currency in an economic area without a genuine political federation or federal government. in order to make up for the lack of federal government and budget, the treaty establishing the economic and monetary union has introduced rules to prohibit monetary financing of fiscal deficits and to discourage free - riding among national governments. in addition, a framework was set up to ensure sound fiscal positions in individual countries. fiscal rules like those enshrined in the maastricht treaty and in the stability and growth pact are essential in any single currency area as key for the economic rationale and consistency of the economic and monetary union. the ecb β s monetary policy concept although these institutional requirements were necessary to ensure the credibility of economic and monetary union and of the single currency itself, i contend that they were not sufficient alone. our challenge was that the euro had to benefit from the highest levels of credibility and trust available within the future euro area, since this was vital to european growth and job creation. to meet this challenge, the ecb designed a specific monetary policy strategy. in | growth throughout the recovery. various indicators suggest this cycle has not been disrupted by the loss of growth momentum this year. employment growth remains relatively strong, even though the latest data suggest some slowdown. the contribution of labour income to household income growth in the first half of this year was the strongest in a decade. and consumer confidence remains above its long - run average in the euro area and across most economies. perceptions about the general economic climate have declined somewhat this year, but consumers β assessments of their personal situation β which tend to be more correlated with consumption β have remained steady. there are three considerations that underpin our view that this cycle is resilient. first, an important force behind employment growth in the euro area is longer - term structural changes, and these are less sensitive to cyclical swings. over the past five years, employment has increased by 9. 5 million people, rising by 2. 6 million in germany, 2. 1 million in spain, 1 million in france and 1 million in italy. 2 this growth is similar to the five years before the crisis, when employment grew by 10 million people. in that period, however, close to 70 % of employment growth was β prime age β, meaning it came from the 25 - 54 age group. but since 2013 more than 70 % of employment growth has come from those aged 5574. this partly reflects the impact of past structural reforms, such as to pension systems. indeed, the participation rate of people aged 55 - 74 has almost doubled, from around 20 % in 1999 to 38 % in 2017. the share of women in work has also risen by more than 10 percentage points since the start of emu to almost 60 % β its highest level ever. in addition, countries that have implemented structural reforms have in general seen a rise in labour demand in recent years compared with the pre - crisis period. germany, portugal and spain are all good examples. 2 / 6 bis central bankers'speeches the second consideration that points to the resilience of domestic demand is the strong link between consumption and job growth in the euro area. consumption is much more conducive to jobs than exports, reflecting the higher labour - intensity of services, which are the bulk of consumers β expenditure. in contrast, exports have a higher manufacturing content and are less labour intensive. 3 this is one reason why the labour market recovery was not affected by the contraction in world trade in 2015 - 16. in fact, the continued strength of consumption may | 0.5 |
financial stability board, but also by including more effectively countries such as ours in sub - saharan africa. for example, the unintended consequences of the global reform agenda, such as the global de - risking and withdrawal of correspondent banking relationships, requires urgent attention. i should mention that, in my capacity as co - chairperson of the financial stability board regional consultative group for sub - saharan africa, i hope to have greater focus on these issues. conclusion distinguished ladies and gentlemen, in concluding, i remind you that the saying " may you live in interesting times " is reputedly an old chinese curse. to the extent that the past decade has certainly been " interesting ", the continued challenge to pol14 icymakers is to make life at least a little bit boring, while not repeating the mistakes of the past. on a more positive note, despite the recent pushback by the supporters of economic nationalism, the fundamental driving forces of globalisation are not reversible. nor is it desirable that they should be, given the extent to which they have contributed to global poverty reduction. however, the globalised economy is a source of not just tremendous opportunities, even for conservative investors, but additional risks and associated costs of mitigation. these include the potential for various levels of contagion, as indicated by both the experience of the global financial crisis and the rise of cybercrime which, as i indicated my remarks, is an increasingly global phenomenon. no central bank governor, wealth or fund manager can afford to act as if they are immune from such risks. distinguished ladies and gentlemen, i thank you for your kind attention. | same time, we must recognise that the impact will vary according to the specific circumstances of each region and country. one thing for sure is that the current financial crisis is unprecedented in modern times for its scale and catastrophic dimensions, and its full impact has yet to unfold. another defining feature of the crisis has been the pace and dynamism of its development, often in unexpected directions. it is less than two months since the collapse of lehman brothers on september 15, 2008, but it is not much of an exaggeration to say that this seems like a life time away. africa had initially appeared relatively insulated, both for its financial system and economic development more widely. but the continent can no longer be lulled by any sense of security that this is a crisis only for the developed world, and its banks in particular. globalisation has many benefits, but there are associated risks and, as the international monetary fund has repeatedly come up with lower forecasts for global economic growth, it is increasingly clear that developing economies will feel the chill of the looming recession. the commodities boom has come to an abrupt halt, and this is of particular concern to many african economies given the negativeimpact of reduced trade on balance of payments. panel members : mr kofi annan ( chair ), mr tony blair, mr michel camdessus, mr peter eigen, mr bob geldof, ms graca machel, ms linah mohohlo, gen olusegun obasanjo, mr robert rubin, mr tidjane thiam, prof muhammad yunus, mr michael keating ( director ). slowing world demand also undermines african countries β efforts towards diversifying economies away from primary sectors. as we are witnessing in botswana, even when investors wish to proceed with new developments, they are increasingly constrained by lack of access to credit. the so - called β flight to quality β where risk averse investors concentrate their investments in the short end of the yield curve, can destabilise financial flows. in the face of global financial markets, africa β s banking practices as well as related regulatory and oversight regimes cannot continue to remain local and, in many instances, ineffective. needless to add, investing foreign exchange reserves in volatile markets is an additional challenge which requires the establishment of prudent investment policies and guidelines, depending on whether the reserves are the minimum necessary for short - term import cover, or represent an accumulated stock of national savings ( e. g. | 0.5 |
- july 1998 reflecting growing anticipation for permanent tax cut. however, they have declined since then as a wait - and - see posture has prevailed among market participants with the growing attention to the concrete measures of the new administration β s economic policies. meanwhile, euro - yen interest rates and the japan premium indicate strong market concerns regarding credit risks of financial institutions and liquidity risks at end - september 1998, the end of the first half of fiscal 1998. with respect to monetary aggregates, growth in m2 + cds has been slowing, reflecting the sluggish private bank lending. these developments basically reflect the further decline in the credit demand of private firms with the worsening of overall economic activities, along with the continued cautious lending stance of private banks. the bank β s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on august 11, as the basis of monetary policy decisions. the rise in medical service charges due to the medical insurance system reform of september 1997. meanwhile, some firms, especially small and medium - sized firms, have been facing difficult financing conditions in terms of both funds availability and fund - raising costs. this influence on the overall economy continues to warrant careful monitoring. | bank of japan β s august report of recent economic and financial developments bank of japan communication, xx / 8 / 98. the bank β s view1 japan β s economic conditions continue to deteriorate. with respect to final demand, public investment seems to have bottomed out. net exports have resumed to increase mainly due to a decline in imports. however, business fixed investment has been decreasing significantly, and housing investment has weakened further. private consumption has not yet shown a resumption. against this background of weak final demand, substantial production cutbacks continue. as a result, inventories have decreased somewhat, but the level is still high. with the decline in expenditure and production, corporate profits continue to decrease, and employee income remains below the previous year β s level. in addition, the ratio of job offers to applications has dropped to a historically low level, and the unemployment rate has increased further. as a whole, employment and income conditions have worsened. although the above indicates a continued negative interactions of production, income, and expenditure, a further deterioration in the economy is expected to cease gradually from the effects of the comprehensive economic stimulus package including additional public works and the special income tax reduction. given the current considerably low level of economic activities, however, the positive influence of the package on private demand will likely be limited, and the economy β s immediate transition to a self - sustained recovery is hardly expected. in these circumstances, the relevant bills have been submitted to the diet to rebuild the stability of the financial system. moreover, the new administration is planning to launch new economic stimulus measures, including additional public investment in the supplementary budget for fiscal 1998 and the reduction in personal income taxes and corporate taxes. the materialization of these policies along with their effects on corporate and household sentiment should be carefully monitored. with regard to prices, wholesale prices are on a downtrend, and consumer prices ( excluding the effects of institutional changes2 ) remain below the previous year β s level. with respect to the factors affecting the outlook, the downward pressure on domestic prices induced by the decline in import prices is weakening. in addition, the expansion in the output gap in the economy is expected to slow in line with the implementation of the comprehensive economic stimulus package. nevertheless, reflecting the present large output gap, the downward pressure from domestic factors is unlikely to weaken considerably, and hence, prices are likely to be weak for some time. as for financial markets, yields on long - term government bonds and stock prices rose toward mid | 1 |
goh chok tong : strengthening singaporeaβ¬β’s position as a leading financial centre in asia speech mr goh chok tong, senior minister and chairman of the monetary authority of singapore ( mas ), at the 2005 mas staff seminar, singapore, 29 november 2005. * * * let me begin by welcoming you to the 2005 mas staff seminar. it has been a busy but good year for the industry and mas. positive global and regional outlook 2. globally, 2005 looks set to end on a positive note. the imf has projected world economic growth of 4. 3 % this year and sees the potential for further growth next year. the us economy remains resilient. it has withstood progressive interest rate hikes and the devastation caused by hurricanes katrina and rita. while the oil market remains tight and the us current account and budget deficits continue to be cause for caution, the greenspan era should end positively. 3. asia is doing well. east asia's combined economy has been growing by an average of 3. 4 % per year between 2000 and 2004. take away japan, east asia's annual growth rate is even more impressive - 6. 4 %, well above the global average of 3. 8 %. east asian countries have accumulated massive foreign reserves and now account for nearly 60 % of global reserves. global investors looking for better returns have shown strong interest in asian equities, bonds and alternative investments. 4. the blockbusters in asia's growth story are china and india. i have spoken about them in some detail last year. china and india, fast becoming global economic powerhouses, offer immense opportunities for asia and the world. 5. but we should not overlook japan. it is, after all, still the second largest economy in the world. japan is experiencing renewed vigour after more than a decade of economic stagnation and deflation. earlier this month, i was in tokyo for the nomura singapore seminar. the political and business leaders i met exuded a strong sense of confidence that japan has turned the corner and is firmly on the path of sustained growth. asean is doing well 6. prospects for southeast asia have improved. despite the bali bombings, regional economies remained stable. unless there is an avian flu pandemic, we can expect asean countries to grow at a steady 5 % this year and next. 7. asean has been deepening and quickening the pace of integration. asean countries have agreed to form an | hand they should not be so stringent as to impose unnecessary costs on the financial sector. it is a matter of finding just the right level of regulation. handling the interactions between monetary policy and macro - prudential policy poses further challenges. during the recent financial crisis, we observed the difficulties of conducting monetary policy in a non - stable financial environment. interest rate signals from the central banks were sometimes dwarfed by contradictory events in the markets. conversely, financial stability is dependent on smooth and predictable monetary policy. thus, policy makers must always keep in mind that the increased use of regulatory tools will inevitably affect monetary policy in different ways. regulations will affect the interest rates that firms and households meet and this is something that the central bank needs to take into consideration when setting the policy rate β in much the same way as monetary policy has to take into account changes in interest - rate spreads due to changes in financial conditions. a key element in handling the interactions between monetary policy and macro - prudential policy will be putting an appropriate governance structure in place. how should we structure the decision - making process in order to take account of the nexus between monetary policy and financial stability? it seems clear that the central bank should have some role in setting macro - prudential policy but that precise role may differ depending on the regulatory structure preferred by different countries. for example, responsibility for macro - prudential policy could be given to a committee in which a representative from the central bank would sit ( like in the united states ) or it could be given to the central bank ( like in the uk ). and central banks can adopt different internal governance approaches : some have a separate board for monetary policy ; others also have a separate board for financial stability. most central banks have the same board for both, but may have separate deputy governors responsible for each of the two strands. what matters, as i see it, is that β the buck stops somewhere β. there must be a decision at some high managerial level which balances the interests of monetary policy and financial stability as well as other central bank responsibilities. the organisation and processes of the central bank must also be structured so that there are analytical tools and resources available to help policy makers take a balanced view in their decisions concerning both monetary and financial stability policy objectives. for instance, there should be interdepartmental working groups. it is also important to remember that systemic risks can quickly spread between countries and reducing the build - up or impact of such risks will require coordinated | 0 |
developments in the economy and provide projections for inflation and economic activity. reasons for transparency why is increased transparency viewed as such an important issue? the primary task of central banks is to get monetary policy right - that is, to pursue policies that effectively promote the objectives established by their legislatures or parliaments, such as stable prices, full employment, and maximum sustainable growth. communicating what the central bank is doing, and why it is doing it, is of secondary importance to getting it right. nonetheless, transparency is important, and even valuable, for two reasons. transparency, independence, and accountability first, over recent decades it has become increasingly clear that central banks need to have a considerable degree of independence to carry out their jobs effectively. of course, central banks are part of their governments, ideally subject to a well - defined legal framework. but there is now a broad consensus that central banks should be able to apply their own professional judgment in setting their operational instrument, usually a short - term interest rate. to be sure, this independence does not refer to the goals of monetary policy. in a democracy, it is appropriate that the central bank's ultimate goals should reflect the common good and, in that spirit, should be set by voters'representatives. rather, independence applies to the instrument settings and other policy choices made by the central bank to achieve the ultimate policy goals. the main reason that central banks need to be independent in using their instruments is that effective monetary policy requires a distant time horizon. the monetary policy most appropriate for long - run stability and growth of an economy may not be politically popular in the short run. but along with a high degree of independence, central banks are required to account for their decisions in various ways. this, too, is appropriate in a democracy : the public has a right to know what its unelected, as well as elected, officials are doing, and why. and this is the reason that transparency is so important for supporting the independence of the central bank. transparency facilitates a broad understanding of what the central bank is doing and thereby gives the public the tools to hold the independent central bank accountable. transparency, in fact, can play a valuable role in reinforcing the institutional independence of a central bank. history has shown that, even with the best intentions and safeguards, the independence of a central bank can come under strain when the appropriate long - run policy is unpopular in the short run. the clarity transparency brings to the objectives and strategy of policy can greatly help a | as a result, we are committed to regularly engage with firms and the technology to develop a shared understanding of these issues as they evolve. fundamentally, financial institutions themselves are responsible for providing innovative financial services safely. financial services firms must pair technological know - how and innovative services with a strong compliance culture and a thorough knowledge of the important legal and compliance guardrails. while β run fast and break things β may be a popular mantra in the technology space, it is ill - suited to an arena that depends on trust and confidence. new entrants need to understand that the financial arena is a carefully regulated space with a compelling rationale underlying the various rules at play, even if these are likely to evolve over time. there is more at stake in the realm of financial services than in some other areas of technological innovation. there are more serious and lasting consequences for a consumer who gets, for instance, an unsustainable loan on his or her smartphone than for a consumer who downloads the wrong movie or listens to a bad podcast. at the same time, regulators may need to revisit processes designed for a brick - and - mortar world when approaching digital finance. to ensure that fintech realizes its positive potential, regulators and firms alike should take a long view, with thoughtful engagement on both sides. when we look back at times of financial crisis or missteps, we frequently find that a key cause was elevating short - term profitability over long - term sustainability and consumer welfare. it was not long ago that so - called exotic mortgages originally designed for niche borrowers became increasingly marketed to low - and moderate - income borrowers who could not sustain them, ultimately with disastrous results. in addition to the financial consequences for individual consumers, the drive for unsustainable profit can contribute to distrust in the financial system, which is detrimental to the broader economy. it is critical that firms providing financial services consider the long - term social benefit of the products and services they offer. concerns regarding long - term sustainability are magnified in situations where banks may bear credit or other longerterm operational risks related to products delivered by a fintech firm. one useful question to ask is whether a product β s success depends on consumers making ill - informed choices ; if so, or if the product otherwise fails to provide sufficient value to consumers, it is not going to be seen as responsible and may not prove sustainable over time. the key challenge for regulatory agencies is to create the right balance. ultimately | 0.5 |
for proper credit assessment and monitoring are in place. this is particularly important for those countries with huge quantities of domestic savings ; if appropriate measures are not implemented, such countries may face further financial crises in coming years. finally, probably the major factor generating the sharp economic decline in asia was the dramatic reassessment of prospects for the region, largely reflecting a β wake - up call β regarding the financial sector β s level of performance. of necessity, investors will punish such downside surprises severely. to limit the magnitude of such downside surprises, policymakers should take action to maximize financial sector transparency and ensure appropriate disclosure of information. | pressure is expected to ease in the long term, there is no need to take a further step toward a normalisation of interest rates at this point in time. in addition, the stronger franc has already resulted in more restrictive monetary conditions. with our decision to keep the three - month libor rate on hold, we are adhering to our current monetary policy course : we are making use of our monetary policy leeway to support growth without jeopardising long - term price stability. every forecast and every decision is fraught with uncertainty. should unexpected events delay economic recovery or push up the swiss franc sharply, we shall take appropriate action. for such cases, the swiss national bank keeps all its options open. 2 / 3 observed inflation december 2004 inflation forecast on september 2004 with libor at 0. 75 % and of december 2004 with libor at 0. 75 % 3 / 3 | 0 |
, with the ratio of debt to gdp rising significantly to its current level of around 260 per cent ( graph 9 ). http : / / www. rba. gov. au / speeches / 2018 / sp - gov - 2018 - 05 - 23. html 10 / 20 5 / 25 / 2018 australia's deepening economic relationship with china : opportunities and risks | speeches | rba graph 9 this increase in the debt ratio over the past decade has been larger than in any other major economy. this can be seen in this next chart, which shows the increase in this ratio since 2009 for a range of countries and the current level of that ratio ( graph 10 ). china clearly stands out. the stock of credit outstanding in china, relative to the size of the economy, is now unusually high by emerging market standards. and this ratio is already higher than in many advanced economies. so what has happened in china is quite different to the normal pattern. http : / / www. rba. gov. au / speeches / 2018 / sp - gov - 2018 - 05 - 23. html 11 / 20 5 / 25 / 2018 australia's deepening economic relationship with china : opportunities and risks | speeches | rba graph 10 over the period of rapid credit expansion, there was a series of reforms to modernise the chinese financial system. interest rate controls have been relaxed, although there is still β guidance β. a deposit insurance system has been introduced and the regulatory system has been strengthened. the capital markets are playing a more prominent role in the financial system. the large state - owned banks are now listed on stock exchanges in china and hong kong. it is also now somewhat easier for private firms to obtain equity finance. controls on capital flows have also been relaxed somewhat over the last decade. it is worth recognising that, taken together, these are significant changes. a decade ago, many outside observers were sceptical that the chinese authorities would undertake reforms across many of these fronts. yet they have made significant progress. despite this progress, there is still much to be done before the chinese financial systems looks like financial systems we see in the advanced economies. one area where the chinese financial system is moving towards a more modern form is in households'access to mortgage finance. prior to the late 1990s, mortgages were essentially nonexistent. but in recent years, households have progressively enjoyed increased access to finance, which has helped lift the share of consumption in national income. at the | loans. on the other hand, though, the involvement of the state can make it easier to work through problems when they arise, and we have seen past examples of this in china. the state has the capacity, and the demonstrated willingness, to address financial problems when they occur. however, this has also tended to add to the moral hazard in the system. whether this willingness to extend assistance to troubled borrowers and lenders will extend into the future is therefore difficult to tell. so it is complicated. another concern is the growth of the so - called β shadow banking β system β that is, credit extended outside the formal banking system. the growth in non - bank financing is evident in this next graph, which again shows the ratio of debt to gdp, but broken down into the type of entities that are providing the credit ( graph 12 ). the picture is pretty clear. most of the growth in debt has occurred outside the formal banking sector ; non - bank financing now accounts for 45 per cent of total debt, up from 25 per cent a decade ago. graph 12 this growth of shadow banking reflects a few factors. many entities in china, including private businesses and provincial governments, have had restricted access to credit through the large stateowned banks. as a result, they have sought finance outside the formal sector and they have been http : / / www. rba. gov. au / speeches / 2018 / sp - gov - 2018 - 05 - 23. html 14 / 20 5 / 25 / 2018 australia's deepening economic relationship with china : opportunities and risks | speeches | rba prepared to pay higher rates. on the other side of the equation, many investors have sought higher returns on their savings than those available through holding conventional deposits in the formal banking sector. over time, thousands of smaller banks and other financial institutions emerged to connect those seeking to borrow outside the formal sector with those seeking higher returns. many of these connections were very innovative and were often made through opaque structures, sometimes in off - balance sheet vehicles. hence, the term, shadow financing. it is useful to provide a couple of examples. one is so - called β entrusted loans β ( graph 13 ). these loans effectively involve one entity ( say, a business ) lending directly to another entity ( say, another business ), rather than the loan being intermediated through a bank balance sheet. notwithstanding this, a bank would normally act as a trustee to the transaction and there can be a perceived promise by the | 1 |
ewald nowotny : cesee outlook - reconciling fiscal consolidation and growth opening remarks by prof dr ewald nowotny, governor of the central bank of the republic of austria, at the seminar on the imf β s regional economic issues report β cesee outlook : reconciling fiscal consolidation and growth β, vienna, 13 november 2015. * * * ladies and gentlemen, β’ on behalf of the oesterreichische nationalbank, i would like to welcome you to today β s seminar on the imf β s new β regional economic issues report β, the rei. β’ the rei is a semiannual publication by the imf and assesses the macroeconomic outlook for the central, eastern and southeastern europe ( cesee ) region in light of the latest global economic and financial developments. β’ hence, this report covers more than twenty countries, including central and eastern europe ( cee ), southeastern europe ( see ), the baltic region, the cis group, and turkey. β’ cesee is a region of strategic interest for the oenb and is therefore in the focus of our analytical work. β’ this year, the oesterreichische nationalbank has the honour to host the launch of the new rei in vienna. the rei will then be presented in a series of seminars in several european cities, such as ljubljana and zagreb. β’ by launching the new rei here in vienna, the oenb continues a well - established tradition, as the oenb has already hosted several rei launches, with the last presentation having taken place in october 2013. β’ the title of this new rei is β reconciling fiscal consolidation and growth in cesee β. this is without doubt a well chosen topic, which is also highly relevant in the euro area and in austria. β’ the rei shows that especially the central european countries are growing at a healthy pace, while russia, ukraine and the rest of the cis countries are in recession, mainly because of russia. overall, activity in the region is set to contract by 0. 6 % in 2015, but to expand by 1. 3 % in 2016. β’ compared to the 2015 spring rei, the policy challenges have not changed much and still include supporting domestic demand and rebuilding buffers against external shocks. β’ however, the balance of risks has shifted to the downside, as new risks stem from further slowdown in major emerging markets ( china ). the ongoing refugee crisis in europe constitutes a potential risk | a key term in this discussion : foreign direct investment ( fdi ). particularly in cesee and in china, increasing openness to fdi has contributed largely to growth performance. many empirical analyses have provided evidence on the relationship between fdi and growth. however, not only the fact that capital inflows take place, but in particular the way this capital is put to use plays a major role in achieving sustainable convergence. 4 direct fdi linkages between cesee, china and russia are very small in terms of volume. 5 our business panel discussion in the late afternoon will give us an opportunity to examine fdi from a practitioner β s perspective. at this point, let me draw a first conclusion. the relocation of production sites, catching - up in technology - intensive production and dynamic export growth in general are challenges to any economy. at the same time, they can be seen as opportunities to adapt institutional settings to promote sustainable, growth - enhancing development in the home markets. in this sense, the emergence of china and russia as global economic players offers clear opportunities. china and russia can become attractive target markets for exports β from cesee as well as from other regions. not only is china expanding its role as a supplier of goods, but both china and russia increasingly demand final products from abroad. although the eu - 15 remain the major trading partner for cesee, the region should make active use of china β s and russia β s growing demand for imported goods β particularly in the light of the recent economic and financial crisis. russia β s forthcoming accession to the wto will open new possibilities to strengthen the linkages in the real economy via fdi and trade and to foster financial linkages as well. so far, the financial ties between russia and cesee have been closer than those between china and cesee. chinese banks have started to invest in cesee only recently. moreover, china β s increasing investment in several sectors in europe proves that the financial linkages between these two economic areas will gain importance in the future. see e. g. firdmuc, j. and m. reiner ( 2011 ). fdi, trade and growth in cesee countries. in : focus on european economic integration q1 / 2011. oenb. china β s stock of fdi in cesee is very small and has been decreasing since 2000. bis central bankers β speeches in this context, i may add that only two weeks ago the oenb and the people β s bank | 0.5 |
our agricultural sector is the result of a combination of factors, including the vulnerability it has to natural disasters, minimal private sector investment, inadequate infrastructure, marketing deficiencies, soaring production costs and the limited access to finance. apart from agriculture, the reserve bank is also committed to help grow the renewable energy sector. at the national level, we are aware that any increase in economic activity means higher energy demand ; a substantial portion of which comes from fossil fuels. fiji imports all its mineral fuels and this dependence on imports has huge implications for our current account. over the five years from 2006 to 2010, the current account deficit averaged around 13. 4 percent of gdp. over the same period, domestic mineral fuel imports accounted for around 25 percent of total retained imports, on average per year. given the hikes and volatility in international crude oil prices, the need to lessen our dependence on mineral fuels is critical. policy development, macro monitoring as well as creating greater public awareness and support for projects involving renewable energy, are thus essential to rein in fiji β s high fossil fuel usage and import bill. the associated environmental cost also has a direct impact on the economic well - being of our country. in this regard, investment in renewable and sustainable energy is important to mitigate all the allied risks. ladies and gentlemen, the reserve bank and the government are also promoting local value adding, which basically means using our own local resources where - ever and whenever we can. this also means that we work towards conserving energy and developing and supporting greater use of renewable energy sources such as hydro, solar, biomass, biodiesel and wind farms, where feasible. the reserve bank has been working with various stakeholders in exploring opportunities to incorporate more local value - added content into food and beverages, renewable energy and handicraft to name just a few. the fiji national university ( fnu ) is one of these stakeholders, given its critical role in training a skilled workforce for both the domestic and international markets. bis central bankers β speeches in 2010, the reserve bank sponsored a local chef from the fnu for training in malaysia to support and develop innovative new ways of using local foods and produce in our hotel industry, and on resort menus. additionally, in march this year, we sponsored three local chefs to attend the inaugural south pacific food and wine festival in denarau. in the past, this was an area of concern to the bank as a lot of the food used in the tourism industry was imported. | caused equity prices to fall sharply, the cost of short - term credit β where available β to spike upward, and liquidity to dry up in many markets. losses at a large money market mutual fund sparked extensive withdrawals from a number of such funds. a marked increase in the demand for safe assets β a flight to quality β sent the yield on treasury bills down to a few hundredths of a percent. by further reducing asset values and potentially restricting the flow of credit to households and businesses, these developments pose a direct threat to economic growth. the federal reserve took a number of actions to increase liquidity and stabilize markets. notably, to address dollar funding pressures worldwide, we announced a significant expansion of reciprocal currency arrangements with foreign central banks, including an approximate doubling of the existing swap lines with the european central bank and the swiss national bank and the authorization of new swap facilities with the bank of japan, the bank of england, and the bank of canada. we will continue to work closely with colleagues at other central banks to address ongoing liquidity pressures. the federal reserve also announced initiatives to assist money market mutual funds facing heavy redemptions and to increase liquidity in short - term credit markets. despite the efforts of the federal reserve, the treasury, and other agencies, global financial markets remain under extraordinary stress. action by the congress is urgently required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and for our economy. in this regard, the federal reserve supports the treasury's proposal to buy illiquid assets from financial institutions. purchasing impaired assets will create liquidity and promote price discovery in the markets for these assets, while reducing investor uncertainty about the current value and prospects of financial institutions. more generally, removing these assets from institutions β balance sheets will help to restore confidence in our financial markets and enable banks and other institutions to raise capital and to expand credit to support economic growth. at this juncture, in light of the fast - moving developments in financial markets, it is essential to deal with the crisis at hand. certainly, the shortcomings and weaknesses of our financial markets and regulatory system must be addressed if we are to avoid a repetition of what has transpired in our financial markets over the past year. however, the development of a comprehensive proposal for reform would require careful and extensive analysis that would be difficult to compress into a short legislative timeframe now available. looking forward, the federal reserve is committed to working closely with the congress, the administration | 0 |
, bis central bankers β speeches i. e. those for july and august, show a certain moderation in the rate of job creation in this period, albeit still in a positive vein. labour costs continued to moderate in the first half of the year, reflecting the greater flexibility with which firms can adjust their labour conditions to the macroeconomic environment. if the trend prevailing in the past year and a half continues, the rise in employment may put the unemployment rate at around 20 % in 2016 q4. in the realm of inflation, the recent energy price falls have interrupted the course of recovery of the cpi. after posting positive year - on - year rates in june and july, for the first time in nearly a year, the overall price index slipped back ( by β 0. 4 % ) in august. it is important, however, to emphasise the temporary nature of this new bout of disinflation, linked to the recent oil price fall in the international markets. in fact, the rate of change of the cpi excluding energy increased by 0. 9 % in august, growing slightly faster than in july, while the indicator which excludes unprocessed food as well, so - called β core inflation β, grew by 0. 7 %. the latest data have not invalidated the outlook for gradual recovery of inflation reflected in the most recent forecasts. budgetary policy in 2016 as i have said in previous appearances before the senate, the primary objective of budgetary policy is to ensure that the recovery is underpinned by lasting stability. in particular, it is indispensable to persevere with the strategy of fiscal consolidation leading to the stabilisation and subsequent reduction of the public debt ratio. the improvement in the cyclical conditions envisaged in the macroeconomic scenario used to prepare the draft budget has a positive effect on public finances owing to increased tax collection, a further drop in unemployment benefits and a progressive reduction of the average interest rates paid on public debt. all this means that the budgetary policy measures to meet the budget deficit targets are less costly. specifically, the draft state budget envisages economic growth of 3. 0 % for 2016, slightly below the 3. 3 % projected for 2015, with growth of domestic demand and a progressive recovery of inflation rates which would lead to an increase in nominal gdp of nearly 4 %. against this background, the overall general government deficit for the coming year will foreseeably stand below 3 %, the ceiling established in | as i reported to this very parliament, early this year the banco de espana approved its strategic plan, whose essential content has been made public. based on an analysis of the challenges facing the institution and its main strengths and weaknesses, the plan sets out the priority objectives for the coming years and the actions required to accomplish them. aside from the importance of this exercise from the standpoint of internal coordination, i believe the drawing up and publication of this plan is a fundamental transparencyenhancing factor that will facilitate evaluation of the effectiveness of the bank β s actions. accordingly, under the strategic plan our activities will be subject to assessments. should you see fit, we could report to this house on the content of the strategic plan, headway made in its implementation and the results of the assessments. i will now turn to another aspect that is key to understanding the correct configuration of an independent authority : good governance. this is understood not only in terms of observing certain basic principles of public action ( such as efficacy and effectiveness ) or of impartiality and due diligence, but also of implementing procedures and collegiate decisions to ensure that the primary institutional course of action is to uphold the public interest. as i have already said, the banco de espana has collegiate bodies, such as the governing council and the executive board. these, along with the governor and the deputy governor, make up its governing bodies. the fact that these collegiate bodies have broad powers in relation to the functions of the bank and that a majority ( six ) of the members of the governing council are elected and have recognised competence in the field of economics, the financial system or the legal arena, reinforces the independence of our institution. https : / / eur - lex. europa. eu / legal - content / en / txt / html /? uri = celex : 52019xb0308 ( 01 ) & from = en a further good governance practice is having a structure of committees to support the governing bodies. these are able to appropriately assess and address the various matters that fall within the organisation β s remit, ensuring an overall view and that all the relevant areas of the institution participate in the analysis of the issue concerned. this is the situation currently existing at the banco de espana, which has a solid structure based on an audit committee and 12 other committees, some with a very significant mandate, such as the steering committee and the recently created financial stability committee. this modus operandi is particularly important for | 0.5 |
kishori j udeshi : in quest of new cheese speech by ms kishori j udeshi, deputy governor of the reserve bank of india, at the indian banks β association seminar, mumbai, 26 april 2005. * * * iba deserves to be complimented for having organised this seminar on the subject of β in search of new cheese β towards newer profit avenues β. the subject holds considerable contemporary relevance coming as it does at a time of intense competition, thinning margins, rising yields, and dwindling trading profits. as we look back we can see that the declining interest rate scenario during the last three to four years coupled with prudent regulation, in alignment with international standards and effective supervision has strengthened the balance sheets of banks. it β s a different matter that had the asset quality been as it should have been, the profits could have been more gainfully utilised. what is of concern however, is whether the reduced npa levels reported are sustainable through stronger credit appraisal processes built up over the years or are they only a result of massive provisioning which will be difficult to sustain in a scenario of rising bond yields. only time will tell. before i talk of cheese let me begin by chalking out two issues on the expenditure side in the future scenario. this chalk may serve to highlight the quest for cheese. first and foremost, banks would need to invest heavily in technically qualified professionally skilled staff. for this you recognise to invest in arms i. e. attract, retain and motivate staff. turnover of such staff in banks is going to be as volatile as it is for the bpo firms and compensation structures would need heavy revamping. this should necessarily be accompanied by good hrm system which can measure performances. secondly, although technology deployment in banks has increased remarkably, this has not been leveraged to the maximum extent essential to achieve and maintain high service and efficiency standards. in effect, managing technology, is still a key challenge for indian banks. we have, therefore, had to settle for just the standardised approach under basle ii. we need to move to advanced approaches under basle ii in order to achieve greater efficiency of capital and be competitive in india as also globally. for this, banks not all but certainly the large and significant banks need to invest heavily in advanced technology which is another item of expenditure that cannot be avoided in the near future. given this backdrop, can banks make profits by the same old 3 - 6 - | place outside the regulated banking system. focusing on the pre - requisites for sustenance of shadow banking, claessens and ratnovski ( 2014 ) have described shadow banking as all financial activities, barring traditional banking, which require a private or public backstop ( in the form of franchise value of a bank or insurance company, or in the form of a government guarantee ) to operate. 4. in the last two to three decades, growing innovations in the financial sector, changes in regulatory framework and growing competition with non - bank entities caused banks to shift a part of their activities outside the regulatory framework. this contributed to the growth of shadow banks. as a result, shadow banking activities have evolved over time in response to newer set of regulation and supervisory guidelines and spread in the domains where the scope for regulatory arbitrage was higher. it emerged not only as an avenue for exploiting see financial stability board ( 2012 ). bis central bankers β speeches regulatory arbitrage but also in response to market demand for innovative financial instruments that could mitigate risks and yield higher returns. 5. the recent global financial crisis brought to fore the need for monitoring and regulating the activities of shadow banking. there is, nevertheless, a concern that the forthcoming implementation of basel iii, which has more stringent capital and liquidity requirements for the banks, might further push the banks to shift part of their activities outside of the regulated environment and therefore increase shadow banking activities. size of shadow banks 6. one cannot precisely gauge the size of shadow banking as the activities lack transparency. according to the fsb report ( 2013 ), size of global shadow system expanded to us $ 71 trillion2 in 2012. in 2012, the assets of other financial intermediaries, which undertake non - bank financial intermediation, accounted for about 24 per cent of total financial assets, about half of banking system assets and 117 per cent of gdp of the above - said 25 jurisdictions. the largest system of non - bank financial intermediation in 2012 was found in the usa, which had assets size of us $ 26 trillion, followed by the euro area ( us $ 22 trillion ), the uk ( us $ 9 trillion ) and japan ( us $ 4 trillion ). the size of shadow banking in a large number of emerging market economies ( emes ) was found to have increased in 2012, nevertheless, the share of non - bank financial intermediation remained relatively smaller at less than 20 per cent of gdp. as | 0 |
toshihiko fukui : recent developments in economic activity and prices and the bank of japanaβ¬β’s conduct of monetary policy summary of a speech by mr toshihiko fukui, governor of the bank of japan, at a meeting with business leaders, osaka, 29 september 2005. * * * introduction today i plan to focus on recent developments in economic activity and prices and the basic thinking behind the bank of japan's conduct of monetary policy. the current situation and the outlook for economic activity and prices the japanese economy has recently emerged from a pause that started during the summer of 2004 and continues to recover. the current economic expansion has lasted three years and eight months as of this september, based on the cabinet office's reference dates of business cycles, thus recording the third longest expansion phase in the post - world war ii period. the economy is expected to continue to recover, albeit at a moderate pace. real gdp growth has been strong so far this year with a large annualized increase from the previous quarter of 5. 8 percent in january - march 2005, followed by a 3. 3 percent increase in the april - june quarter, although it either remained unchanged or dipped slightly over the three quarters from april - june 2004. this favorable performance can be attributed to the stronger - than - expected domestic private demand, such as business fixed investment and private consumption, along with moderate export growth due to the expansion in overseas economies. in this environment, positive effects stemming from the increased corporate profits have gradually spread to household income, feeding back to the corporate sector via the increase in private consumption : in other words, there is a positive interaction between the corporate and household sectors. industrial production is on the increase with the completion of adjustment in it - related sectors. overall, the current economic recovery appears moderate in pace, but sustainable. the economy is thus unlikely to fall into recession due to domestic factors. in the corporate sector, profitability has substantially improved, as the adjustment in excess capacity and employment has finally come to an end. according to financial statements statistics of corporations by industry, current profits of japanese firms have increased for three consecutive years from fiscal 2002, with both profits and the ratio of current profits to sales for fiscal 2004 exceeding those during the height of the bubble era. in fiscal 2005, profits are forecast to grow for the fourth consecutive year, signifying buoyancy in corporate performance. backed by high corporate profitability, business fixed investment is growing steadily in a wide range of industries. | to increase thereafter, as the 2 / 4 japanese economy is likely to continue growing at above its potential rate, causing the gap between supply and demand to shrink further, and also the recent uptrend in wages is likely to exert upward pressures on prices. the bank's conduct of monetary policy based on the above assessment of economic activity and prices, i will explain the bank's thinking on the conduct of monetary policy. the bank has been implementing the quantitative easing policy to achieve sustainable economic growth under price stability. the framework consists of two key elements. first, the bank provides ample liquidity to the money market far in excess of required reserves. second, the bank is firmly committed to maintaining such ample provision of liquidity until the year - on - year rate of change in the core cpi registers zero percent or higher on a sustainable basis. this framework underpins expectations, based on inflation projections among market participants, that the quantitative easing policy will continue for some time. as a result, market interest rates remain steady at low levels, including those with relatively longer maturities. with regard to the first element, the bank's provision of ample liquidity greatly contributed to maintaining financial system stability and an accommodative corporate financing environment by responding to precautionary demand for liquidity of financial institutions when there were strong concerns about financial system stability. since then, concerns about financial system stability have largely subsided, as evidenced by the smooth implementation of the full removal of blanket deposit insurance in april 2005. as a result, the quantitative easing policy is effectively becoming closer to a maintenance of zero interest rates. in the current situation, the quantitative easing policy contributes to maintaining an accommodative financial environment by stabilizing market interest rates, thus allowing firms to continue to enjoy low funding costs. as for the conduct of monetary policy, the bank will continue to maintain the quantitative easing policy based on the commitment mentioned earlier since the core cpi is still registering a slight year - on - year decline. the bank formulated this commitment when it introduced the quantitative easing policy in march 2001. at the time, following the bursting of the global it bubble, and the resultant sharp fall in aggregate demand, the economy had fallen into recession and prices were declining. the bank decided to employ an unprecedented measure, linking its commitment in terms of policy duration to the observed cpi, to create further monetary easing effects even under zero interest rate conditions. thereafter in october 2003, the bank clarified its commitment to maintaining the quantitative | 1 |
and the main remedy for this disease. i won β t make comments about yesterday β s governing council and monetary decision. but our collective fight against inflation calls for a more appropriate policy mix : the revision of the european economic governance framework provides a major window of opportunity to realign fiscal and monetary policy. page 2 sur 4 alongside high inflation, public debts have reached historical levels mainly due to unprecedented waves of shocks, but also, for several countries, to legacy debts. now that these shocks are fading, governments must avoid an overly expansionary stance that would further fuel inflationary pressures. we therefore need a more coordinated and realigned fiscal and monetary stance. better alignment of fiscal and monetary policies would unleash greater efficiency of the policy mix : everyone agrees on this point. the question is how to ensure a better coordination between fiscal authorities β overseen by the commission within the european semester β and the ecb, which are both independent, and have specific mandates. well : coordinating two independent and strong - minded personalities is always challenging, even more so with two independent institutions. in my view, they can be seen as travellers that have to take a journey together. they did not necessarily choose each other, but they can follow simple rules of cohabitation. ( i ) agree on the destination, i. e. the respective β anchors β of the 2 % inflation target over the medium term, and the medium - term debt reduction path ( ii ) ensure a continuous dialogue to foster mutual trust and address divergences. moreover, the higher the inflation and interest rates, the harder it is to manage public debt. attention is increasingly focusing on the sustainability of public finances, and rightly so. in this context, the july eurogroup statement on the euro area fiscal stance, ii which highlights the need for fiscal consolidation, is very welcome. this is also true for france, which should avoid drifting towards a gloomy resignation about the constantly increasing government expenditure ( 58 % of gdp vs 51 % on average in the euro area in 2022 ) and public debt ( 112 % vs 94 % ). moreover, my country failed in the past to meet its commitments on budgetary targets. i strongly hope the next pluriannual public finance programming bill and the 2024 budget will demonstrate increased commitment and credibility. * * page 3 sur 4 the reform of eu fiscal governance underway is a key opportunity to reestablish a sound framework for public debt management. in april 2023, the commission published its | % believe in the wisdom of institutional processes or in enlightened economic debates for sufficiently steering national cycles. they must be complemented with common rules and anchors to ensure fiscal discipline. in other words, in the famous rules / discretion debate, we need indeed more discretion β¦ but not too much ; and we need less mechanical or obscure rules, but we still need rules. the setup should indeed ensure binding thresholds for the minimal annual adjustment of public finances. let me add that the more we progress effectively on national fiscal discipline, the easier we could envisage a common fiscal capacity β which we badly need. mario draghi eloquently advocated it recently, v and i wish it will be part of his new mission on competitiveness in europe. * * * to conclude, let me borrow a fundamental principle from physics, stated by isaac newton : β when two forces unite, their efficiency double β. well, it is time to combine the two forces of our monetary and fiscal policy, towards a greater efficiency of our euro area economy and to the benefit of our citizens. thank you for your attention. i press release : governors and heads of supervision endorse initiatives in response to the banking turmoil and reaffirm priority to implement basel iii. ii eurogroup statement on the euro area fiscal stance for 2024, press release, 13 july 2023. iii c. bouthevillain, s. debu, towards a much - needed reform of eu fiscal rules : the european commission β s proposals, banque de france bulletin no. 246 : article 2, 21 june 2023. iv x. debrun, l. jonung, under threat : rules - based fiscal policy and how to preserve it, european journal of political economy. v the economist, mario draghi on the path to fiscal union in the euro zone, 6 september 2023. | 1 |
level of employment that is consistent with price stability was higher than most previous estimates. our flexible inflation - targeting framework contemplates seeking or probing for maximum sustainable employment in the right circumstances. when we do this, we will be transparent, communicating that we are probing and what we are seeing in our labour market and inflation indicators as we do so. communication is key this brings me to the final, and very important, point. we know that monetary policy works better when people understand it. this starts with a clear mandate. and it is enhanced by transparency. the move toward increased transparency by central banks over the past 30 years has increased the credibility and effectiveness of monetary policy. by explaining how our decisions link to our mandate and by delivering low inflation for 30 years, our monetary policy framework has earned the trust of canadians. to keep that trust, we will be clear about how we are implementing flexible inflation targeting. because monetary policy needs to be forward - looking, our decisions and our communication are anchored by our inflation forecast, our interpretation of incoming data relative to that forecast, and our assessment of the risks. 11 this will include how a broad set of labour market indicators are affecting our estimates of potential output and our assessment of inflationary pressures. we will continue to use the flexibility built into our framework when that flexibility will help us better manage risks and achieve our mandate. and when we use that flexibility, we will be clear about why and how we are using it. you will see it in our inflation forecast, and we will discuss it relative to incoming data and our assessment of the risks. 11 see bank of canada, β box 10 : evolving communications, increased transparency, β monetary policy framework renewal ( december 2021 ) : 72 β 74. conclusion it β s time to conclude. our monetary policy framework has delivered prosperity to canadians by keeping inflation very close to 2 percent, on average, for 30 years. flexible inflation targeting is well understood and broadly supported by canadians. and the credibility of the target helps to stabilize both inflation and output. this agreement reaffirms our commitment to price stability and the 2 percent target. this is the framework we need now as we face elevated inflation and the challenge of reopening the economy. looking beyond the pandemic, the renewed agreement also articulates clearly how we will continue using the flexibility in our framework to address future challenges confronting our economy. it explains how we will use our extended set of monetary policy tools when needed. and it outlines how we | flexible inflationtargeting framework. for inflation to reach its target sustainably, the economy has to reach full employment. the two go hand in hand. our public consultations complemented the expert analysis. the results highlighted both the diversity of canadians β experiences and some common themes. when asked about the alternative monetary policy frameworks, the people we engaged with gave the most support to flexible inflation targeting, ait and a dual mandate. and overall, flexible inflation targeting was the preferred framework. 6 the overriding message that came though from the consultations is that canadians value low and stable inflation. inflation is difficult for many. when the cost of living goes up, they have trouble stretching to cover all their expenses. canadians are also concerned about the unequal impacts of inflation and economic cycles. it is striking to me that the results of our historical experience, modelling, simulations and public consultations were all in broad alignment. what comes through clearly is that flexible inflation targeting is hard to beat in theory and in practice. its 30 - year record of success has demonstrated that it is built for all seasons β it has survived the test of large global crises and done well in ordinary times. but some of the insights of ait and a dual mandate could help us address the two important challenges facing monetary policy. what we agreed the new agreement on our monetary policy framework secures the continued benefits of flexible inflation targeting. and it provides increased clarity on how we will implement the framework to control inflation and help the economy reach its full potential. the government of canada and the bank of canada agreed that the best contribution of monetary policy to the well - being of canadians is to continue to focus on price stability. the government and the bank also agreed that monetary policy should continue to support maximum sustainable employment. we also recognized that maximum sustainable employment is not directly measurable and is determined largely by non - monetary factors that can change over time. further, the government and the bank agreed that because well - anchored inflation expectations are critical to achieving both price stability and maximum sustainable employment, the primary objective of monetary policy is to maintain low and stable inflation over time. the inflation target continues to be the 2 percent midpoint of a 1 to 3 percent inflation - control range. we want to maintain and safeguard the advantages of a clear and achievable target that is well understood and highly credible. 6 bank of canada, β toward 2021 : consultations with canadians. β - 6the agreement also articulates how we will continue | 1 |
peter praet : we need to complete the banking union speech by mr peter praet, member of the executive board of the european central bank, at the eurofi conference, malta, 6 april 2017. * * * the eu moved in less than five years from decentralized banking supervision and resolution to the single supervisory mechanism and the single resolution mechanism, based on the single rulebook. this is part of an overarching effort to create a sound institutional framework for financial integration in europe. but there still are a number of legal, institutional and political problems to overcome before a european bank can operate in the banking union as it operates in its domestic market. several dimensions need to be taken into account : first, private risk - sharing. the financial system is a private risk sharing device, but we have learned the lessons from the financial crisis in terms of budgetary costs, when excessive risk - taking by the private sector was eventually borne by the public sector. we do not want to revert to the old world of implicit government guarantees for risky behaviour of financial institutions. this entails making banks equally liable across countries for the amount of risk they want to take into their respective balance sheet. the general principle of the new european rules such as the bank recovery and resolution directive is to absorb bank losses by bailing - in shareholders and uninsured creditors. the new rules contain sufficient flexibility to deal with exceptional situations where public money may be required to ensure financial stability. second, public risk sharing. a certain level of public risk sharing is necessary to create confidence in the overall financial system. even well - capitalised banks can fall victim to runs and contagion. this is why central banks act as lender of last resort and fiscal backstops should be in place to ensure trust in the stability of the financial sector. in the banking union, both supervisory responsibility and the fiscal backstop need to be at european level, to underpin durably confidence in the area - wide financial system. just as necessary is the establishment of a european deposit insurance system ( edis ). the current situation, where supervision is common, but the consequences of potential bank failures are still predominantly national, should not last. in such an incomplete framework, national considerations inevitably continue to affect supervisory decisions. this is not without consequences for the incentives for banks to become more european. concrete examples include a lack of fungibility of liquidity or capital. the fact that the euro area is not considered as a single jurisdiction | monetary policy that has been conducted. it is a little like taking medicine in connection with an illness and when cured drawing the conclusion that it was unnecessary to take the medicine. on this point i feel that the events of spring 2015 are a good illustration. the ecb had announced in january that it intended to buy securities over slightly more than a year to come for the equivalent of sek 10, 000 billion ( around 2. 5 times the size of swedish gdp ). this is indeed a very substantial monetary policy intervention. within the course of just a few weeks the krona exchange rate appreciated significantly against the euro, from almost 9. 65 krona per euro to just over 9. 10. this was in itself a large appreciation of almost 6 per cent, but the real danger lay in the fact that it could have been much worse. during 2014 and up to spring 2015 the us dollar and the british pound sterling had appreciated by between 15 and 25 per cent against the euro. there was agreement on the market that differences in monetary policy were decisive for the different development paths of these currencies and the swedish krona against the euro. if the swedish krona had in this situation so to speak appreciated level with the dollar and sterling, the total appreciation would have been around 30 per cent. this would have meant a very serious deterioration in the competitiveness of the swedish export industry and would have entirely changed the playing field for the swedish economy ( see figure 8 ). under such circumstances there would certainly not have been any growth in the vicinity of 4 per cent in 2015. my own impression is that the risk the swedish economy was exposed to at this stage is severely underestimated by many commentators. they appear to assume that the strong performance in 2015 would have happened more or less regardless of monetary policy and the krona exchange rate. the fact that the riksbank in february reacted by introducing a negative repo rate and beginning to buy government bonds is not considered to have played any major role. although it is possible that the outcome would not have been quite as bad as i have outlined above, i think that it is extremely misguided to assume that monetary policy was more or less insignificant. there is also good reason for a reminder of a circumstance that tends to be forgotten. the current debate sometimes gives the impression that the swedish economy has for some time been in a situation of almost overheating. but the fact is that we fairly recently, according to most empirical estimates, once again attained | 0 |
a post - crisis period, and sine qua non for long - term stability. therefore in our case, the current context of transition towards a steady state, the classical economic policy dilemma of rules versus discretion cannot be solved with an extreme option. both β unrestricted discretion β and a rigid β lock - in β rule lead us nowhere. in contrast, an intermediate scheme β the monetary aggregate approach, combining a dose of flexibility ( such as indicative inflation targets ), with simple rules on the growth of money supply providing the adequate accountability by the policymakers β may gradually rebuild the credibility lost in the crisis without loosing the necessary discretion to address the contingencies inherent to this stage. we definitely cannot β take shortcuts β : we need to develop and calibrate the instruments with capacity to stabilize cyclical fluctuations and, in turn, reduce macroeconomic risks. one of these tools is a deep domestic financial system and the capital market. we are working to rebuild credit to the private sector as a monetary policy transmission channel as our financial markets are not deep enough to channel large capital inflows. local currency debt markets are still in their infancy, and secondary markets are not liquid enough. yesterday afternoon, rajan himself pointed out the financial systems β inability to efficiently intermediate foreign savings as an obstacle for economic growth in emerging economies. the development of the market in domestic currency, as malcolm knight pointed out, allows a reduced dependence on capital flows, diminished currency mismatches, and a lesser concentration of risks in banking systems. but here we should also be cautious, all the more so at a stage when monetary stability and confidence in the local currency are gradually recovering, so as to avoid reducing currency mismatches at the expense of assuming an excessive maturity mismatch risk, or to avoid flooding local investors with instruments that restrict the possibility of risk diversification. we applied strict guidelines to reduce financial system exposure to the public sector. consequently, in the past years the share of credit to the government in total assets decreased by 20 percentage points, fast reversing the crowding - out process of credit to households and firms. in fact, these kinds of financing are today the main component of financial institutions β assets and the focus of their business. anyhow, we see that every country in the region is taking precautions. in our case, for an economy in transition towards its long - term cruising speed, foreign reserve accumulation is an extremely useful countercyclical policy. i have referred to | martin redrado : financial stability and the importance of aml / cft supervision and regulation speech by mr martin redrado, governor of the central bank of argentina, at the fiba annual aml compliance conference, miami, 13 february 2007. * * * all of us in this room share a vision about the need for regional integration. efforts include forums like this one for discussion about opportunities and shared challenges in different spheres of action at the regional level. in my view, these efforts represent an effective mean of adopting international standards and adjusting them to the realities of the continent. regional agreements are extremely valuable as a way of consolidating the implementation of a uniform set of best practices. for those of us who, on top of being central bankers, are also bank supervisors, we must increase our efforts to incorporate the advantages of international standards, with the fundamental addition of a regional perspective. this means a thorough knowledge of the reality of each region to take into account the factors that affect its dynamic. regional realities evolve, and regional demands do not necessarily match the original design and development of international standards. let me give you a practical example : as an international standard, consolidated supervision has existed for over thirty years. the situation with quantitative supervision is pretty much straightforward : standards are uniformly and widely applied. however, there are gray areas on qualitative supervision ( that is the impact on risks of related non - financial activities ), where standards are just being developed and, therefore, the implementation as a tool for supervision is under debate. another concrete case is the implementation of the basel ii accord on capital requirements, particularly on how to compute capital requirements for operational risk ( that is the risk of loss resulting from inadequate processes and systems, or from external events ). we have dedicated sizable resources to managing market and credit risks, and those were wellknown, narrowly - defined. operational risk was anything but well defined since there is a lot of disagreement about the specific contingencies that should be considered under this umbrella. in the basic approach banks must hold capital for operational risks equal to the overall average over the previous three years of a fixed percentage of annual gross income. now, in the standarized approach, banks β activities are divided into several business lines : corporate finance, sales & trading, retail banking, commercial banking. operational risks should be considered for these particular lines of business. in latin america, stress tests determine relatively high regulatory capital charges for operational risk, based on the alternatives foresee | 0.5 |
traditional mismatch constraint therefore comes into play. this requires a well developed mortgage market to address longterm funding requirements of the sector. developing mechanisms for long - term finance is good for monetary policy transmission as well. the mpc has been trying to address the issue of long - term finance ; we do hope this forum can provide some viable and feasible options. ladies and gentlemen : the government β s commitment to growth of real estate sector is in our blueprint for vision 2030 and is also well articulated in the finance bill, 2010. the finance bill outlines a number of measures to spur growth in the property market. in particular, in order to facilitate provision of adequate housing to kenya β s growing population, the finance bill, 2010 contains proposals to amend the banking act : ( i ) to allow mortgage finance companies to operate current accounts ; and ( ii ) to allow banks to advance up to 40 % of their total deposit liabilities up from 25 % for purchase, improvement or alterations of land. these measures will unlock the sector β s potentials by availing funding required to finance growth of real estate in kenya. the central bank will continue to work with the sector to improve the operating environment. it is equally important for the players in the real estate sector to design innovative ways of securing funds to exploit opportunities available. for instance, pension funds are needed for guaranteeing members β mortgages. this is happening in kenya, but still at a low scale. leveraging on such long - term instruments will lower costs and make decent and low cost housing available to potential borrowers. also, other investment vehicles such as unit trusts have the potential of pooling funds required for specific projects. in addition, the success of the kenya government infrastructure bond as well as other corporate bonds that have followed, demonstrates enormous potential of the bond market. in 2009 alone the government raised a total of ksh 54. 7 billion through bonds issues, and the infrastructure bonds were oversubscribed every time. this is a clear testimony of the market β s ability to provide cheaper source of funding for long - term projects such as mortgages. to further deepen the bond market, the central bank has implemented a number of measures, including introduction of benchmark bonds and re - opening of these benchmark bonds to create liquidity and facilitate trading. we can then use this infrastructure bond platform to develop housing bonds. ladies and gentlemen : in all this, a vibrant financial sector with adequate and dynamic human capital is a vital | the financial times. fdi into kenya by project numbers increased by 47 percent, reaching 84 announced projects, compared with increases in ghana ( 21 percent ), nigeria ( 19 percent ), egypt ( 14 percent ) and south africa ( 3 percent ). likewise kenya ranks high as a home country for fdi. in particular, fdi out of kenya by capital investment reached us $ 1 billion in 2015 placing it tenth in the middle east and africa region compared with u. a. e. ( us $ 21. 8 billion ), south africa ( us $ 2. 5 billion ), mauritius ( us $ 2. 1 billion ), and egypt ( us $ 1. 7 billion ). key trends on foreign inflows in 2015, reported in the economic survey, include : β’ fdi into kenya increased by 8. 4 percent to us $ 1. 5 billion in 2015 β’ portfolio investments declined from us $ 3. 4 billion to us $ 34 million in 2015 on the backdrop of the sovereign bond issuance in 2014 β’ other investment flows more than doubled from us $ 2. 2 billion to us $ 4. 6 billion in bis central bankers β speeches analysis by sector indicates that the top five recipient sectors of fdi inflows include : wholesale and retail trade, financial and insurance, manufacturing, construction, and electricity and gas supply. allow me now to touch on three global developments that are likely to have implications for foreign investment flows to our country. β’ first, the subdued global economic growth that has been worsened by the prolonged period of uncertainty relating to the slowdown and rebalancing of the chinese economy, lower commodity prices, and geopolitical developments and concerns surrounding β brexit β. consequently, global growth is now projected at a worrisome 3. 1 percent in 2016. the fact that central banks in advanced economies are maintaining an accommodative stance is a clear indication that the global economy has not yet recovered to sustainable levels. in addition, most of the emerging economies have faced volatile capital flows and exchange rates attributable to the accommodative policies, and the prospects of unwinding the unconventional monetary policies. β’ second, the ongoing divestiture of major international companies around africa, as reflected in a number of multinational enterprises downsizing their assets through outright sale and transfer to domestic companies, otherwise referred to as derisking. the main problem we observe with this process is the ambiguity and poor information flow on the measures by | 0.5 |
reserve system. innovation and human capital i started out by saying that innovation is an elusive concept. so what do i mean by innovation? there is a consensus among economists that long - run growth in economic standards of living depends critically on the rate of technological change. growth occurs not only because we have more people working or more machines ( or, in economic terms, more labor and more capital ) but also because technological advances make existing workers more productive. such advances might be entirely new types of machines, such as the steam engine or the transistor, or they might be new techniques for making existing products. in the 1980s, for example, the steel industry was transformed by the introduction of mini - bis central bankers β speeches mills, which used scrap instead of iron ore and dramatically lowered the time and cost of producing steel. ( as an aside, the first mini - mill was developed by nucor, whose headquarters are just a few hours south in charlotte. ) the million - dollar question, of course, is how and why do such innovations occur? there are a variety of economic forces and incentives at work, but a large body of research suggests that human capital is an important determinant of long - run growth in productivity. countries with more initial human capital appear to have a greater capacity to develop new technologies and to copy or adapt technologies developed in other countries. but innovation and human capital also are linked by the fact that new technologies sometimes increase the demand for skilled workers who can operate those technologies, a phenomenon known as β skill - biased technical change. β because it takes time for people to learn new skills, this increase in demand initially leads to higher wages for skilled workers relative to less - skilled workers. but as the higher wages spur more people to obtain the necessary education, the supply of skilled workers tends to respond to the demand, and the wage differential tends to narrow. economists claudia goldin and lawrence katz have documented this dynamic β the β race between education and technology β β throughout the 20th century in the united states. 1 in the early 1900s, new technologies such as typewriters and adding machines created a new class of white - collar clerical jobs that required a high school education. because few people had a degree, these jobs paid about twice as much as jobs that did not require a high school degree. 2 the response was a dramatic increase in high school graduation rates. between 1910 and 1940, the number of 19 - year - olds in the united states with a diploma increased from 9 | and confidence. the improvement we β ve seen in consumer finances in recent years should also bolster growth. the value of household assets has increased by 38 percent since early 2009, while household liabilities have fallen slightly over the same time period. while the process of balance sheet repair may not yet be complete, substantial progress clearly has been made. recent advances in consumer sentiment and financial wherewithal have not invigorated the housing market, however. over the last 12 months, new home sales have fallen by 1. 6 percent and new housing starts have fallen by 7 percent. much of this sluggishness, i believe, is due to factors that are unlikely to change quickly. the fall in home prices during the recession has given households a greater appreciation of the risks of leveraged investments in housing. this is contributing to what appears to be a relatively persistent shift in preferences away from ownership of single - family detached homes. so while i expect some gains in housing activity in 2015, i don β t think we should look for housing to make major contributions to overall growth. in contrast, business investment in plant, equipment and intellectual property has been a solid contributor to this expansion. coming out of the recession, this measure of investment grew rapidly for a couple of years, then more moderately, but it picked up steam in the second quarter last year. business investment seemed to be carrying good momentum into the year - end, and in my view is likely to continue to contribute to growth in overall activity in 2015. net exports are likely to be more of a challenge this year. over the last year, the value of the dollar in foreign exchange markets has risen by 8 percent. that makes imports more attractive here and domestic producers less competitive globally, which can be expected to increase our trade deficit and slow the growth of overall economic production. finally, federal government spending on goods and services is likely to continue to restrain growth. over the last three years, we β ve seen such spending fall at a 2. 5 percent annual rate. that may sound surprising, but note that this is only spending for goods and services, and it excludes transfer payments, such as medicare or food stamps. these transfer payments do not add directly to gdp ; their only effect is through household incomes. most forecasters are projecting federal spending to contract further in 2015 and beyond. you are probably well aware of the importance of federal spending on goods and services for virginia ; for example, close to 13 percent of all federal contract spending | 0.5 |
in the federal funds market and global financial market developments, and present to the president their plans for open - market operations for his or her comment. open - market operations will be arranged shortly after this " call, " and the results are disclosed to the public generally within a few minutes. the desk is in the market on most business days, adding from $ 2 billion to $ 10 billion in reserves to keep the funds rate near the fomc's target. as an additional means for managing the fed funds, the federal reserve stands ready to lend reserves to depository institutions that request them. financially sound banks are eligible to borrow from the fed at what is called the primary credit rate, which to date has been set at 100 basis points ( 1 percentage point ) above the target funds rate. historically, reserve shortages occasionally caused the funds rate to " spike " well above its target, once even hitting 100 percent ( in 1991 ). the primary credit facility is designed to avoid such spikes by providing an elastic supply of reserves at a rate not far above the funds rate target. since the introduction of the primary credit facility, the rate has exceeded the primary credit rate only in a few unusual circumstances, such as the power outage in the eastern united states in august 2003. the federal reserve's multiple means of injecting reserves into the banking system - a belt - and - suspenders approach - was shown in its best light following the september 11 terrorist attacks. with a significant part of the financial system inoperative and with many payments not being made as scheduled, the banking system's demand for reserve balances rose sharply. those reserve needs were met initially through large amounts of direct borrowing from the fed. as market functioning improved, needed reserves were provided by means of open - market operations. the increase in the supply of reserves topped $ 80 billion by the end of the week. the funds rate and other market rates i have discussed at some length how the federal reserve manages the federal funds rate, the most direct instrument of monetary policy. as i have already hinted, however, monetary policy is effective only to the extent that federal reserve actions can affect a wide range of interest rates and asset prices. what is the link between the funds rate and these key financial variables? the interest rates most closely linked to the funds rate are those prevailing in short - term money markets. financial market participants are able to trade short - term liquid funds in a number of markets, including, for example, the market | governors, may 2022 ), https : / / www. federalreserve. gov / publications / files / financial - stability - report - 20220509. pdf. better or worse, you can β t program confidence. that question doesn β t always have a clear answer, and it involves real and difficult tradeoffs. but it β s a question that every new and fastgrowing financial product must address if it wants to last very long. thank you. | 0.5 |
as motivation for further structural reforms. these reforms are needed in accession countries in order to further transform their economies into fully - fledged market economies, so as to enable them to cope with competitive pressures and provide the conditions for sustainable and non - inflationary growth. given the positive impact of structural reforms on those countries'disinflation processes, there appears to be no contradiction between real and nominal convergence. thus, both objectives should be pursued in parallel and the emphasis should not be focused on one target at the expense of the other. in the context of real and nominal convergence, i should like to emphasise the important role played by sound fiscal policies. although we judge the overall fiscal policy stance as being broadly satisfactory in most accession countries, budgetary consolidation efforts in some countries appear to have experienced a recent setback. in these few cases, a strengthening of efforts to return to the path of sound fiscal policies is crucial. a determined pursuit of fiscal consolidation is all the more necessary as the accession process and the completion of the transition phase are likely to place further demands on the budgetary situation, for example in relation to higher infrastructure investments or future reforms of the accession countries'health and social security systems. ladies and gentlemen, i should like to conclude my presentation by answering one of the main questions which usually arises when a representative of the ecb talks about enlargement : will the accession process have consequences for the conduct of the single monetary policy? the answer is no. as i have already argued with regard to the issue of monetary policy and regional differences, the ecb's monetary policy can focus only on maintaining price stability in the euro area as a whole, irrespective of the number of regions or countries forming part of the euro area. furthermore, the definition of price stability, as adopted by the ecb, should be seen as a lasting quantification of its primary objective. the purpose of a definition is that it should remain valid as a consistent and credible point of reference over time and in different circumstances. ladies and gentlemen, it has been a pleasure to be able to use this brief presentation to convey the perspective of a central bank on topics that are also of great interest to the committee of the regions. thank you very much for your attention. | lower the adjustment costs associated with asymmetric shocks affecting one particular country or region. although considerable progress has been made, much remains to be done. ladies and gentlemen, allow me to also stress the importance of your role in contributing to informing european citizens about the dangers caused by divergences in price developments across countries or regions, which might arise as a result of excessive wage increases or the unsustainable expansion of profit margins at the local level. the more such developments become entrenched in the economy, the more they will lead to a loss in competitiveness and, eventually, to a loss in output and employment in the respective economies. clearly, our efforts to make the euro a success will require all of us to master β at home β the challenges which i have outlined. however, the european union, and also the euro area, face an important external challenge β and this brings me to the second topic of my presentation : the eu accession process and the subsequent enlargement of the euro area. the fact that your committee has established a liaison group with applicant countries bears witness to the substantial implications which enlargement will have not only for a central bank but also for representatives of regional and local authorities. as you are well aware, to date 12 countries from central, eastern and southern europe are involved in negotiations to become members of the eu and, ultimately, also of the euro area. the integration of such a large number of new countries into the european union β which would imply almost a doubling of the current number of member states β will be an enormous task for both sides and be without a precedent in history. as i have just said, accession to the eu also entails significant implications for the economies of the accession countries themselves. for them, the main priority is indeed to foster the convergence process with the eu, both in real and in nominal terms. thus, accession countries are aiming to achieve the european union's standard of living, while at the same time seeking macroeconomic and financial stability. this process will entail profound and comprehensive adjustments in their real economies as well as in the careful design of sound economic policies. undoubtedly, significant progress has already been made in this respect. a substantial reallocation of resources, a strong reorientation of trade links towards the eu, a complete institutional overhaul and a sizeable development of the private sector are the most obvious signs of systemic change. however, these achievements should not give rise to complacency but rather be taken | 1 |
villy bergstrom : can we be best again? the importance of capital formation for long - term growth speech by mr villy bergstrom, deputy governor of sveriges riksbank, at a meeting in kiruna, 8 december 2003. * * * i would like to begin by thanking you for the invitation to come here and speak before the local group of the center for business and policy studies. i intend to speak today about the factors that affect a country β s long - term growth capacity. to this end, i will focus on the role played in this regard by capital formation, but will also discuss other important factors such as changes in both the labour supply and the age structure of the population in the coming years. like many other countries, sweden is facing the problem of an ageing population. this is going to place a greater burden on the public finances and will entail increased demands on the working population to forgo consumption in favour of supporting the elderly. meanwhile, labour force growth in sweden will be slower in the years ahead. moreover, the rate of net investment in sweden is low in comparison to previous periods. this affects sweden β s long - term growth capacity and thereby also the prosperity of people in general. it is these topics that i shall be concentrating on in my speech today. but allow me first to begin with a few words about the riksbank β s role in this context. the riksbank has little opportunity to influence sweden β s long - term growth capacity as everyone knows, one of the riksbank β s statutory remits is to promote price stability. a large part of the riksbank β s operations revolve around this remit. in order to be successful in this regard, it is important that the process of wage formation works well and that both the central and local governments manage their finances in a responsible manner. relatively stable inflation in recent years and expectations of future inflation around the riksbank β s target of 2 per cent indicate that the bank has been successful in its conduct of monetary policy in recent years. this success has been largely attributable to increased stability in economic policy in general ; in particular, fiscal policy has been governed by a ceiling for central government expenditure and a surplus target for the public finances. furthermore, partly as a result of greater credibility for the riksbank β s inflation target, the social partners have managed to halve the rate of wage increases from the levels that were common in | , i am very comfortable at this point with a decision to start to taper our asset purchases before the end of the year and, preferably, as early as at our next meeting in november. in my view, our asset purchases were an important part of our response to the economic effects of the pandemic, but they have essentially served their purpose. i am mindful that the remaining benefits to the economy from our asset purchases are now likely outweighed by the potential costs. in particular, i am concerned that our asset purchases could now be contributing to valuation pressures, especially in housing and equity markets, or that maintaining a highly 5 / 6 bis central bankers'speeches accommodative monetary policy stance at this stage of the economic expansion may pose risks to the stability of longer - term inflation expectations. if the expansion continues as i expect, i will support a pace of tapering that would end our asset purchases by the middle of next year. in closing, i would say that our economy has made great strides this year, which is a testament to the resilience of u. s. households and businesses and the many challenges faced throughout the pandemic experience. while many risks to the outlook remain, i expect that the recovery will continue in the coming months, and that steady progress will be made toward our maximumemployment and price - stability goals. 1 the views expressed are my own and not necessarily those of other federal reserve board members or federal open market committee participants. return to text 2 except in very unusual circumstances, monetary policy decisions are made during our regular fomc meetings eight times each year. the 12 reserve bank presidents and the members of the federal reserve board of governors participate in these meetings, with 5 of the 12 presidents and all of the governors voting as members of the fomc. return to text 3 see the december 2020 fomc statement ( paragraph 4 ), which is available, along with other fomc statements, on the board's website at www. federalreserve. gov / monetarypolicy / fomccalendars. htm. return to text 6 / 6 bis central bankers'speeches | 0 |
β how to do it β tends to vanish. in other words, while the relationship between economic theory and policy recommendations is reasonably well defined during β normal β times, in periods of turmoil, this relationship becomes much weaker. we have reached a point in which economic theory is having a hard time keeping up with praxis. my reading is clear : there is no single policy or one optimal approach that could be defined in a vacuum. every policy option has its costs and benefits. the key is to choose whether we want to avoid β going long β or β falling short β. naturally, beyond any attempt to mitigate this trade - off, the strategy and policy choice will crucially depend on the attitudes of the government and its people towards risk. it will also depend on their intertemporal considerations, because the profit and loss profile of alternative regimes will not always coincide. furthermore, past trends in the relevant economy and the starting conditions will naturally affect our policy choice. also, current turmoil and policy reaction in developed countries is an opportunity to understand how monetary policy is performed in emerging economies where financial markets are shallow, the power of monetary policy to affect aggregate demand is limited. one interesting conclusion from the ongoing crisis is that the way of doing monetary policy in such an extreme framework is not much different in emerging or developed countries. it could be framed as a matter of effectiveness of the available tool - kit. however, this is not a negligible point. monetary authorities in emerging countries, are much more used to employ diverse tools. even the emerging countries with inflation targeting regimes were forced to make their systems more flexible to face the new environment. in the end, we all operate under similar principles, but are surrounded by different realities, circumstances and idiosyncrasies. in the case of small open economies the job becomes even more comprehensive from a monetary policy perspective. emerging economies need to achieve macroeconomic and financial stability, develop capital markets, deal with fewer and less developed policy instruments, with fiscal, external and financial dominance, and build credibility, all at the same time. we often lack developed economies β room to implement counter - cyclical fiscal and monetary policies. it is hard to think of an asian country doubling its monetary base in four months or reducing its reference interest rate to almost zero percent, as the u. s. did, without adversely affecting economic agents β expectations regarding future inflation or the sustainability of the foreign exchange regime. it is also hard to imagine an emerging economy | announcing a fiscal package of 7 percent of gdp to bail out financial institutions, without creating doubts as to the sustainability of their public accounts. at the same time, emerging countries are more likely to experience joint crises. a drop in deposits may lead to fx pressures with an impact on the external position and may affect fiscal accounts ( due to the impact on sustainability of the potential fiscal cost of a financial system bailout or domestic currency depreciation in the face of a currency mismatch ). these limitations together with second round effects make a strong case for more coordinated efforts with a greater voice from the emerging world. otherwise, countries might be tempted to further address the shocks in an uncoordinated way probably by taking measures to isolate themselves. the backfire could be seen either on financial integration ( by controlling capital outflows ), or on trade policy ( rising barriers on imports ). we have to avoid that the positive aspects of integration are overcome by the flaws of the system. it is also worth noting that self - insurance via international reserve accumulation or fiscal funds seems not to be enough when confronted to the magnitude of the de - leveraging process taking place at a global level. we are seeing many welcome developments, particularly the surge in bilateral currency swaps agreements such as the recent one between the hungary national bank and the swiss national bank as well as the one between the people β s bank of china and the monetary authority of hong kong to facilitate a smoother trade. this adds to those seen during last year between central banks in developed economies and with emerging ones : the fed with mexico, brazil, korea, and singapore ; the bank of japan with india and the scandinavian central banks with iceland. all of these bilateral agreements just prove the need for international cooperation in a context of an absence of a multilateral organization in a position to perform as a kind of β central bank of the central banks β. this is the next step we need to go for. while challenges for policy makers around the globe are significant, now we seem to understand that policy recipes vary from one country to the other in this complex scenario. this progress is, obviously, welcomed. especially for us, emerging markets β policy makers, as we have to catch up with the standards of living of our population and, most importantly, build institutions and credibility at the same time. in fact, it is more a synchronic than a sequential two - fold challenge : advancing towards the development of our economies and building institutions simultaneously. and | 1 |
market liquidity and the opportunity for risk sharing. the bond market β s depth has recently increased to 11 trillion dollar, outnumbering the size of euro area β s gdp. admittedly, the corporate bond market in the euro area is still substantially smaller than in the us, as european firms traditionally rely more on bank financing. however, firms on this side of the atlantic increasingly make use of debt securities. between 1998 and 2006, the value of outstanding bonds in terms of gdp has doubled, while it increased β merely β 60 percent in the us 4. more efficient and deeper financial markets benefit companies through lower borrowing costs. the challenges for emu as we speak, the euro area is undergoing an upturn. economic figures have been better than expected. in 2006, gdp grew by 2. 9 percent, outstripping the united states for the first time in 5 years. unemployment has fallen to 7. 5 percent in 2006, the lowest level in 15 years. while the recovery reflects a cyclical upswing, these figures also suggest that structural reforms in the past are starting to pay off. however, as henry kissinger once said : β each success only buys an admission ticket to a more difficult problem β. monetary union β s problem is twofold : weak public finances and subdued per - capita - income growth. things have improved, but i am convinced we can do much better. without aiming to be exhaustive, i will mention a few steps that enable countries to tackle these issues and to further capitalise on the advantages of the single currency. creating sustainable fiscal positions a first challenge will be to bring public finances on a sustainable footing. in periods of buoyant revenue growth, there is often a tendency to overestimate the strength of the underlying budgetary position. that is partially because economists can only tell you tomorrow why things predicted yesterday didn β t happen today. if spending is allowed to increase on a structural basis, but higher revenues turn out to be transitory, the budgetary position starts to deteriorate as soon as economic conditions turn nasty. this was exactly the mistake made by some countries in the beginning of this decade. let β s not repeat that mistake. countries with sizeable deficits and public debts should use the current windfall in tax revenues to consolidate. sound public finances are also crucial for dealing with the costs due to population ageing. while living longer is good news, public expenditures in the euro area are projected to increase by up to 10 percent | raised pertaining to these requirements revolve around the calibration of the ratios, rather than the conceptual basis of the framework. it is important to emphasise the goal in establishing the liquidity framework : to require banks to withstand more severe shocks than they had been able to in the past, thus reducing the need for such massive public sector liquidity support in future episodes of stress. the success of the framework should not be measured in terms of whether it will have zero cost. instead, the better measure of success is whether the framework corrects pre - crisis extremes at acceptable costs. banks that take on excessive liquidity risk should be penalised under the new framework, while sound business models should continue to thrive. with these objectives in mind, the committee will use the observation period to review the implications of the standards β all the more as they are brand new β for individual banks, the banking sector, and financial markets, addressing any unintended consequences as necessary. bis central bankers β speeches in this regard, the basel committee β s focus is now on ensuring that the calibration of the framework is appropriate. certain aspects of the calibration will be examined and this will involve regular data collection from banks. any adjustments should be based on additional information and rigorous analyses. however, banks β data on the crisis are distorted because of the government support schemes. hence, the analysis will need to include both quantitative bank experience and additional qualitative judgement. it is worth emphasising that a number of effects of the framework are indeed intended. for example, with regard to the pool of liquid assets, the rules are meant to promote changes in behaviour and to create incentives to reduce risky liquidity profiles. this can be done, for example, by pushing out the average term of funding or increasing the share of stable funds. in other cases, banks did not price liquidity appropriately throughout the firm, and correcting risk management deficiencies will in turn improve liquidity profiles. in fact, the initial response we have observed in some countries that have already implemented comparable liquidity ratios suggest that these are the types of strategies that are being pursued. effects of basel iii on financial markets since the new regulation will change the behaviour of banks, it will also have wider effects on financial markets. the effects in the transitional phase will be different from the effects in the new steady state. in the transitional phase, adjustments of banks β balance sheets to meet the new capital and liquidity standards will affect supply and demand in | 0.5 |
interbank payment systems infrastructure is expected to create an integrated and interoperable digital retail payments ecosystem which will facilitate seamless funds ba es o f gh a na nk t. 1 9 5 7 transfer across payment systems to promote financial inclusion. 13. these developments in the ghanaian payments system landscape have not only increased security, affordability, convenience and efficiency in digital financial services, but have also worked to promote financial inclusion among the country β s financially underserved populations. 14. ladies and gentlemen, building a digital business and financial ecosystem requires a strong and resilient financial sector. it is against this background that the bank has, in recent times, instituted several policy measures including the new capital requirement regime, introduction of new corporate governance guidelines, fit and proper test directives as well as transitioning to basel ii and iii regulatory framework to foster an enduring financial sector which supports the country β s economic growth agenda. 15. in concluding, let me say that building a digital business and financial ecosystem requires a robust financial sector. to keep pace with innovation therefore, the bank of ghana will continue to strengthen the oversight and regulatory regime ba es o f gh a na nk t. 1 9 5 7 to support developments in the payment and settlement systems. this would ensure safety, reliability, efficiency and confidence in digital financial transactions to support the growth agenda of the government. 16. thank you. | ba ko es f gh a na n t. 1 9 5 7 launch of the cyber security directive for financial institutions a safer digital financial industry speech by dr. maxwell opoku - afari, first deputy governor, bank of ghana bank of ghana head office, accra october 22, 2018 honorable minister of communications, mrs. ursula owusu - ekuful, second deputy governor, bank of ghana, members of the board, bank of ghana, heads of banks, members of the ghana association of bankers, members of the ghana association of savings and loans, members of the ghana association of microfinance institutions, members of the chartered institute of bankers, staff of bank of ghana, distinguished members of the press, ladies and gentlemen, all protocols observed. 1. good afternoon ladies and gentlemen. it is a pleasure to welcome all of you to the bank of ghana and i deem it a great honour for having such august audience joining us for this special occasion. as we are all aware, today marks another significant milestone in the history of ghana β s financial sector as we launch the cyber security directives for financial institutions. 2. after careful consideration on issues regarding cyber security and its implications on financial intermediation, the bank chose the theme β a safer digital financial industry β to launch the cyber security directives for two main reasons. first, we envisage that this theme will shape the strategic direction in terms of cyber security of the banking industry and to the larger extent, the entire financial sector. and secondly, it signals the collective efforts of stakeholders to address the canker of cyber threat and all other actions that exploit vulnerabilities of the financial systems and processes. 3. currently, technology is intertwined with our everyday lives. it is re - defining business interconnectedness processes, between promoting countries and greater peoples, enhancing skill development and innovation, and more broadly, breaking down perceived barriers in every sector. in the banking sector, for instance, technology has taken a center stage in the financial intermediation process. recently, key developments within the intermediation process include the growing importance of fintechs in delivering financial services as well as the introduction of electronic payment platforms to enhance interoperability. in effect, the continuous role played by technology has had considerable impact on the operations of financial institutions and ultimately driven policies aimed at promoting financial inclusiveness for growth and poverty reduction. 4. in all of these developments, financial services remains critical and the bank of ghana has | 0.5 |
significant proportion of asia β s syndicated borrowing. singapore, for its part, has evolved into the main banking center for southeast asia. asian emerging market economies β some generalisations in the current context the growing importance of the asian economies in the global economy and the dynamics of the asian economic integration are also reflected in the added significance of the asian emes ( aemes ) as the sub - set of the emes in the global economy. while the aemes are not homogenous in their economic systems, structure and size, it may be useful to consider some generalisations in the current context recognizing the severe limitations of such generalizations whenever a country - context becomes the focus. developments in the japanese economy are very critical to the aemes and there is scope for considerable applied research in this area, recognising the signs of resurgence in the japan β s economy. the narration that follows essentially relates to the aemes, commencing with favourable factors. first, they currently enjoy strong global demand for their exports, favourable terms of trade and easy access to external financing. second, comfortable foreign currency reserves along with reduced external debt as percentage of gdp serve as cushion against any sudden external shocks. third, though public debt in some asian economies still remains at elevated levels, most of the debt is of longer maturity, with higher proportions in local currency. fourth, the banking system has been strengthened through restructuring and supervisory systems have improved. financial markets have evolved considerably in most of these economies. fifth, the resilience to external shocks is reinforced by a combination of lower balance sheet exposure to exchange rate risks, lower refinancing risks in debt structures, strong financial systems and above all, an observed tendency for greater policy flexibility. sixth, most of the economies display strong growth - performance and reasonably well - anchored inflation expectations. there are, however, several challenges being faced by the fast - growing aemes, particularly in sustaining the hard - won stability while maintaining growth momentum. first, while growth impulses are strong in asia and easing of oil - prices should moderate inflationary pressures, there are concerns about inflationary pressures being reinforced by ample liquidity driven by excess capital flows and rapidly rising credit. strong capital inflows into asia pose a challenge to monetary management. while some appreciation of currencies of countries enjoying current account surplus is evident, the macro policy may need to be predominantly governed by the compulsions of domestic supply and demand considerations. the currency appreciation or depreciation could, at | ##mediation leveraging on technology and new business models will emerge. with the exponential growth of digitisation and online commerce in india, the reserve bank has also directed its policy efforts to put in place a state of the art national payments infrastructure, while ensuring a safe, secure, efficient, cost - effective and robust payments ecosystem. the reserve bank is positioning itself to provide an enabling environment in which regulated entities are catalysed to exploit these new avenues, while maintaining and preserving financial stability. the regulated entities, on their part, need to strengthen their internal defences to identify emerging risks early and manage them effectively. financial stability is a public good and its resilience and robustness needs to be preserved and nurtured by all stakeholders. we need to support economic revival and growth ; we need to preserve financial stability. thank you. | 0.5 |
extension and potential effect of any reallocation of bank sovereign exposures across banks ; the interactions with other rules of the basel framework, including in particular the rules on liquidity ; the impact of changes in regulation on the provision of loans to the broader economy ; the consequences for monetary policy ; the effects on the functioning of sovereign debt markets and on governments β financing conditions ; the impact on other financial market segments. several of these issues are being investigated at the bis and also at the eu level, within the european systemic risk board and the economic and financial committee. the impact on market liquidity has been examined in this conference. changes in the current prudential framework leading to stricter capital requirements on sovereign bonds could incentivise banks to further reduce the two pillars of market - making : sovereign bond inventories and repo activities, which are eroding liquidity in secondary markets. the effects of a regulatory change requiring substantive bank recapitalisations could be destabilising in the transition phase, as it would entail a temporary but negative impact on credit to the economy β an important effect, in the presence of stubbornly low nominal growth and deflation risk. such an effect is hard to capture analytically, as non - linearities are possible, especially in the presence of financial tensions, and multiple equilibria cannot be excluded. envisaging a long transition period is unlikely to help, as market participants will probably respond immediately by front - loading future changes in regulation, in order to exploit β first mover β advantages. ratings have important drawbacks, but practical alternatives are hard to find. if the decision is eventually taken to adopt risk weights on sovereign exposures, mechanisms based on fiscal sustainability indicators, such as those computed by the eu commission or by the imf could be considered as an alternative to β or in a suitable combination with β credit ratings. 12 to conclude, the debate on changing the prudential regulation of sovereign exposures was prompted by the recognition that β sovereign debt is not risk - free β. there is no doubt that this is true. however, at the current stage a broad agreement has been reached on the pros and cons of different reform options, not on their overall balance. my personal view is that the potential benefits of a reform are uncertain, while the potential costs could be sizeable. be that as it may, as long as such a balance remains uncertain, a prudent stance would be to wait for | issues that merit separate consideration. i will turn now to financial risks. the most important of these is credit risk, which turkish banks pay the most attention to managing. the turkish banking sector has become used to accepting and managing credit risk over the years. a credit culture has been developed in which firms, sectors, regions and individuals participate. increased competition in the sector clearly has implications for the risk - taking process, which requires that the banks restudy their credit strategy. an overall examination of credit risk showed that the banking sector has been able to manage its credit risks by keeping the level of non - performing loans low in spite of an environment of shrinking international financing. as to liquidity risk, the fact that depositors prefer shorter terms, while investors, driven by expectations of high inflation and uncertainty, prefer longer terms, has caused a mismatching of the maturity structures of the assets and liabilities of the banking sector. as a result, banks become more vulnerable to liquidity risk. financial distress and global financial crisis were the main ingredients of the conjuncture of 1998. following scattered failures in the emerging financial environment, almost all emerging economies began to be treated as risky, due to growing uncertainty about the near - term outlook for the financial markets. in this situation, international investors became more cautious about investing in the emerging markets and became reluctant to provide them with credit. turkish banks slowed their disbursements of credit, preferring to be liquid in the marketplace. we also checked using different ratios for the liquidity in the system. interest rate risk is another important form of systemic risk. since the maturity structure of interest - sensitive liabilities in the turkish banking system tends to favor the relatively shorter maturity segments, external funds are repriced at shorter intervals than assets. this mismatch in the pricing structure at various periods increases the sensitivity of assets and liabilities to changes in interest rates. banks manage the degree of interest rate risk to which they are exposed during times of rising interest rates by converting their low interest bearing securities into high interest bearing securities by means of repurchase transactions. interest rate swaps and some other derivative instruments are also used to hedge interest rate risk. as to foreign exchange risk, the difference between the turkish lira interest rate and the nominal depreciation of the turkish lira is the major reason why the banks place foreign currency funds in turkish lira funds or other alternative investment opportunities. in turkey β s case, the practice of taking short positions for foreign exchange started | 0 |
pay homage to the role of pioneers like dr pylee whose vision for establishing a business school in kochi enabled several of us to partake of these critical skills which have enriched our lives and hopefully the effectiveness of organisations that we serve. thank you for your attention. namaskaar!! inputs provided by pradeep kumar and saurabh pratap singh are gratefully acknowledged. 5 / 5 bis - central bankers'speeches | g padmanabhan : international seminar on principles of financial market infrastructures and innovations in retail payments valedictory address by mr g padmanabhan, executive director of the reserve bank of india, at the international seminar on principles of financial market infrastructures and innovations in retail payment organised by the reserve bank of india, new delhi, 15 february 2013. * * * assistance provided by shri saswat mahapatra and smt radha somakumar is gratefully acknowledged. distinguished speakers, participants, other guests, ladies and gentlemen. it is a pleasure to be amidst you and speak to you all as we conclude this international seminar on β principles of financial market infrastructures and innovations in retail payments β organized by the reserve bank. the theme of the seminar, which was chosen after considerable deliberations, is quite apt, given the markets around us. as you know, the term fmi refers to systemically important payment systems, csds, ssss, ccps, and trs which facilitate the clearing, settlement, and recording of monetary and other financial transactions, such as, payments, securities, and derivatives contracts ( including derivatives contracts for commodities ). the role and importance of fmis in the global financial system came to fore during the crisis which has been succinctly captured in the imf report β central banking lessons from the crisis β ( may 27, 2010 ). the report mentions β the crisis would have been much more severe had central banks not taken efforts to introduce robust payment and settlement systems, including for foreign exchange, over the two decades ahead of the crisis. the systemic impact of failure of a financial institution depends critically on the robustness of the infrastructure underpinning those markets in which it is active β. the fmis which act as plumbers in the financial system helped in maintaining the market confidence during the crisis for two reasons. first, fmis like the ccps shift the counterparty risk from participants to themselves thereby ensuring trust in an environment where participants distrust each other and thus provide the market confidence to carry on transacting. second, their ability to settle when transactions are due for settlement on account of their risk management practices helps in retaining the sanity in the market. many studies had been undertaken analyzing the role of fmis during the crisis. the common findings of such studies are that fmis were successful in ensuring reliability and mitigating risks despite unprecedented volatility and shaken market confidence. fmis like cls, rtgs systems and cc | 0.5 |
speeches year, mainly due to higher retail inflation. it is projected to rise gradually over the course of 2018, with the gradual absorption of remaining slack in the labour market and the attendant pickup in domestic demand. cpi - all items inflation is similarly projected to be in the upper half of the 0 β 1 % forecast range for 2018 as a whole. accommodation costs are forecast to decline less sharply than last year, while private road transport inflation is expected to fall. mas β inflation forecasts are robust to alternative outcomes for key external prices, including the upsides to global oil prices. mas has revised its global ( brent ) oil price assumption to an average of us $ 72 per barrel for the year as a whole, up from us $ 66 previously. mas undertook a measured tightening of monetary policy in april this year after keeping to a neutral stance for two years. the slope of the s $ nominal effective exchange rate policy band was increased slightly, consistent with a modest and gradual appreciation path. the gradual normalisation of monetary policy was appropriate in the context of the continued mild ascent of core inflation since h2 2016. core inflation is now around 1. 5 % at mid - year and we expect it to rise further, approaching 2 % by year - end as the labour market continues to tighten. monetary policy is predicated on baseline projections of growth and inflation. it does not aim to pre - empt tail risk scenarios. while we are closely monitoring the global risk factors mentioned earlier, our baseline forecast is for continued economic expansion and gradually rising inflation. the threat of a disruptive trade war has risen, but remains a tail risk for now. our approach therefore has been to begin monetary policy normalisation but to do so in an incremental fashion in view of still - benign inflation and growing trade - related tail risks. in the short term, the policy band provides sufficient room for the s $ nominal effective exchange rate to accommodate modest shocks to the singapore economy. future adjustments to monetary policy will depend on how the economy evolves and our updated assessments of inflation and growth prospects. property market and macroprudential policy the singapore property market has seen a resurgence in prices and transactions over the past year. prices of private housing have increased 9. 1 % since the trough in q2 2017. this has mostly offset the cumulative price decline of 11. 6 % during the four - year period between mid2013 and mid - 2017. the number of property transactions over the last 12 months was around 25 % higher | % of gdp β will continue to benefit from external demand and the global tech cycle. there is a structural upshift in the end - demand for semiconductors globally. chips are now being used across a wide range of applications beyond computers - including in smartphones, automotives, and β internet of things β ( iot ) devices. the modern services cluster β financial, ict, and professional services, making up 30 % of gdp β will continue to benefit from firm regional demand and ongoing digital transformation among corporates. regional demand for financial intermediation, and wealth and asset management will support growth in financial services. growing adoption of ict and automated customer platforms by corporates are expected to boost demand for various ict and business services, including cloud storage, data security, and it consultancy. the domestic - oriented cluster β construction, retail and food, health and education services, making up 25 % of gdp β has lagged somewhat but is expected to catch up in the quarters ahead. in 2017 and q1 2018, this cluster contracted, as the drag from construction offset the modest growth in health, education and other essential services. the retail and food segments were largely flat. but part of the weakness should dissipate. contracts awarded for public infrastructure projects and the pace of private residential en - bloc activities indicate a recovery in construction works in the quarters ahead. and firm labour market conditions and healthy consumer demand should support a recovery in retail & food services. while the central prognosis for the singapore economy this year remains intact, spillovers from global trade conflicts bear close watching. these spillovers arise from singapore β s role as a node in the regional electronics production value - chain, as well as a hub for air and sea transport and financial intermediation services. these are important intermediate inputs to the main trade flows between the us and its trading partners. bilateral trade between the us and china indirectly contributes to about 1. 1 % of singapore β s gdp. flows between the us and eu contribute about 0. 5 % to singapore β s gdp. nafta trade contributes 0. 6 %. inflation and monetary policy inflation in singapore has been within expectations β on a modest uptrend but still below historical norms. mas core inflation this year is expected to average in the upper half of the 1 β 2 % forecast range. core inflation averaged 1. 5 % in the first five months of 2018, up slightly from 1. 4 % in q4 last 4 / 11 bis central bankers ' | 1 |
darryl chan : europe, asia and the changing global economy welcoming remarks by mr darryl chan, deputy chief executive of the hong kong monetary authority, at the joint conference of the hong kong institute for monetary and financial research ( hkimr ), the european central bank ( ecb ) and the bank of finland institute for emerging economies ( bofit ) on " europe, asia and the changing global economy ", hong kong, 20 january 2025. * * * governor rehn, dr lane, distinguished guests, ladies and gentlemen, good morning! a very warm welcome to all of you for joining today's conference. as we begin the new year, let me wish everyone a prosperous year ahead. the hong kong institute for monetary and financial research ( hkimr ) is deeply honoured to host this conference in collaboration with the european central bank ( ecb ) and the bank of finland institute for emerging economies ( bofit ). the title of today's conference, " europe, asia and the changing global economy ", has been aptly chosen. barring any surprise, this year will be marked by major changes β changes that echo political and economic events taking place in different parts of the world. indeed, the world economy is at a critical juncture. we are facing increasingly challenging near - term macroeconomic environment, heightened geopolitical tensions and geoeconomic fragmentation, rising trade disruptions and protectionism. across both advanced and emerging economies, public debts as a share of economic output have surged steadily for years, further constraining the fiscal policy headroom going forward. meanwhile, medium - term growth rates are expected to decline on the back of lacklustre productivity growth and ageing populations. against this complex backdrop, policymakers need to look to structural reforms as the most effective way to stabilise debt dynamics and boost domestic productivity and longer - term growth. one notable example is the european commission's " draghi report ", which highlights the main elements necessary to enhance europe's competitiveness. many policymakers in asia share a similar sense of urgency to boost or reinvigorate economic growth. if history is any guide, a key lesson from the asian financial crisis before the turn of the century is the need to address structural weaknesses through broad - based reforms and greater regional cooperation to enhance financial resilience. history has also consistently demonstrated that an open and rules - based multilateral trading system generates value for the global community. in our view, it is crucial | resilience of hong kong β s financial system, all the actions we are taking now to create opportunities are an investment in our future. in both dimensions, i believe this kind of long - term approach is the hallmark of a high - quality financial system. concluding remarks 27. i hope these reflections have shed some light on hong kong β s distinctive qualities as an international financial centre. it is resilient β our institutions and markets remain safe and sound in good times and bad. and it offers huge opportunities to local and global participants, driven by the mainland β s continued financial liberalisation, as well as developments in fintech and green finance. 28. my team and i are committed to upholding these qualities. we will continue to reinforce hong kong β s position as an international financial centre of the highest quality. this journey has no end β and we will rely as always on strong support from everyone that we work with, including many of you. i am confident that, by working together, we can continue to build on hong kong β s unique foundation β and enhance our position as one of the world β s pre3 / 4 bis central bankers'speeches eminent financial centres. 29. it only remains for me to thank the hong kong management association for having me here tonight ; to thank you all for your attention ; and to congratulate the winners of the quality award β your achievements are rightly honoured today. 4 / 4 bis central bankers'speeches | 0.5 |
barbara novick, vice - chair of blackrock and the author of impactful articles on asset management and public policy ; as well as mr alain papiasse, deputy chief operating officer ( coo ) at bnp paribas, representing the group in north america. barbara and alain are two top market practitioners with a comprehensive experience in both asset management and investment banking. so, dear barbara, dear alain, i hope you will provide us with β insider β and complementary visions of what it really means to finance the economy. β’ and finally let me introduce mr thomas philippon, a distinguished academic from nyu, notably specialized in the evolution of the financial industry. dear thomas, your research on the financialization of the economy will provide a unique viewpoint by putting in perspective the links that exist between the financial industry and the economy. thank you all for being with us today. let me now give the floor to our panelists. i suggest that each speaker delivers a 10 - minute presentation before we start the actual discussion between the members of the panel and turn later on to the audience. mrs bair will speak first, followed by mrs novick, then professor philippon and eventually mr papiasse. sheila, would you start? bis central bankers β speeches | alan bollard : keeping inflation anchored during economic recovery speech by dr alan bollard, governor of the reserve bank of new zealand and mark blackmore, special adviser, economics department, to the taranaki chamber of commerce, new plymouth, 19 august 2010. * * * the main theme of my commentary today is inflation during the recovery, what we expect to happen with the forthcoming increase in gst and what it means for monetary policy. the new zealand economy is into its second year of recovery with much of the ground lost during the recession already made up. the economy has been growing since the june quarter of 2009 and we are now in this september quarter in the sixth quarter of growth. initially growth was very muted but it picked up a little momentum towards the end of last year. compared with some past recoveries this is certainly not a fast or robust one. so far, it is comparable with the initial slow rebound from the 1991 recession. it lags behind the 1998 / 99 recovery from the east asian crisis, which is probably freshest in most peoples β minds. we should not really be surprised by the gradual nature of the recovery. the global shock that hit us was, something like a once - in - a - generation event. we also still have to work off some of the excesses of the past expansion, such as high levels of private indebtedness along with reducing the fiscal deficit. these will remain a drag on growth for some time yet, as they are in a number of oecd countries. as a result the recovery still has some fragility about it. we do, however, expect gdp growth to continue, with the emphasis on export growth as household and business spending remain subdued. this outlook and the associated policy implications will be reviewed over coming weeks as we prepare the september monetary policy statement. what does this imply for inflation? inflation has been well contained recently, with consumer prices increasing 1. 8 percent in the 12 months to the june quarter this year. this marks five consecutive quarters where annual consumer price inflation has been at or close to the midpoint of the reserve bank β s 1 to 3 percent inflation target. it is worth noting that this contained inflation picture comes after a period of very strong growth in the prices of domestic assets and international commodities. both played a major part in the strong inflation pressures new zealand experienced in the mid - 2000s. how does this inflation performance compare with other countries? globally, consumer price inflation has reduced as a | 0 |
and inventory management. e - commerce has also virtually opened the entire globe for the entities to market their wares. so, instead of competing against large multinational companies, the msmes can take advantage of the opportunities afforded by e - commerce to access new and distant markets or global value - chains. c ) utilizing alternate sources of finance the msmes have always lamented lack of institutional finance as an impediment to their growth. however, lately few alternate sources of finance have become available in the market as a supplement to bank credit. the common forms of alternative finance include crowd - funding, invoice trading, peer - to - peer or marketplace lending, angel investors etc. similarly, nse has a sme platform for entities whose post issue paid up capital is less than or equal to rs. 25 crores. the platform allows new, early stage ventures and small companies to raise much needed growth capital as they grow and mature. alternative finance tend to be more transparent about fees and eligibility as well as flexible in terms of payment. alternative finance allows businesses to use different assets for security. this is particularly very handy for service industries that can secure loans against the value of their unpaid invoices, rather than tangible assets such as property or stock. spreading awareness about the availability of these alternate sources of 3 / 6 bis central bankers'speeches finance however, remains a challenge which must be addressed by the industry associations. d ) seeking credit rating a credit rating can make a msme unit β s access to financial services more efficient as it provides transparency, helps overcome perceived uncertainty in lending decisions and thereby reduces time and transaction costs. msmes can use ratings to enhance their credibility with other counterparties too, such as technology providers, suppliers, and customers. in this context, having proper documentation would be extremely critical. a related aspect that the lenders need to be mindful of is that msme is a vast universe comprising of several million micro enterprises without elaborate system of account - keeping. hence, standard ratio analysis would be an ineffective mode while apprising their credit proposals. in such cases, the banks would need to look to assess their credit worthiness under a credit scoring model using unconventional matrix comprising of utility bill payments, remittance history etc. i would like to add here that adoption of ind - as will play a key role in enhancing the quality of ratings as better disclosures will increase information availability on rated companies. recent policy measures / work - in progress 9. the regulators | exposures to single borrowers or borrowers in the same corporate group and forcing the large borrowers to meet their fund requirements from market borrowings rather than from banks. under the circumstances, it would make sound commercial sense for the banks to look at msme sector as a potential growth area. 5. therefore, with favourable ecosystem in the manufacturing / services sector, msmes can pave the way for fulfilling entrepreneurial ambitions and in the process would be able to generate significant levels of employment. yet providing adequate and timely finance at reasonable rate of interest to these 50 million units at the bottom of the pyramid has remained an elusive goal. it must be appreciated that to realize the country β s aspirations for a double - digital growth, it is crucial that the potential of msme sector is optimally tapped. 6. before coming to the theme of the summit proper, let me briefly touch upon few major reasons for the sector β s limited access to institutional credit. these include β small ticket size loan which renders these accounts operationally less profitable, lack of information about the operations of these enterprises and financial illiteracy among the small enterprise owners. due to unavailability of timely as well as flexible institutional credit, a number of msmes fail to tide over temporary setbacks and eventually have to shut shop. with the above background, in my address today i intend to outline some mantras for the bankers and the borrowers that need to be pursued for ensuring vibrancy of the msme sector in emerging environment. i will also dwell upon 1 / 6 bis central bankers'speeches few recent policy measures that rbi and government of india have taken for the sector and also some measures in the pipeline. mantras for bankers 7. in my opinion developing empathy for micro, small and medium borrowers and understanding their financial and other related needs is the first and foremost mantra for the bankers. this can obviously be achieved if the top management is convinced about the potential of the sector and treats msme lending as a priority for sound commercial reasons. developing business sensitivity towards such entrepreneurs would require focused capacity building through training interventions. a ) appreciating the life cycle needs of the msmes micro and small units are more prone to financial difficulties than large enterprises / corporates. often absence of timely support at crucial junctures during the operating lifecycle of msmes leads to their sickness. the banks need to be sensitive in providing continuous support to viable mses during phases of transient financial difficulties. towards this | 1 |
it is a sort of basic provision. besides, the quality of capital is very carefully monitored. is it immediately available to cover risks? or is there only a commitment that the capital would be available in the event of a crisis? supervisors closely scrutinise the risks posed by assets, loans and trading activities. the greater the risks of such deals, the more capital the bank must hold. a german government bond, for example, does not represent a risk when calculating the capital ratio, unlike securitised loans. so the average figure of 12 % is only indicative. so you take a close look at banks β books? yes. and in the end the capital ratio for one business segment may be much higher than the average. on average three times as much capital has been put aside for the trading activities of banks as in 2008. but we also need to strike the right balance between capital requirements and 1 / 3 bis central bankers'speeches risk. after all, banks should always be able to issue loans to businesses and consumers and to support the real economy, to assist with mergers and acquisitions, and to organise initial public offerings on the stock market. savings banks and credit unions are complaining about the costs of regulation and about supervisors going too far. generally speaking, the same risks must be subject to the same rules. nevertheless, a systemically important bank must today meet considerably more stringent requirements and is monitored much more closely than a savings bank or a credit union. the key point is that a major bank in difficulty is more likely to pose a threat to financial stability than a small bank, and if that is the case, distinctions are called for in some, but not all, rules. and after ten years, we should check whether the new rules are also having the intended effect. in the united states there are plans to relax the rules for banks. i don β t believe in returning now to deregulation or to purely national rules. that would be a big mistake. we need globally consistent rules for the activities of large banks, of banks which are important for the financial system. the crisis should have taught us that. banks are not only highly interconnected with each other but also with financial markets, and only global rules can protect us from chain reactions and regulatory arbitrage, i. e. exploiting differences in regulatory standards. there is now a european resolution authority for ailing banks, but recently it didn β t intervene in several credit institutions in italy. again, the | . there are, for instance, many young families who can build their own home because interest rates are very low. an expansionary monetary policy helps in the medium and long term, also because, as a result of growth, jobs are created, which in turn generate income. only that makes it possible for people to buy property or to save or invest. you approach monetary policy as a member of the ecb β s executive board and governing council. when will the ecb start to unwind its monetary policy? the expansionary monetary policy has both advantages and side effects. as time passes, the positive effects get weaker and the risks increase. so it β s important to prepare for the exit in good time. what β s crucial in that context is a stable trend in the rate of inflation towards our objective of just under 2 %. it β s not quite there yet. still, we need to address the issue : how should the return to normal monetary policy be arranged? what will be the time frame, what will be the tools and what will be the sequence? what steps are to be taken and when should we start to wind down the bond purchases? that β s likely to be a long process. that β s why we on the ecb β s governing council should now answer the questions i just asked. 1 a mittelstandsbank serves small and medium - sized enterprises. 3 / 3 bis central bankers'speeches | 1 |
will do our best to ensure that a digital euro meets the needs and expectations of europeans. but it can only be a common european enterprise. the alignment of european authorities and institutions, mindful of their respective mandates and independence, will be key if a digital euro is to be accepted. i am therefore pleased to see that this committee welcomed our work in its recent resolutions on the ecb annual report and the international role of the euro. as co - legislators and representatives of europeans, you have a fundamental role to play in the discussions on the framework that would be needed to issue a digital euro. this is why i very much appreciate exchanges like the one today. i now look forward to your questions. annexes 14 april 2021 appendix - the eurosystem β s analysis of privacy - enhancing techniques in central bank digital currencies english 1. β eurosystem report on the public consultation on a digital euro β 2. i have discussed elsewhere the possibility that a digital euro may become too successful β namely if, owing to its strengths of safety and liquidity as a form of central bank money, it were to affect monetary and financial stability β and how this risk can be mitigated through appropriate design choices. see panetta, f. ( 2021 ), β evolution or revolution? the impact of a digital euro on the financial system β, speech at a bruegel online seminar, 10 february. 3. the questionnaire used in the public consultation included a multiple - choice question ( question 1 ) that asked respondents to rank, in order of importance, the features that a digital euro should offer in their view. the percentages in the text refer to the share of respondents that ranked a specific feature first, i. e. most important. the full question reads as follows : how would you rank, in order of importance, the features that a digital euro should offer? a. i want to be able to use it throughout the euro area. b. i want my payments to remain a private matter. c. i want to be able to use it with my smartphone and at payment terminals. d. i want to be able to pay even when there is no internet or power connection. e. i want it to be easy to use. f. i want to use a digital euro without having to pay additional costs. g. i want it to take the form of a dedicated physical device. h. i want it to be a secure means of payment. i. i want | and acquisition of eligible rural banks and thrift banks by strategic third party investors. as of 30 june 2014, seven merger / consolidation applications involving fifteen ( 15 ) banks have been approved by the pdic and are being processed by the bsp. in addition, there are five ( 5 ) other applications for consolidation / acquisition that are in the pipeline. capacity building is another area we have focused on. in particular, the bsp β s supervision and examination sector developed a completely new four - day training program targeted for the board of directors and senior officers of rural banks which we now refer to as the rural bank management course. the bsp worked with rbap on the coverage of such a program. after a series of pilot and early runs we are now ready to hand over to rbap the course materials and the conduct of this well - received and highly rated course. if needed, the bsp is prepared to extend further assistance on this program to rbap. redefining a strategic direction while these programs are meant to enhance the operations of rural banks, we recognize that there is still a lot more that can and should be done. a good starting point is a fundamental review of your banks β strengths and weaknesses. after this is completed, identify the needs of your constituents in the context of the competition that has emerged. such a review is likely to show that different communities require different forms of access and delivery of financial products and services. this is the direct result of having an archipelago where demographic differences across localities are significant. this may seem like a stumbling block but this also represents opportunities for rural banks. for instance, our experience in microfinance and financial inclusion shows that alternative delivery channels are viable. you can therefore find a balance between alternative delivery mechanisms vis - a - vis the brick and mortar approach of traditional branching. bis central bankers β speeches as you move from one locality to another, you will discover that one approach is more viable than the other, depending on the economics of the locality itself. for other areas, it may be economically feasible to offer both approaches to the community. in the current environment, we do see a silver lining : in the face of rising competition, we see the market growing as the benefits of development programs and fresh investments increasingly find their way to the countryside. we see for instance the positive impact of infrastructure development, tourism and even the conditional cash transfer program. in small communities, such inflows can serve as catalysts for sustainable and inclusive growth. microfin | 0 |
individual banking groups. in addition, not only banks, but also insurance companies, pension funds and ideally the entire financial system, including the shadow banking sector, should be covered in order to effectively help policymakers identify potential sources of systemic risk. furthermore, data with sufficient granularity are instrumental in macro - prudential analysis in order to take both averages and distributions into account. in turn, the microfoundations of aggregates must be explored. in seeking ways to overcome these shortcomings, i am impressed by the convincing and β in fact converging β arguments, proposals and suggestions that have emerged during the discussions at this conference. when considering the different ways in which we can try to close the existing data or information gaps, there are essentially three options : i ) launch a new data collection effort ; ii ) make better use of existing data ; and, perhaps most importantly, iii ) revisit the data collection processes that are currently in place. we are fully aware that, irrespective of whether the first or second options are adopted, we will in any case have to review our existing data collection processes. bis central bankers β speeches as regards the collection of new data, it is widely agreed that we cannot merely impose additional reporting requirements on reporting agents β irrespective of the size of the data gaps that we need to fill β before having thoroughly considered all other possible alternative solutions. while an overall increase in the reporting burden may well be justified in individual cases, insofar as it is clearly supported by a cost - benefit analysis, this should only be the last resort after all other options have been exhausted. for instance, concerning the issue of how to make better use of the existing data, work is under way to help reduce the number of overlapping data collection efforts. a prominent example of this is the work being carried out under the auspices of the ecb and the european banking authority ( eba ) to reconcile credit institutions β statistical and supervisory reporting requirements. in this context, i would like to recall that the second version of the classification system linking the requirements of the ecb β s monetary and financial statistics with the supervisory reporting templates ( finrep, corep and large exposures ) developed by the eba was published last month on the websites of both the ecb and the eba. i welcome and encourage all initiatives to review our data collection processes in a comprehensive way. a strategic shift towards granular, multi - purpose data collection and | jose manuel gonzalez - paramo : future challenges for central bank statistics speech by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, at the sixth ecb statistics conference, frankfurt am main, 18 april 2012. * * * ladies and gentlemen, on behalf of the executive board of the european central bank ( ecb ), let me warmly thank you for your attendance at and valuable contributions to the sixth ecb statistics conference. please allow me to make a few concluding remarks before the end of this successful event. this is the last time that i will be able to attend this conference as a member of the executive board of the ecb and i greatly appreciate this opportunity to address such a distinguished audience. as the media and the markets repeatedly remind us every day, there is much at stake as regards the future of the european project today. indeed, the credibility of european integration is being challenged for reasons that no responsible policy - maker can afford to disregard. although the european system of central banks ( escb ) has been successful in achieving its main objective, which is to maintain price stability, let us not forget that, under article 3 of the statute of the escb and of the ecb, the escb is also responsible for contributing to the stability of the financial system. this is why i greatly appreciate the focus and title chosen for this conference, which reflect the contribution of central banking statistics to both the maintenance of price stability and the mitigation of systemic risks. the system and processes for producing statistics that are used directly for monetary policy purposes are well advanced in terms of their accuracy, timeliness and coverage. the compelling question is therefore whether these statistics could also serve the needs of financial stability policies and macro - prudential supervision. as you very well know, the answer to this question is β yes, but with some limitations β, or rather β yes, but the data currently available are not sufficient β. rather than being discouraged by this, i would call upon you to accept this shortcoming as a challenge to be taken up in your future work. but what exactly are the most pressing challenges that we face in this area? as you have already discussed in detail throughout the conference, monetary statistics tend to provide us with aggregated data. there are, of course, very good reasons why this is the case, but for the purposes of macro - prudential analysis, it would be more useful if the data were also consolidated at the level of | 1 |
series produced by nhk [ japan broadcasting corporation ] ) to be aired in 2021. shibusawa eiichi also has a close relationship with the bank of japan, and his portrait will be printed on the new 10, 000 yen bank of japan note to be issued from 2024. ii. results of the financial literacy survey a. overview now, i would like to move on to the main topic. the central council for financial services information conducted the financial literacy survey last year. this survey was conducted for the first time in 2016 and for the second time last year with the aim of understanding the current state of financial literacy in japan. it is an online questionnaire targeting 25, 000 individuals aged 18 to 79 sampled throughout japan. the questions in the survey can be largely divided into two types ( chart 1 ). the first type of questions are true / false questions on " financial knowledge and financial decision - making skills. " these are questions with correct answers, such as, " if interest rates rise, what will typically happen to bond prices? " the correct answer is, " they will fall. " the other type of questions are those on " characteristics of behavior and attitude. " these questions ask the respondents how much each of the given statements, such as, " i set long - term financial goals and strive to achieve them, " apply to them personally. these questions have no correct answer, and ask the respondents about their current state or attitude. next, i will introduce some interesting points and implications from the results of the 2019 survey. b. survey results 1. percentage of correct answers given to true / false questions looking at the percentage of correct answers given to the 25 true / false questions, the nationwide average was 56. 6 percent, an increase of 1 percentage point on the previous 2016 survey ( chart 2 ). the percentage of correct answers rose in all categories of the financial literacy map, including family budget management and financial knowledge. also, the percentages increased in almost all regions. in other words, financial literacy in japan has risen moderately overall over the past three years. by age group, the percentage of correct answers tended to be higher for older age groups. this confirms that people's financial literacy increases with various experiences through life and with more opportunity to engage in financial transactions and acquire financial and economic information. how does the level of financial literacy in japan compare with that in other countries? when comparing the percentage of correct answers given to the 11 common questions asked in the financial | - reaching future effects. therefore, global action and continuous efforts into the future are required if we are to overcome these externalities. various groups and organizations that make up society will need to take responsible action for the sake of the planet. firms have been acting to reduce greenhouse gas emissions under their own initiative, while at the same time maintaining their accountability to a wide range of stakeholders, such as investors and consumers, through disclosure and other means. financial institutions have also played an important role. they have been stepping up their efforts in such areas as green finance and supporting firms from the financial side. consumers have also become more conscious of the environment, using reusable shopping bags and energy efficient electronic appliances, and purchasing electric vehicles. in terms of policy responses to solve climate change issues, governments and legislative bodies play an important role. many countries have been setting greenhouse gas reduction targets and implementing initiatives to reduce greenhouse gas emissions to a socially optimal level. these 1 / 6 bis central bankers'speeches initiatives include reviewing regulations or introducing carbon pricing, such as emissions trading and carbon taxes, through which the costs of climate change will be explicitly reflected in the decision making of firms and households. the japanese government has declared its aim of reducing greenhouse gas emissions in japan to net - zero and achieving carbon neutrality by 2050. it has also stated that, under its β green growth strategy, β it will promote policies that contribute to growth centered on decarbonization, including carbon pricing. in this way, through the active initiatives of firms and households, together with the government β s measures, the externalities of climate change that were originally not recognized are now gradually becoming reflected and β internalized β in the decision making of a wide range of agents. the key to addressing climate change issues is how to reinforce these trends. ii. overseas initiatives in recent years, climate change has been a major issue not only at central bank governors β meetings, as i mentioned earlier, but also at various international forums and organizations. created under the financial stability board ( fsb ), which monitors and makes recommendations about the global financial system, the task force on climate - related financial disclosures ( tcfd ) published its final report in 2017 on recommendations for climate - related financial disclosures. these recommendations are being followed by an increasing number of firms, and japan now has the largest number of firms supporting the tcfd recommendations. also in 2017, the network of central banks and supervisors for greening the financial system ( ngfs ) | 0.5 |
andrew bailey : monetary and financial stability - lessons from recent times speech by mr andrew bailey, governor of the bank of england, at the institute of international finance, washington dc, 12 april 2023. * * * it is a great pleasure to be back in washington. there is plenty going on and a great deal to talk about, so thank you to the iif and oliver wyman for organising this event. i want to pick out big issues we face, and try to set out how they fit together and the challenges they give rise to. in recent weeks, we have seen the crystallisation of problems in a few parts of the banking sector. this is against a background of a necessary sharp tightening in monetary policy to bring down inflation from levels that are much too high. all of this has to be set against the most serious global pandemic for at least a century and the most serious war in europe since 1945. let me therefore draw a first set of conclusions and propositions from what is going on. the post crisis reforms to bank regulation have worked. today i do not believe we face a systemic banking crisis. when i look at the uk banks, they are well capitalised, liquid and able to serve their customers and support the economy. this positive assessment of financial stability is important for monetary policy. in our case monetary policy set by the mpc should be able to respond to the macro implications of any dislocation to credit markets to the extent that they influence the outlook for inflation and thus deviations of inflation from target, just as the mpc conditions its policy decisions on asset price and balance sheet developments on all other occasions. that's natural. but, what we have not done β and should not do β is in any sense aim off our preferred setting of monetary policy because of financial instability. that has not happened. that outcome depends on having institutional structures governing decisions on monetary policy and financial stability. internationally the picture remains more mixed on the latter. let me next move on to the first stage of what i will call developments in money. many central banks, the bank of england included, are now implementing quantitative tightening ( qt ), the reversal of the quantitative easing ( qe ) we had previously used. qe has worked through its effects on interest rates and asset prices more generally. those effects are temporary and their size is state contingent, being larger in times of crisis and market upheaval. we can think of qt likewise, except that | ( 1878 ), pp. 383 - 396. bis central bankers β speeches it is hardly surprising that only a third of people believe markets work in the interests of society. 2 the more people see, the less they like. people trust markets less with age. and yet, most people think markets will become ever more important. and they β re right. as i wrote this week to g20 leaders, the structure of financial system has changed significantly since the crisis. virtually all of the net credit since the crisis has been from the bond markets and the size of assets under management has increased by 60 % to $ 74 trillion. real markets don β t just happen. they depend on the quality of the market infrastructure. that means hard infrastructure, the plumbing of markets that determines the mechanics of markets ; and soft infrastructure, like standards and codes that define how market participants should behave. robust market infrastructure is a public good. but like many public goods it risks being undersupplied. if taken for granted the infrastructure that supports markets won β t keep pace with their dynamism ; just as it failed to do so in the run - up to the crisis. we all have a responsibility to stop this from happening again. that β s why i am delighted that so many people are here today, joining those that have already participated in panels in manchester and cambridge. i am also very pleased that we will be hearing from many others who are attending parallel forums in birmingham and edinburgh. and that people are already sharing comments, ideas and thoughts on social media. for the first time, people who connect with markets from all sides and in all ways are being brought together. not just bankers, traders and regulators ; but companies, investors, workers, academics, judges, trade unionists and journalists. that β s important. because we all rely on markets and we are all affected by them. and because everyone who connects with markets can help rebuild the real markets we need. the good news is that today isn β t the beginning of this process. over the past seven years, a huge programme of reform has been underway to fix the fault lines that led to the crisis and to build more resilient sources of finance to serve the real economy. 3 the uk has played a leading role, consistent with our position as the pre - eminent global financial centre. 40 % of global foreign exchange trading goes through london. half of all trades in otc interest rate derivatives. two - thirds of trading in | 0.5 |
always been a major source of social iniquity. in addition, it prevents the economy from functioning properly, by falsifying the signals which are given by prices. the speculative boom in the real estate markets in some of our countries at the end of the 1980s caused serious damage - and we are still paying the price. 2. once inflation has been brought under control, and once this control has been confirmed, monetary policy can guide short - term interest rates to a level which contributes to balanced growth. quite a number of eu countries are in such a situation already, with short - term interest rates at around 3 %. in others, where inflation has been brought under control more recently, rates have not yet reached this level but are approaching it gradually. the confirmation that inflation has been brought under control does, unfortunately, take time. finally, in one major country which has seen rapid growth for several years now and in which unemployment has fallen remarkably, short - term interest rates have been raised - applying the principle of preventive medicine. 3. now, what can we say about long - term interest rates, which also have an important role to play in stimulating growth - perhaps an even more important one than short - term rates? monetary policy does have an influence on the level of these rates, but its influence is not exclusive and we cannot even predict the direction of its influence with certainty. at this particular point in time, in the first group of countries to which i referred a moment ago, nominal long - term interest rates are at a historically low level - they are well below 6 % - but real long - term interest rates can be regarded, perhaps, as still being too high to put continental europe on the road to more vigorous growth. i am doubtful whether a further easing of monetary policy in this group of countries would be able to help move the yield curve in the desired direction. it could actually have the opposite effect - if investors perceived it as heralding a weak euro. in any event, given the current level of short - term interest rates, monetary policy β s margin for manoeuvre is extremely limited. it is possible that the level of real long - term interest rates in europe reflects, partially at least, that of real interest rates worldwide. europe has no influence over that effect. europe can, however, have an influence on the effect which comes from the constant increase in public sector indebtedness in our countries. as a reminder, between the end of 1991 and | have raised in my speech tonight serve a range of objectives ; and each of them is worth pursuing with ambition. thank you very much for your attention. bis central bankers β speeches | 0 |
was enacted in july 2010. the so - called basel 2. 5 agreement, which strengthened the market risk capital requirements of basel ii, had already been finished. just a few months after the dodd - frank act was enacted, agreement was reached on the basel iii reforms, which require improvement of the quality of regulatory capital, an increase in the quantity of minimum required capital, maintenance of a capital conservation buffer, and β for the first time internationally β compliance with a minimum leverage ratio. in the coming months, the banking agencies will be finalizing regulations to implement basel 2. 5 in the united states and will be proposing regulations to implement basel iii in the united states. bis central bankers β speeches with respect to macroprudential capital regulation, section 165 of the dodd - frank act mandated that the board establish enhanced risk - based capital standards for large bank holding companies that would be graduated based on the relative systemic importance of those companies. consistent with this requirement, we espoused proposals in the basel committee for capital surcharges on the world β s largest, most interconnected banking organizations based on their global systemic importance. last year, agreement was reached on a framework for such surcharges, to be implemented during the same transition period applicable to basel iii. the board β s aim has been to fashion the enhanced capital requirements of section 165 and the associated international framework in a simultaneous and congruent manner. both the dodd - frank act provision and the basel systemic surcharge framework are motivated by the fact that the failure of a systemically important firm would have dramatically greater negative consequences on the financial system and the economy than the failure of other firms. stricter capital requirements on systemically important firms should also have the benefit of helping offset any funding advantage these firms derive from their perceived status as too - big - to - fail and providing an incentive for such firms to reduce their systemic footprint. if the benefits of all these improvements to existing capital requirements are to be realized, it is crucial that capital standards be not only agreed upon globally, but also implemented consistently across jurisdictional boundaries. we have strongly supported efforts within the basel committee to monitor implementation β not only in the laws and regulations of member countries, but also at the level of individual large banking organizations, including an assessment of the consistency of risk - weighting practices by banks. we look forward to the evolution of the basel committee β s new plans for conducting this monitoring exercise, which are considerably more ambitious than any pursued in the past | the federal open market committee ( fomc ) as a consumer of model - based forecasts and analysis suggests that work remains to be done on both fronts - - and, in particular, on meeting both objectives with the same model. as regards the first property, the conceptual - - albeit informal - - framework that many policymakers like to use is largely " bottom up " and features costs and expectations. it starts with wages and the prices of other inputs into production, and after taking into account productivity, it sees prices set as a markup over unit costs. wage determination plays a key role in this framework and is influenced by such factors as inflation expectations, productivity, the views i express here are my own and not necessarily those of other members of the federal open market committee. flint brayton and david reifschneider, of the board's staff, contributed to these remarks. 1 / 4 and labor market slack ; the markup, too, is important because it varies over time depending on changes in the competitive environment, expected future costs, and other factors. at first glance, the empirical structural models currently favored in academic research and discussed at this conference - - such as the new keynesian phillips curve - - appear to conform to the informal policymaker model : expectations formation is dealt with formally, and price inflation, at least in some empirical representations, is directly tied to measures of unit labor costs. on closer inspection, however, one sees that the specifications of these models typically ignore important factors bearing on the inflation outlook. one category of neglected factors is price shocks - - changes in the levels of key inputs, such as energy or imports. policymakers spend a great deal of time discussing the circumstances under which such shocks can lead to persistent changes in the rate of inflation. yet, despite their historical importance for aggregate inflation, energy prices, for example, are controlled for in only one of the structural models discussed at this conference. and this importance is not necessarily a concern of the past : prices for oil and natural gas have soared since 2003, directly boosting the energy component of the consumer price index as well as raising the production costs, and ultimately to at least some degree the prices, of non - energy goods and services. as a policymaker, i can assure you that any model of inflation that did not take account of these effects, and how they might or might not affect ongoing rates of inflation, would have been of little practical use to the fomc over the past | 0.5 |
adjustments made under adverse conditions may now be further bolstered by a favourable financial climate. it is important that the spanish economy consolidate these gains and that it maintain the pace of reform and the improvements in competitiveness in a framework of stability. bis central bankers β speeches | luis m linde : monetary policy β current situation and challenges closing remarks by mr luis m linde, governor of the bank of spain, at the launch of the yearbook β anuario del euro 2014 β / fundacion de estudios financieros - fundacion ico, madrid, 28 january 2015. * * * firstly, i would like to thank irene garrido, chairwoman of ico, fernando fernandez and juan carlos ureta for kindly inviting me to attend the launch of this new edition of the anuario del euro. i will begin by reviewing the current economic situation in the euro area and the measures adopted by the european central bank. then i will go on to briefly comment on the leeway available to monetary policy in a context of very low inflation rates, and conclude by saying something about the different position in the monetary policy cycle of the main developed economies. the economic situation in the euro area and the ecb β s monetary policy the euro area β s economy is in a situation of weakness, with overall expected growth of 0. 8 % for 2014. after remaining fairly dynamic in first quarter of 2014, gdp grew only modestly in the following two quarters, and according to available forecasts, the path of recovery, both in the short and medium term, will be fragile, with disparities between countries. according to the european central bank β s projections, in line with the consensus, 2015 and 2016 will see growth of 1 % and 1. 5 %, respectively. these rates are not only modest, but are also subject to certain risks, which, on balance, point to even lower increases in economic activity. turning to prices, for some months now inflation has been well short of the 2 % benchmark, which is the ecb β s medium - term monetary policy target. the forecasts available continue to point to the risk of inflation remaining too low for too long. the ecb β s latest projections entail a further downward revision, with inflation expected to stand at 0. 7 % in 2015 and 1. 3 % in 2016. in recent months, against a background in which, given the weakness of demand and fierce competition, firms have limited price - setting power, the slump in the price of oil has exacerbated the drop in inflation. at the end of 2014, the annual rate of inflation stood at β 0. 2 % ( the average rate in 2014 was + 0. 4 % ) and it is | 1 |
jean - claude trichet : global economic governance and euro area economic governance speech by mr jean - claude trichet, president of the european central bank, at the world policy conference, marrakech, 16 october 2010. * * * ladies and gentlemen, it is a real pleasure to be here in marrakech β a city which, in its history, is a demonstration of the link between economic success and political events and choices. morocco is also an important partner for the eu in the context of the union for the mediterranean and the barcelona process. let me also mention that the ecb and the bank al maghrib have wellestablished bilateral relations, as well as close contacts in a multilateral framework. for example, the ecb and the other eurosystem central banks regularly meet with bank al maghrib and the other central banks of the mediterranean region in the framework of highlevel seminars, in which they discuss economic and financial issues of common interest. * * * let me start by saying a few words about the current economic outlook in the euro area. real gdp in the euro area grew by 1 %, quarter on quarter, in the second quarter of this year. growth has been supported mainly by domestic demand, but also reflects some temporary factors. recent statistical releases and survey evidence generally confirm our expectation of a moderation in the second half of this year in the euro area. therefore, we do not declare victory and we have to remain cautious and prudent. that being said, the positive but modest underlying momentum of the recovery remains in place. annual inflation in the euro area is currently 1. 8 %, and we expect inflation to remain moderate in 2011. very importantly, we note that inflation expectations over the medium to longer term continue to be firmly anchored in line with our definition of price stability. * * * in my remarks today, i will focus on global governance and in particular on the lessons that can be drawn from the extraordinary events of the past two years. i will first elaborate on why we need a set of rules, institutions and international relations that we call β global governance β. second, i will analyse how, in hindsight, the existing global governance has fared during the global financial crisis. third, i will deal with the evolution of the system as a response to the crisis, and in particular i will discuss the rise of new key entities in the world economy such as the g20 and the financial stability board, with a view to the | as core inflation is at 1. 5 % in the medium term and the latest reading of long - term inflation expectations ( 5y / 5y ) was at 1. 9 %, we may conclude that the trend in euro area inflation is now in line with the ecb β s strategy. logically, on the basis of this data and in line with its revised strategy, the ecb leans on the side of not overreacting. * * * let me now turn more specifically to our strategy review, which was concluded in july. highquality analysis and extensive dialogue between research and policymaking were crucial for reaching substantive, pertinent conclusions going forward. you may compare the strategy review exercise to a major research project with dozens of in - depth seminars, covering key issue areas relevant to the making of monetary policy. we reviewed the definition of price stability, monetary policy instruments and their effectiveness, as well as our communication practices. we also assessed the importance of digitalization, financial stability, globalization, monetary and fiscal policy interactions, and climate change from the perspective of monetary policy. the most important revision to our strategy is the new definition of price stability and how it will be applied in our future decision - making. according to the new strategy, price stability is best maintained by aiming at a 2 % symmetric inflation target over the medium term. the old aim of β below, but close to 2 % β was less precise and very much open to interpretation. in particular, the former definition had probably a certain feel of asymmetry, and its ambiguous wording appeared more of a ceiling than a symmetric central target. the new 2 % inflation target is genuinely symmetric, unambiguous, and easy to communicate. symmetry means that the governing council considers both slower and faster inflation to be equally undesirable. the symmetric 2 % inflation target under the new strategy thus serves as a buffer against deflationary risks and provides monetary policy with more space to react to a sharp decline in inflation. obviously, we also want to rein in the costs to the economy from a too high rate of inflation. and we have the tools to do it effectively, if and when needed. this change in the price stability definition is clearly reflected in our forward guidance. as decided at our monetary policy meeting in september, the governing council expects the key ecb 2 / 4 bis central bankers'speeches interest rates to remain at their present or lower levels until it sees inflation reaching 2 % durably, and | 0 |
when we initiate new common projects in europe, they should adhere to the same criteria that brought success 70 years ago : they must be based on a consensus that action is truly necessary ; the projects should complement the actions of governments ; they should be clearly linked to people β s immediate concerns ; they should unequivocally concern matters of european or global significance. if these criteria are applied, there are many areas in which europe does not need to get involved. but there are also important areas where it clearly needs to, and where european initiatives are not just legitimate, but even essential. today this notably includes the fields of migration, security and defence. both types of action are essential because unresolved internal divisions, for instance concerning the completion of economic and monetary union ( emu ), are likely to distract us from addressing the new geopolitical, economic and environmental challenges. this is a real danger in europe today β and it is one we cannot afford. we need to find the strength and wisdom to resolve our differences and go forward together. to do that we need to rediscover the spirit that led a small number of great leaders, in much more difficult conditions than we face today, to overcome mutual suspicion and succeed jointly instead of failing separately. so to conclude, let me quote again alcide de gasperi, whose words resonate as much today as they did in 1952 : β economic cooperation is, of course, a matter of compromise between the natural desire for independence of each participant and overriding political aspirations. if european economic cooperation were dependent upon the compromises put forward by the various administrations concerned, we should probably be led into weaknesses and inconsistencies. so it is the political aspiration for unity which must prevail. we must be guided above all by the overriding realisation that it is essential to build a united europe in order to ensure for ourselves peace, progress, and social justice β. 7 speech to the consultative assembly of the council of europe, strasbourg, 16 september 1952. bis central bankers β speeches | ivan iskrov : association of banks in bulgaria β 20 years congratulatory address by mr ivan iskrov, governor of the bulgarian national bank, to the association of banks in bulgaria on the occasion of the 20th anniversary of the association β s foundation, sofia, 3 april 2012. * * * mr. president, ladies and gentlemen, dear colleagues and friends, it is a great honour and a pleasure for me to be here today commemorating with you the 20th anniversary of the guild of the banking profession β the association of banks in bulgaria. this is a perfect opportunity to congratulate the association for the long way it successfully traversed, and along which it established itself as one of the most reputed trade associations in the republic of bulgaria. all these years the association consistently assisted its members in pursuing their banking business and protecting their interests, all the while standing as a stable and constructive partner of the central bank, as the banking regulatory authority, of other government authorities, and of the representatives of the business. therefore, we the members of the bnb governing council are all pleased to attend this occasion as a proof of the respect cherished by the central bank β s management for your work and professional achievements! behind the abb β s history stands the individual road of achievements, but also of challenges, of each one of the association β s members. as an anniversary usually brings up both a tally of what was done in the past, and wishes for the future, i will try to have some measure of both in my congratulatory address to you. practicing our profession involves our capability to serve society and help the bulgarian economy. because, as we are all very well aware, banks have high responsibilities in a market economy β the ongoing technological innovation, developing and offering new products and services, as well as the predictability and stability of banks are a mandatory prerequisite for economic prosperity. from my first day as a bnb governor to this very day, i have never stopped reiterating and instilling the idea that this responsibility requires the individual efforts of each one of us to be governed by a long - term goal β let β s call it a sense of mission β which goes beyond the specific financial or market considerations of the current day. it is exactly a jubilee like today β s that reminds us of the historic horizons behind the daily statistics, balance sheets or income statements, which ultimately mark the road of new and democratic bulgaria. speaking of history, exactly the current crisis stir | 0 |
##ing deep and diversified capital markets that provide a wide source of financing options to european companies and individuals is one of the cmu β s primary objectives. this is key to enhancing innovation and growth and to strengthening the cross - border dimension of investments in the eu, thereby promoting deeper integration and development of markets. better - integrated capital markets can also help to enhance the resilience of the euro area and complement the banking union by facilitating financial risk - sharing. cross - border financial integration has not yet exhausted the potential for bringing cross - border private risk - sharing up to the level we would like to see in emu. compared with the united states, where 60 % of shocks to gdp growth can be mitigated through diversification via capital markets, only 20 % of shocks to gdp growth are mitigated in the euro area. https : / / www. ecb. europa. eu / press / key / date / 2019 / html / ecb. sp190907 ~ 81df41228e. en. html 2 / 4 9 / 9 / 2019 growth and competitiveness in the euro area european capital markets are currently small and fragmented. policies that foster innovation and market size and that remove cross - border barriers will help develop more vibrant european financial markets and intermediaries that are able to compete internationally. let me point out here that the creation of a single rulebook for calculating taxable profits throughout the eu also offers a welcome opportunity for removing the debt bias in corporate taxation. [ 22 ] most tax systems currently favour debt financing due to the deductibility of interest rate payments from the tax base, while other forms of financing instruments are not considered. this is an obstacle to a larger equity base for firms and is therefore a significant impediment to the creation of a cmu. finally, fiscal policy can play a greater countercyclical and stabilising role. fiscal space should be used wisely in countries where it exists, while all countries should work towards a more growth - friendly composition of public finances. furthermore, a fiscal capacity at euro area level would be a great achievement that would complement national stabilisers. let me conclude. it is vital to continue implementing reforms to address the structural challenges facing the euro area. reducing barriers to trade in services and disparities in national corporate tax systems could provide a new impetus to the european single market and stimulate investment. deepening european integration requires us to pursue an ambitious agenda for the financial system | 6 ] a growing share of investment is gradually being directed towards intangible assets. [ 7 ] this might not be fully accounted for in national and firms β accounts. firms tend to invest less in a declining and ageing economy, unless labour could be replaced by capital. finally, production in advanced economies is gradually shifting from manufacturing to services, [ 8 ] where equipment matters less. weak investment since the crisis has been accompanied by slow productivity growth across virtually all advanced economies. labour productivity growth had already begun slowing well before the crisis. since 1995 it has averaged 0. 3 % per year in italy, compared with 1 % in the euro area as a whole and 2 % in the united states. there are many underlying reasons for this decline in productivity growth, so let me focus on two : the role of technology and population ageing. evidence suggests that the failure of firms to adapt to the ict revolution has played a central role. this may be why a relatively large number of very small firms are not growing, [ 10 ] and the resulting resource https : / / www. ecb. europa. eu / press / key / date / 2019 / html / ecb. sp190907 ~ 81df41228e. en. html 1 / 4 9 / 9 / 2019 growth and competitiveness in the euro area misallocation may contribute to the productivity gap across countries. some see the decline in the rate of radical innovation as a key factor in the global decline of productivity growth, simply because new ideas are becoming harder to find. [ 11 ] others claim that the current lull can mostly be attributed to the depth of the great recession, [ 12 ] or to the fact that innovation comes in waves, and the economy has only recently begun to commercialise discoveries from fields such as nanotechnology, genetic engineering and quantum computing. in any case, innovation is changing the nature of production and employment, with digitalisation having already transformed how we do business. automation, in particular, is replacing labour in certain jobs, particularly in manufacturing, but it has also raised demand for highly skilled professionals in other areas. [ 14 ] both of these processes are likely to contribute to higher productivity growth, but also to higher income inequality in the future. a more troubling scenario is one in which artificial intelligence focuses exclusively on automation. if it provides small productivity improvements over human activity it may destroy more jobs than it creates β take automated call centres as an example. [ 15 ] while | 1 |
9th global alliance for banking on values ( gabv ) conference kathmandu / 7 - 9 march 2017 address by dr. chiranjibi nepal, governor, nepal rastra bank rt. honorable prime minister mr. pushpa kamal dahal, chairman of global alliance for banking on values and ceo of triodos bank mr. peter blom, executive director of gabv dr. marcos eguiguren, chairman of nmb bank mr. pawan kumar golyan, ceo of nmb bank mr. upendra poudyal, my friends from the financial community in nepal media friends, distinguished guests from nepal and abroad ladies and gentlemen, it gives me immense pleasure to address this 9th global alliance for banking on values ( gabv ) conference, being held here in kathmandu. i would like to thank nmb bank and other members of the gabv for providing me this privilege. i believe the theme of this conference entitled " shifting the financial paradigm - courage to act together " encompasses the work of the global alliance targeted at changing the world of finances to put people before profit. in this respect, i appreciate this laudable effort of the members of gabv who are focusing on strengthening local communities and entrepreneurs to become self - reliant. ladies and gentlemen, the challenge of building a sustainable financial system is to develop one which is a servant of the real economy, not its master, and which enables the sustainable intergenerational increase of common welfare and environmental resilience. the ultimate aim of the financial system should be to cater to people β s needs. there may be differences in values with respect to geography and time, but human welfare will always remain the principal value across different cultures. it was in the aftermath of the global financial crisis that a number of sustainability - focused or values - based banks had exhibited the ability to provide steady risk - adjusted financial returns by focusing on the real economy, and acting as financial intermediaries dedicated to supporting economic, social and environmental impact. these banks that put people before profit have gained credibility and recognition and are growing in strength and number. these banking institutions are united by the principles of sustainable banking that are based on certain values including sustainability, transparency, diversity, fairness and inclusion. in this banking model, profit is a result of sustaining and growing value in the real economy and healthy communities, not an end goal. ladies and gentlemen, allow me now to share with you a few words on financial sector development of nepal which would | delisle worrell : economic research as a practical guide to policy opening remarks by dr delisle worrell, governor of the central bank of barbados, at the central bank of barbados β 33rd annual review seminar, bridgetown, 23 july 2013. * * * i am, as many of you will know, an accidental central banker. if sir courtney blackman had not actively sought me out at uwi mona to establish the research dept of the new barbados central bank in 1972, i would have pursued my career as an academic, as was always my intention. however, i quickly discovered that the central bank can be the most rewarding career for an economist, because at the central bank you can bridge the gap between academics and policy making that affects the lives and welfare of real people. practicality has been the hallmark of all my economic research, and my motivation continues to be the desire to better understand why people undertake commercial transactions, so that policy makers may guide us towards transactions that uplift the community, and away from actions that are self - defeating. this bias towards research that captures deep economic insights, and is practical, intuitive and that may be applied to the issues of the day, is manifest in much of the research you will find published on the central bank of barbados website. let me cite you a few recent examples. in april this year, as you should know, central bank introduced a new policy to provide guidance to financial markets on interest rates. that policy was informed by research published under the title β a framework for interest rate policy in barbados β, which you may consult on the website. the research established that us t - bill rates and the volume of excess funds in banks are the most important factors affecting local rates. in 2011 the bank made a change in policy pertaining to the foreign exchange market, which was informed by the publication β an analysis of central bank intervention in the barbadian foreign exchange market. β in 2011 the bank published β an analysis of the tourism sector in barbados β, in which we measured barbados β competitiveness in the us, uk and canada in terms of market share. the study investigated how market share has been affected by β shocks β which have impacted caribbean and world tourism, and the factors affecting the utilization of existing tourist capacity as well as factors affecting hotel construction and investment in other tourism and ancillary services and infrastructure. β a note on tourism expenditure β, also published that year, broke down barbados β tourism performance in the uk by country | 0 |
differentiated risk - return profiles, allowing individual households significant opportunities to match their savings patterns with their anticipated requirements. in all probability, these opportunities are also subject to some threshold requirements, which means that households below a certain income and savings level cannot as yet access them. from the inclusion perspective, the challenge is clearly to lower this threshold in a way that does not compromise the commercial viability of the service provider. slide 11 presents a picture of the motivations that people say drive their savings behaviour. the question obviously allows people to acknowledge as many of the listed items as they want and the responses reported indicate the percentage of households who marked a particular motivation. although the data reported does not distinguish between households by income, the height of some of the bars clearly suggests that these motivations cut across income groups. let us focus on the four most frequently occurring responses. of these four, we have already spent a fair amount of time on ceremonies. the other three are, as might have been quite reasonably expected, are old age, children β s education and emergencies. once again, at the risk of repetition, i want to emphasize the point that, for all these requirements, the indian financial system currently offers a variety of products and services, but threshold requirements apply, which means that many lower income households whose motivations are the same as those of more affluent ones cannot access the same products and services. one could argue that there are no products and services which can meet these requirements with commercial viability. but this is a proposition that needs to be explored and, hopefully, proved wrong. the essential business - related point i would like to make with reference to savings decisions and motivations is that they must be seen in a dynamic context. in an economy that is growing rapidly, households are also equally rapidly evolving in terms of their consumption and savings choices and motivations. as many successful marketers have demonstrated, a life - cycle approach to the consumer is an extremely effective long - term strategy. a significant proportion of low - income households today will achieve middle income status in a few years. their choices then will partly be dictated by their experience with service providers during their transition. service providers who get customers in first, even at relatively low levels of activity, provided that they take a forward view of the relationship, can realistically look at bis central bankers β speeches benefitting from the increasing affluence and greater and more complex financial needs of those very customers. ( d ) borrowing motivations let me now turn to | woods architecture was not designed to cope with the instability and volatilities of the kind that i referred to earlier. having said this, it has to be recognized that, particularly after the asian crisis, there has been some progress in strengthening the structure of the old architecture. various high level forums such as g - 7, g - 33, g - 20 and international institutions such as imf, world bank and iosco have been busy in analyzing the past experience and in introducing ways and means of imparting greater transparency, early detection, better supervision, higher capital requirements, more sustainable exchange rate regimes, stronger standards and codes, and involving the private sector in resolving crises. some improvement has also been effected in imf financial facilities, such as contingency financing facility, to provide quick and higher access in the event of a crisis. however, it is also clear that these efforts, while having improved our understanding of the causes and consequences of financial volatility, and perhaps also helped in devising some precautionary measures, do not amount to a new international financial architecture which can cope with the new realities. i am also not sure that given the large volumes involved and short period over which a crisis can manifest itself, whether workable international solutions to the weaknesses in the present architecture are feasible within a reasonable time? my third point is that today - whether we like it or not - most of the responsibility for coping with the burden of instability and volatility is that of the country itself. from our own experience in india, i believe that there are three fundamental requirements for a country to prevent a financial crisis : β’ careful monitoring and management of exchange rates without, - i emphasis without - a fixed target or a pre - announced target or a band. flexibility in exchange rates is essential, but so as the ability to intervene, if and when necessary ; β’ a policy to build a high level of foreign exchange reserves which takes into account not only anticipated current account deficits but also β liquidity at risk β arising from unanticipated capital movements ; β’ a judicious policy for management of the capital account. short - term banking capital for financing investments and growth has to be avoided, while foreign direct investment and portfolio investment have to be encouraged. the point is simply that in respect of foreign direct investment and portfolio investment, there is a β cost β involved for the foreign investor in quickly reversing such flows. this cost is not present in respect of fixed | 0.5 |
a little bit of stodginess? speech given by sir jon cunliffe, deputy governor financial stability, member of the monetary policy committee, member of the financial policy committee and member of the prudential regulation committee cumbria chambers of commerce, kendal friday 13 july 2018 all speeches are available online at www. bankofengland. co. uk / speeches β in my view both as a citizen and as a policymaker, a little stodginess at the central bank is entirely appropriate β alan blinder β s 1999 advice to central bankers, quoted above, was not, i am pleased to say in these fitness conscious times, an injunction on the appropriate nutrition for monetary policy makers. rather, it was advice on how to respond to uncertainty or, to be precise, the need for caution when faced with a particular type of uncertainty β uncertainty about the impact of monetary policy on the key variables in the economy it seeks to influence. but i would like today to look at the case for β stodginess β when faced with uncertainty more generally about possible changes in how the economy works and the β model β of the economy that policymakers necessarily have in their minds. uncertainty, as i have noted before is the natural environment of monetary policy. there is a large academic literature on the optimal way for policy to deal with different types of uncertainty. but i would like to look at these issues first in the context of my time on the mpc and then in relation uk monetary policy going forward. the mpc since i joined it at the end of 2013 certainly appears to have been pretty consistently stodgy in the sense of slow moving. we have moved policy twice over that period. and one of those moves was a response to an exceptional and unprecedented exogenous event β the brexit referendum. only one move, the rate increase last november can be thought of as usual, β bread and butter β monetary policy. there has been one or more votes for changing policy in only 22 of the 49 meetings. when i compare this to 2002 to 2007 - - my period on the committee as the treasury representative - - the contrast is striking. over that period, the committee moved policy 12 times and with one or more votes for changing policy in 41 of the 56 meetings. this lack of action from the committee since i joined it as a member in 2013 was certainly not the reflection of lack of developments in the uk economy. from mid 2013 to early 2015, unemployment dropped like | a stone β by 2pp in the space of 18 months, the fastest rate for 25 years. at the same time, growth was picking up from close to 1 % to about 3 %. blinder all speeches are available online at www. bankofengland. co. uk / speeches nor was it the result of lack of advice. as mark carney has recently pointed out, the pre - crisis mpc had always tightened policy in response to accelerating growth and firming business confidence. with pre - crisis rules of thumb and the boe β s pre - crisis reaction function in mind, there were many and loud calls for pre - emptive tightening to prevent the build up of inflation pressure. the committee β s reluctance to tighten was of course motivated by the sizeable output gap and the need to allow a stimulative policy stance more time to squeeze out slack in the labour market β or as one committee member put it at the time β don β t just do something, stand there β¦ ( and think ) β. but underlying this, there were more fundamental doubts about what had happened to the supply side of the economy during the crisis, particularly around the labour market and around the collapse of productivity growth. it was these concerns that underlay the committee β s decision, shortly before i joined, to give forward guidance that it would not consider changing policy until unemployment fell to a certain level. as the expansion progressed from mid 2013 towards the brexit referendum in 2016, evidence grew that the supply side was not returning to pre - crisis norms. unemployment reached 5 % - the pre - crisis estimate of the natural rate - in early 2016 without any hint of upward pressure on pay. pay growth serially undershot the mpc β s forecasts ( chart 1 ). at the same time, as the expansion progressed, it became disappointingly clear first that the uk would not recover any of the productivity growth lost in the crisis and ensuing recession and then that it would not recover anything like the pre - crisis rate of productivity growth ( chart 2 ). i have noted before the much greater degree of attention to the supply side given by the post - crisis mpc relative to its pre - crisis predecessors. this is clearly accounted for by the much greater inability to forecast the evolution of supply and its impact on inflation ( charts 3 & 4 ). mark carney β s recent speech illustrates that bank rate might have risen by 2 - 3 percentage points between august 2013 and the end of 2014 | 1 |
β, mentions that there is a strong linkage between depth of credit information index and credit penetration. credit information index is influenced by the institutional mechanisms in an economy for gathering and disseminating credit information. public registries and credit bureaus play a very important role in boosting the information infrastructure. key developed economies like the us and uk demonstrate a strong and mature credit bureau environment. in developing economies, lending, especially to retail, is, in a large measure, made possible by credit bureaus, which perform the vital task of collating and distributing reliable credit information to the underwriter. as you all know, reports from the bureau contain information about the payment behaviour of consumers and commercial entities, including data on timely fulfilment or delinquency behaviour pertaining to financial obligations. let me emphasize that credit bureaus can serve at a micro as well as at a macro level. while at a micro level they help credit underwriters make an informed decision about a credit applicant, on a macro level, they assist the senior management understand the broad credit market tendencies and also help the banks benchmark their performance against the industry on various dimensions such as sourcing, portfolio quality, delinquency, etc. at the level of a regulator, bureaus can play a pivotal role in providing insights that can drive effective policy changes. they can also provide important inputs for the banking supervisors in monitoring systemic risks. a further bis central bankers β speeches use of the bureau at a regulatory level may be to analyze appropriate capital and provisioning strategies for banks and, in particular, to assess whether current capital and provisioning regulations match up to actual risks. at the level of the society, as i mentioned a little while ago, the cics have to work towards making individuals and financial entities credit information literate. this would involve generating awareness about the importance of credit history and the need for maintaining a healthy credit record. credit bureaus also provide other benefits for both borrowers and lenders. for example, if borrowers know that lenders have access to their credit histories, they would have a greater incentive to repay loans to maintain access to credit in the future. a 2010 world bank study indicates that half of all customers would be more likely to pay their bills on time if they knew that those payments were reported to credit bureaus. further, borrowers who have established a good credit record with a credit bureau may gain bargaining power for the terms of credit. information sharing between lenders reveals borrow | also been tried with much success. in partnership with banks and ngos, centres for financial literacy are being established at grassroot levels to boost community driven financial literacy. last month, rbi organised a'financial literacy week'on the theme " make a right start β become financially smart'targeted towards young adults, mainly students. the idea was to increase awareness on the advantages of inculcating financial discipline from an early age with inputs on saving, budgeting, power of compounding, banking essentials and cyber hygiene. 2 / 3 bis - central bankers'speeches as we focus on safeguarding the young, let us not forget the vulnerability of our senior citizens to financial frauds and cybercrime. it is incumbent upon us to extend our efforts to ensure their financial security and well - being as well. in conclusion, it is imperative that we remain vigilant and proactive in addressing the emerging risks and challenges. by implementing robust regulatory frameworks, enhancing cybersecurity measures, and promoting consumer awareness and financial literacy, we can mitigate the risks associated with digitalization and protect consumers from exploitation and fraud. thank you for this opportunity, and i wish you fruitful discussions at the global money week. 1 please refer master direction on digital payment security controls available at https : / / rbi. org. in / scripts / notificationuser. aspx? mode = 0 & id = 12032 2 please refer to rbi circular dated july 6, 2017 on customer protection β limiting liability of customers in unauthorised electronic banking transactions available at https : / / rbi. org. in / scripts / notificationuser. aspx? id = 11040 & mode = 0 3 rbi'guidelines on digital lending'issued on september 2, 2022, available at https : / / rbi. org. in / scripts / notificationuser. aspx? id = 12382 & mode = 0 4 https : / / cybercrime. gov. in / 5 https : / / www. rbi. org. in / financialeducation / 3 / 3 bis - central bankers'speeches | 0.5 |
together, we believe that adb and its partners in the region will go a long way in mobilising funds and building the capacity of developing members in delivering high - quality infrastructure projects. as an international financial and business centre in the region, hong kong, china has an active role to play in supporting and promoting infrastructure investment in asia. corporates, as well as national and multilateral development agencies including adb and ifc, have been making extensive use of hong kong, china β s deep financial markets in raising funds for infrastructure projects. joint ventures and funds have been set up in hong kong, china for identifying opportunities and managing investments in infrastructure projects in the region. we have also been seeing increasing offshore issuance of renminbi ( rmb ) bonds in our market to finance infrastructure projects. with the increasing use of rmb in trade and investment in the region, it is expected that the use of rmb in infrastructure financing will continue to rise. hong kong, china, as the largest offshore rmb centre with a wide range of rmb financial services, is well placed to support these infrastructure financing activities denominated in rmb. besides financial services, hong kong, china also has a pool of bis central bankers β speeches talents in professional services like construction and planning, surveying, engineering, project management, accounting, legal and arbitration, logistics, etc. firms and consultants of hong kong, china are well placed to take part and support infrastructure developments in the region. substantial investment is needed in many developing asian economies to break the infrastructure bottlenecks and move forward to the next stage of development. increasing cross - border connectivity will also promote greater trade and economic integration, unlocking the region β s growth potential. we are pleased to see that adb and national governments are making this a priority and taking meaningful steps to promote infrastructure investment in the region. as a member of the region, hong kong, china stands ready to contribute to this work. bis central bankers β speeches | mistakes or shifts in the international economic environment. currently, there are no deep, liquid and mature debt markets in asia for the intermediation process to function more efficiently. the process has begun in the last few years, and with the building of better financial infrastructure, this round of turmoil should add greater impetus to greater cooperation in building better regional financial intermediation. 13. as we all can see in hindsight, the risks involved in international capital flows are exacerbated when short - term capital flows are all attracted to the asset markets. this has led to asset bubbles, with all the painful consequences of asset price deflation. 14. but what is much more evident in asia is that the process of hedging, arbitrage and β carry trade β, whereby arbitrageurs borrow in one market and invest in another market that offers higher interest rates, has created both regional and global contagion. portfolio shifts mean that when asset prices change ( and in this i would include : consumer prices, interest rates, exchange rates, debt and equity prices and property prices ) funds will flow in and out to follow the β law of one price β. this suggests that open economies must adjust to global prices. the speed of such adjustments is only determined by the degree of openness of the domestic economy and financial markets. in other words, whether we like it or not, we are being priced globally by the market. 15. many of us have not fully appreciated the full logic of this. the financial turmoil suggests that while the real sector causes of the stress is global competition, the financial effect is stress on domestic banking systems, as the banks intermediate the global portfolio adjustments. in an open economy, capital inflows will increase the deposit base of domestic banks which may be channelled through credit mistakes into fuelling domestic asset price bubbles. there are two implications. first, asset price inflation eventually feeds into domestic inflation and erodes external competitiveness. second, excessive lending concentration into less productive assets, either real estate or over - investment in infrastructure and production capacity, exposes the financial institutions to huge risks. 16. from the viewpoint of financial intermediation, there are three major risks in asia that underlie the shocks there : β’ first, maturity mismatch - - asian markets made the mistake of borrowing short - term capital flows to finance illiquid non - tradables, such as property, thus exposing themselves to huge liquidity needs when capital flows reversed. | 0.5 |
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