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the cbc and external scientific collaborators, all of whom are here with us today. the formulation of the national strategy drew heavily from the results of the cbc survey on financial literacy. a key finding of the survey was that the average financial knowledge score in cyprus is below the minimum level considered by the oecd as sufficient for someone to be counted as financially literate. the results of the survey also indicate specific population groups, which are in greater need for financial education such as the young, the unemployed, women, low income and lower 2 / 5 bis - central bankers'speeches education citizens, and individuals who did not take economics courses during secondary education. they also indicate specific domains where lack of financial knowledge is evident, namely, interest compounding and diversification. one of the main parameters of the national strategy to promote financial literacy and financial education in cyprus relates to the need of the establishment of a permanent committee, which will be responsible for the national strategy implementation. the ad hoc committee continues to operate for a transitional period until this permanent committee is convened. for the time being, significant preparatory work has been undertaken by the cbc, particularly as regards the designing of the detailed governance structure of the new permanent committee. another piece of preparatory work undertaken since the adoption of the national strategy last june, is the launching of an oecd technical assistance project, in the context of a 250, 000 euro grant from the european commission, in relation to the implementation of specific actions for the promotion of financial literacy in cyprus. the work on the agreed pillars of the project is progressing according to plan, with close collaboration between cbc staff and oecd technocrats. these pillars are, first, the conduct of an updated national survey on financial literacy in cyprus, second, the development of a website and application for smart devices that would provide useful information and financial calculators and tools to the public, and third, the development of a " train the trainers " program for adults, which would focus on strengthening financial education. the abovementioned preparatory work undertaken at the cbc, will be utilised as input by the permanent committee for the implementation of the national strategy in cyprus. in addition to this work, let me also mention a few other areas related to financial literacy where the cbc is currently actively involved. first, since 2022 the cbc has assumed a coordinating role for the global money week in cyprus, a global public - awareness campaign coordinated by the oecd annually, aiming at raising awareness among young people on the | importance of strengthening financial literacy, skills, attitudes and behaviours. in fact, this conference is organised in the context of the global money week in cyprus for 2023. also, the cbc has recently become a full member of the international network on financial education ( infe ) of the oecd, in which it aspires to have an active role in the network's activities. finally, i would like to mention that the cbc continues to devote resources on research of this topic, particularly in examining the link between financial literacy and financial stability. according to preliminary findings from the 4th wave of the household finance and consumption survey in cyprus, financially illiterate individuals are 7 - 11 % more likely to have late loan payments, providing evidence on the negative correlation between the level of financial literacy and financial stability risks. the analysis is still work in progress. more extensive results on the issue are expected from further analysis as well as from the new more elaborate survey on which we are collaborating with the oecd. concluding remarks 3 / 5 bis - central bankers'speeches let me conclude by reiterating that this conference is a milestone event and sets the pace for a new era in cyprus. an era whereby all efforts for the promotion of financial literacy and education in cyprus are coordinated under the national strategy umbrella, so as to enhance the well - being and prosperity of cypriot citizens and to support the financial resilience and sustainable economic growth in the country. as governor of the central bank of cyprus my promise is to assist the new permanent committee's role in implementing the national strategy, as we also ensured that the cbc prioritises and leads this initiative since the very first establishment of the committee in december 2020. in this conference, we brought together a top - notch group of experts from both cyprus and abroad, that can exchange expert views and share with us their knowledge on best practices from other countries'experiences. i would like to mention by [ surname ] alphabetical order, professor panayiotis andreou from the cyprus university of technology, dr sophia anyfantaki from the bank of greece, professor adele atkinson from the university of birmingham, dr maria demertzis from bruegel, professor michael haliassos from goethe university frankfurt, professor alexander michaelides from imperial college london, professor andreas milidonis from the university of cyprus, dr elena miteva from the organisation of economic co - operation and development ( oecd ), professor dennis philip from durham university and dr | 1 |
would show up as gdp growth, though it may be predominantly reflected as higher measured productivity rather than generating a large volume of extra employment. the question will be whether other areas of domestic demand start to strengthen. many households have made progress in reducing debt burdens. at some point that might be bis central bankers β speeches expected to lead to such households feeling more inclined to spend. but a complex interaction of factors β asset values and expectations about job security to mention two β will be at work in ways that are not amenable to accurate short - term forecasting. overall, our assumption is that consumption will probably continue to grow at about trend pace, in line with income. public demand is scheduled to be subdued as governments seek to return budget positions to surplus. the near - term outlook for business investment spending outside the resources and resource - related sectors is subdued, judging by currently available leading indicators. in most cycles, it takes time for this sort of investment to turn ; this episode looks like no exception. the exchange rate may also have some role in helping the needed re - balancing. while it β s not surprising that the australian dollar has been very strong given the terms of trade event we have had, it is surprising that it has not declined much, at least so far, given that the terms of trade peaked more than a year ago. a lower exchange rate would, of course, need to be accompanied by a pace of growth of domestic unit costs below that seen for much of the past five years, in order to maintain low inflation. one area of stronger potential demand growth is dwelling construction, which has been unusually weak. it is not clear, actually, that the degree of weakness has been adequately explained. various explanations have been offered β interest rates too high, housing prices falling, zoning restrictions, planning delays, construction costs, lack of β confidence β, all have featured. at present, at least some of the pre - conditions one might expect to be needed for higher construction seem to be coming into place. interest rates have declined, dwelling prices seem to have stopped falling, rental yields have risen, and the availability of tradespeople is assessed as having improved. we have, moreover, seen a rise in approvals to build. so there is some evidence of a turning point, albeit a belated one. will the net effect of these developments mean that aggregate demand rises roughly in line with the economy β s supply potential over the next couple of years, or will a significant gap emerge | this event is not just the peak level observed, but the apparent persistence of high levels. the terms of trade will very likely record over a decade an average level 50 per cent higher than the previous long - term mean. that is a big deal. even with a more pessimistic assumption β say that commodity prices fall by twice as much over the next five years β there is no doubt that this is easily the biggest, and the most persistent, terms of trade event for a very long time. see stevens g ( 2010 ), β the challenge of prosperity β, rba bulletin, december, pp 69 β 75. i noted two years ago that a ship load of iron ore, which five years previously had had the same value as 2, 200 flat screen television sets, was by late 2010 buying 22, 000 such tvs β an increase in that particular β terms of trade β of a factor of ten. as of the current quarter the figure is 28, 000. at the peak, it reached 38, 000. bis central bankers β speeches graph 2 still, the terms of trade have peaked, and will probably have fallen by about 15 per cent by the end of this year. further declines over time are likely. so while a high level of the terms of trade continues to add to the level of national income, we can no longer expect that a rising terms of trade will be adding to growth in living standards. we are entering a new phase. this is not so much because of the β end of the mining boom β. as a matter of fact, talk of the β end of the mining boom β has been somewhat overhyped. the β boom β is not so much ended as simply evolving, as these events would be expected to. thoughtful commentators have already pointed out on a number of occasions that there are three phases to the β boom β. the first was the rise in prices β something that began as far back as about 2004. the peak in prices was more than a year ago now. the reserve bank began noting that prices had declined in our monthly interest rate announcements in october 2011. but relative prices for natural resources are still high. at this point, the terms of trade are down to the β peak β seen in the september quarter of 2008, which was of course a fifty - year high. the second phase of the β boom β is the rise in resource sector physical investment. this is aimed at taking advantage of expected high demand for iron ore, coal | 1 |
be substantially reduced if a smaller share of the multi - hundred - trillion - dollar derivatives market was referencing it. some possible alternatives include rates based on the u. s. treasury market or rates based on the secured funding markets that have replaced much of the borrowing banks used to do in the unsecured interbank market. the federal reserve is not seeking to dictate the particular rate that financial markets adopt. instead, we will encourage key market participants to further the work done by the fsb β s mpg by narrowing down the list of alternatives and developing them into robust reference rates that meet agreed - upon international standards and best practices. 12 there are enough suggestions on the mpg β s list to inspire confidence that we should be able to find common ground. any alternative would, of course, need to be in accord with the iosco principles mentioned earlier, and some potential alternatives would take time to fully develop. but the establishment of alternative reference rates for certain products is in our shared interests and would substantially strengthen the financial system. we are strongly committed that at least one such rate be developed and actively used as soon as practicable. and we look forward to working with financial institutions and other market participants to achieve this end. in the near term, the federal reserve, along with other government agencies, intends to meet with a wide range of market participants, including end users, to hear their views as to how change can be effected and to begin the work of developing alternatives to libor. later this year, we will convene a group of the largest global dealers to discuss these issues, following a model that was successfully used to promote derivatives reform. searching for potential alternative rates and encouraging their use will be a key point of that discussion. of course, end users will be affected by these changes as well, and we will also consult closely with key participants outside of the dealer community to make sure that reform meets their needs and is not disruptive to them. in particular, end users who want to continue to use libor will certainly be able to do so, and we will work toward the goal of ensuring that any changes to libor will not require borrowers or lenders to amend their existing contracts. and the markets that reference dollar libor are so enormous that there will surely be more than enough liquidity to support both a new risk free rate as well as libor itself. one of the lessons that i take from our study of libor is that these existing legacy | revised upward, as was the estimate for july. these revisions added 69, 000 more jobs. in all, employers have added more than 2 million jobs thus far in 2014, at an average pace of 227, 000 per month through september. the unemployment rate fell to 5. 9 percent, marking its lowest level since july 2008 and well below the 6. 7 percent we experienced in december 2013. even the broader u6 measure, which includes discouraged workers and involuntary part - time workers, dropped to 11. 8 percent, its lowest since october 2008 and down from 13. 1 percent in december 2013. the unemployment rate continues to fall faster than many policymakers had been forecasting. for instance, in the summary of economic projections ( sep ) submitted in december 2013, the central tendency of fomc participants was an unemployment rate of 6. 3 to 6. 6 percent at the end of 2014, and by the end of 2015, the central tendency was expected to be 5. 8 to 6. 1 percent. we have clearly exceeded these expectations. the unemployment rate is now below where the committee thought it would be at the end of 2014 and is now within the range expected at the end of 2015. thus, it is fair to say that we are at least a year ahead of where we thought we would be when we started to taper asset purchases. in fact, in september, the central tendency was lowered yet again to 5. 9 from 6. 0 percent for 2014 and to 5. 4 from 5. 6 percent by the end of 2015. we reached our yearend number for 2014 weeks later. how soon will we reach the year - end 2015 number? in pennsylvania, job growth has been positive as well. the state added more than 47, 000 jobs over the past 12 months. the august unemployment rate in pennsylvania was 5. 8 percent, down 1. 6 points from a year ago and down from a peak of 8. 7 percent immediately following the recession. this is not to claim that all is rosy in the labor markets. many americans remain frustrated and disappointed in their jobs and job prospects. for example, a large contingent of those working part time for economic reasons would like to be working full time. nonetheless, we have to acknowledge that significant progress has been made. inflation remains somewhat below the fomc β s long - run goal of 2 percent, but it appears to be drifting upward. headline inflation as measured by year - over - year change in the consumer price | 0 |
marion williams : barbados β financial system and insurance sector address by dr marion williams, governor of the central bank of barbados, to the barbados association of insurers and financial advisers ( baraifa ), bridgetown, 20 march 2009. * * * introduction mr. chairman, madam president mrs. lorena best and past president mr. wilton gale, mrs. shirley clarke, agents and financial advisers, distinguished life underwriters. when last i spoke with you in early 2008, we were only just beginning to see the fallout from the collapse of the us sub - prime market. while at the time we expected there to be some ( limited ) effects on demand and financing conditions, our more immediate concern related to the inflationary impact of record - high international commodity prices and oil prices in particular. since then, however, circumstances have changed dramatically, and for the worse. it has become clear that we are entrenched in a global financial crisis and economic downturn, stemming from an acute crisis of confidence. the only upside ( if one can call it that ) to the situation would be that depressed world demand has helped to stabilise international prices and curb inflationary pressures. current global conditions therefore pose obvious challenges for barbados, as economic downturns in our major trading partners and the ongoing turmoil in international financial markets continue to filter through to the domestic economy. macroeconomic developments i think that everyone in this room is aware that the year 2009 will be a difficult year for barbados, for the caribbean and the world. with the global economy slowing significantly, and most of europe and north america in recession ; with china experiencing half the rate of growth than is customary and south east asia, india, australia and new zealand experiencing significant downturns, or in recession, the expectation is that this must have a significant negative impact on barbados and the caribbean. the questions that most of us want answered are : how badly is it likely to affect us? how long will it last and what can we do to mitigate its impact? what pre - emptive action can we take, collectively as a government or individually? for baraifa members i would expect that one of your main interests would be about how the insurance market will be affected and what are the prospects for the insurance business going forward. as we all know by now, the softening of global demand, amid tight financial conditions, has triggered economic downturns in our key source markets for tourism. barbados is a very open economy and because | . in the right - hand chart, figures are the percentages of the population living in urban areas. sources : world bank ; goldewijk, k. k., beusen, a., and janssen, p., " long - term dynamic modeling of global population and built - up area in a spatially explicit way : hyde 3. 1, " the holocene, vol. 20, issue 4 ( 2010 ) : pp. 565 - 73. chart 12 ii. living with covid - 19 and future conduct of monetary policy ict investment cy [UNK] japan united states united kingdom france cy 1980 source : oecd. conclusion smallpox vaccination in the saga clan " naomasa ko shishi jun'ichiro gimi shuto no zu " ( painting of the smallpox vaccination of jun'ichiro, the heir of nabeshima kanso ) drawn by jinnouchi shorei, owned by saga - ken medical centre koseikan chart 13 | 0 |
business entrepreneurs, etc. 5. india being such a large country that it β s different regions are at different states of economic development and have been growing at different speeds. public policy does recognize this and therefore, has provisions that strategies suiting the levels and speeds of economic growth in the regions be pursued. 6. today, i will be focusing on the β role of financial sector in the growth of the southern region β. since banks are the major players in the financial system, my talk will be centred on the role of banks for economic growth and its future prospects for the region. i have organized my talk as follows : ( a ) i will briefly discuss about major economic parameters of the southern region. ( b ) then i will be analyzing the linkage to growth based on ( i ) deposits to gsdp ( gross state domestic product ) ( ii ) banks β credit to gsdp ( gross state domestic product ) ( iii ) c / d ratio and ( iv ) urban cooperative banks ( ucbs ) in the allocation of resources for economic activities in the region ( v ) role of nbfcs and ( vi ) financial inclusion β general trend in the region. bis central bankers β speeches ( c ) thereafter, i will discuss the scope of the banking sector in the emerging developments of the region and what more can be done by the banks to further the growth in the region. economic growth 7. during the pre β reform period of 1980s, the growth rates of the states in the southern region were generally less than the all india growth rate. during the 1990s, after the economic and financial sector reforms, these states performed better than the all - india growth rate. the growth rates were still higher, during the last 10 years or so when greater push had been given for financial inclusion. ( pl see table 1 ). per capita income 8. let us now look at another indicator of economic prosperity viz., per capita income. the per capita income of the region over the last three decades compared with other regions showed that this region has performed very well. in fact, during 1980s, this region β s average per capita income was below the national average. during the 1990s, while kerala and tamil nadu surpassed the national average, ap and karnataka were just below the national average. however, during the 2000s, the entire region was much more than the national average. ( pl see table 2 ) banking indicators number of offices 9. let us now turn to the role played by the commercial banks as part | various factors behind the delay in improvements in wages and prices. to summarize, i consider one of the major reasons behind the delay to be the expansion of the economy β s supply capacity caused by an increase in the labor supply and by firms β efforts toward increasing productivity. i would like to elaborate on this, because it is particularly important in considering the outlook for economic activity and prices in japan. starting with labor supply, the labor force participation rate in japan rose by 1. 8 percentage points over the five years to august 2017. over the same period, the size of the labor force increased by 1. 92 million, and this accounts for nearly 70 percent of the 2. 82 million increase in the number of employed persons. the trend in the labor force participation rate started to rise markedly from around 2012. indeed, the growth in labor force participation was remarkably rapid, considering the downward pressure on the participation rate stemming from an increasingly aging population. this reflects various structural changes in the economy resulting from, for example, measures to promote the empowerment of women and the elderly, including the provision of child - rearing and nursing care facilities, as well as extending the retirement age or abolishing traditional retirement systems amid the increase in life expectancy. i believe that these structural changes have eased the upward pressure on wages and prices by providing additional labor force to firms facing labor shortages. japan β s productivity has shown relatively high growth in recent years, compared with other major advanced countries, as reported for example by a u. s. private institute, although productivity figures should be regarded as being subject to a considerable margin of error because of their large measurement bias. it has been said that japan β s productivity is low, but this could also be taken to mean merely that there is large room for improvement. as i have already mentioned, most firms are currently trying to improve productivity, and my assessment of the current situation in japan is that, due to labor shortages, productivity is growing sharply to catch up with other countries. naturally, such an expansion in supply capacity raises the economy β s long - term growth potential. enhancing growth potential is an extremely important issue for japan, which is facing a decline in population. a fall in growth potential can lead, for example, to concerns about fiscal sustainability and to restraints in firms β and households β spending due to anxiety about their long - term economic outlook. in this regard, although recent developments in supply capacity may exert downward pressure on wages and prices in the short run | 0 |
to tear down balkan barriers and raise, instead, a comprehensive functional infrastructure, a regional payments system, a regional energy system, a regional market of financial products and lastly but may be most importantly a regional market of production factors. in martin luther king β s words β we may have all come on different ships, but we β re in the same boat now β. dwelling a little longer on the regional theme, i would like to briefly touch on another problem. the experience of the past year shows that as a result of regulatory capital requirements imposed by euro area supervisors, various bank groups reduced their participation not only in the euro area markets but also in our region. this process, known as deleverage, yielded negative consequences. to prevent such phenomena, policymakers and supervisors of partner economies need to cooperate more closely. in this regard, the vienna initiative is a good but limited cooperation platform. it is conceptualised as an instrument to address emergency crisis situations, whereas the current situation requires platforms for dialogue to enable effective and persistent communication among policymakers. this dialogue should aim at preventing undesired mutual effects ; a more ambitious programme, on the other hand, would aim at drafting and implementing coordinated initiatives of mutual interest. nonetheless, potential emergencies arising from contamination from euro area partners would create additional difficulties and huge effective costs for the economies of the region. therefore, we call for the establishment of appropriate mechanisms and instruments for liquidity provision by the european union to peripheral euro area countries. i believe that the financial integration makes this common defence more urgent, through the right understanding of the common fate of our trade partner economies. i take the opportunity, given the presence of many central bank officials from the region, to call for an en bloc coordinated position in this regard. the experience of the latest crisis showed that the countries which had more space to react, in the form of healthier fiscal balances or the financial system, and in the form of more reliable public institutions, were able to cope better with the consequences of the crisis. this lesson should not be neglected. among other things, it implies timely measures and, through counter - cyclical policies, establishment of the necessary space to buffer potential shocks. likewise, it implies ongoing efforts by macro and micro - prudential policies to minimise financial misbalances across all the sectors of the economy and the financial market. these policies, which are often known as β leaning against the wind β, have been and will continue to be part in the logics behind | dimitar radev : positive trends in the banking sector are expected to continue in 2019, however with possible increased challenges publication by mr dimitar radev, governor of the bulgarian national bank, in the quarterly bulletin of the association of banks in bulgaria, issue 56, january 2019. * * * in 2018 the banking sector continued to maintain high level of capital adequacy and liquidity, also generating historically high annual profit. deposits in the banking system increased, lending grew, and the share of nonperforming loans dropped. we expect these positive dynamics in the sector to continue altogether through 2019. loan portfolios are a primary source of operating income for the banks in bulgaria, but credit growth is by definition associated with assumption of new risk. at this stage of credit expansion, banks should continue making adequate efforts to manage the credit risk accumulating on their balance sheets. large part of the central bank β s recent activities, in our capacity as a regulator and supervisor of the banking system, is focused on the risk associated with bank lending. the bnb governing council decided to activate the countercyclical capital buffer from this year. in december 2018, the national assembly passed new legislative amendments, proposed by the bnb, which provide us with an additional macro - prudential toolbox of measures regarding bank lending. it includes for example bnb β s new powers to require enforcement of limiting the loan - to - value ratio or the debt - to - borrower β s income ratio. the probability of realization of credit risk would grow particularly in an economic slowdown or a situation less favourable than the one observed in the recent years. presently, we see growing indications of possible problems and increased uncertainty β globally and in the euro area β which could, through certain channels, bring negative effects domestically. from the perspective of the sector, 2019 will also be dominated by the asset review and stress test in several banks. we are at the stage of finalising the preparations for the practical implementation of these processes. they are under the lead of the european central bank, but with the active cooperation of the bnb. the asset review, stress test and synchronization of our supervisory practices with the european central bank are a very important, though not the only, element of the efforts associated with bulgaria β s plans for entry of the bulgarian lev in the exchange rate mechanism ( erm ii ) and bulgaria β s accession to the single supervisory mechanism. these strategic steps should be made simultaneously | 0 |
karnit flug : two economies - one society remarks by dr karnit flug, governor of the bank of israel, at the eli hurvitz conference on economy and society β one society β one economy β, tel aviv, 19 june 2017. * * * private consumption has led growth in the economy in recent years, covered for the slowdown in exports and in investments against the background of moderate global growth, and supported a significant improvement in labor market data, with an emphasis on weaker population groups. growth based on consumption comes with risks if it is based on factors that are not sustainable, but the main factor in increased consumption in recent years was increased income from labor. the rapid increase in consumer credit in recent years requires closer monitoring by regulators, increased caution on the part of the public and credit providers, and an informed examination of repayment capabilities when providing or taking out credit. growth that is led by consumption generally leads to lower long - term growth. low investment leads to a smaller increase in the stock of capital and in the adoption of technologies that accompany that investment, and lower exports lead to the economy being less able to exploit its relative advantages. the good current state of the economy, thanks partly to the rapid increase in private consumption, makes it necessary for us today to focus on dealing with the challenges we face β improving human capital and workers β skills, improving the business activity environment, and investing in infrastructure. all these will ensure improved productivity and a better standard of living in the long term. in recent years, private consumption has become an important component of israeli economic growth, and this has various implications. today i would like to discuss israel β s macroeconomic situation in recent years, and particularly the significance of the fact that growth is being led by private consumption, and the long - and short - term implications of this phenomenon. in recent years, gdp in israel has grown by higher rates than in most other advanced economies, but the growth rate of per capita gdp is similar to that of the other advanced economies. in the past year - and - a - half, growth data have been affected by what economists call β noise β ( mainly volatility in the import of vehicles ), but excluding that noise, the growth of gdp has accelerated, and it currently stands at about 4 percent in annual terms. this is an impressive rate, particularly if we take into account that world trade, which reflects global demand for our exports, increased by an average of about 3 percent | and we are witness to important initiatives in the area of academic education, mainly among the ultraorthodox sector. the israeli education system β s achievements in the international pisa tests are below average. we have recently had better achievements in tims tests, and i hope that they will also be reflected in the other tests. we must improve the achievements of the education system in order to achieve higher economic success. the world bank conducts a survey of the ease of doing business in all countries each year. in 2013, we were in 38th place, a very unsatisfactory placing. we have fallen significantly in this ranking during the past decade, not because our situation has deteriorated, but because the bureaucratic burden in other countries has lessened. the bureaucracy affects not only the ease of doing business, but also the cost of living. for instance, we see its effect on the ability to adjust the supply of housing and on housing prices. the concentration committee made two important recommendations on the matter of breaking apart pyramids and separating financial and real holdings. in this context, i note that if we require the immediate complete separation of financial and real holdings, there would be no people who would be able to be controlling owners of banks, since they would not be able to obtain the required capital through their activities in the real industries. it is possible that in another few decades, we will reach the conclusion that controlling owners are not necessary for banks. but in the meantime, i suggest not to conduct such large experiments on the financial system. i usually don β t make comparisons to greece, but this time i will do so : for hundreds of years, we have seen the ramifications that an unstable financial system has on the market. we have a strong banking system, which was of tremendous assistance in our ability to withstand the crisis. we must not endanger its stability, so i suggest not to limit cross - holdings of financial and real entities for now beyond what the concentration committee recommended when it set a benchmark of nis 6 billion for holdings of a real company by someone who holds controlling interest in a financial entity. i understand the logic behind the other suggestions, but i think that we must first of all examine the ramifications of lowering the number of entities that can hold controlling interest before we continue advancing in this field. labor productivity in the israeli economy is 20 percent lower than the oecd average. while we are a wealthy economy, it is a mistake to compare ourselves to the us and | 0.5 |
productivity and stability for sustainable growth address by dr mario vella governor, central bank of malta delivered during the ifs annual dinner 18 november 2016 dear president and members of the committee of institute of financial services ( ifs ) malta, personally and on behalf of the board of directors of the central bank of malta and of its senior management, i thank you for the opportunity to address this distinguished audience. dear minister. ladies and gentlemen. this annual event brings together key stakeholders in this country β s economic development and growth, and in the development of the social, educational and cultural conditions without which economic development and growth are not possible. it is now an established tradition that the governor of the central bank seizes the opportunity of the annual dinner of ifs malta to make a number of factually grounded remarks about some matters in the remit of the central bank. the traditional presence of the minister of finance at this event is of vital importance because it provides the stakeholders present with a more dynamic view of the whole, in the light of the statutorily distinct roles of the ministry of finance and the central bank. before sharing some thoughts with you, i would like to commend ifs for its ongoing commitment to responding to the changing needs of the marketplace and its pursuit of excellence in the provision of financial services education. it is encouraging to hear that the institute has had a successful year and that you are working on new initiatives to promote even higher professional standards. this is most welcome, as education and professional development are fundamental to the sustainability of our financial sector and its continued success. your strategic partnerships with the university of malta and overseas professional bodies such as the european banking & financial services training association ( ebtn ), the london institute of banking and finance, and the global association of risk professionals page 1 of 8 ( garp ) - whose representatives are with us tonight - reflects the institute β s excellent reputation. that a committee member of ifs - malta has been elected to the highest decision making body of a european association for a third consecutive term confirms the institute β s integrity and professionalism. the central bank has always worked closely with ifs and will continue to support its activities. this year, we also cooperated with the ifs during the european money week to promote financial literacy to underprivileged youths and participated in the successful ifs malta annual seminar on pension reform. i look forward to even more cooperation in the future. mr president, well done and thank you for taking a | , to amend banking rule 9 which involves measures addressing credit risks arising from the assessment of the quality of asset portfolios of credit institutions. in a nutshell, the proposal aims to establish a concrete plan with those banks with npls higher than 6 % to reduce such npls below that level over a period of 5 years, where failure to adhere to this plan will require the institution to shore up its resilience through the accumulation of an additional capital reserve. meanwhile, on a european level, the european authorities are pushing for the establishment of a european deposit insurance scheme ( edis ), which is a necessary ingredient to complete the architecture of the banking union project. this is because a common deposit insurance fund inspires the same level of confidence to depositors throughout the entire banking union, creating a consistent and common framework for supervision, resolution and depositor protection. moreover, this joint safety net within the banking union is expected to prevent the creation of competitive distortions, thus facilitating cross - border banking and hence strengthen financial integration. however, in this regard, there is still some way to go for agreement among all member states, as risk reduction measures, particularly through asset quality reviews of the less significant institutions and addressing the banking - sovereign debt loop, need to be also implemented. malta is committed to taking the edis file forward during its presidency. risks : going forward, we expect economic growth to moderate, while remaining robust and well above the euro area average. we consider that risks around this scenario are balanced. on the upside, there is the potential for private consumption to grow even more rapidly in a low interest rate environment especially if labour productivity increases to permit higher wage settlements. the downside risks relate mostly to the external situation. malta is one of the most open economies in europe, heavily dependent on international trade for its long - term prosperity. slower than expected growth in key trading partners, geopolitical tensions in our immediate neighbourhood and a resurgence of protectionism threaten this prosperity. another dimension of risk relates to inflation. i have already explained that the bank believes that malta β s potential economic growth rate has risen in recent years, implying that the economy can grow more rapidly than it used to without fuelling inflation. nevertheless, output currently exceeds potential. page 5 of 8 should such a situation persist, we would normally expect to see upward pressures on prices and costs. we have not observed them yet, as wage growth has remained largely contained and foreign inflation is subdued. the labour market situation, however, | 1 |
njuguna ndung β u : investing differently in women speech by prof njuguna ndung β u, governor of the central bank of kenya, at the african women β s economic summit, nairobi, 18 β 20 march 2010. * * * the right hon. raila odinga, prime minister of the republic of kenya ; hon. uhuru kenyatta, deputy prime minister and minister for finance of the republic of kenya ; mrs. graca machel, founder, new faces, new voices network ; dr. donald kaberuka, president, african development bank ; distinguished guests ; ladies and gentlemen : first, rt. hon. prime minister, may i take this opportunity to thank you most sincerely for finding time from your busy schedule to grace this important forum whose theme is investing differently in women. your presence demonstrates the seriousness with which the government of kenya embraces the role of women and participation in the development process and more importantly their role in the financial sector. may i also heartily thank the new faces, new voices network ( nfnv ), the founder madame graca machel and the african development bank ( afdb ) represented by the president, dr. donald kaberuka for choosing to host the inaugural african women β s economic summit ( awes ) in nairobi. this is a great honour to us in kenya. i also warmly welcome all international delegates represented here including fellow central bankers from the region. the rt. hon. prime minister, the central bank of kenya is delighted to partner with afdb and nfvn in this summit especially when the central bank and indeed the government of kenya is in the process of promoting more inclusive financial policies. in the recent past, the government has introduced new institutions to support, shape and deepen the financial sector. examples include : licensing and supervision of deposit taking microfinance institutions ; savings and credit co - operatives ( saccos ) and the saccos regulatory authority ; amendment of the banking act to allow shariah - compliant banking products ; licensing of credit reference bureaus to facilitate credit information sharing ; agent banking for cost effective financial outreach. since we have seen commercial bank branch expansion by over 100 branches in three years, deposits have increased from ksh. 800 billion on to ksh. 1. 01 trillion and accounts from 2. 4m to 8. 4m in the same period. the rt. hon. prime minister, as we commence deliberations at this important summit, it is | of price stability. maintaining the value of the currency preserves the purchasing power of the currency, and therefore that of french citizens. in addition, parliament has sought to create the conditions for growth and for job creation, via the stability of the currency. this is also the goal of the monetary policy council. to achieve this goal, we use two means. first, by preserving the value of the currency, we enhance its credibility in france, in europe and in the world and allow our economy to benefit from financing at favourable market interest rates. it is very important for future french growth, for investment and for job creation that we have the lowest medium - and long - term market rates in the european union today and the third lowest interest rates in the world. second, price stability curbs cost increases in our productive sector. in doing so, the competitiveness of our economy β other things being equal β is preserved and enhanced. this is good for future french growth and for job creation. it is important to note that we currently have a dynamic export sector and, according to the latest forecasts for 1996, the third highest current account surplus in the world. one other indicator of competitiveness is encouraging, namely the flow of foreign direct investment into france. it stood at frf 120 billion in 1995. the latest figures for the first nine months of 1996 show inward foreign direct investment totalling frf 74 billion. in all, since the beginning of 1995, a total of frf 194 billion, the equivalent of usd 39 billion, has been invested directly in france, making us the third - ranking industrialized economy in terms of inward foreign direct investment, behind the united states and the united kingdom. thus, when the monetary policy council makes interest - rate decisions, it bears in mind first the objective of preserving the purchasing power of the currency, for and on behalf of all french people, and second, its corollary, namely the creation of monetary, financial and competitive conditions that will allow our economy to achieve its full potential for sound and sustained growth, for job creation and therefore for combating unemployment. central banks cannot β command β growth. growth is the fruit of the labour of men and women, of the efficiency of employees, workers and engineers, of the imagination and skill of business leaders, and also, more broadly, of the influence of european and international business conditions. it is stimulated, in the medium and long term, by structural reforms that liberate initiative, strengthen the dynamism | 0 |
global economy and finance, the g20 has replaced the g7. this means that henceforth all the emerging countries as well as the industrialised countries with a systemic influence at the global level bear full responsibility for the governance of the integrated global economy. how do you envisage this governance developing in the medium and long term? governance today is still founded on the notion of sovereign states in a β westphalian β world, which does not correspond to the new governance needs of an integrated global economy. the big challenge right now is to speed up the move to a system of global governance that fits the new world that we have created over time, in particular over the past 20 years following the collapse of the soviet empire and the conversion of large emerging countries to the market economy. what is your view on the current economic situation in france? france, like all of the other european countries, is asked to subject itself to a very sizeable fiscal consolidation exercise. this will help to engender confidence and thus to consolidate the recovery and, in turn, create jobs. like all euro area countries, france is encouraged to continue to actively implement reforms. the euro area as a whole can and must increase its potential for growth and job creation. the extensive reforms that have been undertaken in all countries, such as the pension reform in france, are needed. they are a step in the direction of fiscal responsibility and the smoother functioning of the european economy, and of the french economy, and will lead to more growth and jobs. | , what we have got at the end makes sense from an economic point of view. basically, we had a substantial impact on credit markets, which is good as financial conditions were worsening and credit spreads were going up. what dominated was very much the tltro and the broadening to corporate bonds of the asset purchases. in terms of other asset prices, i believe markets are very conscious already that the monetary policy courses of the major world currency areas remain quite on different trajectories as they reflect fundamentally different domestic underlying conditions. as we have said few times in the past, the fact that there are significant and increasing differences in the monetary policy cycle between major advanced economies will become ever more evident in the near future. but do you think the market is right to believe there will not be more cuts? in the introductory statement we said very clearly that we β expect the key ecb interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of our net asset purchases. so you haven β t reached the lower bound? bis central bankers β speeches no, we haven β t. as other central banks have demonstrated, we have not reached the physical lower bound. this re - composition of the tool - box does not mean that we have thrown away any of our tools. if new negative shocks should worsen the outlook or if financing conditions should not adjust in the direction and to the extent that is necessary to boost the economy and inflation, a rate reduction remains in our armoury. on corporate bonds purchases : would this instrument be accessible for companies like, let β s say, volkswagen? yes, as long as they have investment grade. you have corporate bonds in other sectors too, such as utilities, insurance, telecommunications, energy. don β t you think you are entering the dangerous territory of choosing who to distribute money to? for example, you may end up favoring larger companies. normally what you do is that you give liquidity to the bank in exchange of collateral. here, you take a direct exposure. the other point is, you want to avoid influencing relative prices. we asked the committees to work on the specific definition of the bonds we will buy. we could buy something that is close to the index, but excluding banks, so that we avoid price distortions in the corporate bond market. the important point is that if the price goes up because you are buying non - financial corporations, there will be search for other bonds by the | 0.5 |
channeled toward low - return projects and insufficient capital to be directed toward the high - return projects needed to propel income and growth. moreover, deterioration in banks'balance sheets caused by insider lending or excessive risk - a discussion of how the costs of doing business vary across a number of countries is in world bank research finds that increases in corruption are associated with lower growth ( for example, mauro, 1995 ). wei ( 1997 ) also finds that corruption significantly reduces foreign direct investment, which is generally considered to be beneficial to growth. taking that leads to a proliferation of bad loans can cause banks to cut back sharply on lending, with negative effects on the economy. if the deterioration in banks β balance sheets is severe enough, it can result in banking and currency crises that substantially disrupt the economy, phenomena that unfortunately have been all too common in developing countries over the past several decades. 5 preventing banking crises must start with prudential regulation, in which rules set by the government ensure that banks have sufficient capital and manage risks well. to guarantee that these regulations are enforced, the government must also engage in prudential supervision, in which it monitors banks by examining them on a regular basis to ensure that they are complying with government regulations. the role of microfinance in developing countries is receiving much attention these days. microfinance is a positive development ; it has clearly helped substantial numbers of poor people escape poverty, and the nobel peace prize awarded to muhammad yunus for his pioneering efforts in this area was certainly well deserved. 6 however, microfinance is not a substitute for the institution building i am talking about here. globalizing to advance institutional reform now that we understand what kinds of institutions are needed to promote financial development and economic growth, let β s turn to the question of how developing countries can improve the likelihood that these institutions are developed. one of the most powerful weapons for stimulating institutional development is globalization. wealth is not something that can be attained by remaining closed off to the rest of the world. poorer countries would do better by embracing globalization β that is, opening their financial markets and their markets for goods and services to other nations so that funds, goods, and, often, the ideas that accompany them can flow in. such inflows can help them achieve reforms that build productivity and wealth that will benefit all their citizens. of course, countries need to take care that the foundations of the fundamental institutions discussed above are in place, and they must monitor the pace of reform. opening | , raquel fernandez, francesco giavazzi, dalia marin, kevin o β rourke, richard portes, paul seabright, anthony venables, thierry verdier, and l. alan winters ( 2002 ). making sense of globalization : a guide to the economic issues, cepr policy paper series 8. london : centre for economic policy research, july. dell β ariccia, giovanni, and robert marquez ( 2006 ). " lending booms and lending standards, " journal of finance, vol. 61 ( october ), pp. 2511 - 46. demirguc - kunt, asli, and enrica detragiache ( 2005 ). " cross - country empirical studies of systemic bank distress : a survey ( 422 kb pdf ), " imf working paper series wp 05 / 96. washington : international monetary fund, may. de soto, hernando ( 2000 ). the mystery of capital : why capitalism triumphs in the west and fails everywhere else. new york : basic books. dollar, david ( 1992 ). " outward - oriented developing economies really do grow more rapidly : evidence from 95 ldcs, 1976 - 1985, " economic development and cultural change, vol. 40 ( april ), pp. 523 - 44. dollar, david, and paul collier ( 2001 ). globalization, growth, and poverty : building an inclusive world economy. new york : oxford university press. easterly, william ( 2001 ). the elusive quest for growth : economists β adventures and misadventures in the tropics. cambridge, mass. : mit press. easterly, william, and ross levine ( 2001 ). " it β s not factor accumulation : stylized facts and growth models, " world bank economic review, vol. 15 ( 2 ), pp. 177 - 219. easterly, william, and ross levine ( 2003 ). " tropics, germs, and crops : how endowments influence economic development, " journal of monetary economics, vol. 50 ( january ), pp. 3 - 39. edwards, sebastian ( 1998 ). " openness, productivity, and growth : what do we really know? " economic journal, vol. 108 ( march ), pp. 383 - 98. eichengreen, barry ( 2001 ). " capital account liberalization : what do cross - country studies tell us? " world bank economic review, vol. 15 ( 3 ), pp | 1 |
the volatility of capital flows. however, in spite of widespread unease about the current state of affairs, such reforms do not seem likely anytime soon. furthermore, there are complex unsolved issues involved regarding potential conflicts between domestic and global objectives. that leaves us with what individual countries can do. in principle, they have three avenues to mitigate the problem. the first is to adjust macroeconomic policy frameworks. the second is to use prudential regulation and supervision aimed at reducing vulnerabilities and increasing resilience in face of volatile capital flows. the third is to introduce tools aimed directly at the financial integration part in order to regain greater monetary independence and shift the effect of monetary policy more to the interest rate channel and towards the non - traded goods sector. this could, for instance, be some form of a variable tax or reserve requirement that would make the relevant capital inflows more expensive and thus limit the increase in the effective interest rate differential vis - a - vis abroad when domestic interest rates are raised. there are complex design, governance, and international issues involved that i do not have time to expand on here. what should be stressed, however, is that it is not optimal that countries are increasingly forced to take unilateral action in this domain. credible and reliable co - insurance is better than self - insurance. at least, the imf should monitor the process, and further ahead, some rules of the game regarding capital flows would be welcome so that we are not faced with excessively sub - optimal outcomes and unintended consequences for the global system. see for instance mar guΓ°mundsson and thorsteinn thorgeirsson, β the fault lines in cross - border banking : lessons from the icelandic case β suerf studies 05 / 2010, european money and finance forum ( 2010 ) ; mar guΓ°mundsson, keynote address at the eighth high - level meeting for the middle east & north africa region : recent policy developments for strengthening the resilience of the financial sector, abu dhabi, 28 november 2012. www. cb. is ; and mar guΓ°mundsson β s speech at the iiea conference in dublin, ireland, β iceland β s crisis and recovery : facts, comparisons, and the lessons learned β, 27 april 2015. www. cb. is. bis central bankers β speeches let me conclude by telling you what we are contemplating in iceland in this regard, as this issue is very much on the agenda as we prepare | which clearly facilitated the cross - and off - border expansion of the icelandic banks through the so - called european passport. it was and is deeply flawed. the basic problem is that the freedoms are not matched by public action and frameworks at the eu and eea level. bank size relative to country size was assumed to be a matter of no concern, and fx risk was largely ignored. based on the icelandic experience, a banking union makes perfect sense, but only fully for the eurozone, and even then it has to include all three elements β common supervision, resolution, and deposit insurance β in order to break the deadly embrace of banks and sovereigns. in the interim, i think small countries, especially those with their own currencies, will have to impose their own prudential measures in order to defend themselves against the risks they face. the third lesson relates to the structure of the financial sector in small, open economies in the absence of robust and credible international or regional safety nets. to my mind, international financial centres cannot be located in such countries without some ex ante mechanism that at least partly insulates the domestic economy from the risks involved. in some sense, this is what iceland did in the nick of time in early october 2008. furthermore, in very small, open economies with their own currency, like iceland, the international activities of domestic banks and fx risks on their balance sheets must be limited and regulated. in this context, we have been thinking about the prudential regime that must be in place in iceland when we have lifted capital controls and icelandic banks are again free to use their european passporting rights. we will have more stringent restrictions on permissible currency mismatches than in the past, also taking into account positions of unhedged households and companies, but more importantly, we will, through some combination of lcr - and nsfr - type ratios in foreign exchange, put strict limits on fx maturity mismatches. the combination of these and other measures will make it impossible for the banking system to attain the size and cross - border reach it had before the crisis. the big question is whether it will be deemed compatible with the eea agreement. bis central bankers β speeches more generally, i think the distinction between macroprudential measures and capital controls can be more complex than many make it out to be. the fourth lesson is on capital flows : deal with the inflows if you want to avoid the risk of having to introduce comprehensive capital controls | 0.5 |
bank of thailand β s monetary policy : navigating towards sustained growth veerathai santiprabhob, governor of the bank of thailand thailand focus 2018 august 29, 2018 ladies and gentlemen, it is my pleasure to be addressing you this morning. i will take this opportunity to speak to you about thailand β s economic outlook and monetary policy at this important time. but before i move on, i would like to first thank the stock exchange of thailand for hosting this event, and all participants for your interest in the thai economy and the thai capital market. this is an important time, not only for the global economy, but also for the thai economy. after five years of sub - par growth rates, thailand has managed to restore economic growth to its potential. as the economy moves from a recovery phase towards an expansionary phase, the role of macroeconomic policy needs to evolve accordingly. what used to be a stimulative tool will eventually have to transition into a support on which the economy could grow on a sustainable basis. furthermore, we need to step up structural reform policy to address long - term challenges. ladies and gentlemen, the turning point of macroeconomic policy stance is not a straightforward one. imagine yourself on a road trip with a group of friends. you were driving, and one of your friends asked you, β when will we make a turn? β if you have a gps navigator or open up google maps, you might be able to say with precision, β in 2. 5 kilometers. β when talking about a policy course, the answer might be, β in the next two or three quarters, if things go according to plan. β in real life, we policymakers do not have the luxury of having a gps navigator, not to mention the fact that this said turn could be moved closer or further away without giving any warnings in this volatile world. what we do have, however, are indicators we observe from our surroundings, and indicators of road conditions and possible storms ahead of us. similarly, the mpc considers a number of factors when formulating a policy decision β not only the current state of such factors, but also their longer - run trends and expectations of risk scenarios going forward. for a small open economy in an increasingly volatile world, mpc β s decisions will have to be data dependent. in my address to you this morning, i will share with you the factors that the mpc considers when making policy decisions. since the main objective of a flexible | pss has set a vision to foster integrated, safe, and efficient payment and settlement systems in the region that enable businesses and individuals to make or receive electronic payments with greater convenience. in achieving its goals, the working committee has identified the roadmap for regional connectivity which is divided into three phases. β’ in short term ( 2012 β 13 ), the roadmap focuses on promoting standardization to enable interoperability and inter - linkage among payment and settlement systems. international standards such as swift message or other message standards are encouraged to be implemented. β’ in mid term ( 2014 β 15 ), the roadmap focuses on improving existing infrastructure and payment environment. the improvement should meet economic needs, and takes the opportunity to standardize the systems to be ready for long term goal of regional integration. the bank of thailand has been proactive in this aspect. we have already upgraded our cheque clearing system from paper - based to image - based system, namely icas in bangkok and the metropolitan areas and we will launch the icas for the entire country within next year, and the new version of bahtnet system will also be launched next year. in addition, a policy to set up a system for local switching ( i. e. a system for switching, clearing, and settlement of domestic payment transactions via local debit card ) has been prescribed, and will come into force within 2013. β’ in long term ( beyond 2015 ), asean payment and settlement linkage should be explored. currently, the bank of thailand is exploring the potential of linking our payment and settlement systems with that of other countries, such as the linkage with hong kong usd chats which aims to reduce fx settlement risk. the second consideration is new channel of payment and new technology advanced development in information and communication technology ( ict ) has made it possible for money to move faster and more safely. important development nowadays is atm aseanpay, operated by national itmx, which already connects atm system between thailand and malaysia. more connections will be made in the future, which will help facilitate retail payment and money remittance across asean countries. moreover, other payment channels and instruments such as e - banking, e - payment, and mobile payment will play an important role in enhancing efficiency and inclusiveness of financial services. bis central bankers β speeches to get the real benefit from the advancement in ict, we need to educate and persuade customers to change their behavior in using other payment instruments, from cash to non - cash instruments. | 0.5 |
s no point artificially setting the interests of different countries against each other, because we are all in the same boat β¦ your policies have also weakened the banks, who have seen their margins shrink to the point that some of them are no longer concerned about charging for deposits. on the one hand, interest rates are not low because of the ecb. us lowering our β key rates β ( for example, the rate at which bank deposits held with the ecb are remunerated ) to very low or even negative levels means that there is a savings glut in the economy : the natural rate of interest has fallen due to weak growth, the ageing population and a sort of anxiety in the global economy leading to demand for very safe assets, like government bonds. but for monetary policy to work and stimulate the economy, the interest rates set by the central bank have to be below this equilibrium rate. if one wants to return to a situation in which savings generate returns and conditions are supportive for the financial sector, criticising the central bank achieves nothing. action needs to be taken on the fundamentals to boost returns on capital, which would naturally lead to interest rates increasing, and the central bank could follow. on the other hand, it is true that the fact that the yield curve is flat, in other words that interest rates are low across the maturity spectrum, is weighing on the financial sector. indeed, the difference between the long - term performance of savings and the short - term cost of funding is currently almost zero. but what is weighing even more heavily on the profitability of european banks is that they have a cost base that is much higher than that of banks in the united states, japan, the united kingdom and scandinavia, and that, in certain countries, they have nonperforming loans on their balance sheet that no longer yield a return. and finally, there are too many banks in europe and consolidation has not started. so, we need fewer banks in the euro area? the banking union hasn β t yet enabled consolidation within the sector. we need to see crossborder m & a activity in the banking sector, and we also need to overcome a number of obstacles to banking activity. but the banking union has played a useful role in stabilising a sector that is now much more robust than it was in 2012, since the ecb has taken on the role of banking supervisor and has strengthened capital and liquidity requirements. it is important to recognise that one of the | do whatever it takes to preserve the euro, and the creation of 3 / 5 bis central bankers'speeches outright monetary transactions, which were the concrete manifestation of that commitment and made it possible to maintain the integrity of the euro area. then there was the episode with greece, which was of course very controversial, as can be seen in the costa gavras film β adults in the room β. but when the greek government was close to bankruptcy, we ensured the continued financing of the greek economy and of greek banks β which had lost access to the markets and to their own savers following a capital flight β while respecting the political will of euro area governments that the assistance to greece should be conditional. our actions ultimately allowed greece to remain in the euro. there were those who wanted to make the ecb responsible for greece leaving the euro area, but we resisted that! and the third thing i β m proud of is the quantitative easing we launched in 2015, which averted the risk of deflation. any regrets? we probably started quantitative easing ( qe ) a little too late, though i β m not blaming anyone. it was a major innovation which required an immense effort of persuasion within the governing council. for example, we had long discussions as to who would bear the risk of these asset purchases and we finally decided that 80 % would be borne by the national central banks on their balance sheets and not by the ecb. the idea was to prevent qe, a massive purchase of public securities β we now hold almost a third of total european debt, equivalent to 20 % of euro area gdp β from being a way of ushering in a fiscal union through the back door against the wishes of member states. we also underestimated the impact that the policy of fiscal austerity would have on activity ; this policy was enshrined in the treaty on stability, coordination and governance and was necessary at the time in order to provide stability to the financial markets. but this would have required a more accommodative monetary policy, as recommended by the imf, going as far as qe, which should have been running from 2010 rather than from 2015. finally, we may have sat on the fence for slightly too long with regard to climate change, even if that is not our core task. other central banks, such as the bank of england, became aware of it earlier than we did. for one, climate change needs to be integrated into financial sector supervision, taking into | 1 |
new york federal reserve bank, mimeo. mccallum, bennett t, β robustness properties of a rule for monetary policy, β carnegie - rochester conference series on public policy, 29, 173 - 204. mishkin, frederic s, and adam s. posen, β inflation targeting : lessons from four countries, β federal reserve bank of new york economic policy review, august, 9 - 110. svensson, lars e o, β how should monetary policy be conducted in an era of price stability? β new challenges for monetary policy, federal reserve bank of kansas city, forthcoming. taylor, john b, β discretion versus policy rules in practice, β carnegie - rochester conference series on public policy, 39, 195 - 214. | at least cecchetti and ehrmann find that the fed β s revealed inflation aversion is now as high as that of the formal inflation targeting countries. given this strong inflation aversion, ultimately there may be little difference between informal inflation targeting as practiced in the united states and flexible, forward - looking inflation targeting as practiced in many other countries around the world. that said, one could still ask the normative question of whether the united states should go to what i will call a more formal system of inflation targeting. such a system would have pluses and minuses. one potential plus is in credibility and transparency. even if the present - day pragmatic fed responds to exogenous rises in the growth of aggregate supply or drops in the non - inflationary rate of unemployment in a fully accommodative manner, inflation targeting may better communicate the strategy. for example, explicit inflation targeting statements may help to make it clear that the fed is really fighting inflation, not economic growth. but there are also potential disadvantages. economic circumstances have been good in the 1990s, when countries have gone over to inflation targeting, and it is worth repeating that inflation targeting is no panacea. it may not work well in the presence of negative supply shocks like those experienced throughout the world in the 1970s. moreover, there is a potential problem with inflation targeting even in good economic times. if forecasting inflation is difficult, even forward - looking inflation targeting central banks may respond to inflationary shocks too late to ward off inflation. although there are several ways to forecast inflation, none may be that reliable. on one side, many analysts use econometric models, but these may have intrinsic problems in periods of significant structural shifts. the very nature of such shocks is that they are not easy to predict or model. on the other side, one could imagine constructing leading indicators of inflation, but the experience until now is that not many of these are reliable either. one could also rely on market expectations of inflation, survey evidence, or other forecasts of inflation. but if models are not working well and there are not many reliable leading indicators, it is not clear how much information is contained in these other forecasts. without models or leading indicators, even forward - looking inflation targeting strategies may not work as well as advertised. conclusion inflation targeting has many things going for it. this strategy of conducting monetary policy has been widely adopted around the world, and it has seemed to be successful in lowering | 1 |
, place, price, protection, and profit. if we are to draw in the poor, we need products that address their needs ; a safe place to save, a reliable way to send and receive money, a quick way to borrow in times of need or to escape the clutches of the moneylender, easy - to - understand accident, life and health insurance, and an avenue to engage in saving for old age. simplicity and reliability are key β what one thinks one is paying for is what one should get, without hidden clauses or opt - outs to trip one up. the rbi is going to nudge banks to offer a basic suite of products to address financial needs. two other attributes of products are very important. they should be easy to access at low transactions cost. in the past, this meant that the place of delivery, that is the bank branch, had to be close to the customer. so a key element of the inclusion program was to expand eventually, we will have to find a way to wean those who start earning significant amounts from receiving such transfers. how to do this without providing disincentives to working and earning is a future problem born of success which is best left for another day. the united states has dealt with the disincentive effects of getting off welfare with programs like the earned income tax credit. bis central bankers β speeches bank branching in unbanked areas. today, with various other means of reaching the customer such as the mobile phone or the business correspondent, we can be more agnostic about the means by which the customer is reached. in other words, β place β today need not mean physical proximity, it can mean electronic proximity, or proximity via correspondents. towards this end, we have liberalized the regulations on bank business correspondents, encouraged banks and mobile companies to form alliances, and started the process of licensing payment banks. the transactions costs of obtaining the product, including the price and the intermediary charges, should be low. since every unbanked individual likely consumes low volumes of financial services to begin with, the provider should automate transactions as far as possible to reduce costs, and use employees that are local and are commensurately paid. furthermore, any regulatory burden should be minimal. with these objectives in mind, the rbi has started the process of licensing small local banks, and is re - examining kyc norms with a view to simplifying them. last month, we removed a major hurdle in | improve the functioning of the corporate bond market, a high level expert committee on corporate bonds and securitisation ( chairman : dr. r. h. patil ) has suggested various measures to revitalise the corporate bond market through setting up of trade reporting systems, trading platforms, auction platforms and clearing & settlement systems. the trade reporting systems suggested for corporate bonds is on the lines of trade reporting and compliance engine ( trace ) of national association of security dealers ( nasd ) in the us. such on - line real - time data dissemination will help the participants in making efficient trading decisions and at the same time, enable the regulators to obtain and monitor information on the market trends. these recommendations are under examination by the agencies concerned. concluding remarks the basic objective of deployment of technology in the financial sector should be to progressively move away from paper - based transactions, which include use of currency notes, cheques or challans, and to the extent possible, switch over to electronic means using rtgs or neft or any other electronic mode. it is opportune that we are today recognising the valuable contributions of the path breakers in the field of banking technology. the identification of technology leaders and their recognition in the form of technology awards is a pointer that we are capable of excelling in our respective fields. the awards of today are not a destination but only mark a good beginning - of a more exciting and challenging era ahead of us in our march towards a technologically advanced and efficient, effective, progressive and inclusive financial system. i wish you all success in your future endeavours. thank you. | 0.5 |
##ing new technologies and developing skills at the upper end of the value chain ; unless, in other words, the conditions that favour high private investment are re - established. moreover, it is worth remembering that reforms that raise potential growth produce permanently higher income not just for the economy as a whole, but also for governments, through higher tax revenues and more sustainable public debt, which opens up fiscal space. and that, in turn, means there is more scope for fiscal policy to support monetary policy in stabilising the economy. second, in the area of structural reforms, special attention should be paid to measures that bring about a reduction in the debt overhang. certainly, a lot has already been achieved in the banking sector with the creation of the single supervisory mechanism, and as part of that, the comprehensive assessment and the ensuing significant recapitalisation of the banking sector. this has also supported the repair of the banking lending channel and the monetary policy transmission mechanism. but it is clear that, in some countries, the large stock of non - performing loans ( npls ) is still preventing a stronger pick - up in lending. high stocks of npls can dampen credit supply for several reasons : they absorb resources and operational capacity ; they tie up bank capital in unproductive uses ; and they reduce bank profitability, which weighs on banks β capacity to generate capital internally. such effects on lending tend to be exacerbated for smaller firms, which are more dependent on bank lending. moreover, slow resolution of npls hampers the necessary process of corporate restructuring during which viable firms reduce their debt and start investing again, and non - viable firms exit from the market. creating the conditions for a rapid workout of npls has to be part of the economic policy actions to restore conditions that favour productive investment. each country has its own list of actions needed to speed up this process, and delays on this front are a serious drag on growth. in particular, well - designed insolvency regimes are key in separating viable from non - viable borrowers and in facilitating the valuation of assets to be sold off. an efficient judicial system is also essential. analysis by ecb staff shows that the pace of deleveraging is faster in countries that have a strong and effective legal apparatus. from this perspective, the recent reform of insolvency law in italy is welcome. it is estimated that the average length of bankruptcy procedures will be halved. foreclosure times are also expected to decrease | significantly. this is important because a shorter time to recover collateral brings the market value of non - performing assets closer to a level at which transactions can take place, meaning bank deleveraging can accelerate. the ongoing work towards a capital markets union ( cmu ) is an opportunity to accelerate progress on all fronts. a true cmu should aim to harmonise insolvency regimes and improve bis central bankers β speeches their overall quality by converging towards international best practices. that should in turn also help expand secondary markets for distressed debt, helping banks get npls off their books more easily. and if cmu is successful in developing european markets for sme assetbacked securities, banks will be able to diversify credit risks from lending to smes more easily, strengthening credit supply. finally, if we are to truly underpin confidence, it is important that, even while dealing with more pressing priorities, we do not lose sight of the need to complete our monetary union. in that context several steps taken by the commission are steering the process in the right direction. but what is also important for confidence is that those steps form part of a longerterm vision that removes fragility from our union. in sum, the combination of our monetary policy measures on the demand side, coupled with structural reforms on the supply side, goes a long way towards creating the conditions for a genuinely structural recovery. monetary policy and structural reforms together support demand, deleveraging and confidence, all of which are key for increasing investment. but when it comes to actually implementing the reform agenda, in many countries of the euro area hesitation seems to prevail over determination. certainly, we need to bear in mind that the necessary changes are on such a scale as to be unachievable without major consensus. but we also need to bear in mind that delays in making important structural reforms, which make a country more prosperous and more able to face today β s challenges, may sometimes have political reasons, but never economic ones. bis central bankers β speeches | 1 |
as reflected in the world bank β s latest logistics performance index. thailand has, therefore, been a natural gateway that links extra - regional economies to asean markets. thailand has advantages to be a hub for regional headquarters of multinational companies ; a hub for logistics and distribution activities ; a sourcing hub for regional markets ; and a financial hub for regional markets. however, to remain competitive as a regional hub is a challenging task. bis central bankers β speeches 14. to remain as the preferred hub and entry point of the region, we perceive an opportunity for investment from china which has the advantage in capital, construction capacity and technology. as the advantage of low cost factor of productions is rapidly declining, china is facing an urgent need to re - orient supply chains through thailand to enter asean and the greater mekong subregion ( gms ) in particular. china and thailand should therefore make every effort to grasp this opportunity and construct win - win solutions for both sides. ladies and gentlemen, 15. let me conclude that china economic prosperity and advancement provides wide range of untapped opportunities for thailand. they are right here where we are now, in our region. we should seize it and not miss it. and i am confident that so long as we work hand in hand with china, unite together, and embrace the merit of economic integration, the synergy of the two will surely give its fruit on the growing tree. thank you. bis central bankers β speeches | quality of regulation and lay the grounds for strengthening the financial sector. our foremost task, as we see it, is enhancing protection of rights of financial services consumers. i will be honest with you β at the nbu we truly hoped that ukraine would get a real protection system guaranteed by laws. but the parliament decided otherwise. however, this is not an excuse to abandon people with their problems with banks and nonbank financial institutions. today, i am very happy to inform you of the following : the nbu assumes responsibility for protection of rights of financial services consumers and establishes a special unit in charge of these issues. first of all, it will enable regulation of the information disclosure system that will deal with information on financial products and services. information transparency is at the core of trust in the financial services and safeguards higher prosperity of the public. we will continue our work on people β s complaints, but from now on it will be more systematic. the chain β complaint β response β changes in regulations β will become shorter and more efficient. this will help reduce the number of misunderstandings between financial institutions and their customers, improve their information awareness, and teach the financial market to address their customers β questions and comments. second. the nbu has assumed the leadership and developed a vision for the future strategy of financial literacy. why does the central bank need it, considering that we are not part of the education system? our goal is to prepare young people for life in the real world full of challenges and rapid changes. today, we encourage everybody present to join in common work based on our vision. i hope in a year we will be able to sum up our first results. ladies and gentlemen, i am confident that many of you have joined the forum with brilliant ideas of how to make financial services more accessible for ukrainians. so, let β s get to work! 2 / 2 bis central bankers'speeches | 0 |
to addressing some of the global challenges in urban development and the growth of megacities, both within asia as well as in other parts of the world. demographics third, uneven global demographics will present countries with both challenges and opportunities. developing countries with young and growing workforces will face the challenges of creating enough jobs and investing adequately in infrastructure, industry and institutions. if they succeed, they will be able to reap their β demographic dividend β and grow rapidly into middle - income economies. if they fail, high unemployment will cause increasing restlessness and agitation for political change and revolution. the international labour organization, in its β global trends for youth employment 2012 β report, attributed the arab spring protests partly to high levels of youth unemployment. such instability could similarly affect other countries, and a demographic dividend could turn into a demographic curse. at the other end of the spectrum, many advanced economies are experiencing rapidly ageing populations. decades of low birth rates coupled with affluence and access to medical care and nutrition mean that the elderly live much longer even as fewer babies are born. even as life expectancy in the eu and north america increased, the average retirement age has fallen from 68 to 63 ( from 1970 to 2010 ). the state will find difficulty financing the increased public expenditure on healthcare and pension systems given shrinking populations of working adults, falling tax revenues and high dependency ratios. in order to remain competitive, these advanced economies have 2 options. they can choose to augment their population through the import of young labour or global talent. this path leads to challenges in cultural integration. the alternative is for these countries to compensate for a stagnant and aging workforce with the deployment of technology. japan and korea are the best examples, relying on an increasing level of automation and sophisticated robotics. as demographics change, so too will consumer demands. singapore is positioning itself to attract companies to monitor and understand these changes within asia. the singaporebased asian consumer insights institute, launched in 2011, is helping companies to develop and test - bed asian - specific products and business strategies. in 2012, nielsen, a global provider of consumer insights, chose singapore to launch an innovation hub. this hub, the first of its kind in asia, will develop new technologies and methodologies in neuroscience, shopper technology, and measurement science to enhance consumer and market insights for companies working to reach consumers in asia. technology the final trend i β d like to talk about is that of technology. technology, especially information technology, continues | for banks and financial institutions. mitigation and green transition policies such as carbon pricing can also affect price stability, potentially precipitating large and long - lasting movements in relative 10 tree - based methods are flexible machine learning algorithms that can tackle a wide range of tasks. decision trees group individual data points by sequentially partitioning data into finer categories according to specific characteristics of interest. neural networks β main building blocks are artificial neurons, which take multiple input values and transform them in a non - linear way to output a single number β like logistic regressions. source : bis. ( 2024 ). artificial intelligence in central banking. prices and shifts in trend inflation. depreciation pressures on currencies of countries frequently affected by climate disasters can also cause financial instability, higher import costs and negative terms of trade. the range of policy options available to mitigate climate risks require dedicated research, especially in the context of the complex, non - linear ways in which climate, the real economy, financial systems and markets interact and affect each other. improved inter - disciplinary macroeconomic modelling is becoming crucial for understanding directions of causality and feedbacks. iii. globalisation and the natural rate of interest monetary policy making has evolved in line with structural changes in the economy and the financial system. inflation targeting ( it ) β the longest surviving modern monetary policy framework - is no exception. this could be attributed to the β rule - based β principle built into the framework alongside elements of β flexibility β that have evolved in practice. it has been argued while the application of a core set of " scientific principles " has expanded significantly in practice, there remains, and will likely always remain, elements of art in the conduct of monetary policy 11. 11 mishkin, frederic s. ( 2007 ). will monetary policy become more of a science? nber working paper 13566, october. one principle followed by central banks in setting policy rates is the natural rate of interest β popularly known as r - star. it is a theoretical benchmark for monetary policy, reflecting the real interest rate that supports the economy at full employment while keeping inflation low and stable. this concept of r - star or the natural rate dates back to 189812 and currently forms an integral element of modern macroeconomic frameworks. it is argued in a seminal work that β a central bank should seek to close the gaps between actual economic conditions and the economy β s potential for output and employment ( y - star and u - star, respectively ) | 0 |
canada's history in developing our local - currency bond and money markets, because it has parallels with the situation in which many emerging market economies now find themselves. in the 1950s, canada was a relatively small, but very open economy that relied heavily on foreign trade, was dramatically influenced by fluctuations in commodity prices, and had a long history of foreign capital inflows to finance major projects. the bank of canada's primary emphasis at that time was on the development of a government treasury bill market, to assist in the more effective implementation and transmission of monetary policy. in addition, the finance department, with the central bank as its fiscal agent, wanted to promote the development of a well - functioning government bond market. this would help to provide the government with low - cost and stable financing. moreover, canada had also moved to a floating exchange rate, and so it was even more important that our debt be issued in the domestic currency. but the authorities also saw the financial system efficiency benefits that could flow from the development of a well - functioning government bond market. in particular, it would support development of, and access to, market - based credit for firms. the broader goal was to develop the foundation for an efficient domestic fixed - income market for private issuers. of course, our markets have been continually evolving, and so we have had frequent consultations with market participants. these consultations have led to the development of a well - functioning and liquid market for government debt right across the yield curve. this market provides the pricing benchmarks for all other fixed - income instruments and their derivatives, thus facilitating market access for firms seeking debt financing. so what have we learned over the years? well, experience has shown that in order to maintain an efficient, well - functioning local - currency debt market, it's helpful to focus on the key aspects of liquidity, transparency, regularity, and integrity in the structure of government bond and money markets. as such, our efficient government debt market contributes to overall capital market efficiency by providing key benchmark and hedging tools. now, in terms of financial system stability, the development of our domestic bond and money markets has led to stronger and sounder financial institutions. stronger institutions and more complete markets facilitate better allocation of domestic savings. this increases domestic investment, and thus, encourages stronger economic growth. creating local - currency bond and money markets can insulate an economy from global economic shocks in two ways. first, by providing more stable and secure sources of | cleviston haynes : bio - digestion - benefits to barbados speech by mr cleviston haynes, governor of the central bank of barbados, at the conference on " bio - digestion : benefits to barbados ", bridgetown, 17 may 2019. * * * welcome to this conference on β bio - digestion : benefits to barbados. β at the outset, we thank mr. joseph tesar, president of quantalux, and the spouse of the bank β s 2019 distinguished visiting fellow, dr. linda tesar, for offering to share his expertise and experience in converting waste to energy in a clean and sustainable way. we are also thankful for the support provided by members of the local alternative energy community. this conference is important, opportune, and necessary because our national energy policy is focused on shifting to the use of renewables and cutting our reliance on fossil fuels that are currently central to meeting our transportation and electricity needs. indeed, government has announced an ambitious goal of 100 % reliance on renewables for energy generation by 2030. it is ambitious because at present only an estimated 4 % to 6 % of our energy needs are being met by renewables. it is ambitious because the transition requires significant investments. but ambitious it needs to be so that we can promote greater energy security, enhance our long term competitiveness and address the negative spillovers that accompany the use of fossil fuels. i wish therefore to commend the efforts of local agencies such as the ministry of energy and water resources and the barbados renewable energy association that have been championing this thrust towards renewables. as we seek to promote greater stakeholder engagement in this process, it is important that we enhance our knowledge about how we can benefit from alternative energy sources such as solar, wind, hydro, and waste. today β s conference fits neatly into that vein as mr. tesar will help us to better understand how the waste we generate can fit into the new energy mix ; how we can turn our organic waste into economic value ; and how we can protect a fragile environment and mitigate the risks associated with climate change to which the carbon produced by fossil fuels contributes. we must see the shift to renewable energy in the context of leveraging our biological resources, while building resilience : building environmental resilience, financial resilience, and economic resilience. you may recall the topic of our 2004 sir winston scott memorial lecture, β the economy or the environment : what is the bottom line | 0 |
##agnation in the stock market. the proposals that have emerged from our discussions fit into three categories : ( i ) noting that pension plans have exceeded that fifty percent limit because of the sharp use in equity prices, some stakeholders advocate valuing equities at original cost with a premium adjustment of, say 25 percent. this approach has several practical difficulties in that the valuation basis for the same equity will differ according to the time of purchase. there are also practical difficulties involved in retrieving data on historical costs. perhaps more importantly, however, this proposed valuation procedure goes against the current dominant trend ( best practice ) of market valuation. ( ii ) there is also a proposal for increasing the limit from the current 50 percent to 60 percent. while this has the merit of simplicity, it has serious drawbacks in failing to recognize that a fifty percent equity limit is already too high for pension plans that are underfunded and that lack even rudimentary investment policies and guidelines. ( iii ) the third option which has much support, uses the principles of the investment regime now applicable to insurance companies. the main elements of this option are : ( a ) define a funding threshold of one hundred and fifty ( 150 ) percent of pension liabilities to which the fifty percent equity limit is applicable. put differently, all plans with a surplus of less than fifty percent of pension liabilities will remain subject to the equity limit of fifty percent. ( b ) plans with a funding ratio in excess of one hundred and fifty percent will be allowed to invest in equities beyond the fifty percent limit. put another way, trustees will be able to make additional equity investments with any surplus in excess of fifty percent of pension liabilities ( up to a maximum level, to be determined ). the merit of this option is that it provides the additional room to wellfunded pension plans. the additional equity is really financed out of pension fund β s surplus after providing a buffer, equivalent to fifty percent of pension liabilities. as you may know, the investment regime for insurance companies allows for fifty percent of the statutory fund to be held in equities. however, the statutory fund must only be sufficient to cover policy holder β s liabilities and thus any excess or surplus assets are not subject any limits, but need to be an examination of thirty - seven pension plans which account for eightyfive percent of total equity investments of pension funds indicate that there are about 10 plans which are way below the 50 percent equity limit, and which | s momentum. the downside risks, if they materialize, could weigh on economic activity. basic principles of risk management in a low neutral rate environment with compressed conventional policy space would argue for softening the expected path of policy when risks shift to the downside. 3 our review with recent indicators suggesting the expansion is continuing at a solid pace and unemployment at a 50 - year low, inflation has not yet moved to our goal on a sustained basis. in many ways, that can be viewed as an opportunity, with the sustained expansion providing critical job opportunities to a broader set of applicants. in parallel, it is also vital that a central bank meets its inflation target on a sustained basis, which will provide more capacity to buffer the economy if it encounters headwinds. 1 / 4 bis central bankers'speeches we are undertaking our review to ensure we are well positioned to meet our goals for many years to come, especially in light of the way the economy is changing, which i have been referring to as the β new normal. " 4 there are a few key features of that new normal. first, interest rates have stayed very low in recent years in the united states and in many other advanced economies, and it seems likely that equilibrium interest rates will remain low in the future. low interest rates present a challenge for traditional monetary policy in recessions. in the past, the federal reserve has typically cut interest rates 4 to 5 percentage points in order to support household spending and business investment. however, when equilibrium interest rates are low, we have less room to cut interest rates and less room to buffer the economy using our conventional tool. another big change in the economy is that inflation does not move as much with economic activity and employment as it has in the past, which is what economists mean when they say the phillips curve is very flat. a flat phillips curve has important advantages : the labor market can strengthen a lot and pull many workers who may have been sidelined back into productive employment without an acceleration in inflation, unlike what we saw in the 1960s and 1970s. on the other hand, today β s low sensitivity of inflation to slack, along with the limited ability to cut interest rates in a recession, means it can be more difficult to achieve our 2 percent inflation objective on a sustainable basis. the limited ability to cut interest rates could provide less ability to buffer the economy in a downturn, while the very flat phillips curve could make it harder to boost inflation during an expansion. and that could further compress | 0 |
sabine lautenschlager : state of play in the european banking sector 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 iif annual meeting, washington dc, 13 october 2017. * * * it is quite difficult to present my views on the state of the euro area banking sector in such a short statement β there are more than 100 large and medium - sized banks in 19 countries, with substantial differences between them. but what i can say is that the banks are in a better position than they were. they are better capitalised and have improved their liquidity situation and their governance. they are making slow but steady progress in tackling all the well - known challenges and adapting their business models. still, supervisors are paid to demand more. so we want quite a few banks to adapt more quickly to the new environment. digital technology is rapidly gaining traction in the banking world. it brings new opportunities but also new competitors for each and every bank. and we are seeing more and more banks incorporating a digital dimension into their strategies. however, they are doing so at varying speeds and we are not always satisfied with their progress. all banks need to focus on transforming their services more quickly. interest rates are still low, weighing on the profits of many banks. this situation makes it imperative for them to adjust their business models. some banks still need to diversify their sources of income, manage their costs more diligently and become more efficient. legacy assets, such as non - performing loans, are still high in some parts of the banking sector in europe. they depress banks β profits and curb their ability to finance the economy. the good news is that we are seeing some progress here. the proportion of non - performing loans in the euro area fell from more than 7 % in the second quarter of 2015 to below 6 % at the beginning of 2017. still, i think the banks need to be more ambitious. we are not satisfied with the strategy of each and every bank. some need to act more decisively β and we will push them to do so. and finally, brexit is on the horizon, and will have a major impact on the banking sector. most of all, it will affect those banks which access the european market from the united kingdom and vice versa. they have to prepare themselves for other forms of market access β and quickly. all this | , maybe it is no coincidence that they and romania have folk songs called doina and daina, respectively, included in the intangible unesco heritage. romania is a mostly greek - orthodox christian country, the same as greece, cyprus and bulgaria. by the way, let me congratulate our bulgarian friends on the 140th anniversary of the establishment of their central bank! the legal and political systems of modern romania were inspired by the french ( i limit myself to just mentioning the napoleonic code ). this is also the case with modern romanian culture : prominent romanian artists such as constantin brancusi and george enescu achieved international recognition in paris. coming back to the legal system, the first constitution of modern romania in 1866 took after the belgian one. in addition, the nbr was founded based on the constitutive principles of the belgian central bank. the report to parliament underlying the establishment of the national bank of romania in 1880 saw belgium as β and i quote β β a small but happy country β, which developed rapidly with the assistance of its national bank, rendering it a suitable model for the institutional set - up of romania. as regards the neighbouring netherlands, the name of romania β s domestic currency β the leu ( meaning lion ) β comes from a dutch silver coin very popular in this part of europe in the 17th and 18th centuries : the lion - thaler. crossing the channel, our most beloved queen marie was the granddaughter of queen victoria of the united kingdom. it was her son, king charles ii, who reconstructed this royal palace. moving west again, let us not forget that the irish writer bram stoker took vlad the impaler as an inspiration for his famous novel dracula, creating a myth that romania is frequently associated with. returning to romania β s monarchs, under whose reign the country saw a remarkable modernisation, they belonged to the german house of hohenzollern - sigmaringen. as for the economic ties with germany, i would mention the fact that the name of the street where the old palace of the national bank of romania is located, i. e. lipscani, derives from leipzig ( lipsca in romanian ), the place where long ago local merchants used to bring their goods from. going further back in time, the saxons ( originating also in the luxembourg area ) settled in transylvania, which they called siebenburgen ( seven fortified towns ). one of these towns is sibiu or hermannstadt, where romania β s | 0 |
colleagues handled economic forecasting and modelling, foreign exchange reserve management, communication policy and financial stability. and, finally, the bundesbank colleagues β supported by the bank of slovenia, the national bank of austria, the national bank of portugal and the national bank of slovakia β were responsible for accounting, financial consumer protection and it security. a long and impressive list indeed! this list illustrates the comprehensive character of the project and all the hard work that has gone into it. crucially, the commitment, responsibility, professionalism, and deep engagement of our serbian counterparts were key in bringing the project to a successful conclusion. all parties involved were united by their full determination to make the project a success and by the β corporate spirit β through which central bankers around the world feel connected. at today β s concluding celebration, everyone involved in this joint project can proudly look back : on the months of hard work and in - depth treatment of the subject matter, on the many discussions of different professional and personal perspectives and on the host of valuable personal contacts, and maybe even friendships, that have grown from it. ladies and gentlemen, allow me to close with a few words of thanks to the people behind the project. thank you ms tabakovic, especially for your commitment and strong support throughout the duration of the project. i would also like to thank ms tomicic from the croatian national bank and mr matei from the romanian national bank. your commitment to form a consortium between your institutions 2 / 3 bis central bankers'speeches and the bundesbank and the large - scale support from your staff were indispensable for the success of the project. my thanks also goes to the project leaders, mr savic from the national bank of serbia and mr spicka from the bundesbank β as well as to the junior project leaders, mr loncarek from the croatian national bank and mr copaciu from the national bank of romania. last but not the least, i would like to thank all of you who have made your own personal contribution to the success of the project and whose names i wouldn β t be able to mention now without running out of time : the managers of the individual components, the visiting experts and all those who took on the vital administrative work. ladies and gentlemen, the german chancellor angela merkel recently emphasised that β the western balkan states are also part of a united europe. β 1 in this spirit, i very much look forward to continuing our cooperation as central banks in the | , the ratio of short - term debt denominated in foreign currencies was quite high compared to central banks β foreign reserves. the ratio of short - term debt to total foreign debt of the affected countries exceeded 50 percent. 10 as foreign capital poured into the asian countries, lending booms emerged in all these countries before the crisis. if the capital inflows and lending booms had enhanced the corsetti, giancarlo, paolo pesenti, and nouriel roubini, 1999, β what caused the asian currency and financial crisis?, β japan and the world economy, vol. 11, no. 3. productivity and competitiveness of the economies, there might not have been a crisis. however, many of the loans were misallocated and eventually turned sour. before the crisis, nonperforming loans exceeded 10 percent of total bank lending in those countries. the other aspect of capital inflows was the current account deficit. for example, thailand, indonesia, and korea ran current account deficits of 8. 0, 3. 4, and 5. 0 percent of gdp, respectively, in 1996. the crisis started in thailand with the collapse of the thai baht. the crisis spread quickly around the region. indonesia and south korea were particularly hard hit. hong kong, malaysia, laos and the philippines were hurt by the slump, and the rest of the region also suffered from a loss of demand and confidence. the asian financial crisis showed the weakness of an emerging economy against the volatile international capital markets. together with inflows of foreign capital, overconfidence or excessive optimism created credit booms in the economies. ironically, they were β victims of their own economic success. 11 β the input - dependent development strategy, which had worked very well up until then, itself contributed to the crisis. after the crisis, asian countries introduced various measures to tackle the weaknesses that had led to the crisis. first of all, they enlarged the scale of their foreign reserve accumulation as the first line of defense. they also shifted to a free floating exchange rate system to contain the excessive capital flows. the other measures included making financial surveillance and regulation efficient ; improving the functioning of the market by breaking the links between businesses, banks and the government ; and enhancing transparency by enforcing the duty of disclosure of key financial or corporate sector information. controversy has raged over the imf prescription for the affected countries. for example, the imf was criticized as acting in | 0 |
providing the ecb with alternative channels for transmitting monetary policy and by enabling capital markets to play a role in cushioning asymmetric shocks. however, to facilitate the mobility and free flow of capital and financial assets across europe, it is essential that an efficient underlying infrastructure is in place. a lot has been achieved already, but still we need to ensure that we use the market infrastructure as effectively as possible. target2 - securities nine years ago this month ( on 23 may 2008 ), the governing council issued a proposal to all european central securities depositories ( csds ) to join t2s. the project was backed by the european parliament, but the ecofin council specified three requirements : ( i ) the platform should be multicurrency ; ( ii ) participation in t2s should not be compulsory ; and ( iii ) access to 1 / 4 bis central bankers'speeches central bank money should not be restricted for non - participating csds. nine years on and the first roll - out phase of t2s is almost complete. the system is multicurrency and the danish krone is set to join in october 2018. the majority of european markets will be connected, although participation remains voluntary. and some csds outside the european union have even expressed an interest in joining t2s. this february, the successful migration of six csds from austria, germany, hungary, luxembourg, slovakia and slovenia doubled the settlement volume in t2s. today, a daily average of around 500, 000 transactions is settled on the platform. this represents 90 % of the transaction volume that is expected to be settled on the platform after the end of the full migration in september 2017. the volume is in line with the expected yearly forecast done by the advisory group on market infrastructures for securities and collateral. the most recent survey from march 2017 shows that the overall volume growth for the next two years is anticipated to be 5. 3 % on average. additionally, when the danish krone joins next year we expect the volume to increase by 5. 5 million transactions per year. with the introduction of t2s, the average cost at market infrastructure level per transaction has decreased significantly β in particular for cross - csd transactions. our initial cost estimations showed that the average fee per domestic csd settlement in the euro area was 73 euro cent while cross - border transactions were up to ten times more expensive. the launch of t2s has brought the transaction fee per instruction down to 15 euro cent | exchange rate objective could easily jeopardise the maintenance of the objective of price stability and could thereby also be detrimental to real economic development. target zones for exchange rates could, for example, lead to the ecb having to raise interest rates in a recession, despite increasing downward pressure on prices. i am sure you will agree that such a mechanistic response to a change in the euro exchange rate would not be optimal. furthermore, it is important to remember that we are living in a world with high capital mobility. exchange rate agreements, which might have been possible to implement until recently, are no longer feasible. the lack of an exchange rate target does not mean that the ecb is totally indifferent to or takes no account of the euro exchange rate. on the contrary, the exchange rate will be observed and analysed as a potentially important monetary policy indicator in the context of the broadly based assessment of the outlook for price developments. a stability - oriented monetary and fiscal policy, as stipulated by the maastricht treaty and the stability and growth pact, is an essential pre - condition for a stable euro exchange rate. of course, there is no guarantee of lasting exchange rate stability, not even in a fixed exchange rate regime. exchange rate fluctuations are often caused by structural or fiscal policy, asymmetric real shocks or conjunctural differences. monetary policy would clearly be overburdened if it had to prevent such movements in the exchange rate. we cannot and shall not gear our monetary policy towards a single variable, whether a money supply aggregate, an index, the exchange rate or an inflation forecast for a particular point in time. nor can we be involved in any ex ante co - ordination which would entail an obligation to react to particular commitments or plans. the ecb will always carefully analyse all relevant indicators. in this context, it is particularly important that the economic causes of potential risks to price stability in the euro area are understood as fully as possible. appropriate monetary policy decisions also depend upon the causes of unexpected changes in important economic variables. the governing council must, for example, take a view on whether changes in important indicators are of a temporary or permanent nature, and whether a demand or supply shock is involved. in our deliberations we also attempt to take into account how the financial markets, consumers and firms are expected to react to monetary policy decisions. i believe few would contest that such a complex analysis cannot meaningfully be reduced to a more or less mechan | 0.5 |
cecilia skingsley : are non - banks reshaping the retail payments market? speech by ms cecilia skingsley, deputy governor of the sveriges riksbank, at the conference β non - banks in payment market : challenges and opportunities β, organised by the bank of lithuania and the sveriges riksbank, vilnius, 8 october 2015. * * * the retail payments market is undergoing a structural change, potentially unparalleled with anything we have seen in a long time. this gives rise to a number of important questions as regards competition and cooperation, regulation and where this development may take us in the long run. an interesting and important market the retail payments market is an interesting and important market. important because it underpins the modern economy. if we were unable to pay in a safe and efficient way, the economy would soon grind to a halt when markets for goods and services stopped functioning. interesting because of its rapid development. it is here the action is. on a global level, the payments market has grown by some 8 per cent a year for a decade. growth has been higher not only in the developing world, reflecting overall higher economic growth rates, but also in europe and north america, where it has been some four per cent annually. given the financial crisis and the relatively low economic growth, this is a healthy growth rate. on a global level, estimates indicates that the retail payments market is worth several hundred us billions in revenue from transactions. if we add account - related revenues and interest rate and penalty fees from credit cards, the figures increase further. with this growth rate and potential revenue, it is no wonder that the retail payments market attracts so much attention. there are other factors that help explain why so much has happened over the last few years and that continue to drive the development. the rapid techno - logical development of smartphones, tablets, and high - speed internet connection is one of the most important factors. today, approximately half of all adults in the world have a smartphone and this share is likely to increase significantly. some 40 percent of the global population use internet. this technology is widespread and accessible at a reasonable cost and it has changed the way we shop. we purchase goods and services in new ways and because of this we also demand payment services that are suited to this new type of interaction. e - commerce is the prime example. this year some 38 billion e - commerce transactions will take place. we interact with e - merchants who we have no | ##ated from the ( then ) 2. 5 % target by more than one percentage point. as ed balls commented in a lecture in 2001 4 : β inflation targeting : a new framework for monetary policy? β, ben bernanke and frederic mishkin, journal of economic perspectives, 1997. β constrained discretion and monetary policy β, remarks by ben bernanke before the money marketeers of ny university, new york, february 2003. β delivering economic stability β, oxford business alumni annual lecture by ed balls, june 2001. β some have assumed it [ the requirement to write an open letter ] exists for the chancellor to discipline the mpc if inflation goes outside the target range. in fact the opposite is true β¦ β¦ in the face of a supply - shock, such as a big jump in the oil price, which pushed inflation way off target, the mpc could only get inflation back to 2. 5 per cent quickly through a draconian interest rate response β at the expense of stability, growth and jobs. any sensible monetary policymaker would want a more measured and stability - oriented strategy to get inflation back to target. and it is the open letter system which both allows that more sensible approach to be explained by the mpc and allows the chancellor publicly to endorse it. β constrained discretion also provides much needed room for learning. monetary policy remains more art than science, and its practice is riven with uncertainties and risks. as the present governor put it in a lecture delivered in 1997 5 : β inflation targets are a practical response to the fact that knowledge increases over time. β so a framework of constrained discretion combines much needed scope to implement policy flexibly, in the light of both circumstances and experience, with the credibility benefits of committing policymakers to secure a pre - determined outcome for inflation. that, in essence, was the key difference from the failed experiments of the past. the development of the mpc the mpc got off to a good start. it inherited an inflation rate that had been low for the past 5 years. and the financial markets welcomed it by reducing the risk premia on uk assets. no one had very clear expectations about how it would behave or how it might think. while it inherited some technical features of the previous regime, the new committee had quite a lot of scope to define its own operating procedures and intellectual framework. if not a blank sheet of paper, it was a book with many pages still to fill. as time has gone by, | 0 |
incorporated in the list of main priorities for bank of albania β s institutional approximation to the model applied in the european system of central banks. in addition, in light of addressing these priorities, the european commission decided to allocate eur 800 000 as under ipa 2015. after a long process of consultations and sharing information, for the first time, bank of albania β s experts put together a twinning project, which was submitted to the european union delegation to albania. at the end of the process, banca d β italia and deutsche bundesbank were selected to implement bank of albania β s project. banque de france and national bank of romania are also part of the team for certain components of the project. we feel privileged, certainly, by this close partnership with these two major central banks. relations with these two institutions date back to quite early in the history of the bank of albania. 1 / 2 bis central bankers'speeches whether multilaterally or bilaterally, they have assisted for many years the bank of albania achieve its objectives and operate like a modern and reliable institution. i am therefore optimistic about the success of this next project, irrespective of the relatively tight agenda and deadlines. now, let me briefly introduce you to the main components of this project. it will involve eight departments at the bank of albania and will address important issues, grouped as follows : 1. banking supervision and financial stability 2. monetary policy and statistics 3. internal audit 4. payment systems 5. other central banking functions such as human resources and european integration for each component, measurable results have been envisaged, which will be translated into regulatory documents, guidelines and specific recommendations related to policies. all outcomes will aim to approximate the final product at a higher level to standards and models of the european system of central banks. dear ladies and gentlemen, i hope that this project will deliver long - term results, and will strengthen the regulatory and operational frameworks at the bank of albania, an institution that makes substantial contribution to the sustainable economic development of albania. on behalf of the bank of albania, let me iterate our readiness and commitment for the successful implementation of the twinning project, as we strive with professionalism and responsibility to achieve its objectives. concluding, i would like to thank the european commission, for its support in securing funding for this project. i am certain that the commission will continue to support future initiatives of the bank of albania, as we deal with approximation challenges and endeavour to progress | gent sejko : enhancing bank of albania β s alignment with eu acquis address by mr gent sejko, governor of the bank of albania, at the launching ceremony of the twinning project β enhancing bank of albania β s alignment with eu acquis β, tirana, 19 december 2019. * * * your excellencies ambassadors, representatives of banca d β italia and deutsche bundesbank, ladies and gentlemen, dear guests, i have the pleasure, as the governor of the bank of albania, to welcome you to the launching ceremony of the twinning project on β enhancing bank of albania β s alignment with eu acquis β. the project is financed with ipa 2015 eu funds, following a previous project on needs analysis for the bank of albania β designed and led by the ecb in partnership with 11 central banks of the european system of central banks. from this perspective, the new twinning project we are launching today may be considered a continuation of the previous one, given that it will address a significant number of recommendations from 2014. hoping that in the spring of 2020 we will see a green light for the opening of accession negotiations for albania, i would like to reassure you of bank of albania β s commitment to fulfilling priorities arising from the european integration process. major objectives for strengthening the long - term capacities of the institution coincide with the approximation of its legal, regulatory and operational frameworks to that of the european system of central banks. i would like to emphasise that undertaking such projects emphasises the mutual engagement of the eu and albania with regard to deepening integration processes of our country, and reiterates albania β s european perspective. dear ladies and gentlemen, in the last decade, bank of albania has implemented a number of eu - funded projects. the first twinning project was implemented during 2012 β 2013. at that time, like now, banca d β italia β in partnership with banque de france β contributed successfully to achieving concrete results in six areas of bank of albania β s activity. the second project β needs analysis for bank of albania β s approximation, funded by the eu β was led by the european central bank and was implemented during 2014. the aim of the sixmonth project was to assess the legal, regulatory and operational frameworks of the bank of albania vis - a - vis standards and best practices applied in european central banks. from this perspective, it should be underlined that the recommendations left upon the completion of this project are | 1 |
amando m tetangco, jr : financial capability as a 21st century life skill speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the citi - ft financial education summit, makati city, 5 december 2012. * * * mr. michael zink, head of asean and singapore citi country officer ; mr. sanjiv vohra, citi country officer for the philippines ; secretary imelda nicolas, chairperson, commission on filipino overseas ; ms. brandee mchale, chief operating officer, citi foundation ; mr. david pilling, financial times asia editor ; ms. kathy hurley, executive vice president, education alliances, pearson foundation ; distinguished resource persons ; experts and practitioners in financial education ; friends who have traveled from other countries ; my colleagues in the bsp ; ladies and gentlemen, good morning everyone! finally, this annual financial education summit is in the philippines. now on its 9th year, it continues to enjoy such high level of interest and support for its relevance to the times. congratulate and thank citi and ft and the other sponsors and organizers of this gathering. for starters, its forum theme β financial capability as a 21st century life skill β β¦ is an outright declaration that financial capability is a must - have - skill. i agree with this statement. indeed, the ability to make sound financial choices and decisions is essential β¦ to ensure one β s financial well - being. and yet, most people are sorely lacking in this necessary skill. the summit β s keynote session pushes the envelope further : it raises the social, economic and moral imperatives of bridging the financial capability gap. discussions are also bound to be thought - provoking on the topic β the ultimate financial education challenges β impact, scale and sustainability. β ladies and gentlemen. the organizers of this summit have brought together world - class finance education experts and advocates to tackle these important issues. the bangko sentral ng pilipinas is therefore pleased that it is a host partner in this financial education summit. for your information, the bsp was also co - host... in the last two days... of the asia and the pacific regional meeting on child and youth finance organized by the child and youth finance, international. and three months ago, the bsp co - hosted with the oecd in cebu the asian seminar on financial literacy and inclusion | salute the department of education for being our active partner in bringing financial education to millions of our schoolchildren. we also acknowledge the banks who help our youth develop the habit of saving and give lessons on personal finance to teachers and parents. so far, we have made significant strides in the development of the philippine microfinance sector that has liberated millions of entrepreneurial filipinos from poverty and transformed them into net savers in banks. in fact, our latest data indicate that for the first time consolidated bank deposits of microentrepreneurs at over p8 billion have now exceeded their total bank loans. i also thank all the industry groups, all companies β big and small, our partners from both public and private sectors for your support in bangko sentral β s advocacies that promote coin recirculation and clean banknotes, as well as protection against counterfeit money and financial scams. once again, ladies and gentlemen, we at the bangko sentral ng pilipinas thank and congratulate all of you for being our active partners in the pursuit of our mandate and in making lives better through better policies and programs. together, let us steer the economy toward balanced, sustained and inclusive growth. maraming salamat sa inyong lahat! mabuhay ang ating mahal na bansang pilipinas! bis central bankers β speeches | 0.5 |
reduced short - term funding pressure for primary dealers, which improved market conditions. 17 at its largest, the facility grew to $ 42 billion. what we are now proposing, in addition to the regular term repo program i just mentioned, is a contingent term repo facility that we can activate at our discretion when we see severe liquidity problems that are market - wide. the facility would offer liquidity for terms of up to one month that could be made available to primary dealers and, in some circumstances, other institutions if we judge it necessary for the stability of the financial system. in addition to this facility to deal with extraordinary market - wide stress, we are proposing changes to how we deal with liquidity issues at individual institutions. this is our traditional role as lender of last resort. what this role means is that we act as a backstop to make sure that a liquidity shortage in one place doesn β t turn into widespread stress for the whole system. we haven β t done a comprehensive review of this role since 2004, and it β s time to take the lessons of the crisis on board. our emergency lending assistance ( ela ) was traditionally meant for financial institutions that were judged to be still solvent, but unable to access liquidity. in an emergency situation, it can be very difficult to distinguish insolvency from illiquidity. so we will now restrict ela to those institutions that have in place the credible frameworks for recovery and resolution that i spoke of earlier. this will ensure that any lending will be part of a coordinated effort taken by the institution and the authorities, as needed, to bring a distressed institution back to viability. and if it can β t recover on its own, the authorities can do what is needed to restructure or liquidate the business while maintaining any functions that are critical to the financial system and without exposing taxpayers to loss. we are also clarifying that we would, under certain conditions, provide emergency lending to provincial institutions such as caisses populaires or credit unions and their centrals. because these institutions can get liquidity support from their provincial centrals, we would limit ela to cases that have implications for the canadian financial system. as well, we are prepared to provide emergency lending to address liquidity problems at key canadian market available at https : / / en. ews. staging. boc. ets. net / 2015 / 05 / public - consultations - bank - canada - framework | kevin greenidge : leading with resilience and innovation in cybersecurity remarks by dr kevin greenidge, governor of the central bank of barbados, to protexxa, bridgetown, 24 may 2024. * * * good morning, everyone. it's a pleasure to be here today to discuss a topic close to my heart : leadership. as the governor of the central bank of barbados, i understand the critical role leadership plays in guiding organisations through challenges and opportunities. in today's digital age, cybersecurity is more important than ever. leadership in this sector requires a unique blend of resilience, innovation, and vigilance. ladies and gentlemen, today i stand before you not just to share a story but to illustrate the power of perseverance, visionary leadership, and the impact of positive thinking. from an unremarkable student to a top economist at the central bank of barbados, my journey is a testament to the belief that we can achieve greatness with determination and the right mindset. let me take you through the milestones that have shaped my path and the principles that guide my leadership. i achieved remarkable academic success, setting the stage for my future career. i was not always a top performer in class. actually, during most of my secondary school life, i did not excel. however, a fellow student inspired me in the fifth form when he aced his o'levels. his achievements inspired me. i told myself if john could do it, so could i. so, i begged my principal for a second chance, got it, and grasped it. the rest is history. that brings me to another good value we leaders should nurture : never giving up on people. instead, we must help them, especially when they show potential but may lack guidance. fast forward a few years, and i decided to be an economist at the central bank of barbados. i visited the institution, found out the requirements, and set out to achieve them. i aced my studies at uwi cave hill campus, achieving 21 as. this academic success did not come without sacrifice. i gave up all the liming and lollygagging and focused on my studies. i am a visionary leader who believes in leaving a solid legacy or making a difference that redounds to the betterment of everyone. in that regard, i am committed to creating a better place, and that's why i took up the job as senior economic | 0 |
lot of time discussing culture internally at the fed right now, so expect to hear more about it in the near future. adjusting as necessary and engaging in dialogue as firms are developing and implementing changes, such as the ones i mentioned, to meet the requirements of the enhanced prudential standards, it is important to refine the business strategy of the u. s. operations. we all know that regulation in markets is nothing new and what it requires is a better analysis by firms on the cost of doing business in different markets compared to profitability. for some firms, we see aggressive actions to adjust their geographic footprints to avoid, at least for a time, the impact of the new standards. for other firms, we see productive and realistic discussions about how to address the new standards, including how booking models and other business operations need to change. in addition, we are seeing home country supervisors engaging in discussions with firms, asking important questions about how host country rules and regulations will affect group operations and seeking to understand the knock - on effects of the new rules across the global operations. as firms are adapting both business strategies and operations to meet home country and host country rules and regulations, we are hearing about the challenges that have been identified. however, there is still a lack of specificity around these challenges, including quantifying the impact β on business, strategy, customers and staff ; identifying potential near - term mitigants ; and developing proposals on potential longer - term solutions that could be the basis of a productive dialogue. rhetoric is fine, but it β s not enough. we need to understand on a more concrete level how these changes are going to impact the firm, from your clients to your operations, from your business models to your culture. we have been hearing some of this, but more specific examples and solid data is needed to be in a position to address the issues. remaining issues on my insomnia list turning now to the issues that still keep me awake at night, i will highlight three of these today : ( 1 ) aml / bsa ( yet again ) ; ( 2 ) information technology ; and ( 3 ) communication and coordination. bis central bankers β speeches 1. aml / bsa the world of aml / bsa keeps growing. what started out decades ago as a us - centric emphasis on hindering drug trafficking has transformed into a global framework that addresses a range of criminal activity, anti - terrorism, arms proliferation, and tax avoidance. as i know | the most economically devastating periods in our history. there has been substantial effort on the part of global regulatory and supervisory bodies to address the weaknesses identified in the financial crisis. the work of the basel committee on capital and liquidity standards, as well as the work of the financial stability board ( fsb ) on cross - border resolution, are but a few examples of the hard work that global bodies have been undertaking to address the weaknesses identified through the crisis. at the same time, national authorities have been working hard both to implement the agreedupon global fixes, but also to develop and execute appropriate remedies for problems identified at the national ( or local ) level. locally, while appreciating the need to address the bis central bankers β speeches crisis on a global scale, many countries saw the need to be in a better position to safeguard their own. the bottom line, in fact, was : the crisis was global, but the impact was felt locally. global in life ; local in death, as the saying goes. so, while authorities have endeavored to develop and implement common global rules across a wide range of issues, many national authorities have simultaneously moved to develop and implement national standards β that may conflict with or appear at odds with a barrier - free and harmonized financial system that allows the free flow of capital and competition across the globe. national rules that require local capital and local liquidity are two examples of standards that may present challenges to the efficient and effective operations of global firms. it will be important for firms to be in a position to meet both sets of requirements. what i β d like to offer in my remarks today are some steps i see as necessary for institutions navigating in this new environment to begin to address the concerns i β ve outlined above. and, i β ll close with a couple of issues that remain on my β insomnia β list that will continue to warrant increased efforts in the coming year. what will it take for firms to navigate in this new environment? addressing the weaknesses i β d like to start first with a fundamental observation : we need to focus first on fixing what was so obviously broken. the new sets of rules and regulations, whether global or local, were designed to address the very weaknesses that led to bad outcomes during the financial crisis : low levels and quality of capital ; insufficient liquidity ; fundamental weaknesses in a range of risk management practices ; poor management information and reporting systems ; complex structures and systems that couldn β t be quickly | 1 |
uncertain krone positions are perceived to be and the size of the risk premium required for these positions. the bank β s analyses3 indicate that the krone exchange rate is also affected in the short term by uncertainty in the global economy and international financial unrest. volatility in international foreign exchange markets may explain short - term fluctuations in the krone exchange rate, particularly since 1997. this may be because international operators are more aware of the norwegian krone as a speculative object. the direct relationship between the interest rate and the exchange rate is therefore not stable, and the exchange rate level in itself provides limited information for the setting of interest rates. it is essential to take into account that the norwegian economy is small and very open. norway β s foreign trade is substantial. all capital controls have been removed. our financial market is becoming increasingly integrated into the international economy. significant structural changes took place during the 1990s. household savings are now to a large extent invested abroad through life insurance companies and funds. changes in capital flows have a greater impact on exchange rate movements than payments for exports and imports. capital flows can easily be influenced by events in other see mussa ( 2000 ) and stiglitz ( 2000 ) for two opposite views on this question. see bernhardsen and rΓΈisland ( 2000 ). countries and by changes in expectations concerning developments in the norwegian business sector, norwegian prices, costs and interest rates. in the long term, a country β s exchange rate tends to move in line with developments in domestic price and cost inflation compared with other countries. this is the hypothesis of purchasing power parity between countries. if the level of prices in one country rises at a faster pace than in other countries, that country β s currency will tend to depreciate to the same extent over time. empirical evidence has been found for these effects for a number of countries even though the effects are relatively weak in the short term. however, substantial medium - term convergence in purchasing power parity has been found between norway and its trading partners. 4 i have described a foreign exchange market with a market - determined krone exchange rate. normally, we cannot influence price formation in this market through direct interventions. in other words, we have a floating currency not only formally but also in reality. the formal regulation ( from 1994 ) and its interpretation reflect the limitations of monetary policy as a result of developments in foreign exchange markets and the structure of the norwegian economy. price and cost inflation is influenced by monetary policy through a | despite its dependence on raw materials and relatively large exports to russia, was less adversely affected than the other nordic countries. for norway, success in maintaining a stable exchange rate could become more challenging in the new environment. β 3 β use of the euro in norway. euro and the norwegian banking industry use of the euro in norway i would now like to comment on how, and to what extent, norwegian economic agents might be expected to use the euro in the future. there are many indications that the euro will be used more extensively in trade between norway and euro countries than the currencies of the 11 member states combined today. over time the euro will most likely be used on an even wider scale. obviously, the euro would increase in importance in the norwegian market should sweden, denmark and the uk join emu. the euro may also play a role β though probably limited β as a settlement currency between residents. this will primarily be of relevance for import and export enterprises as well as subcontractors in industries that are heavily exposed to the euro area. however, several factors point to the continued use of norwegian kroner among enterprises and households. government payments such as pensions, social security and taxes will continue to be in norwegian kroner, as, most probably, will wages. furthermore, norwegian residents are not permitted to settle outstanding claims in foreign currency in cash, according to norwegian foreign exchange regulations. regulatory issues norway is under no obligation to incorporate eu legislation pertaining to the introduction of the euro into norwegian law. however, there has been some discussion as to whether it would be appropriate to implement some changes in the regulatory framework. one issue has been whether there is a need for statutory amendments to assure the continuity of contracts in which the parties β payment obligations are expressed in ecus or in one of the participating countries β currencies. norwegian law is considered to be clear on this issue, however, and in the view of the ministry of finance there was no need for legislative changes. in its deliberations on the revised national budget last spring, the storting ( norwegian parliament ) took note of this. another issue is the possibility of keeping accounts in currencies other than the norwegian krone. the new accounting act, which entered into force on 1 january 1999, provides for the registration of accounting information in swedish, danish, english or norwegian. annual company accounts, however, are to be recorded in norwegian kroner and in the norwegian language unless otherwise provided for by regulation | 0.5 |
mr. heikenstein discusses the advent of the euro and emu in relation to sweden speech by the deputy governor of the bank of sweden, mr. lars heikenstein, at world trade day β 98 held at the stockholm chamber of commerce on 25 / 8 / 98. i should like to begin by thanking our hosts for the invitation to world trade day β 98. the introduction of a new currency is due in our vicinity in little more than four months β time. this is the first instance in modern times of a large group of sovereign states establishing a monetary union with a single currency. along with the collapse of the iron curtain, the creation of the european monetary union is probably the most significant european event since world war two. today i shall be focusing on what the birth of the euro may mean for developments in the currency market. i shall not, however, be attempting to predict the euro β s future strength or weakness. instead, i shall begin by discussing factors that could affect the single currency in the course of the changeover and the somewhat longer term. then i shall consider how the euro is likely to affect the position of sweden β s currency, the krona. i can say right now that, basically, i do not believe that the euro will fundamentally alter either the role of the krona in sweden β s economy or, for that matter, the value of the krona in the long run. in view of the discussion that this matter occasions from time to time, there may be reason to say something about the view of the riksbank. 1. a new currency is created a new currency will see the light of day in january 1999. eleven countries in europe are forming a monetary union and will accordingly be having a currency, a monetary and exchange rate policy, and a central bank in common. the euro will be the domestic currency of a major economic area. today, the euro area β s share of world output is around 30 per cent, as against around 35 per cent for the united states. as regards world trade, the share for emu β s external trade amounts to around 17 per cent and the united states around 15 per cent. emu is a central component in the process of european integration. this process was initiated in the 1950s with agreements on the joint control of certain means of production, the european coal and steel community. the idea was to forge economic bonds between nations as a way of promoting peace in europe. the establishment of the common market in | - related damage. the risks may also increase on the financial markets when various branches are forced into major changeovers as a result of demand, taxation or regulations being changed. 7 monetary policy can also be affected more directly, for instance if economic data becomes more difficult to interpret when the effects of the weather lead to larger fluctuations in prices and production. 8 it is important that the riksbank understands these changes, both to be able to conduct an effective monetary policy and to be able to identify risks on the financial markets. in other words : the riksbank must be able to manage the economic consequences of climate change. 6 some people talk about central banks β role being not just β lender of last resort β but also β market - maker of last resort β. see, for example, the bank for international settlements ( 2014 ). ngfs ( 2019 ) talk about physical impacts and transition impacts, respectively. 8 see cΕure ( 2018 ). 4 should the riksbank buy green bonds? another question that is sometimes discussed is whether the central banks themselves should try to affect climate change. this usually involves two different directions. the first is regulating the financial markets to steer investments in a more sustainable direction. in many countries it is the central bank that is responsible for this type of regulation, but in sweden it is the responsibility of finansinspektionen ( the swedish financial supervisory authority ). the riksbank does not have any of these tools at its disposal. the second direction concerns the central bank β s own investments. after the financial crisis, many central banks, including the riksbank, built up large balance sheets through asset purchases. shouldn't these purchases reward sustainable assets, for instance by focusing on green bonds? this is a question faced by central banks today, and the answer is not evident. i shall try to describe my views on this. but i would like to point out that these are preliminary views. i am happy to listen to arguments against them. the riksbank β s assets can be roughly divided into two parts. we have a portfolio of swedish securities ( almost sek 400 billion ), that has been built up through quantitative easing for monetary policy purposes. and we have foreign exchange reserves ( just over sek 500 billion ) that we hold for contingency purposes. 9 the swedish portfolio consists solely of government bonds. this is partly to hold down financial risks, and partly because monetary policy, apart from determining the general interest - | 0.5 |
lael brainard : community investment in denver speech by ms lael brainard, member of the board of governors of the federal reserve system, at the federal reserve bank of kansas city, denver branch, denver, colorado, 15 october 2018. * * * good afternoon. i am delighted to be here in denver for a few days to visit with community leaders working to support affordable housing, workforce development, and small businesses across the mile high city. so far, i have had a chance to hear firsthand about the housing affordability challenges facing many denver families, which are requiring some families to make difficult choices between paying rent and paying for other necessities, and the associated challenges of homelessness. i have also had the opportunity to see the incredible work underway in denver to ensure that individuals and families in need have access to safe, affordable shelter and the healthcare and case management services they need to get back on their feet. not only is denver's approach to service delivery a national model, but your use of social impact bonds to fund those programs is also at the forefront of innovation in the community development sector. i can see there is a lot of pride in what you are accomplishing locally, and i look forward to seeing more groundbreaking work during the remainder of my time here. every few months, i try to make a visit such as this one to better understand how different communities across the country are experiencing the economy. promoting community development is one of the key purposes and functions of the federal reserve, and it requires that we have a strong understanding of the impacts of financial policies and practices in communities in all of our districts. 1 i have heard about the important role the community reinvestment act ( cra ) has played in strengthening community investment, so i am happy to have this opportunity to learn about your perspectives, as bankers here in denver, on opportunities for further improvement. this roundtable is the first of several that the federal reserve system will host in the next several months to hear directly from bankers, community members, practitioners, researchers, and others about improving the cra's effectiveness in making credit available to lower - income areas. we are inviting representatives of other banking regulatory agencies to join us so that we can all benefit from learning from different local experiences with the cra. our hosts at the reserve banks will be taking notes, and a summary of the findings from this outreach initiative will be made public. before we get started, i want to say a few words about the | forecast presented to the mpc at the most recent mpc meeting prior to the publication of the mpr. furthermore, in our statements which are released after each mpc meeting, we give details of the forecast so that market participants have a good idea of the timing and level at which inflation is expected to change direction. we also indicate where we expect inflation to be at the end of the forecast period. more recently we have also published our core model following numerous requests from private sector analysts and forecasters. we have also provided an assessment of the performance of the model over time which shows that the bank β s model has performed well, particularly relative to other private sector forecasts. the obvious question to ask is, should these analysts not also be transparent with their models? would it not improve the quality of debate or assist in the development of better models if we could see how other forecasters generate their forecasts? i have noted a deafening silence when i raise this issue with market economists. 6. conclusion i will not attempt to forecast the winner of the competition. i congratulate all of the contestants. the winner is the forecaster who has most accurately forecast the month - ahead inflation over the past year. although forecasting near - term inflation is useful, as the financial times columnist, sir samuel brittan argued, this type of forecast tells us more about the present and the recent past than about the future. from a monetary policy perspective, we are primarily concerned with forecasting over a longer time horizon. there is nothing monetary policy can do about the latest inflation numbers. monetary policy should be judged on whether appropriate actions are being taken today to ensure that inflation will be within the target range in 18 - 24 months time. for this we need to have a good medium - term forecast to provide us with a coherent framework. despite all the problems associated with forecasting, they remain integral to policy decisions, and we will continue to use them. the models have become increasingly sophisticated, but the future is inherently uncertain. at the same time the economic and political environment has also become more challenging and difficult to predict. unfortunately, as is sometimes said, the future is not what it used to be. thank you. | 0 |
often not appreciated when citing these success stories that only one service, i. e., a remittance product, is being offered and not the complete bouquet of financial services envisaged by us. the other three products identified under financial inclusion can obviously not be offered by a non - bank. moreover, particular environments in a few countries enabled the non - bank led model to be successful viz. presence of a monopoly operator, very poor banking infrastructure and availability of a source β npci. bis central bankers β speeches national identification number. is it not surprising that the same success story has not been repeated by the same service operator in a neighbouring country? cross border remittance through mobile banking 14. an issue that has been often raised is that if mobile banking has the potential of reaching anywhere, why cross - border remittance through mobile banking is not permitted liberally or why it is not taking off? one of the regulatory challenges in encouraging inward remittance from abroad is to maintain a balance between regulatory - compliant flow of funds ( for example, whether they are bona - fide current / capital account flows ) and ease of transfer of funds to the beneficiary. given the higher level of anonymity in cross - border transactions, concerns on the associated aml / cft related risks and the fact, as has been acknowledged in a world bank report, that with a very few exceptions, supervision of m - money has really not been implemented effectively, reserve bank has allowed only banks and authorized entities to undertake such cross - border transactions. to obviate any operational difficulty in remitting and receiving funds, bank account - to - bank account cross - border remittance has been permitted under the money transfer service scheme ( mtss ). realizing the need for facilitating hassle - free withdrawal of funds at the beneficiary end, reserve bank has also permitted transfer of funds to the beneficiary β s account or to a pre - paid instrument ( ppi ) issued by banks which could be m - wallet also. the underlying rationale is to ensure flow of cross border funds through the banking channel only irrespective of the media, ( which could also be mobile sets ) opted for undertaking the transactions. customer ownership and grievance redressal 15. the most often faced problem in mobile banking is as to who owns the customer β the mobile network operator ( mno ) or the bank? whom shall the customer contact in case of | ##m, thereby, increasing business and profitability. robust it security and finally better it governance for achieving better risk management should be the key focus areas of the banks beyond the physical implementation of cbs in the coming years. 21. banks need to know that it holds the way forward for a more cost effective and yet, inclusive banking system. they also need to remember that banking is about branding and relation building with customers and in this relation building, it can be an important instrument. it is the realisation of this potential of it among banks and their ability to harness this potential that would pave the way for growth of the banking sector in the years to come. 22. i thank the idrbt for inviting me over to share my thoughts with you all, and wish the deliberations of the roundtable all success. | 0.5 |
law laid down exactly what assets the snb was permitted to invest in and what securities were eligible as collateral in lombard business. in future, the national bank will be responsible for making these decisions itself. at the time when the new law enters into force, we shall publish two directives. one will spell out the technical preconditions for our monetary operations ; the other will set out how we shall use our extended investment policy scope. my colleague, philipp hildebrand, in his address will present our first ideas on this subject. the new law vests specific responsibilities in the snb with respect to the oversight of payment and securities settlement systems. up to now, our oversight of the sic interbank payment system was based on a contractual relationship. as from next year, our responsibilities in this domain will be based on the law and will extend to the oversight of all major payment and settlement systems. my colleague, niklaus blattner, will discuss this subject in more detail in his remarks. the new law also provides that the snb shall issue implementing regulations in the area of minimum reserves, statistics and the oversight of payment and settlement systems. the draft of an ordinance has already been submitted to the interested parties for consultation. in the field of minimum reserves and statistics we intend in principle to take up the provisions already existing in the federal law on banks and savings banks and the federal law on investment funds. as regards the oversight of payment and settlement systems, we are advancing into totally new territory, where for the time being only the main principles have been defined. this implies pioneering work in the implementation. | mark w olson : the banking industry in 2002 after a decade of change speech by mr mark w olson, member of the board of governors of the us federal reserve system, before the first annual convention of the ohio bankers league, columbus, ohio, 12 november 2002. * * * many of us began our careers in the financial services industry during an era when bank and thrift executives saw each other as both business competitors and political foes. i distinctly remember one experience i had as a member of the american bankers association's government relations committee in 1979. at our first meeting of the year, the " quarter - point differential " that thrift institutions were allowed under regulation q was the banking industry's top political priority. for those of you too young to remember, regulation q established the maximum allowable interest rate that could be paid on deposit accounts, which at the time was a quarter point higher for thrifts. this first annual meeting of the ohio bankers league following the merger of ohio's banking and thrift trade associations is emblematic of the changes that have taken place in these two industries. and this event presents a good opportunity to review today's depository financial service industries in the context of a decade of major change. to begin, let's review the highlights of the past decade. first, there was the bank and thrift crisis of the late 1980s and early 1990s. many banks and thrifts failed, and many others were weakened to the point that they became acquisition targets. the congress and the regulators responded forcefully with the federal institutions reform, recovery and enforcement act ( firrea ) in 1989, and the federal deposit insurance corporation improvement act ( fdicia ) in 1991. these legislative initiatives restricted banking practices, limited the supervisors'discretion in dealing with weak banks, imposed new regulatory requirements - - including prompt corrective action - - and strengthened supervisory oversight overall. beyond the bank and thrift crisis in this country, there were also indications that banks of other nations followed different norms of capital adequacy, which had implications for competitive equity and for the overall soundness of the global banking system. the g - 10 nations responded with the basel accord, a single, fairly simple global standard that was implemented in the early 1990s. the basel standards have become somewhat less simple over the years and are again under review. but achieving international agreement on both components of capital and a risk - based approach to capital adequacy was a major achievement. a second force | 0 |
our location was seen as a liability β we were simply too far from the major engines of global growth. today, though, our location is seen as an asset. we live in the most dynamic region of the global economy and we have capitalised on this with strong trade and personal links with asia. over recent times, we have benefited significantly from these links. the most obvious example is the very strong growth in exports of our resources. but increasingly, it is also being seen in the growth of exports of high - quality services, food and manufactured goods to asia. naturally enough, after 26 years of economic expansion people wonder what the future holds. this is an issue that often comes up in discussions with overseas investors. so i would like to use the opportunity of this dinner to address three related questions that we are frequently asked. these questions are : 1 / 5 bis central bankers'speeches what are the next few years likely to hold for the australian economy? what are the challenges facing the australian economy? as other central banks reduce monetary accommodation won β t the rba have to, too? the next few years for a while now we have been expecting the australian economy to grow more strongly in 2018 and 2019 than it did, on average, over recent years. there are a number of reasons for this. we are all but through the decline in mining investment to more normal levels, there is a large pipeline of urban infrastructure work to be done, the global economy is experiencing a solid upswing, commodity prices are up and financial conditions remain accommodative. all this is helping. the rba will be releasing our latest economic forecasts tomorrow in the statement on monetary policy. these forecasts will be largely unchanged from the previous set of forecasts. the rba β s central scenario remains for the australian economy to grow at an average rate of a bit above 3 per cent over the next couple of years. this outlook has not been affected by the volatility in the stock market over recent days. indeed, it is worth keeping in mind that the catalyst for this volatility was a reassessment in financial markets of the implications of strong growth for inflation in the united states. for some time, many investors had been working under the assumptions that unusually low inflation and unusually low volatility in asset prices would persist, even with above - trend growth at a time of low unemployment. a reassessment of these assumptions now appears to be taking place against the backdrop of | an issue we have been discussing around our board table for some time. while low growth in wages has helped boost employment, it has also put the finances of some households under strain, especially those who borrowed on the basis that their incomes would grow at the old rate. and in terms of the inflation target, it is difficult to see how a continuation of 2 per cent growth in wages is compatible with us achieving the midpoint of the inflation target β 2Β½ per cent β on a sustained basis. so from that perspective alone, a pick - up in wages growth over time would be welcome. perhaps more importantly, sustained low wages growth diminishes the sense of shared prosperity that we have in australia. in our liaison with businesses, including here in adelaide, many tell us about the very competitive environment in which they are operating. they tell us about how this competitive environment means that they have limited ability to pay bigger wage increases. at the same time, though, we are hearing a few more reports of larger increases in those areas where there is a shortage of workers with the necessary skills. after all, the laws of supply and demand still work. we also see evidence in the aggregate data that wages growth has troughed and we expect to see a further pick - up. this is likely to be a gradual process, though. at today β s meeting, the board also reviewed the staff β s latest forecasts for the economy. these will be published on friday in our quarterly statement on monetary policy. those of you who are close readers of this document will notice some changes in this issue, as we seek to make the report more thematic. the latest forecasts should not contain any surprises, with only small changes from the previous set of forecasts, issued three months ago. this year and next, our central scenario remains for the australian economy to grow a bit faster than 3 per cent. this would be a better outcome than the average of recent years. if we are able to achieve this, we will make inroads into the remaining spare capacity in the economy and see a further modest decline in the unemployment rate. inflation is expected to remain low, at around its current level for a while yet, before gradually increasing over the next couple of years, towards 2Β½ per cent. a key element here is the pick - up in wages growth that i just mentioned. so, in summary, there has been progress in lowering unemployment and having inflation return to around the middle of the target range, | 0.5 |
to 50 employees in the euro area ( excluding luxembourg ) is estimated to have been around ten times larger than in the us 18. the immense importance of this issue is increasingly appreciated by the successive eu presidencies and european governments and several initiatives at national or eu level have started to implement actions for a β better regulation β. fourth, to fully exploit productivity potential, the labour and product market reforms just mentioned need to be accompanied by policies that help to diffuse innovation and technological change. this includes, inter alia, measures to support innovation by higher investment in research and development ( r & d ). in 2004, roughly 1. 9 % of euro area gdp was spent on r & d. the us spends 2. 8 % of gdp on r & d. 19 europe has set itself the target of achieving a share of 3 % of gdp by 2010. to make these measures most effective, they need to be accompanied by efforts to improve the labour force β s level of education and expertise. the impact of education on growth may be related to innovation, as well as the adoption of new technologies. additionally, better education and training help to reduce mismatches in the labour market and allow for a smoother reallocation of workers between sectors and firms. 20 the last decades have already brought about an enormous increase in the level of educational attainment, the so - called β catch - up effect in education β. in the euro area, according to oecd data for 2003, an average of 73 % of those aged 25 - 34 had attained at least upper secondary education, compared to only 46 % of persons aged 55 - 64. 21 nevertheless, meeting the challenges of technological progress and ensuring the labour force β s employability and flexibility, requires that human capital is continuously adjusted to labour market needs through improved education and training as well as lifelong learning. in 2005, the us annual expenditure on higher education institutions per student was 22, 234 usd, while in the euro area only about 9, 200 usd was spent. furthermore, we need more high quality scientists and researchers. in the eu we have about 5. 3 scientists and researchers per 1000 workers, which compares to the us β s 9 per 1000. 22 groningen database. see also ecb ( 2006 ) β competition, productivity and prices in the euro area services sector β, ecb occasional paper series. no. 44. see the world bank web site www. doingbusiness. org. eurostat data. see g. sc | spending. on the labour market, the unemployment rate was at a record low in july and employment growth remained resilient in the first half of the year, albeit that momentum is slowing. 1 / 4 bis - central bankers'speeches as the energy crisis fades, governments should continue to roll back the related support measures. this is essential to avoid driving up medium - term inflationary pressures, which would otherwise call for an even stronger monetary policy response. fiscal policies should be designed to make our economy more productive and to gradually bring down high public debt. policies to enhance the euro area's supply capacity, such as high - quality public investment and structural reforms, can help reduce price pressures in the medium term, while supporting the green transition. risks to the outlook continue to be tilted to the downside. growth could be slower if the effects of monetary policy turn out to be more forceful than expected, or if the world economy weakens further and geopolitical risks intensify. on the other hand, growth could also be higher than projected if the strong labour market, rising real incomes and receding uncertainty boost confidence among consumers and businesses and lead them to spend more. inflation since peaking in october 2022, euro area headline inflation has more than halved. the decline is broad - based across the main components of inflation and reflects falling energy commodity prices, the easing of supply bottlenecks and the impact of tighter monetary policy. core inflation remains at elevated levels, reflecting the fact that the fading impact of the past surge in input costs is being counterbalanced by rising labour costs. indeed, employees demanding compensation for the loss in purchasing power amid tight labour markets has resulted in historically high wage growth. we expect euro area inflation to continue to decrease, owing to easing cost pressures as well as the impact of tighter monetary policy. wage growth is expected to decline gradually, albeit remaining high over the projection horizon, driven by increases in minimum wages and inflation compensation in a context of tight, though cooling, labour markets. profit margins, which expanded notably last year, are expected to provide some buffer to the pass - through of labour costs to final prices in the medium term. inflation is expected to decline to levels close to 2 % in 2025. however, the downward path has risks in both directions. upside risks stem from renewed upward energy and food cost pressures, a de - anchoring of inflation expectations above our target, and higher than anticipated increases in wages or profit margins. the downside risks include | 0.5 |
phase two. let me also say that i truly value our close relationship built over many years with the nbc. we continue to benefit from our mutual exchange of knowledge, ideas and experience on many areas, including though not limited to our respective instant payment systems and arrangements. one such area that we seek to learn further from nbc's experience is in leveraging on distributed ledger technology or dlt for its bakong system which will offer useful lessons for our own cbdc exploration journey. clearly, exciting times still lie ahead of us in the payment space. before i close, let me take this opportunity to acknowledge, thank and congratulate the contributions of everyone involved in this project. in particular : ( i ) to the national bank of cambodia, the operator of bakong, ( ii ) to paynet, our instant payment system operator ; and 2 / 3 bis - central bankers'speeches ( iii ) to maybank as the sponsoring bank that has helped bridge the two instant payment systems. our launch today would not have been possible without the efforts and commitment from all of you. the launch of this qr linkage is more than just a technical feat. it is a testament to our commitment to build a world where financial services transcend borders, and where innovation creates new pathways for inclusive economic development. our work does not end here, and i certainly look forward to seeing the close partnership between malaysia and cambodia in the area of payments and beyond continue to grow. thank you. 3 / 3 bis - central bankers'speeches | the financial sector blueprint 2022 - 2026 under the cluster of " finance for all ", which is having diverse choices for consumers, with most preferring digital solutions. we aspire for consumers to benefit from the availability of'digital first'solutions such as invisible payments, digitalised motor claims and smart contracts. beyond digitalisation, we aspire for consumers to be confident and capable of taking charge of their finances. towards this end, we are working together with other ministries and agencies in enhancing consumer protection reforms such as the enactment of the upcoming consumer credit act, the establishment of the consumer credit oversight board and the streamlining of the regulatory regime for financial advisors and financial planners. the world we live in today is ever - changing and fast evolving. we live in a world where, while life expectancy has increased, health and 3 / 4 bis - central bankers'speeches medical risks have also risen. while income is growing, the nature of employment has also change from largely stable income, to more volatile due to the growth in the gig economy as well high tendency for labour mobility. although technology attempted to keep pace in managing the impact of climate change, climate - related events have also becoming more frequent. these are only some of the many dynamics that we are experiencing at a rapid pace today. what these underscores to all of us, is the importance of continuous learning so we can continue to adapt and evolve. i am sure the knowledge you have learnt in your respective courses will provide you a strong foundation as financial planners professionals. however, to keep pace with the changing environment you must have a lifelong learning mindset. it is important to keep abreast with the latest economic developments and continuously update your information set so that you are able to provide the most optimal advice to your clients. apart from providing information and filling the gaps in financial knowledge, financial planners play the important role of defusing biases that lead to common financial mistakes among consumers and help mediate in joint decision - making. this is especially true for vulnerable consumers who largely lack capability to fully understand and comprehend the risk - return assessments, not only of complex financial products and services but sometimes even those basic ones. one financial decision can have far - reaching consequences on their current and future livelihood. it is therefore crucial not to downplay the importance of professional advice in improving the quality of life and the wellbeing of individuals and households. in this regard, it is commendable that mfpc provides an evolving set of | 0.5 |
transactional platform for faster, cost - efficient and convenient transfer of funds. among others, e - money can be used by microfinance clients to purchase goods, pay bills or loans, and move value to their deposit accounts. indeed, the e - money ecosystem offers opportunities for mfis as our regulatory framework allows banks and non - banks β such as telco subsidiaries and e - money agents β to participate as issuers or delivery channels. today, this ecosystem consists of more than 24, 000 agents which complement over 10, 000 banking offices and over 15, 000 atms as financial service access points. mfis can tap into this infrastructure, in response to clients β need for easier access and other convenient functions. please note that the number of e - money accounts opened over a period of five years has reached 26. 7 million. this represents exponential growth compared with the 47. 4 million deposit accounts that took our banks 100 years to generate. while e - money accounts are just transactional accounts, it can be the first step or an β onramp β to more valuable financial services such as savings, credit, even microinsurance. it is a fact β mfis that keep finding ways to serve clients thru efficient, sustainable business models can help nurture more successful microentrepreneurs. strong support from public and private sector partners can provide more impetus to grow more success stories in the microfinance sector. one prime example is cma itself, made possible by mutual support and collective diligence of the microfinance council of the philippines, inc. ( mcpi ), citibank, citi foundation, and the bsp itself. at the same time, the participation of distinguished members of the cma national selection committee provides prestige and valuable linkages that generate long - term benefits for cma winners. let β s give them a big hand. networks such as bank associations and cooperative federations also play unique roles in providing support to their mfi members. the role of media is also important β you raise public awareness of microfinance, prompt discussions about its promise and opportunities, and even make microfinance a β trending β topic. ladies and gentlemen, let us keep in mind that with appropriate enabling regulations, responsive mfi services, and multi - sectoral support for microentrepreneurs, we can help improve the lives of millions of filipinos. bis central bankers β speeches through our collective efforts, we can | of concerned bsp personnel against lawsuits arising from the conduct of the bsp β s financial regulation duties. other important laws concerning the bsp have also been enacted recently, including islamic banking law, which provides the framework for regulation and development of islamic banking in the country ; ( 2 ) gold law, which exempts from taxes the sale of gold from small - scale mining to the bsp ; ( 3 ) the national payment systems act, which formally recognizes the bsp as supervisor of the country β s payments and settlements system ; ( 4 ) personal property securities act, which allows use of other assets besides real properties to serve as collateral for loans to boost micro lending ; ( 5 ) philippine id system, which will ensure all filipinos have proper identification, thus allowing banks to comply with know - your - customer ( kyc ) rules when they offer financial services to the poor ; and ( 6 ) anti - hacking law, which imposes stiffer penalties on hacking, thus better protecting the financial services industry and their customers from it - related fraud. with my appointment as bsp governor coming shortly before and after the enactment of these new laws, i consider it my personal mission to oversee the prompt and effective implementation of these game - changing reforms. we are not stopping here. more legislative reforms are in the pipeline, and we are keen to see them being implemented soon. these include ( 1 ) amendments to bank secrecy laws, which will support efforts versus money laundering and tax evasion ; ( 2 ) amendments to the agri - agra law, which will relax provisions of mandated lending to the agriculture sector ; ( 3 ) financial consumer protection bill, which seeks to require financial institutions to have mechanisms in place to protect financial consumers ; and ( 4 ) amendments to the warehouse receipts law, which seeks to modernize the warehouse receipts system to better account for assets that can serve as collateral for loans. 4 / 5 bis central bankers'speeches besides the legislative agenda, we are also pushing for a wide range of other reforms, including in the areas of risk governance, fintech, integrity of financial system and safeguarding of public interest ; and capital market development. the newly enacted laws and those in the pipeline are a continuation of the philippines β long history of structural reforms, which have strengthened the country β s macroeconomic environment over the years. rest assured that the bsp will be one with the government in continuing the reform agenda to push the philippines to its next stage of development. at the moment, the philippines | 0.5 |
. in november, the financial stability board ( fsb ) published a cyber lexicon. having a common set of definitions in non - technical language will support the work of the fsb, standard - setting bodies, authorities and financial institutions to address cyber security and cyber resilience in the financial sector. the ecb continues to participate in these international fora, ensuring that global initiatives are aligned with our work in europe. from an operational perspective, the market infrastructure board, which is in charge of the eurosystem - operated financial infrastructures, continues to scale up its activities to ensure the continued cyber resilience of its systems and platforms. at our meeting in march6, we identified four key areas for further focus : 1 ) crisis management and incident response ; 2 ) information sharing ; 3 ) awareness and training ; and 4 ) third - party risk. there was general agreement that these key areas warranted further thought and focus. the unitas exercise further confirmed that these areas require attention. today we will reflect on how to address them collectively on the basis of proposals made in close cooperation with the experts at your institutions. thank you. 1 eurosystem cyber resilience strategy 2 cyber resilience oversight expectations 3 tiber - eu framework 4 cpmi - iosco guidance on cyber resilience for financial market infrastructures 5 tiber - eu services procurement guidelines 6 ecrb public summary march 2018 2 / 2 bis central bankers'speeches | acted responsibly, also from the point of view of its banking sector, which is not currently a cause for concern. the sector was successfully restructured. and spain is a very competitive country β the external sector is the main source of growth in the spanish economy. the form the recovery takes will depend on how the business landscape has changed. if we can avoid a situation where many companies go under as we journey through this wilderness, i β m sure that when normal life resumes companies will start hiring again and moving in the right direction. this will make it more of a v - shaped recovery than a u - shaped one. and what about essential industries being paralysed? that is a political decision. the government thinks that it is accelerating the flattening of the infection curve. i hope it works out. but it has an economic cost. if you were in government, would you have done the same? i can β t say. this crisis is unique. i think the guarantees were a good measure to take. we have to try to reduce the costs to firms and ensure that as many of them survive as possible. because 3 / 4 bis central bankers'speeches this situation will pass. it β s temporary. last question : if you were a minister now, would you be in favour of a total shutdown of the economy for a short period of time? i can β t answer that, i β m afraid. i β m not a minister now. i was a minister for more than six years, but now i β m at the ecb. what i can tell you is that we at the ecb will do everything possible to keep the euro together and to provide the best funding possible, under the best conditions possible, to the euro area economies, including spain. 4 / 4 bis central bankers'speeches | 0.5 |
paul tucker : credit conditions for firms β stability and monetary policy speech by mr paul tucker, deputy governor for financial stability at the bank of england, to the association of corporate treasurers β annual conference, liverpool, 18 april 2012. * * * it is quite a few years since i last spoke to an act gathering and it is very good of you to ask me back. since then, many of you have been close to the front line of the financial crisis that overtook us nearly five years ago. bridging the financial economy to the real economy, you have had to navigate a demanding obstacle course while the real economy β rebalances β. that means that businesses β the productive part of the economy on which our prosperity depends β are having to adjust after years, preceding the crisis, when spending was loaded too much towards household and government consumption, the country β s income from net trade was too weak, and investment was too heavily weighted towards commercial real - estate construction. that rebalancing has some way to go. while many of the planned tax increases are already in place, government consumption will continue to be scaled back for the next few years. there is also a risk that households will spend less than expected in order to rebuild their balance sheets, holding higher liquid savings than previously as a precautionary buffer. on the supply side, as the world economy recovers, the balance of production will continue gradually to shift towards exporters and towards firms which, given sterling β s large depreciation since mid - 2007, can now compete somewhat more readily against importers. for sectors primarily serving domestic markets, the adjustment is more challenging. some face both higher costs for imported inputs to production and weaker demand β not just temporarily but persistently β for their final output. on the ugly side of this rebalancing, there has already been an increase in vacant properties on the high street, which is also facing structural change due to on - line shopping. some of those properties will no doubt be converted to other uses over time, but i know it will not be easy for the firms affected or for their employees. company insolvencies have ticked up, and will likely continue to do so for a while. credit supply and the corporate sector recovery will come, and the necessary adjustments will occur, over time. but it is made harder for you by the problems in the financial system. you have faced first tightening, then in late 2008 frozen, and now a prolonged period of | argument to its logical limit β to ensure we internalise all possible spillovers let β s just have one body determining every aspect of public policy β i think we β d all have misgivings with the outcome. apart from anything else the policymaking process would be far too complicated to hold any one bit of it to account and the all - powerful policymaker would naturally tend to focus on the more verifiable tasks. a bit like the man who loses his keys in the park but looks for them under the streetlamp β because that β s where the light is β the attention of policy would be directed to the most observable objectives. perhaps we collectively fell foul of this trap, in some ways, ahead of the crisis. the risk of a rare event is not an easy thing to judge and, having gone so long without a serious problem in the financial system, our attention was distracted by the more easily monitored task of stabilising the economic cycle. maybe people were too beguiled by the β great stability β, if only because data confirming it arrived with such regularity, to notice what was going on within the financial system. all speeches are available online at www. bankofengland. co. uk / speeches one obvious lesson has been that the stability of inflation is no guarantee of financial stability β hence the ( re - ) creation of macro - prudential policymaking. i think another lesson is that it β s better to grant these powers to a single, accountable body, β ring - fenced β from the other functions of the central bank. i don β t want to overstate the case and i β m certainly not suggesting any sort of β chinese wall β between the two functions. there are clear advantages in having them housed in the same institution. many economic issues are relevant for both and, in the bank of england, the mpc and fpc regularly receive joint briefings on such matters. even if the two hands are separate, it is important that the one should know what the other is doing, and in that respect it helps that some people sit on both committees. and if and when there were a serious co - ordination challenge β if, for example, one body became concerned about its ability to meet its primary objective, without enlisting the assistance of the other β then i think the current system in the uk would allow that to happen. equally, there are also clear advantages in a degree of separation. one β something i | 0.5 |
frequent numerical target misses. nevertheless, the czech republic enjoys low inflation, and inflation expectations seem to be firmly anchored at low levels at present. monetary policy decision - making is rule - based and transparent, thereby enhancing the credibility of the cnb. such a framework allows an independent central bank to commit credibly to its long - term goal of price stability, and at the same time preserves enough discretion for an active anti - cyclical monetary policy that takes into account not only inflation, but also other factors such as variability of output. | higher inflation and rising inflation expectations. the economy needed a new nominal anchor in order to return to a disinflation path. inflation targeting was chosen as β the best of all bad β alternatives at the time. such a sudden switch from a fixed exchange rate system to inflation targeting required a radical and fast change in the central bank β s mentality. this was perhaps the biggest challenge that the cnb had to face. over the past five years it has involved much work on improving our forecasting tools, leading to substantial development in our internal analytical processes. these changes culminated a year ago, when the cnb settled on a new forecasting process. this integrates expert judgement and short - term analyses - which were the key pillars of the cnb β s forecasting tool - kit in the first years of inflation targeting - with a small - scale macroeconomic model developed by the cnb β s staff with the assistance of the international monetary fund. an important element of this step was a switch from a forecast with a fixed - interest - rate assumption to an unconditional forecast that includes a reaction - function of the central bank. our current quarterly projection model is a small - scale model belonging to the first generation. it is thus fairly simple and arguably misses many important links in the economy. nevertheless, it is already quite close to the state - of - the - art among the inflation - targeting central banks around the world, and intense work is in progress to build a higher - generation model. the good standard of our current forecasting know - how is reflected, among other things, in our ability to start providing technical assistance in the forecasting field to some other central banks in transition and emerging market economies. in line with the transparency philosophy of inflation targeting, the czech national bank published a book called β the czech national bank β s forecasting and policy analysis system β last year. this book describes not only the core forecasting model itself, but also the whole process of creating the final integrated forecast. the model has also been published in a professional journal, the czech journal of economics and finance. to conclude, i would like to emphasise that the development of our forecasting and analysis system has been part of a wider evolutionary process that the czech inflation targeting regime has gone through. during the first years, many of the details were adjusted in response to the changing needs, challenging experience and evolving thinking of the central bank. the first years of the new regime were not easy, and included | 1 |
: the 2 / 4 bis central bankers'speeches tiering system and tltros. the tiering system was introduced after the deposit facility rate was pushed in negative territory, to offset the negative side effects of low - for - long interest rates for banks intermediation. in the case of the tltros, we have excluded housing loans from the lending benchmark to avoid contributing to a potential housing bubble. so far, i have mentioned adjustments to our individual instruments ; but more generally, our monetary policy tools could be combined with each other so that they maximise their impact on inflation while minimising the side effects on financial stability. 4 indeed this is precisely what the old tinbergen rule asserts : we now have several instruments in our monetary policy toolkit, allowing us to reach several goals. iii. economic stability let me now turn to economic stability. the stabilisation of the business cycle is the area of policy trade - offs and dilemmas par excellence. as long as price dynamics are in line with the business cycle, monetary policy is counter - cyclical. fortunately, this is the case most of the time, as demand shocks tend to prevail. that said, monetary policy is not the only stabilisation policy : fiscal policy is also very active, which raises the very topical issue of the congruence between monetary and fiscal policies. as long as inflation prospects remain too low with respect to the central bank β s inflation objective, accommodative monetary and fiscal policies can be congruent without any formal coordination. this is obviously the description of the policy - mix at the current juncture. moreover, in a context of low r *, fiscal policy is more effective and gains policy space thanks to the accommodation provided by the central bank ( as r < g ). in turn, the effects of monetary policy, which is constrained by the effective lower bound ( elb ), are reinforced by fiscal policy, which becomes today one of its main β transmission channels β. but in the longer run β and in the years to come β, the greatest risk is of course that monetary policy could become subordinated to fiscal policy. if and when inflation reappears, central banks must be able to normalise their stance and increase the interest rates paid on debt. acting too late or too little, for short - term or political reasons, can be very costly for long - term interest rates and inflation. the best way to foster the current policy - mix | risks as well. within europe, italian fiscal policy is under investor scrutiny. and there is brexit, although its direct effect on the euro area macroeconomy is likely to be small. how should we, as euro area central bankers, respond to this economic environment? by combining two apparently contradictory aims : clarity and flexibility. as regards clarity, our first duty as policymakers is to provide markers to help guide economic actors and financial markets in the increasing fog of uncertainties. for our guidance to be reliable, we need to be as clear, credible and consistent as possible. we cannot be clear like a train timetable but more like how a captain sets a course and adapts to the wind and the waves. so our sequence of steps for policy normalisation is very predictable : first, we halved our net asset purchases to 15 billion this month and will very probably end them in december ; 1 / 4 bis central bankers'speeches second, we set down a guide post with our long - dated forward guidance : we will maintain interest rates at current levels until at least through the summer of 2019 ; and third, we will retain our stock of assets for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. let me insist on this : the end of the net asset purchases will not be the end of our monetary stimulus, far from it. moreover, this sequence doesn β t depend on the fiscal uncertainties that can appear in member states. the governing council is clear about the fact that there is no fiscal dominance in the euro area and no influence of any national fiscal policy on our common monetary policy. in addition, our past consistency forges our credibility for the future. since march 2016, we took decisions on the evolution of our net asset purchases at intervals of approximately 9 months. each time, we gave visibility over the next twelve months ; and we stuck to the provisional indicative timetable that we set without extending the time limits. i turn now to flexibility. our sequence is clear but the details of implementation are flexible and state - dependent. we have included several options, such as the precise timing of the first increase in interest rates and the path of policy rates thereafter, or the pace of our reinvestments. there is much speculation for instance on the future trajectory of our interest rates ; but at this stage, i don β t see any value in trading off our flexibility tomorrow against more clarity today. beyond that, as mario draghi mentioned today, | 0.5 |
β s monetary policy strategy. a close understanding of the framework of our analysis is indispensable in order to fully grasp the policy pursued by the ecb. the first element of the ecb β s monetary policy strategy is the published definition of price stability. price stability has been defined as β a year - on - year increase in the harmonised index of consumer prices ( hicp ) for the euro area of below 2 % β. the ecb has also stated that price stability is to be maintained over the medium term. the definition is intended to securely anchor inflation expectations. moreover, it provides a clear yardstick against which the ecb β s monetary policy can be held accountable for the achievement of its primary objective. in order to take appropriate decisions with regard to this objective, the ecb monitors a broad set of indicators. first, a prominent role has been assigned to money as the so - called first pillar of the strategy. the assignment of such a prominent role to money is justified by the available econometric evidence. this evidence suggests the existence of a stable relationship in the euro area between the broad monetary aggregate m3, the price level and a small number of other euro area - wide macroeconomic variables. the important role assigned to money has been signalled by the announcement of a reference value of 4Β½ % for the annual growth rate of m3. the first pillar consists not only of a detailed analysis of deviations of m3 growth from the reference value for the information that they contain about the outlook for price stability, but it also embodies a thorough analysis of monetary developments, including careful monitoring of the components and counterparts of m3. in addition to a thorough analysis of monetary developments, a comprehensive assessment of a wide range of other economic and financial indicators constitutes a further basis for monetary policy. this assessment encompasses an analysis of, inter alia, cost and price indices, the exchange rate, real economic indicators, and financial markets indicators. in brief, the role of this second pillar is to provide information about the prevailing economic situation and on the nature and magnitude of risks to price stability, which are not made apparent from an analysis of the monetary aggregates in a complete or timely way. some commentators have regarded this strategy, based on the assessment of two sets of indicators, as unclear and overly complex. i have two responses to such criticism. first, new methods and new strategies are not always fully understood from the outset. the learning and familiarisation process can take some time. second | a good deal of deregulation and liberalisation of previously sheltered sectors has taken place, there is still plenty of scope for further measures to increase the level of competition and stimulate entrepreneurial initiative. let me now shift the focus from structural to more conjunctural issues and briefly discuss the current economic situation. the first message i should like to convey is that there is good reason to remain confident that strong growth will be sustained in the euro area. euro area real gdp has been growing at an annualised rate of around 3Β½ % for four consecutive quarters, including the second quarter of 2000. some monthly indicators, which extend into or cover the third quarter of this year, point to some moderation of these high growth rates. in particular, the pace of growth in industrial production appears to have declined somewhat and some survey data showed signs of moderation. at the same time, however, confidence remains high, underpinned by positive factors such as high employment growth. the extended period of high and rising oil prices has certainly increased the uncertainty surrounding the sustainability of recent growth trends in the world economy. however, by contrast with previous periods of strong and prolonged increases in oil prices, the world economy is now less dependent on oil and inflationary pressures are still being contained. this should help to ensure that the impact of high oil prices on growth remains moderate over the medium term. all in all, the outlook is for the continuation of robust growth in the foreseeable future. turning to monetary developments, m3 growth has been deviating from the reference value of 4Β½ % since the beginning of 1999. the three - month average of the annual growth rates of m3 covering the period from july to september stood at 5. 4 %. over recent months, however, a moderation in m3 dynamics has taken place, as is visible in shorter - term growth rates. for example, the seasonally adjusted and annualised growth rate of m3 stood at 3. 6 % in september. at the same time, the recent increase in the growth rate of loans to the private sector should not be overrated. this was considerably influenced by the financing of the payments for umts licences by telecommunication companies. this does not imply high risks to price stability in the medium term as long as the proceeds are used, as expected, to redeem government debt. in sum, recent developments seem to indicate that, following the series of interest rate increases by the ecb, monetary developments are currently settling down at a more moderate | 1 |
it is still possible to achieve this, but we do need to be prepared for other outcomes as well, including a sharper rise in unemployment. given the world we are living in, there are many sources of uncertainties at present and we could be knocked off that narrow path. recent data as the board navigates this path, it is paying close attention to developments in the global economy, household spending and the outlook for inflation and the labour market. i would like to say a few words about each of these in light of the recent data. first the global economy, which is in a challenging position. the imf is predicting a period of weak growth, especially in advanced economies ( graph 5 ). even so, recent forecast revisions have tended to be to the upside, following stronger news on labour markets and household spending on services in several countries. a change in china β s covid policy has also improved the near - term outlook there. graph 5 advanced economy gdp growth * ppp - weighted % imf forecast % - 2 - 2 - 4 - 4 - 6 * - 6 imf estimate for 2022 ; imf forecast for 2023 and 2024. source : ceic data the main global issue though is still inflation. headline inflation has peaked in most economies and is now coming down due to the resolution of supply side problems, softer demand for goods and a decline in some commodity prices ( graph 6 ). even so, there is still uncertainty about how quickly inflation will come back down. in many countries, the prices of services are still increasing quickly and wages growth is above the rate that is consistent with sustainable achievement of inflation targets. reflecting this, in underlying terms, inflation is proving to be uncomfortably persistent. while most central banks are forecasting that inflation will be back to target within two to three years, there is a range of other plausible scenarios where it occurs quicker or slower. graph 6 consumer price inflation year - ended % united states euro area % % - 2 canada united kingdom % - 2 sources : rba ; refinitiv in australia, the monthly cpi indicator for january published last week provided support to the idea that headline inflation has also peaked in australia ( graph 7 ). this monthly indicator is still experimental and can be volatile from month to month, so some caution is required. but the year - ended inflation rate showed a welcome decline from 8. 4 per cent in december to 7. 4 per cent in january. graph 7 monthly cpi indicator headline inflation, year | cannot pursue any economic policy avenue other than one which, firstly, provides for and boosts higher employment growth or, on the other side of the same coin, brings about swifter and more sustainable gains in our productivity and competitiveness ; and, secondly, helps curb the growth of our public and private debt with a view to subsequently reducing it. in economic policy, hits and misses only become clearly manifest after some time. just like big vessels which, owing to their great inertia, can only change course or speed slowly, an economy such as ours also moves with considerable inertia : correcting mistakes takes time and, almost always, entails losses in income and well - being, and social instability. our experience β both in the pre - crisis expansionary phase while the imbalances were accumulating and during their correction and the recovery of growth β should help us avoid errors, persevere with reforms to safeguard and enhance our competitiveness, and fulfil our public finance commitments in the european union. thank you. bis central bankers β speeches | 0 |
difficult to obtain elsewhere, and allowing a more orderly process of asset sales and the necessary deleveraging by financial institutions. ultimately, however, market participants themselves must address the fundamental sources of financial strains by raising new capital, restructuring balance sheets, and improving risk management. this process is likely to take some time. the federal reserve's various liquidity measures should help facilitate that process indirectly by boosting investor confidence and by reducing the risk of severe disruption during the period of adjustment. once financial conditions become more normal, the extraordinary provision of liquidity by the federal reserve will no longer be needed, and financial institutions will again look to private counterparties, and not central banks, as a source of ongoing funding. consistent with the historical mission of the federal reserve, the third component of our policy response has been to use all our available tools to promote financial stability, which is essential for healthy economic growth. at times, this has required working to preserve the stability of systemically critical financial institutions, so as to avoid further costly disruptions to both the financial system and the broader economy during this extraordinary period. in particular, the federal reserve collaborated with the treasury to facilitate the acquisition of the investment bank bear stearns by jpmorgan chase and to stabilize the large insurer, american international group ( aig ). we worked with the treasury and the federal deposit insurance corporation ( fdic ) to put together a package of guarantees, liquidity access, and capital for citigroup. other efforts include our support of the actions by the federal housing finance agency and the treasury to place the government - sponsored enterprises ( gses ) fannie mae and freddie mac into conservatorship and our work with the fdic and other bank regulators to assist in the resolution of troubled depositories, such as wachovia. in each case, we judged that the failure of the institution in question would have posed substantial risks to the financial system and thus to the economy. the federal reserve has worked to promote financial stability through other means as well, such as strengthening the financial infrastructure. for example, the federal reserve bank of new york has led cooperative efforts to improve the clearing and settlement procedures for credit default swaps and other over - the - counter derivatives. in addition, the federal reserve is collaborating with the securities and exchange commission and the commodity futures trading commission to facilitate the development of central counterparties for the trading of credit default swaps. properly managed, central counterparties can mitigate the counterparty risk that | ben s bernanke : federal reserve policies in the financial crisis speech by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the greater austin chamber of commerce, austin, texas, 1 december 2008. * * * it is a privilege for me to be here in texas, and i would like to thank the austin chamber for hosting this luncheon. the texas economy is strong and diversified, accounting for more than a trillion dollars of output last year. however, our nation, and texas too, is being tested by economic and financial challenges. those challenges and the federal reserve's policy responses are the topic of my remarks today. federal reserve policies during the crisis as you know, this extraordinary period of financial turbulence is now well into its second year. triggered by the contraction of the u. s. housing market that began in 2006 and the associated rise in delinquencies on subprime mortgages, the crisis has become global and is now affecting a wide range of financial institutions, asset classes, and markets. constraints on credit availability and slumping asset values have in turn helped to generate a substantial slowing in economic activity. the federal reserve's strategy for dealing with the financial crisis and its economic consequences has had three components. first, to offset to the extent possible the effects of the crisis on credit conditions and the broader economy, the federal open market committee ( fomc ) has aggressively eased monetary policy. the easing campaign began in september 2007, shortly after the turbulence began, with a cut of 50 basis points in the target for the federal funds rate. the cumulative reductions in the target rate reached 100 basis points β that is, a full percentage point β by the end of 2007. as indications of economic weakness proliferated, the committee continued to respond, reducing the target rate by an additional 225 basis points by the spring of this year. by way of historical comparison, this policy response stands out as exceptionally rapid and proactive. in taking these actions, we aimed not only to cushion the direct effects of the financial turbulence on the economy, but also to reduce the risk of a so - called adverse feedback loop in which economic weakness exacerbates financial stress, which, in turn, leads to further economic damage. unfortunately, despite the support provided by monetary policy, the intensification of the financial turbulence this fall has led to a further deterioration in the economic outlook. the committee again responded by cutting the target for the | 1 |
a broad array of independent academic research aimed at adding to the general knowledge and understanding of the economy. each year, fed staff members publish hundreds of papers and others forms of research, sometimes in collaboration with scholars from universities and other institutions, all of it available for use by the research community and on view to the public. conferences play an integral role in promoting the federal reserve β s research mission as well. this biennial community development research conference, organized by community development officials from across the federal reserve system, serves to encourage high - quality research see pew research center ( 2014 ), β emerging and developing economies much more optimistic than rich countries about the future ( pdf ) β ( washington : prc, october ). see ben s. bernanke ( 2007 ), β the level and distribution of economic well - being, β speech delivered at the greater omaha chamber of commerce, omaha, neb., february 6. see janet l. yellen ( 2014 ), β perspectives on inequality and opportunity from the survey of consumer finances, β speech delivered at the conference on economic opportunity and inequality, sponsored by the federal reserve bank of boston, boston, mass., october 17. bis central bankers β speeches and also helps bridge the gap between community development research, policy, and practice. in my brief remarks, i would like to mention a few aspects of economic mobility that i think are particularly important and worthy of further research, with the hope of stimulating the conversation that will take place here over the next couple of days. this conference will explore economic mobility as it is influenced by or affects families, communities, and the economy, so let me touch on each of those three facets. we know that families are the locus of both opportunities and barriers to economic mobility. there are important research questions to be tackled here. what individual or family characteristics may predict who will achieve upward mobility? how much does someone β s initial circumstances in life influence how far that person can get or how hard he or she needs to work to get there? researchers and policymakers need a better understanding of how much mobility individuals may experience over the course of their lives and at what age people β s outcomes may become more difficult to change. families are the source of many of the resources and experiences that influence economic mobility, and more research can help us understand to what extent and in which ways differences in the economic circumstances of families affect the upward mobility and economic security of offspring. research may be able to provide evidence on which public policies are | in the first quarter of 2004, a pace of advance not experienced since 1983. this sharp recovery in profits reflects, at least in part, the dramatic swing over the past couple of years from relatively heavy business price discounting to the restoration of a significant degree of pricing power. the most visible manifestation of the return to pricing power can be seen in the recent acceleration of core consumer prices. the twelve - month percent change in the core pce price index, which stood at just above 0. 8 percent in december of last year, was at 1. 4 percent in may. to better understand recent developments, it is helpful to view prices from the perspective of consolidated costs and profit margins. from the first quarter of 2003 to the first quarter of 2004, consolidated unit costs for the nonfinancial corporate business sector declined. hence, at least from an accounting perspective, all of the 1. 1 percent increase in the prices of final goods and services produced in that sector during that period was the consequence of a rise in profit margins. the 6. 4 percent increase in nonfinancial corporate business productivity over those four quarters accounts for much of the decline in unit costs. the remainder of the decline is accounted for by the effects of accelerating output in reducing nonlabor fixed costs per unit of output. productivity in the nonfinancial corporate sector evidently decelerated somewhat this year. moreover, as best we can judge, the growth of compensation per hour has stepped up in recent months. with gains in hourly compensation now apparently outstripping advances in productivity, unit labor costs have moved up. moreover, the increase in overall operating expenses over the last couple of months has also reflected higher energy costs and rising prices of imported non - oil inputs. it seems unlikely, however, that a further rise in profit margins will contribute to significantly higher prices of final goods and services. in an endeavor to exploit current high margins, businesses are being driven to expand their use of capital and labor resources. if history is any guide, this will tend to increase both real wages and interest rates. fears of losing market share should dissuade businesses from passing these high costs fully through to prices. accordingly, the forces of competition should cap the rise in profit margins and ultimately return them to more normal levels. to date, the aforementioned cost pressures have been relatively subdued. nonetheless, the persistence of the rise in energy prices is a worrisome element in the cost picture. fears for the long - term security of oil | 0.5 |
be used should output decline dramatically. the outlook for financial regulation a major consequence of the crisis already apparent is the growing consensus around the need for a fundamental review of the foundations of financial regulation. the crisis has also rekindled concerns about the structure of supervision. as you know, at the french president β s instigation, huge efforts are made to think about what is termed now a β new bretton woods β. beyond these ambitious words, i do believe it to be useful to take a fresh look at the existing financial regulation. this must be done without haste, but no stone should be left unturned. improved regulation appears to be necessary in several domains, from rating agencies to risk management, the organisation of financial markets and even the question of compensation. as a contribution to this debate, i would like to make two sets of remarks. one has to do with the fluctuations of financial systems. the other concerns financial supervision. financial systems that operate in the context of a developed market economy are, by nature, subject to cyclical forces. some are a consequence of the business cycle. credit activity is an obvious example, as credit demand is heavily influenced by economic activity. others are from within financial systems. for instance, financial institutions β equity position moves in line with asset prices specially in a fair value world where fluctuations result in capital gains or losses. this effect tends to be exacerbated when financial intermediaries actively manage their balance sheets to target a preferred degree of leverage. the challenge for the authorities is to assess whether and to what extent regulations reinforce these dynamics and impact the entire financial system. with these questions in mind, work is being undertaken to examine the impact of prudential standards. it is also on this basis that the accounting adjustments that i mentioned earlier have been made. we will have to set up supervisory systems that are more suited to economic developments. the need to develop a β macro - prudential β policy is now under debate. the general principle is straightforward : it consists in ensuring that supervision manages to limit risks for the stability not only of a particular institution, but also of the entire financial system. its implementation, however, is complex. for the moment, we are only at a preliminary stage, contemplating which tools a macro - prudential policy could be based on, and how these tools could be used. as regards supervision, this crisis has shown three things. first, it has highlighted the merits of having the banking supervisor close to the central | banking services reach especially to rural areas to help drive increased domestic savings. 5. in this regard, it is imperative for stakeholders to explore mechanisms to deliver financial services and push forward the financial inclusion frontiers in tandem with vision 2030. as a first step in pushing the initiative forward, the banking act was amended through the finance act 2009 permitting banks to use third parties ( agent banking ) to provide certain banking services on their behalf. i take this opportunity to urge banks to take advantage of the new provision. the agent banking model was designed to assist banks to lower their cost of offering banking services while at the same time improving their earnings as more kenyans are offered an opportunity to access financial services. 6. the kenyan banking sector continues to perform well despite the global financial turbulences and challenges on the domestic front. the sector β s total assets increased by 21 % from ksh. 1. 20 trillion in march 2009 to ksh. 1. 45 trillion in march 2010 whereas deposits increased by 23 % to ksh. 1. 14 trillion over the same period. profit before tax for the sector increased by 33 % from ksh. 12. 8 billion in the first quarter of 2009 to ksh. 17. 0 billion in the first quarter of 2010. this is remarkable, especially against the backdrop of domestic shocks and global financial crisis. 7. despite the impressive performance by banks, customers still have to contend with high borrowing costs. although many banks have responded to central bank β s plea of lowering interest rates, it is our expectation that all the banks should follow to support the economic growth via the support of expanded private sector credit at an affordable cost. on our part, we should now ask the real sector to access and negotiate credit in line with their potential investment. 8. finally, let me reiterate that central bank and indeed the government of kenya will continue to pursue policies that create a conducive environment for growth of the financial sector and encourage the provision of banking services to majority of the un - banked kenyan population at affordable cost. for us to be successful in this, we need to support strong institutional growth and remove underlying constraints that inhibit growth and financial reach. 9. with these few remarks ladies and gentlemen, it is now my honour and pleasure to declare the new brand of consolidated bank of kenya officially launched. thank you and god bless you all. | 0 |
. in this endeavour, the onus is on the east african central banks to ensure we contribute to the achievement of a monetary union within the stipulated timeframe. we have to play our role in terms of monetary policy formulation and management through contributing to the east african regional economic harmonisation and convergence programmes. it is in this context that the 16th east african central banking course, which bank of uganda is happy to host, has been organised. i am confident that the programme provides you a unique opportunity to gain a more comprehensive understanding of central banking. you should be able to appreciate better the role of our central. banks in terms of fostering price stability and a sound financial system that enables macroeconomic stability, economic growth and poverty eradication in our region. a case in point is coverage of various financial markets and payment systems which should go a long way in enabling you to appreciate the role our central banks play in investment and trade on which our governments have placed emphasis. the programme also provides you an opportunity to interact and exchange ideas, not only while on the course but also when you return to your respective offices. this networking is extremely important in the development process in our region. we expect you to advance it further. it is also important for you to note that you are being prepared for higher responsibilities in your respective central banks and also at the regional level as far as enhancing monetary policy harmonisation and convergence are concerned. you must appreciate that the monetary union, on which we are targeting, will be a joint effort of managers like you who have been specially prepared for the task. i urge you to seize the opportunity to learn and be better prepared to give quality service to your respective institutions, your countries and the wider east african sub - region. i further urge you to share experiences, learn from one another and acquaint yourselves with the socio - economic opportunities that exist in the country. there is no doubt in my mind that you will accord the course the seriousness it deserves for the good of our region. ladies and gentlemen, with those few remarks, it is my sincere honour and pleasure to declare the course officially open. | ##tization would, in their words, β limit the amount of money created. β yet, as i suggested earlier, the g - m proposal itself might constrain securitization in undesirable ways, both related and unrelated to repo transactions. in addressing the franchise value issue, it would be interesting to pursue an important idea that g - m mention, but which is not at the center of their proposal : making the repo bankruptcy exception available only where the collateral conforms to certain criteria established by law or regulation. given the demand for repo funding, it seems worth considering whether this device could be used to create the necessary franchise value. indeed, if this approach had promise, it might be feasible for a regulatory body to establish the requisite criteria without providing insurance. with or without insurance, the β franchise value β might attach more to the instrument than to an institution. there is not time here to enumerate the potential difficulties with these ideas, but they are not hard to discern, even as stated in such skeletal form. in common with the g - m proposal, they would require a level of expertise and involvement in credit rating by the government that could pose practical and, in some conceivable alternatives, policy concerns. in any case, these are thoughts for further discussion, rather than developed options. gary gorton and andrew metrick have, in setting forth this proposal, continued to shape our understanding of the role and risks of the shadow banking system, as well as to add a specific proposal to our menu of possible responses. | 0 |
restoring price stability, which is the foundation for a vibrant and healthy economy. over the past year, inflation has increased rapidly and dramatically to levels last seen in the early 1980s. a year ago, overall inflation, as measured by the percent change in the personal consumption expenditures ( pce ) price index, was 2. 5 percent. in march, it was 6. 6 percent. a portion of this sharp rise reflects global increases in food and energy prices. but, even excluding energy and food costs, the " core " inflation rate has increased from 2 percent a year ago to 5. 2 percent today. 1 / 4 bis - central bankers'speeches three major imbalances are contributing to an overheating economy and high inflation. first, the effects of the pandemic have significantly increased demand for certain categories of spending, especially for durable goods and housing. this increase in demand is occurring while supply in these sectors is being adversely affected by the pandemic. the case study for this dynamic is the automobile sector. the combination of high demand and supply shortages has led to historically low inventories. customers are lining up to buy cars but are finding the dealer lots empty. it's a seller's market, and prices have soared. new car prices are up nearly 15 percent since the start of the pandemic, and used car prices have skyrocketed, rising more than 50 percent. another prominent example is housing. with remote work policies in place, many people have relocated - buying larger homes in the south, in the suburbs, and in more affordable cities. this shift has caused demand for housing in some regions to far outstrip supply, while new housing construction has been held back by shortages in labor and materials. the imbalance between demand and supply has led to bidding wars. homes have sailed off the market at record prices, with many purchased sight unseen. this combination of high demand and crimped supply has also resulted in rapid increases in rents, especially for apartments coming onto the market. the second major imbalance is in the labor market, where overall demand far exceeds existing supply. the ratio of job vacancies to the unemployed is near its all - time high, workers are quitting jobs at a record rate, and employers are bidding up wages. this sizzling hot labor market is also related to the imbalance between demand and supply for goods and housing, as businesses seek to hire more workers to help meet the high demand. and labor supply shortages | njuguna ndung β u : building a platform for greater partnership remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the business editors β workshop, naivasha, 2 may 2014. * * * dr. haron sirima, deputy governor, central bank of kenya mr. jaindi kisero, managing editor ( economic affairs ), daily nation business editors here present central bank of kenya colleagues other distinguished participants ladies and gentlemen i would like to register my profound appreciation to you, members of the fourth estate for making time to attend this workshop. no doubt, your role as editors is extremely demanding on your time. i believe this workshop in an important step in enhancing the partnership between the central bank and the media, in line with the theme, building a platform for greater partnership. as you may already be aware, it was once believed that central banks needed to be as uncommunicative and as secretive as possible due to the conventional idea that doing so would safeguard the autonomy of policy making, coupled with the perceived wisdom of saying as little as possible. however, the last 15 or so years has witnessed tectonic shifts regarding how central banks view their communications. central banks have recently begun to engage in public communications more proactively and purposely. the shift is validated by the linkage between enhanced communication and the achievement of economic outcomes. transparency in the policy making process creates partnerships and best outcomes. ladies and gentlemen : communication is essential to the functioning of a modern central bank as a policy tool rather than merely a means of conveying information, as traditionally understood. communication enhances the effectiveness of policy by improving the public understanding of policy objectives and enhancing the legitimacy of the message. an overriding priority for a central bank is to provide financial markets, and by extension the general public, the confidence that its policy actions are in the public interest. by clearly explaining its objectives, central banks gain public support and in the process, secure the opportunity to shape expectations and influence behavior in a desired direction. additionally, the prevailing emphasis on communication is informed by the need to balance increased demands for central bank independence with an equally necessary accountability to the public. that means ensuring that policy objectives are communicated in a manner that is understood and comprehended by the target audience. by investing in communication, central banks earn the trust of the public to pursue its strategic priorities independently. in addition, the decisions made by the central banks are themselves important inputs to | 0 |
nine indicators, in april 2017, the nbrm officially launched the initiative to join this highest data dissemination standard. at that time, we were already sure that we passed the right path and that we came within an ace of attaining our goal β to the moment that we mark with today β s event. dear ladies and gentlemen, on a global scale, it has long been resolved that quality data dissemination is key to use the benefits of statistics. therefore, i can say for certain that 28 january 2019 is a date of historical significance for the macedonian statistical system. but also for the macedonian economy, because it now has an opportunity to be one of the eighteen economies in the world that have a set of statistical indicators according to the highest international data dissemination standard. our cooperative journey to the sdds plus does not end here. we will have to fight off more challenges. we need to continue to work with the same commitment as so far to deliver the other four indicators. we are already actively working in this field and some of these data, in particular the data on the sectoral financial accounts produced by the nbrm, have been experimentally submitted to eurostat. i am sure that we will successfully reach our final destination. we have a vision, we have teams of responsible professionals who work every day to achieve the goals set by the sdds plus, we have excellent interinstitutional cooperation... and all this, which is also necessary to build and develop modern and quality statistics, guarantees us that we will succeed to the end. thank you. 2 / 2 bis central bankers'speeches | anita angelovska bezhoska : the denar was and remains one of the key pillars of the stability of the macedonian economy address by ms anita angelovska bezhoska, governor of the national bank of the republic of north macedonia, on the 29th anniversary of the monetary independence, skopje, 26 april 2021. * * * monetary sovereignty is one of the main components of the sovereignty of any state. today we mark 29 years since the laying of the foundations of our monetary independence β the day when the denar replaced the yugoslav dinar, and the national bank began to function as an independent central bank, facing numerous challenges in those turbulent times of separation from the former yugoslav state. looking back through years, we can freely say that the monetary independence took place in an extremely difficult period marked with high macroeconomic instability as its main feature. frequent exchange rate devaluations, when there were almost no foreign reserves, along with structural problems, ignited inflation, which reached four - digit levels, and all this had strong effects on the economy and the living standards of citizens. the economy has been declining 1996, when economic growth of 1. 2 % was registered for the first time since independence. hence, no doubt that establishing a stable macroeconomic environment required great courage, commitment and professionalism of the national bank team. the efforts of the national bank, together with other policy makers and the academic community, have played a key role in ceasing the inflation spiral and stabilizing the exchange rate of the domestic currency. in 1995, the monetary strategy of stable exchange rate of the denar was formalized β a strategy for which then and now there is a broad consensus that it is one of the key pillars of the stability of the macedonian economy. the benefits of macroeconomic stability have been enjoyed for 24 years. our economy is small, commercial and financially open and hence, prone to external shocks. despite the numerous external and internal shocks, the national bank constantly succeeds to keep inflation at a moderate level, which is similar to the european level. low inflation is extremely important for the protection of the real purchasing power of citizens, but also for maintaining the competitiveness of our exports without which small economies like ours can not achieve higher and sustainable growth. the maintenance of low and stable inflation, as the main goal of the central bank, is underpinned by the stable exchange rate of the domestic currency against the euro. the prudent monetary policy, as well as the good coordination | 0.5 |
is still being blocked by weak demand expectations and uncertainty about future economic trends, geopolitical developments, and the consequences of the uk referendum. it is no longer demonstrable that credit availability poses a major obstacle to investment decisions ; business lending is not growing essentially as a result of weak demand. the differences across categories of firms are significant : trends in loans to firms with more than 20 employees and to those in services are positive, while in the construction sector they remain negative. interest rates on new business loans continue to fall and the differential with respect to the corresponding euro - area average has been all but wiped out. in the three months ending in august, lending to the non - financial private sector stagnated on a seasonally adjusted basis, while household lending continues to expand ( 1. 4 per cent on an annualized basis ) ; loans to non - financial corporations contracted by 1. 2 per cent. for new loans to firms the cost of borrowing has come down by around 25 basis points from the end of 2015. signs from the labour market are positive overall. in 2015, thanks in part to the social security contribution relief for open - ended hiring and the introduction of contracts with rising levels of protection, employment grew more rapidly than trends in output might have suggested. in 2016 employment continued to expand ; during the year there have been signs of a slowdown, possibly also in connection with the retrenchment of social security contribution relief. following the hiatus of the second quarter, gdp β on the basis of the information provided by the cyclical indicators β could start to increase again in the third, albeit at a very slow pace. in july industrial output rose by 0. 4 per cent, returning to the average levels recorded in the second quarter. in september business confidence was bolstered across all sectors of economic activity, also thanks to the more favorable assessments on order books. household confidence is still relatively robust, but below the levels recorded at the end of 2015. according to september β s survey on inflation and growth expectations, firms expect to increase investment expenditure overall in the second half of 2016. the macroeconomic outlook in the update of the economic and financial document is less favourable compared to that of april. according to the current legislation scenario, gdp in italy will increase by 0. 8 per cent this year ( as against 1. 2 per cent forecast in the spring ) and slow slightly in the next ( to 0. 6 per cent, compared with 1. 2 per cent ). the | nevertheless believe it could be an effective way for capital markets union to contribute to consistent pricing of risk across countries. for it will help ensure a homogeneous, but risk - consistent transmission of monetary policy decisions. 10. but capital markets union can deliver on more than just that. it can also greatly increase the efficacy of monetary policy. common to all monetary policy decisions is that their transmission to the real economy is sluggish and can sometimes be incomplete. for example, the extent to which banks are able to lower lending rates following a rate cut depends on many factors beyond the control of monetary policymakers. one can think of the level of competition in the banking sector, or the health of bank balance sheets. a successful capital markets union will open up entirely new channels for the transmission of monetary policy to the real economy, making central bankers much less dependent on a single sector for the transmission of its policy decisions. in that sense, central banks can diversify the channels through which they can influence the economy, adding to its effectiveness. 11. note that economic agents can benefit from capital markets union in a very similar way. households and firms can diversify their dependency on financing, if alternative sources of finance are in abundance, making themselves less vulnerable to risks stemming from a single sector. a well - diversified financial structure increases the resilience of the balance sheets of households and corporations to shocks. and the resilience of the economy as a whole. and when an economy is better able to cope with external shocks, monetary policy will not get distracted from pursuing its primary remit : delivering price stability. 12. the latter is even more relevant for monetary policy in a monetary union. structural differences between national economies imply that the euro area economy is prone to asymmetric shocks. private sector risk - sharing across countries can greatly enhance a smooth transmission of such shocks. this is what capital markets union can accomplish, for an increase in the cross - border holdings of financial instruments will enhance risk - sharing across the euro area, thus improving the functioning of the monetary union. 13. however, capital markets union is no silver bullet. clearly, its introduction does not absolve us from pursuing prudent policies in other policy areas, too. moreover, it will take time before we can reap the full benefits of capital markets union. but there can be no doubt that it will prove an important complement to banking union in enhancing the functioning of our monetary union. 14. at the same time, capital markets union will | 0 |
year and about 3Β½ % in 2023, as consumer spending on services rebounds and business investment and exports show solid growth. putting all this together, governing council concluded that, consistent with our forecast, a rising path for interest rates will be required to moderate spending growth and bring inflation back to target. of course, we discussed when to begin increasing our policy interest rate. our approach to monetary policy throughout the pandemic has been deliberate, and we were mindful that omicron will dampen spending in the first quarter. so we decided to keep our policy rate unchanged last week, remove our commitment to hold it at its floor, and signal that rates can be expected to increase going forward. the timing and pace of those increases will be guided by the bank β s commitment to achieving the 2 % inflation target. this ends our emergency policy setting and signals that interest rates will now be on a rising path. this is a significant shift in monetary policy, and we judged that it is appropriate to move forward in a series of steps. by being clear and deliberate, we are really trying to cut through the noise so that monetary policy is a source of confidence rather than another source of uncertainty. let me say a final word about another important monetary policy tool β our balance sheet. the bank will keep the holdings of government of canada bonds on our balance sheet roughly constant at least until we begin to raise the policy interest rate. at that time, we will consider exiting the reinvestment phase and reducing the size of our balance sheet by allowing maturing government of canada bonds to roll off. as we have done in the past, before implementing changes to our balance sheet management, we will provide more information on our plans. with that, senior deputy governor rogers and i will be happy to take your questions. 2 / 3 bis central bankers'speeches content type ( s ) : press, speeches and appearances, opening statements 3 / 3 bis central bankers'speeches | ##evik β and the leader of social democrats, and governor risto ryti, who were joined later on the day by kyosti kallio, president of the republic at the time. now you may wonder where the acronym β bofit β actually comes from. let me tell you. as i noted in my opening remarks today, its origins can be traced to the bank of finland β s bilateral trade department, which focused on trade with the then soviet union. in finnish, the department β s name was β idankauppa β, and research in this field was β idantutkimus β, so an β i β and a β t β. the next thing was to combine this it with the bof for bank of finland : bofit! while we have held on to the handy bofit acronym all this time β and will certainly keep the brand β the actual full name of the institute has changed over the years. each time this has reflected relevant real - world changes in geopolitics and in the global economy. until last year, the full name was β bank of finland institute for economies in transition β. however, the word β transition β is not necessarily the most appropriate one any longer, for various reasons. so, we settled for the new name, bank of finland institute for emerging economies, which follows the currently valid taxonomy in international political economy and will certainly serve bofit well. 1 / 2 bis central bankers'speeches ladies and gentlemen, for those of you who were able to attend the conference today, i hope you found today β s discussions at the conference enlightening. in my view, one thing in particular is worth noting and let me reiterate that. that is, in spite of all the ongoing global tensions, the return of power politics, and the talk of a new cold war, global policy cooperation among the central banks is very much alive and functioning. indeed, this cooperation was crucial in sparing the world economy from a new recession or even a depression, when the covid - 19 pandemic forced the global economy into lockdowns and slow motion began 20 months ago. the rapid and forceful action by the federal reserve and the european central bank has supported the economy through troubled waters. for instance, the dollar swap lines agreed between the fed, the ecb and four other western central banks preserved dollar funding, which is the fuel of the financial system and thus of the world economy. and | 0 |
should be brought to the attention of our examiners, because even a slight tightening of standards can have a significant effect on credit markets, especially if combined with other supervisory actions, and a tightening at the beginning of a recession could cause it to be deeper or longer than might otherwise be the case. marsh and norman highlight the need to avoid requiring excessive standardization of bank loans. such standardization could interfere with effective relationship lending, and as we β ve seen from the research i β ve already discussed, that relationship lending is a key aspect that makes community banks such valuable assets to small businesses and so important to a thriving economy. the marsh and norman paper stresses that, to the extent the laws allow, we should reduce compliance costs for community banks, such as by simplifying capital rules for smaller banks and relying on market incentives, when feasible. the moore and seamans results from their failure - prediction model contribute to this discussion by demonstrating that simple capital ratios do a good job of identifying those community banks with the greatest probability of failure, so that regulators need not unduly impede the actions of the great majority of community banks that are highly unlikely to fail. meanwhile, the rosenblum and organ paper argues for an alternative approach to addressing β too big to fail β that the authors suggest would benefit community banks by creating a more level playing field. although both the traditional bank regulatory agencies and the consumer financial protection bureau ( cfpb ) are constrained, to some extent, by the language in the doddfrank act, all regulators should aim to ensure that we are not unduly rigid in our actions. indeed, some steps have already been taken with that goal in mind. for example, the federal banking agencies carefully considered the thousands of comments received from community bankers regarding three notices of proposed rulemaking for revisions to the capital framework. in response to these comments, the agencies reduced and simplified many of the proposed changes to the risk - based capital rules that apply to community banks. and the cfpb has shown an openness to input from the industry and from other regulators in crafting its regulations. in our role as a bank supervisor, the federal reserve has been refining our examination programs and recently launched an initiative to review our consumer compliance supervision program for community banks. while federal reserve consumer compliance examiners have traditionally applied a risk - driven approach to supervision, we recognized the need to provide more specific guidance to our examiners. under the updated program, our consumer compliance examiners will base the examination | assess the overall effects of the new rules on the safety and soundness of community banks and to consider whether modifications to rules, or the ways in which we implement them, could achieve our safety and soundness aims with a lesser burden on this class of depository institutions. we, of course, would value any observations and suggestions you have along these lines. my fellow governors and i encourage community bankers to use all the available communication channels to share with us their insights and concerns regarding new and existing regulations. and i promise that their voices will be heard in washington when policy issues that may affect the ability of community banks to thrive are under consideration. while community banks certainly face challenges, i do not see their future as bleak. community banks continue to do a good job of attracting core deposits, and those stable and relatively inexpensive deposits remain the most sought - after liability on bank balance sheets. however, many of the asset classes that traditionally comprised much of community bank portfolios have faced increasing competition in recent decades from firms that operate at the national level. as auto, mortgage, and credit card loans have become increasingly standardized, community banks have had to focus to a greater extent on small business and commercial real estate lending β products where community banks β advantages in forming relationships with local borrowers are still important. these are not cheap or easy loans to make, and the loss of some traditional product lines has threatened the stability of some community banks. it is incumbent on the federal reserve and other regulators to understand bis central bankers β speeches the challenges community banks face and to ensure that our regulatory policies do not exacerbate them. i look forward to hearing from the community bankers who will be participating in the conference β s final session. thank you for your attention and for your participation in this inaugural community banking conference. i would be happy to take some questions from the audience. bis central bankers β speeches | 1 |
over the last year. moreover, low longer - term interest rates increase the market value of financial assets held by banks. this, in turn, results in capital gains that further support bank profitability. this aggregate picture masks some heterogeneity within the banking sector. in particular, depending on their business models, individual banks might be affected in different ways by the low interest rate environment. a second issue is the potential risk of credit or asset bubbles. currently, we do not see compelling evidence at the euro area level of stretched asset valuations. both corporate bond spreads and equity prices appear to be broadly in line with fundamentals. similarly, real estate price growth remains moderate in the area as a whole, although significant cross - country heterogeneity is observable. this assessment is corroborated by the fact that credit growth is still modest, which suggests that asset price developments are not accompanied by increasing leverage. nevertheless, the longer the accommodative measures need to be kept in place, the greater the risks of unwarranted side effects on the financial system become. for instance, asset prices may increase to levels that are not in line with fundamentals because investors might be tempted to take on more risk during times of low yields. such developments are best addressed by enacting appropriate macro and micro prudential policies. while our single monetary policy is geared towards delivering price stability for the euro area as a whole, macroprudential policy measures can be designed to address financial stability risks that may be building up in specific market segments, jurisdictions or individual countries. addressing potential risks at their origin also reduces the probability of contagion throughout the euro area. microprudential policies also help to reduce vulnerabilities in banks. i therefore welcome the european commission β s risk reduction proposals presented last november, which further develop the eu β s legal framework for credit institutions and should increase the resilience of banks. conclusion let me conclude. as i argued last week in ljubljana, and as the crisis has shown, the benefits of the single currency can only be fully reaped if we have policies and institutions at national and european level that ensure it works for everyone. in the run - up to the launch of the euro, there was a strong commitment to advancing along the path of institutional and economic convergence. the crisis showed that this commitment cannot be relaxed. in fact, it remains fully relevant today as we seek to strengthen emu and the | i should like to emphasise how important it is that monetary policy is supported by structural measures to improve the functioning of labour, product and capital markets. this would also enable the economies of the euro area to operate at a higher degree of resource utilisation and thus make better use of the available productive capacity. in particular, it is widely recognised that the euro area faces a problem of high and persistent unemployment, which is largely structural in nature. there is therefore, a pressing need for measures targeted at making labour and product markets work more flexibly. furthermore, flexible labour and product markets are also important to enable national economies to adapt to shocks, particularly those that do not affect the countries of the euro area equally. monetary policy has to maintain price stability in the euro area as a whole, so national labour and product markets need to be flexible enough to adjust to such shocks. although some countries have adopted a wide range of measures, the progress made so far in pursuing structural reforms has been uneven and not yet satisfactory overall. however, there are some encouraging signs. over the past few years, the european community has stepped up its efforts in this field, aiming to co - ordinate and improve member states β policies in the field of employment and labour market reform and to initiate reforms that improve the functioning of goods, services and capital markets. the experience of countries that have undertaken significant reform programmes shows that it takes time to implement structural reforms and even longer for the benefits of these reforms to materialise in full, but that these reforms bring about swift progress in employment creation and the reduction of unemployment. finally, let me stress that while there are challenges ahead, the independence of the eurosystem, together with the clear mandate to maintain price stability in the euro area, provides a solid foundation for the long - term stability of the euro. the first six months of 1999 have seen the successful launch of the new currency. in the coming years the euro will make an important contribution to further economic and financial integration, helping to improve the growth potential of european economies. | 0.5 |
jean - claude trichet : economic diversity on both sides of the atlantic speech by mr jean - claude trichet, president of the european central bank, at the us sciences po foundation annual benefit, new york, 16 june 2011. * * * ladies and gentlemen, it is a great pleasure for me to speak to you here tonight. the past few years have been a testing time for the economies of both the united states and europe. we were faced with the worst financial and economic crisis since the second world war. still today β on both sides of the atlantic β we are dealing with the consequences of the crisis β for economic growth, for employment and for government finances. the crisis has also exposed the united states and europe to a number of asymmetric shocks β in which different parts of our economies have had a wide diversity of experience. some countries within the euro area are the particular focus of market attention at the moment as a result of their sovereign debt issues. some observers have been wondering how diversity can be dealt with in europe β s economic and monetary union ( emu ), what it means for monetary policy and whether the variations in economic conditions are aggravated by product and labour market rigidities. it has often been argued that economic diversity or heterogeneity is very significantly larger in europe than in the united states. we at the european central bank ( ecb ) have been looking closely at the degree of diversity in the two large, continental advanced economies on either side of the atlantic. and some of the findings from this comparison are quite interesting. because they show that economic diversity within the two currency areas is very similar in many ways. the analysis also shows that, in fact, in a large number of respects the two economies are similarly diverse. i would like to share some of the key insights of this analysis with you tonight. i. economic diversity in the euro area and the united states the united states and europe are often compared. this is quite natural. americans and europeans share a common cultural legacy. but our two economies, and i am speaking here of the economy of the euro area on our side, are also similar. both are of similar size, in terms of population and in terms of economic output. both have closely integrated financial and product markets. and both have a single currency. let me begin my comparison with an economic indicator that is particularly close to a central banker β s heart : inflation. in historical terms, overall inflation has been low and stable in both the united | timothy f geithner : us monetary policy in the global financial environment remarks by mr timothy f geithner, president and chief executive officer of the federal reserve bank of new york, at the japan society corporate luncheon, new york city, 9 march 2006. i would like to thank margaret mcconnell of the bank β s research and statistics group for valuable contributions to this speech. * * * we are in the midst of another wave of global economic and financial integration. this movement toward greater openness and the associated rise in capital mobility offers the prospect of substantial economic gains for the u. s. and the global economy. stronger real and financial linkages across nations have the potential to significantly raise the prospects for long - run world growth. the ensuing development of the market sector in emerging market and developing economies offers probably the most powerful means available for raising income growth and living standards in a very large share of the world β s population. these changes, and the complementary advances in technology, offer the prospect of more productive and stable real economies. the increase in the ties between national financial systems, the greater sophistication of financial markets and financial market instruments and the increase in capital flows across borders, allow risks to be shared more broadly and capital to flow to where the returns are highest, also contributing to stronger and more stable future economic growth. this process of integration has, of course, a range of implications for policymakers. many of these implications are positive, for the benefits of integration over time are powerful and compelling for all economies. in important ways, economic integration may have made the principal job of central banks easier, by contributing to productivity growth and reducing some sources of inflation pressure, at least during the transition when a large share of the working age population of the world is being brought into the market. but the process of change in how economies and financial markets interact also complicates the task of central banks. our understanding of the how these changes affect our capacity to forecast economic activity and inflation and our ability to assess how monetary policy affects the economy almost certainly lags the changes underway. in my remarks today, i will talk about some of the implications of these challenges for the conduct of monetary policy. i will focus on two features of what is happening in the world economy and financial markets today that are among the most interesting and consequential of the many questions we face today in thinking about the changes in the world economy and the task of central banking. these are, first, | 0 |
an increased activity in money and capital market, while the interest rate performance was generally oriented by the bank of albania β s monetary policy. under the conditions of excess liquidity, the interest rates had a downward trend during the first half of the year. the interest rates went upward after the tightening signal of monetary conditions in the second half of the year. the interbank market was more active during 2006, thus ensuring a more efficient way of banks β excess liquidity management. the average daily volume of transactions amounted to all 1. 6 billion or all 0. 2 billion more than the previous year average. the interbank market was characterised by narrowing the interest rate spread according to maturities and their positioning close to key interest rate. the average overnight - weekly interest rate spread dropped to 0. 7 percentage point in 2006, from 1. 6 percentage points in 2005. in the first half of 2006, there was a constant decline in treasury bills yields and government bonds, due to low government demand for funds. in the second half of 2006, following the bank of albania β s tightening signals and the increased demand for liquidity in the system, there was a gradual rise of these yields. the yields increased respectively by 0. 83, 0. 45 and 0. 98 percentage point in comparison with the previous year. the government bonds issues has increased compared to the previous year, making the banks β portfolio, as the sole participants in this market, increase to all 37. 0 billion. the share of bonds to total government securities increased 22 percent in 2006 from 12 percent in the previous year. their maturity structure varies from 2 to 5 years. five - year bonds were issued for the first time in november of this year, for the amount of all 6. 3 billion. the demand for them resulted higher than the issued amount. lek deposit interest rates went down during the first half of 2006, and up after the tightening monetary policy signals. the interest rates were raised faster for long - term maturities, reflecting the adjustment of their term to long - term government debt rise. lek credit interest rates went down for all maturities during 2006. the weighted average interest in december 2006 fell to 12. 92 percent, from 13. 50 percent it was in the previous year. though the intermediation cost declined in comparison to the previous year, the spread level is still high. it is influenced by imperfect competition in this market and by higher risk nature of loans extended in all. the interest rates of deposits den | . let me conclude this opening address with some personal anticipation. the banknote and coin, as classical symbols of the medium of exchange, but also as objects that stylishly represent the historical and artistic values of the time, will continue to be part of economic reality for the future generations as well. the albanian people have written poems about money. in his β autobiography of the people in verses β, kadare writes : β holding the horse reins / breastfeeding the son / the gold pouring over the forehead. holding the mule rein / breastfeeding the daughter, the gold pouring over the neck. β the currency museum we are initiating today will not only preserve this historical memory, but it will continue to enrich in the future as well. this is the beginning of the national museum of monetary and numismatic values that the bank of albania will soon offer to the public in its reconstructed headquarters, and present the added historical values of our nation. in conclusion, let me thank the albanian and foreign collectors and the national historical museum for their cooperation in organizing this exhibition. bis central bankers β speeches | 0.5 |
in developing markets these data should be collected with consideration toward improving standardization of many of the aspects of the product, which can help to increase transparency, improve efficiency, and reduce uncertainty. for example, the recovery of the cmo market was aided by improved information and modeling, which increased confidence, especially as products became increasingly standardized. standardization in the terms and in the contractual rights and obligations of purchasers and sellers of the product reduces, but does not eliminate, the need for market participants to engage in extensive efforts to obtain information and reduces the need to verify the information that is provided in the market through due diligence. reduced information costs, in turn, lower transaction costs, thereby facilitating price discovery and enhancing market liquidity. also, standardization can reduce legal risks because litigation over contract terms can result in case law that applies to similar situations, thus reducing uncertainty. the benefits of the development of standardization for enhancing the liquidity of financial markets have a long history. one particularly clear example dates back to the development of exchange - traded commodities futures contracts in the mid - 1800s. the standardization of the futures markets improved the flow of information to market participants, reducing transaction costs and fostering the emergence of liquid markets. 2 in the mid - 1850s, the market for grain did not enjoy the very deep liquidity we see in today's market. at the time, chicago was facing competition from exchanges in minneapolis and st. louis and from some in europe that had created innovative structures to make markets more liquid. to create a liquid market for grain trading, buyers and sellers of grain needed a way of systematically analyzing the different kinds of grain that came into the exchange from different sources. in other words, the market needed a way to " grade the grain. " the market created special silos that combined grain from a number of sources. buyers no longer bought a silo of grain from one source ; a silo, for example, of " winter wheat number 2 " would be graded in a way that allowed buyers to know exactly what they were getting. standardization and related controls reduced traders'information requirements and, thus, their transaction costs. the board of trade established minimum quality standards based on the need for market participants to evaluate the reliability of promises of future deliveries of grain to the buyer. in 1865, the chicago board of trade standardized the delivery dates for the contracts, thus fostering the emergence of liquid markets in which traders could readily hedge the risk of price changes in the commodities and contracts. buyers and sellers | to the long - term prospects, in order to raise the rate of potential economic growth in the euro area, structural reforms in the size and composition of public revenue and expenditure, as well as in product and labour markets, have to continue. advances have been made in times of high real gdp growth, although in many areas, including in labour markets, more could have been achieved. as adjustment needs are likely to become more visible in periods of less vigorous economic growth, policy - makers must now intensify the acceleration of reforms rather than allow efforts to abate. moving forward the reform agenda decisively will enable the euro area economy to respond flexibly in future and thereby underpin our confidence that external shocks can be more easily absorbed than in the past. | 0 |
and supervisors towards greening the financial system and managing climate - related risks. on the adaptation front, our contribution in the design of the national strategy on adaptation to climate change in 2015 has been of major importance in paving the way for adaptation measures. our current participation in the life - ip programme adaptivgreece, reinstates our commitment. a commitment, within the remit of our mandate and alongside central banks around the world, to act as a catalyst in the financial system, to accelerate the transition to an environment - friendly, carbonneutral economy and to enhance, through adaptation, society β s resilience to climate change risks. i hope we have an insightful and fruitful event. thank you. [ 1 ] adapt now : a global call for leadership on climate resilience [ 2 ] contribution by isabel schnabel, member of the executive board of the ecb, to the international monetary fund β s magazine finance and development, august 2021 | yannis stournaras : β european banking supervision : the first eighteen months β welcome address by mr yannis stournaras, governor of the bank of greece, at the presentation of the book by dirk schoenmaker and nicolas veron : β european banking supervision : the first eighteen months β, athens, 14 july 2016. * * * we are really pleased and honored to have you here for the presentation of the study related to the first eighteen months of the european banking supervision. i strongly believe your work brings valuable insight in an era involving new policy regimes that have brought forward profound change to the european banking landscape. i also feel the work presented here today is essential as it provides an excellent overview related to ssm β s operations as well as the response to several challenges. needless to say if we were having this discussion a couple of years ago it would have been hard to anticipate that a major organization of this size would be fully operational at such an early stage and truly competent in dealing with major issues in the euro - area. it is equally important to understand that these challenges have not changed much over the past few years : asset quality deterioration, market segmentation and business model viability are still issues to be tackled by monetary policy and supervisory decision makers in our days. it is worthwhile examining a persistent characteristic during these years, indicative of these considerations : shares of european banks have been trading at a discount to tangible book value, while those of the largest us banks trade at a premium to book value. a comparison of capital - adequacy ratios can no longer explain this difference in valuation multiples, as capital ratios for euro area banks have risen from about 8 percent in 2008 to about 14 percent today. on the contrary, they are indicative of a european banking sector undergoing a transformation that demands a comprehensive and radical adjustment of the core business model of operation. i feel that, eight years after the financial crisis, we are still witnessing a transition phase. banks are definitely stronger than one decade ago, capital adequacy ratios do demonstrate that, but they are still adjusting their business models to a post - crisis world. at the same time, they also have to address legacy issues with problems of non - performing exposures adding to the overall assessment of investment considerations. the euro - area financial crisis, as originated in the end of the previous decade, provided the perhaps most serious challenge to the stability of the european union ; it is now well understood that a | 0.5 |
its rugged geographical terrain and sparsely distributed provinces which stand to benefit considerably from the use of electronic and mobile phone banking. the greatest challenge is to extend these services to the β unbanked β segment of the population who are mostly in the rural areas. in this respect a trade store in the remote part of papua new guinea could be an agent of this service and this could solve the everyday problem of a farmer who has to travel long distances and incurs high costs to get the required financial services in urban towns. role of bank of png section 7 ( c ) of the central banking act 2000 specifies that bank of png has to promote an efficient national and international system. in this regard, the bank welcomes the introduction of electronic payments and mobile banking products, which can assist in reducing transaction cost and contribute to the expansion of financial services in the country, particularly in the rural areas. whilst the bank seeks to encourage the introduction of new innovative instruments for payments, it also needs to ensure that high levels of standards are maintained for safety, security and cost effectiveness with adequate levels of protection for consumers β interests. in other words, the bank wishes to ensure that electronic payments and mobile banking instruments are appropriately regulated to mitigate any potential incidences that might give rise to systemic risk on the entire financial system. it is also important that the other legislations such as the proceeds of crime act ( pca ), information, communication and technology act ( icta ) and independent consumer, competition, commission act are also adhered to provide the necessary safety net for financial transactions. in this regard, the bank of png introduced its statement of intent on electronic payments and mobile banking in may 2010. it outlines the current views and approach of the central bank towards electronic and mobile payment services and sets out the measures which the bank intends to adopt in the future. this forum demonstrates the bank β s intention to work with our development partners in achieving the governments objectives of promoting financial inclusion, access to finance, and reduce the cost of banking that will lead to sustained economic growth. in this regard, the bank of papua new guinea has been actively involved with the development of microfinance industry, the mobile phone banking and payment services, and is now finalizing a project with donor partners to undertake a financial literacy survey and linkage program for the unbanked. these programs will see the introduction of a financial inclusion and literacy policy which will be submitted to the government for adoption, and development of a microfinance regulation | loi m bakani : the benefits of electronic payments and mobile banking products welcome speech by mr loi m bakani, governor of the bank of papua new guinea, at the mobile money workshop, port moresby, 10 august 2010. * * * acknowledgements mr. tilman bruett, regional advisor, pacific financial inclusion program ( pfip ), mr micheal tarazi, senior policy advisor, consultative group to assist the poor, mr waameek noor, alliance for financial inclusion, representatives from the adb, undp and world bank, ladies and gentlemen. introduction it gives me great pleasure to host this mobile money workshop at the bank of papua new guinea. this workshop is a follow up of the workshops in vanuatu, philippines and fiji in which three bank of png representatives together with our colleagues from other pacific islands central banks attended to learn about regulatory processes and operating environments as well as benefits of electronic payments and mobile banking products. the convening of this workshop is part of the programs on β financial inclusion β agreed to by central banks and finance ministers in the pacific, and is also consistent with the government β s increased focus on extending financial services to the rural areas of papua new guinea. this program was supported by the forum economic ministers meeting in raratonga, cook islands in october 2009, which stressed that measures should be taken by respective governments to strengthen advances in financial inclusion in their respective countries to reduce poverty. before discussing the benefits of mobile phone banking in papua new guinea, i wish to outline briefly the geographical and economic setting, financial sector innovations, and the challenges in papua new guinea. geographical and economic setting papua new guinea is characterized by rugged geographical terrain with many parts of the country inaccessible by road and fragmented markets which are separated by oceans and jungles. as a consequence, the provision of government services in the rural areas is scarce, if not it is non existent, and this has led to an absence of some basis services in the rural areas. some of the government services either absent or in very poor and deteriorating conditions in the rural areas include : inadequate infrastructure ; inadequate health services ; and inadequate educational services. these core inadequacies have led to : high infant mortality, pregnancy deaths, and deaths from curable diseases such as malaria ; low literacy and high unemployment levels ; poor accessibility to markets ; and poor accessibility to banking and other financial services. whilst the government has addressed and continues to focus on the structural issues in the previous | 1 |
mr. yam looks at the future of hong kong as a financial services centre for china and the asian region speech by the chief executive of the hong kong monetary authority, mr. joseph yam, jp, to coopers and lybrand financial services conference in hong kong on 28 / 10 / 97. i have been asked to speak on hong kong β s role as a financial services centre for china and the asian region. as you know, many of the economies of the asian region, including of course the mainland of china, have been undergoing a rapid process of financial liberalization. this has brought tremendous benefits to the region, through providing the mechanisms for channelling savings into investments, domestically and internationally, thus promoting growth and development of the region. the process has brought substantial risks to the region as well, as clearly you have witnessed in the past few months when financial turmoil spread in the region. 2. notwithstanding the financial problems now being faced by the region, the balance of opinion is still firmly that financial liberalization is of long - term benefit. the correct response to such problems is clearly, at least for the immediate future, to take the right medicine and implement the necessary economic adjustment programmes, prescribed if necessary by the international monetary fund. indeed, this has very much been the focus of recent attention when one looks at individual economies in this region that have been subject to financial turmoil. but prevention is always better than cure. much attention will also be required, in the fullness of time, to make sure that the financial systems through which financial intermediation takes place are robust so that the benefits of financial liberalization could be maximized and the associated risks could be minimized and prudently managed. 3. as a financial services centre which operates with a highly liberal regime, hong kong has important roles to play in all this. there is not enough time to go into details here on this occasion, so i shall just identify three general areas for your consideration. 4. the first area concerns financial intermediation within individual economies, in other words, the channelling of domestic savings into domestic investments. here hong kong, at this stage at least, largely only plays an advisory role. the less liberalized financial systems in this region are very much dominated by domestic financial institutions, particularly in the banking market. further, domestic politics and a desire to protect domestic financial institutions from undue competition are such that liberalization to admit foreign financial institutions to take part in domestic financial intermediation | investors managing institutional savings to come here and those in need of funds to raise them here. the opportunities in this region, in particular in china, are enormous, and international investors would have a preference to operate in markets in which the rules of the game are transparent and familiar to them, and are of internationally accepted standards. and that means coming to hong kong. 8. the banking market in hong kong is of course a very international one, with a total of 182 licensed banks, 151 of which are incorporated outside hong kong. 81 of the largest 100 banks in the world are licensed in hong kong. collectively they provide a wide range of banking and other financial services, not just for hong kong but for the region as a whole. the banking sector of hong kong is reputed to be amongst the most efficient and profitable in the world. 9. hong kong β s debt market, which has developed quite rapidly in the past eight years, is also playing a significant role in the region. financial intermediation through the debt market is still relatively underdeveloped in the region, but the prospects are good. as the very substantial savings of the region is increasingly institutionalized through the establishment of provident funds and pension funds, the demand for debt securities would grow, perhaps much faster than that for banking and equity instruments. at the same time, the huge investments envisaged for the development of the physical infrastructure in the region will require much debt financing, thus increasing the supply of debt securities. with the first class infrastructure in our newly developed debt market, hong kong is in a very favourable position to take advantage of these good prospects. 10. hong kong β s equity market is of course one of the largest and most liquid in the world, and, notwithstanding recent volatility, is the favourite market for institutional investors and for those wishing to raise funds. one popular area recently is, of course, the use of hong kong β s stock market for raising funds by chinese state - owned enterprises. up to late october, 38 enterprises from the mainland of china have made their initial public offerings in hong kong in the form of the issue of β h β shares. these shares were bought by investors both in hong kong and overseas. it is important to note that when mainland enterprises sought to be listed on the hong kong stock exchange, they are required to comply with all the listing rules and other relevant regulations in hong kong. no favouritism or preferential treatment has been or will be given to mainland companies | 1 |
the economy ", world economic forum 2020. 4 " the economic case for nature ", world bank 2021. 5 https : / / www. eea. europa. eu / publications / water - resources - across - europe - confronting 4 / 4 bis - central bankers'speeches | situation appears even more challenging than for climate change, and this calls for further action. another challenge is the fact that there is no single metric capturing the breath and width of biodiversity. the lack of a single metric has been prompting researchers to focus on specific aspects of nature. bundesbank researchers, for example, have been zooming in on the macroeconomic consequences of water stress events β a highly relevant phenomenon that is getting worse. 5 the bundesbank research focusses on water as a transport medium. waterways normally offer a cost - efficient way to transport goods. droughts, however, can seriously disrupt or even halt shipments and, in return, affect supply chains and hence prices and production. our researchers are now assessing the macroeconomic relevance of low water levels of the rhine, europe's most important waterway. looking at 30 years of data, they show that germany's overall producer price index β which encompasses thousands of product lines β tends to rise in the months with low rhine levels. their preliminary results are statistically and economically significant and hence relevant to inflation watchers. 4 conclusion let me sum up. climate change is a reality β so is the loss of biodiversity! they affect our economies, communities and lives. there will be no stable climate without a healthy natural world. central banks and supervisors hence need to consider both β climate change and biodiversity loss. that said, more research on the transmission channels of climate change and biodiversity loss is required. if central banks do not fully understand the channels through which climate change and biodiversity loss affect the real economy [ and thus their mandate ], they will find it hard to do their job properly. that is a key reason why the bundesbank is dedicating this year's conference to climate change and central banks β and is addressing nature - related risks. we aim to encourage networking and knowledge sharing between the academic community and central banks. it will help us to better understand each other's considerations and concerns and underpin the evidence - based foundations of the eurosystem's monetary policy. so, please make the most of the next two days. and enjoy the spring weather. 3 / 4 bis - central bankers'speeches 1spain bakes in summer - like heat, and worries about what comes next - the new york times ( nytimes. com ) 2 https : / / www. munichre. com / en / risks / natural - disasters. html 3 why the crisis engulfing nature matters for business and | 1 |
abdul rasheed ghaffour : launch of the malaysian insurance institute brand refresh keynote address by mr abdul rasheed ghaffour, governor of the central bank of malaysia ( bank negara malaysia ), at the launch of the malaysian insurance institute brand refresh, kuala lumpur, 18 september 2024. * * * assalamualaikum and a very good morning. distinguished guests, ladies and gentlemen. i am honoured to be here today to witness the rebranding of the malaysian insurance institute to the asian institute of insurance ( aii ). having once served on the board of aii, i am proud to be part of this historic occasion. since its establishment in 1968, close to 10, 000 insurance and takaful professionals have benefitted from internationally recognised training and qualifications delivered by aii. this remarkable feat underscores aii's integral role in the development and modernisation of the insurance and takaful sector not only within malaysia, but also across the region. let me start by briefly highlighting the performance of the insurance and takaful sector. compared to last year, new business premiums in the life insurance and general insurance industry recorded double - digit growth in the first half of 2024 to more than rm20 billion. similarly, the family takaful and general takaful industry also showed strong growth to record total contributions of over rm7 billion. the malaysian economy continued to expand, with the economy growing by 5. 9 % in the second quarter of 2024, supported by resilient domestic demand and recovery in external demand. importantly, our longer - term prospect is equally bright, as investments rebounded strongly in what is being described as a new'investmentupcycle '. from the e & e sector to infrastructure projects to renewable energy, there are clear prospects for private and public investments to be sustained going forward. these quality projects will contribute towards higher productivity, greater economic complexity and, ultimately, high - income jobs for malaysians. nevertheless, to realise our full economic potential, it is important that we remain resilient to shocks and disruptions and continue to put risk management at the top of our agenda. this is where insurance and takaful protection can play its part β one that will foster greater stability and resilience in our economy. ladies and gentlemen, the malaysian insurance and takaful sector is at a pivotal point. we have observed evolving trends and developments, and are also part of the dynamic asian | third, creating a more inclusive insurance ecosystem. by enhancing financial and digital literacy, particularly among the unserved and underserved segments, industry players help ensure all malaysians have access to the protection they need. 4. fourth, as we continue to advance towards deeper regional integration, insurers and takaful operators must remain ever - ready to respond to, and serve the needs of the region, ensuring that their offerings resonate with the diverse communities and contribute to sustainable economic growth of the region. we cannot overlook the importance of public - private collaboration in these areas. the synergy created from such partnerships can strengthen the contributions from the insurers and takaful operators. these could take the form of development of sophisticated risk transfer solutions that can manage large - scale and emerging risks that are beyond the capacity of individual institutions. at bank negara malaysia, we are actively laying the foundation for a competitive, efficient and inclusive protection landscape. this involves driving meaningful initiatives to modernise the existing regulatory framework, making it more principles - based while opening avenues for insurance and takaful operators to innovate and test new solutions. guided by the principles of parity, proportionality and neutrality, we have refreshed our regulatory sandbox and introduced the licensing and regulatory framework for digital insurers and takaful operators. these steps are designed to 3 / 5 bis - central bankers'speeches help the industry deliver strong and meaningful value propositions that support the goals of inclusion, competition and efficiency. to complement this front, we continue to strengthen our regulatory framework to uphold sound financial and business practices. this includes enhancing the policy document on responsibility mapping and raising standards on the professionalism of insurance and takaful agents. i believe that these policies are integral not only to improve the oversight and governance of insurers and takaful operators, but to also inspire public confidence in the integrity of the agency workforce as a trusted and reliable channel for distribution of insurance and takaful products. for many, their first contact with insurance would have been through an agent - initiated meeting. for this reason, agents need to be competent, qualified and act professionally in the best interest of customers at all times. beyond this, we strive to make critical protection solutions more accessible and targeted. as one of the countries with the highest cost of private medical care in southeast asia, an important priority for us at the bank is to improve access to affordable insurance and takaful coverage through the revised policy document | 1 |
contexts but on global markets. what would not be possible in paris or frankfurt could still be allowed in london or new york for instance. they may also be counterproductive since they could deter activities away from our market onto others and they could significantly alter the liquidity of securities aimed by the restriction since foreign investors may shy away from them and turn to other opportunities. let me be clear, though, this does not mean that nothing should be done. on the contrary, i believe that instead of banning and creating incentives to relocate certain activities elsewhere or circumvent those rules, it is preferable to attract and better supervise. this can be done : - first by integrating otc markets into regulated and supervised market infrastructures such as trading platforms, trade repositories and ccps. in the case of sovereign cds this will mean that all cds written on euro area sovereigns should be compensated in a ccp located in the euro area. incidentally, that requires a fair amount of standardization of these single name cds. - second, by enhancing transparency, both ex ante and ex post to improve our understanding of the price discovery mechanism and our knowledge of actual net positions of financial institutions. - finally, by improving risk management by agents active in these markets and ensuring that these practices are compatible with their risk profile. in the case of sovereign cds, the issue is not necessarily with buyers who ultimately carry limited risks but with sellers. in fact we probably need a specific supervision of credit protection sellers. regarding credit rating agencies, the agreement on strengthening the regulatory oversight is becoming a reality with the implementation of the agreed european framework, which will give a pivotal role to the european securities market authority. at the same time there is a need to reduce the dependency on credit rating agencies for regulatory purposes, both in prudential regulation and as eligibility criteria for central bank refinancing. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * let me now conclude briefly. we are still going through very challenging times. the european banking system seemed to have recovered partly thanks to central banks and governments policies supporting the banking sector. this return to profitability should be used to comfort capital positions in those firms, in views of the various risks i have rapidly discussed. recent renewed strains on financial markets especially sovereign markets and the subsequent impact on the banking sector show us that the crisis is not fully behind us and | bis central bankers'speeches | 0 |
how much we can trust these models now that the deviation of inflation from target is larger, owing to the magnitude of the energy price shock. as i have discussed on previous occasions, [ 20 ] one influence on this judgment is that state of the economy. the uk labour market is currently very tight by historical standards, with unemployment close to fifty - year lows. in parallel, the disruption to supply chains i have mentioned above has increased corporate pricing power. after all, for every producer that has difficulty sourcing its inputs, there is supplier one step earlier in the supply chain that faces strong demand and scope to raise prices. both a tight labour market and strong corporate pricing power are likely to increase the possibility that price and wage setting dynamics add to the intrinsic persistence in inflation. another influence on intrinsic inflation persistence is the magnitude of the shock itself. our standard models are linearised around the steady state defined by the inflation target. this approach is robust to small deviations from inflation target. but where deviations are substantial, non - linear effects may kick β and our standard models may underestimate inflation persistence. for example, now that inflation is substantially higher than target owing to the size of the energy price shock, firms may shift from a β time - dependent approach β to pricing behaviour β say raising prices just once a year β to a β state - dependent approach to pricing β say raising prices more frequently as energy costs pass different thresholds. such a change in behaviour will naturally change the dynamics of the inflation response, possibly creating additional intrinsic inflation persistence in ways that are not captured by our existing models. in principle, we can estimate new models incorporating such non - linearities. but, in practice β owing to the success of the inflation targeting regime in the past quarter of a century β we don β t have recent data from a period of high inflation. either we have to re - commission models from an earlier period ( when economic structures were very different on many dimensions ) or we have to rely partly on judgement as a complement to empirical analysis. in framing those judgements, we need to take a view what is driving intrinsic inflation persistence. in other words, we need to understand the structural economic behaviour underlying the propagation of the fundamental shock : we need a β story β to explain what is driving economic outcomes, in particular price and wage behaviour. this brings me back to the energy price shock. the deterioration in the uk β s terms of trade owing to higher energy prices has adverse consequences for uk | term volatility in inflation is inevitable. as a result, monetary policy needs to be forward - looking, with policy actions calibrated to have the appropriate impact on inflation to steer inflation to target as the lags in transmission unwind. by implication, monetary policy should focus on the inflationary impact of a shock at the 12 to 24 month horizon ( or beyond ) : that is to say, on the more persistent implications of the shock. the inflationary implications of a shock that unwind of their own accord within the period defined by the lag in monetary policy transmission β what have been labelled the transitory inflation impact β are, by nature, of less relevance for monetary policy since there is little monetary policy can do to affect them. the case for monetary policy makers to focus on the persistent component of inflation is therefore clear. but implementing this approach in practice inevitably faces a number of practical problems. in real time, identifying the character and magnitude of the underlying shocks is difficult. the propagation of these shocks to consumer price inflation is uncertain and possibly changing through time, as is the transmission mechanism of monetary policy itself. the lags in monetary transmission are not just long and variable, but also not fully predictable. i address these issues in the remainder of this talk. nevertheless, the mpc β s focus on the persistent element of cpi inflation is consistent with both its remit β which emphasises that the inflation target β holds at all times β β and with the medium - term orientation of its policy strategy β which emphasises that the committee seeks to reach the inflation target β sustainably in the medium term. β underlying these two elements of the framework is recognition that the lags in monetary policy transmission ( and the uncertainties surrounding them ) rule out controlling inflation on a short - term month - to - month basis. attempts to control inflation at that higher frequency risk becoming a source of additional volatility, rather than a contribution to containing it. a well - designed policy will focus on the medium term and thereby emphasise the persistent components of inflation that threaten to cause deviations from the inflation target at that horizon. flavours of inflation persistence for data series that exhibit β mean reversion β β in other words series that return to some average level after being shocked away from it β persistence is typically understood in terms of how long it takes to get back to that average level. given the mpc β s mandate, cpi inflation will revert to 2 % over time. but it | 1 |
new, dlt - based form of money. like book money, it can be issued by both private issuers and the central bank. in the latter case, it is referred to as a central bank digital currency β cbdc for short. depending on the user, a distinction can be made between retail cbdc and wholesale cbdc. wholesale cbdc would correspond to a tokenised form of sight deposits held by commercial banks at the central bank. retail cbdc, on the other hand, would be available to the general public ; it would essentially be tokenised cash. examples of private token money are tokenised account balances at commercial banks, and stablecoins. tokenised account balances at commercial banks correspond to account balances in the form of book money, except that these account balances are made available in the form of tokens on a distributed ledger. tokenised account balances allow end users to exploit the potential of dlt. private token money promises parity with book money by allowing tokenised money to be converted into book money at par value at any time. like today β s account balances at commercial banks, tokenised account balances at commercial banks do not necessarily have page 8 / 11 to be backed one - to - one with high - quality liquid assets at all times. stablecoins, as a rule, are collateralised. 6 payment settlement of token transactions another important question is how exactly should transactions be settled. there are two options ( cf. slide 9 ). the first is integrated settlement, where both money and other assets exist in tokenised form on the same dlt infrastructure. this integration allows for the secure and efficient atomic settlement we talked about earlier. technically, such integrated settlement would be possible with both private token money and cbdc. the second is synchronised settlement, where the cash leg of the transaction is not represented on the ledger but is synchronised with it. both private book money and central bank book money can be used as the means of payment here. for transaction settlement, the transfer of tokenised assets on a dlt infrastructure is synchronised with the transfer of money in conventional payment systems. here, too, money and goods can be exchanged simultaneously on a dvp basis, but the challenge lies in coordinating processes across different infrastructures, each with a different underlying technology. traditional financial market infrastructures use the synchronised settlement model for settling securities transactions, for example by coordinating the rt | philipp m hildebrand : economic outlook and monetary policy speech by mr philipp m hildebrand, member of the governing board of the swiss national bank, aperitif marche monetaire, geneva, 17 november 2005. the complete speech can be found in french on the swiss national bank β s website ( www. snb. ch ). * * * the swiss economy has benefited from a favourable international environment. activity has remained strong in the us, whereas it has improved in japan and, more recently, in europe. in switzerland also, the latest indicators point towards stronger growth. exports remain the engine of the recovery but private consumption has also picked up. however, consumer confidence remains fragile in the context of only modestly improving labour market conditions. the snb expects the economic recovery to continue. a sudden adjustment of the us current account imbalance or a further increase of energy prices are predominant risks. from a monetary point of view, the current situation is characterised by different counteracting forces. on the one hand, the economic outlook is positive. on the other hand, some risks put this favourable picture into perspective. furthermore, the increase of energy prices might endanger medium term price stability at a time when monetary conditions remain expansive. last but not least, globalisation continues to hold down the prices of many goods. in this complex environment, it is important that central banks succeed in preserving their most important monetary asset, namely well anchored inflation expectations. in switzerland, this means that as long as the economic recovery remains on track, we should not postpone for too long the process of normalising monetary conditions. otherwise, we would put medium term price stability at risk. 1 / 1 | 0.5 |
goal of current banking policy as has been mentioned elsewhere. apart from the pressure on the sovereign, the capital position of the banks has, as is wellknown, been placed under pressure by actual and especially prospective loan losses. naturally, long - term lenders to banks need assurance as to the adequacy of the banks β capital position and this means not only that the banks β capital has had to be increased β and this has been done on a very large scale over the past two years β but that investors need more and better information about the portfolio of the banks. the lengthy process of determining the nama - related loan losses and the time taken in some cases to meet the central bank β s capital target set out in the prudential capital adequacy review pcar announcement of march 30, 2010, and revised at the end of september, has tended to muddy communication around the capital adequacy of the irish banks. there is market concern about tail risk in the banks [UNK] portfolios. this, together with the heightened market uncertainty prevailing since the end of april, certainly argues for higher percentage capital targets. and, while the external experts have found no fault with the methodology used for this year β s pcar stress test, the next exercise, which takes place early in 2011, will both dig deeper where possible, and take account of evolving economic and loan performance developments and prospects over the year. as already indicated in the past couple of days, it is clear that addressing both the capital ratios and the pcar exercise will be key elements of the programme being negotiated at present with the eu commission and the imf in liaison with the ecb. capital is an indispensable multi - purpose buffer against unexpected risks, though it is costly, especially for dealing with tail risks. there is another dimension along which tail risk can be lowered, thereby further increasing confidence of investors on a less costly basis. this falls into your area as accountants, because i am talking about accounting and other information disclosed to the market. i have already railed elsewhere against the backward - looking loan - loss provisioning practices encouraged by international financial reporting standards ( ifrs ) and still all too pervasive in the reporting by most of the irish banks. i find it unsatisfactory that expected losses in many parts of the portfolio are clearly higher than the provisions already taken, because i fear that this evident and in some cases explicit discrepancy may awaken doubts in the | ##s : the volatile nature of the irish macro - financial system and the history of crises suggests a debt target that should be materially below the appropriate level for a larger, more stable economy. of course, a target for the stock of public debt should be appropriately interpreted in the context of the wider public sector balance sheet, with due allowances for the dynamics of various types of financial and non - financial assets ( including public capital ) and the range of contingent and implicit liabilities. in relation to the cyclical budgetary stance, the pursuit of macro - financial stability requires that the government runs a counter - cyclical fiscal policy. in addition to the mechanical operation of the automatic stabilisers that are embedded in the dynamics of tax revenues and transfers, a government may need to take further discretionary measures to tighten budgetary policy during phases of robust economic growth. the development of a counter - cyclical fiscal strategy should also strike the balance in the allocation of surplus revenues between the proposed rainy day fund and reducing the gross stock of public debt. in addition to ensuring that the fiscal balance is set at a cyclically - appropriate level, the government can use additional tools to mitigate overheating pressures, including the deployment of cyclically - varying expenditure taxes. determining the optimal counter - cyclical fiscal stance may soon be quite relevant for budgetary policy if the economy hits full employment. for instance, the macroeconomic implications of the projected further expansion in public investment during 2019 β 2021 that is signalled in the summer economic statement depend on whether and when the economy attains full employment. while additions to the public capital stock can be expected to raise the productive capacity of the economy and / or assist in the attainment of social objectives over the medium term, the process of public investment acts to raise aggregate demand in the near term. while the demand - raising impact of public investment can be stimulative during periods of economic slack, a surge in public investment under conditions of full employment requires counter - vailing measures to limit the risk of costly over - heating dynamics. alternatively, stretching out a planned public investment programme over a longer horizon can limit pressures on the absorptive capacity of the economy. finally, it is important to note the complementarities between counter - cyclical macroprudential and fiscal policies. 2 in one direction, a robust macroprudential policy framework mitigates creditdriven cyclical shocks, easing the burden on fiscal policy. in the other direction, counter - | 0.5 |
βΉ 427 billion which amounted to only 16. 43 % of the total amount involved. looking at the huge task on hand with as many as 66, 971 cases involving βΉ 1, 415 billion pending before them as on march 31, 2014, i would like to say that reserve bank has a lot of expectations from the debt recovery tribunals. banks approach drts as a last recourse, so cases before drts need to be dealt with more strictly. 27. we are very much concerned that the sanctity of debt contracts has been continuously eroded in india, especially by large borrowers. the system protected large borrowers and their right to stay in control, rendering bankers helpless vis - a - vis large and influential promoters. as explained earlier, we are separately dealing with this issue through the treatment towards wilful defaulters and non - cooperative borrowers. 28. since pendency of large number of cases in drts is one of the prime issues that needs to be addressed, i would like to draw your attention to some of our other concerns and need for better efficiency of drts : β’ it is understood that in a number of cases, drt grants time to borrower / applicant to make payment and subject to payment, bank β s sarfaesi action is stayed and matter lingers on for a long period. β’ though section 17 ( 5 ) provides that an application under section 17 shall be disposed of within 60 days of date of application ( extendable up to 4 months ) the said time frame is not being strictly followed in practice. there is long delay in passing orders by the drts. β’ the officials of drts / drats should be given proper training so that they appreciate the very purpose and adjudicate the cases in a way to meet the purpose for which these tribunals are established. β’ as per the rddbfi act, though the cases are to be disposed of within six months, in some cases, the next date itself is given after six months to one year. β’ when an appeal is filed before drat against the order of drt, though there is provision for stipulation of deposit of 75 % of the amount of debt due as a precondition for admission of appeal, most drats are exercising their discretion and bis central bankers β speeches do not insist for deposit of any amount despite the specific pleas made by the bank in this regard. β’ in many drts, even frivolous applications filed by the | our set - up, with a clear medium - term focus, the eurosystem does not need or have to react mechanically to short - term deviations of monetary growth from the reference value. instead, monetary developments, i. e. both the developments of the components of m3 and of its counterparts, are analysed very carefully in order to examine and extract their information content for future inflation. * * * part 2 : the achievements of the eurosystem β s monetary policy what preliminary assessment can we make of the first six years of the single monetary policy? i would like to underline the following points, considering successively price stability, macroeconomic stability and convergence, monetary stance and predictability. 1. the achievement of the overriding policy objective : price stability confronted with a series of adverse exogenous supply shocks ( affecting in particular oil prices, food products and services prices ) leading to a rise in the hicp of above 2 % in year - on - year terms from 2000 to 2002, the level around which the hicp has hovered since, the eurosystem has been able to achieve its main objective : since the eurosystem became responsible for monetary policy in the euro area, hicp inflation has averaged 2 %, which is near to the β close to but below 2 % β at which we aim over the medium term. let me remind you that hicp inflation was around 4 % in the 1980 β s and about 9 % in the 1970s [ see figure 1 ]. until recently, the single monetary policy also succeeded in stabilising and anchoring medium to longterm inflation expectations at around 1. 8 % to 1. 9 %, despite all the above mentioned shocks. that is to say, once again, at a level close to, but below, 2 % in accordance with our definition of price stability β whether one takes the inflation expectations derived from surveys ( for example, consensus forecast, or the ecb survey of professional forecasters β [ see figure 2 ] ) or those drawn from market data, notably index - linked government bonds. recently, the awareness of a durable higher cost of oil has pushed expectations slightly above 2 %. the last december key ecb interest rate β s hike has however brought these market expectations back to 2 % that is to say in line with our definition of price stability over the medium term. 2. macroeconomic stability and convergence price stability has not come at the expense of higher unemployment. moreover, there are no visible signs | 0 |
preparation for his own role in history. almost as important were the hundreds of fed economists, lawyers, bank supervisors, and market specialists who worked around the clock to craft creative solutions to every financial market challenge. i will never know how many hours it took to develop and implement all of the programs they presented in a series of emergency board meetings. i do know that they responded to every question and strived to mitigate every risk that was identified. and while the strain was evident in their tired eyes, the collegiality and intellectual rigor that i have come to know as a hallmark of the federal reserve never wavered. finally, for me, was the knowledge of all those small businesses that depended on credit to run their businesses. the fed provided credit to banks large and small. in addition, through other programs, we supported securities made up of loans to households and businesses, including loans for business equipment, for inventory, for insurance payments, for business credit cards, and for loans guaranteed by the small business administration. to be sure, lenders reacted to uncertain economic conditions and weaker borrowers by tightening credit standards. but, with liquidity provided by the federal reserve, loans to borrowers who met the tighter standards continued to flow. the u. s. economy continues to face challenges, but i am convinced that the forceful actions of the federal reserve in 2008 helped prevent what might have been a far worse scenario. the federal reserve was originally created to guard against financial panics. but in modern times, many people think of its primary role as responsibility for monetary policy. the congress has given the federal reserve two objectives, known as our dual mandate, to foster maximum employment and price stability. in its conduct of monetary policy, the fed bis central bankers β speeches influences the level of output and the level of prices in the economy through changes to interest rates and credit conditions. during more normal times, the federal reserve β s policymaking is focused on short - term interest rates, our main tool for steering the economy. the fed influences the costs of borrowing to buy everything from cars to condos to computers by controlling short - term interest rates. interest rates can be lowered to stimulate borrowing and spending when demand is otherwise weak, or raised to dampen demand and curb inflation. before i arrived in august 2008, the federal reserve had already responded to the weakening in the economy by aggressively lowering its federal funds rate target from 5 β 1 / 4 percent in september 2007 to 2 percent. from a historical | ##ing, to be surrounded by so much brainpower and intellectual curiosity. but everyone approaches the work with a serious sense of purpose and collegiality. it is hard for me to describe what it is like to work there, but if you ever get the chance to do so, i would highly recommend it. see alberto alesina ( 1988 ), β macroeconomics and politics, β in stanley fischer, ed., nber macroeconomics annual, vol. 3 ( cambridge, mass. : mit press, september ), pp. 13 β 52 ; vittorio grilli, donato masciandaro, and guido tabellini ( 1991 ), β political and monetary institutions and public finance policies in the industrial countries, β economic policy, vol. 6 ( 13 ), pp. 342 β 92 ; alex cukierman ( 1992 ), central bank strategies, credibility, and independence : theory and evidence ( cambridge, mass. : mit press ) ; alex cukierman, steven b. webb, and bilin neyapti ( 1992 ), β measuring the independence of central banks and its effect on policy outcomes, β world bank economic review, vol. 6 ( 3 ), 353 β 98 ; alberto alesina and lawrence h. summers ( 1993 ), β central bank independence and macroeconomic performance : some comparative evidence, β journal of money, credit and banking, vol. 25 ( may ), pp. 151 β 62 ; alex cukierman, pantelis kalaitzidakis, lawrence h. summers, and steven b. webb ( 1993 ), β central bank independence, growth, investment, and real rates, β carnegie - rochester conference series on public policy, vol. 39 ( 1 ), pp. 95 β 140 ; and alex cukierman, geoffrey p. miller, and bilin neyapti ( 2002 ), β central bank reform, liberalization and inflation in transition economies β an international perspective, β journal of monetary economics, vol. 49 ( 2 ), 237 β 64. each federal reserve bank β s class b and class c directors appoint a president. see section 4 ( 4 ), subparagraph β fifth, β of the federal reserve act, as amended by section 1107 of pub. l. no. 111 β 203 ( 2010 ). for a fuller discussion of the responsibilities of the board of governors and the federal reserve banks, see the federal reserve system : purposes & functions | 1 |
improving access to financial services. within a short span of three years, afi has been instrumental in galvanising commitments from member countries to enhance financial inclusion policies, resulting in 20 million of the unbanked to gain access to financial services. yet we wish to achieve more than just access. the nature and quality of the financial services and the nature of the participation in the financial system is equally important. the poor are confronted with challenging circumstances, such as low and irregular income that makes monthly debtservicing difficult, or living in remote rural areas which have no financial services access points, or long working hours that prevent visiting bank branches within the conventional operational hours. as a result, many of the marginalised may have financial services made available to them, but it may not be at the needed conditions or quality that can provide the real promise of upward economic mobility. access, therefore needs to be complemented by the quality of the financial services. of importance is the innovation and design of consumer products which have characteristics bis central bankers β speeches that are linked to the goal of welfare improvements for the underserved. there is a greater need for features that are responsive to the constraints faced by those that have been marginalised. flexible microfinance for the agricultural sector for example, addresses the cash flow mismatches between fixed repayments to banks and the irregular income flow of the farmers due to the seasonality of crops. a further innovation has also involved the creation of platforms for matching savers with those that need financing. in malaysia, the introduction of investment accounts as opposed to deposit accounts in the islamic financial system is an example, where savings are matched with the funding required by small and medium scale enterprises for financing of specific projects β has resulted in an investment intermediation function by the banking institutions. in addition to innovation, technology is also an agent to deliver quality financial services. technology can lower cost, increase outreach and expand the range of financial services. the kenyan mobile payment services, m - pesa, leverages on mobile technology to provide the poor with high frequency, small value transactions and affordable financial services. priority 2 : building on the sasana accord for measurable goals the second area relates to the identification and adoption of the measureable and timebound targets as included under the sasana accord. clear and measurable outcomes provide a shared understanding that will align the different stakeholders towards the common goal of delivering results to the financially excluded segments of society. a key aspect of realising the sasana accord is | only be resolved when different stakeholders, each with different spans of authority and oversight, work together in a coordinated and cohesive manner. it will need to involve the cumulative efforts of the government, regulators, market agents, the financial industry and the consumers. at the national level, improving inter - agency cooperation is vital to ensure that the respective strategies are aligned to achieving the common goals of financial inclusion. this may call for institutional arrangements to bring authorities together to secure a joint commitment towards clearly defined and measurable financial inclusion goals, with well - defined lines of accountability. brazil, mexico, tanzania, indonesia and fiji have also established national bis central bankers β speeches co - ordination frameworks, which offer afi members diverse examples of such national collaboration. while we focus on financial inclusion initiatives at the national level, equally important is that adequate attention be accorded at the global level. in this regard, afi assumes a unique role because it is the only global network that comprises of practising financial inclusion policy makers. therefore, afi has an important role in leading the way in gathering examples of best practices based on specific country experience, in the area of financial inclusion and its relation to financial stability and consumer protection objectives. afi is therefore also a key platform that brings together policymakers, financial service providers, telecommunication and technology industries to have greater awareness on the trends that can support the advancement of financial inclusion. additionally, afi β s engagement with international organisations is also key given the implications of their initiatives on financial inclusion. conclusion let me conclude. there is now greater appreciation that the level and quality of financial inclusion will have a significant impact on the prospect for balanced and sustainable growth. afi has demonstrated its important role in leading the way for greater financial inclusion in the world economy. afi is unique because its membership covers practitioners from developing and emerging economies, who can share approaches that can be customised to a respective country β s unique circumstances. we begin this two day global policy forum, with our vision firmly focussed on our long - term goal of universal access to quality financial services which will provide our communities with the chance to change. this global forum and afi provides an unparalleled opportunity that brings together strategy, knowledge, expertise and best practices from across the afi membership. this provides us with the real potential to make a difference in financial and economic inclusion and thus with the potential to transform lives. thank you. bis central bankers β speeches | 1 |
in the monetary policy arena. in line with many central banks, we have a mandate in statute β the bank of england act β to conduct monetary policy. the government sets a target inflation level which we are required to meet. importantly we β and you β can see how we are performing month by month in relation to our mandate. we also have a tested analytical framework. we model possible future outcomes and we look at the balance of risks around a central view. we can rely on experience and judgement to make regular policy decisions. and we can alter our policy decision on interest rates each month as the data and circumstances evolve. ii ) financial stability and why it is different if financial instability occurs, costs to society may be high. damage to our reputation could be potentially high too. yet judging the optimal amount of resources to devote to prevent crises is problematic. what degree of resilience do we want? and what should we be prepared to pay for insurance? this is a familiar problem in public policy β what is the optimal size of the fire brigade or army? the challenges we face in seeking to maintain financial stability are very different to those in the monetary policy arena. β’ firstly there is neither a clear over - arching analytical framework nor a commonly agreed set of indicators of incipient financial instabilities. β’ secondly the task is made harder because we are dealing with tail events β low probability scenarios β rather than central projections. it is about aberrant rather than normal behaviour and situations : less predictable and harder to model. β’ thirdly there are a number of different potential policy instruments that can affect the financial environment in various, sometimes conflicting, ways. and by no means are all in the hands of central banks β’ fourthly national financial stability responsibilities are often shared. in the uk we work with her majesty β s treasury ( hmt ) and the financial services authority ( fsa ). for cross - border activities we operate alongside overseas central banks and supervisors. β’ fifthly although the roles of the uk authorities are outlined and published in a memorandum of understanding ( mou ), this gives little guidance as to what financial stability is or a clearly identifiable target. β’ and lastly it is harder to get motivational feedback β unless in unwelcome form should a crisis occur. 3. defining our role in financial stability oversight these factors pose a number of challenges in defining our role in financial stability oversight β what activities should we as a central bank undertake? to make these decisions, firstly we should | the euro area was more modest, with the policy interest rate falling from 4. 75 % to 2 % over the same period. since mid - 2004 the fed has raised its policy rate by a cumulative 375 basis points, while the ecb started to raise rates only in late 2005 and since then has increased them by 50 basis points. against this background, i would like to address the following questions : how can these differences in the pattern of policy rates in the two currency areas be explained? do they reflect differences in the monetary policy strategies adopted by the two central banks or deeper differences in the structure and dynamism of the two economies? the observation that the policy rate has been much less volatile in the euro area than in the us can certainly not provide reliable information on the strategy of the two central banks, nor can it prove that the monetary policy of the ecb has been too gradual, or not sufficiently active. to answer these questions, it is crucial to assess policy moves against the prevailing state and structure of the respective economy. some early research undertaken by ecb watchers already addressed this topic. 1 some more recent work undertaken by ecb staff has provided further insights that i believe are worth discussing today. the common theme of this work is that the causes of the different behaviour of policy rates in the euro area and the us over the last years can mainly be found in the following two factors. first, shocks of a different nature and pattern have hit the two economies, generating an unfavourable trade - off between inflation and output in the euro area, while the us economy was supported by rather strong productivity improvements. second, the structure of the two economies is very different β mainly with respect to the degree of market flexibility β producing different effects in the two areas in response to similar shocks, with specific implications for monetary policy. this interpretation does not deny the presence of some differences in the policy framework adopted in the two currency areas. for instance, the ecb β s primary objective of price stability and its mediumterm orientation imply scepticism regarding the appropriateness and efficacy of fine - tuning policies. in addition, the importance of monetary analysis in providing early warnings of price instability in the future, the strength of the central bank β s reaction to inflation expectations and the response of the yield curve to policy changes would indeed normally translate into differences in the setting of the policy instrument. however, these factors seem to be of minor importance when dealing with the specific criticism that has been voiced | 0 |
option - implied volatility gbp / usd 3m option volatility gbp / usd 2y option volatility 3m s & p variance swap rate 2y s & p variance swap rate 3m10y normalised imlied vol on usd ir ( lhs ) 2y10y normalised imlied vol on usd ir ( lhs ) basis points per cent jan 10 jul 10 jan 11 jul 11 jan 12 jul 12 jan 13 jul 13 jan 14 jul 14 jan 15 sources : barclays live, bloomberg. implied volatilities are β normalised β by the level of interest rates, so the data show the volatility of absolute ( rather than percentage ) changes in swap rates. bis central bankers β speeches chart 3 impact of asset price news on volatility in uk equity and debt markets conditional daily volatility ( % ) pre - crisis credit ( jan 2001 - jun 2007 ) post - crisis credit ( april 2009 - jan 2015 ) 1. 8 pre - crisis equity ( jan 2001 - jun 2007 ) 1. 6 post - crisis equity ( april 2009 - jan 2015 ) 1. 4 1. 2 1. 0 0. 8 0. 6 0. 4 0. 2 - 3 % - 2 % - 1 % 0 % 1 % unexpected daily change in price ( per cent ) 2 % 0. 0 sources : bank of american merrill lynch, thomson reuters datastream and bank calculations. bis central bankers β speeches chart 4 negative rates in european government bond markets positive negative switzerland - 0. 89 - 0. 99 - 0. 81 maturity ( years ) - 0. 61 - 0. 47 - 0. 38 germany - 0. 27 - 0. 25 - 0. 24 - 0. 21 - 0. 16 - 0. 09 - 0. 02 0. 05 0. 13 0. 20 finland - 0. 20 - 0. 18 - 0. 15 - 0. 11 - 0. 08 - 0. 06 - 0. 03 0. 09 0. 14 0. 22 - 0. 18 - 0. 15 - 0. 13 - 0. 07 - 0. 05 0. 00 0. 07 0. 17 0. 26 - 0. 31 - 0. 04 netherlands - 0. 32 - 0. 29 - 0. 24 - 0. 11 denmark - 0. 80 - 0. 62 austria - 0. 16 - 0. 17 - 0. 17 - 0. 12 - 0. 06 - | management, not ordinary people with deposits in banks. and finally it means making sure that if you take out an insurance contract, it will pay out if whatever you are insuring against happens. the work that the bank does in all of these areas can ultimately be summed up very simply : we maintain confidence in money. this confidence is not, though an end in itself ; it is a means to an end. confidence in money provides the foundations for prosperity. without it, companies would struggle to provide the goods and services we all use every day ; you would face difficulties in knowing how to invest for your futures, be it financing studies or buying a house. maintaining this confidence is the best contribution the bank of england can make to the good of the people of the united kingdom. all speeches are available online at www. bankofengland. co. uk / speeches building public understanding of what the bank does β by engaging with people directly β is essential to our work. that β s because our policies work better if our objectives are clear and the british people have confidence that we will do the right thing whatever happens. improving understanding of the bank β s role is also part of being accountable to the people we serve. the bank is at the heart of the uk economy. the responsibilities parliament has given us are wide - ranging and the decisions we take affect everyone in the country. people deserve the information and tools to judge how well we are doing our job and to know that we are listening to your views. today β s event is also part of a wider effort by the bank to move beyond traditional modes of communication to speak more directly to the people we serve. while three hundred thousand people read the financial times, there are 30 million facebook users in the uk. and while everyone knows it is good to talk, the bank is learning how it can also be good to tweet β our twitter account has 227, 000 followers, though that still leaves us a little behind wayne rooney β s 16. 7 million. we are revamping our publications to make them more accessible, using icons and graphics to convey our messages on webpages designed for mobiles and tablets, rather than relying only on pages of words on paper. you can take a look at our first example of this β the november inflation report β online, at www. inflationreport. co. uk. this afternoon β s event will showcase a selection of the materials we are planning to run alongside these changes in our communications | 0.5 |
banking supervision. 1 / 3 bis - central bankers'speeches let me now turn to our immediate challenge, that of inflation. while still in the process of recovering from the pandemic, we were hit by an unusual confluence of supply shocks. we were hit, for example, by a spike in global prices of fertilizer β so not just food prices and not just oil prices.. this was due, of course, to the sanctions on [ shipping from ] belarus and russia. in response, we tightened monetary policy and we tightened aggressively, the way an inflation - targetting central bank would. we worried about expectations, and we worried about second - round effects. today, we're beginning to see tantalizing fruits of our efforts. headline inflation seems to have peaked and looks to be on its way to our target range of 2 to 4 percent. our monetary board, our deputy governor francis dakila and his team are to be thanked for this. nonetheless, it's too soon to declare victory. core inflation remains high. there are still upside risks to inflation β for example, risks in the form of el nino and further supply shocks. we will wait and see. we will analyze the data as they arrive, and that analysis will decide monetary policy down the road. the next challenge is the payments system. for the sake of efficiency, we seek the magic of digitalization. we want this magic to also help with financial inclusion. we're making some progress. at last count, 42 percent of retail payments were in digital form. this is up from just 1 percent ten years ago. that proportion should hit our target of 50 percent this year. at this stage, we've given licenses to 258 digital payment providers. over time, we expect competition and network effects to result in a system where the most innovative, efficient and responsible providers truly respond to the needs of customers. this digitalization has been a pathway to financial inclusion. more filipinos are now part of the formal financial system. in our financial inclusion survey in 2021, 56 percent of [ adults ] in the country had a bank account, a significant increase from just 23 percent in 2017. we're confident we will reach our target of 70 percent by this year. we're not stopping here. these accounts should provide the opportunity for people to build savings buffers, invest in their future and more actively participate in the digital economy. programs like paleng - qr help digitalize crucial value | eli m remolona : navigating the road ahead - looking back to look forward speech by mr eli m remolona jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the 30th anniversary reception for the banking community, manila, 28 july 2023. * * * former central bank governors, members of the monetary board, friends from the banking sector, the diplomatic corps and fellow workers in government : magandang gabi po ; good evening! tonight, i am honored to be standing here before all of you. thank you for joining us tonight. let me begin by expressing my gratitude to my predecessor and good friend, governor philip medalla. while he's not able to join us tonight, i want to express my thanks to him for his dedication to upholding the integrity of our monetary system and for resolutely keeping the economy to its course towards price stability. let me now tell you about an interview i had two weeks ago with kathleen hays, bloomberg's dean of economic reporting. she asked me, " governor, when you're not thinking about monetary policy, what do you think about? " the right answer, of course, was, " when i'm not thinking about monetary policy, i think about my lovely wife! " but being the central banking nerd that i am, i said instead, " when i'm not thinking about monetary policy, i think about banking supervision and the payments system! " so you'll forgive me for saying a few words about each of those three things : monetary policy, banking supervision and the payments system. let me start with how our economy recovered from the crisis of the pandemic. as we all know, it was a surprisingly strong recovery. coming out of a crisis, it was a recovery like no other. what was the difference this time? i'd say it was the banking system. our banks maintained more than adequate levels of capital and remained flush with liquidity. this time, there was no need to repair balance sheets. i have said this before, and i'll say it again. unlike in previous crises, this time our banks were part of the solution rather than part of the problem. let me pause at this point to thank our friends in the banking sector. and let's not forget to also thank deputy governor chuchi fonacier for her persistence and that of her team in | 1 |
modal outlook appears to have softened a bit, and risks appear more weighted to the downside than the upside, the best way to safeguard the gains we have made on jobs and inflation is to navigate cautiously on rates. risk management in an environment of a low long - run neutral rate and an attenuated relationship between resource utilization and overall inflation supports this approach. watchful waiting will allow us to gather more information about domestic momentum and foreign growth as well as some of the policy risks weighing on sentiment. balance sheet normalization let me turn now to the second tool used by the federal reserve in recent years - asset purchases. recall that, after reducing the federal funds rate to its effective lower bound of zero in the 2008 - 09 recession, the fomc sought a mechanism for providing additional stimulus in order to achieve maximum employment and target inflation. 13 the federal reserve purchased longer - term treasury securities in an effort to push down longer - term interest rates to support economic activity, an approach sometimes referred to as quantitative easing. it also purchased agency mortgage - backed securities for the same reason, as well as to provide support to the housing sector, which was at the heart of the crisis. although the empirical estimates vary, most conclude that the asset purchase programs were successful in supporting the recovery. 14 once recoveries become well established, the federal reserve moves its policy settings to more normal levels. our current extended recovery is no exception : the federal reserve first started moving the federal funds rate to more normal values once some foreign central banks have reduced their short - term policy rates below zero. see ball and others ( 2016 ) for a discussion of the advantages and disadvantages of such a policy. see the evidence cited in ball and others ( 2016 ). - 10 the expansion was well established, and then it started normalizing the balance sheet once normalization of the federal funds rate was well under way. of course, the benchmark for normalization has changed since before the financial crisis. demand has grown for the fed β s liabilities from a variety of sources. the demand for u. s. currency has grown notably relative to nominal gdp, the treasury department now holds large balances in its account at the fed as an important part of its cash management, and foreign central banks hold larger deposits than in the past. in addition, the demand from commercial banks for deposits at the fed - - that is, β reserves β - appears to have increased substantially. spurred by new liquidity regulations and their own internal | mohammed laksaci : impact of the oil price decline on the algerian banking system keynote address by mr mohammed laksaci, governor of the bank of algeria, at a meeting with bank executives, algiers, 26 april 2016. * * * i would first like to point out that in terms of external shocks, the algerian economy, which is closely linked to hydrocarbon sector resources, has particularly suffered from the shock inherent to the sharp and sustained fall in world oil prices. it is therefore from this perspective that i start my presentation. i shall talk first of the macroeconomic implications of this external shock, before outlining its impacts from the perspective of financial stability, in light of the new challenges for the banking system in the financing of non - hydrocarbon growth. 1. macro - economic stance economic and financial performance during 2001 - 2008, particularly the significantly improved external financial position and a substantial accumulation of budget savings, enabled the algerian economy to demonstrate resilience in the face of the severe external shock in 2009 inherent to the intensification of the international economic and financial crisis. following the strengthening of the external financial position over 2010 - 2013, algeria continued to preserve monetary and financial stability during 2014, in a context of persistent fiscal deficit and a return to a balance of payments deficit. the impact of the oil price decline on the algerian economy can be examined through the main recent economic and financial developments. first, following the sharp decline of hydrocarbon prices in 2014, the large contraction of hydrocarbon exports in 2015, in a context of still high imports after the significant increase of imports of goods over the period 2007 - 2014, resulted in a high external current account deficit ( - 16. 4 percent of gdp ). with hydrocarbons remaining algeria β s main export, the external shock resulted in a significant contraction in international reserves, from us $ billion 179 in 2014 to us $ billion 144 in 2015. nonetheless, this level remains comfortable, representing 27 months of imports of goods and services, in a situation of historically low medium and long term external debt ( 1. 8 percent of gdp ) and the absence of any external indebtedness of the hydrocarbon sector for more than a decade. second, the exchange rate of the dinar vis - a - vis the us dollar depreciated by 20 percent in 2015, while it depreciated by only 3. 8 percent vis - a - vis the euro. in view of the large depreciation of algeria β s main | 0 |
recovery in the rest of the euro area in the near term. [ slide 23 ] financial stability risks and macroprudential policy financial stability risks and macroprudential policy while the current monetary policy measures are necessary for the ecb to achieve its primary objective of maintaining price stability and to ensure that inflation does not remain too low for too long, the current monetary policy stance may also have unintended sideeffects on the financial system. a key concern is that a prolonged period of very accommodative monetary policy could result in a misallocation of resources that would ultimately undermine financial stability. [ slide 24 ] the mandate of the ecb the eurosystem β s primary objective is to maintain price stability, and monetary policy decisions are based on the assessment of the risks to price stability in the euro area as a whole. higher risks to financial stability should be addressed primarily through domestic socalled macroprudential policy in the different member countries. in a single currency area, macroprudential policies are particularly important for dealing with sectoral and regional risks that cannot be accounted for by the single monetary policy. macroprudential policy therefore provides a much needed instrument for mitigating financial stability risks and thereby supporting the price - stability - focused monetary policy. [ slide 25 ] the ecb β s role in the new supervisory architecture from the perspective of financial stability, the euro area is now in a substantially better position than a few years ago. we are now operating in a new regulatory and supervisory environment. in november last year, the ecb took over responsibility for supervising banks in the countries belonging to the banking union. it is less well - known that, at the same time, the ecb became the ultimate macroprudential decision - maker in the union. [ slide 26 ] the ecb reinforces but cannot substitute β¦ more specifically, the ecb can apply higher requirements for specific macroprudential tools than proposed by the designated national macroprudential authorities, if it deems that the suggested national measures are inadequate. in contrast to the single monetary policy, macroprudential policy in the banking union is a joint responsibility between different authorities. the main responsibility in macroprudential policy lies with national authorities. they are in the best position to detect country - specific systemic risks and take appropriate measures to address them. bis central bankers β speeches the role of the ecb in macroprudential policy is to enhance national policies and reduce the | david dodge : central bank website of the year remarks by david dodge, governor of the bank of canada, at the website awards event, central banking publications and lombard street research, london, england, 12 march 2003. * * * it is very gratifying to be here tonight to accept, on behalf of the bank of canada, this award for " central bank website of the year. " it has become almost a cliche to point out that " internet time moves faster than normal time. " but i'm reminded of that observation as i accept this award - an award for achievement in a medium that barely existed ten years ago. for that matter, it was only eight years ago - in 1995 - that the banco de mexico, the bank of canada, and a few other central banks launched their first web sites. back then, it would have been hard to imagine just how quickly the web would evolve into the hugely influential medium it is today. it would also have been hard to imagine back then just how far central banks would move towards greater openness and transparency in their day - to - day operations. so it seems significant that these two trends - the push towards more open, transparent communications, and the unexpectedly rapid ascendance of the web - should have coincided. at the bank of canada, our web site has been an integral part of our communications strategy over the past eight years. the web offers us a cost - effective global distribution channel for vast amounts of data, analysis, and commentary pertaining to our main functions - that is, the conduct of monetary policy, the promotion of financial stability, the supply of bank notes, and the provision of central banking services to the federal government. our site also offers a growing amount of purely instructive material. through the use of glossaries, " backgrounders ", and other information, we have made a concerted effort to ensure that every document we publish provides enough context to help non - specialists read and understand it. this is no small challenge, given the admittedly dry and complex nature of much of the material a central bank deals with. we have also developed " inflation and investment calculators " so that our message about the benefits of low inflation is clear to the public. and we use a graphic presentation to explain the transmission of monetary policy. as well, we are currently developing a web - based simulation game, designed to explain the intricacies of monetary policy to high school and undergraduate students. based on our efforts to | 0 |
. we will cross that bridge when we come to it or, as my mother used to say : if the skies fall down, all the birds are dead. interest rates in the united states are higher, but you have to realise that the united states is in a totally different phase of the cycle than we are and whether that will in any way induce capital flows to move differently from what they are moving today remains to be seen. and the third part of your question was, have we in any way made the conclusion that the banks, when the rate was 3 %, were not giving in enough to the demand for credit. no, on the contrary, as you know, the development of credit to the private sector has been quite buoyant over the past few months, although its bias of increase has come down somewhat. the last time i was here, i reported that credit to the private sector was growing at an annual rate of nearly 10 % ; the latest figure we have now is that it has come down to a rate of slightly over 9 %. but then, when you analyse that credit to the private sector and its development, it is also very clear that those high rates of growth are particularly present in the smaller countries of europe and not too much in the larger countries, although there is quite a difference between the various countries. so, in itself, that rate of growth of credit, which is already moderating somewhat, is not a cause of inflationary concern for us, and neither is the move today any inducement to the banks to be more forthcoming in giving credit. they are already quite forthcoming. question ( translation ) : mr. duisenberg, the situation in europe at the moment, especially this latest interest rate move by the ecb, now reminds me somewhat of japan. you reduce interest rates time and again, yet on the other hand, no progress is being made in the areas of politics and restructuring in europe. in december, although i cannot quote you directly, you stated, much in the same way as today, that following the cut in interest rates the situation with regard to interest rates in europe would be settled. it is now the beginning of april and we see obviously a further cut in interest rates. is there not the danger, mr. duisenberg, that this process is about to begin again and that, after a certain period, owing to a lack of willingness in europe and in germany, in particular, to bring about structural reforms, the | it may be worth noting that goods prices may continue to move upwards temporarily, in particular as oil prices increased strongly from mid - february onwards. such movements reflect the higher volatility of price changes of some categories of goods, in particular imported oil and other commodities. the interest rate decision has been taken in a forward - looking perspective, focusing on the mediumterm trends in inflation and the compatibility of these trends with the eurosystem β s definition of price stability. in the view of the governing council, monetary growth is - at the current juncture - not a risk for future price stability. the decision taken today keeps monetary policy on a longer - term stability - oriented course and, by doing so, contributes to creating an economic environment in which the considerable growth potential of the euro area could be exploited. those responsible for other policy areas are urged now even more to take the necessary steps to improve longer - term growth prospects for the euro area through strictly and decisively adhering to the aims of the stability and growth pact and through convincing structural reforms in the economy. i should now like to inform you about some of the other matters considered today. the governing council examined the outcome of a test run of the production of euro banknotes. this so - called zero production run involved the printing works of the participating countries. the main purposes of this test were, first, to check the compliance of the test banknotes against the technical specifications and, second, to prove that all printing works are in a position to produce the euro banknotes to the same high quality standards. the result of this test was positive, as only some minor technical specifications need to be modified slightly. the printing works will now start their final preparations for the commencement of the mass production of the euro banknotes. the governing council also decided to establish an analysis centre for counterfeit euro banknotes. as is already indicated by its name, the main purpose of this analysis centre will be to technically analyse and classify new types of printed counterfeits, and to store the related technical data in a database. the analysis centre will be located at the ecb in frankfurt. we are now at your disposal should you have any questions. transcript of the questions asked and the answers given by dr. willem f. duisenberg, president of the ecb, and christian noyer, vice - president of the ecb question : i would be very interested if you had anything to say about the exchange rate of the euro, if the | 1 |
should print to facilitate the economy. under the mla, the central bank has the powers to print money by acquiring several kinds of assets. those assets are provisional advances to government, purchase of government securities, purchase of foreign exchange and lending to banks. in conducting monetary policy, the central bank determines the annual growth of money desirable for the economy taking into consideration price inflation and production growth. in line with the desirable growth of money, the central bank maintains its asset growth to facilitate new money required. in the us and euro area during the last six years, central banks have been expanding their assets many times to print money so that the economy is flooded with money to be invested in production and creating employment while keeping interest rates at rear zero levels. third, regulation and supervision of banks and financial institutions banking, finance and leasing businesses fall within the purview of the central bank under the mla and relevant statutes. state supervision according to the global literature has three specific dimensions. i. e., the prudential aspect, conduct of sound business and consumer protection. prudential supervision promotes the safety and soundness of institutions through their risk management. conduct of sound business supervision covers fair and orderly conduct of businesses. consumer protection covers safeguarding interest of consumers. the central bank β s supervision mainly covers prudential supervision in three areas, i. e., issues of regulations, examinations and problem resolution. issues of regulations covers maximum limits on business to limit risks, minimum requirements on risk mitigation instruments such as bis central bankers β speeches minimum capital, liquidity, loan loss provisions and governance. periodical examinations cover the assessment of risk management capacity and early warnings of impending problems to take early remedial actions. problem resolution covers solution to institutions in crisis or distress such as restructuring, bailing out and liquidation. this supervision has two perspectives at the micro and macro levels. micro supervision means dealing with individual institutions. macro supervision means actions to protect the system stability. although the differentiation between the two is barely understood by many, the central banks β supervisory actions are clearly understood from how central banks have acted in crisis times. the best example is permitting the failure of small ailing institutions and bailing out of systemically important institutions. however, the customers of each ailing institution want the central bank to bail them out, despite risky behaviour of both customers and institutions. the central bank has no mandate to bail out each such institution and repay their investments. similarly, the central bank cannot reasonably be held responsible for | ajith nivard cabraal : management accountants β focusing on the repositioning of the profession special address by mr ajith nivard cabraal, governor of the central bank of sri lanka, at the global summit, organised by the institute of cost and works accountants of india on β repositioning the management accountant β, new delhi, 12 january 2008. * * * the theme of the conference suggests that the management accountants of today are de facto doing something different to the traditional role of the management accountant. the new de facto role seems to be more of that of a strategist and a performance management specialist, rather than a historical β information supplying β or even a β decision facilitating β role of an accountant. if one were to drill down, we may perhaps note that the education and training of those who have become strategists and performance management specialists may not have necessarily been intended that way. but yet, it happened. how did this happen? β’ perhaps the training, although intended to create management accountants, was appropriate to create a strategist. β’ perhaps the training, coupled with business developments and public expectations, shaped management accountants to become strategists or the deliverers of outputs rather than contributors of inputs only. β’ perhaps the ability of the management accountant, as a result of his core disciplines, enabled him to respond effectively to unfolding developments and then deliver new outputs, and such abilities were recognized by the business community in the course of time. if all this happened without anyone consciously or deliberately β positioning β the management accountant in that role, what is the need to β re - position β the management accountant now? now that some re - positioning has already taken place, albeit accidentally, need we do more? should we let the status quo remain? why should we tinker with the management accountant now? by the time we do that, would the goal posts have shifted due to the rapid developments that are always taking place? to answer these questions, we may need to take a long hard look at the future of the global business environment over the next 10 years. what do we see? we see β’ new developments : tremendous change and a rapid rate of changing ; β’ blurring of traditional roles : different people doing old jobs ; new people doing new jobs ; β’ new skills and multi - disciplinary teams at work ; β’ status quo being challenged all the time and impermanence becoming a feature ; β’ volatility becoming a given fact and chaos being the | 0.5 |
, but the war is eroding growth ] russia β s brutal, illegal war in ukraine has profoundly transformed the european security order, as well as the economic policy landscape, with global ramifications. as an expression of europe β s firm support of ukraine, the european commission yesterday recommended candidate status for ukraine, which is a critical, major step in ukraine β s journey towards eu membership β and i assume the eu leaders will soon endorse it. before the war broke out, the eurozone economy had recovered from the pandemic better than expected. while russia β s share of the world economy is small, knock - on effects of the war are amplifying the supply bottlenecks and impacting energy, commodity and food prices. these headwinds will weigh on confidence and dampen growth in the near term, but once they abate, economic activity is expected to pick up again. the ecb β s latest eurozone projections forecast annual real gdp growth of 2. 8 % in 2022, 2. 1 % in 2023 and 2. 1 % in 2024. like in the us, the inflation outlook is ever more challenging for the eurozone, with headline inflation accelerating above 8 % in may. [ slide # 3 inflation dynamics β a driver and an anchor ] currently, we have a very clear driver and likewise a very clear anchor for inflation dynamics in the eurozone. the driver is of course energy inflation, as fuel prices have steeply increased since the summer of 2021. the anchor is a relatively moderate level of wage inflation β at least until recently. let me elaborate in a bit more detail on these. [ slide # 4 inflation on the rise in the eurozone β energy inflation explains ] while eurozone inflation has risen mainly because of surging energy and food prices, inflationary pressures have recently broadened and intensified. the latest ecb projections forecast an annual eurozone inflation rate of 6. 8 % in 2022, after which it is projected to decline to 3. 5 % in 2023 and to 2. 1 % in 2024. headline inflation at the end of the projection horizon is thus expected to be only slightly above the ecb β s target of 2 %. it must be underlined that energy inflation and supply chain bottlenecks alone would not lead to a sustained acceleration in inflation. in the medium term, the critical question is whether rising energy prices will increase inflation expectations and wage demands, leading to a wage - price | had already steadily weakened against major currencies in the second half of 2014. furthermore, at the start of 2015, there were signs of further easing of monetary policy in the euro area. against this backdrop, the euro was expected to weaken further. in contrast to 2011, the environment at the beginning of 2015 was no longer characterised by swiss franc strength, but by broadbased euro weakness. in these circumstances, the minimum exchange rate was no longer sustainable. the snb could only have enforced it through ongoing foreign currency purchases of rapidly increasing magnitude. however, there would still have been no prospect of a long - term stabilisation of the situation. an uncontrolled expansion of the balance sheet would have compromised the snb β s bis central bankers β speeches ability to conduct monetary policy in the long term. continuing to uphold the minimum exchange rate was therefore no longer justifiable. delaying any decision to discontinue would also not have helped the situation. on the contrary, if we had not faced facts and had delayed abandoning the minimum rate, the turbulence on the foreign exchange markets would have been no less severe. the impact on the economy would have been just as great, while the losses on the foreign exchange reserves would have been considerably heavier. the swiss franc initially appreciated sharply on 15 january 2015. in the meantime, it has broadly declined, although it is still considerably stronger against the euro than before discontinuation. this is attributable to the persistent weakness of the euro. developments since january 2015 have confirmed that our assessment at the time was correct. current situation the discontinuation of the minimum exchange rate marked a shift in our monetary policy focus. it is now based on two key elements. the first is the negative interest rate, which is currently β 0. 75 %. this is charged on sight deposits held at the snb by banks and other financial market participants. the second is our willingness to intervene in the foreign exchange market as necessary, while taking the overall currency situation into consideration. our monetary policy is thus expansionary and aimed at easing pressure on the swiss franc, thereby ensuring price stability in the medium term. many feared a recession on the back of the discontinuation of the minimum exchange rate and the rapid appreciation of the swiss franc. yet our economy grew by 0. 9 % last year. this may not be a strong growth rate, but it is still a good sign. on the one hand, it | 0 |
in the euro area and, as jorg has said, expectations there have remained very well anchored. but as in japan, people in europe are talking about a lost decade. cΕure : there is a risk of a lost decade in europe, if the right reforms are not undertaken. but the challenges and answers are very different from those in japan. it is true that the crisis has been a step backwards [ a setback ] for the european economy, but the underlying problems, such as declining trend growth and unsustainable social promises, were there before. the crisis has only uncovered them and has shown the need for answers more clearly and more urgently. but the high level of unemployment is certainly worrying β¦ asmussen : yes, the level of unemployment is unacceptable. but the question is what we can do about it. we have a strategy in europe that is based on stable prices, sound fiscal policies bis central bankers β speeches and growth and employment - enhancing structural reforms. it will take some time to see the positive effects, but i don β t see any viable alternative. cΕure : the high level of unemployment, particularly youth unemployment, shows the urgency of taking forward - looking reforms at the national level and, collectively, at the euro area level. with the crisis, differences between countries are becoming clearer and larger. is it a challenge for friendship between european nations? asmussen : we must acknowledge the resurgence of national stereotypes. that is worrying. the cliche that the greek people are lazy, whereas all germans are hard - working, is simply false β¦ reality is more differentiated. cΕure : we see the risk of nationalism in european discussions as well, with the temptation to defend narrow national interests. but politicians can overcome this temptation and make progress. take the banking union, for example. it is the most important step to be taken in european integration since the inception of the euro, perhaps more important than the single currency itself. it will have far - reaching consequences for national economic models and national legislation. so there is room for optimism if we succeed in taking that quantum leap forward. isn β t that overly optimistic? what can germany and france do to overcome these challenges? asmussen : you have described the challenges rightly, but the answer to them can only be more integration. france and germany have a leading role to play, because they stand at the core of european integration. they jointly, but only jointly, fulfil the definition of a superpower : if | many observers doubt that this is possible, especially within a short period of time. we are convinced that the three components will have a sizeable effect on our balance sheet β with the consequences i have described. we expect the most significant effect to come from the tltros. this is also why we again cut interest rates. there had been rumors that banks might not come to the first tltros because they were speculating that interest rates could be cut later. this is now off the table. does that also mean the smaller the tltros uptake, the bigger the purchase programs will be? this is not necessarily the case. but again : we believe that this new facility is very attractive. so banks are well advised not to miss this opportunity. and if everything else fails the ecb will start buying government bonds? this option of a broad based quantitative easing ( qe ) was already discussed in the governing council, but it did not happen already this time. does that mean there is no β comfortable majority β for this step β like for the others which were announced last week? there was no proposal for doing qe at this meeting. qe was discussed, but it was not on the table for a decision. so i don β t think you could draw this conclusion. so qe, including the purchase of government bonds, would be the next logical step for the governing council? we are convinced that we are allowed to buy government bonds in the secondary market, if it is justified by monetary policy considerations. but we also know what it means and this is certainly something we would prefer not to be forced to do. we hope that the recent package will be enough. but in view of our responsibility and our mandate, buying government bonds certainly is something we cannot exclude. but this would lead to even more dissent within the governing council. last week β s decision was not unanimous β although it is always stressed that the governing council is unanimous in its commitment to do what is necessary against the risks of low inflation. this phrase does not mean that in a particular moment everybody has to agree to a concrete package. the most significant thing about this phrase β which was decided upon unanimously β is that no unconventional instrument is a priori excluded. but calibration and timing can occasionally be a source of discussion. but with the most recent decision the consensus decision - making is ultimately history now? since 2010, we have had some decisions which were not taken unanimously. in such difficult times, there | 0.5 |
. a large number of financial entities, including those not obligated by law, joined the system and began reporting to it and receiving data from it. we also set out the separation of two credit card companies, while ensuring that the parameters of the separation support the goals of the reform. i am also happy to update that the financial stability committee has already met several times and is making progress with the formulation of its tools and work procedures. we presented to the government an extensive and clear analysis on the need to carry out fiscal adjustments. in parallel, we presented a plan to improve the standard of living and productivity in the economy β with an emphasis on operative policy proposals. we are not blind to the housing issue, and its impact on the young generation. therefore, i asked the research department to begin formulating operative recommendations in the housing area, in order to help the new government identify the order of priorities and to act to remove obstacles that weigh on increasing the supply of homes. in a joint initiative with the imf, we are developing a new macroeconomic model, which takes into account two sectors that to date have not been included in the common models β the housing market and the financial system. recall that these two were among the main factors in the 2008 crisis. the model will serve us in macro assessments but will also contribute to the work of the financial stability committee. in another joint initiative with the imf, we are working on an international conference on cyber risk in the financial and banking system, with the understanding that looking forward, this is one of the main risks to financial stability. given the changes in the global economy, and with eyes to the future, i initiated a strategic process to define the bank β s goals for the coming years. the entire management has been enlisted in this process, which is being conducted by the director general of the bank, hezi kalo. it is not straightforward to carry out such a process in the midst of the ongoing work that is always very intensive, but it was clear to me that we must look beyond the immediate issues. therefore, we added a slogan to the process β β working today, thinking about tomorrow β. i asked the members of management to think outside the box, and to try to identify the important challenges that the bank of israel and the israeli economy will deal with in the coming years. to that end, we set up several teams, with the participation of tens of staff and managers, in all the relevant areas : the first | economy growing at a decent pace and with high budget revenues, we hear calls β populist calls β for increasing government expenditure for one need or another. and there are always needs. and they are mostly justified. but these calls ignore the macroeconomic situation which is so important for sustainable growth and for dealing with problems of society, not just today but tomorrow too, not just in the short term but in the long term too. and what exactly is the budgetary policy that will support sustainable and strong growth? the answer is simple : it is a policy that continues the government's strategy of the past three years. only this week, the prime minister made a decision in this field ; that the budget deficit target for 2007 will be 2 percent of gdp. and this is in line with the government's basic policy guidelines, which, inter alia, set the deficit target for 2009 at 1 percent. and it is important to note that this target is actually a ceiling. but there's another target, no less important ; that government expenditure will not grow by more than 1. 7 percent, in real terms, each year up to 2010. why are these decisions so important? firstly, regarding the expenditure ceiling ; this allows an increase in government spending, which should contribute to the various needs of the economy, particularly the problem of poverty. we heard during yesterday's morning session many recommendations to deal with poverty. it is important that poverty in israel is addressed. it is important that we help the weaker members of society by giving those that can work the incentive to do so, especially through negative income tax, and that we help the needy who cannot work ( the old, the disabled ) directly through welfare payments. it is also important that we help the development of human capital, in the long term, through education. but this should still be within the macroeconomic framework of achieving sustainable growth. this combination β a policy for sustainable growth and a policy of correct treatment of society's problems β contributes to creating the necessary balance between economy and society. it is important that we understand, and that we declare, that the best way to deal with poverty in the long run is through economic growth. this is because in this way we create more places of work and more opportunities to earn a higher wage and, in addition, it will provide the government with the necessary resources for its role in combating poverty. secondly, the new budget deficit ceiling β which is lower than before β helps to cope | 0.5 |
life for other equipment is about seven years. firms must invest in computers at a faster rate than that for other forms of capital just to maintain a given level of the capital stock. the rapid replacement of high - tech capital means that technological progress becomes β embodied β in the capital stock at a faster rate than is the case for longer - lived assets. the second feature of high - tech equipment that sets it apart from other classes of capital is the sensitivity of its demand to fluctuations in the cost of capital. economists have debated for decades about the magnitude of cost - of - capital effects on traditional capital goods. a past consensus was that the cost - of - capital effect was small and very difficult to identify empirically. a somewhat different conclusion has arisen lately when the same basic models of investment are applied to spending on computers alone. the latest research suggests that computers are quite sensitive to movements in the cost of capital. the combination of an apparently high price elasticity and a rapid decline in relative computer prices - - 20 percent per year over the past decade - - likely led to the boom in high - tech investment. a third characteristic of high - tech investment is the magnitude of β external β or β spillover β effects that it generates. high - tech equipment generates benefits not only to the owner of the machine but to other agents in the economy as well. i am thinking in particular about so - called network effects - - that is, linking computers together makes possible larger productivity gains than do computers operated as stand - alone units. although difficult to measure, such network effects certainly have stimulated the demand for high - tech equipment and have helped to speed up the dispersion of new technologies. supporting structural changes the technological changes inspired by investments in computers have enhanced the ability of businesses to reduce their operating expenses. in many industries, investments in information technologies have helped firms to cut back on the volume of inventories that they hold as a precaution against glitches in their supply chain or as a hedge against unexpected increases in aggregate demand. product development costs have probably also been reduced through the use of better computer hardware and software, and new communications technologies have increased the speed with which firms can share information - - both internally and with their customers and suppliers. this is the intersection of macroeconomics and management. many business observers now believe that these newer technologies are not only reducing the cost of transforming inputs into outputs but also decreasing β interaction costs, β the costs incurred in getting different people and companies to | speech unconventional fiscal and monetary policy at the zero lower bound keynote speech by isabel schnabel, member of the executive board of the ecb, at the third annual conference organised by the european fiscal board on β high debt, low rates and tail events : rules - based fiscal frameworks under stress β frankfurt am main, 26 february 2021 one of the greatest conundrums and policy challenges of our times is the coincidence of persistently low real long - term interest rates and low inflation. even before the coronavirus ( covid - 19 ) pandemic, inflation across many advanced economies had been falling short of central banks β aims for nearly a decade. in the euro area, hopes that inflation would sustainably recover to levels closer to 2 % have been repeatedly and persistently disappointed, despite highly favourable financing conditions. years of subdued price pressures have raised the spectre of low inflation becoming entrenched in people β s expectations. considering that financial markets believe that real interest rates will remain in negative territory for the foreseeable future, private investors appear to harbour serious doubts about the capacity of the euro area economy to chart a sustainable path towards higher nominal growth. in my remarks this morning, i will argue that the experience of the past decade requires us to think differently about the optimal policy mix in the vicinity of the effective lower bound. in particular, whether low inflation will prevail in the medium term will depend not only on monetary policy but also on the decisions made by fiscal policymakers, including on the structural side. monetary policy implications of persistent supply - side shocks before the pandemic, the global economy enjoyed a period of benevolent growth. slack was gradually disappearing, output gaps had closed and unemployment had declined to record low levels in many advanced economies ( see slide 2 ). even broader measures of slack, including, for example, the number of people working part - time involuntarily, signalled growing scarcity in labour markets ( see left chart slide 3 ). yet, inflation in advanced economies did not show any signs of acceleration. since 2012, there has not been a single year in which inflation for a group of advanced economies as a whole exceeded 2 % β the level that is widely considered to be consistent with price stability ( see right chart slide 3 ). at first sight, these developments seem to point to a weakened relationship between economic slack and inflation. ecb staff analysis for the euro area, however, suggests that while the slope of the phillips curve is | 0 |
. however, even before the pandemic hit our shores earlier this year, there was increasing evidence that consumption growth was slowing as households were becoming more cautious, perhaps because of elevated debt levels and a somewhat less robust economy. when the containment measures were imposed in canada in mid - march, many households had to suddenly prepare for a prolonged stay inside their homes to reduce their exposure to covid - 19. as a result, spending habits changed significantly. in particular, household consumption was affected by the reduction of goods and services available for purchase. many non - essential stores and restaurants were forced to close, while others had only online access or takeout service. 8 these demand and supply effects not only lowered consumption during the containment period but also changed what canadians were buying. the volume of consumption, as measured by the national accounts, plummeted by nearly 9. 0 percent in the first quarter of 2020 at an annual rate, and the 7 on the demand side, sharp declines in stock markets had negative wealth effects, and lower commodity prices reduced canada β s terms of trade. both factors also weighed on consumption. 8 according to a survey by statistics canada, 40 percent of retailers closed their doors in march, including 91 percent of clothing retailers. most remained closed until recently. in contrast, grocery and pharmacy stores remained open. - 6preliminary release for april indicates a further decline as nominal retail sales fell 15. 6 percent ( chart 4 ). 9 chart 4 : retail trade activity declined sharply across canada nominal retail trade deflated by provincial cpi for goods, index : april 2018 = 100 index apr - 2018 aug - 2018 canada dec - 2018 apr - 2019 energy - intensive regions aug - 2019 dec - 2019 rest of canada note : the april 2020 value for canada is a preliminary estimate. source : statistics canada apr - 2020 last observation : april 2020 consumption patterns during the early stages of the shutdown saw a boom in demand for necessities. many households stocked up on food, alcohol and personal care products β creating the infamous runs on toilet paper, flour and cleaning products. in the first week of march, sales of hand sanitizer rose 792 percent over the same week last year ( chart 5 ). chart 5 : sales of health and household cleaning items spiked in march 52 - week percent change january hand sanitizers february masks and gloves note : data are experimental and subject to revision. source : statistics canada consumer prices program, special tabulation march soap april bathroom tissue % - | ##t - up demand. the household savings rate rose from 3. 6 percent in the fourth quarter of 2019 to 6. 1 percent in the first quarter of this year. in addition, april saw an unprecedented increase in deposits in personal bank accounts, consistent with higher savings continuing into the second quarter ( chart 18 ). some of the higher savings may be the result of the decline in discretionary spending by some households on services, motor vehicles and clothing. without restaurants or 23 with most of the fiscal support flowing through transfers ( cerb ) rather than through wage subsidies ( cews ), some people may temporarily lose the incentive to return to work. - 19 movie theatres to go to, money simply accumulated in household bank accounts. some of this accumulation may, however, represent a deliberate choice by many canadians to save more as a precaution, given the higher uncertainty about the future. these precautionary savings could be converted into more consumption if confidence improves as the economy is reopened and the virus is controlled. of course, there are sizable differences in financial circumstances across households. we are mindful that many lower - income families who have lost their jobs are having difficulty making ends meet. they may be dipping into their savings or taking on more debt to simply buy necessities. 24 chart 18 : deposits in personal bank accounts rose sharply in april monthly growth in chequeable and non - chequeable deposits % source : regulatory filings of canadian banks - 1 last observation : april 2020 the recovery of services subject to a more gradual removal of containment measures, such as travel services, is expected to be more protracted. the rebound in services that are usually consumed in crowded environments, such as restaurant meals as well as cultural and sporting events, should also be limited by capacity constraints. we expect that the recovery will vary by region because containment measures are being lifted at different times across canada ( chart 19 ). this staggered reopening of establishments and manufacturing facilities across the country adds an additional layer of uncertainty in estimating the path of the recovery in overall household spending. for example, ontario made more frequent announcements but pursued a more gradual reopening than saskatchewan and alberta, where a greater share of businesses opened sooner. 24 j. c. macgee, t. m. pugh and k. g. see, β the heterogeneous effects of covid - 19 on household consumption, debt and savings β bank of canada staff analytical note ( forthcoming ), examine the impact of | 1 |
/ 6 bis - central bankers'speeches this cannot be viewed in isolation from what is happening in the rest of the world, as slower growth will be a problem in almost all advanced economies both this year and next. growth has slowed particularly sharply in the european union, which is the main theatre of activity for estonian companies. companies and households in europe are particularly exposed to the consequences of the war between ukraine and russia and the energy crisis, because europe is a net importer of energy and was highly dependent on cheap gas from russia but now has to cope with much higher energy costs. the opportunities for growth in estonia, which is an open economy in which exports play a large role, depend directly on demand in the markets for our exports. there are many other reasons as well though why the estonian economy is currently performing worse than those in other parts of europe. the estonian economy had recovered rapidly by the start of 2022. companies had managed to accumulate financial buffers after the sudden stop of the pandemic, and households had improved their standard of living, but this equally meant that there was a higher peak from which to descend. the overheating caused by higher consumption gave a further boost to rising inflation. russia's military aggression and its consequences also affected the estonian economy more than it did others on average. rising prices for energy passed through more quickly and to a larger extent to other prices because many electricity consumers in estonia used exchange - based price packages, and estonian households spend more on energy and fuel than those in other countries, while the estonian economy is also more energy - intensive than the average in europe. the price level in estonia was pushed even higher by the interruptions to supply chains, which particularly affected sectors that had earlier used cheap raw materials from russia. being the immediate neighbour of an aggressive country also poses risks to business in estonia that are reflected in the cost of capital and in, for example, the number of foreign tourists. the sharp rise in interest rates has affected borrowers in estonia more immediately, as the majority of loan contracts here have floating interest rates. and to cap it all, the position of estonia is made more difficult by our main export markets performing more poorly than the average, as the nordic economies are under pressure from weak demand at home and abroad and from rapidly rising borrowing costs and a steep drop in house building. just because there has been a setback in the economy, does not mean that a longer period of stagnation will necessarily follow. the economy is | potential to be a new way to hold money and make payments. while all of this innovation opens up possibilities to do things differently than the past, it also carries risks. just like listening to music, the " how " may change, but the " what " will remain the same. as we look ahead, it's important to remember that even as the technology changes, the role of the central bank has not. it is and will always be to supply money and liquidity to bring stability to the economy and financial system. therefore, it's critical that we understand how these transformations could affect the economy and the financial system, as well as monetary policy implementation and central bank balance sheets. in addition, we must think carefully about proper regulation to protect consumers and investors and ensure the stability and safety of the financial system. 1 so, what are some of the things that the new york fed should be thinking about? to start, digital transformation could have implications for markets and for our interactions with counterparties, as well as how we carry out monetary policy. like in the example of music, change is already underway. take the fed's overnight reverse repo ( on rrp ) facility, for example2. the on rrp facility has broadened the set of our counterparties and diversified the type of instruments on the liability side of our balance sheet. this facility has supported the control of short - term interest rates according to the fomc's policy direction. this has had profound effects on the composition of liabilities on our balance sheet. traditionally, the fed's liabilities have primarily been paper currency and reserves held by banks at the fed. for example, a decade ago, paper currency totaled $ 1. 1 trillion and bank reserves $ 1. 5 trillion. but since then, we've seen a dramatic change in the makeup of the liability side of our balance sheet. today, in addition to $ 2. 3 trillion of currency and $ 3. 3 trillion of bank reserves, there are $ 2 trillion in overnight reverse repos, representing funding from nonbank sources such as money market funds. turning to the future, the big question is what a world of digital currencies like stablecoins and cbdcs would mean for the implementation of monetary policy. how will central banks anticipate and adapt to the changing landscape brought on by the possibility of digital currencies? there is much more to discuss about these important considerations in a fast - changing world | 0 |
is being exacerbated by trade tensions between the us and various other large economies, in particular china. increased tariffs, if they persist, threaten to reduce global trade volumes and disrupt complex supply chains. the recent rise in oil prices is a further challenge, driving up inflation and weighing on the trade balance of oil - importing countries. the price of brent crude oil has doubled since early 2016, but remains well below the high of approximately us $ 154 reached 3 ilzetzki, e., reinhart, c. and rogoff, k. ( 2017 ). exchange arrangements entering the 21st century : which anchor will hold? national bureau of economic research working paper 23134. page 3 of 8 in 2008. however, when priced in the currencies of emerging markets like brazil, mexico or south africa, brent crude oil is back near its historical highs. notwithstanding these concerning developments, global growth on aggregate remains relatively strong and is expected to moderate only marginally over the medium term. this trend is also reflected in the forecasts for south africa β s major trading partners where, on average, gdp growth is expected to slow slightly from 3. 6 % in both 2017 and 2018 to 3. 5 % in both 2019 and 2020. south africa faces two key external risks over the coming months. the first is a possible sharp and sustained drop in capital inflows, as us interest rates increase. the second is a further substantial rise in oil prices. the two could also conceivably occur simultaneously. if so, south africa would face increased inflationary pressure and a further drag on household disposable income. domestic economic developments the domestic economy has substantially underperformed in 2018 relative to expectations formed at the beginning of the year and the longer - term trend. indeed, the technical recession recorded in the first half of the year surprised most economic analysts. at the january meeting of the monetary policy committee ( mpc ), we had forecast gdp growth of 1. 4 % for this year. by the september mpc meeting, this was revised down to 0. 7 %. the weakness in economic activity witnessed in 2018 reflects a combination of transitory factors and more persistent constraints. poor weather conditions exacerbated the fall in agricultural output from 2017 β s elevated level. meanwhile, ongoing policy uncertainty and weak domestic demand resulted in a lack of business investment and hiring. moving into 2019, we are anticipating an economic rebound driven largely by an export recovery and improved growth in | though a single currency implies a single exchange rate, the euro area representatives in the imf executive board do not always sing from the same hymn sheet when discussing exchange rate developments in other major countries. it is my conviction that a unified representation of the euro area countries at the imf would strengthen the exchange rate policy of the euro. exchange rate developments during the crisis let me now turn briefly to exchange rate developments since the outbreak of financial turbulence in the summer of 2007. during the last year and a half, foreign exchange markets have witnessed sharp swings in all major bilateral rates. foreign exchange volatility β both realised and implied β has reached historical levels ( see fig. 1 ). more recently, the situation seems to have improved as realised volatility eased substantially. yet the markets β perception of risk still remains elevated compared with longer term averages. 2 despite the extremely volatile environment, the spot foreign exchange market seems to be functioning normally. looking at the euro / dollar bilateral rate, bid - ask spreads ( expressed as percentages of the spot rate ) have remained largely unaffected by the rise in realised and analysing options β maturities ( see fig. 2 for the euro / dollar rate ) reveals that the increase in the perception of risk was concentrated over the shorter horizons ( one to six months ), while it remained more contained at the one - year horizon. since the beginning of 2009, shorter - term expectations of exchange rate volatility have been significantly scaled down, signalling a return to β normal β market conditions. implied volatilities ( see fig. 3 ), and broadly in line with their averages since 2004. nonetheless, some tensions have emerged in the forward foreign exchange market. the us dollar funding needs have led to tensions in global money markets 3 and forced many institutions to convert euros into dollars through fx swaps. in addition, tensions have not remained confined to the shortest horizons, but also spread to longer maturities, as banks have realised that the financial crisis might last longer than anticipated. 4 turning to exchange rate movements, until the summer of 2008, the us dollar weakened against the euro, while the japanese yen remained broadly stable. this reflected the market perception that the turbulence originated in the united states ( see fig. 4 ). subsequently however, and especially after the lehman collapse, the euro weakened both against the us dollar and the japanese yen. the dollar benefited from increasing risk aversion worldwide as well as from temporary factors associated with a widespread shortage of dollar liquidity | 0 |
and investment. before the pandemic β i need to remind you β we had agreed that the equilibrium real interest rate was zero or even negative. has this changed? what are the fundamental forces that could have produced such a change? personally, i am not convinced at all that the deflationary tendency that we witnessed for a number of several years in the euro area before the pandemic has now turned into an inflationary one. as i mentioned earlier, the inflation surprise that we have recently observed has to do with supply - side shocks. fourth, on the relationship between the growth rate of money supply and inflation : Ξ±s we all know, this relationship is not stable ; it has broken down in the past. have you noticed for instance that, despite the very high growth of money supply recently, inflation expectations have stayed anchored at below 2 %? this is extremely important. having said that, i can also tell you that i do not belong to this school of economists that totally ignore money supply. i actually believe that the economy is being governed by aggregate demand and aggregate supply forces and money is part of the aggregate demand forces. however, under certain circumstances, money does not matter, in the sense that it cannot affect economic variables. keynes for instance had talked about the β liquidity trap β. in addition, we know from various variations, old or new, of the mundell β fleming model, that there are conditions under which money supply does not matter. so let β s not be dogmatic either way. there is no doubt that in the long - term inflation is a monetary phenomenon, but the β long term β might actually be too long! fifth, we should not forget that monetary tightening in the eurozone will start in june, with the likely repayments of tltros. finally, i want to reassure you once again that we will do β whatever it takes β to safeguard price stability. 2 / 2 bis central bankers'speeches | . recently we have made some concrete steps in this direction. therefore, the banking system is more extended geographically and richer in products. increase of assets, rise in the number of clients, modern infrastructure and other developments have made our contribution to cash reduction in the economy be significant. i believe that the above accomplishments, combined with determined administrative measures, will contribute to the closure of informality gates one by one in the economy. however, i observe unexploited space particularly in terms of : increasing opportunities for more electronic payments ; the last year overturned the ratio in the favour of electronic payments, when their level reached the figure of 320 thousand as compared to the number of 300 thousand of payments effected at the windows. this is an encouraging sign, urging us to better focus on this direction. channelling periodic settlements for utility services through bank accounts ; more concretely aec, alb telecom and water supplying should be related to the banking system so that their services are settled electronically. compulsory transfer of salaries of private sector β s employees through the banking system ; the so - far experience with the private sector resulted successful, while even some big private operators are applying this method efficiently. i think that the obligation to transfer salaries through the banking system will significantly decrease the evasion existing on income tax and social insurance contributions. i personally think that it is just the time to enhance popularity for imposing the creation of a banking culture and education. the obligation of each individual for opening a bank account in addition to an important massive service the state does to the population, is more than necessary. more concretely, i propose that new cards be associated with a bank account number. in conclusion, it is understandable that for being successful in the long run, more focus is needed on all the problems i briefly treated above. more loans, more prudence in the supervision, more qualified services, more free prices, less cash in the economy, more banking business, will all lead to more access of the population into your business. i deem that this is an essential prerogative that ensures sustainable long - term development of the albanian economy. | 0 |
##ing the errors. cost associated with foreclosure documentation problems, including β robo - signing β ( discussed in more detail later ), are not the only potential liabilities facing financial institutions. investors in mortgage - backed securities and purchasers of unsecuritized β whole loans β have begun to explore and in some cases assert contractual and securities law claims against the parties that originated the loans, sold the loans, underwrote securities offerings, or had other roles in the process. the essence of these claims is that the mortgages in the securitization pools or that had been sold as unsecuritized whole loans did not conform to the representations made about their quality β specifically, that the loan applications contained misrepresentations or the underwriting was not in conformance with stated underwriting guidelines. with respect to the contract claims, this potential liability is usually called β put back β risk, because many of the relevant agreements permit the buyer of the loans to put the loans back to the seller ( or other party that makes representations ). that is, the buyers can demand that the seller repurchase the loans at par if defects are found in the loan underwriting contrary to representations and warranties in the pooling and servicing agreement that created the securitization trust or the whole loan mortgage purchasing agreement. at the time of the putback, the loan has usually gone into default, sparking a review of the original loan application file. the defaulted loan, given current market conditions, is typically worth substantially less than par, thus the put - back transfers any potential loss from the buyer back to the seller. although the representations and warranties in the various agreements vary considerably, they frequently require that the defect materially and adversely affect the value of the loan before put - back rights can be exercised. there are also pending claims by some that underwriters and sponsors of securitizations failed to comply with the federal securities laws covering offering documents and registration statements. these suits specifically reference descriptions of the risks to investors, the quality of assets in the securitization, the order in which investors would be paid or other factors. most of these lawsuits are in the early stages, and it is difficult to ascertain the probability that investors will be able to shift a substantial portion of the losses on defaulted mortgages, specifically, or mortgage - backed securities back to the parties that sold the loans or underwrote the offerings. nevertheless, | condition. as i indicated at the beginning of my statement, the occ, the ots, the fdic, and the federal reserve are in the process of conducting interagency targeted examinations of the foreclosure policies and practices of the financial institutions that control a majority of outstanding mortgage loans. the agencies expect to conclude the on - site portion of our examination process by the end of this year and plan to review the findings immediately thereafter. we want to ensure that our analysis is comprehensive and provides a basis for development of remedial actions. currently, the banking agencies plan to publicly release a summary report highlighting the industry - wide findings in early 2011. in our examinations, the agencies are reviewing firms β policies, procedures, and internal controls related to foreclosure practices and are sampling loan files to test the effectiveness of those policies, procedures and internal controls. we are prepared to take supervisory action where necessary and appropriate to hold institutions accountable for poor practices. specifically, we are examining the firms β internal governance processes related to : ( 1 ) foreclosure policies and procedures ; ( 2 ) organizational structure, approval process, and staffing levels ; ( 3 ) vendor management of outside law firms ; ( 4 ) quality control processes and internal audit ; and ( 5 ) foreclosure workflow process and loan documentation procedures. we have also solicited information from consumer organizations to help us better direct our actions to detect problems at specific servicers and to determine whether systematic weaknesses are leading to improper foreclosures. for additional insights into foreclosure processes, we have sent a self - assessment questionnaire to other federal reserve - regulated institutions that have mortgage servicing activity but were not part of the interagency horizontal examination effort. the staff will analyze the responses from the firms and determine what follow - up work is required to validate the information they provide. the federal reserve requires supervised institutions to have sufficient corporate governance and maintain adequate risk - management programs to ensure the institution β s safety and soundness, as well to comply with consumer protection laws and regulations. institutions with identified weaknesses will be directed to take remedial actions. any remedial action mandated by the federal reserve will be consistent with the goals and objectives of the dodd - frank wall street reform and consumer protection act of 2010 to promote best practices and financial stability. supporting loan modifications notwithstanding the right of lenders to pursue foreclosure, the federal reserve encourages mortgage servicers to first pursue a sustainable | 1 |
if the central bank were to try to slavishly keep cpi inflation at a certain target level at all times, it would have to change interest rates or other instruments frequently and significantly, and would probably not be successful in doing so. after all, nkm itself recommends focusing on the narrower price indices of so - called core or super - core inflation, which consist mainly of items whose prices are rigid. but there is no doubt that targeting a specific and narrow price index would not be very comprehensible to the markets and the public. for this reason, central banks tend to choose pragmatically to target a broad index close to the cpi and 3 / 5 bis - central bankers'speeches explain sophisticatedly in their communications why they sometimes react less or more strongly than the observed or forecasted cpi inflation would imply. under inflation targeting as practised in reality, central banks then set their rates to meet the cpi inflation forecast in the relatively short term. the problem is that we cannot reliably forecast cpi inflation and its twists and turns. virtually every major shock to inflation, in one direction or the other, has more or less surprised central banks this century. on the other hand, we are undoubtedly quite capable of understanding that inflationary potential is being generated in the economy. but again, we cannot reliably predict how this potential will manifest itself over time, through what channels it will enter the economy and whether or not it will show up as overt inflation at some point in time. particularly in small open economies, where shocks to the exchange rate and other shocks from abroad have a significant impact on inflation, it is quite likely that the generation of inflationary potential may initially translate into asset price growth or, in some cases, current account deficits rather than into overt cpi inflation. the latter may then stay quite low for a long time even when the economy is overheating. as a result, rather than inflation - forecast targeting, central banks may slide towards a response - torecent - inflation - numbers regime. what is the solution to this situation? i offer no simple one. the above dilemmas need to be reflected in our thought processes. in monetary policy decision - making, in addition to model - based forecasts of highly variable cpi inflation, we need to give equal weight to the longer - term fundamental inflationary pressures generated by macroeconomic, monetary and financial developments. i understand the arguments that we have no reliable indicator of these pressures and that few people outside | in these few years, the syndicated loan market has expanded in terms of number of arrangements and value of each arrangement. the rapid development of macao β s syndicated loan market has brought professionalism, diversification and internationalization to the financial sector of this enclave. they certainly have had positive impact. the arrangement of syndicated loans involves higher demand for professionals, such as analysts for specific industries, back office administrative and operational staff, property valuation agents and legal counsels. the growth in syndicated loan markets thus stimulates professionalism in a number of service sectors. in the past, syndicated loans concentrated on financing of local construction projects. but in the past few years, funding purposes of syndicated loans show diversification β from casinos, hotels, residential and commercial properties to construction projects of various nature. we expect that the development of syndicated loan market locally will accelerate the economic diversification process. the recent arrangements of several syndicated loans for gaming projects have attracted the participation of renowned international investment and commercial banks as arrangers and bookrunners. we believe that the continued growth in macao β s economy, and hence the accompanying expansion of the local syndicated loan market will certainly serve as catalyst for further globalization of the macao economy. as financial regulator, i encourage local financial institutions to participate in syndicated loans which will accelerate the expansion and internationalization of our financial sector. in the process, we should always be on the alert to mitigate losses arising from reckless lendings which will certainly undermine the stability and healthy development of our financial sector. before the asian financial crisis, some might use the term β asset - based financing β to describe the lending culture of the region. many credit exposure were in fact backed by assets before the crisis. but after the value of these assets had taken a nose - dive, the shock to the financial system was critical and it took a long time to recover. collaterals do provide good protection for credit risk but their market values are prone to fluctuations under the ever - changing economic and monetary conditions and should only be regarded as the last resort for repayment. the condition of the overall economy, the soundness of the financial system and the self - perfection of the regulatory regime in the region have greatly improved since the asian financial crisis. the resilience of the region to withstand the same sort of crisis has been much strengthened. but will it be able to withstand another shock of a more devastating magnitude, especially now that the global financial markets have been characterized by two features ; inflated asset prices and excess liquid | 0 |
confidence by removing some of the worst downside risks associated with a potential slide into deflation. as i noted a moment ago, we aim to source the gilts from institutions other than banks. because the banks end up with more customer deposits and more liquid assets, they may be encouraged to extend more bank credit. in this way, qe could boost the supply of credit through the banking system, as well as through the capital markets. but in the circumstances prevailing after the financial crisis, with the banks engaged in repairing their balance sheets, this particular channel was expected to be weak. what is probably more relevant to the supply of credit at the current juncture is the amount of bank capital and the cost and availability of bank funding. qe may then boost credit supply indirectly if it leads investors to increase their demand for bank debt and equity. as you will be aware, the monetary policy committee has so far purchased Β£325 billion of gilts, Β£200 billion in a first phase during the worst of the recession in 2009 ( qe1 ) and Β£125 billion in a second phase as the economy slowed at the end of last year and which was cash can be thought of a zero - interest perpetuity issued by the state. but it has value because it can be used in transactions. the mpc β s asset purchases are actually financed by issuing bank reserves which pay bank rate rather than nothing and which can be easily converted into cash. bis central bankers β speeches completed shortly before our latest policy meeting ( qe2 ). to give some context, that represents around a quarter of the total stock of uk government debt in issue. it is, though, important to remember that throughout this time the debt management office has been issuing substantial net quantities of new gilts in order to fund the government β s budget deficit. so, despite the scale of our purchases, the stock of conventional gilts held by the private sector is actually higher now than when we started our purchases ( see chart 1 ). what impact have our purchases had on asset prices? chart 2 shows the evolution of a representative gilt yield and an equity price index from the beginning of 2007, just before the start of the financial crisis. i have also marked on the periods when the mpc was buying gilts in grey. when there is bad news about the economic outlook, one would expect to see gilt yields and equity prices both falling. that is indeed what one observes during late 2008 / early 2009 at the worst | the point that comes across, for me, is that inflation would be lower had effective expectations of the implications of brexit, across different parts of the economy, been more uniform. let me be clear. i β m not saying one side or the other β households and financial markets β is β wrong β or β right β. we don β t yet know. my points are rather ( i ) that for as long as we don β t know the ultimate brexit outcome, it β s understandable that expectations should differ and ( ii ) that the particular difference we β ve seen since the referendum, with the foreign exchange market more pessimistic than the real economy, has been inflationary, and the gap in expectations has therefore been an important contributor to the recent rise in inflation and therefore interest rates. a corollary is that at least until brexit actually happens, its significance for inflation and interest rates derives not so much from the process itself but from whether those expectations move closer together or further apart. however it occurs, whether via a stronger exchange rate or weaker consumption, a degree of reconciliation would tend to lower inflationary pressure. further divergence would do the opposite. i think it β s hard to predict which of these is more likely. some remarks about wage growth and unemployment : don β t forget productivity one consequence of being uncertain about supply growth, for a monetary policy maker, is that you begin to rely somewhat less on indicators of economic growth β it β s no longer so clear what constitutes a β strong β or a β weak β gdp print, relative to underlying productivity β and instead put more weight on direct measures of spare capacity, such as unemployment. however, that β s advisable only to the extent you trust the link between unemployment and wage growth. in recent years, many seem to have lost that trust. according to the β phillips curve β, low unemployment is meant to push up wage growth. yet here we are with unemployment at a four - decade low and wages still growing at a rate well below the historical average. as a result, several commentators have questioned the mpc β s central prediction that wage growth will rise next year. some have gone further and pronounced the death of the phillips curve. all speeches are available online at www. bankofengland. co. uk / speeches there are always risks to any forecast. but the latter claim, at least, is premature. using annual data, chart 10 plots uk wage growth | 0.5 |
##uable contribution to the coordinated intervention of national authorities in the event of crises of cross - border groups. ( iv ) cooperation agreements and sharing the burden of crises. lastly, it appears desirable to develop mechanisms for coordinated intervention in crises to minimize the impact on markets and, ultimately, on taxpayers. in line with the indications contained in the memorandum of understanding signed by the ministries of finance, central banks and supervisory authorities of the european union in 2008, the economic and financial committee is preparing general recommendations for agreements under which each national authority undertakes a clear commitment with regard to the support it could provide in the event of the crisis of a cross - border group. the details of these burden - sharing agreements should be left to the structures for coordination among supervisory authorities, central banks and finance ministries ( crossborder stability groups ) that will be set up for each banking group. conclusions in the coming months it will be necessary to monitor the implementation of the reform closely and make sure that an ambitious and rigorous approach is adopted, as indicated by the minister for the economy and finance in the note accompanying the transmission to parliament of consob β s annual report. ambiguous solutions risk creating confusion of roles and conflicts between authorities ; compromises that in reality maintain the status quo as regards national authorities β powers or encourage lax controls do not solve the problems that the crisis has brought out. in my remarks i have tried to outline the points that can determine the success of the reform : β’ in the first place it is necessary to provide the european systemic risk board ( esrb ) with effective operational instruments and a solid institutional basis, possibly by activating article 105 ( 6 ) of the treaty, which provides for the ecb to be entrusted with specific supervisory tasks ; β’ then it is necessary to guarantee the independence of the new european authorities : the political authorities can be involved as observers in the process of macroprudential supervision and contribute to the implementation of the esrb β s recommendations ; the european securities authorities ( esas ) will have to be exclusively responsible for defining the technical standards of supervision for the european union, with appropriate accountability mechanisms ; β’ it is also necessary to take determined steps towards effectively uniform rules, with greater recourse to european regulations instead of directives and with the technical standards of the new authorities directly applicable throughout the entire single market without their having to be transposed. moreover, the uniformity of the rules will have to be accompanied by equal degrees of rigour in the supervisory approaches to implementing controls and | de larosiere report, the ecofin council has charged the commission to reinforce the so - called β infrastructure legislation β referring to the procedures for the prevention and resolution of crises of cross - border groups. the economic and financial committee has been asked to develop proposals to improve the cooperation mechanisms for managing crises at these intermediaries. ( i ) the instruments for managing crises. in the first place significantly increased harmonization of legislation on the instruments for managing crises is necessary. in fact the large disparities between member states with regard to national authorities β powers and responsibilities in early interventions and the procedures for resolving crises prevent the coordinated management of interventions involving cross - border groups. the commission has undertaken to present proposals for european legislation in this field shortly. the procedures laid down in the italian legislation on the management of banking crises, which include preventive measures, have proved effective and could be a useful model for guiding the work carried out at the european level. the possibility of introducing a common procedure for the management of the crises of cross - border banking groups should also be weighed. if this were not feasible, at least the application of the directive on the winding up of credit institutions could be extended to the subsidiaries of foreign banks, as a first step towards a greater degree of harmonization in this field. ( ii ) the removal of obstacles to the transfer of assets within the european union. progress is needed in the harmonization of company and bankruptcy law to remove the obstacles that prevent the transfer of assets and liquidity between the various components of cross - border banking groups. the possibility of ring - fencing assets held in a country leads in fact to solutions that are rational from the standpoint of individual member states but inefficient in terms of enhancing the value of the group β s assets ; in some cases ring - fencing may even accelerate insolvency and complicate the management of the crisis. ( iii ) deposit insurance schemes. the commission is also working to reduce the disparities still present in the working of deposit insurance schemes. the recent revision of the directive raised the levels of coverage and shortened reimbursement times, but it did not reduce the wide margins of discretion member states enjoy regarding the funding of the schemes, or the conditions for and the characteristics of the interventions. in promoting a greater degree of harmonization of these aspects, it should also be possible to consider a common deposit guarantee scheme at european level, which could interact with national deposit protection schemes and make an inval | 1 |
the ecb should not raise the issue limit of 33 % when buying bonds? could this raise legal questions in the future? the ecb has made it clear that, within its mandate, it will do everything needed in order to safeguard the full transmission of its monetary policy in all euro area countries. the pepp allows purchases to be conducted flexibly over time and across asset classes and jurisdictions. the governing council has explicitly communicated that, if necessary and proportionate to the extraordinary risks that we are facing due to the coronavirus crisis, it will consider revising any self - imposed limits, including the issue share and issuer limits, in line with our legal framework. this flexibility makes the pepp a highly effective instrument to ensure the smooth transmission of our monetary policy and to avoid fragmentation across euro area countries. the ecb granted a waiver which allows it to purchase greek bonds under the pepp. what does this move signal to the markets? how important is this development, and could it later open the door to greece participating in the normal asset purchase programme? 1 / 3 bis central bankers'speeches greece has made impressive progress in recent years, after many years of economic and social hardship. the economy was on an encouraging trajectory before the pandemic, and the greek authorities have responded decisively to the health crisis. by including greek bonds in the pepp, the ecb is sending a clear signal to markets that this crisis affects the entire euro area, and that it will not tolerate any risks to the smooth transmission of its monetary policy in any euro area country. the ecb will do everything that is necessary to fulfil its mandate and support the euro area and its citizens through this historic crisis. if greece is included in an enhanced conditions credit line ( eccl ) programme, along the lines described in eurogroup president mario centeno β s recent letter to the european council, would it then be eligible for the public sector purchase programme ( pspp )? greece does not yet satisfy the minimum rating requirement for eligibility for outright purchases under the pspp. under certain conditions, a waiver to these requirements can be granted. it also depends on political decisions and on the specific features of any potential credit line instrument that is being considered by the relevant european institutions, including the european stability mechanism ( esm ). the pepp also allows for the purchase of corporate bonds. what is the situation for greek corporate bonds? are they included in the pepp? can they be included in the | njuguna ndung β u : growth and performance of the kenyan banking sector remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the launch of southern credit banking corporation ltd international mastercard debit card, nairobi, 10 august 2009. * * * chairman ; managing director of southern credit banking corporation ; board members ; management and staff ; distinguished guests ; ladies and gentlemen : i am delighted to be here this morning to join hands with the family of southern credit banking corporation ltd in celebrating the launch of its mastercard debit card. allow me at the onset to appreciate the presence of the mastercard representative assistant vice president : commerce development, mr. charlton goredema. i also wish to salute the board, management and staff of southern credit banking corporation for successfully serving kenyans in the last twenty seven years. i am pleased to note that your bank has expanded its network from the two branches at incorporation in 1982 to nine branches countrywide and has been in the forefront of innovations in electronic payments solutions in kenya, a position that it first achieved with their senator card brand. today, the bank is becoming a market leader with the launch of the first mastercard debit card in kenya and also in the region. it is also one of the only three banks in kenya with the acquirer status on the mastercard franchise. the service will enable the bank β s existing customers transact business at more outlets, at their convenience, anywhere in the world. i commend the board for this. ladies and gentlemen ; this new service will provide an expansion of kenya β s card market segment which is currently thin and requires patronizing by many of the bank customers. similarly, the new product will go a long way in deepening the financial sector by facilitating payments. mr. chairman, let me turn to growth of the banking sector and its performance, one of the main pillars of kenya β s economic growth. ladies and gentlemen ; despite the local and global turbulences experienced over the past one year, the banking sector remained stable and exhibited resilience. the sector has continued to grow and expand both locally and regionally to new markets within the east african region and beyond. in addition, banks are posting good results for their second quarter ending june 2009. we commend the banking sector for the efforts in weathering storms of the global financial crisis and our own share of internal shocks. mr. chairman ; let me at this point mention some | 0 |
have seen the deposits by the euro area money - holding sector increasing by about 200 billion euros since august 2012. another sign of normalisation, and a very important one for german savers, has been the increase in german government bond yields, previously suppressed by panic - driven safehaven flows, which have edged up by around 25 basis points. and target balances, which are a summary indicator of fragmentation, have declined by 285 billion euros, or 25 %, since the peak last year, and now are at the same level as in late - 2011. therefore, also perceived risks for creditor countries such as germany have greatly diminished. the establishment of omt has therefore been beneficial to everybody : sovereigns, corporations, banks as well as individuals, and it has benefited both periphery and core countries. bis central bankers β speeches the decision on omt was necessary. it was effective. and it was in line with our mandate. it was necessary to remove severe obstacles to the appropriate transmission of monetary policy that were putting the singleness of our monetary policy at risk and which were harming the economy of the euro area very deeply. and it is fully in line with our mandate because it is designed to preserve price stability for the euro area and uses instruments foreseen in the statute. in short, for the ecb responsible leadership has meant being true to our founding treaty. staying independent from the voices calling for us to β do more β or to β do less β ; staying fully focused on our mandate to secure price stability for the citizens of the euro area. for the euro area to now move forward and establish itself on stronger ground, we need all decision - makers to take their responsibilities. governments to put right their public finances and address the structural challenges to growth in their economies ; and the euro area as a whole to build a stronger economic and monetary union based on shared sovereignty and greater legitimacy. there is a great deal of work ahead of us. but i am sure we will succeed. thank you for your attention. bis central bankers β speeches | mario draghi : responsible leadership in times of crisis address by mr mario draghi, president of the european central bank, on the occasion of receiving the esmt ( european school of management and technology ) leadership award 2013, berlin, 13 june 2013. * * * good afternoon. it is a great honour to receive this award for responsible leadership and i would like to thank mario monti for his kind introductory words. i regret that i am not able to join you in person today in berlin but am pleased i can address you via video. the fact we have a single currency and a european central bank is itself testament to the role of leadership. many of you are too young to remember, but those of us who can recall europe 20 years ago know how unimaginable it once was to speak about a single currency. today, it is an integral part of our lives. but as this award reminds us, the key aspect of leadership is responsibility. in the words of peter drucker, β rank does not confer privilege or give power. it imposes responsibility β. as you know, the primary responsibility of the ecb is to maintain price stability in the euro area β to secure the value of our common currency. we take this responsibility with the utmost seriousness as it directly affects the lives of 330 million citizens of the euro area. since the launch of the euro in 1999, we have fulfilled our mandate even through difficult times. we will continue to fulfil this task. i am very proud to be personally contributing to the historic project that the euro represents as the most tangible sign of european integration. but this pride is accompanied by a deep feeling of responsibility. there is no doubt that the recent period of economic and financial turbulence has tested us in new ways. we have had to take new measures to fulfil our responsibility for price stability. we had to look at all the data, assess all the evidence, and decide what measures were necessary to ensure the stability of the euro. one such decision was to combat market fragmentation by outright monetary transactions ( omt ), based on a country committing itself to strict and effective conditionality under an eu / imf economic adjustment programme. at almost one year from its announcement, the benefits of omt are visible to everybody : banks have been able to re - access the market, for both funding and for raising capital, and the strong divergence in funding costs across constituencies has receded. deposits have flown back : banks in stressed countries | 1 |
supply in the economy diminishes, core inflation is expected to move back to 2 per cent by the end of 2005. the main uncertainty for the outlook continues to relate to how the canadian economy adjusts to global developments. overall, the risks to the outlook appear balanced. mr. chairman, paul and i will now be glad to answer the committee β s questions. | recovery evolves in line with or stronger than in our latest projection, then the economy won β t need as much qe stimulus over time. further adjustments to our qe program will be gradual, and we will be deliberate both in our assessment of incoming data and in the communication of our analysis. we are committed to providing the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective. with that, let me stop and turn to you for questions. 3 / 3 bis central bankers'speeches | 0.5 |
end - april 2020. at the same time, banks showed strong liquidity position by ably servicing cash withdrawals and providing needed financing to the economy. the operational risks from possible disruptions in the delivery of financial services was also a concern duly mitigated by the comprehensive business continuity management ( bcm ) system that banks are required to have. finally, the financial consumers β shift to digital payments amidst the need to maintain physical hygiene intensified global cyber - and money - laundering - related risks. nevertheless, the bsp, in coordination with other regulators such as the anti - money laundering council, is prepared to conduct investigations and information awareness campaigns to address cyber threats and financial crimes. the volatility, uncertainty, complexity and ambiguity ( voca ) in the economy and financial system has intensified due to this once - in - a - generation crisis. this has further muddled the task of forecasting and budgeting amongst businesses and policy makers. however, we are confident of the banking system β s ability to emerge out of this crisis stronger and more resilient. this optimism is shared by the japan credit rating agency ( jcra ), which gave the country β s first ever β a β credit rating amid global ratings downgrades. among other factors, jcra underscored the strength of the banking system for its β a - β rating and stable outlook. non - performing loans ( npl ) is edging up but remain manageable. the adverse impact of the pandemic on borrowers is expected to exert pressure to the current quality of bank loan portfolio. however, we expect the impact to be manageable due to the banking system β s sound risk management systems and financial strength built over decades of strategic reforms implemented by the bsp. another factor is the relatively low leverage of the biggest recipients of the banks β loans β the corporate borrowers. in fact, the moderate level of private sector debt in the country is one of the reasons why the philippines retained the s & p global ratings β banking industry country risk assessment ( bicra ) of 5 ( with rating of 10 as extremely high risk ) in 2020. this rating is among the best in south east asia. stressed cars meeting regulatory standards. our simulation exercises reinforce the banking system and the banking groups β capability to weather assumed stressed scenarios with a postshock car of the system and banking groups easily hurdling the 10 percent regulatory minimum. this was achieved as the banking system and banking groups entered the pan | the β new economy β. moving forward, we are monitoring developments and preparing additional measures to ensure the soundness, stability, resilience and inclusivity of the banking system. to complement our regulatory and supervisory initiatives to mitigate the adverse effect of the covid - 19 pandemic, the bsp sees the need to implement the following legislative measures : the enactment of the financial institutions strategic transfer ( fist ) act. it will assist the financial system in managing the levels of non - performing assets in the industry. the proposed amendment of the new central bank act. this will further strengthen our supervision over financial conglomerates. a deeper understanding of conglomerate risk is important for regulators to be able to mitigate the impact of material issues on the financial system. a law on recovery and resolution planning for banks. this will align the philippine legal framework with international standards the bsp is also strongly supporting measures to accelerate the use of digital platforms to deliver financial services. the use of digital technology in the country will support the government β s advocacy on financial inclusion by providing safe and efficient access to essential financial services. lastly, we need to sustain information campaign and strengthen collaboration with stakeholders to combat financial crimes and cyber threats related to the increased use of digital platforms. with the massive shift to digital financial services by clients, as well as work - from - home arrangements in response to covid - 19 pandemic, financial crime and cyber threat levels have surged. as such, the bsp has started on key initiatives to better guide bsp - supervised financial institutions and the public against financial crime and cyber threats. in any case, we need to be mindful of the potential risks. with the rise in unemployment and reduced economic activity, the paying capacity of some household and business borrowers are adversely reduced. thus, we expect some banks to have issues on their credit portfolio. banks are aware of the consequences, which prodded higher provisioning on their loans. rest assured though, that the banks β comprehensive risk management systems implemented under close bsp guidance provides the banks with the resources to effectively manage underlying credit risk. the bsp also intensified the monitoring of banks β liquidity positions particularly during the 3 / 5 bis central bankers'speeches lockdown period as the uncertainties during the community quarantine might trigger clients to withdraw their deposits. we are happy to report that the public continue to trust the banking system. this may be seen from the observed increase in deposit liabilities based on their reports as of | 1 |
there are about 47 million deposit accounts held by 38. 4 million accountholders in june 2014. this is a considerable increase from the 40. 1 million accounts in the name of 31. 1 million depositors that was recorded as late as march 2012. the number of unbanked municipalities has also dropped, mainly due to a rise in alternative channels that target low - income clients. we have seen a rise in the use of electronic money ; an increase in the number and reach of automated teller machines ; as well as the expansion of the microfinance portfolio of the banking industry. this last point is critical because we are aware that microfinance responds to its stakeholders by calibrating related products and services to meet the idiosyncratic needs of its constituents. exciting times β synergies these banking indicators point to a rise in retail savers β the very segment who we believe can migrate into investors as they prepare for their future through trust and pension products. these are clearly very encouraging developments. they reflect growth and portend of opportunities while institutionalizing the synergies among financial institutions and professionals in banking, trust and pensions. derived from 62 quarters of consecutive growth ending q2 of 2014, β banking on safety nets, β gov β s speech during the sss balikat ng bayan awarding ceremonies and peso fund, 25 sept. 2014. bis central bankers β speeches it is not enough to preserve these gains. rather, we need to build upon them so that we continue to dynamically prepare for the uncertainties facing differentiated individuals. fortunately, we see some points of convergence that we can focus on : first, the country β s widening banking network can provide more access points for the convenient collection of premiums and the distribution of pension benefits. second, bsp - supervised trust entities can broaden their participation in the pension system by managing the employee benefit funds of private firms as well as the trust funds of preneed companies. as of end - june this year, only 13. 7 % of assets under management of bsp - supervised trust entities are those of employee benefit programs as well as individual retirement and pension funds. this is an area where improvements can be made, especially when you consider the very nature of the trust business. third, under the irr of the personal equity and retirement act, trust entities are allowed to serve either as product provider, administrator, investment manager or securities custodian of retirement funds that are over and above those that the gsis and the | ##anational european policies and national fiscal policies is fundamental. for their part, the latest decisions taken by the ecb are the result of an analysis that weighs up the different risks arising from the current context for our price stability target. the measures agreed strengthen the data - dependent nature of our decisions, increase the flexibility and optionality available in our various monetary policy instruments and provide certainty to economic agents as a whole, with a clear commitment to adopt all the measures that may be needed to fulfil the ecb β s price stability mandate and to safeguard financial stability. third, the sharp rise in the prices of energy and certain other commodities at global level in recent quarters, which has intensified as a consequence of the conflict in ukraine, entails for the spanish economy β a net importer of these products β a negative shock to our terms of trade. this reduces national income and raises inflationary pressures in the near term. in this context, it is vital to prevent these near - term inflationary pressures from passing through to the medium - term through second - round effects and, in particular, through an inflationary wage - price spiral. avoiding this spiral is not in the least bit easy ; nor, of course, is it rewarding in the shortterm. an incomes agreement is needed between workers and employers that will ensure gains for everyone in the medium - term, although in the near term everyone will have to assume a loss. as in similar situations on previous occasions, i would like to emphasise the need for consensus to confront the scenario before us effectively. employment in spain and the competitiveness of the economy over the coming years will largely depend on our ability to reach these difficult compromises. in the past we have reached agreements of this importance and they have borne fruit. given this evidence, and the magnitude of the current challenge, i am optimistic that we will manage to do so once again. | 0 |
and korea. the state β s economy is also quite diverse, and its industry mix mirrors that of the national economy. a sizeable number of jobs in the state are in the healthcare, professional and business service, wholesale and retail trade, and leisure and hospitality categories. when we look at the northern part of the state, we see a somewhat greater concentration of jobs in finance, particularly in hudson county, in goods distribution, related to the ports, rail lines and trucking and warehousing activities that are prominent here, in pharmaceuticals manufacturing and research and development, and in the private education sector. the area also has important links to new york city. for example, the data centers here in the state serve many of the city β s financial firms. in addition, a large number of residents, including myself, commute each day into the city. a smaller but still sizeable number of new yorkers commute into this state. now, how did the state fare during the downturn and how is the recovery proceeding? as i mentioned, the new york fed produces indexes of economic activity to help monitor the bis central bankers β speeches performance of the region. 1 based on our index, the downturn in activity in new jersey began about the same time as the great recession was beginning nationwide β that is, around december 2007. while activity in the state is no longer declining, and there has been a slight pickup this year in the level of activity, to date there is still no sign that a strong recovery has taken hold. quite frankly, this modest recovery in new jersey contrasts with the relatively sturdy recovery in activity in new york city over the past 18 months. employment in our region also declined substantially during the great recession. job losses in new jersey totaled about 250, 000 β on par with the roughly 6 percent loss nationwide. the pattern of job losses here in northern new jersey was very similar. in new york city, job losses were also large but somewhat less severe, with employment in the city down a little over 4 percent. the jobs recovery in new jersey to date has been sluggish. the private sector has seen moderate gains, with growth in some of the key sectors i mentioned earlier, particularly professional and business services, education and health, and leisure and hospitality. businesses in these sectors, on balance, expanded jobs at a faster rate than in the nation. but the state continues to shed jobs in manufacturing and residential construction. notably, overall employment in the state has been weighed | β remarks at the quarterly regional economic press briefing, new york city. august 12. bis central bankers β speeches current with their payments β using the special consumer credit panel we developed. the report for the second quarter of this year was just released on monday. 3 families in new jersey are reducing their debt levels. as of the second quarter of this year, for those people with a credit report, average debt per person was about $ 60, 400 down from $ 63, 000 three years ago. but the crisis has taken its toll. delinquency rates on the debt are high : 7. 4 percent of all debt in the state is seriously delinquent, roughly the same rate as the nation. the comparable figure for the state just three years ago was 4. 1 percent, so, like the nation, households in the state still appear to have a considerable way to go before they reach more comfortable debt levels. while there have been indications that home prices in the area have been firming in the past few months, the mortgage crisis continues to take a toll on new jersey homeowners. as of march of this year, 10 percent of all borrowers in the state were either 90 - plus days delinquent on their mortgages or their homes were in foreclosure β above the national rate of 7. 7 percent. in essex county, that rate had reached 16 percent, and in newark it was 30 percent. in our recent small business survey, which we conducted in may, we asked firms to report on their first quarter sales and their future outlook. the results were encouraging. over twothirds of firms told us they had stable or increased sales in q1, up from 50 percent last year. when asked about their future outlook, while the majority of business owners, 56 percent, were neutral β many more said they were optimistic than pessimistic β 37 percent compared with only 7 percent. conclusion these debt and delinquency figures, together with the weak jobs picture, suggest that new jersey faces a number of challenges. in the near term, the key issue will be to expand jobs and reduce unemployment. at this point it is difficult to say when the pace of recovery in the state will pick up, but several factors appear encouraging. a continued expansion of output and employment nationally would clearly help to expand activity and employment in a number of industries in the state, including professional and business services and the goods distribution industries. also, the pace of contraction in | 1 |
zeti akhtar aziz : international thoughts on leadership β β too many bosses, too few leaders β opening address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the launch of leading voices and the international centre for leadership in finance β s ( iclif ) latest publication, kuala lumpur, 23 may 2011. * * * today i am pleased to launch the first session of leading voices, an international thought leadership series presented by the iclif leadership & governance centre. this is where you will come up close and personal with exceptional and extraordinary leadership from various industries to exchange leadership thinking and realities in our now highly dynamic operating environment. any individual who has assumed a leadership role β at any level in any type of organisation needs to have a platform that will provide an opportunity to meet other leaders and leadership thinkers to exchange and learn from each other's leadership experience. leading voices is that platform. these sessions will be arranged by iclif, starting with this inaugural session today. while leadership requires distinct behaviors, there are wide ranging leadership styles and approaches that have been successfully adopted. moreover, the now highly dynamic operating environment has become more complex, ambiguous and uncertain. what are the ways then to lead and bring success to our organisations in this more challenging environment. while the foundations for leadership are essential, we also need to keep abreast of the new developments taking place and the new leadership capabilities needed in this ever changing environment. having an understanding of the range of possibilities, having the ability to make sound strategic decisions and excelling under the different circumstances also becomes important. the iclif leadership centre was established in 2003 as part of bank negara malaysia β s commitment towards providing a focused and coordinated approach to enhance leadership capability and to develop world - class leaders. it was initially for the financial services industry, post the asian financial crisis, with the aim of producing a new generation of leaders to steer the industry in a fundamentally transformed financial landscape. it has since been extended to corporate and public sector participation. the centre, the first of its kind in asia, focuses on the emerging market experience, contextualized mainly to asia. iclif has now grown to offer a wide range of services in the areas that include leadership development, organizational performance, corporate governance and advisory services that are designed to enable sustainable and responsible business growth. in 2010, the iclif has further repositioned itself through the setting up of a new governance centre with a vision to | promote high impact boards and develop world class directors who are advocates of best practices and excellence in corporate governance. known as the financial institutions directors β education program or fide, it is currently the only governance initiative in the region that focuses exclusively on the financial sector and has trained hundreds of directors since its inception. the centre has now been renamed as the iclif leadership and governance centre with an enhanced faculty comprising renowned experts from the world leading institutions. iclif is also currently expanding its outreach beyond the asia pacific, middle east and african regions. these initiatives are based on the conviction that human capital development needs to also include the leadership level. human capital development in general is of strategic importance and is integral to the success of any organisation. building human capital capability has never been more important in today β s world. successful businesses of the future will be the bis central bankers β speeches ones that are able to fully harness their pool of talent. this more difficult operating environment demands new abilities to manage the new challenges and the new emerging opportunities, and the ability to deal with the high level of unpredictability. the role of leaders in such an environment is to create organisations that are able to effectively respond to the changing environment and at the same time nurture flexibility and innovation. also important is that it is also supported with high values. effective leaders in this era, will be those that can deliver results in this environment. it is all about having clarity of purpose and aligning the entire organisation to achieve these goals. thus, the investment in leadership development is vital to equip leaders and future leaders with the necessary capability to perform their role in the organisation. this brings us to the second part of our event today β the launch of one of iclif β s research studies which has been written by mr. rajeev peshwaria, the ceo of iclif, published globally as a book entitled β too many bosses, too few leaders β by simon schuster of new york. the book illuminates on what it really takes to be an effective leader. the book extends beyond the advice on the distinct behaviors and attributes required of leaders to providing β a clear path β, β a road map β to achieving leadership excellence at every level in the organisation. in my own experience, the core foundations to achieve superior performance set out in the book is essential. defining with great clarity the purpose and values of the organisation and articulating it throughout the entire organisation is key towards achieving these desired | 1 |
it makes sense for macroeconomic surveillance to have a clear focus on the euro area countries with large current account deficits, significant losses of competitiveness and high levels of public and private debt. as regards fiscal surveillance, ambitious benchmarks are needed when establishing an excessive deficit and in setting the adjustment path towards a country β s medium - term budgetary objective. such benchmarks need to be even more ambitious if a country β s debt exceeds the reference value of 60 % of gdp or there are fiscal sustainability risks. finally, the gap between the eu and national level must be closed. new procedures will not be sufficient if they are not solidly anchored at national level. binding commitments by member states to swiftly implement strong national budgetary frameworks are essential. major improvements are needed regarding the quality and independence of fiscal and economic analysis and the production of fiscal statistics. all these aspects should be contemplated as mandatory features in the foreseen directive on national fiscal frameworks. bis central bankers β speeches in the ecb β s view, the proposals meanwhile agreed do not go far enough. regarding the final result, we are encouraged by the fact that the european parliament has shown some ambition in its approach, particularly as regards greater automaticity and the broader and timelier use of sanctions. the room for halting or suspending procedures against those member states breaking the rules must be reduced. some other points of the parliament β s proposals also deserve a positive mention like the strengthening of the commission β s role in the procedures and an earlier and more gradual application of financial sanctions within the macroeconomic surveillance framework. it is also positive the support in the same framework for a clear distinction between member states belonging or not to the euro area. the requirements of avoiding negative imbalances must be more demanding for members of the monetary union. this type of distinction, making full use of the treaty β s new article 136, has to be applied in different domains, drawing the appropriate lessons of the crisis for the functioning of the monetary union. we hope that the ongoing negotiations over the legislative package will permit the texts to be significantly improved along these lines. the ecb is encouraged that the amendments proposed by the european parliament go in the direction of the significant strengthening of economic governance that we have called for. however, there are some important areas in which the texts should not be weakened. in particular, softening the stability and growth pact by introducing further exceptions or treating in a special way specific expenditure items, such as public investment, would create | further room for unwarranted discretionary decisions. it is also of crucial importance that the economic governance reform is fully implemented as soon as possible and without any transition period. economic governance is not only about preventing crisis, but also about creating conditions for economic growth. here the second strand of the economic governance package β the euro plus pact β is important to give renewed impetus to structural reforms and support the ambitious targets of the europe 2020 strategy. on current projections, economic growth in both the eu and euro area is expected to be weak over the next decade, in a large part due to disappointing productivity growth. faced with ongoing debt sustainability challenges and future age - related expenditures, europe needs to do more to reverse this trend. elevating the growth potential of the euro area through structural reforms is therefore essential. reinforcing economic governance and elevating economic growth cannot exclude the possibility of crises. we would all agree that, even with the best fire - proof materials and state - of - the - art alarms, it is still prudent to employ a fire service. thus the third part of the package β the creation of the esm β is appropriate. however, it should be underscored that the esm is for the last resort. its purpose is to provide temporary bridge funding to solvent but temporarily illiquid countries in financial difficulties, with the aim to create breathing space to implement a deep adjustment programme to correct imbalances and regain market access. any financing under the esm needs to be subject to very strong policy conditionality and, in general, should be designed such as to avoid moral hazard. if implemented in a comprehensive and ambitious manner, the overall governance package will ensure competitiveness in the euro area, strengthen its growth potential and contribute to prevent future crises. however, within this package the first priority is prevention and correction of fiscal and macroeconomic imbalances, as this provides the pre - conditions for sustainable growth and financial stability in the euro area as a whole. the ecb hopes that policymakers seize this opportunity to place the euro area and its citizens on a prosperous and stable path. bis central bankers β speeches | 1 |
ecb has continued to satisfy the entire demand for liquidity. inflation expectations, by contrast with some other countries, are firmly anchored. this fact must not be forgotten : it is the credibility built up by the ecb over the years that has enabled monetary policymakers to exploit the full scope for flexibility in dealing with the crisis. the securities markets programme for the purchase of the securities of euro - area countries under financial pressure injected liquidity into markets in a state of crisis, averting the collapse of the european financial system and preserving the monetary policy transmission mechanism. the resolute commitment to sterilize the liquidity so created remains. once the solidity of the economic recovery is confirmed, the phasing out of unconventional monetary measures will need to be resumed. although temporarily suspended in recent weeks because of the severe strains originating in the greek government securities market, this process has been under way since the end of 2009. no twelve - month refinancing operations have been offered in 2010. the operation that resulted in the unprecedented liquidity injection of over β¬400 billion a year ago reached maturity on 1 july. in the auctions held in the past two weeks banks requested far less than the amounts maturing, resulting in a significant reduction of excess liquidity. because some banks are still having difficulty in accessing market funding, this has translated into a moderate rise in money market rates of about 10 basis points. the monetary policy stance must not be altered by the condition of these marginal intermediaries. their problems need to be dealt with by the relevant national authorities using appropriate instruments. in italy, a three - year budgetary adjustment package was approved in late may β ahead of the usual schedule in view of the financial market tensions provoked by the greek crisis. the measures are designed to reduce net borrowing by β¬12 billion in 2011 and β¬25 billion in both 2012 and 2013. two thirds of the adjustment is to come from reductions in expenditure, above all current expenditure. on the revenue side, the measures focus mainly on combating tax evasion. notwithstanding the short - run costs of the budgetary adjustment in terms of economic growth, prompt action was unavoidable : the projected scenario was not sustainable. we are still paying the price of the slowness with which italy β s public debt - to - gdp ratio was reduced in the decade following the inception of the european monetary union. whether the adjustment measures will effectively succeed in attaining the net borrowing objectives can only be determined in the course of | mario draghi : economic overview and banking supervision reforms address by mr mario draghi, governor of the bank of italy and chairman of the financial stability board, at the italian banking association annual meeting, rome, 15 july 2010. * * * in the life of the italian banking association ( abi ), today β s gathering marks the handing over of the baton to a new president. to corrado faissola, i would like to convey my personal appreciation, and that of the bank of italy as a whole, for his competent, level - headed and decisive leadership of abi through one of the most difficult periods in the history of economies and financial systems. to giuseppe mussari, i wish success in his new undertaking. he will accompany our banking system during a phase fraught with perils but also offering excellent opportunities for a financial system that is able to interpret and serve the real needs of households and firms. the state of the world β s economies the global economic recovery is uneven and of uncertain resilience but it is going ahead. the international monetary fund estimates growth in global output at around 4. 5 per cent this year and next : 8 or 10 per cent in some large emerging economies and scarcely 1 per cent in the euro area. here in europe the recovery, driven by the expansion of world trade, remains exposed to risks : the persistent weakness of domestic demand in our countries ; turmoil in still - fragile financial markets that overreact to the heightened perception of sovereign risks ; and possible inflationary pressures in the emerging countries, which would lead to more restrictive policies. the italian economy is now benefiting from the renewed vivacity of world trade. the bank of italy β s economic bulletin, published today, presents a scenario in which the volume of exports expands by 9 per cent this year and 5 per cent in 2011. consumption and investment will remain weak because real incomes are stagnant and employment prospects uncertain. economic policy bottlenecks the consequences of all nations β economic policies are ever more interwoven and interdependent. an acceleration in the adjustment of imbalances in the public finances is indispensable ; the effect on the economic recovery will be positive if the adjustment helps to reduce yields on sovereign debt, which often constitute banks β benchmark in determining the cost of credit. but if the cloud of uncertainty hanging over bank balance sheets is not removed, funding difficulties will persist. monetary policy in the euro area remains strongly expansive. the governing council of the | 1 |
, than in continental europe, where relationship lending is thought to be prevalent. it may also imply that the role of banks in the transmission of monetary policy differs in continental europe and in the us or the uk. in continental europe, banks would insulate the firms from the effects of changes in the market interest rates to a larger extent than us or uk banks would, because of the larger proportion of loans granted through relationship lending. but, as i will argue, current trends in bank structure and competition seem to be putting pressure on banks to limit the scale of their relationship lending activities. 2. what then are the main characteristics and trends of the european banking sector? let me briefly touch upon some aspects that have been addressed in the papers by dermine and by rajan and zingales. these papers stress that competition, both among banks and from other financial intermediaries, has led to the consolidation of the european banking sector and to a diversification of the financial services proposed by banks. first, there has been significant consolidation of the banking sector, including a sharp fall in the number of banks. overall, the number of banks in the euro area decreased by about a third in the last fifteen years. second, financing through issuance of market instruments, which has historically played a minor role for euro area corporations, has become more important since the start of stage three of economic and monetary union. due to the monetary union, large issuers can more easily go abroad if their domestic financial markets are not sufficiently developed. and european banks have been confronted with competition from non - european investment banks in the issuance - underwriting business. third, traditional deposit - taking activities have been challenged by the emergence of assets management companies and mutual and pension funds. these bank competitors have boomed in the last decades, accentuating the competitive pressure on the traditional banking business. fourth, retail lending, and especially lending to smes, remained untouched from the competition of either other financial intermediaries or foreign banks. however, given the over - capacity of most domestic banking sectors of euro area, retail lending is likely to undergo intensified competition among domestic banks. like any business that is confronted with new competitors, banks reassess their activities. for instance, we observe in most countries that banks have been able to generate income by entering into the business of their competitors. banks actually have offered mutual funds and other portfolio management services to the customer network acquired via their traditional deposit taking and lending activities. now, many economists have asked whether | relationship lending can remain profitable in a more competitive environment. 3. increased competition in banking seems to be reducing the availability of relationship lending in the euro area before further describing the effects of increased competition on the availability of relationship lending, let me stress that the phenomena we are talking about are not directly observable, and hence making it hard to evaluate the availability of relationship lending with certainty. on the one hand, increased competition may deter banks from costly acquisition of information on borrowers if they fear that the latter can more easily switch to other banks in good times. on the other hand, the competition from non - banks in so many of banks'activities may push more banks towards relationship lending with sme, a segment on which they can not be challenged by non - banks. recent evidence seems to suggest that the availability of relationship lending is decreasing. we observe for instance that in belgium and germany, the growth rate of real loans to the private sector is lower than output growth, which is quite different from what was observed in previous episodes of economic slowdown. this decline coincides with large commercial banks reducing the scale of their retail banking because competition from local savings banks has intensified. there is also evidence that the banks which have been involved in mergers tend to limit the scale of their lending relationship activities. finally, some observers expect that the introduction of the basel ii accord would increase the capital charges on loans supplied to small and medium enterprises. this new regulation is likely to make the price of credit to small and medium enterprises more responsive to market interest rates. this would directly affect the role of banks in the monetary policy transmission ; as the recent research in the eurosystem has shown this role depends on the particular environment in which european banks have operated up to the recent past. in conclusion, recent trends in the european financial markets seem to have put pressure on banks, leading some of them to reduce the scale of their relationship lending activities. if it continues, the recent reduction in the availability of relationship lending in europe could affect the euro area business cycle and the transmission of monetary policy as the liquidity insurance provided by banks to sme decreases. all in all increased competition will trigger substantial changes and cause difficulties. but in the end after a period of transition the financial industry of the euro area will have gained competitiveness and strengthened robustness. such developments are clearly of primary importance for central bankers and this is precisely why this conference is so useful. | 1 |
04 / 11 / 2020 the two sides of the ( stable ) coin speech the two sides of the ( stable ) coin speech by fabio panetta, member of the executive board of the ecb, at il salone dei pagamenti frankfurt am main, 4 november 2020 the payments industry is undergoing a digital transformation, and this transformation is accelerating. we can now pay with cards that are stored in our mobile wallets, ready for a transaction to be initiated at the touch of a button. mobile payment apps allow us to easily pay or send money to friends. new services based on application programming interfaces, such as payment initiation services, are expanding consumers β choice of e - commerce payments. fintechs have sparked the latest wave of innovation. in a recent survey by the european system of central banks, over 200 new payment solutions were reported, of which more than one - third were provided by start - ups. new providers have progressively shifted their business models from fee - based to data - driven, where payment services are provided free of charge in exchange for personal data that offer deep insights into users β preferences. the global technology firms β the so - called big techs β are using this model to leverage their large customer base and expand in global markets. thanks to their global footprint, they are uniquely positioned to offer services in the area of global cross - border transactions, where current solutions are low quality and expensive. this is the backdrop against which stablecoins have emerged. they could be used by the big techs to offer innovative payment solutions that work both within and across national borders. while stablecoin initiatives are still in their infancy, they should be carefully analysed as they could radically transform the payments landscape. today, i will discuss the potential advantages and risks of stablecoins, and their implications for the payments market, the financial sector and the overall economy. i will then turn to the forward - looking policies that are needed to steer innovation towards welfare - enhancing outcomes. two sides of the same ( stable ) coin stablecoins are digital units of value designed to minimise fluctuations in their price against a reference currency or basket of currencies. [ 2 ] to this end, some stablecoin initiatives pledge to hold a reserve of state - issued currencies or other assets against which stablecoin holdings can be redeemed or exchanged. stablecoins became the subject of heated debate last year, after the technology giant facebook and its partners announced their own global stable | ##coin, libra. https : / / www. ecb. europa. eu / press / key / date / 2020 / html / ecb. sp201104 ~ 7908460f0d. en. html 1 / 5 04 / 11 / 2020 the two sides of the ( stable ) coin global stablecoins are initiatives which aim to achieve a global footprint [ 3 ], without necessarily relying on existing payment schemes and clearing and settlement arrangements. for example, libra is an integrated construct that simultaneously encompasses a new settlement asset, a new payment rail and new end - user solutions. global stablecoins could drive further innovation in payments, responding to the need for cross - border payments and remittances that are more efficient and cheaper. indeed, the financial stability board has proposed a roadmap to enhance cross - border payments that recognises a role for sound global stablecoin arrangements. the flip side of stablecoins is the host of risks they can pose to our social and economic life. for example, data - driven models could pose a risk of misuse of personal information for commercial or other purposes, which could jeopardise privacy and competition and harm vulnerable groups. another concern is that wide acceptance of stablecoins offered by foreign companies would make european payments dependent on technologies designed and governed elsewhere. this could raise potential issues of traceability in the fight against money laundering, terrorist financing and tax evasion. it could also make the european payment system unfit to support our single market and single currency and vulnerable to external disruption, such as cyberattacks. risks to financial stability and monetary sovereignty other risks involve the monetary and financial system. in fact stablecoins, if widely adopted, could threaten financial stability and monetary sovereignty. as i mentioned earlier, stablecoin issuers often promise that their stablecoins can be converted into fiat currencies. but this promise generally differs significantly from the convertibility mechanism for bank deposits or e - money. in the case of bank deposits, one - to - one convertibility to the fiat currency is safeguarded by deposit insurance schemes and prudential regulation and supervision. the value and safety of e - money holdings are protected by the fact that e - money issuers must hold customer funds in custody by third parties. these safeguards may not apply to stablecoins, which are therefore vulnerable to runs. if the issuer does not guarantee a fixed value, the price of the | 1 |
##ntial norms and regulations. the finsac head also blamed the crisis on jamaica β s failure to adequately regulate and supervise the financial sector. he noted, in particular, that the office of the superintendent of insurance, was not adequately staffed and as a department within the ministry of finance did not appear to have the stature needed to deal β at eye level β with the moguls of the insurance industry. this was the jamaican situation in the 1990s. it may not be our present circumstance, but let β s be frank, we have our own skeletons and we should learn from the jamaican experience and seek to put our house in order. in the context of the integrated supervision project conducted by the lawrie savage group, diagnostic studies on several insurance companies were conducted. the data obtained from these studies, as well as information from the office of the supervisor of insurance, suggest that while several companies operate in conformity with the statutory requirements, there are too many cases, similar to the jamaican example, where the prudential norms and regulatory requirements are flouted. the evidence suggests that there are far too many cases of chronic statutory fund deficits, late filing of returns, inadequate reinsurance and other areas of non - compliance. the diagnostic studies also indicate that the investment strategy of some companies requires stricter regulatory attention, in part because of limited portfolio diversification and related party transactions. the latest insurance industry report makes reference to the need for companies to upgrade corporate governance and risk management structures. it also identifies market conduct in the industry as another matter of concern. in this regard, there are clearly too many instances of inadequate and delayed settlement of legitimate claims of policyholders as well as questionable, if not, unfair and deceptive marketing practices. the capacity of intermediaries to competently fulfill their role is also an issue that reportedly comes up with some frequency. specifically, there is a perception that the training of intermediaries does not always keep pace with the evolution of products offered by some companies. these are but some of the issues that call for stronger regulation and more focused supervision. and so, what are we doing? as you know, cabinet has approved that the supervision of insurance companies and pension funds be integrated with that of banking institutions under the authority of the existing bank inspection department of the central bank. the legislation to effect this transfer is currently being finalized and is expected to be presented to parliament by the end of july or early august. in the meantime preparations for the transfer are proceeding apace. internal | need to respond constructively to changing conditions ; this could mean more mergers, more product innovation and the taking on of new risks. well - managed institutions in strong financial condition should have great freedom. the central bank will give weak companies time to manage themselves back to financial health and will also develop appropriate exit strategies for those which can no longer be viable. i invite the stakeholders in the industry - attic, ttii, the brokers association - to work with the central bank to meet these objectives. it β s in all our interest to have strong and effective regulation that meets international standards. stakeholders can and should bring peer pressure to bear on companies that do not play by the rules or flaunt best practices, since a few non - compliant operations can present industry - wide risks or even threaten the stability of the financial system. thanks again for inviting me. | 1 |
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