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17. 11. 2016 challenges facing the retail banking sector remarks at the dinner event organised by the european savings and retail banking group ( esbg ), madrid fernando restoy deputy governor good evening. it is a pleasure to have the opportunity to participate in this event and to address this eminent group of bankers. i am grateful to isidro faine and jose maria mendez for inviting me. i hope that you have now got your breath back and recomposed yourselves after viewing picasso ’ s impressive and to some extent disheartening masterpiece, guernica. you certainly need a strong mind to discuss banking issues nowadays. i imagine that probably much of the agenda of your regular meetings is devoted to exchanging experiences on how financial institutions such as those participating in the european savings and retail banking group ( esbg ) are addressing the current challenges affecting the entire financial sector in the current post - crisis period. allow me to attempt to make a modest contribution to that discussion. i would like to say from the outset that i do not believe that the financial crisis, as such, has challenged any specific business model. we have seen institutions with quite different sizes, governance structures and business orientations failing all around the world. the crisis has affected both investment and commercial banks as well as wholesale and retail businesses. indeed, i would subscribe to the idea that, by and large, the crisis does not provide clear arguments with which to question a particular business model or line of activities, such as retail intermediation, wealth management or investment services. it does however encourage us to analyse whether those banking activities are conducted in a sufficiently efficient way by specific institutions so as to make them profitable. that said, pure european retail banks admittedly face specific challenges in the current environment, which need to be effectively addressed in order to preserve the social function that those institutions provide. let me mention three of the most obvious challenges. first, the low interest rate environment, which is putting heavy pressure on financial margins, particularly for institutions – such as most of those belonging to the esbg - with little investment in securities that could be revalued as rates go down, and with much funding obtained from retail deposits, which impedes a full transmission of very low or negative market rates to funding costs. second, the accumulation of non - performing loans in several regions of the euro zone. this is particularly a challenge for banks, again mostly retail banks, with a significant concentration of exposures in a single country | consumers navigate and compare financial products more efficiently, we are looking into the establishment of an online product aggregator to provide financial consumers with the ability to gather reliable information on a wide range of insurance products and make comparisons on simple products on a single website. a number of issues will need to be addressed to support such an initiative and ensure that meaningful comparisons can be achieved. over the coming months we will be meeting with stakeholders to obtain further views on our aggregator proposals and examine options to move this initiative forward. i have spoken at length this morning about our plans for the industry. in the years ahead, this industry will have an important strategic role in the ongoing transformation agenda that is being pursued for the insurance and takaful sectors. the bank is committed to providing a well - balanced regulatory environment that adequately protects consumers, while encouraging advisers to realise their full potential. we will continue to set a high bar on professional integrity and quality of advice, and we welcome your ideas and input on how we can continue to encourage firms to grow within the industry and bring financial advisory services to a wider spectrum of the public. the association of financial advisers has a very important role in this process and has been a focal point for the bank ’ s engagements with the industry. i look forward to your continued cooperation in achieving our shared goal of developing a financial advisory industry in malaysia that truly serves to improve the well - being of financial consumers in this more challenging environment, and one that we can all be proud of. thank you very much for your attention. bis central bankers ’ speeches | 0 |
26. 07. 2022 inflation and growth : economic policy challenges * encuentro foros de vanguardia pablo hernandez de cos governor * lenglish translation from de original in spanish good afternoon. it is a pleasure for me to participate in this event, organised by la vanguardia. i would like to take this opportunity to explain the ecb ’ s most recent monetary policy decisions, in particular those we adopted last thursday. let me first frame those decisions in the context of the current macroeconomic scenario and the inflationary episode. to conclude my address, i will also briefly describe the role that other economic policies can play in addressing the current challenges. the macroeconomic context the current context is one of extraordinary uncertainty. economic activity in the euro area is slowing, weighed down by the war in ukraine. the economy is being adversely affected by the impact on firms of rising energy and commodity costs and the effects of high inflation on households ’ purchasing power, along with the persistent supply - side constraints, supply chain disruptions and heightened uncertainty. to illustrate this point, according to the flash figure published last week, in july the euro area composite output pmi was down by 2. 6 points to 49. 4, putting it in contractionary territory ( below 50 points ) for the first time since february 2021. 1 overall, these factors are casting a considerable shadow over the outlook for the second half of 2022 and the longer term. at the same time, economic activity continues to benefit from the reopening of the economy ( which is underpinning spending on services, in particular in the tourism sector ), a strong labour market, the support of the savings built up by households during the pandemic and fiscal policy support both at the national and european level thanks to the implementation of ngeu - funded projects. against this backdrop, the eurosystem projections published in june envisaged real gdp growth of 2. 8 % in 2022 ( albeit with 2 percentage points ( pp ) relating to carry - over from 2021 ) and 2. 1 % in both 2023 and 2024. these projections represented a further downward revision. for instance, compared with the december 2021 projections, the gdp growth forecasts for 2022 and 2023 were down by 1. 4 pp and 0. 8 pp, respectively. meanwhile, last week saw the publication of the ecb survey of professional forecasters ( spf ) for the third quarter of 2022, conducted in early july. the | story. in typical recessions, the challenge is that there are not enough jobs available for the number of people seeking work. in today ’ s job market, demand for labor is very high — we hear that from employers who are finding it hard to fill all their openings — and a lot of people are getting hired. at the same time, people are leaving their jobs in large numbers, either to look for new work or exit the labor force altogether. this cycle of hires and quits reflects the extraordinary nature of the pandemic, as workers and employers adapt to rapidly changing circumstances. these vacancies won ’ t be filled instantly — it takes time for employers to find the right workers. but as demand for workers and progress on hiring remains strong, i am confident that we will continue to see meaningful job gains and continued progress toward maximum employment. the last aspect of the outlook that i ’ ll speak about is inflation. recent data show core inflation, which excludes volatile food and energy prices, running at about 3 - 1 / 2 percent, which is well above the federal reserve ’ s longer - term 2 percent goal. taking a closer look at the data, it ’ s clear that this spike in inflation largely reflects the transitory effects of the rapid reopening of the economy, which is pushing supply and demand in extreme ways. as the economy gets through these unusual dynamics, i expect inflation to come back down to around 2 percent next year. given the complexity of this topic, i ’ ll go into this in more detail. i find it helpful to view recent developments in terms of three categories. the first is related to prices for goods and services that underwent huge declines during the pandemic but are now rebounding as the economy reopens. for example, in the first year of the pandemic, prices for airfare and lodging fell sharply as people cut back on travel. since then, we ’ ve seen these rebound toward their pre - pandemic trends, pushing the inflation rate up. one simple way to get a better read of inflation that is not overly influenced by these big swings in prices is to take the average inflation rate from the start of the pandemic. that calculation shows that core inflation has averaged 2 - 3 / 4 percent since february of last year. but even that number is heavily influenced by the effects of the pandemic on the second category : used vehicles. even though used cars and trucks are a small category, their soaring | 0 |
banks'business models and their future profitability. moreover, by establishing a harmonised framework for its supervisory activities through the single rulebook, the ecb has reduced the fragmentation that existed previously. and the srep reform is another important milestone in our efforts to better assess risks while stabilising the methodologies we use. however, much of the work that still needs to be done falls outside of the ecb's remit. a strong supervisory framework plays a key role in supporting the growth and competitiveness of the economy but will never replace the need for structural reforms to boost productivity. 3 / 4 bis - central bankers'speeches other factors will also play a major role, such as changing demographics, including ageing societies, and geopolitical risks. overall, the profitability of european banks has increased significantly in recent years, but they need to continue adapting to a changing environment presenting a cluster of challenges. long - term investment and a strong capital base will be crucial for banks to meet these challenges. from the ecb's perspective, there is no room for complacency. 1 directive 2013 / 36 / eu of the european parliament and of the council of 26 june 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending directive 2002 / 87 / ec and repealing directives 2006 / 48 / ec and 2006 / 49 / ec ( oj l 176, 27. 6. 2013, p. 338 ). 2 conference of the parties ( or " cop " ) to the united nations framework convention on climate change ( unfccc ). 3 di vito, l., martin fuentes, n. and matos leite, j. ( 2023 ), " understanding the profitability gap between euro area and us global systemically important banks ", occasional paper series, no 327, ecb, august. 4 ecb ( 2024 ), digitalisation : key assessment criteria and collection of sound practices, 11 july. 4 / 4 bis - central bankers'speeches | the case of investment and private consumption. traditionally the mainstays of stable growth in any economy, these components looked to have performed worse than expected. over a longer time frame, investment has proven significantly less dynamic than activity since the pandemic, with the transport and housing components performing particularly poorly. by sector, while the 2023 public investment - to - gdp ratio stood well above its pre - pandemic level, the private investment - to - gdp ratio remained more than 10 percentage points below that figure. using data from the banco de espana's central balance sheet data office to analyse these developments at firm level, 1 it would appear that this state of affairs is in part attributable to the fall in the share of firms investing, particularly in the sectors hardest hit by the pandemic, as well as to the decline in investment in young firms. moreover, productivity remains notably weak, potentially acting as a brake on economic growth over the medium and long term. this sluggish productivity may be contributing to the rise in unit labour costs, which could undermine spain ’ s international competitiveness. against this backdrop, the latest short - term indicators suggest that economic activity in spain should remain notably buoyant in the opening months of 2024. a similar conclusion can be drawn from the figures on social security registrations ( up 0. 7 % in the first quarter ) and the purchasing managers ’ indices ( pmi ), which, in their composite version, stood in march at their highest point since may last year. looking ahead, the outlook for growth in the spanish economy in the coming years remains fairly encouraging. in particular, based on the banco de espana's latest projections, the gdp growth rate is expected to stand at 1. 9 % in 2024 and 2025, before gradually converging towards levels more in keeping with the spanish economy's growth potential towards the end of the projection horizon ( with gdp growth of 1. 7 % in 2026 ). noteworthy among the factors underlying these projections are the gradual reactivation of the european economy as the negative impact of monetary policy tightening slowly fades, the recovery in economic agents ’ real income, the population growth envisaged and the fiscal impulse from the next generation eu ( ngeu ) programme. conversely, the notably weak investment and sluggish productivity of recent quarters will weigh on the future pace of output growth. meanwhile, activity will be adversely impacted as certain tailwinds that have recently driven growth | 0 |
##ous outcome – a man - made construct – and the job of macro - prudential policy is to try to smoothen this cycle as much as possible. beyond increasing the resilience of the system, i will argue that macro - prudential policy should be ambitious in leaning against imbalances and if so, it has to be prepared to be bold and intrusive. decisions on the timing, design and calibration of interventions need to be underpinned by robust analysis. while monetary policy should not be employed to smoothen the credit cycle, under the principle of “ one objective, one tool ”, the macro - prudential policy function should rest under the responsibility of central banks given synergies and the interactions between the two policy functions. this reflects the macro - prudential policy framework adopted for the ecb / ssm. the nature of systemic risk and the objectives of macro - prudential policy macro - prudential policies aim to maintain the stability of the financial system as a whole through containing systemic risks. systemic risks can be defined as risks that, if materialised, have the potential to make financial instability become so widespread that the functioning of the financial system is impaired to an extent that growth and welfare suffer materially ( ecb 2009 ). ecb staff, combining available literature and practical experiences, has developed a conceptual framework that relies on three mechanisms that can lead to systemic financial instability : risk coming from large aggregate shocks, contagion risk, and bis central bankers ’ speeches the risk from the unravelling of widespread financial imbalances that have built up endogenously over time. 1 contagion occurs when the failure of one institution “ infects ” other hitherto “ healthy ” institutions. prominent recent examples of the materialisation of contagion risk include the drying up of interbank funding following the collapse of lehman brothers. large aggregate shocks have always been an important source of widespread financial instability through history. gorton ( 1988 ) documented how negative economic news were the best leading indicators of the likelihood of banking panics in 19th century usa. the third, and, in my view, most important source of systemic risk is the risk of the unravelling of financial imbalances. these imbalances may build up gradually, mostly endogenously, and can then unravel abruptly. they form part of the inherent pro - cyclicality of the financial system. 2 it is crucial to recognise that the financial | has an important role in building cross - border consensus and collaboration on the strategic direction for the islamic financial services industry for better alignment to the objectives of financial stability. as islamic finance continues to become an integral part of the global financial system, there is scope for the current framework of cooperation to be strengthened and broadened to address the new challenges that have emerged. islamic finance has been inclusive in its development, not only at the national level but also across jurisdictions. at the national level the islamic financial system provides the full spectrum of financial services from the large multinational corporations to micro - enterprises and to households. at the international level, the development and expansion of islamic finance become important in strengthening financial and thus economic linkages between emerging economies. it has allowed emerging economies to participate in its development thus increasing the potential to contribute to the rebalancing of global growth as financial flows not only provides support to domestic demand but also to greater trade and investment flows across borders. concluding remarks in this challenging international financial environment, islamic finance has continued to demonstrate its evolution and strong growth. islamic finance in its advancing journey today is presented with an opportunity to increase the financial linkages with the broader financial system thereby facilitate a more efficient allocation of capital across borders. indeed, islamic finance as an integral part of the international financial system has the potential to contribute to global financial stability and to enhance the prospects for global growth. | 0 |
, induced by the steady increase in oil and gas prices, set in motion the evolution of a more sophisticated, more diversified and more complex financial sector which brought with it many benefits. not unexpectedly, it also brought a whole host of challenges, some of which are still to be resolved. let me cite some of the more notable changes that have occurred in our financial system over the past twenty years : • there has been significant consolidation among the banks, with the three largest banks now accounting for 70 per cent of total bank assets ; similarly the three largest insurance companies accounting for three - quarters of the insurance industry. ( the largest insurance company, clico accounts for close to 55 per cent of total insurance assets ). • most banks have greatly expanded their product offerings, functioning as “ universal banks ”, offering in addition to basic banking services, pension and mutual fund management, individual annuity plans, trust services, leasing, brokerage and merchant banking services. in an effort to compete, insurance companies have been issuing deposit - like products and mutual funds. ( clico has led the cross - over to bank - like products ). • to reduce costs and to compete effectively, some of the institutions adopted conglomerate structures. here again, cl financial led the way in terms of the breadth and complexity of its structure. • a fourth significant change in the last few years is the extent of regional penetration by our banks and insurance companies, both through off - shore lending and insurance coverage as well as through shareholding and ownership. of course, the extra - ordinary level of regional penetration brought increased risk and has created special problems in the clico case. • and one last change i would like to mention : you would re - call that in the 1970s and 1980s, we embarked on the “ localization ” of the banking sector. currently, reflecting the impact of what we could broadly call “ globalization ”, of the eight commercial banks operating in trinidad and tobago, six are foreign - owned – a reversal of the localization trend. unfortunately, neither the legal nor the prudential framework kept pace with the rapid evolution of the financial sector. for example, the first upgrade of the financial institutions act since the early 1990s came in september 2006. this was followed by a comprehensive reform of the fia, which was approved by parliament in december 2008. the current insurance act dates back to 1966, with an important amendment from 1980. the next upgrade came a few weeks ago, in the context of the clico crisis. the | economies in the recent tightening cycle points to an increased latitude in managing the impact of the global financial cycle while maintaining some policy autonomy. asean economies weathered the post - pandemic round of interest rate hikes in industrialised economies surprisingly well, avoiding the capital surges and sudden stops they had suffered through during the earlier shocks. what conjunctural and structural factors might explain this apparent improvement? first, the common global inflation shock and resulting synchronicity of monetary tightening across developed and emerging market economies reduced the risk of destabilising capital flows or currency fluctuations. the inflation cycle in asean was also somewhat more contained than in the advanced economies. asean economies reacted to the global inflation shock earlier, and their pre - emptive monetary tightening reined in domestic inflation and reduced incentives for capital outflows. improved communication and orderly transmission of higher policy rates also supported risky asset classes, such as emerging market bonds and equities. 2 second, asean economies had stronger buffers against outflows than in previous cycles. they maintained broadly balanced current accounts and benefited from positive foreign direct investment trends, terms of trade tailwinds and continued recovery in key sectors. with generally strong external positions, asean economies also reduced their reliance on foreign capital, deepening their local currency asset markets and increasing domestic participation in these markets. third, asean economies relied on expanded toolkits to reduce financial stability risks and dampen the impact of the global monetary cycle. over the past few years, most have deployed macroprudential measures to reduce leverage, limit balance sheet mismatches, and discourage the formation of asset bubbles. when regional currencies faced depreciation pressures earlier this year, asean policymakers engaged in discretionary policy management, accepted some currency flexibility, and used targeted foreign exchange interventions and administrative measures to temper currency volatility and capital outflows. extending our perspective to the last 30 years, recent research by mas3 confirms that capital flows to emerging markets in asia – both in debt instruments and more generally – were heavily influenced by the external global financial cycle during the period from 1995 to 2010 – from the asian financial crisis through the global financial crisis. on average, about 45 percent of the variation in capital flows during this period was attributable to external or global factors. however, our research also shows that this influence has diminished over the past 15 years, to the point where a much - reduced 10 percent of the variation in flows can be ascribed to external " push " | 0 |
authority to decide on norway ’ s monetary system and institutions under the union with sweden. norges bank is thus celebrating its 200 - year anniversary in 2016 and has announced ambitious targets for its bicentenary project. in 2016 we want to see that this project has produced three high quality books on the history of norges bank 1816 - 2016, the monetary history of norway 1816 - 2016 and on selected topics in central banking in an international historical perspective. the aim of the workshop is to bring together international experts from central banks and academia for informal discussions and an exchange on topics related to the writing of central bank and monetary history. we expect discussions to be active and lively and we want this workshop to kick - start research activities in these important areas. i want to thank the graduate institute here in geneva and professor marc flandreau in particular for their hospitality and for allowing us to spend almost two days discussing research in central bank and monetary history. previous books about the history of norges bank have been written in norwegian, and predominantly by previous central bank governors. but “ the times they are a - changin ”, to phrase bob dylan ( dylan, 1964 ), 1 and today we believe that best practice in writing central bank and monetary history is achieved by contributions from professional academic experts in relevant areas. the research should be brought up to international quality standards through the usual peer review process. and, once it is recognized that there is only one central bank in each country, it is also clear that a strong international perspective on central bank history and monetary history is needed in order to trace the origin of ideas and how monetary policy views and practices have developed over time as well as across different countries. the key responsibilities of central banks are to promote price stability and financial stability. this fall, policy makers around the world have struggled to implement policy measures to bring the international financial markets back into a more normal mode of operation. in this pursuit we are constantly reminded of the importance of having a solid understanding of economic history and developments as a backdrop to designing the right policy for the current situation. this fall, international experts like you are in greater demand than ever to help bring about this level of understanding, and many of you appear frequently in debates on these issues in policy workshops and conferences as well as in the media. against this backdrop we see this workshop as one of many arenas where policy makers and academic experts can exchange ideas and views on what has been characterized as the most serious financial crisis since the great depression in the | . this room for discretion was used to take domestic considerations into account. this extra room for manoeuvring, however, was only available to the bank as long as its commitment to defend the gold standard was not called into question. was this a preview of today ’ s modern inflation targeting regime? as long as inflation expectations are well anchored, more weight can be given to developments in the real economy. the independence of norges bank was de facto substantially reduced after wwii. the legitimacy of the bank and confidence in the bank had been seriously undermined during the interwar period and during wwii. the government tried on several occasions in the first decade after wwii to turn norges bank into a subordinated agency. if the history of norges bank was written in a vacuum with no international references, one might have thought that this was unique for norway. not so, similar developments were observed in many countries who previously subscribed to the gold standard. political control over central banks was tightened in many countries with one notable exception, the bundesbank in west germany which was established as the most independent central bank in the post - wwii period ( sejersted, 1994 ). 3 norges bank was in fact not as dependent as believed. the truth may lie somewhere in between. recent research on the role of norges bank during the first decade after wwii ( ecklund, 2008 ) 4 suggests that norges bank maintained a relatively high degree of operational independence in this period. norges bank ’ s independence was gradually restored. in 1986 norges bank was granted instrument autonomy and started to set short - term interest rates to sustain the prevailing fixed exchange rate regime. the current inflation targeting regime was introduced in march 2001 and norges bank now sets short - term interest rates aimed at keeping inflation around 2. 5 % over time. greater independence demands adequate accountability. along with greater degree of autonomy and independence norges bank has become more open and transparent in its monetary policy communication. increased openness by norges bank is not only a way of achieving accountability to its constituents, but is also instrumental to enhance policy effectiveness. this stands in stark contrast with the mystique and opaqueness which characterized earlier central bank communication. for a long time central banks have focused predominantly on their interest rate policy. considerably less attention has been devoted to their liquidity policy which used to be carried out somewhere in the basement of the monetary policy temple, far away from the spotlight of the announcement of interest rate decisions. this | 1 |
of oil. the evidence thus far is that demand has slowed a little, but supply has increased rapidly in recent years and is expected to remain at a high level this year. this matters because, usually, more supply of something and a cheaper price is good news, not bad. to be sure, lower oil prices require adjustment on the part of producers – corporate and sovereign. but this has always been so and an increase in the availability of energy and cheaper prices has generally, in the past, been seen as a plus for overall global growth – a positive ‘ shock ’. this was because the response of consumers of oil to a decline in its price was to consume more – not just more oil but other goods and services as well, using the higher real income afforded by lower oil prices. it was thought that this outweighed the negative effects of spending cutbacks in oil - producing countries. it seems people are less confident this time of a fall in oil prices being expansionary. why so? the fact that the united states has become a larger oil producer ( and a significant producer of the short - run ‘ marginal barrel ’ ) is clearly relevant. so is the possibility that consumers both there and in europe may, for particular reasons, be more inclined to save any windfall from lower oil prices than they used to be. these factors may, for a time, work against the traditional positive effect. in addition, the price for oil was high enough, for long enough, that many investment and spending decisions were taken around the world that look, perhaps, not quite so sound in hindsight. hence, producer countries have budget strains ; some sovereign wealth funds are liquidating financial assets ; spreads on debt instruments issued by energy companies have widened sharply ; exploration and new investment is being curtailed rapidly. it seems as though the sheer strength and longevity of the preceding period of very high oil prices prompted behaviour that made some players more vulnerable to a price decline. that, of course, is not unknown in the history of commodity markets. having said all that, people might be being a little too pessimistic about the effects of the fall in oil prices. it is still equivalent to a reduction in taxes for a very large number of consumers around the world who now have more disposable income to spend or to repay debt. the shareholders and state owners of the producing assets, who gained from the higher prices, are wearing most of the costs of the lower price, along with those who provided | sentiment and in the feedback we were receiving directly from firms. australia was being affected through our trade, financial and business linkages with the rest of the world. australia was doing better than most countries, as had been anticipated. but for a few months it was not clear how much comfort we should take from that, because the economic news from abroad seemed to be so dire. as one metric, the imf ’ s forecasts for global output in 2009 as at last february were for growth of ½ per cent. that was already a marked reduction from a few months earlier. subsequently they were cut further, and when released in late april showed an expected contraction of over 1 per cent, which would be the weakest outcome for at least six decades. forecasts for australia were inevitably marked down as well. the time of our may statement on monetary policy was when the outlook for the local economy seemed weakest. in this environment, the possibility that we would need to ease monetary policy further was obviously canvassed. financial markets expected as much, at one point pricing in a decline in the cash rate to less than 2 per cent. yet the board had already aggressively eased monetary policy, delivering the largest reduction in debt servicing costs to households in modern times. interest rates were low, or in some cases very low, by historical standards. substantial fiscal stimulus was also in train. these could be expected to provide significant support for demand. so even as activity abroad continued to contract, the board had to be mindful of how much action had already been taken in anticipation of serious economic weakness. those measures would take time to have their full effect. but that lag could not be shortened by increasing the dosage. accordingly, while keeping open the option of further easing, the board kept a fairly steady setting through this period. there was one further small decline in the cash rate in april. apart from that, official interest rates have been unchanged since we last met, in contrast to the very sharp falls from september through to february. where then do we stand at present? things abroad hardly look rosy, but they look distinctly better than they did a few months ago. conditions in international financial markets have continued to improve. there have been occasional reversals, but each time the improving trend has resumed. extreme risk aversion has abated ; spreads have narrowed ; capital markets have continued to thaw, though in some overseas cases this has relied heavily on central bank financing activities. financial institutions in the united states and | 0.5 |
14 months. nevertheless, it is still running at close to 3. 5 %, because it also excludes prices that have declined sharply. so the underlying trend shows inflation is still well above target. and the longer the underlying trend remains too high, the harder it can be to bring inflation down. why? because when households and businesses expect inflation to be above 2 %, buying patterns and corporate pricing behaviour adjust. when that happens, it becomes more difficult to bring inflation back to 2 %. looking ahead, we want to see less - generalized price increases as well as a decline in the average price increase. both of those things are happening, but they need to keep happening to restore price stability for canadians. slowing demand that brings me to the other factor we ’ re watching closely : the balance between demand and supply in the economy. inflation has come down from 8 % because supply chains have opened up, energy prices have fallen and the big price increases of a year ago have dropped out of the data. for inflation to continue to decline, we need demand to continue to grow more slowly than supply for a period of time. that will relieve price pressures, slow increases in labour costs and restore normal price - setting behaviour. and that ’ s what will bring inflation sustainably back to target. but i want to be clear — we are not trying to kill economic growth. we want strong, sustainable growth and a healthy labour market. the best contribution we can make to these objectives is to deliver low, stable and predictable inflation. price stability is a cornerstone of a market - based economy — without it, nothing works well. the way we achieve price stability is by using the policy interest rate to find a balance between demand and supply in the economy. too much demand, and inflation rises above target. too little, and inflation falls below target. we ’ ve seen both in the last three years. at the beginning of the pandemic, demand collapsed and inflation fell below 1 % — and was even briefly negative. we used all of the tools at our disposal to support the economy so that - 6canadians could continue to pay their bills, businesses could stay afloat and people would have jobs to go back to when the shutdowns ended. as economies around the world reopened, supply chains became tangled and demand for goods and services came roaring back. businesses could not keep up with demand, prices rose quickly and inflation became a big problem. the shift into excess demand required the opposite policy reaction | open up this year would have closed by the end of 2004. we projected that core inflation would likely fall to about 2 1 / 2 per cent in the second half of this year and to about 2 per cent by early 2004 as some of the special factors pushing up inflation ran their course. we also pointed out that total cpi inflation would continue to be importantly affected by swings in crude oil prices and that it would likely fall temporarily below the core rate in the first half of 2004 before steadying out at a rate close to core inflation. factors influencing monetary policy in the april monetary policy report, we listed a number of factors that we intended to watch closely as we set monetary policy. these factors are the pace of economic expansion in the united states and overseas, the strength of domestic demand, financial market conditions, and the evolution of inflation and inflation expectations. so, let me review how we have seen these factors evolving. i ’ ll start with the external environment. in europe, domestic demand and economic growth have continued to disappoint. japan ’ s economy has also remained weak. while demand growth in the rest of asia has been strong, the outbreak of severe acute respiratory syndrome ( sars ) is clearly going to slow growth in some countries. in the united states, domestic demand has not been recovering as quickly as expected, which has negative implications for canadian exports, at least over the short term. consumer spending continues to underpin economic activity in that country. however, business fixed investment has not yet picked up. expectations as to when the u. s. recovery will occur have been pushed back until late this year when confidence levels should improve, and when the impact of very expansionary monetary and fiscal policies should begin to be fully felt. now, let ’ s turn to the second factor - domestic demand in canada. on the whole, demand has remained quite strong, supported by a healthy employment market, low interest rates, and a recovery in corporate profits. while growth in consumer spending slowed slightly in the first quarter, it was still quite strong, especially on housing. governments and businesses both increased their spending. as a result of strong domestic demand, gross domestic product grew at an annual rate of almost 2 1 / 2 per cent in the first quarter, up from about 1 1 / 2 per cent in the final quarter of 2002. in nova scotia, we are seeing some fall - off in consumer spending. business investment prospects have also been dampened by the postponement of natural gas projects | 0.5 |
prototypical banking relationship that exists to allocate financing from depositors to projects that produce value. i view proprietary trading as an activity of low or no real economic value that should not be part of any banking model that has an implicit government backstop. nonetheless, the volcker rule, as written by congress, provides limited exemptions to this proprietary trading ban, so activities that would otherwise constitute proprietary trading can be permitted if those activities constitute hedging or market - making and do not threaten the soundness of the bank or the stability of the financial system as a whole. stated in terms of the analogy i have been using here, federally insured financial institutions and their affiliates can operate in narrow circumstances along the lines of a low - road banking model where there are sufficient guard rails in place to protect the integrity of the banking system. these guard rails are those limited exemptions based on safety and soundness and financial stability. the law mandates that the five regulators craft their implementing regulations to reflect the broad prohibition on proprietary trading activities by regulated banks, albeit with exemptions. the regulators then need to carefully examine whether exemptions like market - making or hedging can be conducted by the financial institution within the guard rails of safety and soundness and financial stability and therefore fit within the exemptions as congress intended. i dissented in the vote for approval of the proposed implementation of the volcker rule. let me say a bit about that dissent now. one reason for my vote was my sense that the proposed regulation ’ s guard rails were insufficient. i was concerned that, as proposed, the guard rails were too broad and would allow banks to be able to go too far off the road. further, i was concerned that the guard rails as crafted could be subject to significant abuse – abuse that would be very hard for even the best supervisors to catch. i feel it is very important that the guard rails be strong and be set very close to the road because of the potentially severe dangers of, and costs associated with, proprietary trading by institutions that have access to the federal safety net. in fact, it is not inconceivable to think that the potential costs associated with permitting hedging and market - making within these exemptions still outweigh the benefits we as a society supposedly receive from permitting these capital market activities. the potential compliance, supervisory, and other costs could be so great as to eliminate whatever value may arguably be derived by virtue of these capital market activities. what might such | relationship between financial markets and the public compels decisionmakers to correct the adverse incentives and moral hazards created by low - road business models. in my view, though, the regulation of low - road banking models is not without cost. indeed, some banking models are so complicated that they cannot be regulated without the expenditure of significant public or private dollars. when these business models have such a distant connection to meaningful financial intermediation, i believe that we as a society may very well want to rethink whether we want to support these business models at all. the costs of supporting them, simply put, may be prohibitive. indeed, there may not be worthwhile regulatory approaches to all problems, even where the benefits of an activity outweigh the costs to regulate it. for example, when considering the “ cost - to - regulate ” perspective, some regulatory structures consist of rules that are based solely on metrics. while such rules may have the advantage of being less costly and easier to implement than a more subjective rule, as a regulator, i have to ask whether a metricbased rule will foster the development of internal controls, processes, and cultures that are capable of correcting the problems embedded in a low - road business model. metrics - based oversight regimes do not work well in correcting misaligned incentives if the metrics in the see “ putting the low road behind us, ” speech delivered at the 2011 midwinter housing finance conference, park city, utah, february 11. nixon, simon ( 2012 ). “ lie bores into credibility of barclays and the city, ” wall street journal, june 28, http : / / online. wsj. com / article / sb10001424052702304830704577492963344243348. html. bis central bankers ’ speeches regime can be manipulated. it is the potential of metrics manipulation that leads me to favor, in certain instances, clear restrictions on the scope of particularly unproductive activities. let ’ s look at the “ volcker rule ” and consider the benefits of a specific activity and the costs to regulate this activity. the volcker rule, which was included in the dodd - frank act and should have the biggest impact on the largest and most complex financial institutions, prohibits proprietary trading by federally insured banks and their affiliates, such as brokerdealers. proprietary trading by such financial institutions is a capital markets activity quite distinct from the | 1 |
crisis economic growth in countries with bank - based systems lags behind that of countries with more balanced financial systems. 3 the clear policy message is that it is better to finance the real economy through several channels rather than to rely on just one. capital markets in particular can act as a useful “ spare tyre ”. 4 that is why the esrb fully supports the capital markets union, which aims to remove barriers to the development of capital markets. removing these barriers will foster changes in the structure of the financial system in europe. in fact, capital markets and other non - bank sources of external finance have been growing relative to banks. 5 this growth should improve firms ’ access to funding, and ensure that any losses are dispersed more widely. low bank profitability the overbanking in europe, highlighted in the asc ’ s report, is also a factor in the currently low 1 / 4 bis central banker's speeches level of bank profitability. a number of reasons have been mooted as the causes of this low profitability, including low interest rates. long - term real interest rates have been falling in the major advanced economies for two decades. technological change, demographics, income inequality and safe asset scarcity are just a few of the factors exerting downward pressure on long - term real rates. 6 accommodative monetary policy by the european central bank and other major central banks, acting in accordance with their price stability mandates, has also contributed to low interest rates. low interest rates tend to squeeze net interest margins owing to downward rigidity in banks ’ deposit rates. 7 but overbanking is also a factor in the current low level of bank profitability. overcapacity in some national banking sectors, and the ensuing intensity of competition, exacerbates this squeeze on margins. such over - capacity also means the sector does not operate at the efficient frontier, which is one reason why cost - to - income ratios remain high in some countries. at the same time, banks benefit from revaluations in their fixed income portfolios. moreover, profitability is boosted by a greater flow of lending and lower loan loss provisions than would have occurred in the absence of accommodative monetary policy. analysis by the ecb suggests that these effects tend to outweigh the impact on net interest income over the short term, but the picture varies depending on banks ’ business models. 8 in the broader context of generalised overcapacity and technological innovation, some banks | michael s barr : managing the promise and risk of financial innovation speech by mr michael s barr, vice chair for supervision of the board of governors of the federal reserve system, at the dc fintech week, washington dc, 12 october 2022. * * * thank you, chris, and thank you for the invitation to speak to you today about the opportunities and risks of innovation. for the purposes of our discussion today, i will be focusing on financial innovation supported by new technologies, or fintech. 1 in the fall of 2017, we managed to get chris to accept an invitation to speak at a fintech conference in ann arbor, so it's about time that i returned the favor. since then, we have continued to see major changes in technologies and the financial services and products they support. in looking over the materials for that conference, however, i'm struck by how the key themes have remained constant over, not only the last five years, but arguably for centuries. financial innovation has always brought promise and risk, and the urgent need to get regulation right. in 1610, when dutch merchants and bankers were otherwise busy creating global finance, a series of destabilizing bank runs also moved them to establish a ban on short - selling. many of the issues we grapple with today are not as new as we think. supporting innovation with appropriate regulation first, let's start with the promise. every day, we all have countless interactions with the financial system - depositing our paychecks, buying groceries, paying rent, borrowing, saving, and insuring against important risks. the promise of fintech is that it can make financial products and services better, faster, cheaper, and more available. financial innovation supported by new technologies can disrupt traditional providers by spurring competition, creating products that better meet customer needs, and extending the reach of financial services and products to those typically underserved. to realize the benefits of innovation, we need to manage relevant risks. we have seen through history that excitement over innovative financial products can lead to a pace of adoption that overwhelms our ability to assess and manage underlying vulnerabilities. as we saw in the lead up to the global financial crisis, innovative financial products can mask emerging risks, resulting in significant harms to businesses and households and ultimately undermining financial stability. these products can leave consumers vulnerable if they are not coupled with meaningful disclosures and basic protections against abusive practices. innovation can lead to disruptions of existing | 0 |
financial markets were affected to a certain degree by the fact that market liquidity declined because risk taking by major market makers was constrained by the full - fledged enforcement of the so - called volcker rule since july, and consequently the presence of technical players – that is, players engaging in algorithmic trading and high frequency trading ( hft ) – grew amid the thin summertime trading volume. i feel it is necessary to carefully bis central bankers ’ speeches monitor whether or not something trivial could lead to market instability not only in summer but also at other times, such as the end of the year or quarter, when liquidity tends to decline due to various constraints imposed by regulation ( chart 4 ). second, there is a possibility that the u. s. dollar funding cost will hover at a high level due to structural factors. the cost of converting yen into u. s. dollars in the swap market has been increasing and the basis swap spread has widened, as expectations for the interest rate hike in the united states have mounted, in addition to the usual end - of - year strengthening of demand for u. s. dollar funds ( chart 5 ). while i assume that japanese banks already have been making efforts to enhance their stable foreign - currency funding base while expanding their overseas business, i feel that it is necessary to carefully monitor this situation. the bank, in cooperation with the federal reserve, has a backstop in place in the form of the u. s. dollar funds - supplying operations, but i would like to reemphasize the importance of financial institutions ’ efforts to secure their own stable funding base. the third point is the impact of additional monetary easing by the ecb on the global financial markets. in europe, the presence of negative interest rates already has become prevalent in some countries in relation to the currency policy, even before the deposit rate reduction by the ecb to a negative rate. the ecb ’ s recent deposit rate reduction is expected to escalate this situation. the yield curve in germany, used as a benchmark, had temporarily turned negative with respect to bonds with maturities of six or seven years. i am keeping a close watch on how such an interest rate formation, coupled with the interest rate hike in the united states, will affect the flow of funds in the global financial markets, and whether or not the flattening of the yield curve will undermine the sustainability of government bond purchasing by the ecb from the perspective of the sustainability of the bank ’ | . recently, the international monetary fund ( imf ) has also been fairly consistently revising downward its forecast of global growth in its world economic outlook ( chart 1 ). although the chinese economy has been slowing somewhat, mainly in the manufacturing sector, its services sector has been firm ( chart 2 ). under the authorities ’ strong commitment to supporting growth, the economy is expected to broadly follow a stable growth path, albeit with the growth rate continuing to slow somewhat, as the authorities proactively carry out policy measures to support economic activity from both the fiscal and financial sides ( chart 3 ). however, there are signs of deflationary pressure from asset price adjustments, as shown in the gdp deflator turning negative again in the gdp statistics for the july - september quarter, and this warrants attention. the key to realizing stable growth will be whether the economy can shift from being investment - and export - driven to being domestic demand - driven, accompanied by structural reforms. bis central bankers ’ speeches i see downside risks to the outlook that i have just described, and note the following three points. first, the growth of the world economy is disproportionately led and driven by that of the united states. the expansionary phase of the u. s. economy already has lasted for around seven years since the global financial crisis, representing the fourth longest period of expansion in the postwar era, and from the perspective of the economic cycle, it can be said that the expansionary phase is maturing. of course, under pressure from balance sheet adjustments, the pace of recovery after the global financial crisis has been moderate compared with that in past recovery phases, so making a simplistic comparison in terms of the duration of expansion may be problematic. however, if wage growth – which so far has been lagging – gains momentum while the slack in the labor market diminishes gradually, it seems it will be necessary to keep in mind the risk that the economy may enter an adjustment phase due to the narrowing of the margin for firms. under these circumstances, the federal reserve intends to normalize the monetary policy at a moderate pace. i would like to watch how the normalization of interest rates plays out in relation to the duration of the expansionary phase. second, in europe, there remain various adjustment pressures ; in addition, the refugee problem is emerging as a serious challenge. for example, an agreement of sorts was reached among relevant countries on the greek debt problem around the middle of the | 1 |
cultivation of responsible use of credits and the other the introduction of new financial products and channels of distribution. while the former can improve the overall risk profile of financial institutions ’ retail portfolio, and thus lower the lending rates, the latter can potentially stimulate more demands and lower the cost of service provision. it is therefore the responsibility of lending institutions to convey clearly the message of ‘ no free lunch ’. in other words, prudent lenders must ensure that borrowers are fully aware of the financial obligation of their debt burdens and legal consequence of default. failure of either party could tarnish the healthy usage of retail credit. mindful of the importance of consumer protection, the bank of thailand already issued a regulation requiring financial institutions to disclose information, especially on effective interest rate and fee charged, financial position and operating results, so that customers can make well - informed decisions. additionally, financial institutions will be required to have in place clear procedures for handling customer complaints. on a system - wide scale, the authorities will introduce a deposit insurance scheme in place of the existing blanket guarantee to ensure protection of retail consumers. 3. supervisory concerns and challenges i have already touched on regulators ’ concerns that directly affect consumer benefits. now allow me to go through the concerns and challenges of retail banking from a wider perspective. first, we are concerned for those considering jumping onto the booming retail credit bandwagon without having sufficient skills and resources to capitalize on the key drivers of this market segment. second, the risks inherent in credit extension, which have to be adequately monitored and managed. third, the one that directly concerns us, regulators, - how to achieve a balanced objective of financial institution stability and fostering development, competition and level playing field. drivers of retail banking business the gaps of financial services provided by financial institutions in thailand reflect untapped opportunities in the retail sector awaiting those having the capability to fill in these gaps. the opportunities are open to banks with the right business models for the identified niche markets. however, it takes more than that to be successful in this competitive segment - banks must be capable of accurately charging the right price commensurate to the risk profiles of customers and their own operating cost. to this end, it is important that banks know their pool of customers in this sector, as well as have in place an efficient network of service distribution and able team of staff to achieve extensive outreach and operation efficiency. adequate oversight of various risks the profitability of banks hinges on their ability to manage various risks arising | existence of a national identity system in the country. 8. a few words about indian approach to fi. we have always been alive to the need for extending the reach of the financial sector to the under - privileged sections of the society. financial inclusion for us aims not merely at remittances but also aims at savings product, a loan / credit product, remittance product as also insurance product. thus, in india we believe that, financial inclusion has the potential to bring in the unbanked masses into the formal banking system, could lead to increased savings, provide timely credit to the unbanked masses and all these positive externalities would lead to economic growth. the efforts to channelize the government benefits and subsidies through direct benefit transfers programs to beneficiaries ’ bank accounts directly would not only be helpful in plugging the leaks in distribution but also help in inculcating banking habits. 9. how has india approached fi? we have adopted a structured, planned and an integrated approach towards fi by focusing on both the demand and supply side constraints. we have permitted non - bank entities to partner with banks for their fi initiatives. the technological advancement has made it possible for us to think of novel and innovative ways to approach the objective of financial inclusion. for example, handheld devices, used by bank agents to draw people living in remote areas into the banking fold. mobile technologies are trying to reach out to the populace starved of banking services as well. financial institutions are also joining forces with network operators in providing access to mobile based payment services even to those who do not have bank accounts. 10. let me give you some statistics on our financial inclusion initiatives : 4 bcg - swift “ global payments 2013 – getting business models execution right ”, september 2013 ; and bill & milinda gates foundation “ fighting poverty profitably – transforming the economics of payments to build sustainable, inclusive financial systems ”, september 2013. cgap “ financial access 2012 ”, july 2013. financial inclusion in india – journey so far and way forward ” – speech by dr. k. c. chakrabarty, deputy governor of the reserve bank of india, at the finance inclusion conclave, organised by cnbc tv 18, new delhi, 6 september 2013. bis central bankers ’ speeches • nearly 268, 000 banking outlets have been set up in villages as on march 13 as against 67, 694 banking outlets in villages in march 2010 • about 7400 rural branches opened during this period • nearly 109 million | 0 |
our stock markets, our bond markets and our foreign currency market work as a market and really respond to the challenges of bringing in more participants, broadening its appeal and becoming real instruments of channeling the savings not only of sri lankans but also of people living overseas so that institutions and our real businesses can benefit from those flows of financial activity and grow at a stronger pace than they have grown in the past. that is our broad challenge going forward and at the same time ensuring that we do not allow the sort of excesses that creep in, in such situations which cause financial disturbances and panics. so this is going to be the challenge going forward for all of us, to establish that stability and to have a very clear set of rules. remember that the way financial markets have evolved historically for centuries is on the basis of having “ rule - based ” systems, where every player in the market, whether it is the regulator or the regulated, abides by a set of rules. and that is the most effective way for any system to function. it cannot be based on the whims and fancies of the regulator, or the government or any single player in the market. there has to be an even playing field, the goalposts have to be stuck very firmly in the same place and the same rules have to apply, just like game football or cricket. you cannot change the rules as you go along. that to me, is very essential. so at the moment we are trying to make those rules very clear to all the market players in various forms. we have already done so in most of the markets, in the foreign exchange market, in the fixed income markets, and i think the sec is now trying to establish the rules in the equity market. once all that comes together i think you will see a significant improvement in the way our entire financial sector operates and hopefully that will be the main conduit for financing of development in the years to come. so this deals more or less with the challenges we have in the financial space and our efforts to ensure financial stability. but really, it is the third objective, which is the economic development of the country that i wish to spend a few minutes on today. this is the area, which, for various reasons central bank has engaged and disengaged over the years and decades. basically, the bank took a backward step about fifteen to twenty years ago and very understandably so, because that was the time when the war | of licensed banks are carried out prudently and in line with the international best practices. the central bank will also formulate a crisis preparedness plan for the banking industry, to minimise the adverse impact on troubled banks and mitigate spillovers. a consultation paper will be issued to banks in this regard. as we firmly believe in the need for strengthening inter - regulatory cooperation and collaboration, a memorandum of understanding was signed between the central bank, securities and exchange commission and insurance regulatory commission on risk based consolidated supervision where the central bank will be the lead regulator. as we have reiterated on many occasions, market driven consolidation will be facilitated with the objective of promoting strong and dynamic banking and non - bank financial institutions to meet financial needs of the economy more effectively, while safeguarding the stability of the financial system. the performance of licensed finance companies ( lfcs ) and specialised leasing companies ( slcs ) slowed down significantly during 2018 due to low credit growth, declining profitability and increasing nonperforming loans. the slowdown in the sector was also a result of moderate economic growth and the impact of natural calamities, such as floods and drought conditions that prevailed in 2017 and the first half of 2018. policy measures taken to curb excessive demand for vehicle imports also impacted the sector significantly. several regulations were introduced to strengthen non - bank financial institutions during 2018. a financial customer protection framework was introduced to protect customer interests and to strengthen customer confidence in the sector. a new capital adequacy framework for lfcs and slcs was implemented with a view to fostering a strong emphasis on risk management and to encourage ongoing improvements in the risk assessment capabilities of the sector. in terms of the new framework, companies with assets over rs. 100 billion are required to maintain higher capital adequacy ratios. moreover, a new direction on outsourcing of business operations was introduced to standardise outsourcing arrangements. a direction was issued to regularise the valuation procedure of the lfcs and slcs regarding immovable properties. in the interest of depositors and stability of the system, several resolution actions were taken in relation to distressed companies during 2018, including cancellation of some licences and introducing regulations on winding up lfcs. going forward, the sector needs to cope with enhancement of the minimum capital requirement and higher loan loss provisioning with the introduction of sri lanka financial reporting standards 9. further, the change in the regulatory posture of the central bank will result in early interventions against noncom | 0.5 |
current situation in and challenges facing the financial system let me next turn to the financial system. for japan ’ s economy to achieve sustained growth, it is critical to enhance the functioning of financial intermediation, through which the financial system supports the economic activities of firms and households, while also maintaining the stability of the financial system. in what follows, let me explain the current situation in and challenges facing the financial system in terms of its stability and functioning. at present, there are no significant problems concerning the stability of the financial system. japanese financial institutions as a whole have a sufficient capital base, and even if there should be a large domestic financial or economic shock, the likelihood that financial intermediation will be significantly impaired is very small. however, at the global level, following the experience of the global financial crisis, there have been calls to prepare for potential risks in international financial markets and the financial system in order to prevent any shocks from spreading. against this background, requirements of financial institutions to ensure their soundness and improve their business bis central bankers ’ speeches management have become more stringent. both international financial regulations such as basel iii and national regulations have been successively introduced and implemented, and discussions have been ongoing that could lead to internationally active financial institutions being required to hold more capital. the bank of japan is deeply committed to the aims underlying this review of international financial regulations, namely, to further strengthen the soundness and business management of financial institutions and to further enhance the stability of the financial system. at the same time, if such regulations excessively constrain financial institutions ’ activities, this might hamper the smooth transmission of monetary policy effects or weaken the ability to provide support to the economy from the financial side, which warrants due consideration in designing specific regulations. in addition, the fact that institutions and circumstances surrounding the financial system differ across countries should be borne in mind. the bank will actively participate in international discussions so that these will lead to the formulation of appropriate regulations taking account of the aforementioned considerations. let me next touch on the functioning of the financial system. with economic activity and prices improving, firms ’ demand for funds has also been increasing gradually and become more widespread in terms of industries and regions, and financial institutions are trying to actively respond to such demand. in this respect, we at the bank judge that the financial system has been functioning steadily to encourage economic recovery. at the same time, the financial system is expected to play a more important role in supporting firms ’ and regions ’ initiatives to | ##s and prudent monetary policy. so, how does one celebrate the life of a globally respected and celebrated statesman? there is such a rich history to the story of nelson mandela, as told in his own words in his bestselling book long walk to freedom, that the sarb has had to use our full range of banknotes as well as a commemorative r5 circulation coin. the banknotes highlight president mandela ’ s historical journey from the rolling hills of the eastern cape, to soweto, to howick, to robben island, to the union buildings. the page 3 of 4 commemorative r5 circulation coin features a portrait of tata madiba, smiling at the nation he helped to build. nelson mandela ’ s life has touched all of us : south africans from all walks of life, rural and urban. what could be more fitting than to commemorate his life through an instrument that we all use every day? money touches all of us, young and old. tata represents the best version of ourselves as south africans, and there is no more appropriate an occasion than his birthday centenary to honour all that he represents with these commemorative banknotes and r5 circulation coin. when a young girl in mvezo or a pensioner in soweto carry a r10 or r20 note to buy a loaf of bread, they should know that those two banknotes will change hands more often than all the other banknotes in south africa and in some of our neighbouring countries. one banknote touches many lives. by drawing strength from our fellow south africans and identifying those traits which best reflect the madiba in me, we will remind ourselves in the words of nelson mandela that, : “ we are together in this. our human compassion binds us, the one to the other – not in pity or patronisingly, but as human beings who have learnt how to turn our common suffering into hope for the future. ” finally, if you have not already done so, i would really like to encourage you to walk around the exhibit outside, which reflects on the images on the banknotes and coin. i also hope that you will take the time to download the currency mobile app from any of the mainstream app stores and that you will use this app to empower yourself by learning about the interesting facts and details of our banknotes. thank you very much. page 4 of 4 | 0 |
in any aspect in order to preside potential risks. we must be vigilant and we have to understand and preside all potential risks of issuing a digital euro. 2. challenges central banks are largely sailing into unchartered waters, with new territories to explore when designing a cbdc. to map out the best way forward, as central bankers, we would face many challenges associated with the design of a cbdc. i would now focus on this aspect by sharing the experience gained in participating in the activities of the investigation phase of the digital euro project. i will also mention the interconnections between the various aspects of this complex project. we can bring the challenges together in four main areas : i. the economic of cbdc ; ii. the legal issues ; iii. the technological issues given the fast innovation in this sector ( eg dlt ) and the associated security risks ; iv. the organizational issues and the impact on the internal structure of central banks. i. the economic of cbdc the main focus here is on the adoption rate of digital euro. a too high large adoption rate might endanger the financial stability ; a too low adoption rate might be insufficient to maintain the central bank footprint in the economy. thus the challenges of the economic of cbdc require a ) the analysis the potential impact on the role of supervised financial intermediaries and on the transmission of monetary policy and financial stability and b ) the ability to meet the end - user needs including privacy issues and the integration with existing retail payment schemes / systems ; the introduction of a cbdc can influence the transmission of monetary policy and financial stability through several channels that are mainly related to the substitution of commercial bank deposits with a public digital currency. in the euro area, as in all modern economies, banks grant loans and issue deposits, thereby performing maturity and liquidity transformation services that improve the allocation of households ’ consumption across time and firms ’ capital across productive activities. these activities are essential for the well - functioning of the economy and are key components of the transmission of monetary policy and the stability of the financial system. if households and firms were to substitute a large share of their deposits with the digital euro, or they were to use the digital euro as a safe heaven in time of stress, banks would need to replace a some of their stable funding and lose customer information that are essential to perform their activities. the eurosystem ’ s ability to support the economy through the banking system may be weakened, with broad macroeconomic | while things might change – they always do – we will continue to act in a way that ensures stable inflation over the medium term while still providing what support we can to jobs and economic activity. thank you. all speeches are available online at www. bankofengland. co. uk / speeches references beaudry, p. and portier, f. ( 2006 ), ‘ stock prices, news, and economic fluctuations ’, american economic review, vol. 96, no. 4. broadbent, b. ( 2012 ), ‘ productivity and the allocation of resources ’, speech given at durham business school, available at http : / / www. bankofengland. co. uk / archive / documents / historicpubs / speeches / 2012 / speech599. pdf broadbent, b. ( 2017 ), ‘ brexit and the pound ’, speech given at imperial college, available at http : / / www. bankofengland. co. uk / publications / documents / speeches / 2017 / speech969. pdf. carroll, c. ( 2001 ), “ a theory of the consumption function, with and without liquidity constraints ”, journal of economic perspectives, vol. 15, no. 3. deaton, a. ( 1992 ), understanding consumption, oxford university press, oxford. di pace, f., king, p. and theodoridis k. ( 2017 ), ‘ assessing the effects of supple side news in a dsge model estimated for the uk ’, mimeo. kamber, g., theodoridis, k. and thoenissen, c. ( 2017 ), ‘ news - driven business cycles in small open economies, journal of international economics, vol. 105. kurmann, a. and otrok, c. ( 2013 ), ‘ news shocks and the slope of the term structure of interest rates ’, american economic review, vol. 103, no. 6. all speeches are available online at www. bankofengland. co. uk / speeches | 0 |
concern is how a non - controlled expansion of the digital euro as a form of investment could, indeed, threaten the ability of authorities to properly maintain financial stability. as a matter of fact, a too attractive and accessible digital euro could foster a significant migration of banks deposits, thus compromising their intermediation and lending capacity plus also likely destabilizing the entire banking system in times of financial stress. to prevent these macroeconomic consequences from happening, ongoing discussions are currently focusing on what potential safeguards could be built into the digital euro, yet final decisions remain pretty much open at this stage. the main reason being they not only depend on the practical feasibility of the various available tools but also on the likelihood of different scenarios to materialize and the extent to which the latter may actually compromise banks ’ resilience. as such, the fine - tuning of design features of the digital euro calls for additional research which i strongly believe the members of cebra are best positioned to provide us with. as of today, operational and legal considerations have been the bulk of our work thus far. the digital euro project faces little chance of success unless it can prove to rely on a solid theoretical foundation. that means one that takes into account aspects such as potential distortions of cbdcs to cross - border capital flows, the prospect of a displacement of international reserve currencies or the degree of fragmentation of capital markets they may introduce due to unresolved interoperability issues. hence, the time is ripe to ask and encourage you all to actively consider including cbdcrelated topics in your respective research agendas as means to broadly support our efforts in landing at the best possible blueprint for a digital euro : one that helps maximize its benefits while containing its hazards. and having said that, i think it ’ s about time that we not only feed our minds and souls but our bodies, too. so, thank you very much for listening and bon appetit! | ##ity and sovereign equity need to be preserved to enable the various global challenges ahead to be addressed. notwithstanding this, the new economic, social and geopolitical realities call for a reform of multilateralism. we must work to adapt multilateral institutions to the new realities, eliminating obstacles that hinder collective action, making them more flexible, efficient, representative, transparent and accountable. they also need to become more cooperative and to better complement regional arrangements and institutions. thank you. 8 / 8 | 0.5 |
for which detailed information is not yet available. business surveys continue to be favourable overall, but there are signs that the trade tensions could lead to a revision of investment plans. this is also why a deterioration of funding conditions in the economy stemming from higher interest rates on public debt must be avoided. in a country such as italy, where the pace of growth is already slow and has been below that of the euro area for many years now, a further slowdown in economic activity would be felt more deeply than elsewhere. fiscal policy has limited room for manoeuvre to compensate for a possible contraction in private demand. in this context, priority should be given to measures that incentivize investment in infrastructure, both material and immaterial, and labour market participation. resources should be concentrated on measures that are clearly directed at supporting economic activity effectively. the common monetary policy responds to the situation of the euro area as a whole. last week the ecb ’ s governing council, in view of ongoing economic growth and of the gradual increase in inflationary pressures, reiterated its intention to end the net asset purchases at the end of this year. however, taking into account the uncertainty surrounding the outlook for the world economy and for financial markets, as well as the need to support price dynamics in the medium term, the council has confirmed that it intends to continue to provide significant monetary stimulus. even after the end of the net purchases, this support will arise from the sizeable stock of assets in the eurosystem ’ s portfolio, the reinvestment of the principal as these securities mature and the indication that the key ecb interest rates will remain at their present levels for as long as necessary. monetary policy normalization is a very delicate process, as the experience of other countries has shown. as i have observed in the past, the italian economy can withstand an end to the low interest rate regime with no risk to economic activity or the public finances, provided that fiscal policy remains anchored to stability and that the reform process aimed at strengthening the economy continues. growth potential the growth gap between italy and the rest of the euro area is a structural problem that cannot be resolved through monetary stabilization policies or by an expansionary fiscal stance. its main cause is the low productivity of firms which have lagged behind in responding to the drastic technological changes that began a quarter of a century ago. in this period italian firms have generally not been sufficiently innovative and have grown very little. in addition, italy has an older population than other countries | prices ( hicp ), which is the measure of inflation in the euro area, france is one of the three best - performing countries in terms of inflation : french inflation stood at 0. 7 % as an annual average in 1998, compared with 1. 1 % for the euro area. in the course of 1998, the franc remained constantly above its central rates vis - a - vis the other most credible currencies of the european exchange rate mechanism. the goal of a stable external value for the franc — which was the external intermediate objective of french monetary policy over the last five years — was thus achieved. this went hand in hand with the maintenance of the competitiveness of the french economy. the current account surplus totalled frf 236 billion in 1998, or 2. 8 % of gdp, comparable to the level recorded in 1997. with regard to monetary and financial developments, and particularly growth in monetary aggregates — which constitutes the internal intermediate objective of french monetary policy —, the means of payment covered by m1 posted a year - on - year rise of 3. 1 % in december 1998, after 6. 5 % in december 1997. sight deposits paying regulated rates of interest included in m2 – m1 showed a yearon - year increase of 5. 7 % in december 1998, sharply down on the 9. 2 % recorded at the end of the previous year. similarly, m2 progressed by 4. 3 %, less than the 7. 8 % rise recorded in 1997. the aggregate m3 – m2, which covers liquid investments paying market rates of interest, stabilized in 1998 with a 0. 6 % decline after the 8. 2 % drop recorded in 1997. this was mainly due to growth in money market ucits, which rose by 4. 1 % after declining by 11. 3 % the previous year. the year - on - year increase in m3 was 2. 7 %, compared with 2. 0 % in december 1997. growth in investment in contractual savings products recorded in the p1 investment aggregate maintained a sustained pace in 1998, and in all m3 + p1 showed a year - on - year progression of 4. 0 %, against 5. 1 % in december 1997. total domestic debt posted a year - on - year rise of 3. 4 % at the end of december. it had shown an increase of 3. 7 % in december 1997. financing raised on the domestic markets progressed vigorously, with the year - on - year advance standing at 9. 2 % | 0 |
ewald nowotny : the rebalancing challenge in europe – perspectives for central, eastern and southeastern europe opening remarks by prof dr ewald nowotny, governor of the central bank of the republic of austria, at the conference on european economic integration ( ceei ) 2014, vienna, 24 november 2014. * * * your excellences, dear governors, ladies and gentlemen, i am delighted to welcome you to the annual conference on european economic integration ( ceei ) hosted by the oesterreichische nationalbank. thank you for coming to vienna. many of you have traveled long distances to be with us today – a fact that highlights the importance of the topic we are going to discuss over the next two days : “ the rebalancing challenge in europe – perspectives for central, eastern and southeastern europe ( cesee ). ” what do we mean by “ rebalancing ”? obviously, the term signifies a readjustment from a state of imbalance – an economic imbalance in our case. typically, economists distinguish between external and internal imbalances. by external imbalances, they usually mean disequilibria ( mostly deficits ) in the current account which, if protracted, might lead to an unsustainable net international investment position. the underlying reason for a current account deficit can differ from case to case ; it can be trade - induced via export weaknesses, indicating a lack of competitiveness ; it could also reflect strong import demand due to unsustainably high growth. this leads us directly to internal imbalances, which comprise accumulated private and public debt, asset price bubbles, unemployment or excessive inflation ( or deflation ). one could also add sectoral or distributional imbalances contributing to uneven growth. internal and external imbalances are often interlinked, but their interrelation is not always clear - cut. this year ’ s ceei coincides with three anniversaries, which are crucially linked to our conference topic : 25 years since the fall of the berlin wall, 15 years since the creation of economic and monetary union ( emu ) and 10 years since the – so far – biggest round of eu enlargement. this is not only a reason for celebration but also an occasion for honest stocktaking and thoughtful reflection. i think that the developments that followed these events have been broadly successful. for an overwhelming majority of europeans, the last quarter of a century brought hugely improved living standards | ##18 ). market rates also reflect growing expectations of delay and moderation in the rate - hike cycle. accordingly, benchmark bond yields fell during the second quarter and continued to hover around historic lows despite the increased risk aversion ( figure 19 ). the downturn in market rates was also driven by the improved inflation outlook. the flattening of the yield curve in july compared to april indicates that policy rate - expectations of market players have been revised downwards ( figure 20 ). the downslide was more significant in market rates than in inflation expectations during the second quarter, pushing medium - term real rates down to historic lows ( figure 21 ). yet i would like to underline that real market rates in turkey did not decouple substantially from other emerging economies ( figure 21 ). the ongoing downward trend both in market rates and the tightness in credit conditions contributed to the maintenance of low levels in loan rates. no remarkable change is observed in loan rates in the second quarter despite the continuing improvement in credit markets ( figure 22 ). 3. inflation and monetary policy outlook having summarized the central bank ’ s monetary policy stance as well as the effects of this stance on the markets, i would like to share with you the economic outlook underlying our revised forecasts. the first - quarter data on the gdp were largely consistent with the outlook presented in the april inflation report. accordingly, the gdp expanded by 11. 7 percent year - on - year during the first quarter of 2010 ( figure 23 ). this increase was driven by the low level in the same quarter of 2009. meanwhile, in seasonally adjusted terms, the gdp followed a nearlyhorizontal course by growing by 0. 1 percent quarter - on - quarter ( figure 24 ). the weak global economy continued to weigh on economic activity and employment in external demand - oriented sectors. the recovery in the private sector gained stability in line with our forecasts. in this respect, the largest contributors to growth in the first quarter became private consumption expenditures and the change in stocks. this was also affected by the low base in the same quarter of 2009 ( figure 25 ). meanwhile, public expenditures contributed to growth by – 0. 8 points ( figure 26 ). recent domestic demand indicators show that private consumption demand continues to grow and it will run above pre - crisis levels in the second quarter. meanwhile, despite the rebound in the first quarter, investments remain below pre - crisis levels. these developments indicate that the total final domestic demand | 0 |
level, smaller banks are more sensitive to changes in interest rates – their earnings are more reliant on interest - generating business than they are at larger banks. at savings banks and credit cooperatives, net interest income makes up more than two - thirds of total net operating income – i guess that won't be news to you, ladies and gentlemen. against this backdrop, i will now focus 1 / 4 bis - central bankers'speeches my attention on this subset of banks and leave andrea enria to take a look at the big banks. one factor that determines how rising interest rates affect banks is the time horizon. over the medium to long term, increasing rates are certainly welcome news. they mean that higher - yielding exposures will probably increase on the assets side of the balance sheet, while rising rates are passed on only in part to depositors on the liabilities side, thus widening the interest margin. in the short term, though, it's a somewhat different story. for one thing, most banks have to revalue many more items from their current liabilities than they do on the assets side – which means that many institutions will probably see their interest expenditure rise more sharply than their interest income, to begin with. to make matters worse, the yield curve was very flat for a very long time, forcing many banks to transform maturities on a substantial scale – you see, the flatter the yield curve, the wider banks have to make the gap between the maturities of their assets and liabilities in order to still be able to generate stable margins. this has left these institutions even more vulnerable to an abrupt uptick in interest rates. time will tell whether and to what extent these risks now materialise. for another thing, rising interest rates depress securities prices, especially at banks that have not hedged securities holdings on their balance sheets – and these tend to be smaller banks, for the most part. an interest rate shock of 200 basis points would now result in a situation where around half of all institutions saw the present value relative to regulatory own funds decline by more than 20 %. the challenge would be even stiffer still if the yield curve inverted – that is, the level of long - term interest rates were to fall below that of short - term rates – which isn't an unlikely scenario given the looming recession. how are banks addressing this situation? what we are seeing is that german banks are increasingly liquidating their hidden reserves for securities. and it is indeed the | rescue measures helped to prevent the crisis from escalating. but they did so by mutualising fiscal liability on a substantial scale. fiscal and economic policies, on the other hand, essentially remained a national prerogative, though the fiscal rules have admittedly been adapted. as a result, the balance between liability and control has been thrown out of kilter. however, striking an even balance between liability and control is crucial for the functioning of emu – and that ’ s a point i made in my last speech in amsterdam 2½ years ago. and i also said in my speech back then that there are two possible ways to restore the balance between liability and control : deeper integration, or more individual national responsibility on the part of the member states. the first solution would be to create a fiscal union with centralised decision - making powers. only within this framework would fiscal transfers and mutual liability via eurobonds be consistent and put control and liability back on an even keel. while a fiscal union would not guarantee sound fiscal policymaking, it could certainly mitigate the deficit bias of individual member states. and interestingly, even for karl otto pohl, the former bundesbank president who was a member of the delors commission, the “ fiscal union approach ” was the intuitive one : “ in a monetary union with irreversibly fixed exchange rates, the weak would become ever weaker and the strong ever stronger. we would thus experience great tensions in the real economy of europe. for this reason alone, monetary union without the simultaneous integration in fields like fiscal policy as well as regional and social policy is completely inconceivable. " but let ’ s be honest here : a fiscal union approach was not on the cards 2½ years ago, and it has become ever more improbable since then. the outcome of the brexit referendum has laid bare the scepticism about the european project and a tendency to reject further integration steps. surveys reveal that many citizens in the eu doubt whether the existing process of integration is still sustainable. this is possibly not unrelated to the fact that the ongoing debate over the right response to the crisis in the euro area has brought out into the open the persistent differences of opinion in fiscal and economic policy matters. 5 / 9 bis central bankers'speeches this is all the more astonishing because the euro - area countries had actually already established a consensus on the appropriate role of fiscal policy – as documented in the stability and growth pact. so building trust in | 0.5 |
in terms of the year - on - year rate of change in the consumer price index ( cpi ) at the earliest possible time, with a time horizon of about two years. second is introduction of a new phase of monetary easing both in terms of quantity and quality in order to clearly underpin such a commitment. the bank decided to change the main operating target for money market operations from the uncollateralized overnight call rate ( i. e., interest rates ) to the monetary base ( i. e., quantity ) and conduct money market operations so that the monetary base will increase at an annual bis central bankers ’ speeches pace of about 60 – 70 trillion yen. to this end, the bank will purchase japanese government bonds ( jgbs ) so that its holding of their amount outstanding on its balance sheet will increase at an annual pace of about 50 trillion yen. in terms of quality, in increasing the purchases of jgbs, those with all maturities including 40 - year bonds were made eligible for purchase, and the average remaining maturity of the bank ’ s jgb purchases was extended from slightly less than three years to about seven years. furthermore, the bank decided to purchase exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ) so that their amounts outstanding on the bank ’ s balance sheet will increase at an annual pace of about 1 trillion yen and about 30 billion yen, respectively. third is enhancement of the intelligibility of monetary policy. for instance, the bank ’ s purchases of jgbs had been conducted according to two types of operations : one under the asset purchase program introduced in october 2010 and the other for facilitating money market operations, often referred to as rinban operations. the bank decided to synthesize the two purchasing methods of jgbs and to express the target of jgb purchases as a net increase in its jgb holdings, instead of the total size of jgb purchases. we believe that these changes facilitate understanding of the bank ’ s intention with regard to monetary easing in a straightforward manner. the bank ’ s adoption of the monetary base as an indicator for quantitative easing also reflects our judgment that the monetary base will be the most appropriate indicator for conveying the bank ’ s aggressive stance on the monetary easing to the public. fourth is explicit indication of the bank ’ s thinking on the continuation of monetary easing. the bank will continue with the quantitative and qualitative monetary easing, “ aiming to achieve | on fiscal structural reforms. iii. low profitability of lending and challenges to enhancement of the functioning of financial intermediation as should be clear, the financial system does not face major problems in terms of stability and fundamental strength. nonetheless, i believe that the current financial institutions ’ financial intermediation cannot be described as full of vigor or dynamism. this is mainly because of the low profitability of lending. i will now discuss how the quantitative and qualitative monetary easing will affect the low profitability of lending and whether the problem of low profitability hinders the spread of the monetary easing effects. low profitability of lending and the background financial institutions ’ lending stance used to be restrained due to limited capital when they were suffering from the npl problem. at present, however, they are not under any restrictions in terms of financial strength with a sufficient amount of capital, and have taken an aggressive lending stance toward positive demand for funds. in fact, they have recently increased loans to large firms for mergers and acquisitions and acquisition of interest in natural resources, as well as real estate - related loans and overseas loans. nevertheless, such activity is still limited. loans to small and medium - sized firms have remained sluggish. although financial institutions have advanced their initiatives to facilitate financing in recent years, improvement in the quality of their loan assets has been slow. the profitability of lending and interest rate margins on loans have remained on a long - term downtrend because of intense competition among many lenders to attract limited positive demand for funds and borrower firms that are top rated ( chart 7 ). such a problem is basically a reflection of prolonged deflation, sluggish economic activity, and weak demand for funds. therefore, if the effects of the quantitative and qualitative monetary easing permeate through japan ’ s economy and stimulate positive economic activity, it is expected that loans will increase and the problem of low profitability and the bis central bankers ’ speeches issues related to the quality of loan assets will gradually be resolved. however, given the intense lending competition, it is unclear to what extent the supply and demand conditions should improve and demand for funds should increase for interest rate margins on loans to start improving. toward enhancing financial institutions ’ financial intermediation financial institutions are expected to actively elicit positive activity from firms and households, instead of passively waiting for such activity, and to work to enhance their capability for financial intermediation. this will raise the added value of their financial inter | 1 |
tiff macklem : release of the monetary policy report opening statement by mr tiff macklem, governor of the bank of canada and ms carolyn rogers, senior deputy governor of the bank of canada, at the press conference following the monetary policy decision, ottawa, ontario, 29 january 2025. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our policy decision and the monetary policy report ( mpr ). today, we lowered the policy interest rate by 25 basis points. this is our sixth consecutive decrease and brings our policy rate to 3 %. we also announced our plan to complete the normalization of our balance sheet, ending quantitative tightening. the bank will restart asset purchases in early march, beginning gradually so that its balance sheet stabilizes this year and then begins to grow modestly in line with economic growth. we have three main messages this morning. first, inflation has been close to the 2 % target since last summer. monetary policy has worked to restore price stability. second, lower interest rates are boosting household spending, and economic activity is picking up. third, the potential for a trade conflict triggered by new us tariffs on canadian exports is a major uncertainty. this could be very disruptive to the canadian economy and is clouding the economic outlook. since the scope and duration of a possible trade conflict are impossible to predict, the mpr projection we published today provides a baseline forecast in the absence of tariffs. we also provide some discussion of the potential consequences of a major trade conflict. let me expand on the first two messages before turning to the threat of tariffs. first, inflation. a year ago, inflation was 3 %, short - term expectations were still elevated and inflationary pressures were broader than normal. in recent months, inflation has remained close to 2 %, business and consumer expectations have largely normalized and there is no longer evidence of broad - based inflationary pressures. shelter price inflation remains elevated, but it is gradually coming down. while we expect some volatility in cpi inflation due to temporary tax measures, our forecast is that inflation will remain close to the 2 % target over the next two years. second, growth. there are signs economic activity is gaining momentum as past interest rate cuts work their way through the economy. lower borrowing costs are boosting activity in the housing market as well as consumer spending on big - ticket 1 / 3 bis - central bankers'speeches items like automobiles. the pickup in household spending is | starting to broaden to other consumer items and is projected to strengthen further. business investment has been weak, but is forecast to increase gradually. and the outlook for exports is being supported by new export capacity for oil and gas. employment has strengthened in recent months. but with job creation having lagged labour force growth for more than a year, the labour market remains soft. the unemployment rate was 6. 7 % in december, and wage pressures, which have proven sticky, are showing some signs of easing. the bank forecasts gdp growth will strengthen from 1. 3 % in 2024 to 1. 8 % in 2025 and 2026. growth in gdp per person is projected to pick up as lower interest rates and rising incomes support spending. the projected increase in overall gdp growth is more modest than it was in october, largely due to lower population growth that reflects new federal immigration policies. there are risks around our outlook, and governing council is equally concerned with inflation rising above the 2 % target or falling below it. absent the threat of tariffs, the risks to the inflation outlook are roughly balanced. let me turn now to the question of tariffs. us trade policy is a major source of uncertainty. there are many possible scenarios. we don't know what new tariffs will be imposed, when or how long they will last. we don't know the scope of retaliatory measures or what fiscal supports will be provided. and even when we know more about what is going to happen, it will still be difficult to be precise about the economic impacts because we have little experience with tariffs of the magnitude being proposed. nevertheless, some things are clear. a long - lasting and broad - based trade conflict would badly hurt economic activity in canada. at the same time, the higher cost of imported goods will put direct upward pressure on inflation. the magnitude and timing of the impacts on output and inflation will depend importantly on how businesses and households in the united states and canada adjust to higher import prices. unfortunately, tariffs mean economies simply work less efficiently - we produce and earn less than without tariffs. monetary policy cannot offset this. what we can do is help the economy adjust. with inflation back around the 2 % target, we are better positioned to be a source of economic stability. however, with a single instrument - our policy interest rate - we can't lean against weaker output and higher inflation at the same time. as we consider our monetary policy response, we will need to carefully assess the downward | 1 |
investment in underserved areas. a number of methods have been derived for evaluating the effectiveness of community development projects. the one with which i am most familiar, through my work on the board of neighborworks america, is the success measures data system. this system uses more than forty indicators and a variety of data - collection tools - - including surveys, interviews, and focus groups - - to quantify the effects of housing, economic development, and community building programs at the personal, organizational, and community levels. this array of tools allows neighborworks to measure success not just quantitatively but qualitatively, looking beyond the numbers to detect sustainable positive change. the underlying philosophy is that a community development initiative cannot be judged successful just because it puts a family in a home ; rather, it must be able to say that, by doing so, it has improved the community, the family ’ s quality of life, and the family ’ s economic potential. these data are also useful to corporate partners insofar as they demonstrate business performance against internal goals and commitment to the community. businesses recognize that demonstrable success enhances their reputation, increases brand recognition, and improves their ability to compete successfully for future partnership opportunities. thus, being able to determine the return on a business ’ investment in a community development initiative in both quantitative and qualitative terms is the next logical step in attracting further private investment. but the social and economic needs of our inner - city neighborhoods extend beyond business investment. effective partnerships with local officials and community leaders are another key element of the revitalization process. at the state and local levels, public officials contribute to the attractiveness of investment conditions by maintaining sound fiscal policies. these policies allow local officials to take the lead from social compact and begin to market local neighborhoods using the analysis that demonstrates the buying - power residing within these more challenging neighborhoods. their willingness to address other neighborhood needs, such as housing, infrastructure, education, health care, and other social supports will also be important to investors. in general, when community development is a cooperative effort, it can lead to more sustainable outcomes along both economic and social dimensions. while the return on investment can be a sufficient gauge of their economic success, success in broader terms can be viewed by assessing the commitment of all segments of the community to the goal of revitalization. moreover, the benefits of such cooperative actions are not always readily measurable in dollars and cents. greater opportunities in local neighborhoods evidence themselves through better schools and stronger | years, and their balance sheets are strong. the reports on first - quarter earnings have been quite positive, and available measures of credit quality, such as credit ratings and loan defaults, show few signs of stress. financing costs have moved up since last fall, but the federal reserve ’ s most recent survey of bank lending practices, which was conducted in april, indicates that domestic banks are noticing increases in requests for business loans. they also indicated an increased willingness to supply business loans in an environment of brisk competition from other lenders, a liquid secondary market for business loans, and an increased tolerance for risk. in that regard, research conducted by federal reserve economists notes that more banks are offering loans to businesses in markets where the banks do not have branch offices ; the research suggests that new technology has spurred competition for some types of small business lending in recent years. more broadly, businesses currently have access to plentiful debt and equity financing from a variety of sources in addition to banks. the challenge that community development practitioners face in working with businesses looking for new investment opportunities is to demonstrate through careful analysis that promising inner - city neighborhoods can be good investments. that the current overall conditions for business investment are positive is thus good news for the work of social compact and its partners. the importance of data to investment decisions community development has come a long way since i first began following it as a young congressional staffer thirty - five years ago. whereas government programs once funded the bulk of inner - city development, public - private partnerships now dominate. in many places, community - based organizations have been able to " jump start " markets by facilitating private investment. the focus of neighborhood revitalization has shifted increasingly toward market - based approaches. in that regard, organizations that seek to promote neighborhood revitalization must focus on what makes their projects competitive. social compact is perhaps best known for its focus on one important input into the investment process - - information. timely and accurate information is what project planners need to bring entrepreneurs, investors, and lenders together to objectively assess the proposed undertaking. having been a banker, i know very well how much more efficient the process can be when decisionmakers are presented with a clear assessment of the projected returns and a balanced analysis of risk. another related feature of market - based investment decisions is the importance of built - in measures of accountability. hard data on results are important in establishing the credibility of projects. with data, and results, such investments can also serve as catalysts for additional private | 1 |
in the latter part of 2021. meanwhile, inflation further eased in december 2021. on an annual basis, inflation for food, 1 / 4 bis central bankers'speeches alcoholic beverages and tobacco, and non - food items continued to slow down in december owing to easing supply constraints. however, prices of electricity, gas, and other fuels further increased amid elevated global prices of crude oil and coal. core inflation, which excludes volatile food and energy prices, likewise declined in december as supply - side price pressures abated. targeted non - monetary measures by the national government helped ease the pressures from supply - side factors. the consecutive quarters of positive year - on - year economic growth point to prospects of sustainable recovery. nevertheless, with recovery still in its nascent stage, the bsp is keen to maintain policy support for the economy. we will properly time our exit strategy as withdrawing support either too early or too late may have undesirable consequences to the economy. to date, the bsp ’ s liquidity - easing measures in response to the pandemic amount to 12 percent of gdp. the prevailing monetary policy stance is supported by a manageable inflation outlook and anchored inflation expectations. based on our latest baseline forecasts, inflation is seen to settle at 3. 4 percent in 2022 and 3. 2 percent in 2023, well within the official target range of 2. 0 to 4. 0 percent. however, risks to the inflation outlook appear to be slightly on the upside for 2022 but remain broadly balanced for 2023. over the near term, major upside risks include increase of global nonoil commodity prices due to strong global demand. additionally, we continue to monitor the developments surrounding typhoon odette to determine if it will have secondary effects on inflation. meanwhile, results of the bsp ’ s survey of private sector economists conducted in december 2021 showed steady mean inflation forecasts at 3. 5 percent for 2022 and 3. 1 percent for 2023. the domestic economy is expected to rebound stronger this year. the interagency development budget coordination committee ( dbcc ) sets its 2022 gdp growth assumption to a range of 7. 0 to 9. 0 percent from 5. 0 to 5. 5 percent last year, taking into account continued recovery prospects as more people get vaccinated and as more businesses rebound from the pandemic. meanwhile, overseas filipino remittances are seen to have reached a new record high of us $ 31. 7 billion in 2021 from | of the mid - term review of monetary and credit policy for the year 2003 - 04 has announced a number of initiatives to bring about a significant and enduring improvement in the functioning of the financial system. the financial sector now takes increasing challenges and complexities in the context of globalization and risk management. a standing technical advisory committee on financial regulation has been set up by the governor which, through a consultative process, will endeavour to simplify and rationalize the regulatory regime to move towards a clear and unambiguous framework. in another initiative, standing committee on procedures and performance audit on public services provided by the rbi is being set up to bench mark the current level of service and to enhance the timeliness and quality of these services. the committee will also coordinate with the ad hoc committee on customer services being set up by each bank. these initiatives would, it is expected, bring about a significant improvement in customer service in the financial sector. the central objective of financial reforms is to attain a significant improvement in the efficiency of financial intermediation and the endeavour of the rbi would be to provide a regulatory framework in which economic agents can perform their activities in an optimal manner. in this endeavour, the rbi would approach issues in a collaborative manner, and in this, seek the hand of market participants. i wish your deliberations all success. | 0 |
was the lehman shock. in the latter case, the contraction was more acute than the first case ( slide 5 ). fifth, japan is facing another sharp decline of economic activity triggered by the great east japan earthquake. research agenda going forward admittedly, the global financial crisis in the late 2000s together with the aforementioned five facts left us with no choice but to realize how little we knew about macroeconomic dynamics. against the backdrop, i put a bubble and a resultant financial crisis at the top of the research agenda. beyond a variety of discussions prompted by the global financial crises, we need to make further progress on this front. the second issue is economic and social consequences of sizeable demographic changes, such as a declining population and ageing. the third issue is repercussions of natural disasters on economic activity. the second and third issues may look remote to financial systems and monetary policy, but it is a prima facie impression as i will flesh out later. a declining population gives rise to an outright reduction in the natural rate of interest and this could constrain monetary policy via the zero lower bound. if the guaranteed return of pension policies did not adequately reflect the anticipated decline in the natural rate of interest due to a decline in the population, the misalignment could spur the search - for - yield which would sow the seeds of a bubble. iii. bubbles and financial crises i will start with the first issue on the agenda, that is, bubbles and financial crises. we have commonly observed across countries that economic contractions following the burst of a bubble tend to be protracted and subsequently, the economies hobble at an early phase of recovery. 2 in the aftermath of the two bubbles, namely, one in the u. s. late 2000s and the see reinhart and reinhart ( 2010 ). bis central bankers ’ speeches other in the japanese 1990s, both the gdp growth rate and inflation show similar trajectories across the two cases ( slide 6 ). the crippled balance sheets can be detected as the primary factors that impede the economic recoveries, while we also need underscore the linkage of low productivity growth and the inefficient resource allocations resultant from the malfunctioning credit intermediation. in fact, to promote economic growth, it is crucially important to maintain economic metabolism by smoothly reallocating economic resources toward the sectors with higher growth potential. in this regard, economists at the bank of japan estimated that the distortion in factor | flooding the economy with the monetary base, the proposition is, at least, not compatible with the recent experiences in japan as well as in the u. s. in japan, between 1997 and 2010, the monetary base soared by 90 percent while money stock increased by 30 percent. likewise, the u. s. experience between 2008 and 2010 clearly shows that the monetary base soared by 140 percent while, by contrast, money stock increased by only 10 percent. despite the flooding monetary base, japan ’ s consumer price level dipped by 3. 7 percent for the thirteen years by the end of 2010. the u. s. core cpi inflation rate has decreased by more than one percent point despite the increase in monetary base. to sum up, significant increases in the monetary base neither gave rise to an equally significant rise in money stock nor inflation, let alone proportional increases. financial systems would see nakakuki, otani, and shiratsuka ( 2004 ). see friedman ( 1970 ). see bordo and filardo ( 2005 ). bis central bankers ’ speeches provide a key to better understanding the proposition. in light of the japanese experiences, i agree with chairman bernanke on his remark in his scholarly work, saying, “ i doubt that it [ money ] completely explains the financial sector - aggregate output connection. ” 6 without more in - depth understanding of the subtle intricacy underlying in financial systems and credit markets, we would remain less informed of macroeconomy and transmission channels of monetary policy. against the backdrop, i am hoping for more research to proceed on this front. iv. demographic changes and policy response keynes ’ perspective we move on to the second issue on the agenda, demographic changes. in 1937, john maynard keynes gave a lecture titled “ some economic consequences of a declining population. ” he noted that “ in an era of a declining population, … demand tends to be below what was expected and a state of over - supply is less easily corrected. thus a pessimistic atmosphere may ensue. ” 7 by suggesting these views, he posed a question mark on the traditional malthusian view that warns against a population explosion. neoclassical growth theories tend to focus on per capita economic variables, such as per capita gdp and per capita capital stock. this means that the very challenges that japan is currently faced with are left outside the scope of their analysis at the outset. looking ahead, japan is heading into a demographic vortex, by which, i mean, rapid ageing | 1 |
how often i used the words " stability " and " confidence " in my remarks. stability and confidence are the preconditions for strong economic and financial performance. we aim to build on our successes as we continue to promote stability and earn the confidence of canadians – and by doing so, we will further enhance the economic and financial well - being of canadians. | in the next time period, and vice versa. if inflation comes in lower than target over a certain time period, monetary policy will be focused on raising inflation beyond the target over the subsequent time period. in price - level targeting, the past is not " forgotten, " but must be offset, so that average inflation becomes somewhat more predictable over longer periods of time than it is with inflation targeting. over the next few years, we'll also be focusing our research efforts on several other important issues. we'd like to better understand the implications of globalization for the canadian economy, including the implications for inflation in canada. we'd like to improve our understanding of the sectoral and regional aspects of economic adjustment. and we'd like to look at how productivity and demographic change affect the economy's potential to grow. now i'll turn to the second area in which we promote economic well - being – the financial system. the financial system i should start here by saying just exactly what i mean by the financial system. the financial system consists of three main elements – institutions, such as banks and credit unions ; financial markets, such as the bond and equity markets ; and clearing and settlement systems, such as the large value transfer system, which handles large - value and time - sensitive payments. it's through the financial system that savings become productive investments, money and financial claims are transferred and settled, and risks are effectively allocated. because it deals with promises to pay, the financial system depends to a very large extent on confidence. individuals and institutions need to be confident that commitments will be honoured, and that the system will work, even in times of turbulence. the bank of canada's objective here, then, is to promote the stability and efficiency of the financial system – which in turn encourages people to have confidence in it. there are three direct means by which the bank promotes financial system stability, and one indirect means by which we promote both stability and efficiency. first, we oversee canada's main clearing and settlement systems. these are the systems that transfer hundreds of billions of dollars of financial assets each day. these systems are designed to make sure that all financial claims they deal with will be honoured – even if a large participant were to fail. the focus of the bank's work is making sure that key systemic risks are identified, and establishing minimum standards to control that risk. with these risk - control standards in place, the private sector operators of the system can find the most efficient | 1 |
support ease of doing business and help improve the country ’ s investment climate. the banking sector was fully liberalized earlier in 2014 to allow entry of foreign banks under republic act no. 10641. since the law ’ s enactment, the bsp has already approved the entry of 11 new foreign banks. 3 / 4 bis central bankers'speeches fifth : the agricultural sector today ’ s fifth panel discussion will revolve around the agriculture sector. and this sector is indeed an important driver and draw for increased investments. recently, the bsp issued guidelines on agricultural value chain financing ( vcf ) to facilitate credit to the agriculture sector. this opens up credit provision to all the players in an organized value chain and promotes vcf as an effective, organized means of channeling funds to the agrifisheries sector, promoting their financial inclusion. by encouraging linkages among various players in an agri - value chain, the credit risk of participating smallholder farmers and fisher - folk can be reduced and facilitate their access to more credit. but beyond this sector are other unserved, underserved and untapped markets. to promote msme access to finance, the bsp has issued comprehensive credit risk management ( crm ) guidelines so that banks can be more flexible, extend more credit, and implement innovative credit products and lending programs. also, a wide range of microfinance services of banks now cover nearly 1. 7 million microentrepreneurs with an outstanding portfolio of p13 billion. empowering these sectors are not just opportunities to exercise social responsibility, but their inclusion creates viable business propositions. to sum up,... why the philippines? first, the philippines is among the fastest growing and most resilient economies in the region. second, coordinated efforts towards structural reforms and public sector investments in infrastructure and human capital development will make the business climate even more competitive. and third, you can rely on the bsp ’ s staunch commitment and effectiveness in delivering on its core mandates of price and financial stability conducive to economic growth. we are deeply committed to implementing ambitious financial sector reforms. let me end on this note. i wish you a very productive investment forum ahead! thank you! 4 / 4 bis central bankers'speeches | nestor a espenilla, jr : why the philippines speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the philippines investment forum, euromoney conferences, 27 november 2017. * * * distinguished guests ; ladies and gentlemen : good morning! i thank euromoney for the invitation to speak at this annual investment forum. my message is simple and straightforward. the philippines today offers viable and strong investment opportunities. the very topics for today ’ s panel discussions point to the key reasons. first, our economic outlook is strong and robust ; second, our capital markets are being deepened and developed ; third, massive infrastructure building gears us for increased growth and development ; fourth, we can rely on aggressive trade and industrial development and fifth, there are untapped markets, the unserved and underserved, such as msmes and the agricultural sector, that present not just the opportunity to exercise social responsibility, but also to create and deliver new products and services. first : the economic outlook the philippines is one of the fastest growing investment - grade rated economies in the region. we realized a better - than - market forecast gdp growth of 6. 9 percent in the third quarter of 2017, our 75th consecutive quarter of uninterrupted economic growth since the asian financial crisis. we are on track to meet this year ’ s target gdp growth of 6. 5 to 7. 5 percent. further economic growth of 7. 0 to 8. 0 percent over the medium term is expected. the sustained economic growth is a product of two decades of structural reforms. amidst this rapid economic development, we expect inflation to remain low and stable and within target. we estimate it will settle at 3. 2 percent this year, 3. 4 percent in 2018, and 3. 2 percent in 2019. to maintain price stability, the bsp adopted the inflation targeting framework in 2002. this has served us well. we continuously refine monetary policy conduct. the implementation of the interest rate corridor system in july 2016 is a manifestation of our commitment. more refinements are coming. these changes are enhancing the transmission channels of monetary policy. the country ’ s external payments position remains manageable and we have built up a strong liquidity buffer against external shocks. at $ 80. 4 billion as of end - october, our gir level can cover 8. 4 months ’ worth of imports of goods and payments | 1 |
the next 25 years. in order to contribute to the achievement of these aspirations, the financial sector has to play a clearly defined role, particularly in mobilising resources required to finance the 20 flagship projects worth ksh 500 billion that will be required over the next five years. this is a significant budget, equivalent to kenya ’ s annual budget and hence the need for a strong and vibrant financial sector that will help channelling these savings into the required investments. it is with this in mind that the government is requiring banks to double their efforts in building a solid capital base capable of supporting product innovation, savings mobilisation and expanded access of financial services to the kenyan public. let me add that the heavy infusion of public investment to attract and enhance private sector investment will be important to continue the economic growth acceleration. 5. although physical bank branch expansion programs play an important role in expanding access, it will be important for the banking sector to complement these programs with increased product innovation. the real challenge for all of us is how to enhance savings mobilisation, and effectively channel society ’ s savings to its most productive use. we, at the central bank would like to encourage banks to offer an expanded range of banking products in order to mobilise savings to support financing of economic activities in the country. this will also provide acceptable options to the investing public who are currently falling prey to schemes being touted by unscrupulous business people in the form of pyramid schemes. we need to guard our successes from these pyramid schemes menace. we will rely on the screening and monitoring roles of the commercial banks like yours to eradicate this menace and with the appropriate savings and investment products in place. 6. the banking sector in this country has, over the last few years, witnessed significant growth in consumer lending. this is evidenced by the growth in real private sector credit of 17. 7 % in the twelve months to may 2007. the resultant credit expansion has brought significant benefits to the economy, but the information asymmetry that is prevailing in the lending environment poses a real challenge in the form of credit risk for the banking sector in kenya. 7. in order to mitigate this risk and promote effective credit provision, consumer protection and strong institutions for these aspects, the central bank has been working towards the development of a credit information sharing mechanism in kenya. the banking act has recently been amended to make it mandatory for institutions licensed under the banking act to share credit information on nonperforming loans. in this regard | network effects ’, where a service becomes more valuable when it has more users. what is also worrying is the value that the market attach to these network effects. we have seen staggering valuations of tech - startups, the so called “ unicorn companies ”, that sometimes have not even realised any meaningful profits. however, their large user base and ability to scale up quickly have resulted in frenzied valuations. it is as if the world has forgotten the dot - com bubble crash of the early 2000s. for financial regulators, a winner takes all outcome is not ideal. it is associated with concentration risks and “ too - big - to - fail ” issues. concentration of risks and dependence on too few service providers never ends well. the only consolation i can think of is that “ network effects ” in the digital economy are not as durable as those found in traditional sectors such as railway networks and power grids. google and facebook may be at the top of their industry now, but remember there were yahoo, myspace and friendster. i am very sure somewhere in some garage, killer apps are being developed to rival current industry leaders. the fourth observation is that shifts in consumer needs and expectations will play a key part in the finance revolution. 91 % of malaysians today have a smartphone and 83 % will look on the internet to research new products and services. finance and business models will need to be redeveloped around changes in consumers ’ lifestyles and expectations. for example mobile banking in its traditional sense does not work anymore in this country as smartphone penetration is quite high and the public is generally receptive to new ideas and innovations. the transformation of finance and technology will also usher in an era of increasingly educated, empowered and activist consumers, who will scout for the best prices and services. globally, around a third of consumers would consider banking with a technology giant ( e. g. google, amazon or facebook ), potentially due to perceived personalisation and better customer experience. the fifth observation is that technology could be the catalyst to propel finance as a great social equaliser of the future. advancement in technology will enhance financial inclusion by addressing information asymmetry and reducing the cost of extending finance to previously underserved groups. this could grant access to around 2 billion people globally who remain unbanked today, enabling them to save, invest and uplift their livelihood. 2 / 5 bis central bankers'speeches however, the evolution of finance must also be managed appropriately to avoid displacement and exclusion. this | 0 |
hence consumption growth. the difference in growth in credit to households and non - financial enterprises is a good illustration of norway ’ s dual economy. over the past few years, credit growth has been far higher for households than for enterprises. the level of household credit growth has remained high recently. an important reason is the sharp rise in house prices in recent years. low investment demand is reflected in credit to non - financial enterprises, which has declined to a very low level. developments in prices for commercial property compared with house prices also indicate that the situation is better for households. developments in mainland enterprises have been characterised by low output growth, falling investment and declining profitability in many industries. in order to boost returns on invested capital, enterprises have taken steps to reduce costs, primarily by reducing their workforce or relocating parts of their production abroad. by way of conclusion, i would like to present a summary of the economic outlook for the norwegian economy. growth in the norwegian economy is projected to pick up this year, primarily fuelled by higher private consumption. there are signs of high productivity growth, which means that companies can produce more with the same workforce. the high cost level in norway and strong competition will probably induce many industries to continue reducing costs and rationalising. against this background, the output potential of the norwegian economy is assumed to increase more than normal in 2004. as demand edges up, enterprises ’ profitability will improve. at the same time, they may meet capacity constraints. investment is therefore expected to pick up gradually and become a more important driving force behind the upturn. mainland gdp growth is projected to pick up markedly this year and remain relatively high in 2005 and 2006. thank you for your attention. | saved for future generations. • monetary policy is aimed at ensuring low and stable inflation. monetary policy the operational target of monetary policy as defined by the government is inflation of close to 2. 5 per cent over time. it is just as important to avoid an inflation rate that is too low as it is to avoid an inflation rate that is too high. the inflation target provides economic agents with an anchor for their decisions concerning saving, investment, budgets and wages. the inflation target also provides a framework for monetary policy ’ s contribution to stabilising output and employment. the economy grows thanks to increases in the supply of labour and capital and technological progress. average growth over time is referred to as trend growth. owing to shocks to the economy, actual growth fluctuates around trend growth. the chart shows actual mainland gdp growth and trend gdp growth. normally, norges bank sets the interest rate with a view to achieving inflation of 2½ per cent two years ahead. a two - year horizon is applied because it takes approximately two years for an interest rate change to have a full impact. a flexible exchange rate norway is a small open economy with a floating exchange rate. the norwegian krone does not stand out as particularly volatile. on the contrary, in countries like sweden, the uk, switzerland, australia, canada and new zealand, the exchange rate fluctuates just as much - or more - than the norwegian krone. there is a cost involved for businesses in hedging against fluctuations in the krone. a krone that is stable - but too strong - also entails costs in the form of low activity. similarly, a krone that is stable but weak - is a source of high inflation. petroleum revenues generally provide substantial, but uneven currency inflows into norway. the currency flows might have resulted in a strong krone and wide variations in the exchange rate. this tendency is countered when the annual use of petroleum revenues over the central government budget is predictable and independent of annual revenue inflows, and the remainder is invested abroad. the capital outflow through the petroleum fund contributes to both curbing the appreciation of the krone and maintaining its stability. norges bank has not defined an exchange rate target. nevertheless, developments in the krone are of considerable importance to interest - rate setting because exchange rate developments have an impact on inflation and output. although the krone may fluctuate in the short term, it will generally stabilise over time. when inflation has | 1 |
philip lowe : investing in a low interest rate world address by mr philip lowe, deputy governor of the reserve bank of australia, to the commonwealth bank of australia ’ s 7th annual australasian fixed income conference, sydney, 21 october 2014. * * * thank you very much for the invitation to speak tonight at the commonwealth bank ’ s 7th annual australasian conference. i would like to extend a particularly warm welcome to those of you who are visiting australia to gain first - hand knowledge of our economy and our financial markets. welcome to our shores. the general topic that i would like to speak about this evening is investing in a low interest rate world. no doubt this is an issue that you have all pondered over recent times. no doubt you have all thought about which assets offer the most attractive returns in the post - crisis world in which interest rates in many countries are extraordinary low. and no doubt you have thought about the risks that come with those assets. i am not a financial advisor, so i will refrain from giving you advice on how to grapple with these difficult issues. but i would like to talk about a couple of the general challenges that we face in this world of low interest rates. the first issue has an international dimension and it has been the focus of many of the discussions around the g20 table this year – and that is, how do we translate greater risktaking on the financial side of the economy into greater risk - taking on the real side. the second issue, which has a more domestic focus, is recent developments in the australian housing market. the international challenge it is useful to start with a reminder of just how unusual the current global environment is. interest rates are as low as they have ever been in most advanced economies. in the united states, the euro area, japan and the united kingdom official interest rates are essentially zero. in germany, investors actually pay the government for the privilege of lending to it for terms of three years or so. and in the euro area, banks are now faced with negative interest rates on their deposits at the european central bank ( ecb ), and the ecb is prepared to lend money to banks for terms of up to four years at just 15 basis points. a number of the major central banks have also engaged in very substantial money creation to buy large quantities of assets from the private sector, including government bonds, assetbacked securities and equities. as a result, financial institutions are holding record balances at central banks and | that determine the trend change in prices. as a measure to prompt an improvement in the aggregate supply and demand balance, in terms of interest rates, the bank has kept the policy rate at the effectively zero level. to encourage a further decline in longer - term interest rates in the money market, the bank introduced in december 2009 a new funds - supplying operation, through which funds with a maturity of three months are provided at an extremely low interest rate of 0. 1 percent, and the total amount of loans to be provided through this operation was set at approximately 10 trillion yen. the total amount of loans was increased to 20 trillion yen in march 2010. in terms of funds provision, the bank has been providing ample funds through various fundssupplying operations, including the new operation. furthermore, the bank has made its stance clear that it will consistently maintain the extremely accommodative financial environment. as for inflation expectations, the other determinant of prices, the bank has, to prevent people ’ s expectations for prices from declining, clearly showed its stance, in the form of the “ understanding of medium - to long - term price stability, ” that it is critical to achieve a positive year - on - year rate of changes in the cpi. to overcome deflation and achieve a sustainable economic growth with price stability, the bank will continue to consistently make contributions as central bank. | 0 |
- rediscounting system in just about five ( 5 ) months since the initial unveiling in manila. we expect to expand the number of participating banking institutions by 7 more banks today here in la union and by an additional 11 banks in davao when we launch this system next month. these should bring the overall number of participating entities to 130 banks. in terms of volume of e - rediscounting loans ( as of 31 may 2007 ), we are pleased to report that loans released by the bsp head office in manila already amounted to p10. 6 billion. in addition, the bsp regional offices had released some p700. 5 million e - rediscounting loans during the period. today ’ s launch of the bsp ’ s e - rediscounting system here at the la union convention center is expected to break new ground in bsp lending. the introduction of a real - time loan refinancing facility to help banks in la union and in the neighboring areas of regions i, ii, iii and the car is expected to scale up their lending capability and help pump - prime the local economy. in the process, this innovation in refinancing technology is expected to significantly improve the credit access for exporters and small, medium, and micro - enterprises in this part of the country. these liberalized rediscounting guidelines, together with the requirement under the electronic commerce act of 2000 for government offices to integrate electronic data documents and processes in their transactions, provided the basis for the development of the e - rediscounting system. the preparatory work for the paperless rediscounting scheme began in march 2006, with the issuance of bsp circular no. 515. aligned with the objective of maintaining price stability, new policy guidelines were established under the circular towards a more consistent, transparent, and efficient bsp rediscounting facility. the main objective of the e - rediscounting system is the simplification, standardization, and automation of loan processes and payment procedures. the front - end system of e - rediscounting allows qualified banks to conduct their rediscounting transactions with the bsp through the internet. the back - end system automates the processing of loan applications, crediting of loan proceeds, debiting of the demand deposit accounts of banks with bsp for loan payments and generating account entries – all in less than 10 | amando m tetangco, jr : philippine banking – reaping the rewards from prudent reforms speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the 2nd asian banker philippine international banking conference, makati city, 6 september 2012. * * * colleagues in banking, fellow stakeholders, ladies and gentlemen, good morning. let me begin by thanking the organizers for holding the 2nd asian banker philippine international banking conference …. when you have a 2nd ( after a 1st ) you create a series … it ’ s like the rocky series ( for those who can still remember ), or harry potter ( to those of this generation ), or batman series or the ipad … the 1st one was a good experience and you want to have more of the same … the organizers did a good job the first time around … today, they again provide a venue for us to take a closer look at the issues that confront us, as they relate to the philippine banking system. and, we look forward, perhaps to a broader asian summit in the philippines at an opportune time in the near future. let me therefore now focus on today ’ s agenda. i will not give you a litany of numbers to prove that the philippine banking system has remained strong in contrast to other jurisdictions. the positive performance indicators are quite familiar to you. for instance, you all know that system resources have been growing, funded by increased balances of deposits and more loans extended to borrowers. let me, however, share with you storylines that are not cited often enough … on the deposits side, growth was faster in the years after the height of the crisis than the years before. between 1999 and 2007, deposits grew a little over 8 % per year. but from 2007 – at the time that the mortgage crisis was already unfolding in the us – philippine system - wide deposit balances increased by 13. 40 % per year all the way to 2011 … on the loan side, the numbers are even more dramatic. loans have been growing at a 10. 62 % pace per year in the last 4 years ( 2007 to 2011 ) when it was growing by only 3. 67 % p. a. in the 8 years from 1999. add to this, the fact that increased loan portfolio was not a case of liquidity chasing after every credit exposure. a simple look at the numbers will show that the npl | 0.5 |
? can the same procedure be applied later possibly to portuguese debt instruments? in these two cases the governing council of the ecb has taken into account the programmes the governments in these countries have set up with the imf – namely by the international community – and the european commission in liaison with the ecb. the bis central bankers ’ speeches programmes have been approved by the imf and the european institutions, and they incorporate strict conditionality. we took our decision on the basis of this strict conditionality. question : now markets know that the ecb will accept junk bonds as collateral. likewise, euro area governments have one incentive less to maintain an investment grade credit rating because they now know that the ecb will accept in an extreme situation their bonds regardless of their quality. did this softening of collateral requirements set a dangerous precedent? i repeat : the decision of the governing council was made on the basis of very strong conditionality of the international community. no government takes lightly the fact that it has negotiated a programme that implies very strong conditionality with the international community and the european institutions. question : once the sovereign debt crisis has been resolved, it may well take years before greece and possibility ireland have regained solid investment grade credit ratings. how is the ecb planning to exit from this softening of collateral requirements? again, strong conditionality and strict implementation of the adjustment programme. it is the sine qua non. at the end of the road stands the return to normal financing with market access. that is always the goal. question : you have a lot of experience of central banking within the european context. you first led the banque de france for ten years and now you are approaching the end of your eight - year term at the helm of the ecb. based on your experiences, what skills and abilities are an absolute must for your successor? i never comment on my succession. one has to consider what a central bank is. a central bank is an institution that is there to be an anchor for stability and to have a sense of medium and long - term direction. it should not depend on an individual. jean monnet said : “ nothing is possible without individuals ; but nothing is lasting without institutions. ” we are an anchor for stability in europe. what counts is the institution and the team. i have had the fantastic privilege of being part of a fantastic team. i like to use the metaphor of a football team : you have all the players on the field and among them is a captain | has been considerably enhanced and strengthened since 2008, its continued development should be ensured when necessary. we are ready to explore all options within our mandate to ensure we can continue to fulfil our responsibilities under the treaty, i. e. promoting the smooth operation of payment systems and ensuring the effective transmission of monetary policy, for which the stability of the centrally - cleared repo segment of euro money markets is crucial. 1 / 2 bis central bankers'speeches ( ii ) technical innovation let me now turn to the second point. how the financial ecosystem is experiencing rapid change due to technical innovation. the eurosystem is responsible for operating two of the systems that form the backbone of financial markets in europe, namely target2, the real - time gross settlement system for the euro, and target2 - securities ( t2s ), a service for the integrated settlement in central bank money of securities transactions. the smooth operation of these services is crucial for maintaining confidence in the euro and to support monetary policy operations. furthermore, it plays a central role in ensuring the stability of the european financial system and in boosting economic activity. the eurosystem market infrastructure is designed to meet the highest levels of safety and efficiency. efficiency covers multiple dimensions : of course it means low costs for institutions that use the infrastructure, but it also implies the opportunity for them to benefit from a range of functionalities that bring added value to the services offered along the value chain. the eurosystem is continuously looking for ways to improve the efficiency and lower the costs of its market infrastructure. it also considers how best to respond and take advantage of technical innovation and meet new user needs, while staying ahead of evolving risks such as cyber risk. in this regard there is also a need to assess if technical innovation can create opportunities to improve financial services. nevertheless, a certain level of caution is needed when technological innovations are applied to financial markets. for innovations to be used in the financial system an essential requirement is that they are proven safe in order to avoid any negative consequences. consequently, if and when innovations are proven to enhance the provisions of financial services without harming safety, they should be explored. ecb working as a catalyst for market integration as a public authority the ecb will keep a watchful eye on technical innovations and assess their possible impact on financial markets. we do this work together with standard setting bodies. the first condition is that innovations are proven to be safe before they find their way into the market. second, it is equally important | 0.5 |
and bank lending rates, the governing council also introduced a number of non - standard measures. notably, the eurosystem provided unlimited liquidity to banks at a fixed interest rate and at maturities of up to one year. it also provided liquidity in foreign currencies, extended the list of eligible collateral and purchased covered bonds outright. these measures have contributed not only to lowering perceived liquidity risks on the part of banks, but also to a better flow of credit to households and firms than would otherwise have been the case. the ecb ’ s approach differs from that of some other central banks in many respects. notably, our outright purchases of securities have been limited to the covered bond market, a market segment that is very important in europe and a primary source of financing for banks. moreover, we have refrained from buying government bonds. this has been different in other regions, especially in the united states and the united kingdom, as you can see from this slide. notably, in providing extra liquidity, we have relied primarily on repurchase agreements ( red parts of bars ), whereas the united states and the united kingdom have focused on buying securities outright ( blue parts of bars ). from the very beginning, we have been aware of the fact that keeping our non - standard measures in place for longer than necessary would entail the danger of creating harmful distortions. therefore, we designed the measures with exit considerations in mind. in view of the improvements in financial market conditions seen since last spring, we have started to gradually phase out some of them. more specifically, we have stopped providing liquidity in foreign currencies, and we have stopped operations involving maturities longer than three months. also, we have decided to return to variable rate tenders in the regular three - month operations towards the end of this month. however, the eurosystem will continue to provide liquidity support to the euro area banking system at very favourable conditions in its shorter - term refinancing operations ( that mature after one week and after approximately one month ). we have decided to do this for as long as necessary and at least until mid - october this year. the speed and path of the subsequent gradual phasing - out of the non - standard measures will depend on economic and financial market developments. the remaining measures are not many. they include, inter alia, the tender procedures to be applied in the main refinancing operations and the operations with a duration of one maintenance period | of the world very closely, as well as the evolution of commodity prices and their potential impact on global inflation. notably, a multi - speed recovery of the world economy, with some regions growing fast, while the recovery in others remains rather slow, has the potential to exert upward pressure on prices. in the same vein, we also need to monitor very closely the possible adverse impact from fiscal developments on the inflation outlook. all in all, risks to the inflation outlook seem to be tilted to the upside. this notwithstanding, inflation expectations remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2 % over the medium term. let me turn to the banking sector. adjustments are continuing in light of a re - focusing on core business and markets, the necessary re - organisation arising from state aid and forthcoming changes to regulatory environment. although there have been improvements, profitability remains subdued. further credit - related write - downs are expected throughout this year, and the risk of a negative feedback loop emerging between the household and corporate sectors and the banks persists. banks ’ may remain under pressure to continue the process of deleveraging, with possible credit constraints impacting on economic growth in the event of credit demand picking up. thus, although the response of policy - makers to the crisis has certainly helped to avert an even more dramatic collapse in economic activity in the euro area and elsewhere, challenges abound. indeed, most advanced economies will continue to face severe macroeconomic imbalances in the years to come. i am particularly concerned about the dramatic deterioration in public finances, which will require very ambitious fiscal consolidation efforts in the years to come. we may already have entered into the next phase of the crisis : a sovereign debt crisis following on the financial and economic crisis. fiscal policy challenges most governments in the advanced countries will exit from the recession with the highest deficit and debt - to - gdp ratios recorded in times of peace. as can bee seen in the chart, the general government deficit in the euro area is expected, according to the latest projections by the european commission, to exceed 6. 0 % of gdp in 2009, 2010 and 2011. in japan, the government deficit - to - gdp ratio is foreseen to reach around 9. 0 % of gdp in these years, whereas the uk and us government deficits are expected to be in excess of 10. 0 % of gdp in the period 2009 – 11. these high government deficits are reflected in mounting government debt | 1 |
for release on delivery 11 : 00 a. m. est january 8, 2021 u. s. economic outlook and monetary policy remarks by richard h. clarida vice chair board of governors of the federal reserve system at the c. peter mccolough series on international economics council on foreign relations new york, new york ( via webcast ) january 8, 2021 it is my pleasure to meet virtually with you today at the council on foreign relations. 1 i regret that we are not doing this session in person, as we did last year, and i hope the next time i am back, we will be gathering together in new york city again. i look forward to my conversation with steve liesman and to your questions, but first, please allow me to offer a few remarks on the economic outlook, federal reserve monetary policy, and our new monetary policy framework. current economic situation and outlook in the second quarter of last year, the covid - 19 ( coronavirus disease 2019 ) pandemic and the mitigation efforts put in place to contain it delivered the most severe blow to the u. s. economy since the great depression. economic activity rebounded robustly in the third quarter and has continued to recover in the fourth quarter from its depressed second - quarter level, though the pace of improvement has moderated. household spending on goods, especially durable goods, has been strong and has moved above its pre - pandemic level, supported in part by federal stimulus payments and expanded unemployment benefits. in contrast, spending on services remains well below pre - pandemic levels, particularly in sectors that typically require people to gather closely, including travel and hospitality. in the labor market, more than half of the 22 million jobs that were lost in march and april have been regained, as many people were able to return to work. inflation, following large declines in the spring of 2020, picked up over the summer but has leveled out more recently ; for those sectors that have been most adversely affected by the pandemic, price increases remain subdued. the views expressed are my own and not necessarily those of other federal reserve board members or federal open market committee participants. i would like to thank chiara scotti for her assistance in preparing these remarks. - 2while gross domestic product growth in the fourth quarter downshifted from the once - in - a - century 33 percent annualized rate of growth reported in the third quarter, it is clear that since the spring of 2020, the economy has | reduce the amount of liabilities that roll off in less than 30 days. deposits which are deemed to be subject to high run - off rates and those which are callable within 30 days will be more expensive for banks. banks are therefore working towards converting many of these less stable deposits into a more stable deposit base. for example, retail and sme deposits are deemed to be ‘ stickier ’ than institutional deposits. part of this transition is being induced by price signals : interest rates offered on new or existing deposit products which are deemed to be more stable are rising relative to interest rates on products deemed to be less stable. these types of changes appear to have accelerated recently as we draw closer to the implementation of the lcr and probably still have some way to run. to date, we have seen only a few banks offer notice of withdrawal accounts to customers. these accounts require the depositor to provide the bank with 31 days or more notice of a withdrawal ( obviously 31 days is one day longer than the 30 - day liquidity stress period ). interest rates offered on these accounts are among the higher rates offered in the deposit market. it may be that we see a broader move to these types of accounts or changes in terms and conditions on existing accounts through the course of next year. we have also seen a fall in the growth of term deposits relative to transaction and at - call deposits over the past few years. in fact term deposits as a share of banks ’ funding has been falling while transaction and at - call deposits have been growing strongly. part of this is because a flattening of the yield curve has made investors less inclined to invest in longer term deposits. but in part it is because under the lcr, some transactional and operational deposits are subject to lower run - off rates than deposits that are largely attracted by higher interest rates. indeed, there has been some indication that banks have been transitioning depositors into deposit products treated more favourably under the lcr. but banks are not limited to just changing their deposit offerings. we could see them look for more opportunities to package retail deposits with other products as the deposits of customers that also have other relationships with the bank are deemed to be more stable under the lcr. so to conclude, the full implementation of the new liquidity regime in australia is imminent. from the beginning of next year, banks in australia will be fully subject to the liquidity coverage ratio. this has already had an impact on the pricing and nature of a number | 0 |
is hoped, will address this concern to a large extent. this is also a challenge which i am sure that the idrbt will also take up in right earnest for the benefit of the financial sector as a whole. the growth in mobile communications and the exponential usage of mobile telephony by india ’ s masses is an aspect which in my view, banks have to look upon as an opportunity to harness to their benefit. the power of the chip in the mobile phone is enormous and its usage for secure banking transactions needs to be examined and provided for. i would also like to touch on another challenge which banks are slowly overcoming. the need for regular, sustained is audit is being highlighted by the reserve bank for some time now. while some initiatives have been taken by banks towards achieving this, much more needs to be done. the speed with which it implementation and upgradation is being done may outpace the frequency of is audit and it is in the best interests of banks that this vital activity is given due importance. it also facilitates a host of other functions which banks have been hitherto performing through manual operations. let me take up the case of verification of the genuineness of the customer - the know your customer or kyc factor. technology facilitates easier access to verification of information on a real time basis. since it tools provide a scientific and almost real time monitoring and analysis of funds movement, this would help a great deal in ensuring compliance to anti - money laundering requirements. many it based banking solutions have incorporated sophisticated algorithms and comprehensive permutations and combinations to provide alerts on a real time basis. such a facilitation may well be impossible using manual means. another vital aspect that has to be taken cognisance of is that technological deployment must always be consistent with the levels of expertise in each bank as well as the nature and sophistication of its customers. alternatively it is important to train all the stake holders to ensure a smooth technological transformation. many of you must have had occasion to read the book ‘ freakonomics ’ by steven levitt and stephen dubner. the narrative there on the lifetime episode of paul feldman on the sale of the american bread - bagels is an eye opener. he commenced sale of the bagels in an unsupervised manner which led to a situation where the buyers did not always pay for their offtakes. nevertheless the recovery rate was rather encouraging. he further studied the behaviour - versus - payment patterns and came out | this has been reflected in a decline, at the margin, in interest rates in australia, even though the reserve bank has not changed the cash rate for a year. australian governments have continued to borrow at or around the lowest rates since federation. similarly, funding costs for financial institutions have been declining. this, and an increase in competition to lend in an environment of still fairly moderate credit growth, has contributed to a reduction in the rates on housing and business loans. economic growth was, as recorded, clearly above trend in the march quarter. the quarterly result was, to a large extent, driven by a substantial increase in resource exports, as new mining capacity came on line and mining operations experienced fewer weather disruptions than usual. data for the june quarter suggest a “ payback ” of lower exports, and also a period of more subdued consumer demand. there are relatively few readings for the september quarter as yet, though at least some suggest that there may have been a reasonable start to bis central bankers ’ speeches the quarter. having printed lower for a few months, the rate of unemployment has recently been recorded at a higher level, though most leading indicators of the labour market seem to have improved a little this year. consumer prices rose by 3 per cent over the year to the june quarter, higher than the pace a year earlier. this partly reflects factors such as the increase in the tobacco excise but measures of underlying inflation also increased. a faster pace of increase in prices for tradable goods and services featured, a reflection of the depreciation of the exchange rate since april last year. the rate of inflation for “ non - tradables ” has actually declined over the past year, helped by growth of labour costs falling to its lowest rate for many years. there is some evidence that productivity performance may be starting to improve, though this is notoriously difficult to evaluate over periods less than several years. when we look ahead, a key feature of the outlook, as everyone knows, is that the capital expenditure phase of the “ mining boom ” is winding down, while the export phase is gearing up. the fall - off in investment spending by resources companies has a long way to go yet and will probably accelerate in the coming year. this impending further fall is captivating most of the commentators. meanwhile growth in non - mining activity has been increasing. a recovery in dwelling investment is well under way, with spending in this area rising by 8 per cent in the year to the march quarter. forward indicators | 0 |
their support and active promotion of our shared goals. may i also recognize contributions of our stakeholders, the information security officers group - isog, the joint cyber security working group - jcswg, the joint anti - bank robbery action and cybercrime coordinating committee - jabraccc, and the national cybersecurity inter - agency committee - nciac, and all our other partners in the government and private sector in our fight against cybercrime. to conclude my speech, let me draw your attention to a powerful and symbolic acronym - sos, step - up capabilities, observe heightened vigilance, and stay connected. as you know, the acronym sos is the universally recognized distress signal. similarly, the fscrp serves as our collective call to action - signaling the urgent need to fortify our defenses and safeguard our financial system against the threats of the digital age. the 2024 to 2029 financial services cyber resilience plan is a pillar of the industry's cybersecurity strategy. i urge all of you to embrace this plan as a commitment to building reliability, security, and trust in financial services for every filipino. maraming salamat at mabuhay tayong lahat! 3 / 3 bis - central bankers'speeches | eli m remolona : digital sos - a comprehensive plan to combat cyber incidents speech by mr eli m remolona, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the launch of the financial services cyber resilience plan for 2025 - 2029, manila, 6 august 2024. * * * introduction senator mark villar, dict ( department of information and communications technology ) undersecretary jeffrey ian dy, bap ( bankers association of the philippines ) president jose teodoro limcaoco, pdic ( philippine deposit insurance corp. ) president bobby tan, leaders in the banking and financial sector, distinguished guests and colleagues, magandang umaga po. digital transformation of the financial sector has brought about unprecedented opportunities. from mobile banking to digital payments, technological advancements have revolutionized the way we conduct our financial transactions. however, with these advances come new challenges particularly in the realm of cybersecurity. cyber threats are evolving at an alarming rate becoming ever more diabolical. as financial institutions embrace digital innovation, they also become prime targets of cyber attacks. these attacks not only threaten the stability of individual institutions but also pose systemic risks to the entire financial system and undermine trust in the system. software glitch just three fridays ago, we saw this in the recent global it ( information technology ) outage which caused massive disruptions around the world. as the so - called blue screen of death experienced by microsoft users worldwide unfolded, the incident reminded us of the risks associated with glitches in the digital supply chain. undersecretary dy is right. it was not even a cyber attack. it was a software glitch - the kind of thing we feared would happen with y2k ( 2000 ) more than 24 years ago. our own financial system and settlement system withstood the glitch. the bsp and the financial services industry have long been aware of these challenges. through the years, policy and supervisory reforms embodied in the bsp's ( bangko sentral ng pilipinas ) 2015 cybersecurity roadmap were rolled out in coordination with industry stakeholders. to further advance our shared cybersecurity agenda, i am pleased to now formally launch the final financial services cyber resilience plan ( fscrp ). 1 / 3 bis - central bankers'speeches our plan is not just a | 1 |
than the average over the 45 years before the financial crisis. as we try to assess the implications of this flattening of the yield curve, it is important to take into account the very low level of the current 10 - year yield by historical standards. for the 20 years before the crisis, the 10 - year treasury yield averaged about 6 - 1 / 4 percent, compared with recent readings around 3 percent. one reason the 10 - year treasury yield may be unusually low is that market expectations of interest rates in the longer run may be unusually low. a second reason may be that the term premium - - the extra compensation an investor would demand for investing in a 10 - year bond rather than rolling over a shorter - dated instrument repeatedly over a 10 - year period - - has fallen to levels that are very low by historical standards. according to one estimate from federal reserve board staff, the term premium has tended to be slightly negative in recent years. by contrast, when the spread between the 10 - year and 3 - month treasury yields was at its peak in early 2010, this measure of the term premium was close to 100 basis points. 9 see kim and wright ( 2005 ) for technical details ; the latest estimates are available on the board ’ s website at https : / / www. federalreserve. gov / pubs / feds / 2005 / 200533 / 200533abs. html. - 8other things being equal, a smaller term premium will make the yield curve flatter by lowering the long end of the curve. with the term premium today very low by historical standards, this may temper somewhat the conclusions that we can draw from a pattern that we have seen historically in periods with a higher term premium. with a very low term premium, any given amount of monetary policy tightening will lead to an inversion sooner so that even a modest tightening that might not have led to an inversion in the past could do so today. there are a number of possible explanations of the low level of the term premium. the asset purchases of the federal reserve and other central banks may be contributing factors. the goal of these policies was to lower longer - term interest rates - - and in many cases, expressly by lowering term premiums. a number of studies suggest that these polices have indeed been successful in lowering term premiums. 10 a second reason the term premium may be lower than in the past is the changing correlation between stock and bond returns, likely caused by changes in expected inflation outcomes. | pce data are somewhat encouraging, we will typically much lower - - around 2 percent today - - compared with high school noncompleters - - currently around 6 percent. - 5want to see inflation coming in around target on a sustained basis after seven years of below - target readings. as i have noted before, the persistence of subdued inflation, despite an unemployment rate that has moved below most estimates of its natural rate, suggests some risk that underlying inflation - - the slow - moving trend that exerts a pull on wage and price setting - - may have softened. 5 for example, some survey measures of longer - run inflation expectations are currently lower than they were before the financial crisis, as are most estimates based on statistical filters. inflation compensation has moved up recently but is still running somewhat below levels that prevailed before the crisis. re - anchoring underlying inflation at the federal open market committee ’ s ( fomc ) 2 percent objective is an important goal. recent research has highlighted the downside risks to inflation and inflation expectations that are posed by the effective lower bound on nominal interest rates, and it underscores the importance of ensuring underlying inflation does not slip below target in today ’ s new normal. 6 in that regard, if we were to see a mild, temporary overshoot of the inflation target, this could well be consistent with the symmetry of the fomc ’ s target and may help nudge underlying inflation back to target. 7 in short, it is reassuring to see core pce inflation moving up, along with marketbased measures of inflation compensation retracing earlier declines. after seven years of below - target inflation, it will be important to see inflation coming in around target on a sustained basis to be confident that underlying trend inflation is running at 2 percent. see brainard ( 2017, 2018 ). see, for example, kiley and roberts ( 2017 ), nakata and schmidt ( 2016 ), and brainard ( 2015, 2016 ). see board of governors ( 2018 ) and brainard ( 2018 ). - 6the yield curve even though longer - term treasury yields have moved up, on net, since the beginning of the year, there has been growing attention of late to the possibility of an inversion of the yield curve - - that is, circumstances in which short - term interest rates exceed long - term interest rates on treasury securities. historically, yield curve inversions have had a reliable track record of predicting recessions in the united states. | 1 |
policy preparations and decisions, and a new interest rate management system for monetary policy has been launched. the endeavour to promote transparency is evident in the riksbank ’ s participation in public hearings by parliamentary committees, in inflation reports, speeches, discussions and seminars of various kinds, and in the publication of specialist reports. this has led, i believe, to a better awareness — among market agents as well as a wider public — of how monetary policy works. one indication of this is that agents ’ expectations about monetary policy have become increasingly congruent with the riksbank ’ s monetary policy intentions. in addition, the five - party agreement on the new riksbank act is a manifestation of broad political support for the low - inflation policy. it is our ambition, moreover, to continue the process for increased transparency as far as is reasonable and feasible. criticism of monetary policy monetary policy has, of course, come in for some criticism. a common issue initially was whether striving for 2 per cent inflation was reasonable and feasible. that discussion seems to have dried up. inflation is currently around 2 per cent and more and more people understand the advantages of this. another question has been why the riksbank does not have the task of promoting other objectives, growth, for example. here, too, there is a growing awareness, though it does not include everyone. in the long run monetary policy is only capable of influencing inflation and there is absolutely no long - term trade - off between inflation and growth. if anything, high inflation tends to impair real economic development. in the short run, however, the situation is somewhat different. in this perspective, inflation and growth are largely two sides of the same coin, at least as long as inflation expectations are stable around the target. weaker growth implies a diminishing risk of inflationary impulses from demand, which normally warrants a less restrictive monetary stance. conversely, demand that is excessively strong in relation to potential output implies a risk of rising inflation and a need to raise the repo rate. the current discussion seems to be about whether the riksbank acts symmetrically. in other words, is the riksbank as concerned about under - shooting the inflation target as it is about preventing inflation from exceeding the target? my answer to that question is definitely “ yes ”. the riksbank aims to keep the rate of inflation at 2 per cent, neither more nor less. the issue of monetary policy asymmetry seems to be linked | 2 sur 6 the fintech - innovation unit, the acpr ’ s “ hub ” for project leaders, has naturally seen a decline in the number of requests for support this year ( 63 between january and august compared with about a hundred over the same period in 2022 ). however, the acpr is continuing its efforts to assist innovative projects and help them navigate their regulatory process. in 96 % of cases ( compared with 90 % last year ), the acpr provided a response within two weeks of first being contacted. and once a project has begun the process of gaining authorisation, we have got even closer to meeting our fintech charter objective, with a response time now averaging 10 days ( compared with 12 days last year … and 19 days on the part of the applicants ). in addition, we have started work to improve the parcours fintech website, to make it even easier to access and understand the regulations in force. this will notably help the least experienced project leaders to prepare their applications properly. 2. the current environment should not detract from the underlying trends the current environment should not detract from the underlying trends, and in particular some key structural strengths. our fintechs are continuing to grow ; in france they have the advantage of being able to access a pool of recognised talent as well as an attractive and dynamic financial centre. ongoing technological innovations, and especially current developments in artificial intelligence ( ai ), are opening up new horizons. iii this is illustrated by the exceptionally fast adoption of new generative ai tools, some of which have attracted over 1 million users in just five days. at the banque de france, to understand and take advantage of this new landscape, we have adopted an experimentation approach to speed up the learning process. in may 2023, le lab, our open innovation centre, launched a call for generative ai contributions from the innovation ecosystem, to help us better understand this technology and speed up its adoption by proposing concrete use cases – or even operational solutions. the call for contributions closed on 21 september and three french companies have been selected from page 3 sur 6 among the 25 high - quality application files that were submitted. iv the projects – a generative ai platform, a specialised conversational assistant and a tool to audit generative ai – will allow us to develop solutions that are suitable for use in our missions. ii. application to two new frontiers : tokenised finance and the climate to conquer these new frontiers, we need to take a collective | 0 |
times of crisis. this has been the case with the current financial crisis where exceptional demand for the us dollar has strengthened the currency while weakening other currencies. in this regard, the fiji dollar is expected to weaken against the us dollar. the appreciation of the usd will augur well for exports to the us or goods priced in usd. however, this will be offset by the losses from the australian and new zealand dollars, both of which have weakened against the fiji dollar. while it is not clear where the trading partner currencies are headed, there is a general agreement that the us dollar will continue to strengthen against the major currencies. in addition, our external competitiveness could be affected by competition from asian economies, as they normally keep an undervalued exchange rate to boost their exports and services ( e. g. tourism ) sectors. • exchange rates : compared to the beginning of the year, the fiji dollar strengthened against the australian and nz dollars by around 12 and 13 percent, respectively. however, the fiji dollar fell against the us dollar and euro by 13 and 2 percent, respectively. • impact on economic growth : the risk to the fiji economy from the financial crisis is on the downside. this can be largely attributed to the expected negative effects emanating from the trade and financial channel. that is, if exports of mineral water, fish, garments, textiles & footwear and other domestic exports ( like agro - based produce ) potentially decline then this will naturally feed into lower production in these sectors. in addition, any slowdown in tourism would impact the wholesale & retail trade, hotels and restaurants sectors, as well as, the air transport and services allied to transport sectors adversely. furthermore, a reduction in remittances flows could suppress consumption expenditure. similarly, lower financial flows ( especially, fdi ) could lead to a decline in investment, especially in the building & construction sector. thus, domestic demand may be affected as a result of the global financial crisis. it is likely that the financial crisis will erode fiji ’ s growth prospects somewhat. • impact on fiji ’ s monetary policy objectives : in terms of the monetary policy objectives, the global slowdown will ease inflationary pressures. although there is some appreciation in the us dollar, oil prices have dropped more sharply. on a net basis, this is expected to ease inflationary pressures from oil. in contrast, it is likely that pressures on foreign reserves ( the underlying position of the balance of | macro - prudential supervision, there is still some conceptual work to be done. work on a well - equipped toolbox of instruments, for example ; instruments that might not only address banks, but also other financial market participants. conclusion ladies and gentlemen, following this digression, let me be clear on one thing : preserving financial stability is truly a herculean task. our aim must be to make the whole financial system stronger and more resilient. so it ’ s a logical step for us to target all the measures at our disposal towards realising this objective. but the ecb ’ s primary objective is still to maintain price stability in the medium term. stable prices are the basis for sustainable growth and a stable banking sector. our most recent monetary policy decisions do justice to this mandate. as an independent central bank, we are committed to explaining our actions to democratically elected representatives. but i personally find it particularly important to enter directly into dialogue with you. i am therefore delighted to engage in a discussion with you now. many thanks to the bundesbank for giving us the opportunity to do so today. bis central bankers ’ speeches | 0 |
only 22 percent of parents with children attending virtual classes agreed that their children learned as much as they would have attending classes in person at school. i hope that the return to in - person learning and reopening of schools will enable children to resume normal learning and that academic achievement will rebound. it seems that even with this return to in - person attendance, many schools are struggling to provide students with the same quality of education as they did pre - pandemic. with 1 / 3 bis - central bankers'speeches the return to onsite education, many schools are confronting challenges that impair their ability to meet the educational needs of students. a number of educators appear to have left the profession, as indicated by the nearly 100, 000 more job openings for teachers in july 2022 than before the pandemic. 1 complicating these issues, across the country the return to in - person instruction has been met by an increase in chronic absenteeism, which is defined as a student missing at least 10 percent of school days in a school year. compared to a typical school year pre - pandemic, 72 percent of u. s. public schools reported an increase in chronic absenteeism among their students during the 2021a€ “ 22 school year, which is a 39 percent increase over the previous year. 2 missed school typically means missed learning, so chronic absenteeism is a key metric of school performance. it's likely that these challenges will result in lower graduation rates and possibly less stable employment than would have otherwise been the case. these outcomes raise difficult questions about how to best respond to the needs of students and educators going forward. for example, how can curricula be adjusted to meet students where they are today, after nearly three years of pandemic - impacted learning? how can we best re - engage the larger proportion of students who may have become disconnected as a result of these pandemic - related disruptions to their education? what does this all mean for the future of the labor force? in addition to the challenges facing primary and secondary education, higher education was not immune to pandemic disruptions. like k - 12 education, studies show that online instruction reduced the academic performance of college students. 3 in addition, we have seen declines in both college enrollment and the rate of first - year college students who continue their education into a second year. 4 these declines are most pronounced at community colleges and open - access programs. some of this decline | dollars each day. many obligators temporarily lost their technical ability to pay on time, leaving those counting on receiving payments caught short. the pressures ultimately ended up concentrated in banks. those needs were met by the federal reserve, both through record lending at the discount window and through an extraordinary infusion of funds through open market operations. to facilitate the channeling of dollar liquidity to foreign financial institutions operating in the united states, thirty - day currency swap lines were arranged with major central banks, again in record volumes. it was essential in such an environment to meet all appropriate demands for dollar liquidity. as the financial markets and payment infrastructure return to normal, loans are being repaid, and the temporarily bloated balance sheet of the federal reserve is now shrinking back to normal. nobody has the capacity to fathom fully how the tragedy of september 11 will play out. but in the weeks ahead, as the shock wears off, we should be able to better gauge how the ongoing dynamics of these events are shaping the immediate economic outlook. for the longer term, prospects for continued rapid technological advance and associated faster productivity growth are scarcely diminished. those prospects, born of the ingenuity of our people and the strength of our system, fortify a promising future for our free nation. | 0.5 |
green capital market where green investments can find the right green projects. we find it important for us, as an issuer of government bonds, to be present in this market and help to set a standard. in addition, it has been important for us to issue a green bond based on the eu taxonomy, as we believe that a single european standard for what is green is a prerequisite for creating the necessary transparency. 1 / 2 bis central bankers'speeches accordingly, we find that we are able to offer a forward - looking framework by taking an explicit position on existing and future regulation regarding green bonds. at the same time, we believe that the explicit government commitment to green spending, which the bonds ensure, and not least the subsequent reporting on the climate effects of the spending, helps to support and create transparency about our green ambitions as a country. read more about danmarks nationalbank ’ s issuance of green government bonds here. the slideshow used in the presentation of the green government bonds can be found here. 2 / 2 bis central bankers'speeches | signe krogstrup : denmark's first green government bonds introduction by ms signe krogstrup, governor of the national bank of denmark, to the presentation of denmark's first green government bonds, virtual, 16 december 2021. * * * hello, and welcome to this investor meeting. it ’ s great to see so many of you. what a pity that we cannot hold the meeting in physical form. today, we are going to talk about green bonds and the net - zero transition. i ’ ll start from a danmarks nationalbank perspective. i will then turn to the excellent cooperation with the ministry of finance on government debt management. i am asked more and more often how danmarks nationalbank is contributing to the net - zero transition. my answer is that danmarks nationalbank contributes by ensuring good conditions for the transition. this has several meanings. danmarks nationalbank contributes by meeting its objectives of ensuring a robust economy with stable prices, safe payments and stability in the financial system. this provides for stable planning horizons as a solid basis for long - term green investments. besides this, a stable economy adds to fiscal space. danmarks nationalbank also contributes to the transition by raising climate awareness in the financial markets. now, we ’ re drawing closer to the green bonds. heightened climate awareness is not just about banks and investors being aware of the risks associated with companies emitting large amounts of greenhouse gases. those companies may not be profitable in the future. heightened climate awareness is also about how companies and governments can obtain favourable financing conditions if they are able to substantiate their transition performance. this strengthens the incentive for transition. at danmarks nationalbank, we are pleased to participate in the establishment of a green bond framework for denmark and – from january – to be able to issue green bonds on behalf of the danish state. given denmark ’ s green ambitions, it is quite natural to introduce a green government bond to support the net - zero transition. it has been a long journey. together with the ministry of finance, we have considered innovative ways of offering a green bond while maintaining the liquidity of our conventional bonds. we did not end up with a certificate model after all. but we humbly believe that the german “ twin bond ” model has been inspired by our certificate model. so, it is only right for us to look to our german colleagues for inspiration. a key motivation for issuing green government bonds has been to establish an efficient and transparent | 1 |
which large parts can be described as being in balance. central government debt has fallen from 80 % of gdp in 1995 to around 70 % in 1999, foreign debt has fallen from a maximum of 40 % of gdp in 1993 to only just over 20 % of gdp in 1999. the long - term inflation expectations have also been stable around the 2 % target for inflation for some time. it is true that unemployment continues to be high but it is falling. this is the most promising development for 30 years : we have strong growth at the same time as we have balance or large surpluses in central government finances and foreign trade. the challenge for monetary policy is not to dampen demand unnecessarily but neither should demand be allowed to increase more than is compatible with the inflation target. in the long - term, monetary policy has, of course, no direct impact on the rate of growth although during a shorter period, demand and growth are influenced by the interest rate set by the riksbank. if, for instance, monetary policy is made more stringent too late, there is a risk that inflation expectations will rise and gain a hold. to restore inflation to the target, a longer period of stringent monetary policy will then be required with weaker demand as a result. then investment will also be throttled and capacity growth braked. the inflation target has not only a value per se but is also first and foremost a means for creating the prerequisites for stable, sustainable growth. the best contribution the riksbank can make is to maintain the inflation target but there is no simple rule of action as to how monetary policy is to be conducted. according to the riksbank act, the overall objective for the activities of the riksbank is to maintain stable prices. however, according to the law, the riksbank shall also support the objectives of general economic policy without setting aside the inflation target, in order to maintain sustainable growth and high employment. as the swedish economy is approaching balance in many respects and the long - term inflation expectations accord with the target, the conditions for carrying out monetary policy are more favourable in many ways than before. this does not prevent there being many components of uncertainty now as well. major structural changes are taking place in the world economy to some extent driven on by information technology. deregulation, eu membership, and stiffer competition are other factors that can be assumed to have an effect on the economy ’ s mode of functioning, although it is difficult | our way into a development similar to the american. at the same time, there are similarities, both with regard to the reorientation of the macroeconomic policy and to the penetration of computers and information technology in swedish society. an important difference between usa and sweden is that use of resources in the american economy has been high for many years while the swedish economy was in a downturn for practically the whole of the 1990s. investment usually increases only after a long period of high capacity use. the focus on stable prices and budget consolidation also started later in sweden than in the usa. a very benevolent interpretation could be that we are moving in the same direction as the usa but with some time lag. the usa also waited for a long time for the productive effects of many computers introduced everywhere in the economy. the conclusion that can be drawn now is that it is anyway still not possible to base monetary policy on a real acceleration of potential growth. is consumption affected by increase in wealth? the strong increases in prices in the swedish stock market indicate that there are expectations among those who handle risk capital that profits will increase sharply particularly in swedish it - related companies. in order for such a development to be realised, it is reasonable to assume that investment must increase on a broad front. a risk with a strong increase in share prices before any visible signs of potential growth accelerating is if consumption is strongly stimulated by households who own shares increasing their wealth. an increase in demand that is not corresponded to by an increase in potential growth increases inflationary pressure that the riksbank must counteract by increasing interest rates. however, increased interest rates also subdue increased investment, which is unfortunate, as it would brake the growth of capacity. it has been difficult during earlier periods of large increases in share prices to prove that swedish households have really increased their consumption as a result of increased wealth. during recent years, however, the proportion of households owning shares has increased. when property prices increased sharply at the end of the 1980s, many households raised loans on their homes and used the money for consumption. a low housing production combined with growth that is strongly concentrated to the big city areas has contributed to housing prices again rapidly increasing in recent years. this development can also stimulate consumption with the risks that i have just mentioned. wage formation risks a further factor of uncertainty for assessment of inflationary pressure in the ongoing evaluation of monetary policy is wage formation. here it concerns the risk that the wage formation processes have not yet been tested in such a strong cyclic | 1 |
improve its risk management and control framework depending on nature, location, size, sophistication, complexity of business operations and approved risk appetite. bis central bankers ’ speeches in order to have comprehensive and current information on operational risk, sbp will expand its existing reporting mechanism. sbp is working on a two prong strategy ; one is to update the existing instructions on frauds & forgeries with the purpose to further strengthen the fraud risk management and monitoring in banks. on the second front, guidelines on operational risk data collection will be issued to enhance the scope of loss data gathering in line with basel ii requirements and to provide the industry a minimum set of instructions for consistent recognition of losses and their reporting to a centralized data consortium. these projects are at an advanced stage of consultation with the industry. these guidelines / instructions will help banks improve their operational risk management processes. information security and business continuity are becoming the top supervisory concerns. banks need to monitor it security risks and respond to security breaches in a timely manner. banks need to devise and test their business continuity plans to ensure they are able to operate on an ongoing basis in the event of severe business disruption. the plans must be based on different types of worst case scenarios like inaccessibility of bank ’ s facilities, it infrastructure or a pandemic event. let me sum up the key message of this address. for sound management of operational risk, we need to inculcate a risk culture within the organization with open communication channels between business lines and control functions. there is a need for close cooperation between banks and sbp. we are all on the learning curve ; therefore exchange of ideas is very important in capacity building for operational risk management. i hope this conference will provide a good opportunity to exchange our thoughts on the subject and learn from each other ’ s experiences. thank you very much for your attention. bis central bankers ’ speeches | ##condition for restoring the confidence in banking ; • build capacity in the central bank itself for pursuing an independent monetary policy and efficient banking system supervision ; • establish a modern payment system. many of these issues were successfully solved. manu of them are still being successfully treated. the national currency was successfully introduced, inflation was surmounted, and in the past 12 years it has been on average on the level of only 2. 2 percent, annually. the function of prudential supervision has been established, which is continuously being improved and upgraded. payment operations are conducted smoothly. so is the function of the government's fiscal agent. the capacity for conducting the monetary policy is in constant progress. from april 1992 until december 1995, the national bank applied a monetary targeting strategy, with the money supply m1 being the intermediate target. at that time, mainly direct instruments were used : selective credits, minimum liquidity, compulsory cb bills, discount rate and reserve requirement. the choice made was imposed by the circumstances : lack of developed financial instruments and institutional financial structure ; absence of the interest rate transmission mechanism, and high interdependence between the aggregate demand and money supply. in october 1995, nbrm made a shift towards monetary strategy of targeting the nominal exchange rate against the german mark, and later against the euro, with the denar exchange rate stability being the intermediate monetary policy objective. such a strategy, applied in a small and open economy such as ours, has proved to be very successful for maintaining the price stability until present day. all reforms in the monetary policy instruments since the independence have been directed towards introducing indirect, market - oriented instruments for enabling efficient monetary policy conduct. therefore, in 1993 deposit and credit auctions were introduced, and at the end of 1994 cb bills auctions were introduced. the initial development and strengthening of the financial system of the republic of macedonia, especially of the government securities market, enabled us to include new instruments, following the example of the modern central banks. in april 2005, we promoted the overthe - counter market for government securities. in the same year, we launched the general repo agreement and we started with repo operations when concluding lombard credits. in march this year, together with the ministry of finance we introduced treasury bills for monetary policy purposes. the transition of the monetary strategy and of the monetary instruments would not have been successful without adequate banking reforms. therefore, rehabilitation and privatization of banks were undertaken, deposit insurance fund was established and new regulation on prude | 0 |
john iannis mourmouras : a post - brexit assessment of risks to debt sustainability in the euro area speech by professor john iannis mourmouras, deputy governor of the bank of greece, at the third omfif main meeting in north america, st. louis, 14 july 2016. * * * views expressed in this speech are personal views and do not necessarily reflect those of the institutions i am affiliated with. this is an abridged version. the 2008 global financial crisis has led to a rapid accumulation of government debt in most countries of the euro area. indeed, the euro area government gross debt - to - gdp ratio is estimated to have risen by 28 percentage points from its pre - crisis level in 2007 to stand at 93 % in 2015. however, financing concerns are currently mitigated by low sovereign funding costs for almost all sovereign rating categories and solid demand for government bonds against the backdrop of the eurosystem ’ s ongoing asset purchase programme ( qe ). total debt service of euro area governments for the next 12 months is around 16 % of gdp ( around €1. 6 trillion ), a figure which comprises 13. 9 % of principal and 2. 1 % of interest expenditure. it is true, however, that despite the fact that debt servicing is much easier today given that lower nominal interest rates worldwide are reflected in reduced coupon payments, risks to debt sustainability are on the downside, as reminded in the latest ( pre - brexit ) ecb financial stability review ( may 2016 ). our objective here is to examine if and how, after the brexit vote, these risks are indeed heightened. i identify below three such downside risks to debt sustainability in the short - to medium - term, in the aftermath of the british referendum. 1. a low interest rate environment, the new global norm, due to persistently low inflation, increases the disincentive to fiscal consolidation and structural reforms. for instance, negative nominal yields, if applied too long, may act as an anaesthetic to euro area governments. the fiscal space gained from lower debt service costs may slow enactment of necessary fiscal and structural reforms. brexit could well amplify the above downside risk. the initial market reaction to the brexit vote was a typical risk - off mode – lower curves, wider spreads, flatter curves. the uk 10 - year gilt yield fell under 1 % for the first time in records, while | percent. 4 ladies and gentlemen, you will agree these are good numbers. asset quality is satisfactory with gross npl ratio at 4. 7 percent as of end - december 2016 ( better than the average in the last five years ) while capital adequacy ratio ( car ), as a measure of riskbased capital, remains well above the minimum bsp and international standards. for instance, the car of stand - alone thrift banks was at 19. 7 percent as of june 20165 in terms of profitability, industry figures were also better. net income for 2016 reached p13. 9 billion, higher by 17. 8 percent than in 2015. return on equity ( roe ) improved to 10. 5 percent. the role of thrift banks in countryside development 1 / 4 bis central bankers'speeches in other words, ladies and gentlemen, the thrift banking industry is well - placed to support countryside development moving forward as reflected in your convention theme “ maximizing opportunities in countryside development. ” that you have aligned your program with the government ’ s 10 - point socio - economic agenda of promoting countryside development is both commendable and timely. just recently, the government approved the philippine development plan ( pdp ) 2017 – 20226. the objective is to reduce overall poverty rate to 14 percent and poverty incidence in the rural areas to 20 percent by year 20227 by promoting inclusive growth. i am glad therefore that you have a special forum on the philippine development plan later today. this will help you determine your roadmap moving forward. meeting the challenges / pushing msmes there are many opportunities to help develop the countryside, particularly within your targeted niche of catering to the msmes. the msme sector is a cornerstone of economic growth. we have seen how successful msmes liberate people from poverty by creating jobs and serving as catalysts for growth in their communities. this is the rationale behind bsp ’ s continuing collaboration with the industry and other agencies of government to create an enabling regulatory environment for increased access to finance, particularly for msmes. among the challenges that we have helped address include : 1 ) the use of collateral and developing product lines ; 2 ) the difficulty to expand reach, given our archipelagic configuration ; 3 ) the competition from the “ big boys ” and now the advent of asean integration ; and 4 ) the changing external macroeconomic environment. addressing collateral on the issue of collateral, the bsp initiated in 2008, the credit surety fund ( | 0 |
njuguna ndung ’ u : mefmi fellows department programme speech by prof njuguna ndung ’ u, governor of the central bank of kenya and chairman of the mefmi executive committee, during the 2007 mefmi fellows graduation & accreditation ceremony, harare, 31 july 2007. * * * your excellencies, governor reserve bank of zimbabwe, dr. gideon gono, executive director of mefmi, dr. ellias ngalande, distinguished invited guests, graduated and accredited fellows, ladies and gentlemen, 1. it is indeed a great honour and privilege for me to be here and witness this memorable occasion as we confer mefmi fellows in recognition of their hard work. congratulations to you all the graduated and accredited fellows! this occasion is especially memorable because of the presence of our distinguished guests ; the financial cooperating partners. your excellencies once more, you are very welcome to the mefmi family. ladies and gentlemen : allow me, on behalf of the board and indeed on my own behalf, to thank you for accepting to come to bear testimony to one of the significant outputs of mefmi. let me assure you of mefmi ’ s commitment in pursuing its objectives and ideals of building sustainable capacity in the region as affirmed by its leadership. i wish also to acknowledge the great hospitality the institute continues to receive from the governor of the reserve bank of zimbabwe, dr. gideon gono that enables us to convene effectively in harare. your presence here today, honourable governor, further demonstrates the very commitment you have for the intended success of mefmi. 2. ladies and gentlemen : mefmi fellows development programme was conceived as a flagship to address the capacity needs of the region in terms of the development of local and regional expertise. specifically the programme was set up to meet the following objectives : ( i ) to develop a critical mass of regional expertise in the priority areas of sovereign debt, macroeconomic and financial management, as a means to gaining sustainable and self - generating capacity ; ( ii ) to create sustainable regional capacity for delivery of mefmi capacity building products and services to answer the concerns about sustainability of the institute ’ s activities ; and ( iii ) to create regional capacity for complementing mefmi ’ s capacity building efforts at in - house level in mefmi member states ’ institutions. the fellows who have graduated today have gone through an intensive programme of customized training, professional exposure to renowned institutions | cooperation among regulatory authorities is essential. as regulators, we need to encourage and support transformation and innovation through better regulation instead of looking for avenues of more regulation. as per sir andrew crockett, better regulation is a regime that : can readily identify weaknesses and emerging vulnerabilities ; is capable of analyzing risks and adequately addressing pricing risks ; bis central bankers ’ speeches provides appropriate incentives ( penalties ) to induce prudent behavior in the market place ; but also to add in our case, the regulator is an agent of market development. better regulation encourages innovation and strong institutions to develop in the economy. cross border banking has its opportunities and challenges. as regulators, it is in our mutual interest to ensure the soundness and stability of our respective financial sectors. we should therefore play our rightful role in ensuring effective supervision of banking entities operating in our respective jurisdictions. we should also ensure that any systemic risk that may be posed by one bank operating in another jurisdiction is mitigated and promptly brought to the attention of the home regulator. the mou which we are signing today will thus enable us share a wide range of supervisory information on a more defined framework. ladies and gentlemen ; both mauritius and kenya are leading international hubs. mauritius is a renowned international financial centre for its offshore financial services. likewise, kenya, because of its leadership in mobile money transfer services, is now referred to as the silicon valley of africa. we can both learn from each other and share our respective experiences so as to increase the competitiveness of our markets as well as our financial institutions. the signing of this mou will therefore set forth a pragmatic approach for cooperation and the sharing of supervisory information. we accordingly look forward to building on the existing good relations between the central bank of kenya and the bank of mauritius and to a future of enhanced supervisory cooperation. i now invite governor bheenick to make some remarks before we proceed to sign the mou. thank you. bis central bankers ’ speeches | 0.5 |
a decisive influence on the direction of direct investment, thus allowing false conclusions to be drawn. for example, in the past year, german parent companies borrowed more from their foreign subsidiaries ( € 25 bn ) than they invested abroad in new equity capital ( € 13 bn ). in this case, it would surely be a mistake to take the net position of these flows to judge the quality of germany as a location to do business. and there is another problem : the low threshold for participating interests for fdi. it ’ s only 10 %. such a low threshold tells us very little about an investor ’ s lasting interest. the bundesbank introduced the reduction in the participation threshold and the inclusion of short - term financial loans and trade credits into the direct investment flows only in 1999 when emu was set up. ultimately, there is a trade - off between the narrow definition of foreign direct investment, on the one hand, and the necessity to provide internationally comparable data, on the other. 6 we have tried to solve this conflict by presenting direct investment data as detailed as possible. the researchers can select the data and definitions in such a way as to adjust them to fit their respective analysis. at the same time, the data are compatible internationally ( and within emu ). 7 after my short discussion of the bundesbank being a data provider, i ’ d like to turn to the second reason for our soft spot for the subject of this conference. it ’ s research. we try to show that the german economy is not only affected by globalisation, but also has a strong impact on globalisation. the german economy, with its extensive cross - border investment and its substantial foreign trade, has actually been one of the driving forces behind the globalisation process. the diverse and everchanging transmission mechanisms of foreign impact on the domestic economy make it all the more important for a central bank to constantly analyse these developments. in the past few years, we have studied intensively the reasons behind foreign direct investment. 8 our research at the bundesbank shows that there are many different motives for conducting fdi. these motives cannot be simply reduced to cost aspects, and particularly not only to labour costs, however important they may be. 9 there are also tax considerations and regulatory differences to consider. see, for example, richard reichel, okonomische theorie der internationalen wettbewerbsfahigkeit von volkswirtschaften, wiesbaden 2002. | hermann remsperger : foreign direct investment ( fdi ) and the deutsche bundesbank dinner speech by professor hermann remsperger, member of the executive board of the deutsche bundesbank, on the occasion of the workshop on multinationals and international integration by the kiel institute for world economics and the deutsche bundesbank, kiel, 8 october 2004. * * * ladies and gentlemen the topic of our workshop today and tomorrow is “ multinationals and international integration ”. this evening, i ’ d like to give you 3 reasons, why we at the bundesbank have a soft spot for this subject, namely : supply of data, research and economic policy. 1 the first reason is very simple, but also very important : we supply the public with data on foreign direct investment ( fdi ). just think about the flow statistics from the balance of payments or the stock figures from our survey on enterprises ’ international capital links. 2 we have anonymously processed the individual data taken from our statistics on german enterprises ’ international capital links in a database. and we make this database available for research purposes. 3 our data currently cover 14 years starting in 1989. for the year 2002, this data record contains reports from around 6, 000 german enterprises with 22, 000 foreign affiliates. and we have data on over 7, 000 foreign enterprises with 10, 000 subsidiaries and branches in germany. our statistics not only provide a breakdown of fdi stocks by country and industry. they also include several important indicators of the respective investments such as the number of employees, the annual turnover and the balance sheet total. our experts at the bundesbank, working together with external researchers, have managed to link the individual data on fdi with other statistics. the links made with the banking and the balance of payments statistics have proved to be very promising. this is documented in research papers by claudia buch and alexander lipponer on the investment behaviour of german banks abroad. 4 now we are examining how to enrich our data on direct investment with further data. some examples are banks ’ reports on their external position, which are collected by the bundesbank, as well as a data set of the federal employment agency. you can imagine, ladies and gentlemen, that we do not only want to supply data on fdi. we also have a great interest that these data are being used appropriately. for example, fdi often serves as an indicator for the sound financing of a current account deficit and for the quality of | 1 |
amando m tetangco, jr : nurturing world - class finance leaders speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the 14th inter - collegiate finance competition, manila, 22 october 2012. * * * good afternoon everyone! on behalf of the bangko sentral ng pilipinas, i congratulate all the students and the schools that participated in this 14th inter - collegiate finance competition of the financial executives, inc. and its partner jp morgan chase. i have personally witnessed a number of previous years ’ final rounds and i can tell you this competition is tough and definitely not for the faint - hearted. participants only have a few minutes to solve difficult questions ; these are questions patterned after the notoriously challenging chartered financial analyst examination for experienced finance practitioners. let us therefore give a well - deserved round of applause to all the students, their mentors, and supporters from about 90 schools who entered the competition. i am happy to note that the finalists come from 20 schools scattered in luzon, visayas and mindanao, proving once again that academic excellence is present across the philippines. let us also thank the delegates from the assumption university of thailand, the university of guam, and the national university of singapore for joining this event and giving it a regional scope. finex president ramon opulencia explains that this competition aims to expose students and schools to world - class finance education standards, as well as to promote exchange of ideas, cooperation, networking and friendship among the participants. we at the philippine central bank support finex in this program for a number of reasons. ladies and gentlemen, you and i know the value of keeping our financial system healthy on an institutional, national, regional, and global level. for better or for worse, financial systems affect economies and the lives of millions even billions of people. it is important to ensure therefore that the people responsible for running the finances of our institutions in particular and our financial system in general meet the high standards required by their job. finex deserves our recognition therefore in engaging students and schools to raise the bar of excellence in financial education year after year. let us thank the hardworking members of finex for their undiminished commitment to this program with a round of applause. in this connection, i am looking forward to seeing finex work with our schools to make sure that ethical practices and social responsibility complete the education of our students. it would | many of them cannot be highly paid. this ties in with the product market reform agenda : if the wages in new jobs can ’ t be that high, we need to achieve downward pressure on prices so that the possible wages command decent buying power. it also speaks to the links between wages and employment. as bheki ntshalintshali of cosatu 11 recently reminded us, there is the real risk of excessive wage demands producing higher unemployment. 12 we know that the agricultural sector shed hundreds of thousands of workers after the imposition of a minimum wage at an excessive level. 13 we know that this economy lost a disproportionate number of jobs during the global financial crisis relative to the decline in congress of south african trade unions. ‘ cosatu urges members to balance pay with job security in wage talks, business day, 4 july 2016 ( http : / / www. bdlive. co. za / national / labour / 2016 / 07 / 04 / cosatu - urges - members - to - balance - pay - with - job - securityin - wage - talks ). see haroon bhorat, ravi kanbur and benjamin stanwix, ‘ estimating the impact of minimum wages on employment, wages, and non - wage benefits : the case of agriculture in south africa ’, american journal of agricultural economics, first published online on 27 june 2014. bis central bankers ’ speeches economic output, in large part because of high wages and rigidities during periods of normal business operations. 14 based on historical trends, we forecast persistent wage growth despite rising unemployment and minimal growth. if we try to play a game in which fewer and fewer people get higher and higher wages while more and more people wind up unemployed, we can only lose. we have to get more people into work. to tackle this problem, one of the things we should do is reconsider the institutions we use to negotiate wage pricing. there is an important argument in academic literature, specifically by lars calmfors and john driffill, connecting unemployment to the kinds of collective bargaining rules used in a country. 15 the basic idea is that a country can achieve better employment outcomes when collective bargaining is done either at a low level, such as one union per firm or plant, or at a very high level, such as the whole economy. the worst outcome is to be in the middle, between the two options. this is because company or plantspecific | 0 |
t t mboweni : the global economy and central banking in africa address by mr t t mboweni, governor of the south african reserve bank, at the national bank of belgium, brussels, 9 november 2004. * 1. * * introduction the global economy changed considerably in recent years with important consequences for central banking. during the last half of the previous century the world economy was characterised by a process of liberalisation, deregulation and eventually globalisation, i. e. a process through which an increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies. globalisation brought increasing prosperity to the countries that became involved in it. the free flow of goods, capital and people boosted incomes and raised living standards in many parts of the world. in addition, new technological advances reduced transportation, telecommunication and computation costs. these developments did not only lead to greater operational effectiveness, but also increased the ease with which national markets could be integrated globally. the more integrated world economy did not benefit all economies and all the inhabitants of the globe. mr horst kohler, the past managing director of the international monetary fund recently stated that : “ nearly 1, 2 billion people - one fifth of humankind - continue to live in absolute poverty, with incomes less than $ 1 a day. in many countries, durable economic and social progress remains elusive. in most of these countries, trade has decreased in the last 20 years and on average, economic growth has not kept pace with population growth. the situation in africa is particularly dramatic because it is aggravated by the aids pandemic. i believe that the fight against global poverty is the greatest challenge for stability and peace in the 21st century. ” it is true that disease, unemployment and poverty reduction remain the major challenges confronting policymakers in africa. for this reason it is encouraging that african leaders have embraced the new partnership for africa ’ s development ( nepad ) to confront the challenges facing the continent. nepad is a strategic development plan that addresses the economic, social and political dimensions of africa ’ s future development. it is a clear demonstration of the willingness of the leaders in africa to take responsibility for actions needed to advance development. the vision and way forward basically consist of creating the policy environment and institutions that are necessary to translate the political commitment into economic benefits. it is further encouraging that there has been some improvement in africa ’ s growth performance since the mid - 1990s, albeit from a low level. the average growth rate | also that the bank will expand beyond one branch and broaden its customer base and operations swiftly in order to consolidate the gains that have been achieved over the last 11 years. i thank you for your attention. | 0 |
this means that we cannot pause, and certainly not change direction, in our attempt to maintain a low deficit. raising the deficit is not an option, especially because our public spending level is already one of the highest, if not the highest, in the world. our estimate is that in the current year, 2001, our ratio of public spending to gdp amounts to 54 %, compared to an average of 42 % in 20 of the oecd countries, where all of the individual countries ratio are lower than ours. so what can the government do, given the current slowdown, to help the economy get out of the recession? the only viable option is to change the composition of spending so that growth - enhancing expenditures will get priority. government investment in infrastructure, for example, ought to get precedence over government programs to support those who are not working. this does not mean that these programs should be scrapped altogether. but it does mean that they should be refocused. the question should not be how the state can help those who are not working to maintain a modest standard of living, but rather how the state can help them join the labor force. another example, often quoted, relates to the efficiency of our public education programs. international comparisons indicate that, in some instances, we get less for our money, compared with other countries. furthermore, we still grapple with the question whether, and to what extent, there is room for private sharing of educational expenses - not necessarily to save public money but, for example, to focus more on education in development towns. these are only some aspects of fiscal discipline or, as it is sometimes called, fiscal consolidation. they serve to illustrate why it seems, sometimes, easier to bypass the need to be more efficient, and just increase overall government spending and the deficit. * * * a good reason to resist the temptation to give up fiscal discipline is its implications for financial markets : - the first, and most immediate, effect of increased deficit is an increase in the interest rate on government instruments to finance the deficit. this has already started to take place in the last few months. the outcome holds not only for the increase in public debt, but also for that part of the debt that needs recycling every year. interest payments take already some 15 % of the government current resources, and are larger than the education budget and very much larger than government investments. - the increased interest on government instruments reverberates to private ones. this is the second effect. we | be distressed - assets managers. 6 / 7 bis central bankers'speeches moreover, one of the main channels through which high npls can have a feedback effect on the macroeconomic environment is through their impact on bank lending capacity to the economy. npls can weigh negatively on the supply of credit by locking in bank capital and funding in the financing of non - productive assets. in addition, high npls distort credit allocation, as non - viable firms are kept artificially alive in an attempt by banks to avoid or delay loss recognition on these loans at the expense of firms that are competitive and have better growth prospects. this brings us to the necessity of restoring the intermediation role of banks in an economy that is suffering from a significant savings – desirable investment gap as well as continuous deleveraging. it is well documented that a credit - less recovery is weaker, mainly because the lack of bank credit affects investment. yet such a recovery can hardly be tolerated given other drags on potential output growth, such as the high public debt ratio and the negative demographic trends. the improvement in the liquidity position of banks on the back of gradually increasing deposits, enhanced access to the secured interbank market and a handful of covered bond and securitization transactions is encouraging. crucially, the elimination of the recourse to ela will allow banks to design and implement credible medium - term credit expansion plans. against this backdrop, financing of non - financial corporates for working capital or investment projects would be given priority. that said it is also important to restore the access of the household sector to credit after a protracted period of almost a complete standstill. that brings us to the challenge for bank managers to come up with a sustainable business model for greek banks. in the midst of the crisis, greek banks were obliged to reduce substantially their international operations as well as non - core domestic activities, as part of their restructuring plans agreed with dg competition in the context of state aid support approval. as a result, domestic traditional banking activities contribute the bulk of their operating profitability and will continue to do so in the foreseeable future. undoubtedly, banks face a challenging, to say the least, operating environment in greece, while some of their best customers, i. e. large extrovert non - financial corporates, can tap the international bond markets directly at relatively favourable terms. against this backdrop, a digitalization drive coupled with other cost containment efforts can further improve banks ’ efficiency, which | 0 |
ties. it is beyond my ability to judge whether such criticism was justified or not, but it is quite possible that at some stage of economic and social development, factors, such as long - term customer relationships and mutual assistance, do have a role to play in the governance mechanism. the exact form of governance mechanism still varies across societies even in the age of globalization. in reviewing policies and systems, including financial regulation and supervision, it is very important that each jurisdiction strives to find an answer that best fits its own financial and economic structures. see masaaki shirakawa, “ way out of economic and financial crisis : lessons and policy actions ”, speech at japan society in new york ( april 2009 ) for discussion on the so - called “ lost decade ”. 5. towards better financial regulation and supervision vigorous discussions are currently being held in a variety of international forums, including the financial stability board and the basel committee, with a view to reforming the framework of financial regulation and supervision. although the asian financial system remains relatively stable, it cannot be guaranteed immunity from global financial crises, and has actually been significantly impacted by the current crisis. a robust global financial system is a public good that benefits the whole world. this cannot be over - emphasized. in order to prevent another financial crisis, each country should be well aware of this common objective in the first place. efforts should then be made to organize an internationally consistent regulatory and supervisory framework. in making such efforts, we must be very cautious that the reforming of the financial regulatory and supervisory framework is conducted in a well - balanced manner. when we talk about regulation and supervision, we should not confine the discussion within the sphere of regulation and supervision itself. we should rather keep our eyes on its wider context. when we embark on regulatory and supervisory reform, i believe, it is very important to strike the right balance in a number of dimensions as follows. balance between macroeconomic policy and financial regulation and supervision first, balance is needed between macroeconomic policy, particularly monetary policy on the one hand, and financial regulation and supervision on the other. in recent years, there has been a growing tendency among academics and central bankers to draw a clear line between the role of monetary policy and that of supervision and regulation : namely, monetary policy should aim at price stability, and regulation and supervision should aim at financial system stability. however, what we actually witnessed during the credit booming period was an unwelcome combination of asset prices increase, rapid credit expansion, and | ##isations. i can only encourage eiopa to press on this issue and ensure that firms that would not be authorised in one country do not find a home in another. two of the panel discussions today focus on the customer in tomorrow ’ s world. let me comment on the role of technological innovation in distribution channels. first, more widespread deployment of online distribution channels has the potential to reduce costs, expand access to insurance products and improve consumer convenience. however, at the same time, online distribution requires a parallel increase in attention to cyber risk. the international association of insurance supervisors has recently discussed this topic, highlighting that the foundation of the insurance business is trust, and that trust could be irrevocably shaken if sensitive data were lost or claims payments disrupted. our assessment at the central bank of ireland is that cyber risks pose not only financial and reputational risks for individual insurance firms but that there are wider consequences for prudential supervision, consumer protection and financial stability. bis central bankers ’ speeches second, the automation of advice to potential customers is a promising development. however, as recently highlighted by the joint committee of the european supervisory authorities, there are pros and cons to these tools from a consumer perspective. the potential benefits include lower costs, increased convenience and greater consistency in advice. the primary disadvantage is the risk of an unsuitable final recommendation due to the lack of a human advisor. to represent a net gain for consumers, the design of automated advice systems must ensure that consumers are provided with clear, accurate and relevant information and recommended suitable products appropriate to their needs. the properties of suitability and transparency are among the most important principles underpinning the central bank ’ s consumer protection framework and are increasingly important in this period of rapid technological innovation. one of the panel sessions will focus on global and european financial stability. in the international regulatory community, there is increasing interest in the inter - relations between the insurance sector and the stability of the broader financial system. in one direction, excessive risk taking by insurance firms can be a source of financial instability, both directly and indirectly through the interconnections between the insurance sector, other financial intermediaries and financial markets. in the other direction, the insurance sector can make a positive contribution to financial stability, given the potential complementarities between the balance sheet structure of the insurance sector and the balance sheet structures of other sectors. much of the current risk discussion has focused on the implications of a protracted low interest rate environment for the insurance sector. | 0 |
was minus €93 billion in distressed countries. of course, in principle firms from distressed countries can issue securities in non - distressed countries. in practice, however, it is legally complicated due to issues of different governing law, especially when securities are traded along a chain of financial intermediaries. this analysis points to two missing pieces in the euro area financial market : lack of retail banking integration and lack of capital market integration. the low level of retail banking integration reflects several factors, but diverging approaches to supervision and resolution are certainly among them. for one, the persistence of national borders in a european financial market has in the past created compliance costs and reduced the synergies of banking integration. a european commission survey in 2005 found that opaque supervisory approval procedures were a major deterrent to cross - border banking m & as. 4 moreover, national considerations may have reinforced the fragmentation of retail markets during the crisis. for example, some commentators have argued that supervisors erected de facto “ internal capital controls ” 5 within the euro area, which restricted the flow of funds between banks and within cross - border banks. a similar pattern can be observed in how national authorities in the euro area have dealt with failing banks. in general, non - viable banks were merged with other national banks, rather than being wound down or broken up and sold off. thus, what could have been an opportunity to increase foreign competition in domestic markets, and indeed to work through the crisis more quickly, in some cases ended up increasing national concentration. to give a comparison with the us, the fdic has resolved around 500 banks since 2008, mainly by selling parts of banks to other banks, whereas the equivalent figure for the euro area is around 50. 6 all this suggests that the move towards a genuine banking union in the euro area could help create the conditions for deeper retail banking integration. a single supervisory mechanism ( ssm ) should lead to harmonisation of rules and standards, and also remove distortions created by national borders. and a single resolution mechanism ( srm ) should ensure that see ecb report on financial integration in europe, march 2007. an example of this view is veron, n. ( 2013 ), “ banking nationalism and the european crisis ”, october. sapir, a. and wolff, g. ( 2013 ), “ the neglected side of banking union ”, note presented at the informal ecofin 14 september 2013, vilnius. bis central bankers ’ speeches banks are resolved from a european perspective and according to least | december 2013. bis central bankers ’ speeches quality securitisation in europe, which the ecb and the bank of england have been jointly pushing. 13 securitisation has the double benefit that it not only encourages existing originators to extend more sme loans, but to the extent that it partially removes credit risk from bank balance sheets, it may also help smaller, less diversified originators to enter the sme loan market. in this way, it could also mean that sme lending is less dependent on a few large banks in each country. it is worth reflecting, however, on what the new normal should be once the credit cycle picks up. on the one hand, there clearly benefits to having a more balanced financing mix. it is useful not only to provide a cyclical cushion in bad times, but also to increase market contestability and reduce over - banking in normal times. on the other hand, if what we are seeing is the beginning of a structural shift from bank to non - bank financial intermediation, we have to keep a close eye on the potential risks that might be building up. indeed, there may be little long - term value in shifting risk from a highly regulated sector to a lightly regulated one, particularly if more and more lending is taken up entities that fall outside the regulatory reach. conclusion let me conclude. my message today is simple : the euro area financial system has been hit by a major shock, which few of us foresaw, but through good policy choices it is possible to steer this development towards a positive outcome, while avoiding unintended negative consequences. and looking at the developments across the euro area today, in my view the right choices are being made. banks are already strengthening their capital as a result of the comprehensive assessment. the european supervisor will be fully operational in november this year. from next year we will start building up a single fund for european bank resolution. and initiatives are underway to strengthen access to finance for smes, especially through securitisation. for asia, there is every reason to be confident that the euro area is addressing the structural problems in its financial system, which should in turn support more sustainable growth in europe and for the world economy. we still have a long way to go, to be sure, but i am confident that europe has now moved from being a risk to the global economy to a partner in global growth. thank you for your attention. bank of england and european central bank, “ the impaired eu | 1 |
bank started intervening again to correct emerging distortions in the market. so while we, as regulator are playing our part to stabilize the market, you exporters, who are the active participants, are also expected to play yours. you cannot continue to take one - way bets on the exchange rate or continue to try to pull the rug in your direction. it will come as no surprise to close observers of the mauritian economic scene that, in its last article iv consultation mission conducted early this year, the imf finds that our currency is broadly in line with economic fundamentals. so let ’ s stop griping about rupee strength or weakness and take action to minimize currency risks. i have every reason to believe that our operators are beginning to appreciate fully the importance of managing their foreign exchange risk – the organization of this seminar with the support of mexa, the exporters ’ association, and the high turnout, are ample evidence of this. 2010 has been a very good year for our exporters in spite of the fragile recovery in our main export markets. exports by eoes rose by 11 per cent in 2010, nearly four times faster than the 2. 8 per cent growth of 2009. the seafood sub - sector is said to be hauling in a very good catch and the textile sector remains stable, with full order books and recovering markets. however, we are conscious that the export sectors are facing daunting challenges in the wake of the uncertainty still surrounding the global economic environment, and, in particular, our main export markets. from our perspective, risks of subdued growth surround these traditional partners, although there are new opportunities arising in other parts of the world. but it is evident that now is the time, more than ever, for our export operators to rethink their business models to adjust to the new economic order. now, more than ever, is the time for them to re - engineer their operations, achieve sustained rises in productivity and move into new products and new markets! salvation can only come from diversification. geographical diversification, sectoral diversification, and product diversification. diversify, diversify, diversify – that should be our new mantra. this is more of a medium - term challenge though ; the simplest way to start is to learn how to properly manage your foreign exchange risk and this is what you are here for today. let me briefly comment on some misconceptions on the use of derivatives. there are indeed many old wives ’ s tales about derivatives | risk is very much part and parcel of the game of our economic operators. since the revolutionary idea that risk can be managed – which literally transformed the world – man is no longer left to the whims of the gods. the concept of management of risks actually drives modern society, and much of the progress made by man would not have been realized without the notion that risk not only can be managed, but can actually be rewarding. indeed, risk and reward are the two faces of the same coin. the exporters ’ outcries show their extreme vulnerability to the vagaries of global financial markets. at the same time they reflect a certain inability, or should i say reluctance, to seize the opportunity that modern risk management tools offer to mitigate their risk. i do understand your fears – trading in derivatives is quite complex and involves many risks. the memories of the collapse of barings in 1995 and the more recent scandal at societe generale in 2008 are still fresh in the minds of many people. these scandals have nourished the myth surrounding derivatives and their potential for leading to catastrophe. in both these cases, as indeed in the more recent cases like bear sterns and lehman brothers, the problem was not with the derivatives but with the controls those banks failed to put in place. and there was also a failure of regulation and supervisory oversight. today, we are here to talk about risk mitigation through the futures market. some corporates in mauritius, as well as the mauritius sugar syndicate, have traditionally hedged their foreign exchange exposure using forward instruments traded in the over - the - counter market. it is good to know that futures and forwards contracts are both contracts to deliver an asset on a future date at an agreed price but they differ in some respects. futures are standardized and exchange - traded, while forwards are customized and traded over - the - counter. thus futures face an exchange, while forwards face a non - exchange counterparty. furthermore, futures are often margined, while forwards are not. they have significantly less credit risk, and their funding is different. like the forward contract, a futures contract is a guarantee that a certain product will be sold at a fixed price at a certain date. although the proliferation of mysterious - sounding acronyms and the complex trade jargon may indicate a recent origin, the concept is certainly not new. in fact the idea of entering into agreements to guarantee a fixed return in the future is mentioned by aristotle. gillian tett, in her | 1 |
bank introduced the policy rate which is aimed at fostering transparency in the determination of lending rates. under the new framework, all financial institutions are now required to realign the pricing of loans with reference to the policy rate. furthermore, in january 2012, the bank of zambia introduced the new minimum capital requirements for commercial banks. the minimum primary capital was raised from k12 billion to k104 billion and k520 billion for locally and foreign owned banks, respectively. this measure is intended to make commercial banks more resilient to financial instability and provide banks with strong balance sheets that would meaningfully support economic activities in the country. i am pleased to note that stanbic bank zambia limited was one of the first banks to reduce their lending rates in line with the objective of the bank of zambia policy rate. i am also pleased that stanbic fulfilled the new capital requirements well ahead of the time set for the exercise. before the end of may 2012 stanbic had fully met the capital increase requirement well ahead of the deadline of 31st december 2012. we are confident that the measures taken collectively by the bank of zambia and commercial banks will provide enhanced scope for more financing at lower cost thereby facilitating further growth of the economy and the sme sector in particular. ladies and gentlemen, let me take this opportunity to appeal to all smes and individuals that obtain financing from financial institutions to be responsible borrowers by ensuring that these loans are paid back as the failure to settle obligations destabilises the banking sector and leads to increased cost of borrowing. as you all are aware, banks play a crucial role in financial intermediation and this is enhanced by branch network expansion programs. thus, there is need for all financial sector players including msmes to play their role in augmenting savings mobilization which will in - turn provide the necessary financing to the productive sectors in the economy. in concluding, i would like to encourage banks to seek various ways of supporting the smes not only in soweto market but in other underserved places throughout the country. for instance buseko market in lusaka and chisokone market in kitwe would offer huge opportunities for banks and other financial players. let me also congratulate stanbic bank for introducing the sme tamanga account and for streamlining processes such as customer bis central bankers ’ speeches evaluation and account opening procedures to cater for the special circumstances of this very important part of our economic sector. it is now my honour and privilege to declare the sowe | further, barclays bank zambia has continued to work closely with junior achievement zambia where i serve on the board. the bank has been providing office space as well as hosting the meetings of junior achievement at its premises. as a matter of fact, on 22 february, 2009, the junior achievement worldwide / barclays bank partnership was launched in dubai. as a result of this partnership ja zambia receives annual grants which are utilized to deliver ja entrepreneurship and work - readiness education to the local young people. i further wish to acknowledge the contribution that barclays bank zambia plc continues to make to the development and deepening of the banking sector in zambia. clearly mr. masud has been a key factor in the process and our expectation is that the incoming caretaker managing director mr. bret packard will continue to progress this process. it is in this vein ladies and gentlemen that i request you to join me in formally wish mr. masud success in his future endeavors as we welcome mr. bret packard, the new acting managing director at barclays bank zambia plc. thank you. | 0.5 |
sector demand for monetary assets increased. private sector credit growth rates were upward and settled at 14. 0 % in october. credit demand was higher both by businesses and by households ; however, this growth is slow. overall, lending terms offered by the banking system and parameters of capitalisation, liquidity and health are appropriate for funding higher demand for private consumption or investments in the future. latest developments in financial markets continue to be characterised by controlled risk, liquidity and inflation premiums. successive key interest cuts appear to have been transmitted forthwith in the money market. government securities yields in the primary market dropped further, reflecting the key interest rate cut in the economy and the low public sector demand for funding. the key interest rate cut is expected to be transmitted in the future to interest rates on deposits and loans, in accordance with the time lag of the monetary policy transmission mechanism. lastly, a positive development in financial markets at home is the reconfirmation of the actual government bond rating and the country ’ s stable outlook by moody ’ s and standard & poor rating agencies. projections for the economic outlook remain subject to high uncertainties, dictated mainly by developments in the global economy. our analysis and estimates suggest continuation of moderate economic growth rates for the reminder of the year and the next year. economic slowdown in our trade partner countries may be reflected in weaker foreign demand and further deceleration of albanian exports. in addition, space for implementing fiscal stimuli narrowed in response to the growing need for maintaining fiscal stability and controlling public deficit and debt levels. consequently, public sector contribution to aggregate demand growth is expected to be downward in 2012. under these circumstances, the extent and speed of recovery of private sector demand will be crucial for the country ’ s economic growth. as we have stated in earlier communications, bis central bankers ’ speeches the actual monetary conditions are appropriate to encourage private consumption and investments. * * * taking into consideration the information set out above, in the supervisory council assessment, inflationary pressures remain controlled over the monetary policy relevant horizon. the presence of the negative output gap in the period ahead will be accompanied by low inflationary pressures originating from internal demand. in addition, inflationary pressures from global economy developments are projected to be more moderate, whereas inflation expectations are anchored. these assessments are materialised in annual inflation projections ranging within the target band of the bank of albania for the medium run. at the conclusion of discussions, the supervisory council decided to leave the key interest rate unchanged at 4. 75 % | some notable exceptions, appear to move effortlessly from one state of equilibrium to another. adam smith ’ s “ invisible hand ” remains at work on a global scale. because of a lowering of trade barriers, deregulation, and increased innovation, cross - border trade in recent decades has been expanding at a far faster pace than gdp. as a result, domestic economies are increasingly exposed to the rigors of international competition and comparative advantage. in the process, lower prices for some goods and services produced by our trading partners have competitively suppressed domestic price pressures. production of traded goods has expanded rapidly in economies with large, low - wage labor forces. most prominent are china and india, which over the past decade have partly opened up to market capitalism, and the economies of central and eastern europe that were freed from central planning by the fall of the soviet empire. the consequent significant additions to world production and trade have clearly put downward pressure on domestic prices, though somewhat less so over the past year. moreover, the pronounced fall in inflation, virtually worldwide, over the past two decades has doubtless been a key factor in the notable decline in world economic volatility. in tandem with increasing globalization, monetary policy, to most observers, has become increasingly effective in achieving the objective of price stability. but because we have not experienced a sufficient number of economic turning points to judge the causal linkages among increased globalization, improved monetary policy, significant disinflation, and greater economic stability, the structure of the transitional paradigm is necessarily sketchy. nonetheless, a paradigm encompassing globalization and innovation, far more than in earlier decades, appears to explain the events of the past ten years better than other conceptual constructs. if this is indeed the case, because there are limits to how far globalization and the speed of innovation can proceed, the current apparent rapid pace of structural shift cannot continue indefinitely. a couple of weeks ago, i indicated in testimony to the congress that the outlook for the next year or two has materially brightened. but the outlook for the latter part of this decade remains opaque because it is uncertain whether this transitional paradigm, if that is what it is, is already far advanced and about to slow, or whether it remains in an early, still vibrant stage of evolution. * * * globalization - the extension of the division of labor and specialization beyond national borders - is patently a key to understanding much of our recent economic history. with a deepening of specialization and a growing population free to take risks over | 0 |
. the global economy is recovering markedly and this should augur well for our exports and tourism industries, which are supporting the domestic economic recovery. on the sectoral performance, aside from the sugar industry, which continues to show low performance, recent data indicate continued strong growth in visitor arrivals and improvements for the gold and fish sectors. there is also some indication of modest increases in consumption activity with consumer spending aided by improvements in the labour market, increased lending and higher inward personal remittances. inflation declined further to 5. 4 percent in july from 5. 5 percent in june and is expected to further decrease to around 5. 0 percent by the end of the year. on the external sector, the trade deficit narrowed in the first five months of this year, thus keeping the foreign reserves at adequate levels. consequently, bank liquidity remains at high levels. overall, the domestic economy is showing sign of improvements however, the speed of recovery is slow. given the need to support economic activity and kickstart the economy, the reserve bank decided to maintain the overnight policy rate ( opr ) at 3. 00 percent during the august board meeting. capital markets in fiji ladies and gentlemen, let me brief you on some of the work that we are doing to develop the capital markets to another level. at the outset, i wish to state that a partnership approach will help progress this faster. as i mentioned earlier, two weeks ago we had a similar seminar in suva and i am happy to say that it was a great success. the rbf had also organised 2 microfinance expos – one in ba and the recent one last week during the hibiscus festival. financial literacy sessions by financial institutions, spse and some players in the capital markets were also carried out during these events. it was encouraging to see the general public at these two venues expressing interest and wanting to know more about the capital markets. in march this year, the reserve bank formed the capital markets development taskforce. the membership of the taskforce is mainly from the private sector with governor sada reddy as the chair. it was the rbf ’ s intention that the private sector involvement in the development of the capital market, similar to the cmda days, continued hence the formation of the taskforce. the taskforce will assist the rbf in strategising on how to tackle some of the longstanding challenges that have hindered the development of capital markets in fiji. “ grow your company, grow the economy | : have you considered the capital markets? ” – what can be done? our role is to see that we create the regulatory and business environment in the capital market that is conducive and supportive of private sector development such that they become the engine of growth in the economy. we hope that by having this seminar in the west and inviting some prominent companies listed on the spse to share their experiences, businesses in the community will be better informed and encouraged to use the capital market given its associated benefits. i assure you that the reserve bank will do whatever it can to ensure the development of the capital markets, and will play a pivotal role in public education and investor awareness programs to foster confidence in the markets. we will also spearhead initiatives in partnership with other agencies including government to develop the capital market. similarly, we will dialogue with fellow regulators and find amicable solutions to areas that are deemed restrictive to the capital markets realising its full potential. our commitment to creating an enabling environment for businesses in the capital markets is evident in the reduced corporate tax of 20 % incentive for companies that list on spse and with minimum 40 percent local equity shareholding. i wish to mention that following cabinet approval, reviews are currently underway to amend the capital markets and unit trust legislations. this we hope will facilitate economic development and improve the governance structures of companies. ladies and gentlemen, today we are fortunate that we have with us those that have experienced what it is like to be listed on the spse. they will share with us their experiences pre and post listing. it is my sincere hope that this seminar will demystify some of the concerns that surround this industry and that in the process we would see more activities in the spse and capital markets going forward. i urge you all to make best use of this opportunity to hear from them and also network with our licensed intermediaries who can assist and answer questions that you may have relating to capital raising in the capital markets and listing on the stock exchange. thank you again for your time and i wish you all a very good evening. vinaka. | 1 |
, it is not too late to get back on a positive trajectory. recent policy changes, including the 49 percent devaluation of the official malawi kwacha exchange rate against the us dollar, and the subsequent floatation of the kwacha exchange rate are some of the policies that are being put in place to create a better malawi. there will be short term costs, but the long - term gains more than compensate for the losses. ladies and gentlemen we made it clear at the onset that the adjustment we have taken will have a price that we all, malawians have to pay in order to have a long lasting solution. waiting any longer would have been worse. at the bank we do not envisage a reversal on the position that we have taken. the results in the short term have been exceptional. forex is now available ; the queues at the bank for forex and fuel have dissipated. tobacco prices are good and we anticipate a reversal in the tobacco production this coming season. there is an immediate pass - through to price increases and we anticipate the full effect of the devaluation in the next six months with inflation going up from the march level of 12 % to an average of 18. 4 % in 2012. however we anticipate an amelioration of inflation to average 16. 1 % in 2013 and returning to a single digit average in 2014. the most frequently asked question is : “ how will the reserve bank ensure sustainability of foreign exchange? ” i am proud to report that the bank has put tremendous efforts to address the supply side of foreign exchange. you may be aware that the bank has taken a lead in the export development fund ( edf ) initiative to promote exports in the country. consequently the government has developed the national export strategy ( nes ) to be implemented through participatory process to transform malawi from a predominantly importing and consuming nation to becoming a producing and exporting nation. the nes will prioritise bis central bankers ’ speeches investment incentives to develop productive capacity, encourage foreign and domestic investment and ultimately create sustainable export capacity. ladies and gentlemen you will agree with me that malawi has lagged behind its neighbours in the sub - saharan africa with its share of regional exports to the world declining sharply over time in terms of the business environment indicators such as transaction costs and infrastructure. adjusting the exchange rate regime was one of the measures to enhance malawi ’ s international competitiveness. the bank recognises that further steps still remain to be | , the decrease in inflation rate and a reduction in interest rates. the imf and world bank boards on 30th and 31st august 2006, respectively, approved that malawi had reached the hipc completion point after making satisfactory progress in implementing its poverty reduction strategy paper ( prsp ) for at least one year, and maintained satisfactory macroeconomic policies as evidenced by its performance under the prgf. furthermore, malawi also met all the completion point targets in the area of economic governance and public expenditure management, safety nets, and microfinance. apart from receiving hipc debt relief, malawi also qualified for the multilateral debt relief initiative ( mdri ) which cancelled all pre - 2004 debt to the world bank and african development bank, and pre2003 debt to the imf. in october 2006, paris club creditors also agreed to cancel almost 100 % of malawi ’ s debt owed to them. these developments, distinguished ladies and gentlemen, reduced malawi ’ s external debt from 142 % of gdp at the end of 2005 to 23 % of gdp at the end of 2006. other external debt indicators also improved significantly. distinguished ladies and gentlemen, let me now turn to the monetary policy stance that was pursued in 2006. monetary developments in 2006 were generally expansionary. the increase in money supply mainly arose from net foreign reserves on account of receipts for balance of payments support. the increase in money stock was also partly a reflection of an expansion in credit to the private sector. it should be noted that since march 2006, credit to the private sector has been increasing steadily, implying that the february 2006 reduction in the liquidity reserve requirement ( lrr ) was bearing fruit. this is in line with the economic program which allows for more credit to the private sector to boost economic growth. the bank rate was adjusted downwards from 25. 0 percent to 20. 0 percent on 13th november 2006. as a result, commercial banks followed suit by adjusting both their savings and deposit rates. the reduction in interest rates should, therefore, give an opportunity to the private sector to participate in borrowing capital, thereby generating economic growth. it is also pleasing to note that the rate of inflation has been declining since february 2006. by december 2006, the annual rate of inflation declined to 13. 6 % from 17. 1 % realised in 2005. this was mainly due to : • slowdown in food inflation as a result of a good crop. • relative stability of the malawi kwacha against other major currencies. • lagged effects of a decline | 0.5 |
that connectedness increases most for the most central individual provisions. the full consequences of using and changing a handful of core rules are inherently broader in this new regulatory architecture. all speeches are available online at www. bankofengland. co. uk / news / speeches chart 4 : pagerank network centrality measure ( provisions for uk deposit takers, 2007 and 2017 ) note : pagerank summarises the centrality of a node within a network. in this case, it counts the number and quality of cross - references to a provision to estimate how important the provision is. more important, i. e. more central, provisions are likely to get more direct and indirect links from other provisions. to construct the decile plot, we calculate pagerank for each provision, rank the provisions ( separately for 2007 and 2017 ), and then split them into ten bins ( deciles ). we display the mean for each bin, and the 95 % confidence intervals ( vertical lines ). now, you might say : so what? different measures give us reads on different aspects of complexity – but of course they don ’ t tell us, in and of themselves, if it ’ s ‘ good ’ or ‘ bad ’. banks and we are engaged in complicated lines of business, so unsurprisingly the regulations are complicated. there is a good deal of sense in that perspective, in my view. perhaps more interesting is what these new analytical capabilities can help us do as a regulator, particularly for the effectiveness of our communications. for example, they can inform policy design by telling us ex ante how a future change in one pra rule could affect the interpretation of others. and they could identify rules where language could be tightened and which are frequently accessed by web users. and we do want to look harder at the competition aspect. small firms tell us that complexity is a real challenge and my instinct is that a simpler – simpler, not weaker – regime for small firms could benefit both our safety and soundness and competition objectives. a weaker regime for small banks would be a bad idea, particularly given the steps we have taken under our competition objective to encourage new entrants, who are by definition new and not yet tested in a downturn. but a simpler regime, perhaps borrowing from the philosophy of recent moves in switzerland and the us, could make small firms stronger and more competitive at the same time. this is an area where we may have more room to manoeuvre following | thresholds mapped against number of banks by size, up to £50b ( deposit - takers ) sources : snl capital iq, crr, bcbs, pra rulebook, eba technical standards, supervisory statements, and statements of policy. note : only includes thresholds that are either set using assets / deposits values, or can be translated into assets / deposits values. the y - axis corresponds to the proportion of thresholds / banks below the £ value for assets / deposits on the x - axis. i invite views on this picture, but offer two preliminary observations myself. first, as everyone in banking knows, by number we have a concentration of firms at relatively low asset sizes. whether this is a result of proportionality – our efforts to lower barriers to entry – or barriers to growth is a key question. second, more novel if perhaps less fundamental : there appear to be minor discontinuities around the thresholds of £5b, £10b and £25b, and a more substantial flattening and bump at £50b. these may be worth investigating further. all speeches are available online at www. bankofengland. co. uk / news / speeches complexity another thing we ’ ve been looking at afresh is the complexity of our prudential rules. the scale of the global financial crisis resulted in part from the huge complexity of the financial system, and the many gaps in the rules that sought to regulate it. fixing these gaps required more regulatory constraints and more regulatory discretion – a necessary increase in ‘ essential ’ regulatory complexity. 5 but when should we start worrying about ‘ too much ’ complexity? this is important for at least two reasons : first, excessive complexity may well be counter - productive in terms of our safety and soundness objective6 ; and second, complexity may be anti - competitive if it is harder for small firms to bear the cost of mastering it. designing a framework to trade off costs and benefits of complexity is an emerging research question. but there ’ s a complementary, empirical step : we have wanted to measure the framework ’ s complexity – to say how complex it is. legal and linguistic scholarship suggests the information burden of understanding individual rules, as well as the nature of the interactions between them, both matter here. the measurement debate tends to start with the simple metric of length : how long are our rules? our robot has run the numbers on prudential regulation for banks and tells me that there were about 700, 000 words | 1 |
engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions. since the beginning of this year, china has continued to implement proactive fiscal policies, and has adopted a series of measures to ease the burden on market participants. fiscal policies have 2 / 4 bis central bankers'speeches been playing a greater role in expanding domestic demand and promoting structural adjustment. supported by robust external and domestic demand, the hong kong sar economy sustained strong momentum with real gdp expanding by 3. 5 % year - on - year in the second quarter of 2018, marking the seventh quarter of above - trend growth. the labor market tightened further with unemployment rate edging down to 2. 8 %, the lowest level in more than 20 years. overall inflation pressure remained moderate, and underlying consumer price inflation remained unchanged at 2. 4 % in q2 2018. notwithstanding the increased uncertainties in the external environment, domestic demand is expected to remain largely resilient and the hong kong sar economic growth is forecasted to maintain at 3 - 4 % for 2018 as a whole. supported by service exports and private consumption, the macao sar economy grew by 7. 6 percent in the first half of 2018. private consumption increased by 5. 1 percent and the unemployment rate fell to 1. 9 percent while inflation rebounded to 2. 7 percent. the fiscal account continued to record surplus. the macao sar economy is expected to maintain its positive growth trend in 2018 and 2019. iii. reform of the imf the imf should continue to support an open, inclusive, rules - based multilateral trade system. the recent rise of global protectionism highlights the importance of maintaining a strong multilateral trade system. having in place a system of well - designed international rules is in the interest of all countries. china stands ready to enhance cooperation with all parties to support the liberalization and facilitation of trade and investment. countries should jointly take measures against trade protectionism and strive to make economic globalization more open, inclusive, balanced and beneficial to all. continued efforts should be made to promote multilateral cooperation and strengthen policy coordination. trade tensions need to be resolved in a rules - based multilateral trade system and in a constructive approach, promoting global trade and investment integration. unilateralism and protectionism will in fact only exacerbate domestic imbalances and undermine the necessary structural adjustments, which will not only have a negative impact on the countries concerned, but also weigh | on global growth. at the current juncture, multilateral mechanisms are particularly needed to play an active role in promoting global growth and safeguarding financial stability. with its near - universal membership of 189 countries, the imf is well positioned to make unique contributions to this process. we expect the imf to play a greater role. the imf should continue to push ahead with quota and governance reforms to ensure that the institution remains strong, quota - based, and adequately funded to preserve its central role in the global financial safety net ( gfsn ). quotas are the building blocks of the imf ’ s financial and governance structure. they not only form the basis of the institution ’ s lending capacity, but are also closely related to the institution ’ s representativeness, governance, and legitimacy. if quota reviews fail to achieve the above objectives, the imf ’ s credibility will be compromised, and its ability to help member countries will be weakened. china is open to any constructive approach to complete the 15th general review of quotas in time, including general, selective, or ad hoc quota increases to reduce misalignment. the quota formula serves only as a tool to achieve our goal. it is important to set a goal that is less controversial and can garner broad political support to reach consensus. in addition, countries need to make continuous efforts to implement the agreed financial sector reforms in a coordinated manner, so as to improve the stability and resilience of the international monetary system. the imf should continue to help low - income countries improve their debt management. the past decade after the global financial crisis has actually been a period of relatively strong economic performance in low - income countries, especially in sub - saharan africa. china stands ready to strengthen coordination with the international community on debt issues. we will support the imf ’ s efforts to help low - income countries strengthen their debt management capability and improve institutional frameworks and governance structure. there is still room for 3 / 4 bis central bankers'speeches improvement in the imf ’ s debt sustainability analysis ( dsa ) framework. debt issues related to infrastructure should be properly addressed, as this type of debt could generate future economic returns. therefore, it is advisable to take a balance - sheet approach, to analyze net debt, rather than gross debt, in order to provide better analysis on whether and how this type of debt should be restructured. we welcome the imf ’ s work in the area of fintech, the bali fin | 1 |
financial goal and presents information on coverdell education savings accounts, u. s. savings bonds, and qualified tuition programs as types of savings vehicles for achieving that goal. programs on estate planning and retirement are offered, as well as seminars on financial planning and advanced investment. many of these programs are geared to those employees who have been in the workforce for many years. however, understanding that many of our young people don ’ t receive formal course work in financial matters, we designed a program that is more meaningful to new professionals. this program, which is designed for those young people just entering the workforce, discusses the importance of starting to save at a young age, homeownership, advanced education, and avoiding debt. workplace education benefits both the employer and employee. for the employee, more knowledge, one hopes, will result in better financial decisions and overall financial well - being. employees who are taking maximum advantage of the benefits available to them will more likely have greater job satisfaction, which may result in lower turnover. for the employer, research studies have shown that employees who are financially healthy are more productive. they are absent less often, spend less time at the workplace dealing with financial crises, and earn higher job performance ratings. we commend the commission for recognizing workplace education as an integral component in formulating a national financial education strategy. | the economy in europe will stimulate demand for swiss exports. we anticipate growth of 1. 5 – 2. 0 % for the current year. dangers of a prolonged low - interest period what do these tentative global economic developments mean for monetary policy? most central banks maintained their very expansionary course and the various unconventional measures. these measures were largely uncontested as long as they served to stabilise financial markets and the banks and subsequently to stimulate the economy. however, the longer the current low interest rate period continues, the greater the associated risks can be. i would now like to talk about two of these risks – the increasing price distortions in various investment categories and the decreasing motivation to undertake structural reform measures. increasing price distortions : the very low interest rates affect aggregate demand in the economy both directly and also via the wealth effect. one of the effects which expansionary monetary policy abroad encourages is the quest for yield and, with it, the transfer of assets into more risky investments. however, low interest rates can result in misallocation on financial markets, particularly when they persist for a long period of time. it is possible that bis central bankers ’ speeches risks may be misjudged and, as a result, relative prices distorted. it is naturally difficult to establish the point at which price movements of this kind need to be considered as excesses. in the past, long periods of rising prices were always followed by corrections. the hefty reaction of risk markets to the tapering debate can be read as a sign of the instability of certain asset prices. in switzerland, for instance, the low interest rates have stimulated activity in the mortgage and real estate markets, where, for a number of years now, we have seen considerable momentum which can only be partially explained by movements in fundamental factors. as a result, imbalances have built up. for example, mortgage volumes have grown significantly faster than gdp for many years, as can be seen in chart 9. the snb has issued repeated warnings about the risks for financial stability associated with these developments. this is the background to the federal council ’ s activation of the countercyclical capital buffer ( ccb ) at the beginning of this year, upon the proposal of the snb. the ccb has been in force since the end of september and its primary aim is to increase the resilience of the banking system against these risks and to combat excessive credit growth. since low interest rates can be expected to persist | 0 |
gather feedback as widely as possible. each of the local fxcs around the globe will be seeking input from their members and other market participants and industry groups in their jurisdiction in the coming months. so that is one avenue for you to provide feedback. at the same time, the gfxc will soon be launching its annual survey of market participants. this year, we will be giving respondents an opportunity to point to areas where they think greater guidance from the code might be necessary. more broadly, the survey will also be gauged to general awareness of the code and opinions on its effectiveness. the survey will be distributed through the local fxcs but also available on the gfxc website, so i would encourage as many as possible to participate. in short, in conducting this review of the code, we ’ ll be looking to employ the same consultative approach that was used in initially drafting the code a couple of years ago. we will work closely with each of the local fxcs and other industry organisations to ensure that the code reflects what is considered good practice. in this, i will be assisted by the two vice chairs from the market : akira hoshino head of fx at citi in tokyo and neill penney co - head of trading at refinitiv. if you have feedback on the code, you can also get in touch with me directly in addition to the other channels i have mentioned. we really want to hear from you to ensure the code remains fit for purpose in contributing to an appropriately and effectively functioning foreign exchange market. 3 / 4 bis central bankers'speeches 1 www. globalfxc. org / fx _ global _ code. htm 2 www. globalfxc. org / reports. htm? m = 72 % 7c427 3 www. globalfxc. org / reports. htm? m = 72 % 7c427 4 www. globalfxc. org / global _ index. htm 5 see www. globalfxc. org / education. htm? m = 71 % 7c433. 6 www. fca. org. uk / news / statements / fca - confirms - recognition - fx - global - uk - money - markets - codes 4 / 4 bis central bankers'speeches | far too high. for example the force of the most recent equity market bubble gives the impression that monetary policy would have to have been tightened considerably in order to slow the increase of almost 150 per cent that was seen on the stockholm exchange between 1998 and march 2000. few central banks today say that they counter bubbles actively. but the very fact that there is such a discussion is an interesting and healthy sign. thank you. for example, there are a number of papers from the centre for economic policy research in london, ( cepr ) that raise the issue. these include monetary policy rules, asset prices and exchange rates ( discussion paper 4114, november 2003 ), boom - busts in asset prices, economic instability and monetary policy, discussion paper 3398, may 2002, and financial asset prices and monetary policy : theory and evidence, discussion paper 1751, november 1997. | 0 |
management, governance, transparency and disclosure standards thereby enabling depositors, investors and counterparties to take a more informed decision. the intended consequences of the regulatory reform measures are all too well known to need repetition before this knowledgeable audience. bis central bankers ’ speeches unintended consequences of reforms 8. it is obvious that the new regulatory and supervisory framework that we are putting in place now have some unintended consequences that are likely to entail additional economic costs. an underlying tension around the trade - off between financial stability and economic growth persists despite impact assessment studies showing results to the contrary. i would like to touch upon some of these issues with a particular focus on the impact on emerging markets. i ) impact on gdp growth although, an ex - ante assessment of the economic impact of regulatory reforms is difficult ; studies conducted by various international agencies indicate different magnitudes of impact. the bcbs ( 2010 ) estimated that the basel iii capital and liquidity charges would reduce the steady state level of economic activity by 0. 6 per cent in total or 0. 08 per cent annually if spread over the eight year transition period. mag of bis in 2010 covered 17 industrialized countries to conclude that the lending spread would increase by 15 bps by 2015 in response to a 1 % increase in capital over 4 years. iif which took a view ( 2010 ) of europe, us & japan concluded that a 2 % increase by way of capital and liquidity would translate into increase in the lending spread by 132 basis points. another study ( 2012 – 19 ) by iif indicates a negative impact of 0. 40 %, 0. 30 % and 0. 10 % on the annual growth for europe, japan and the us respectively. while the differences in outcomes could be attributed to the differences in methodology, the direction of impact is nonetheless clear. the economies need to brace up to the fact that the new regulations would have an adverse impact on the economic growth. the combination of ( a ) increased capital requirements, particularly in the common equity element of tier 1 capital and capital buffers and ( b ) minimum liquidity requirements, are likely to reduce the return on equity for banks. it is unclear how different banks will address the situation but the options include : reduction of rates on retail deposits ; reduced staff compensation ; and increased margins on products. reduction in retail deposits rates can have two consequences. first, it can result in increased disintermediation. second, they can even affect the overall saving rate of | the growth of 11. 5 % recorded in 2007. to address these multiple challenges, policy instruments must be used in an effective and consistent way. effectiveness requires to choose the appropriate policy instrument that can materially contribute to the achievement of an objective in a sustained manner. consistency requires using the available instruments in a way that is mutually reinforcing. the effective and consistent use of policy instruments should produce outcomes that have a durable overall positive impact on economic performance. let me elaborate on these propositions by examining the appropriate policy responses to the global economic challenges we face in the euro area and in china, and by assessing their effects on the eu - china economic relationship. policy responses in the euro area in the euro area, although the slowdown of the economy is mainly the consequence of the impact of the significant past increases in oil and other commodity prices and of the direct and indirect effects of the ongoing financial turmoil, the growth performance of its economy over the medium and longer run will fundamentally depend on the implementation of further reforms that can raise trend productivity growth, by increasing investment in innovation and education, and raising the utilisation of labour, by enhancing the flexibility and adaptability of labour markets. such reforms will simultaneously contribute to the moderation of unit labour cost growth and to the more efficient response of both product and labour markets to the adverse shocks buffeting the european economies. as a result, the adjustment of the economy will be facilitated and its shock - absorption capacity strengthened. moreover, the international competitiveness of the euro area will increase and this will help to reduce some of the asymmetries characterising the china - eu relationship. the question that some will raise is whether such reforms should or can be implemented during a period of heightened uncertainty and reduced consumer confidence. my answer is that if they are properly designed, adequately explained and effectively introduced, such reforms can also help boost confidence in the performance and prospects of the euro area economy, particularly in some of its member states that have experienced a substantial cumulative erosion of competitiveness over the past years. fiscal policy in the euro area can play a stabilising role during the current slowdown automatically, because our tax systems incorporate stronger income - stabilising mechanisms than is the case in other advanced industrial economies. at the same time, budgetary policies for 2009 and beyond should reflect and fully respect existing policy commitments. the implementation of fiscal policies that aim at sound fiscal positions over the medium - term will contribute to containing inflationary pressures and will enhance the functioning of | 0 |
##butable to unusual weather, but it bears deeper analysis. similarly, on the inflation front, while we have had a couple of months of slightly stronger core inflation, which is reassuring, most analysts are expecting softer inflation data later this week because of a sharp movement in february last year. looking through the short - term volatility, inflation still seems to be running at around 1. 2 per cent, give or take a tenth or two. while we expect growth to approach 2. 5 per cent over the next couple of years, we also see the economy ’ s potential capacity growing at around an average of 2 per cent. this is why we say that it will take a couple of years for us to close our excess capacity gap and get inflation back to near our 2 per cent target. looking beyond that, one would normally expect our economy to grow at its potential, which, as i said, is around 2 per cent, and which is made up of about 1 to 1. 5 per cent growth in productivity and a gradually declining contribution from labour force growth, driven by the demographics story i outlined earlier. accordingly, were it not for our demographic outlook, our growth would converge on a higher trend line. this is the sense in which demographic forces help define our limits to growth. in the broader global economy, however, the possibility of secular stagnation needs to be taken seriously. the combination of low demand, low investment and high savings could be having an impact on what economists refer to as the wicksellian rate, or the equilibrium real rate of interest. there is rigorous theory behind this notion, which i will spare you, but it suggests that interest rates may remain lower than we have experienced in the past for a longer period, until some of these long - term forces dissipate. one specific consequence would be that even extraordinarily low policy interest rates could prove to be less stimulative than in normal circumstances. cause for optimism in the g - 20 meetings held recently in sydney, australia, we recognized that the global economy has not yet returned to strong, sustainable and balanced growth, and that there is limited scope for further stimulus from conventional policies. it was in this context that we underscored the importance of structural reforms to future growth. to make this notion concrete, the g - 20 set out an aspiration to collectively boost global gdp by 2 per cent over the next five years, or about 0. 4 per cent per year in growth terms | obvious during the financial crisis. by global standards, bear stearns was a mid - sized institution. but its significance as a counterparty in the otc derivatives market was such that u. s. authorities were required to assist in a transaction to prevent its complete collapse. to prevent this from happening again, g - 20 leaders have agreed that by the end of 2012, all standardized otc derivatives contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties ( ccps ). a great deal of work remains if this goal is to be realized. central counterparties for otc derivatives will provide greater certainty of payment, mitigating the harmful spillovers resulting from the failure of a counterparty, as well as increased transparency, thereby reducing contagion and maintaining continuous markets in times of stress. but ccps also have the potential to create new single points of vulnerability. this calls for the careful design of ccps, as well as robust regulation and supervision. it will also be important to ensure sufficient access to ccps to avoid limiting competition. this is of particular concern in countries that are not host to a large global ccp. there are two potential paths to address these design issues. the first is to promote fair and open access to global ccps with shared oversight arrangements, so that strong, large and mid - tier derivatives market participants have efficient access to central clearing. the second is to build local ccps that are better aligned with local risks and local market conditions. a number of jurisdictions are pursuing the local, or onshore option, including japan, korea, china, hong kong, singapore and brazil. potentially, these local ccps could be linked globally through risk - controlled interoperability. bis central bankers ’ speeches canada is giving serious consideration to an onshore option. this is not to say we are taking the global option off the table, but there are good reasons to consider onshore ccps. going local would give regulatory authorities a high degree of oversight and supervision over systemically important market infrastructure. authorities would also have much more control over the design and implementation of emergency measures, including the provision of emergency liquidity, and influence over a ccp ’ s actions in the event of a member ’ s default. regardless of whether global or local ccps become the path to central clearing, new kinds of interdependencies among jurisdictions will be created. to protect the stability of the financial system, authorities must define shared - oversight | 0.5 |
to play an important role in our payment system for the foreseeable future ( even though not 85 million years ) and why cards and other technological developments will not be able to fully take the place of cash. ironically, part of the explanation for this lies in the strong position that debit and credit cards hold on the swedish market. as usual i would like to make clear that my speech is an expression of my own views and that it may not necessarily be shared by my colleagues in the board of the riksbank. cards and cash in sweden cards compete with cash when we pay directly at the point of sale, for example in supermarkets, petrol stations, restaurants or at cinemas. it is the customers who choose how they want to pay, and as we no longer use cheques in sweden the choice is between cards and cash. a high level of card usage thus tends to go hand in hand with a low level of cash usage, and vice versa. in sweden, the use of cards has increased rapidly in recent years. in 2009, the average swede made 182 card payments but less than 30 cash withdrawals. this means that the value of the payments made by card has increased fivefold, and that the number of card payments has increased more than sevenfold, over the last 10 years. unfortunately, there are no corresponding statistics for cash payments, but if we assume that the cash withdrawn bis central bankers ’ speeches from atms is used to make purchases then the value of all the card payments is three times higher than the value of all the over - the - counter cash payments. another way of measuring cash usage is to compare the value of the banknotes and coins in circulation, which is usually referred to as mo, with gdp. if we do this we can see that between 2001 and 2010, mo fell from 3. 8 per cent to 2. 9 per cent of gdp. approximately two - thirds of the payments in the retail sector are made using cards, with some reservation for the fact that it is difficult to measure the number of cash payments in the economy exactly. the situation in denmark and finland is roughly the same as in sweden. in sweden ’ s case this means that we have really caught up since the beginning of the millennium when we used cards only half as much as our nordic neighbours. in a broader international perspective, we use cards to a relatively high extent in sweden. this particular combination of low cash usage and high card usage is unique to a limited number of countries | , the 1990s provided many illustrations of similar events. the discussion about financial cycles is far from new. one example is the major debate of the 1920s and 1930s between the austrians ( hayek, etc. ) on the one hand, and keynes on the other. keynes was focusing on the demand side and on how to get out of the bust, whereas hayek was focusing on the supply side and on how an economy got into the bust in the first place. while a great deal has been done to understand the reasons behind financial instability, many questions remain unsolved. so the discussion continues and when it comes to crises prevention, two conventional pieces of policy advice seem to emerge. the first line of defense is moral suasion. the central bank could warn market participants in various ways that they are becoming overly optimistic in their expectations about future cash flows, if we are talking for instance about stocks or real estate. the problem with moral suasion is that it is difficult to calm down a market that is rushing to new highs. talk rather than action is often not enough. still, if a bubble is starting to build up, it may be worth a try. this is one reason why several central banks have began to publish financial stability reports. in this way one can perhaps broaden the public discussion about what is happening. the second line of defense is prudential regulation. however, the way prudential regulation is done in practice raises two, interrelated problems. the first has to do with the fact that most financial crises stem not from individual banks getting into difficulties and affecting others by contagion. rather, in most cases, many institutions act more or less similarly, encouraged by overoptimistic expectations that macroeconomic conditions can be extrapolated uncritically into the future. the second problem with prudential regulation is that the tools are themselves often based on perceptions of risk which are not independent of the credit and asset price cycle itself. on the one hand, underlying actual risk builds up as expansion and leverage continue and the financial cycle proceeds on the other hand, apparent risk declines with the rise in collateral values. this causes difficulties for supervisors who tend to concentrate on individual institutions and treat risks as exogenous. this is not to deny that by improving prudential regulation, setting international standards ( for example basle ii ) etc, the risk of financial instability can be significantly reduced. supervisors are also recognizing the shortcomings i just mentioned and are | 0.5 |
is even more the case when there is no general consensus on the matter of fiscal discipline. we sometimes speak of changes in economic policy, and such changes were essential to developments in the last fifteen years. we must however recognize one important fact : growth derives from the increase in the private sector, and in israel we have a private sector that in the main is successful, innovative and creative. it is a private sector that day after day proves its ability to compete in the world. israel ’ s economy is very open to the world, and this is reflected in various ways : 1. in the current decade ( 2000 – 06 ) the share of exports in gdp has reached an average of about 40 percent. 2. in the same period the share of imports in gdp has reached an average of about 41 percent. 3. foreign investments in israel reached about $ 17 billion in january – october 2006, an all - time peak. 4. israelis ’ investments abroad in january – november 2006 reached about $ 21 billion, of which some $ 12 billion were direct investments. 5. israel is in second place ( after the us ) in terms of the number of companies listed for trading on the nasdaq. what is required of an economy that is open to competition from around the world? there are still areas in which we ought to improve, and here i will refer to aspects in the microeconomic sphere. in this context i would like to mention the doing business report of the world bank, which grades countries according to the ease of doing business in them. israel is listed 26 out of 175, not bad at all. but if we look at the different components that go into this grading, we will see that we were good in certain aspects ( investor protection, obtaining credit, international trade, opening and closing a business ), but we scored very badly in others ( obtaining licenses, enforcing contracts and registering assets ). it is very important that we take steps to improve in these areas in order to contribute to a better business environment. we generally relate to these areas as if they are important for foreign investors. but they are important for all investors in israel ’ s economy, domestic and foreign. every israeli investor has the choice of investing abroad. if we do not improve the atmosphere surrounding investment in israel, we are likely to lose some domestic investments of israeli investors ’. c. the oecd the subject of the openness of israel ’ s economy brings me to the question of israel ’ s joining the o | on target, governing council judged that the risk that growth would slow was not great enough to warrant a cut in interest rates. the main reason was that lower interest rates could reduce the downside risk to growth but could at the same time increase financial vulnerabilities. and this would make it harder to achieve the inflation target in the future. in january, the conditions had changed but the reasoning behind our decision was similar. consumer confidence declined in late 2019, but there seemed to be a reasonable chance that this would prove temporary. furthermore, there were signs that the global economy was bottoming out, and there was a growing consensus that world economic growth would edge higher in 2020. accordingly, we again acknowledged that there were downside risks to the canadian economy. but, with the labour market in a very solid situation, we felt that the downside risk was not sufficient to warrant lower interest rates. a lot has happened in the past six weeks. in particular, the global economy will, at the very least, be significantly disrupted by covid - 19 in the first half of the year. it is possible that the global economy will snap back quickly after health professionals have managed the situation and conditions have returned to normal. however, the outbreak and its effects could be more persistent. consumer and business confidence could be set back for a longer period of time, causing economic growth to slow more persistently. this could include longer - term layoffs, for example. at this point, we simply do not know. of course, the coronavirus is not the only issue on the table. just last week, we received the detailed economic report on the fourth quarter of 2019 from statistics canada. as expected, this report shows that the economy slowed significantly in late 2019. some of this was due to special factors, such as an early winter that left some crops to rot in the fields, the canadian national railway strike, the shutdown of the general motors plant in oshawa and so on. still, economic growth in the fourth quarter was lower than 1 percent when you take out the effect of the special factors. this is because some of the slowdown was more structural — exports remained weak, business investment declined and the recovery in housing moderated. the one positive was consumer spending, which remained solid even while the savings rate went up further. consumer confidence did rebound in january, as we had hoped. in short, the solid labour market we discussed earlier is giving the economy a measure of resilience | 0 |
violate the european rules. as regards economic union, the euro area needs to achieve a higher degree of economic convergence, in terms of competitiveness, growth potential and flexibility. this is essential for each individual country and for the smooth functioning of the euro area as a whole. the framework for policy coordination should be made more stringent and enforceable at european level. at the same time, due attention should be paid to fostering national ownership of the necessary reforms. progress in these fields would require commensurate steps towards political union. in view of the multiple geometries implied by the eu integration process, the need for an enhanced political dimension is even more pressing for the euro area. sharing a single currency implies a substantial sharing of sovereignty and economic integration, going well beyond the requirements of a single market. there are a number of possible options to enhance effectiveness and legitimacy of decisionmaking in the euro area. for example, a permanent eurogroup president as the nucleus for a euro area finance ministry with proper analytical capacity and more autonomous decision - making powers could be a step in the right direction. this could be accompanied by stronger accountability towards the european parliament, in particular for the implementation of the governance framework, for example in a euro - area sub - committee of the european parliament. let me conclude by broadening again the scope of our discussion and coming back to the founding declaration of 1950. going beyond the establishment of a common economic system, the eu project was from the beginning aiming at creating a deeper community of member states. recent progress in the financial and economic field should not make us forget that citizens also expect europe to deliver on broader public goods such as internal bis central bankers ’ speeches and external security. the single market and the eu ’ s “ four freedoms ” ( i. e. free movement of goods, capital, services and people ) have brought new challenges for law enforcement authorities. moreover, the fragility of external security, especially at the borders of the eu, remind us that, as put forward by schuman in 1950, “ world peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it ”. it requires going beyond the economic foundations of the european project. bis central bankers ’ speeches | transaction tax ( ftt ), for example further integration of the single financial market and increased financial stability. however, as you know, the ftt is currently discussed among only 11 countries which have decided to enter into an “ enhanced cooperation ” on that specific issue. as all member states will not be part of this arrangement, it should be ensured that the planned tax would not have unintended side effects such as hampering the transmission of the single monetary policy and the smooth functioning of settlement systems. in particular, a coherent approach with countries which are not part of the enhanced cooperation is vital to avoid regulatory arbitrage. the crisis has also spurred discussions on how to better bring the financial sector back to its core mandate : being at the service of the real economy. i strongly believe that more can be done to unlock affordable financial resources for european smes. as 99. 7 % of firms in the eu are smes, euro area economies ’ well - being is intertwined with the financial health of smes. by assisting banks ’ ability to fund and distribute risk the securitisation of sme loans could contribute to connect the financing needs of smes with the funds of investors who would otherwise not invest in those smes.. looking forward, at least three steps are necessary. first, more work should be done to distinguish ‘ high quality ’ segment of the abs market and make them more robust to market stress, thereby providing banks with a more resilient form of funding. second, available data and general standards applied to all abs should be further improved. third, the regulatory treatment of securitisation should be revised to better reflect the risk - mitigating features of high quality securitisation and to address current inconsistencies in the legislation. more generally – going beyond the notion of banking union, we should work towards creating an integrated financial market union that supports the real economy. this requires in particular two elements : developing cross - border capital markets offering a real alternative to banks ’ financing ; and ensuring that banks are able to operate smoothly across borders and to undergo mergers and acquisitions without any national bias. in this context, let me also focus on what is often referred to as the plumbing of the financial sector, that is, the single market for payment and cross - border securities settlement. harmonisation is key to ensure that both the single market and the single currency function smoothly. the ecb has delivered an important contribution in this regard. in the early 2000s | 1 |
india is among the few countries in the world to have introduced a carbon tax. the clean energy cess imposed on coal mined in india or imported into india is collected into the “ national clean energy fund ” set up for funding research and innovative projects in clean energy technologies. 15. the government of india has also kept a plan outlay of rs. 10, 192. 83 crore in the annual budget plan for the year 2016 – 17 towards utilizing new and renewable energy resources of energy for supplementing energy requirements of the country in an eco - friendly and sustainable manner. government is proposing to set up new missions on wind energy, health, waste to energy, coastal areas and redesigning the national water mission & national mission on sustainable agriculture. these steps indicate the government of india ’ s commitment towards energy efficiency and will help to meet our national mission to reduce emission intensity by about 30 % – 35 % between 2005 and 2030. india is looking forward to enhance its renewable energy capacity in line with our vision of providing 24×7 electricity to all households. accordingly, the ministry of new and renewable energy ( mnre ) is looking forward to install 1, 00, 000 mw of renewable capacity in the country in the next five years. in order to fulfil the ambitious renewable energy targets, the country would require huge investments. role of financial entities in sustainable development 16. since no development is possible without a sound financial system supporting it, the spotlight is now on aligning the financial system with sustainable development. we, in the rbi, have been conscious of the role of banks in providing finance for sustainable development. as early as in december 2007, banks in india were sensitized to the various international initiatives including the equator principles and were asked to keep abreast of the developments in the field of sustainable development and corporate social responsibility and dovetail / modify their lending strategies / plans in the light of such developments. 17. india ’ s focus on harnessing the financial system to provide to socially important segments actually dates back to even pre - nationalisation days and got great impetus after bank nationalisation. a core of the financial policy in india is the priority sector lending requirement for banks to allocate 40 % of lending to key socially important sectors such as agriculture and small and medium - sized enterprises. in 2015, the reserve bank of india ( rbi ) included lending to social infrastructure and small renewable energy projects within the bis central bankers ’ speeches targets, thereby, giving a further fillip to green financing | p nandalal weerasinghe : monetary and financial sector policies for 2024 and beyond annual policy statement by dr p nandalal weerasinghe, governor of the central bank of sri lanka, colombo, 10 january 2024. * * * 1. economic performance in 2023 the sri lankan economy started showing signs of gradual recovery during the latter part of 2023. positive economic growth was recorded by the sri lankan economy in the third quarter of 2023, following consecutive contractions since the first quarter of 2022. leading economic indicators signal the continuation of the strong pace of activity during the last quarter of 2023. inflation, which accelerated to unprecedented levels in 2022, was brought down to single - digit levels within a period of one year. despite the historically high level of inflation in september 2022, the price escalation was quickly reined in and entered an impressive disinflation path thereafter, eventually bringing inflation down to the targeted levels within a period of one year. sri lanka's swift disinflationary process was supported by an array of policy measures implemented by both the central bank and the government. meanwhile, core inflation, which reflects the underlying demand pressures in the economy, also recorded steady disinflation during 2023. inflation expectations have been anchored around the targeted levels. extensive policy measures aimed at restoring confidence and stability in the economy, though painful in the near term, have helped stabilise inflation expectations, which remained largely deanchored during 2022. the credible deceleration of inflation and well - anchored inflation expectations within the targeted range allowed the central bank to begin its monetary policy easing cycle in mid 2023. the central bank commenced the relaxing of its monetary policy stance in june 2023 in view of the deceleration of inflation, benign inflation expectations, stable inflation outlook, and improvements observed in the external sector. as a result of the monetary policy easing measures and administrative measures, market interest rates declined significantly, particularly deposit interest rates. market lending interest rates also declined, albeit at a slower pace, partly contributed by the rigidity in the yields on government securities amidst the high risk premia. 1 / 1 bis - 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##prime mortgage conditions in the united states. " for example, a user can choose to view key foreclosure measures such as " foreclosures per 1000 housing units, " " share arms, " and other factors. the maps drill down from national - level data to zip code level. they also depict factors such as " share of low fico and high ltv " and " share late payment in last 12 months " that may help to predict which areas are most likely to experience higher rates of foreclosures. finally, the federal reserve is providing, via downloadable files, the data supporting the maps, as well as data for scores of other loan - performance variables at the state, metropolitan area, and county levels. by making more data and information on emerging trends available to key local leaders, financial institutions, and community organizations, our aim is to improve the efficiency of their efforts to rebuild neighborhoods. the federal reserve system has also established a working group of economists and community development experts in order to coordinate system research efforts. this working group will monitor developments in the mortgage markets and study how these developments may affect individual borrowers and neighborhoods. currently, the group is assessing existing research on house prices, mortgages, and foreclosures, with the goal of identifying important analytical gaps. the federal reserve system conducts outreach and education efforts through its regular contact with financial institutions and market intermediaries, as well as through its network of community affairs staff members who work with communities to identify trends and issues affecting low - and moderate - income neighborhoods. this communication with both financial markets and communities allows the federal reserve to act as a bridge between the two groups and between local communities and the organizations that provide community resources, such as credit counselors. for many borrowers who are behind on their mortgage payments, refinancing their loan is not an option. therefore, the federal reserve is engaged in a number of efforts to encourage the use of loss - mitigation tools by lenders, servicers, and not - for - profit organizations that help individual borrowers resolve delinquency issues. the cost of foreclosure is high for everyone involved ; estimates of the direct losses resulting from a foreclosure range from one - fifth to one - half the principal balance of a mortgage loan. 3 with these costs in mind, the federal reserve, together with the other federal banking agencies, has issued guidance urging lenders and servicers to pursue workout arrangements, when | response to the challenges resulting from foreclosures the federal reserve views the current high rate of mortgage foreclosures as an urgent problem, and we are addressing the issue on many fronts : we are contributing to initiatives already underway at the local and national level, as well as collaborating with other regulators, community groups, policy organizations, financial institutions, and public officials in an effort to identify ways to prevent unnecessary foreclosures and the associated negative effects on local communities. we are also leveraging the decentralized structure of the federal reserve system, which consists of the board of governors in washington, d. c., and the twelve federal reserve banks that each represent a distinct region of the country. this structure enables us to gather information and tailor responses to foreclosure issues at the local level, while using our collective experience to address regional and national policy issues. in addition, the federal reserve uses its considerable analytic resources to conduct research at the national level, which the reserve banks can disseminate to local community groups, counseling agencies, financial institutions, and others who are working to help troubled borrowers and communities. timely analysis of data and other available information is critical to crafting appropriate remedies to any problem. to that end, the federal reserve recently helped neighborworks america identify those regions and neighborhoods throughout the country that are most at risk for higher rates of foreclosure and would therefore benefit from an increased capacity to provide mortgage counseling. using this analysis, neighborworks america in february awarded $ 130 million in newly granted funds from congress to thirty - two state housing finance agencies, eighty - two community - based neighborworks organizations, and sixteen counseling intermediaries approved by the department of housing and urban development ( hud ). the federal reserve has recently made available on its public website detailed reports identifying neighborhoods that have especially high concentrations of foreclosures. these data – in the form of dynamic maps and other data – illustrate the regional variation in the condition of securitized, owner - occupied subprime and alt - a mortgage loans across the united states. 2 local leaders can access these reports and work with community affairs staff at the local reserve banks to more effectively address foreclosure problems. kristopher gerardi, adam hale shapiro, and paul willen ( 2008 ), " subprime outcomes : risky mortgages, homeownership experiences, and foreclosures, " federal reserve bank of boston. " dynamic maps of non | 1 |
. therefore, to fully implement a new strategy or to rebuild an organisation to be effective in a changing environment, it is critical to reshape culture as well. 3 / 6 bis central bankers'speeches the primary responsibility for reshaping culture rests with the executive team, under the direction of the board. it is not a human resources or organisational design exercise. it is a leadership responsibility. it requires leaders to take a long hard look at the current culture, the existing business processes, the work attitudes and behaviours they foster. without first establishing what the current culture is, the issuance of lofty mission statements or long lists of core values are merely paying ‘ lip service ’ to implementing effective cultural change. since employees tend to take their cues on what is important and how to behave from their leaders, negative activities and behaviour at the top foster negative behaviours further down the organisation. “ a good organisational culture is about more than avoiding good people doing bad things ; it is about equipping and enabling good people to do ever better things17. ” a firm in seeking to effect cultural change can take some practical steps to achieve this aim. i will suggest five as a starting point : 1. communicate and " walk the talk " - the cultural values and expectations of the firm need to be consistently communicated and modelled by the top, middle and lower management levels. 2. enhance diversity at senior levels – meaningfully addressing the acute lack of diversity at senior levels requires : more ambition, including in targets and measures ; more than lip service being paid to diversity programmes ; better building of pipelines of talent ; considering the overall construct and functioning of the executive management layer when making appointments ; and identifying and reducing barriers to change. 3. practice, process, performance – principles and values need to be reinforced through practices and processes, including training and particularly performance management. there must be clear alignment between individual roles and objectives and wider purpose, strategy and outcomes, with people held accountable for their actions. 4. ongoing assessment and checking – boards and executives need to have mechanisms and measures to understand whether the culture they espouse is consistent with the culture of the organisation, and consider how they would identify where it is not. considering how decision - making, risk identification, product development, the use of behavioural economics, the treatment of whistleblowers and everything in between works in an organisation is key to understanding the culture of the organisation. boards and executives need to consider the information they receive and | dependence on sources of tax revenue such as stamp duties, capital gains tax and corporation profits tax made total tax revenues dependent to an exceptional degree on profitable economic conditions, high transactions in the property market and asset price appreciation ( chart 2 ). all tax systems tend to do better in such conditions, but the elasticity of tax revenue response to a return to more normal conditions was exceptionally high in ireland. of course tax revenues have slumped, and expenditure has soared in all of the countries affected by the global downturn of 2008 – 9 and the slow recovery that is now in process. ( the taxes and spending programmes that behave in this way are normally seen as stabilizing, and indeed are called the automatic stabilizers. ) but the deterioration in ireland ’ s fiscal position has been worse than almost any other country. partly of course this reflects the fact that ireland ’ s home - grown property bubble had risen further and so has fallen further than most ( chart 3 ). but it also reflects the heightened elasticity of the tax receipts. interestingly, when you plot tax and current expenditure as a percentage of gdp, you might miss this ( chart 4 ), masked as it is by the scale of the collapse in gdp – tax receipts fell even faster despite big increases in rates and base especially in income tax as the government tried to make up for the shortfalls elsewhere. that is one of the main reasons why ireland ’ s exposed fiscal position, with which the government has been struggling for the past two and a half years and which will be the subject of intensified corrective action to be set out in detail in the promised 4 year fiscal programme to be announced shortly, is so exceptional. chart 2 chart 3 chart 4 how could one use accounting numbers to improve the usefulness of the sgp for ensuring sustainable public finances? i have some ideas on this to which i will return after i speak a little about accounting and the irish banks. a full account of the government finances is not complete in ireland without considering the banks. over the past year or more there has been intense interest in figuring out what will be the total cost of the losses incurred in the property bubble. indeed this has been a focus of attention worldwide, with for example the imf ’ s world economic outlook report devoting attention to the issue in each of its five semi - annual reports between april 2008 and april 2010. interestingly, the estimated losses for the global financial system from this source have oscillated, growing from the first | 0.5 |
to use cash. although canadians are holding more cash than ever, cash may not currently be circulating as much. in recent bank of canada surveys, consumers report some t. lane, “ money and payments in the digital age ” ( speech to the cfa montreal fintech rdv 2020, montreal, quebec, february 25, 2020 ). c. boar, h. holden and a. wadsworth, “ impending arrival — a sequel to the survey on central bank digital currency, ” bank for international settlements working paper no. 107 ( january 2020 ). k. huynh, “ how canadians pay for things, ” bank of canada the economy, plain and simple ( october 2019 ). - 4merchant preference for contactless payments, and some report experiencing merchants ’ refusal of cash due to fears of virus transmission. 10 of course, it ’ s too early to tell whether these trends will continue beyond the pandemic, but we are watching closely. the other scenario i raised in my speech last year is the increasing use of digital currencies created by the private sector, including cryptocurrencies and so - called stablecoins. while these products have existed for several years, some could see a boost from the acceleration of digitalization in the midst of the pandemic. even in this increasingly digital economy, though, cryptocurrencies such as bitcoin do not have a plausible claim to become the money of the future. they are deeply flawed as methods of payment — except for illicit transactions like money laundering, where anonymity trumps all other features — because they rely on costly verification methods and their purchasing power is wildly unstable. the recent spike in their prices looks less like a trend and more like a speculative mania — an atmosphere in which one high - profile tweet is enough to trigger a sudden jump in price. in contrast, widespread adoption of stablecoins for everyday transactions is possible, although none is near that point yet. because in most cases they are partly or fully backed by safe assets, their purchasing power is designed to be more stable. but many issues need to be addressed before we can be confident that stablecoins can be used safely by the general public. the financial stability board is examining these issues at the global level, and i am chairing the international working group that is taking this work forward. here in canada, we still have work to do to ensure that our regulatory framework covers these new products. amid all | , insurance, and real estate – accounted for about 18. 5 per cent of real output in 2000 and just over 20 per cent in 2008, based on 2002 constant prices. j. allen, w. engert, and y. liu, " are canadian banks efficient? a canada - u. s. comparison, " financial system review ( ottawa : bank of canada, december 2006 ) : 61 - 65. available at : < http : / / www. bankofcanada. ca / en / fsr / 2006 / research _ 1206. pdf >. v. dolar and c. meh, " financial structure and economic growth : a non - technical survey " ( working paper no. 2002 - 24, bank of canada, 2002 ). available at : < http : / / www. bankofcanada. ca / en / res / wp / 2002 / wp0224. pdf >. the risks associated with financial innovation, in the context of an appropriate regulatory framework. i'd now like to draw some of these threads together by discussing what policy can do to help. the role of policy the combination of factors that are thought to explain canada's productivity problem suggests that efforts to tackle the productivity challenge must be broad based. appropriate labour market policies, tax structure, competition policy, and an open trading system can all help to boost productivity. let me say a few words about the bank of canada's roles in monetary policy and financial system policy. since 1991, canada's monetary policy has been guided by an explicit inflation target. while we have been successful in meeting the target – for the past 15 years, inflation has averaged almost exactly 2 per cent – it's important to remember why inflation control is so crucial. low, stable, and predictable inflation contributes to better economic performance. it enables clear price signals to be sent, which in turn helps people to make wise borrowing and investment decisions and thus makes the economy more resilient to economic shocks. the bank of canada also has important responsibilities in supporting a stable and efficient financial system, which is critical to long - run growth. the bank's work on financial stability is carried out in collaboration with federal and provincial regulators and other public sector partners, and as a member of international bodies. one important responsibility is financial system surveillance – identifying, monitoring, and reporting on risks to the financial system. the bank also oversees canada's clearing and settlement systems, providing liquidity, both | 0.5 |
, as not all of them will be needed to the same extent as in the past. meeting the following challenges will be crucial : • formulating and implementing medium - term - oriented macro precondition for sustained and more balanced global growth ; • intensifying efforts to undertake structural reforms ; • correctly timing and implementing exit policies so as to ensure fiscal sustainability and maintain price stability ; and policies as a • strengthening the financial system and the global financial architecture so as to safeguard financial stability. how can we ensure financial stability in the future? the most recent discussions on financial stability have focused on regulation and the role central banks should play therein. unfortunately, the change of market participants ’ behaviour is not on top of the agenda. as the crisis is the result of many failings, let me recall the various lines of defence that should be in place in order to secure financial stability. the first line of defence is that market participants must be liable for their actions. they have to bear in mind the long - term risk that their actions might impose on financial institutions, and on the financial system as a whole. economic and financial incentives have to be aligned with this simple principle. as yet, i have, however, not seen any significant change in the behaviour of market participants. the second line of defence rests on the transparency of the financial system, including its institutions, products and markets. it rests on the implementation of coherent international supervisory and regulatory standards. this requires an overhaul of supervision and regulation at both the macro and the micro - prudential level. the third line of defence rests on safeguarding liquidity conditions for markets and solvent institutions. the fourth line of defence involves governments applying clear and harmonised procedures to resolve matters when insolvencies of systemically important financial institutions occur. how is the global financial architecture changing? on the institutional side, we are seeing many encouraging developments, both globally and across europe. in fact, some far - reaching changes in the global financial architecture are unfolding. all main central banks in the world are actively involved. the heads of state or governments have decided that the g20 would now be the premier international forum for international economic cooperation. at the recent summits in washington, d. c., london and pittsburgh, five areas were identified for joint action to improve global regulation and oversight, including : • the strengthening of transparency and accountability ; • the establishment of a sound regulatory framework and, in particular, the enhancement of basel ii ; • the promotion of integrity | that the recovery is facing headwinds. we expect the recovery to strengthen over time, as rising real incomes should allow households to consume more. the latest ecb staff projections foresee the economy growing by 0. 8 % in 2024, 1. 3 % in 2025 and 1. 5 % in 2026. the labour market remains resilient, with the unemployment rate standing at 6. 4 % in july – broadly unchanged over the past year. at the same time, employment growth slowed to just 0. 2 % in the second quarter, and recent indicators point to a further deceleration in the coming quarters. according to ecb staff, the unemployment rate is projected to remain around its current low level. turning to price developments, disinflation has been accelerating over the last two months. headline inflation fell to 2. 2 % in august 2024 and is expected to drop further in september, mainly on account of falling energy costs. core inflation – excluding energy and food – edged down to 2. 8 % in august driven by a decline in goods inflation that outweighed an increase in services inflation. the indicator of domestic inflation, which only includes items with a low import intensity, remained high in august as wages continued to grow at an elevated pace. at the same time, the overall growth in labour costs has been moderating in recent quarters, and profits have been buffering the impact of higher wages on inflation. looking ahead, inflation might temporarily increase in the fourth quarter of this year as previous sharp falls in energy prices drop out of the annual rates, but the latest developments strengthen our confidence that inflation will return to target in a timely manner. we will take that into account in our next monetary policy meeting in october. the ecb staff projections from september foresee inflation to average 2. 5 % in 2024, 2. 2 % in 2025 and 1. 9 % in 2026. the ecb's monetary policy stance let me now turn to our monetary policy stance – the first topic chosen for today's hearing. we have come a long way in the fight against inflation. in october 2022 inflation peaked at 10. 6 %. by september 2023, the last time we raised interest rates, it had dropped by more than half, to 5. 2 %. the decline in inflation and the anchoring of longer - term inflation expectations showed that our strong response was bearing fruit. then, after nine months of holding rates steady, we | 0.5 |
anita angelovska bezhoska : address – balkan business week address by ms anita angelovska bezhoska, governor of the national bank of the republic of north macedonia, at the balkan business week, skopje, 7 june 2021. * * * dear all, ladies and gentlemen, the world economy has been faced with one of the most severe threats ever – a pandemic capable of bringing societies to their knees by threatening their livelihoods and wellbeing. western balkan countries, as small and open economies, were not shielded from this global shock, but were caught on a strong footing, amidst solid economic fundamentals and absence of significant disequilibria mirrored in solid growth pattern and moderate inflation. despite this favourable initial condition, the magnitude of the gdp adjustment was immense, with an average contraction of 6. 4 % in 2020, which is three times stronger compared to the global financial crisis. although it is a common global shock that in a synchronized manner affects all economies, the scrutiny of data reveals notable differences in economic losses, which to a great extent can be attributed to the different sectoral composition of the economies, their pre - crisis vulnerabilities and availability of policy space for reaction to the crisis. the dispersion of growth outcomes ranges from - 1 % ( serbia ) to - 15 % ( montenegro ) 1. the recession was particularly severe in countries that rely more heavily on services, especially those largely dependent on social interaction, as well as countries with industries closely tied to the european production chains. yet, according to imf estimates, the shock intensity would have been three times higher without unprecedented monetary and fiscal policy support, both in terms of speed and scale, preventing a more devastating outcome and long - term scarring to the economies. given the lessons learned from the global financial crisis, that is recognizing the risk of self - fulfilling cycles, central banks this time responded quickly, providing ultra - accommodative support such as policy rate cuts from already historically low levels, regulatory flexibility to prevent credit crunch and some of them even experimented with non - conventional tools. in this crisis episode, monetary policy was not perceived as " the only game in town " and since the very beginning, it was coupled with unprecedented fiscal stimulus. average fiscal stimulus in the region amounted around 6 % of gdp, which was twice as low as the global fiscal stimulus, but still on a comparable level with middle - income economies. consequently, the pre - pandemic fiscal consolidation | anita angelovska - bezoska : macedonia – current macroeconomic developments, medium term outlook and challenges ahead speech by ms anita angelovska - bezoska, vice - governor of the national bank of the republic of macedonia, at the ministerial dialogue on the preaccession economic programs on eu candidate countries, european commission, brussels, 9 july 2013. * * * dear ministers, dear representatives of the european commission, european central bank and eurostat, at the beginning, let me express our gratitude to the european central bank, european commission and eurostat for their contribution in assessing our preaccession economic program for the period 2013 – 2015. within the pep we already presented the proactive role of the national bank of the republic of macedonia in dealing with the global crisis consequences, by undertaking a mix of conventional and unconventional measures, aimed at maintenance of the price stability, financial stability, as well as stimulating economic activity. i will use this opportunity to point out several issues regarding the current macroeconomic developments, medium term outlook and challenges ahead. the latest available data on macedonian economy for the first quarter of 2013 indicated a gradual revival of the economy with real annual gdp growth of 2. 9 %, slightly higher than our expectations, being mainly driven by the investment and net export. generally, macedonian economy has been relatively successful in offsetting the crisis consequences which was mainly due to the solid initial conditions prior to the crisis without massive macroeconomic imbalances, the establishment of few new production capacities based on foreign capital that largely contributed to the export diversification, stable and sound financial system and adequate macroeconomic policy mix. the environment for monetary policy implementation in 2013 is quite favorable, considering relatively stable inflation developments and comfortable foreign reserves level. in the first half of 2013, the average inflation was 3. 6 %, mainly due to higher food and energy prices. our latest forecast for the average inflation rate in 2013 is 2. 8 %, with expected further slowdown to 2. 3 % ( close to our historical level ) in 2014, until when no pressures of higher significance by the demand side are being expected. however, there are risks related to this forecast, reflecting the uncertainty about energy prices as well as the world and domestic food prices dynamics and their direct and indirect pass - through to inflation. the performances in the external sector in the first several months of 2013 and the latest estimates indicate quite favorable position in the balance of payments for this year. the reduced trade deficit is neutralizing the lower | 0.5 |
for release on delivery 11 : 30 a. m. edt ( 8 : 30 a. m. pdt ) may 5, 2017 committee decisions and monetary policy rules remarks by stanley fischer vice chairman board of governors of the federal reserve system at “ the structural foundations of monetary policy, ” a hoover institution monetary policy conference stanford university stanford, california may 5, 2017 it is a pleasure to be at the hoover institution again. i was privileged to be a visiting scholar here from 1981 to 1982. in addition, many of the researchers and practitioners with whom i have discussed monetary policy over the years have had affiliations with the hoover institution - - including several people here today. it is a pleasure also to have been invited to speak at this hoover institution monetary policy conference, for the hoover conference series provides a valuable forum for policymakers and researchers to engage in dialogue about important monetary policy issues facing the united states and other countries. today i will offer some observations on monetary policy rules and their place in decisionmaking by the federal open market committee ( fomc ). 1 i have two messages. first, policymakers should consult the prescriptions of policy rules, but - - almost needless to say - - they should avoid applying them mechanically. second, policymaking committees have strengths that policy rules lack. in particular, committees are an efficient means of aggregating a wide variety of information and perspectives. monetary policy rules in research and policy since may 2014, i have considered monetary policy rules from the vantage point of a member of the fomc. but my interest in them began many years ago and was reflected in some of my earliest publications. 2 at that time, the literature on monetary policy rules, especially in the united states, remained predominantly concerned with the money stock or total bank reserves rather than the short - term interest rate. 3 seen with the views expressed in this presentation are my own and not necessarily the views of the federal reserve board or the federal open market committee. i am grateful to ed nelson of the federal reserve board for his assistance. see, for example, cooper and fischer ( 1972 ). there was, however, a long tradition of monetary analysis in the united kingdom and continental europe that was centered on the authorities ’ use of the interest rate as an instrument. see especially keynes and wicksell ( 1936 ). in the post - world war ii decades, this tradition continued in the u. k. research - 2benefit of hindsight, that emphasis probably derived | resource for regional job information. finally, the local government has worked to contend with a long - term loss of jobs in manufacturing and a more recent loss of jobs in professional services by attracting investment in a world - class photonics hub in rochester. i often meet with people who run large companies to get their take on the strength of the economy. whereas a few years ago, they might not have been engaged in a lot of hiring, today they tell me that it is becoming more challenging to find well - qualified workers for the job openings they want to fill. that ’ s good news for those of you participating in the p - tech program. it means employers are looking for graduates of programs just like yours, which are attuned to the job opportunities of employers. p tech rochester programs offer students professional mentors, job shadowing opportunities, and on - the - job experience to ensure that they are ready to contribute positively to the workplaces of local employers. i also understand that companies are investing more in on - the - job training and are strengthening efforts to retain more of the workers they attract, which means younger workers — such as p tech graduates — have a better chance of securing jobs that lead to long - lasting careers. by any measure, the market for younger workers today looks much better than it did in the years just after the great recession, when unemployment rates for teenagers were above 20 percent. 3 1 / 3 bis central bankers'speeches in fact, firms are turning more and more to programs like p - tech to help them find and train the workers they need. so the skills you are gaining today are likely to provide pathways not only to the jobs of today but also the careers of the future. workforce development the federal reserve bank of new york is one of the facilitators of the leading the way campaign. the federal reserve system has a long - standing interest in understanding labor market dynamics and promoting workforce development opportunities. programs like this help workers prepare for jobs and help firms invest in workforce development. together, these efforts help make the economy more productive and help us achieve our goal of maximum employment. in addition to the federal reserve bank of new york ’ s efforts, the federal reserve bank of boston is learning about labor markets in small industrial cities through their working cities challenge and the federal reserve bank of dallas has focused on the importance of infrastructure including broadband for economic inclusion. the federal reserve bank of atlanta has been a leader within the federal reserve system in establishing the investing in america | 0.5 |
bank of zambia keynote speech launch of the 2019 world savings day by dr denny h. kalyalya, governor, bank of zambia intercontinental hotel, lusaka 31st october 2019, lusaka, zambia keynote speech by dr denny kalyalya, governor, bank of zambia at the 2019 world savings day event on 31st october 2019 at the intercontinental hotel, lusaka the chief executive - securities and exchange commission the registrar and ceo – pensions and insurance authority the chairperson – bankers association of zambia senior government officials here present members of the diplomatic corps chief executive officers and senior private sector representatives representatives from education institutions members of the media here present pupils and students here present, and may i just say, distinguished ladies and gentlemen i am delighted to officiate at this official launch of the 2019 world savings day under the theme : ‘ be money smart : savings give life a lift! ’. as you may be aware, the world savings day is a global event celebrated to promote awareness on the importance of savings. in line with the national strategy on financial education of 2012, zambia has observed the world savings day since 2014. distinguished ladies and gentlemen, this year ’ s world savings day commemoration presents yet another opportunity for consumers to learn about financial products as well as how to select and assess appropriate financial products to maximise their usage for key life events. following the launch of the national financial inclusion strategy in 2017, new informal financial service providers have emerged, such as, village banks and savings groups in both the rural and urban areas. as both formal and informal financial service providers are agents of financial inclusion it is important for us, the regulators, to seek effective ways of linking the two types of players with a view to reducing informality as we expand financial inclusion. distinguished guests, in recognition of the importance of formal financial inclusion in supporting economic growth, the bank of zambia is collaborating with savenet, to keynote speech by dr denny kalyalya, governor, bank of zambia at the 2019 world savings day event on 31st october 2019 at the intercontinental hotel, lusaka develop channels to link informal savings groups to formal financial services providers. according to savenet data, at the end of 2018 there were 15, 700 savings groups in zambia, with cumulative savings amounting to k53. 1 million. this points to a good opportunity for the formal financial service providers to mobilise deposits. in this regard, it has been observed that a number of regulated financial service providers and mobile money operators have already started designing products aimed at | securities, the average commercial banks ’ lending rate declined further to around 28 % in december 2006 from about 34 % in december 2005. in january 2007, it slightly declined to about 27 %. mr chairman, clearly, there is a need for commercial banks to do more to reduce lending rates in order to influence a substantial expansion of private sector credit. lower lending rates will contribute to the reduction in the cost of doing business in zambia. the current environment of low inflation and relatively stable exchange rate offer a good opportunity for lowering commercial banks lending interest rates. distinguished guests, ladies and gentlemen, zambia ’ s external position continues to score remarkable improvements as reflected in the build - up of gross international reserves to 2 months of import cover in 2006 from 1. 6 months of import cover in 2005. furthermore, the preliminary assessment is that zambia ’ s surplus trade balance increased to us $ 1, 176. 0 million in 2006 from a trade surplus of us $ 10 million in 2005. similarly, the current account deficit as a percentage of gdp, excluding grants, reduced from 11. 8 % in 2005 to 2. 3 % in 2006. this improvement has been due to increased export receipts arising from record high copper prices and increased export volumes. in addition, the historic debt relief received in 2006 and the increased budget support from our cooperating partners has helped to strengthen the external position. preliminary information indicates that the country ’ s external debt position stood at us $ 635 million as at end of december 2006, a reduction of about 87 % from the end - 2005 debt stock of us $ 4. 5 billion. in 2006, the foreign exchange market was characterized by general depreciation of the kwacha against major currencies. in order to moderate exchange rate volatility and maintain stability in the external value of the kwacha, the bank of zambia intervened by way of purchasing and selling foreign exchange. in the banking sector, there have been no bank failures in the recent past, reflecting stability in the financial sector mr chairman, the government has shown commitment to continuing the economic reform programme. to this end, measures are being taken to ensure that the macroeconomic gains attained so far will be consolidated in 2007. accordingly, government is targeting real gdp growth of 7. 0 % and inflation of 5. 0 %. pursuit of these objectives is within the context of the long - term development objectives well articulated in the national long term vision, 2030. part of this vision is enshrined in the fifth | 0.5 |
jwala rambarran : trinidad and tobago strengthens information exchange address by mr jwala rambarran, governor of the central bank of trinidad and tobago, at the signing of a memorandum of understanding between the trinidad and tobago securities & exchange commission and the central bank of trinidad and tobago, port of spain, 6 january 2014. * * * good morning ladies and gentlemen, economists typically have a penchant for numbers so i ’ ll start with a few : today is the 6th of the 1st month of 2014 and the 12th and last day of christmas 2013. so i hope the next 360 days of 2014 are productive and fulfilling for you, your families and our country. today is also a historic day. effective supervision of our financial system requires us as regulators to see both the forest and the trees. we need to improve our understanding of individual financial institutions ( the trees ) and their intricate connections to the forest ecosystem of financial markets and the macro - economy. today ’ s signing of this memorandum of understanding ( mou ) between the sec and the central bank is about advancing this process of better managing systemic risk. this is not about ego or territory ; it ’ s about ensuring the protection of every citizen who trusts their bank, securities firm, or financial institution with their money. this is why we are here and why this piece of paper matters. as regulators, we need to remember who are at the heart of the financial system. we need to remember it is real human hearts : a teacher with a loan, a market vendor with a savings account in a bank, a bus driver with an insurance policy, or a doubles vendor with an investment in a mutual fund. our duty to these market participants, who all rely on us, means that we must find common ground as fellow regulators, we must collaborate more systematically, and we must craft together a regulatory network that offers protection, consistency, and stability. i think this should answer the question, why this mou is important. ladies and gentlemen, i want to emphasize that the central bank and sec do have frequent contact with each other as regulators. the chairman of the sec and i often consult each other on matters of mutual regulatory concern. the central bank has a representative on the board of commissioners of the sec. our financial institutions supervision department speaks regularly to the sec ’ s enforcement personnel. from a legal perspective, however, when the paths of the central bank and the sec intersect in the conduct of our duties, as it often does, we are | niklaus blattner : the task of overseeing payment and securities settlement systems introductory remarks by mr niklaus blattner, vice - chairman of the governing board of the swiss national bank, at the end - of - year media news conference, zurich, 12 december 2003. * * * with the revised national bank law, the national bank receives an explicit mandate to contribute to the stability of the financial system. this is, in particular, laid down specifically in the law in the task of overseeing payment and securities settlement systems. why does the national bank oversee payment and securities settlement systems? by overseeing payment and securities settlement systems, the national bank is supporting the security and efficiency of financial market infrastructures in switzerland. in doing so, it is helping to ensure the stability of the financial system as a whole. this stability is essential to successful monetary policy in particular, and to the economic efficiency of switzerland in general. the importance of a market economy ’ s financial system derives from the function that it fulfils. the financial system is responsible for the allocation of financial resources and risks, as well as intermediation between savers and investors. a financial system can be described as stable if it performs these tasks efficiently and its markets and institutions prove themselves to be shock - resistant. another part of a stable financial system are secure financial market infrastructures. these include, specifically, payment systems and systems for the clearing and settlement of financial instruments ( securities settlement systems ). deficient payment and securities settlement systems might potentially trigger a crisis in the system. an operational or technical system failure can delay transaction settlement so severely - or even prevent it for such a long period - that widespread credit or liquidity problems among financial institutions result. in particularly serious cases, the financial institutions concerned, and perhaps even the financial markets, are no longer able to perform their role in the economy or can do so to only a limited extent. yet on the other hand, payment and securities settlement systems also play a major part in preventing the transfer of payment or delivery problems from one participant to the others. such difficulties might also trigger a chain reaction which could jeopardise the entire system. this makes the architecture of payment and securities settlement systems all the more important, because it determines their capacity to limit the transfer of weaknesses. secure and efficient financial market infrastructures are especially important to the swiss economy, which has a large financial sector and generates significant payment flows. their significance is illustrated by the relevant figures : every day, sums amounting | 0 |
financial services industry. the current global financial landscape is being shaped by digital transformation, evolving regulatory standards, and changing demands from our growing population of young, technology - savvy and upwardly mobile financial consumers ( our very participants at the icfc today make up this dynamic market! ). the bsp, for its part, has embarked on a comprehensive financial sector reform agenda to proactively respond to this changing market landscape and conditions, while at the same time remaining committed to promoting the stability and soundness of the domestic financial system. the contestants here are young. you have so much potential. there was a time when i too was your age, an economics major at the university of the philippines in diliman. i joined the central bank in 1981, right after graduating. i believed that it was through the practice of economics, through the disciplines and sciences of banking and finance that i would be able to make a difference for our country. now, 36 years later, i am governor of the bangko sentral ng pilipinas, heading an institution responsible for shaping monetary, banking and financial policies. perhaps there will be those among you who will one day join our ranks here at the bsp. i realize 1 / 3 bis central bankers'speeches that this is not a career fair. but since it is quite refreshing and exciting to be in a room full of so many young people who have shown passion for the financial profession, i will take this opportunity to speak about how fulfilling it is to be part of team bsp. maybe i can influence you in your future choice of career. in the bsp, we engage in nation building through the formulation of monetary policy, banking supervision and the functioning of an efficient and reliable payments settlements system. we work so that there would be an enabling regulatory environment for businesses, commerce and industry to flourish and so that our citizens and firms could enjoy price stability as a foundation for making sound investment, consumption and savings decisions. through the bsp ’ s pursuit of deep and meaningful financial and structural reforms through the years, along with policies and actions of national government agencies and the indispensable cooperation of the private sector, the philippines currently enjoys macroeconomic stability. we are currently one of the fastest growing investment - grade rated economies in the region with a better - than - market forecast gdp growth of 6. 9 percent in the third quarter of 2017. this is our 75th consecutive quarter of economic growth since the asian financial crisis! amid this rapid growth, | bankers'speeches circular no. 982 provides an enhanced information security framework to consider cybersecurity controls. this calls for a renewed focus on information security in line with technological developments and innovations, dynamic risk profiles, and a rapidly evolving cyberthreat landscape. you can be assured that the bsp is on constant surveillance mode for fintech activities by new market players. we are monitoring industry developments on crowd - funding and peer - to - peer lending. while crowd - funding has the potential to expand financial access for new businesses and msmes, there is also heightened risk of investor and consumer abuse. we are ready to take regulatory action if necessary to maintain fair and healthy competition. the bsp is also actively engaging regulators from other jurisdictions for possible information sharing specifically focused on fintechs. currently, the bsp has a fintech cooperation agreement with the monetary authority of singapore which provides a framework for collaboration by referring promising fintech firms, sharing of emerging trends and developments, and facilitation of cooperative work on fintech projects. we ourselves are exploring adoption of regtech solutions to strengthen bsp ’ s risk - based regulatory and supervisory activities. we are piloting two regtech solutions to automate some of bsp ’ s work, enhance analytical staff capability, create greater accountability and amplify “ customer voice ” in the policy - making process. these include an application programming interface ( api ) system to improve supervisory reporting ; and an automated complaint - handling system. finally, to cope with all the rapid change, the bsp is undergoing strategic reorganization to enhance our mission focus, foster better collaboration and promote better accountability. even in the bsp, disruption is occurring to improve and transform our capabilities, structures and more importantly, our culture. to make the bsp more capable, agile, and stakeholder - oriented, we are reviewing our nautical charts to reach the objectives of becoming a more credible central bank, of having dynamic stakeholder engagement, of achieving organizational agility, and of possessing organizational capability. closing remarks ladies and gentlemen, disruptive technology is gradually reshaping the financial services industry. it offers opportunities as well as challenges for all. let us embrace it. manage it. and make it work for all filipinos, and your customers. anchors away! we are with you in the journey. again, congratulations to the new set of officers and trustees of ctb. mabuhay ang pilipinas! 4 / 4 bis central bankers'speeches | 0.5 |
the uk has enjoyed since the new monetary framework was put in place. but a fairer measure of the mpc ’ s success is perhaps the fall in inflation expectations since may 1997 ( which can be derived from prices of government bonds ) which has brought the cost of long - term borrowing down to historically low rates. i think that this provides some measure of the growing credibility of the monetary policy framework ; and the expectation that we have moved into an era where we can expect low and stable price conditions. core purpose : financial stability i will say more later about the current position of the uk economy, but first i would like to say something about the other functions of the bank which are perhaps less familiar than the mpc. the bank ’ s second core purpose is maintaining the stability of the financial system. the bank is no longer responsible for the supervision of individual firms but has a clear interest in ensuring the financial system functions smoothly. as the asian crisis in 1998 and the problems in japan show, dislocation of the financial system can impose significant economic costs and it is the bank ’ s role, looking at the system as a whole, to identify potential threats and vulnerabilities. in some respects this interest is integral to the bank as a central bank. for example, secure and efficient payment and settlement systems are an essential condition for economic growth, providing the means for money to flow between individuals, businesses and government. like other essential services - electricity, water - it is easy to take payment systems for granted. but the amounts involved are huge : 30mn transactions are processed every day in the uk clearing system, the value of which totals over £800bn every week. these payments ultimately result in transfers between settlement banks across accounts which they maintain at the bank of england. a failure in the payment system could have an immediate impact on the economy and the bank has worked with clearing banks to reduce the risk to the financial system, first by the introduction of real - time gross settlement and now by moving towards delivery versus payment in securities markets. less esoteric, perhaps, is our interest in the financial stability of individual firms and the structure of the financial system as a whole. while responsibility for individual firms lies with the fsa, the bank takes a close interest in the impact on the wider economy of the regulatory structure and the links between individual institutions and markets. the bank also has a direct role as lender of last resort. in the event that a bank has liquidity difficulties that might | tiff macklem : opening statement before the house of commons standing committee on finance opening statement by mr tiff macklem, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 18 april 2023. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report ( mpr ). last week, we maintained the policy rate at 4a½ % as we continue to assess whether monetary policy is restrictive enough to return inflation to our 2 % target. since the last time we were here with you, we've seen a steady improvement in inflation and modest economic growth. inflation is coming down quickly - data this morning show it fell to 4. 3 % in march. and we forecast it to be around 3 % this summer. we are encouraged by that, but we are also seized with the importance of staying the course and restoring price stability for canadians. several things still have to happen to get inflation all the way back to the 2 % target. inflation expectations have to come down further, services price inflation and wage growth need to moderate, and corporate pricing behaviour has to normalize. we are focused on these indicators, and the evolution of core inflation, to ensure that consumer price index ( cpi ) inflation continues to progress toward the target. if monetary policy is not restrictive enough to get us all the way back to the 2 % target, we are prepared to raise the policy rate further to get there. before i take your questions, let me give you some economic and financial context for the decision. the canadian economy remains in excess demand. gross domestic product ( gdp ) growth in the first quarter of the year appears stronger than we projected in january, and the labour market is still tight. the unemployment rate, at 5 %, remains near its record low, and wages continue to grow in the 4 % to 5 % range. employment growth has been surprisingly strong, reflecting continued demand and increases in labour supply. past policy rate increases are working their way through the economy and restraining demand. households are slowing their spending, particularly on big - ticket items. as mortgages are renewed at higher rates, more households will feel the restraining effects of monetary policy. taking these forces into consideration, we expect canadian gdp growth to be weak for the rest of this year before beginning to pick up gradually in 2024 and through 2025. what does all | 0 |
tarisa watanagase : risk - focused supervision and risk assessment opening address by dr tarisa watanagase, deputy governor of the bank of thailand, at the apec financial regulators training initiative regional seminar on risk - focused supervision and risk assessment, bangkok, 6 september 2004. * * * distinguished guests, ladies und gentlemen, lt is a pleasure for me to be here at the opening of the apec financial regulators training initiative on risk - focused supervision und risk assessment. in making this opening address, i would like to personally extend a warm welcome to all the participants and to express my appreciation to the federal reserve experts who have kindly agreed to share with us their knowledge und experience on risk - based supervision. this regional seminar is held at an opportune time, about two months after the basel committee on banking supervision released the basel ii capital framework. as you all are undoubtedly aware of, basel ii aims to strengthen financial stability by encouraging sound risk management practices at banking organizations. the tools uscd are a more risk - sensitive capital regime ( pillar 1 ) ; the application of risk - based supervision ( pillar 2 ) ; und improved public disclosures to enhance market discipline ( pillar 3 ). of the three pillars, one of the most formidable challenges for emerging market supervisors will be to properly implement the pillar ii risk - based supervisory framework. since risk - based supervision is the main topic of this seminar, it may be useful to provide a few thoughts on some of the broader regulatory und supervisory implications associated with implementing this framework. on the regulatory side, thc adoption of a risk - focused supervisory framework entails a shift away from a rigid, rules based approach to regulation and towards more “ incentive compatible ” prudential standards. by “ incentive compatible ”, i am referring to broad, principles based standards that encourage banks to develop and continuously update their internal risk management systems to ensure that it is commcnsurate with the scope and complexity of its operations. while the benefits are obvious, there are also some consequences for the supervisory side of our business that may not be readily transparent. first, an emphasis an broad prudential standards - while useful rot fostering sound risk management practices - will inevitably create significant challenges for front - line supervisors. this is because they will need to rely much more on sound professional judgment and critical analysis, and less on rules - based compliance criteria, in order to make proper risk assessments. this in turn, will require supervisory staff members to have a fundamental | grasp of risk - based supervisory concepts and how it is applied in the field. the challenge for every emerging market supervisory authority is to equip our front line supervisors with the requisite knowledge, skills, and abilities, in order to help make their transition to a risk - based framework as smooth as possible. at the bank of thailand, we have placed greater reliance an this risk - based philosophy during the past several years. wc are increasingly moving towards more principles based prudential standards ; in addition, we have revamped our supervisory framework to provide a more structured and risk - oriented approach to the on and off - site examination process, while encouraging our front - only supervisors to think analytically. despite these achievements, we still have substantial work ahead of us. above all, our experience with risk - based supervision indicates that there is no going back to the mles - based approach of supervision given the dynamic nature of the banking business. and second, building a robust risk - based supervisory regime requires substantial time and resources and it will necessitate a material shift in the way both supervisors and bank managcment think about risk and risk management. i must therefore, commend apec for this initiative in bringing together bank supervisors from the asiapacific region to learn and to share views on this very important topic. it is my sincere hope that all of you take this opportunity to gain insights from our highly experienced and knowledgeable experts as well as from each other on the practical aspects of risk - focused supervision. ladies and gentlemen, i am pleased to declare open the apec pinancial regulators training initiative regional seminar on risk - focused supervision and risk assessment. i wish you all stimulating discussions in the week ahead and a very pleasant stay in bangkok. thank you. | 1 |
##3a. pdf. bis central bankers ’ speeches reputational problems in the asset management arm could spill over to the parent company, or vice versa. new macroprudential tools, be they leverage limits, guided stress tests, or redemption gates, would need to be placed in the hands of the regulators to be effectively deployed. and just as for the banking sector, to be successful in countering the build - up of systemic risks over the cycle they would need to be applied in a time - varying fashion. however, it is important to stress that, when determining the appropriate policy responses to mitigate growing risks in the sector, consideration should be given to its growing role in credit intermediation. we need to ensure that the impact on supply of credit to the real economy is limited. there is of course much we still have to learn about the design and implementation of such instruments ; indeed, we are still only beginning to discover the mechanisms through which macroprudential policy works in the banking sector. still, i am convinced that these additional instruments are essential – and starting work on them is urgent – if we are to have a holistic view on systemic risk and financial stability. conclusion let me conclude. what i have argued today is that we are entering into an environment where monetary policy cannot be responsible for managing the financial cycle. and this fact, while acknowledged in principle, has not yet been fully reflected in our policy frameworks in practice. a comprehensive approach to macroprudential policy means two things. first, making efficient use of macroprudential tools that can constrain excessive credit growth towards the real estate sector, which is the main driver of the financial cycle. borrower - based measures therefore come to the forefront. given their importance, they deserve to be properly embedded in european legislation and effectively coordinated within european institutions. second, broadening the coverage of the macroprudential toolkit to reflect changing patterns of intermediation – i. e. to the shadow banking sector. it may be the case, as jeremy stein famously argued, that monetary policy is the best tool to “ get in all the cracks ” of the financial system. but as that option may not be available to us for some time, it is incumbent on policymakers to put more attention into developing instruments that can reach into all the corners of the financial system. i trust that our conference today will provide many useful insights on how we can proceed with this agenda. bis central bankers ’ speeches | level of skill, and the result is an apparent excess of supply relative to a declining demand. these changing balances are most evident in the failure of real wages at the lower end of our income distribution to rise during the past quarter - century. the hypothesis that we should be able to improve upon the knowledge that our students acquire as they move from kindergarten to twelfth grade gains some support from international comparisons. a study conducted in 1995 revealed that, although our fourth - grade students were above average in both math and science, by the time they reached their last year of high school they had fallen well below the international average. 1 accordingly, we apparently have quite a distance to go before we catch up. early last century, technological advance required workers with a higher level of cognitive skills - for instance the ability to read manuals, to interpret blueprints, or to understand formulas. youth were pulled from rural areas, where opportunities were limited, into more - productive occupations in business and an advancing manufacturing sector. our educational system responded : in the 1920s and 1930s, high - school enrollment in this country expanded rapidly. it became the job of these institutions to prepare students for work life. in the context of the demands of the economy at that time, the third international math and science study is a project of the international study center, lynch school of education, boston college. a complete set of timss publications is available on the center ’ s web site, http : / / timss. bc. edu / timss1995i / timsspublications. html. a high - school diploma represented the training needed to be successful in most aspects of american enterprise. the economic returns for having a high - school diploma rose and, as a result, high - school enrollment rates climbed. by the time that the united states entered world war ii, the median level of education for a seventeen - year - old was a high - school diploma - an accomplishment that set us apart from other countries. i cannot dismiss the notion that we can learn something from that period and perhaps from other countries. still, i realize that the world was different from today in many ways. societal changes have been numerous and profound, and our schools are being asked to do a great deal more than they have in the past. we need to be forward - looking in order to adapt our educational system to the evolving needs of the economy and the realities of our changing society. one area in which educational investments appear to have | 0 |
like investments that fall due, income is generally reinvested. therefore, foreign exchange reserves tend to rise even when we do not need to purchase additional foreign exchange. the other component of returns is changes in the value of foreign exchange reserves. we value all investments at market prices and in swiss francs. consequently, changes in the prices of interest - bearing paper and shares as well as exchange rate movements have a direct impact on the net result for investment. if the swiss franc strengthens against the investment currencies, this results in a valuation loss on the foreign exchange reserves. the chart shows the net investment result since the first quarter of 2010 for the foreign exchange reserves, as well as for the individual components. the dominant role of exchange rate movements is clearly evident. in the past, too, exchange rate movements have posed by far the greatest risk to our portfolio. taking a long - term view, exchange rates have been responsible for about 80 % of the total risk on the foreign currency reserves. reform of interest rate benchmarks following last year ’ s revelations that libor interest rates had been manipulated, various activities to reform the libor and other interest rate benchmarks are under way. the snb is involved in these reform activities at both international and national level. the objective is to improve the credibility and acceptance of the existing interest rate benchmarks or, where appropriate, to take steps to ensure the provision of robust alternative interest rate benchmarks. international efforts are being coordinated by the financial stability board on behalf of the g20 countries. they involve not only central banks and supervisory authorities but also an international group of private sector financial market participants. they are examining, first, the extent to which the existing libor interest rates fulfil the requirements laid down by securities supervisors last july ( the iosco standards ). second, they are investigating whether there are alternative interest rate benchmarks which would better meet the needs of the market and the requirements of supervisory authorities in the longer term. alternatives to the libor are being developed by the private sector group, which also includes swiss representatives. the financial stability board plans to present the results of its work in the middle of next year. at the international level, activities are also under way to regulate the interest rate benchmarks as well as other important reference variables on the financial markets. in bis central bankers ’ speeches london, the libor is already now subject to a supervisory regime. in brussels, a bill has been proposed which would regulate all interest rate bench | fritz zurbrugg : financial markets, the management of swiss currency reserves and interest rate benchmark reforms introductory remarks by mr fritz zurbrugg, member of the governing board of the swiss national bank, at the media news conference of the swiss national bank, berne, 12 december 2013. * * * i will begin today by looking at the situation on the financial markets. then i will talk briefly about developments in our foreign exchange holdings. i will close with a few comments on the progress that has been made in reforming interest rate benchmarks at both international and national level. situation on financial markets since our last media news conference in june, the positive risk sentiment on financial markets has been largely maintained, as is evident from the soaring share prices, among other things. in the past few weeks, the key us indices dow jones and s & p 500 have reached new record levels, thereby exceeding the peaks attained prior to the global financial crisis. in addition, japan ’ s nikkei index and the most important western european stock exchange indices, including the swiss smi, have again recorded significant gains in recent months. despite all the euphoria on the stock exchanges, we must not forget that it is not only the improvement in the economic outlook but also the continuation of the very expansionary monetary policy around the world which is behind this positive risk sentiment. in may and june we saw what could happen if expectations of a less expansionary monetary policy course become widespread in the market. at that time, the announcement by the us federal reserve of a possible reduction in its bond purchase programme caused share markets to plunge temporarily. the wave of selling did not recede until the beginning of july, when the federal reserve, the european central bank and the bank of england reassured markets that key rates would remain at very low levels until the recovery of the individual economies was on a firm foundation. on bond markets, interest rates continued rising in june and july. since then, they have largely moved sideways. this applies to us, uk, german and swiss government bonds, in particular. until the beginning of september, yields on ten - year confederation bonds rose to almost 1. 2 %. they are currently at around 1 %, which means that they have increased by about half a percent year - on - year. government bonds in the emerging economies were particularly strongly affected by the rise in interest rates, since the expectation of an impending monetary policy normalisation in the us led to significant capital outflows from these countries | 1 |
bad processes, ” that allow these outcomes to occur. i don ’ t believe, however, that either of these hypotheses tells the whole story. root cause analyses of many recent cases of misconduct in the financial sector suggest that misconduct is not just the product of a few individuals or bad processes, but rather the result of wider organizational breakdowns, enabled by a firm ’ s culture. from both a prudential perspective and a financial stability perspective, misconduct risk threatens our core supervisory objective to sustain the efficient provision of financial services to the economy. this suggests that supervisors have an obligation to promote strong internal practices and behaviors that mitigate misconduct risk and create a healthy culture. misconduct risk and cultural capital one way to think about this is “ cultural capital. ” 5 a firm ’ s cultural capital is a type of asset that impacts what a firm produces and how it operates. it is analogous to physical capital, like equipment, buildings and property, or to human capital, like the accumulated knowledge and skills of workers, 6 or reputational capital, like the franchise value or brand recognition. 7 cultural capital is an input into a firm ’ s production process — impacting how it does its business. cultural capital is an intangible asset. that is, we generally experience the impact rather than the thing itself — but its impact can be measured, assessed, and ultimately influenced. for example, in an organization with a high level of cultural capital, misconduct risk is low and observed structures, processes, formal incentives, and desired business outcomes are consistent with the firm ’ s stated values. the unspoken patterns of behavior reinforce this alignment. problems are escalated to senior managers routinely, as employees feel empowered to raise their hand and believe that their efforts will result in meaningful responses. and senior leaders advance through the organization because, in addition to strong business performance, they set a credible tone from above by modeling behaviors consistent with the firm ’ s values. by contrast, consider some characteristics of an organization with low levels of cultural capital. in these firms, formal policies and procedures do not reflect “ the way things are really done. ” the stated values of the organization are not reflected in senior leader behaviors and actions of the 2 / 5 bis central bankers'speeches organization ’ s members, and misconduct results from norms and pressures that drive individuals to make decisions that are not aligned with the values, business strategies, and risk appetite set by the board and senior leaders. employees do not speak freely when they have concerns, and senior | safety and soundness to ensure firms have the appropriate risk identification and risk management processes for prudent banking. we hold them to standards that require them to be resilient to a broad range of potential risks such as credit, market, liquidity, and operational risk. one specific risk is employee “ misconduct risk. ” we define this as the potential for behaviors or business practices that are illegal, unethical, or contrary to a firm ’ s stated values, policies, and procedures. the impact of employee misconduct extends beyond the individual and can impact the firm as a whole, as well as the economy and financial markets more broadly. that is, misconduct risk has both prudential and financial stability implications. for a firm, employee misconduct can make it less resilient by diverting management attention, by harming the firm ’ s reputation in a way that impedes its business, by driving adverse change in the composition of the workforce, or by depleting its capital through losses or fines. since 2008, 1 / 5 bis central bankers'speeches for example, firms have paid, in aggregate, in excess of $ 320 billion in fines related to misconduct. 2 for the broader economy and financial markets, misconduct can inflict harm directly on consumers and employees. in addition, over time, market participants may lose confidence in the financial sector as a whole and adversely impact the sector ’ s critical role in financial intermediation. in 2016, for example, gallup found that confidence in the financial sector had fallen by half over the previous decade. 3 these incidents of misconduct can introduce frictions and raise the cost of financial intermediation, which in turn, reduces the flow of productive financial services. these sorts of external effects that spill over to other firms, consumers, and businesses are a critical rationale for official sector intervention related to employee misconduct. in the u. s., official sector concern with the damage inflicted by employee misconduct dates back to the banking act of 1933. 4 more recently, supervisors have traditionally addressed firm ’ s management of misconduct risk by assessing the effectiveness of firms ’ risk management and internal control functions, such as compliance and audit. yet, despite regulations, supervisory focus, and firms ’ own efforts, significant misconduct risk and bad outcomes continue. why? what explains this persistence? one hypothesis is that recent problems are just a stream of idiosyncratic events, random draws of “ bad apples. ” another hypothesis is that some firms have operational weaknesses, “ | 1 |
. no matter how large the storm is, we have to lean against the wind and adhere to a set of principles which central banks have been practicing. i try to sum up these principles which guide us not only in weathering this storm, but also in sunnier days, when the role of crisis prevention cannot be overlooked. the first and foremost principle rests upon the authorities ’ ability to carry out prompt and preemptive actions with the best set of available information in dealing with changes in the market conditions and practices. of course, we all know that to be able to identify where the risks are is no longer a simple task in this current environment. but once any significant sign of imbalances in the economy is detected, central banks need to be vigilant and act in a timely manner. true, it is difficult to counter the sentiments of the government, investors and the public alike if central banks play their role of “ taking away the punch bowl when the party gets going ”. in a nutshell, this implies that we central bankers need to be watchful and decisive, not to be swayed by these voices. second, we also need to maintain flexibility in the conduct of central banking policies. by this, i mean flexibility in terms of policy instruments and also in terms of using innovative methods to deal with the evolving challenges. for example, we may not be able to just rely on, say, using traditional solutions of raising interest rates to address rising inflation, but we may also have to resort to a mix and match of the toolkit available to us. here i think of some of the prudential measures that could help cool down asset prices, which is a case in point of how monetary and supervisory policies can be intertwined. indeed, central banking policies need regular evaluation as its effectiveness could be undermined by the evolving financial landscape. in sum, we need to continually evaluate the effectiveness of our policy tools, in particular, the potency of monetary policy transmission mechanism in the changing financial environment. my third point is that good central bank governance is also essential. to maintain its credibility, any central bank should strive to be independent, accountable and transparent. i don ’ t need to touch on all three pillars of good central bank governance, but on transparency i should add that effective public communication is key to achieving our policy goals. this is especially important for monetary policy since effective public communication can play a crucial role in anchoring expectations in both sunny days and during the storm. fourth and | tarisa watanagase : the changing financial environment and implications for central banks welcome address by dr tarisa watanagase, governor of the bank of thailand, at the 27th seanza governors ’ symposium, bangkok, 20 september 2008. * * * fellow governors, distinguished guests, ladies and gentlemen, it is my privilege to extend a warm welcome to all seanza governors and distinguished participants to the 27th governors ’ symposium and the central banking course. at the outset, i would like to take this opportunity to express my sincere gratitude to mr. jaime caruana, the former governor of the bank of spain, and currently the counsellor and director of the monetary and capital markets department of the imf, who flew half way around the world to be with us today to share his views and enrich us with his experiences from a global perspective. this year ’ s theme of the governors ’ symposium is “ the changing financial environment and implications for central banks ”. i believe you would all agree that the discussions on this topic couldn ’ t have come at a more appropriate time, given the current financial market turbulence we are encountering today. right now, all eyes are focusing on what solution central banks will come up with to resolve the current global crisis. this gathering is the first regional meeting of governors amidst the turmoil, and so we should take this opportunity to exchange views and reflect on how the financial environment which is undergoing a major transformation as we speak, will have implications on our roles as central banks. looking at the overall picture, what is now going on in wall street may remind us of what happened in our region 11 years ago. at a glance, the root causes of both events are strikingly similar : investors taking excessively high risks creating asset price bubbles, against the background of lax prudential and monetary policy. with today ’ s financial environment, however, changes in the regulatory requirements, market players, business models of financial firms, as well as economic conditions have all played a part in escalating the impact of financial turmoil through the creation of a broader and deeper financial system. what is unfolding right now is taking place in the world ’ s largest economy with deepest capital markets, most sophisticated financial instruments – and, let me also add, the most advanced risk management tools. given the increased complexity and magnitude of the current crisis, this calls into question whether the tools available at hand to policy makers are adequate in ensuring economic stability, the essence of our mission as central bankers | 1 |
me to underscore the importance of emerging payment systems to promoting financial inclusion agenda. ladies and gentlemen : the rapid growth of the mobile phone - based money transfer service in kenya beginning with m - pesa, in 2007 has been seen by many as having produced a tectonic shift in kenya ’ s financial landscape with a great impact on financial inclusion. indeed, the rapid adoption and use of mobile money transfer services by some 70 % of the adult population has suggested that there is huge potential for the development of inclusive formal financial services through mobile phones. equally complementing this was banks integration with it and also payments of goods functionality raising in acceptance and reception. notably, the development of innovative and easy - to - use payment systems by financial institutions and other businesses such as mobile phone operators has helped to bis central bankers ’ speeches support rapid growth in e - commerce, in many cases providing consumers with more effective, convenient, and secure ways to purchase an expanding variety of products. ladies and gentlemen : we all know that in the business world, the customer is king. in this regard, i wish to highlight at this point key issues that policy makers may need to address to strengthen consumer confidence in new and emerging payment systems and which may be categorized into five broad areas including : clarity, transparency and completeness in information disclosure ; variability in regulatory and protection regimes ; fraudulent, misleading and deceptive commercial practices ; dispute resolution and redress and security and interoperability. ladies and gentlemen : any success in financial inclusion has to go hand in hand with financial integrity. in this regard, the central bank of kenya has continuously sought to enhance the regulation and supervision of the financial system in order to improve its integrity. indeed, as part of our efforts in ensuring appropriate and effective oversight, we first issued aml guidelines in 2000. these guidelines were later revised in 2006 and are currently in the process of being reviewed to reflect the prevailing international best practice and to align them with the proceeds of crime and anti - money laundering act, 2009 ( pocamla ) as amended and the new act on combating terrorism financing. it is true that over the last 2 years, the central bank has issued regular aml / cft guidelines to financial institutions to further support and enhance the implementation of the proceeds of crime and anti - money laundering act ( pocamla ), 2009. the guidelines have covered the operationalization of the aml act, suspicious transactions reporting, and measures to be adopted by financial institutions to combat the financing of | but above all build a strong financial sector and financial hub of the east african community. • the strength of kenyan banks is now being felt in the region, specifically within the east african community. to facilitate information sharing and supervisory cooperation amongst the central banks, particularly for regional banking groups, the five east african central banks signed a memorandum of understanding early this year. this arrangement will serve to mitigate cross border risks that regional banking groups may pose to the financial sectors of the east african countries. • further, the central bank together with other stakeholders is working on a legal framework that will enable banks to carry out branchless banking through the use of third party agents such as saccos, microfinance institutions and retail outlets in order to enable kenyans to access financial services with ease. it is expected that once the process is complete, the level of access of financial services by kenyans will widen in depth and breadth. we continue to join hands with other actors locally and internationally to promote financial inclusion and access. • in other developments, following the recommendation of a comesa team of experts, the central bank has been picked to host the comesa monetary institute ( cmi ) that will be based at the kenya school of monetary studies. the institute will generate the required knowledge for monetary policy in the comesa region. it will also work to harmonise regulation of financial markets in the region among other issues like a common comesa currency. let me take this opportunity to commend the banking industry on their achievements in opening new economic frontiers and supporting vision 2030. i challenge all banks not only to invest more resources in technology, but to also expand their outreach into the rural areas in the provision of loans. i do agree that the level of economic activity determines the level of loans and credit advanced – but we are slowly evolving from the crisis so economic activity is picking up. i am also aware that in such areas loans and advances are also plagued with inappropriate definition of property rights and problems of enforcement of contracts. these issues are being addressed through information capital and legal reforms. the central bank will continue to partner with banks and other market players to ensure that the sector plays its rightful role in kenya ’ s development agenda. the nic from its 51st year is thus poised to do better in a more incentivized environment. with these very few remarks ladies and gentlemen, it is now my honour and pleasure to wish you all a very pleasant evening and best wishes in your future endeavours as you celebrate the golden jubilee | 0.5 |
alan greenspan : the resilience of free societies and the impact of free markets remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, on the occasion of his acceptance of the eisenhower medal for leadership and service, eisenhower fellowship, philadelphia, 20 may 2004. * * * i am honored to accept the eisenhower medal, which symbolizes a program for advancing leadership around the world. such a program and the civil values of understanding and peace that it espouses stand in stark contrast to the rising level of violence so evident today. nonetheless, civil values continue to prevail. the resilience of free societies and economies to threats has been most notable in recent years. in the aftermath of the terrorism of september 2001, fears were widespread that international commerce would contract and the ever - widening globalization of most of the previous half - century would come to a halt. and for a short while it did. global trade faltered. travel contracted. new projects were postponed. but the freeing of markets over the previous quarter - century had imparted a flexibility and, hence, a resilience that enabled cross - border commerce to quickly stabilize and, by early 2002, to resume its expansion. despite the worrisome pockets of strife and destruction, commerce and wealth building continue apace. on average, world standards of living are rising, in large part owing to the increasing embrace of free markets, especially by populous and growing china and india. since the autumn of 2001, global gross domestic product per capita has grown some 5 percent. growth in developing asia, where so many of the world ’ s poor reside, has been considerably faster. free markets are the antithesis of violence. they rest not only on voluntary exchange but also on a necessary condition of voluntary exchange : trust in the word of those with whom we do business. to be sure, all market economies require a rule of law to function - laws of contracts, protection of property rights, and a general protection of citizens from arbitrary actions of the state. yet, if even a small fraction of legally binding transactions required adjudication, our court systems would be swamped into immobility. in practice, in virtually all our transactions, whether with customers or with colleagues, we rely on the word of those with whom we do business. if we could not do so, goods and services could not be exchanged efficiently. the trillions of dollars of assets that are priced and traded daily in our financial | markets before legal confirmation illustrate the critical role of trust. even when followed to the letter, laws guide only a few of the day - to - day decisions required of business and financial managers. the rest are governed by whatever personal code of values that market participants bring to the table. commerce is inhibited if we cannot trust the reliability of counterparties ’ information and commitments. indeed, the willingness to rely on the word of a stranger is integral to any sophisticated economy. this necessary condition for commerce was particularly evident in freewheeling nineteenth - century america, where reputation and trust became valued assets. throughout much of that century, laissezfaire reigned in the united states as elsewhere, and caveat emptor was the prevailing prescription for guarding against wide - open trading practices. a reputation for honest dealing was thus particularly valued. even those inclined to be less than scrupulous in their private dealings had to adhere to a more ethical standard in their market transactions, or they risked being driven out of business. to be sure, the history of world business is strewn with fisks, goulds, and numerous others treading on, or over, the edge of legality. but they were a distinct minority. if the situation had been otherwise, nineteenth - century market economies would never have achieved so high a standard of living. over the past half - century, societies have embraced the protections of the myriad initiatives that have partially substituted government financial guarantees and implied certifications of integrity for business reputation. as a consequence, the value of trust so prominent in the nineteenth century seemed by the 1990s to be less necessary. most analysts believe that the world is better off as a consequence of these governmental protections. but recent corporate scandals in the united states and elsewhere have clearly shown that the plethora of laws of the past century have not eliminated the less - savory side of human behavior. we should not be surprised then to see a re - emergence in recent years of the value placed by markets on trust and personal reputation in business practice. after the revelations of corporate malfeasance, the market punished the stock prices of those corporations whose behaviors had cast doubt on the reliability of their reputations. there is no better antidote for business and financial transgression. corporate scandals and evidence of fraud and malfeasance notwithstanding, the history of ever - rising standards of living in a world fearful of violence is extraordinary testimony to the resilience of free peoples engaged in commerce. as president eisenhower opined | 1 |
inflation. this effect, however, does not suggest the maastricht criteria to be revised. the inflation criterion already allows for inflation to diverge by 1. 5 percentage points from the three best performing members of the currency union. nor does the balassa - samuelson effect suggest to loosen the two percent ceiling for price - stability in the euro area, which leaves enough room for price increases due to catching up. sustainable convergence in inflation rates is crucial. inflation rates can be kept at a sufficiently low level only if other policies comply with the stability orientation. prudent wage policies will contribute to containing overall price developments. structural policy also has a role to play. currently, 25 percent of prices in accession countries are still administrated. microeconomic reforms and further price deregulation have to be carried out. only then can the price mechanism fully work through to the economy - a defining feature of a fully functioning market economy. fiscal policy is of special importance in this respect. excessive deficits are to be avoided. the public sector deficit is the decisive measure of a government ’ s demands on the financial markets. it is the benchmark for its stability orientation. last year general government deficits among the accession countries ranged from 0. 4 percent of gdp ( in estonia ) to 7. 1 percent of gdp ( in malta ). eight of the accession countries had not yet met the maastricht budgetary criterion. however, the debt criterion - public debt less than 60 percent of gdp - was met by a broad majority of the accession countries. there are still a few years in which to pursue convergence and to prove its sustainability. nominal convergence is not a goal to be reached at a certain point in time ; it is, rather, the natural and sustainable state of a stable currency union. apart from nominal convergence, real convergence is of importance in a monetary union. i use the term here in the sense of synchronicity of business cycles. the governing council of the european central bank designs monetary policy appropriate to the euro area as a whole. a country whose business cycle gets grossly out of step might suffer if it is subject to a monetary policy that is inappropriate to its national economy. however, marching in absolute lockstep is not necessary, as can be seen in the usa, where certain regions grow faster than others. growth rates of states and regions within a currency union may differ to some degree. it is the size of the gap between actual and potential growth rates | must also have an interest in the losses. " to be able to shoulder major losses, there naturally has to be bail - inable capital in excess of other capital as well, which is why minimum requirements for bail - inable liabilities were 7 / 13 bis central bankers'speeches developed at both the global and european level. for the large, systemically important banks, these requirements play a role in curbing the too - big - to - fail problem. the same is true of additional capital surcharges for this group, which are intended to form part of an even larger buffer, but also to help reduce the size - related funding advantage of these institutions. admittedly, the crisis showed that monitoring the stability of individual financial institutions does not suffice when it comes to safeguarding a stable financial system. anyone who thinks financial stability can be preserved in this way can ’ t see the forest for the trees. or, as janet yellen once put it : before the crisis, “ we looked closely at the trees and not as intently as we should have at the forest ". the approach of looking at “ the forest ” in the sense of financial stability has come to be termed “ macroprudential " - in contrast to “ microprudential ” supervision, which looks specifically at the individual trees. and with regard to the macroprudential approach, considerable progress has since been made here, too. institutions that have analytical capabilities and are designed to identify risks to financial stability have been set up at the global, european and national level. moreover, special tools were created, such as borrowing limits for real estate loans. yet the interactions in which microprudential and macroprudential instruments intervene are always complex, and good intentions do not always produce good results, as history has shown with the cobra effect. the concept is named after a british governor ’ s failed attempt to tackle a plague of cobras in india. because of the bounty for each dead cobra, the indian population began to breed and kill cobras in order to cash in on the reward. and after the bounty was scrapped, the remaining captive cobras were released, so that in the end there were even more cobras than there had been originally. or, to put a less dramatic and more nuanced spin on it, you could say that every measure can of course have side effects alongside the intended effects. at the end of the day, the costs and benefits of regulation have to be | 0.5 |
denis beau : from open banking to open finance speech by mr denis beau, first deputy governor of the bank of france, at the france payments forum “ the europe of banking and financial services ” – paris europlace – france innovation, paris, 24 march 2022. * * * technological innovations, changes in demand, the arrival of new players : the changes underway in the financial sector are providing a strong impetus to relax the conditions of access to the market, in order to foster competition and thus encourage the development of new, more efficient and less costly services. in europe, in the field of payments, this relaxation has already occurred. the emd, the psd1 and finally the psd2 directives have all resulted in the emergence of more agile players, particularly in terms of data exploitation. the pressure to open up data now extends to insurance and savings : after open banking, we now speak of open finance. this pressure calls for further adapting the regulatory framework. but what should our guiding principles be? in the payments sector, the main objective of the directives i mentioned was to reconcile openness and security. while this challenge remains relevant for the transition from open banking to open finance, with digitalisation and the development of the platform economy, we have seen two other challenges emerge : reconciling innovation and integration on the one hand and competition and sovereignty on the other. how do we at the banque de france and the acpr, given our role and experience as a supervisor, plan to address these new challenges? this is what i would like to briefly discuss with you today, after a quick recap of the regulatory framework for open banking and the lessons that can be drawn from it to guide the development of open finance. part i : openness and security a - as regards the assessment of and lessons learned from the regulatory framework for open banking, i would like to start by recalling : 1 - the key principles that governed the sharing of payment data : on the one hand, the creation of appropriate statuses and, on the other, the strengthening of security requirements for access. the creation of the payment service or electronic money service provider status has fostered the emergence of an open banking ecosystem. the introduction of an agent status has also contributed to this process, by creating a gradual – proportionate – regulatory framework : it thus allows emerging players to test the suitability of their services with the market under the aegis of a licensed institution, before applying for a license themselves, | able to be used for payment purposes ; second, care should be taken to ensure that the regulatory requirements are clearly formulated in order to avoid multiple layers of redundant regulation. 2 - the second lesson concerns the technical means to be implemented to reconcile openness and security, and in particular the use of apis. should there be an extension of sharing to other financial data, the psd2 directive calls for a more explicit definition of shareable data, a clearer allocation of responsibilities for authentication, and the promotion of the use of standardised apis. part ii : innovation and integration a - let me now turn to the new challenges posed by the development of open banking and its extension towards open finance. i will start with that of promoting innovation without undermining the integration of the european market. 1 - in the area of payments, we face a number of challenges, not least that of exchanges between financial intermediaries the development of the tokenisation of financial assets could lead to a proliferation of new infrastructures that would no longer be interoperable with each other, leading to a risk of market and liquidity fragmentation. 2 - this trade - off between innovation and fragmentation risk is also reflected in the settlement asset itself used in payment chains. if we take the example of stablecoins, their use for the settlement of tokenised financial assets could undermine the stability and efficiency of settlement transactions for new assets by fragmenting the field of settlement assets. 2 / 5 bis central bankers'speeches b - to reduce this risk of fragmentation, we have two levers. 1 - the first is cooperation between private players to support the efforts of the public authorities to establish a regulatory framework that is clear, proportionate and flexible enough to take account of rapid changes in the market and innovation. in this respect, there are certainly lessons to be learned from the framework developed for open banking. for example, the deployment of the apis i mentioned earlier proved to be more complex than expected due to heterogeneous applications, late developments and the lack of an underlying business model. in this light, two key principles could guide us. on the one hand, institutional players can act as a catalyst for private initiatives on standardisation. i am referring in particular to the mandate given to the european payments council ( epc ) for the creation of a dedicated open finance scheme, the sepa payment account access scheme ( spaa ). on the other hand, the debate on open finance should also be an opportunity to push for | 1 |
been extended to other areas, such as the review of the basel committee core principles for effective supervision, in which hong kong is heavily involved. successful implementation of basel ii depends not just on the standard - setters and the regulators, but also on the banks themselves. the enthusiasm with which the hong kong banking community has taken to basel ii has been impressive. as a senior member of this community, our discussant today is particularly well equipped to provide the perspective from the banks. we are fortunate in having secured david eldon ’ s presence today. after more than 40 years in banking, many of them in hong kong, he is about to retire from the field. he is thus currently much in demand among his many friends within the financial community, who wish to fete him on his retirement. he is also receiving bookings in his new, risk - taking career as popular singer and entertainer – a field in which we wish him every success. i take this opportunity to pay tribute to david for his outstanding contributions to hong kong during difficult and challenging times, not just in the financial sphere, but also in the many community and charitable activities in which he is involved. ladies and gentlemen, it is an honour to welcome governor jaime caruana as speaker, and mr david eldon as discussant. i now have much pleasure in inviting governor caruana to deliver the seventh hkma distinguished lecture. | the rmb has advanced to rank eleven as world payments currency according to swift, a financial messaging service provider. meanwhile the rmb is being added to the foreign exchange reserves of an increasing number of economies. 11. in terms of international transactions where rmb can already play a role, such as in trade settlement and foreign direct investment, transactions in rmb have climbed steadily. today, some 13 percent of all of china ’ s trade transactions are settled in rmb and about 15 to 20 percent of foreign direct investment into china is conducted in the currency. bearing in mind that the rmb trade - settlement pilot scheme was only introduced in 2009, this is an impressive achievement in such a short space of time. and there is plenty of room for further expansion of these numbers. 12. the greater use of rmb in international transactions will be closely related to china ’ s financial reforms and liberalisation, with new fund flow channels being opened up in rmb. for example, the rmb qfii scheme allows offshore institutions to use rmb funds to invest in chinese capital markets, and it is a new channel in addition to the us dollar - based qfii scheme. and further to a recent relaxation, outflows under the qdii scheme can also be made in rmb. such developments, in turn, will bolster the use of the rmb in trade, foreign direct investment and international transactions, thereby supporting the further development of the offshore rmb market. 13. while recent developments in rmb have been exciting, given the possible scope of future expansion, we are probably still only at the early stage of what could be more significant changes in the years to come. after all, rmb deposits and bonds outstanding in the offshore market only account for about one percent of onshore deposits and outstanding debt respectively. the possibility for expansion remains substantial. 14. one of the aims of the hong kong - london forum is to assess what all this means to the financial institutions and to corporates — many of whose representatives are gathered here today. 15. for corporates, especially those already having business links with china, it is important to get prepared for the increasing use of rmb as a currency for transaction, financing and investments. indeed some companies have already begun to adapt their internal systems and processes so that they are able to make greater use of rmb, both in dealing with their chinese counterparts and in their own financial management. this integration of rmb in their business decisions has | 0.5 |
the third anniversary of the establishment of the kosovo credit guarantee fund honourable, mr rinor gjonbalaj, chairman of the board of directors at the kcgf mr christian heldt, german ambassador to the republic of kosovo, mr bedri hamza, minister of finance, mrs lisa magno, usaid kosovo mission director, mr riccardo serri, head of the eu office, mr alessandro tappi, chief investment officer at eif, i am honoured to celebrate today with you the third anniversary of the establishment of the kosovo credit guarantee fund. it has been a privilege for the central bank to contribute, within its legal mandate, to the process of the fund establishment, in particular in the area of proper legal framework. this fund has achieved tremendous success during these past three years, assisting the economic development and creation of new jobs in kosovo. within such a short time, the fund has managed to guarantee more than 2, 560 loans amounting to eur 100 million, with a guaranteed amount totalling to eur 47. 5 million. studies to date show that, among others, access to finance is one of the obstacles to private sector development. challenges faced by small and medium - sized enterprises for access to finance in one hand, and challenges faced by financial institutions during risk assessment of the financing of these enterprises on the other hand, are already known. so, by providing credit guarantees, the fund has assisted in overcoming these challenges by facilitating access to finance for small and medium - sized enterprises. therefore, financial institutions have channelled their liquidity into the type and value of proper funding for the needs of small and medium - sized enterprises. this additional funding mechanism has helped them to develop, create new jobs, and export, thus positioning kosovo at a competitive level in the regional and european markets. an essential prerequisite for the proper functioning of the fund is the interaction with a stable and efficient banking system. the continuous growth of competition in the banking system and the advancement of this sector have led to a decline in cost in bank financing conditions, and improvement thereof. the average effective interest rate on loans in march 2019 was 6. 7 %. this level of interest rates has now approximated the cost of bank financing in kosovo to other countries in the region. also, lending of the banking sector has increased significantly, raising its lending rate to ever eur 2. 8 billion, with an annual growth rate of 11. 4 % in march 2019. considering the high level of banking sector | stability, the continuous growth of the position of liquidity and capitalism, considerably above the level required by the central bank, the fund's introduction and active participation in this sector have strongly influenced the continuation of significant increase and improvement of the aforementioned lending standards. the satisfactory stability of the banking sector is also reflected by the good quality of the loan portfolio. the low level of non - performing loans marked a further decline to 2. 6 % in march 2019. this represents the lowest level so far, and continues to list kosovo as the country with the lowest rate of non - performing loans in the region. despite the hitherto success, the fund will face challenges in achieving future objectives. the good quality of loans guaranteed by the fund, adequate operating tariff, effective risk management mechanisms, operational independence, and financial stability are essential for the functioning and development of the fund. these can be achieved by proper corporate governance which is integrated into the institutional framework of the fund. the board of directors and management shall ensure that such a framework is prudent and operates in accordance with the law and the best internationally accepted standards. it is very important for the fund to increase its activity since the fund's guarantee potential is much higher than what it is currently being utilized. the agreement between the european investment fund ( cosme programme ) and the fund enables the reguaranteeing of the portfolio up to eur 45 million for a two - year period to a credible institution such as the european investment fund which will have a positive impact on increasing access to financing for micro, small and medium - sized enterprises. these benefits would enable the fund to reduce the fee for loans re - guaranteed by the cosme programme. the cbk will continue to ensure the financial stability it currently enjoys. the role of banks in particular, and of other financial institutions in general, is very important and there is still room for this role to be further advanced in order to increase its impact on the development of kosovo's economy and further development of the banking system itself. above all, it is a collective obligation to contribute to the development of a financially stable kosovo credit guarantee fund so that it serves to the development of micro, small and medium - sized enterprises. finally, i would like to conclude my speech with praises on the excellent work done so far in the functioning of the fund, and looking forward to maximum inter - institutional engagement for advancing this fund so that it further increases financial intermediation in kosovo. | 1 |
the scope of this approach. inflationlinked swaps, for example, allow the computation of an inflation curve similar to the yield curve, providing information on the expected path of inflation. market participants ’ beliefs will be reflected in investors ’ attitude towards risk. a widely regarded measure is the bank for international settlements ’ risk appetite indicator, which is derived from the differences between two distributions of returns : one implied by option prices, the other based on actual returns estimated from historical data. here, there is the question of finding an appropriate model and a fitting distribution. i shall return to the question of distributional assumptions in a few seconds. risk indicators may help us to determine, for example, whether historically low spreads on emerging market bonds at one period of time or low corporate bond spreads in another reflect market participants ’ increased willingness to take risks. taking risks without an appropriate premium, might endanger the ability of some entities to honour their obligations. this leads us directly to the field of financial stability which is a major concern for a central bank, both from a monetary and a real economy perspective. a stable financial system is of utmost importance for monetary policy, ensuring that monetary impulses have a reliable and predictable impact on the economy as a whole. 1 / 2 the various transmission channels in the financial sector are vital for the economy as a whole. a stable financial system is able to absorb financial or business cycle shocks even if and when they exceed the capacity of the individual market participants. on the other hand, major price shocks or a credit crunch could harm the economic allocation mechanism which may cause severe real losses in production and growth. moreover, the threat of crisis - driven excessive price movements on capital markets may push up risk premiums to very high levels. and this may further disturb the allocation mechanism. with regard to professor mandelbrot ’ s achievements in the analysis of financial markets, let me now comment a little further on the close relationship between risk models for the analysis of financial stability and the distributional assumptions for financial data. the crucial question is : which distributions fit financial data? since the work of bachelier in 1900, the normality assumption seems to have been the dominant assumption for the last century, and that is still the case today, at least for many practitioners. but, in the early 1960s professor mandelbrot observed the behaviour of changes of speculative prices, which is much more erratic than the normality assumption would imply. in 1963, professor mandelbrot wrote in the journal | of business that " the empirical distributions of price changes in a speculative market are usually too peaked to be viewed as samples from gaussian population. … there are typically so many outliers. … i replace the gaussian distribution throughout by l - stable ( stable paretian ) laws. " it is only from this point of view that we are able to understand what noah and joseph have to do with financial markets, as professor mandelbrot explained yesterday in his lecture in frankfurt. studying mandelbrot influences our understanding of financial markets. he warns that a restrictive distributional assumption for financial data – namely, the normality assumption – may lead to the underestimation of risk in the financial markets. this conference will discuss new theoretical developments in professor mandelbrot ’ s approach and present new applications in the fields of risk analysis, exchange rates and portfolio management. therefore, the conference will make a contribution to the ongoing development on professor mandelbrot ’ s view on financial markets. moreover, the conference aims to bring these highly academic issues closer to practitioners. i wish every participant an exciting and stimulating time during the conference. 2 / 2 | 1 |
about 200 bps estimated to be consistent with italian and german economic fundamentals. the response to the sovereign debt crisis has thus been two - pronged : individual countries have pledged to adopt prudent budgetary policies and structural reforms to support competitiveness ; a far - reaching reform of eu economic governance has been undertaken, backed by political commitment to strengthen the union. but the time needed to implement europe ’ s complex strategy to counter the economic crisis will necessarily be long. distortions and fragmentation in financial markets can in the meantime undermine the transmission of monetary policy and jeopardize the entire process. this has led to the ecb stepping in with emergency unconventional measures, thus providing a “ bridge ”. the ecb governing council ’ s decision to announce the outright monetary transactions in the summer of 2012 was a response to these dangers. the announcement, an unmistakeable signal of the determination to preserve the euro, reversed the spiral of pessimism at a crucial juncture. by restoring confidence, it produced immediate benefits : as a result of a sharp reduction in the redenomination risks, medium and long - term yields in the countries under pressure decreased and the fragmentation of markets along national borders was attenuated. in the presence of a credible and firm action to restore market confidence, there is no need to actually use the new instrument. but the complete elimination of the redenomination risk can only be achieved if sustained progress is made in the euro - area ’ s economic fundamentals and in the process towards a fully fledged european union. discussion on budgetary and political union must be followed by concrete action. curzio giannini, pitfalls in international crisis lending, in charles goodhart and gerhard illing ( eds. ), financial crises, contagion and the lender of last resort : a reader, oxford university press, 2002, p. 521. bis central bankers ’ speeches the recourse to unconventional measures by major central banks and the expansion of their balance sheets have been justified by the severity of the crisis. central banks ’ unprecedented activism has raised new issues, giving rise to a debate that not only encompasses technical aspects, notably how to exit these measures and normalize monetary policy, but at times touches upon key institutional aspects such as independence of central banks. for example, it has been argued that central bank independence in the pursuit of price stability may be incompatible with an active use of unconventional measures in response to the financial and sovereign debt crisis. it | witnessing a new phase of changes in the forms and the use of money ; supranational money management issues and the problems related to the international lender of last resort function. for each of these themes, giannini ’ s works provide a great deal of evidence of his extraordinary foresight. for instance in the early 2000s he had already clearly anticipated the risk that too narrow a focus on price stability could deflect economists ’ and policymakers ’ attention from the importance of the banking system as the transmission belt of monetary policy. he was also aware of the difficulty in replicating typical central banking functions, such as lending of last resort, at an international level ( e. g. the international monetary fund ) and with respect to sovereign borrowers. or that a monetary union also requires a banking union, and this in turn calls for a greater degree of political integration. or that an area that was often neglected, that of an international framework for debt restructurings, would soon need to be addressed. °°° today, discussing the role of central banks, their independence, and their relationships with other economic and financial authorities has again become an issue of the utmost importance. the idea that the central bank ’ s role must encompass a plurality of functions related to one another, at the core of many of curzio giannini ’ s analyses, has gained growing consent : not only in the field of monetary policy and the management of the payments system, but also for macro - and micro - prudential supervision. this coexistence of tasks has historically characterized the bank of italy, and since the onset of the crisis it is becoming more and more of a feature for many central banks worldwide. central banks conduct monetary policy to achieve the objective of price stability – in most cases their primary goal – which in turn fosters broader macroeconomic stability. but central banks also have responsibilities in the area of financial stability : this is indeed a key precondition for price stability. following the crisis, greater attention is being devoted to the interactions and possible conflicts between policies addressed to maintain, respectively, price and financial stability. for example, in the current crisis, “ unconventional ” measures have been used to address dysfunctional liquidity markets and banks ’ reluctance to lend. in many cases, central banks had no choice but to move into unchartered waters, so as to limit the consequences of inadequate institutional or regulatory frameworks, imprudent behaviour in the private sector or national governments ’ | 1 |
njuguna ndung ’ u : the agent banking model remarks by prof njuguna ndung ’ u, governor of the central bank of kenya, at the launch of ecobank kenya ’ s rapid transfer product, nairobi, 17 june 2010. * * * mr. peter kanyago, chairman, ecobank kenya ; mr. anthony okpanachi, managing director of ecobank kenya ; board members ; management and staff ; distinguished guests ; ladies and gentlemen : i am delighted to have been invited to the launch of the new rapid transfer product by ecobank. i am informed that this new product will provide ecobank customers with a fast, convenient, reliable and secure way to transfer funds at all ecobank branches across 27 african countries, making ecobank a truly “ pan african bank ”. allow me at this juncture to commend the board, management and staff of ecobank kenya for the introduction of this new product that will not only enhance customer service but also boost trade across the african continent. the launch of rapid transfer product is indeed another milestone for the banking industry and demonstrates ecobank ’ s commitment to financial innovation. it is noteworthy that since ecobank kenya ’ s entry into the kenyan market in june 2008, the bank has grown its branch network from 9 to the current 20 branches including the head office. this indeed shows the level of confidence that the board and the management of ecobank have in the kenyan market. despite the various local and global turbulences experienced over the past two years, the banking sector continues to exhibit resilience and has remained strong. the impressive 2009 end year performance has been largely supported by growth in deposits, injection of capital, retention of profits and also declining costs of doing business supported by technology. during the period ended april 2010, the sector ’ s assets stood at kshs. 1. 5 trillion, with gross loans and advances at kshs. 799. 5 billion. deposits increased to kshs. 1. 1 trillion supported mainly by branch expansion, receipts from exports and remittances from abroad. at the same time, the banking sector registered a pre - tax profit of ksks19. 5 billion, in the four months to april 2010 compared to shs 48 billion in the twelve months of 2009. the sector is therefore likely to achieve better results this year compared to the previous year. despite the impressive performance by banks, customers continue to shoulder the heavy burden of high transactional costs. this historical burden has to | be dislodged now. in an effort to bring down the cost of offering financial services to the kenyan public, central bank together with other stakeholders have put in place a business model aimed at broadening financial inclusion to the majority of kenyans at a lower cost – the agent banking model. it is envisaged that this model will enable banks to leverage on additional cost effective distribution channels to offer financial services. to achieve this, the banking act was amended through the finance act, 2009, to permit banks to contract third parties to provide certain banking services on their behalf. the guidelines to facilitate the rolling out of agency model were issued by the central bank and took effect from may this year. second, the cost of screening and monitoring existing and potential borrowers will decline with the introduction of credit reference bureaus. this is the time to use this screening and monitoring technology to reach the sme in need of support to invest and expand. the budget proposals in the finance bill 2010 have come up with a wonderful proposal on sme to enhance this. the monetary policy committee ( mpc ) has since september 2009 been implementing decisions aimed at signaling to the market the need to expand credit to the private sector at affordable interest rates. this has been achieved by way of lowering central bank rate and cash ratio requirements. i am happy to note that the mpc decisions have started to bear fruit as evidenced by lowering of base rate by a number of major banks in kenya, with the lowest base rate currently standing at 10 %. we have room to do more, commensurate with returns on investment that banks screen and monitor. finally, let me reiterate that central bank and indeed the government of kenya will continue to pursue policies that create conducive environment to allow the growth of the financial sector by encouraging the provision of banking services to majority of the unbanked kenyan population and to support the real sector of the economy. we want to encourage pan african banks like ecobank to have foot prints in kenya to broaden the financial services platform. with these few remarks ladies and gentlemen, it is now my honour and pleasure to declare the rapid money transfer product officially launched. thank you and god bless you all. | 1 |
, we identified as a core priority the need to reinvent central banking, in part by refreshing and upgrading the tools we use. the cycle of modelling - forecasting - remodelling is as old as empirical economics. it is how we make progress. today, i want to review the history of models at the bank of canada, illustrating how each new generation of models has built on the successes of the previous generation and adapted to the changing needs of policy - makers. i will describe how economic theory and computer technology have enabled this evolutionary process and speculate on what we can expect in the next generation of economic models. evolution and progress a key issue in building economic models is the trade - off that exists between forecasting ability and theoretical rigour. forecasting models focus primarily on capturing empirical regularities. they work well when the economy and the shocks that it faces do not change much over time. in 1 / 7 bis central bankers'speeches contrast, theoretical models built for policy analysis are based on a specific interpretation of how the economy functions. their specifications may hold true on average, but not for every data point. so models with a strong theoretical base tend to underperform empirical models in normal times. however, they can be very useful in explaining behaviour when large shocks cause databased models to break down. the two types of models have tended to be complementary, but that has never stopped economists from pursuing the holy grail of a single model that combines strong theoretical foundations with good empirical performance. over time, advances in computing capability have made it possible to build more realistic behavioural assumptions into models, improving this trade - off. however, the history of model development at the bank of canada reflects both this quest for synthesis as well as the evolving needs of policy - makers. each new model has drawn on the strengths of its predecessors while addressing their shortcomings. and throughout this history, advances in both economic theory and computer technology have played an important enabling role. the bank began modelling in the 1960s, when staff and visiting academics built rdx — which stood for the research department experimental model. the development of the mainframe computer was essential to this work, but not every institution had one. one academic involved in those early efforts at the bank, john helliwell of the university of british columbia, tells of sending boxes of punch cards by bus to a computing centre at the universite de montreal and of inputting data by modem to a computer in utah. early models used by most | can we conclude about the future growth prospects for the region? we need to address our macroeconomic imbalances. historically, regional governments have used deficit financing to stimulate economic activity. however, the large debt burdens which many face and which have led investors to shift away from providing financing could impact this strategy. this does not mean that our economies cannot grow, but we may need to rely more on private sector flows to drive economic activity, at least in the short term. we need more investment spending to drive our productive capacities and raise the ratio of capital spending as a proportion of gdp. current budgetary constraints raise the question of how will governments allocate their resources in the future. social expenditures? capacity building infrastructure? however, while macroeconomic stability is necessary it is unlikely by itself to be sufficient to propel regional economies forward. we will need to inter alia raise productivity levels through process improvements and innovation. we need to take advantage of ict technology and, as old sectors fade, we have to encourage new sectors such as alternative energy, design services, cultural industries, animation and software development, for these are areas in which size need not be an impediment. our future can be bright but there will be some bumps along the way. our ability to recognise and act on these challenges in as expeditious a manner as possible will allow us to achieve our long term objectives. | 0 |
pressures that would otherwise require stronger doses of interest - rate medicine. of course, it is possible for exchange rates to overreact, even in the benign environment i described a moment ago. but the chances of a serious misalignment are much lower when markets are operating in a climate of greater predictability, provided by a monetary policy grounded in domestic price stability. when exchange rates are not anchored by a credible commitment to price stability, it is difficult, if not impossible, for markets to perform the tasks that are expected of them. the operation of the flexible exchange rate system in canada as you know, canada has been one of the strongest proponents of a flexible exchange rate system. we were the only major industrial country to operate under such a system in the 1950s and early 1960s, and we were the first major country to adopt it again in the 1970s. as a medium - sized open economy that relies on exports of primary commodities more than our principal trading partners, we are vulnerable to external shocks and appreciate the ” shock absorber ” effect provided by a flexible exchange rate. let me tell you briefly how the canadian economy has performed under the flexible exchange rate system and describe the main forces that have been acting on our exchange rate. the most significant trend movement occurred over the 1976 to 1986 period, when the canadian dollar experienced a large depreciation vis - a - vis the u. s. dollar, falling from roughly parity to a low of 69 cents ( u. s. ) in february 1986. during this time, annual inflation rates in canada exceeded those in the united states by about one per cent, on average. while on a yearly basis this may not sound like much, cumulatively the differential was rather significant and can explain most of the trend depreciation in the canada - u. s. exchange rate over this period. as for the cyclical swings that accompanied the trend depreciation of the canadian dollar, they reflected a number of factors. among these, the most significant has been the variability in the world prices of primary commodities, which remain an important component of our exports. but the most worrisome factor during the 1980s and 1990s was the growth of the fiscal deficit and the destabilizing effect that this had on financial markets, including the foreign exchange market. rising public debts and deficits contributed importantly to the risk premiums in interest rates on canadian dollar assets and were the catalyst, if not the cause, of unsettling episodes in 1986, 1992, | tiff macklem : release of the monetary policy report opening statement by mr tiff macklem, governor of the bank of canada, at the press conference following the monetary policy decision, ottawa, ontario, 5 june 2024. * * * good morning. i'm pleased to be here with senior deputy governor carolyn rogers to discuss today's policy announcement. governing council decided monetary policy no longer needs to be as restrictive and lowered the policy interest rate by 25 basis points to 4. 75 %. we've come a long way in the fight against inflation. and our confidence that inflation will continue to move closer to the 2 % target has increased over recent months. the considerable progress we've made to restore price stability is welcome news for canadians. since our monetary policy report in april, underlying inflation has continued to ease and economic growth has resumed. with the economy in excess supply, there is room for growth even as inflation continues to recede. let me provide a little more detail about these dynamics. after stalling in the second half of last year, economic growth picked up in the first quarter of this year. at 1. 7 %, growth was lower than projected in the april report. but consumption growth was solid at about 3 %, and business investment and housing activity also increased. in the labour market, businesses are continuing to hire workers. employment has been growing, but at a slower pace than the working - age population. this has allowed the supply of workers to catch up with job vacancies. elevated wage pressures look to be moderating gradually. inflation remains above the 2 % target and shelter price inflation is high. but total consumer price index ( cpi ) inflation has declined consistently over the course of this year, and indicators of underlying inflation increasingly point to a sustained easing. i'll highlight four indicators in particular : cpi inflation has eased from 3. 4 % in december to 2. 7 % in april our preferred measures of core inflation have come down from about 3½ % last december to about 2¾ % in april the 3 - month rates of core inflation slowed from about 3½ % in december to under 2 % in march and april the proportion of cpi components increasing faster than 3 % is now close to its historical average, suggesting price increases are no longer unusually broadbased this all means restrictive monetary policy is working to relieve price pressures. and with further and more sustained evidence underlying inflation is easing, monetary policy no 1 / 2 bis - central bankers'speeches | 0.5 |
nestor a espenilla, jr : good governance in the pursuit of mandates speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the institute of corporate directors 2018 mid - year economic briefing fellows ’ breakfast roundtable, manila, 17 july 2018. * * * icd chairman francis estrada, chief executive officer dr. alfredo pascual, business, industry and government leaders, vanguards of good governance, ladies and gentlemen, good morning. i thank the institute of corporate directors ( icd ) for this opportunity to share the corporate governance initiatives championed by the bsp for itself as an institution, in delivering on our price stability mandate, in setting an example and in giving guidelines to those under our supervision. a plethora of literature on central banking emphasizes the importance of credibility in shaping monetary policy and in guiding the market. credibility too is important for effective regulation. it is notable that even in everyday personal relationships, credibility is built on established competence and character. on consistency. on integrity. on good self governance. at the bsp, we believe that good governance should flow from the top. by this, i am not only espousing decisive leadership. rather i emphasize that to elicit good governance, we must ourselves practice good governance. for it is only then that we will have the credibility and moral ascendancy to elicit the public ’ s and the market ’ s trust and guide expectations, and it is only then that we could effectively require good governance from our supervised entities. good governance in the bsp as early as 2009, the bsp adopted a principles - based governance framework. in 2015, the bsp was recognized as an island of good governance by the icd and as of 2017 [ vetted by the development academy of the philippines ( dap ) ], two out of our five governance principles : accountability and transparency and strategic direction were assessed at “ high integration. ” three of our other principles — integrity, ownership and voice ; and responsiveness — were rated at “ sustainable ”. these principles are set forth in our 3 - year governance roadmap for 2017 to 2019 and are integrated into the bsp ’ s decision - making systems, processes, and work ethic so that we can give the best possible service to our country and to our fellow filipinos. in the bsp, we affirm that good governance is not just about compliance | foreign currency outflows. this is a reversal from previous bop surpluses accumulated from the large inflows due to quantitative easing since the global financial crisis. with the normalization of us monetary policy and rising global interest rates, we see significant corrections in capital flows that are affecting our bop and exchange rate. this is compounded by uncertainties posed by the trade war and geopolitical risks. nevertheless, we view these as short - term macro - stability challenges. over the medium - term, our sound fundamentals should serve us in good stead. first, strong imports are driven by capital goods, raw materials, and intermediate products to support infrastructure development that can raise potential output. second, foreign investments by filipino corporates and residents are increasing. blue - chip companies continue to search for profitable ventures abroad. third, filipinos are prepaying their foreign loans reflecting tempered risk appetite for foreign exchange exposures. these outflows indicate sound risk management. further, the balance of payments is reliably supported by strong structural foreign exchange inflows, specifically revenues from the it - bpo industry and overseas filipino remittances, as well as rising foreign direct investments. finally, gross international reserves continue to provide ample external liquidity buffer. the endjune 2018 gir of usd 77. 7 billion is equivalent to 7. 5 months ’ worth of import of goods, and payments of services and primary income. 2 / 5 bis central bankers'speeches good governance and credibility in our commitment to price stability amidst headwinds brought about by domestic and global factors, we remain strongly committed to our primary mandate of price stability. average headline inflation as of june 2018 is above target at 4. 3 percent. while we expect this to return to within target band in 2019, we nevertheless treat the inflation outlook as a concern given elevated inflation expectations and increasing risks of second - round effects from ongoing price pressures. in achieving price stability — clear and open communication — the announcement of an explicit inflation target is central... to this, credibility is the bedrock. it reflects not only a commitment to the goal, but also to ownership of the inflation target. since 2002, we have been committed to the inflation targeting framework. the framework demands that monetary policy decisions be forward - looking and data - dependent. as an inflation - targeting central bank, we allow foreign exchange flexibility so that we can conduct independent monetary policy primarily focused on assessment of domestic conditions, and is thus not based on actions of the | 1 |
tiff macklem : release of the monetary policy report opening statement by mr tiff macklem, governor of the bank of canada, at the press conference following the release of the monetary policy report, ottawa, ontario, 27 october 2021. * * * good morning. i ’ m pleased to be here with you — in person — to discuss today ’ s policy announcement and the bank ’ s monetary policy report ( mpr ). it seems fitting that we are back together in this somewhat normal setting as we conclude one part of our extraordinary monetary policy response to this pandemic. this morning we announced that we are ending quantitative easing ( qe ) after more than year and a half. we undertook qe first to help restore market functioning and then to boost our monetary policy stimulus. since last october, in line with progress in canada ’ s economic recovery, we have been gradually reducing the pace of our qe purchases. with the economy once again growing robustly, governing council judged that qe is no longer needed. this means we will stop growing our holdings of government of canada bonds. it is important, however, to remind canadians that the significant stimulus we have injected through qe remains in place. we just won ’ t be adding to it. we call this the reinvestment phase. in this phase, we will purchase bonds only to replace those that are maturing so that our overall holdings of government of canada bonds remain roughly stable over time. the end of qe comes as increasing vaccination rates are enabling continued progress in the economic recovery in canada and around the world. while new complications of reopening continue to crop up and that is boosting the prices of many globally traded goods, i ’ m struck by how much progress our economy has made since the start of the crisis. we ’ ve come a long way. and our forecast is for an increasingly healthy economy, even if these complications are going to be with us for a while longer. we are forecasting annual growth in economic activity will be around 5 percent this year, and about 4¼ percent in 2022 and 3¾ percent in 2023. global supply chain disruptions and shipping bottlenecks are expected to restrain growth and boost prices into next year. so relative to our forecast in july, growth in canada is a little lower and inflation takes longer to come back down. the main forces pushing up prices — higher energy prices and supply bottlenecks — now appear stronger and more persistent than we | union. for a single currency area to work effectively, citizens should have faith in money in all its forms, not only in cash but also in bank deposits held across the whole region. we also need a prudential approach that ensures both a level playing field and that no exemptions from the rules are granted to protect zombie banks. which leads me to my second remark. in times of low profitability and increased competition, be it from other banks or from newer start - ups, keeping your customers happy is key to keeping them as your customers. therefore, it is important to ensure that customers ’ interactions with banks can be carried out in the manner that most satisfies the customers. as an example, let me 3 / 5 bis central bankers'speeches discuss briefly the use of cash and the growing shift to newer payment systems. there is now a large range of non - cash payment options available, such as credit cards, electronic payments, portable wallets and mobile phone payments to name but a few. as more people adapt to new payment options, there is a risk of disrupting banks ’ business models. this makes it important for banks to remain agile in the face of these changes and to endeavour to meet their customers ’ wishes. we currently witness frequent lobbying, overt and covert, to abolish cash. i won ’ t dwell today on the plausibility of the justifications proposed, except to note that such lobbying fails to respect the will of the general population : cash remains popular. recent research for the ecb finds that 80 % of transactions at point of sale are in cash. even adjusting for the value of transactions, cash still accounts for the majority. indeed, the demand for cash currently outstrips the growth in nominal gdp. there are valid privacy reasons for maintaining cash, and it provides the general public with direct access to central bank money. for an independent institution like the ecb, maintaining that link is important, which is why we place great emphasis on ensuring people ’ s continued trust in cash. for this purpose, we have overhauled the security features in the euro ’ s new europa series. to date we have released new versions of the lower denominations – up to and including the 50 euro note. next year we will introduce stronger and more secure versions of the higher denomination banknotes. given this widespread desire to use cash, banks should facilitate rather than obstruct customers in using their preferred method of payment. time will tell how the use of cash | 0 |
prices. these are more relevant than the spot price for retail pricing. bank of england persistent, however. and reducing it requires the economy to grow below its trend rate for a period of time. because they ’ ve depressed real incomes, that slowing in demand will to some degree follow from the very same rises in import costs that have pushed up headline inflation. equally, if government support mitigates that effect, there is more at the margin for monetary policy to do. the mpc is likely to respond relatively promptly to news about fiscal policy. whether official interest rates have to rise by quite as much as currently priced in financial markets remains to be seen. i ’ ve received helpful comments from colleagues at the bank of england. i ’ d like to thank fabrizio cadamagnani, kieran dent, joseph oyegoke and doug rendle for their help in preparing the speech. the views expressed are my own and do not necessarily reflect those of the bank of england or other members of the monetary policy committee or the financial policy committee. | “ because of inflation ”. this is not quite right. implicitly, it presumes that monetary policy could have prevented prices from rising so fast without doing anything to nominal incomes. unfortunately, that ’ s not the case. even assuming policy had been tightened sufficiently aggressively, and sufficiently early, to have knocked eight percentage points off the current rate of inflation, it would also have depressed nominal income growth by at least as much and almost certainly quite a bit more. unemployment would be materially higher and nominal wage growth materially lower. ultimately, this reflects what is known as the “ neutrality ” of monetary policy : in the long run it has no impact on real economic variables ( things like real output or relative prices ). it can ’ t boost structural productivity, for example. nor can it offset the consequences for real incomes of ( say ) disruptions to supply chains in asia or russia ’ s curtailment of the supply of gas to europe. indeed, in the first instance, at least for a period of time, tighter monetary policy lowers gdp and real incomes. i will say more about this shortly. for the time being, a better short - hand description is this : the pandemic and the war have led jointly to higher inflation and lower real incomes ; the mpc will ensure the inflationary effects do not persist into the medium term ; but the real - income hit exists either way, and will be reversed only to the extent the underlying shocks themselves go away. the second point i want to make is that we are inevitably having to learn, to some degree, about the scale of these “ second - round ” effects. the mpc has raised interest rates faster than at any time in its history but obviously more gradually than inflation itself. in the main, this is because the direct effects of the jumps in traded goods and energy prices, as violent bank of england as they are, are likely to fade before policy could really do much about them. the exact timing and scale of the peak rate of retail energy price inflation will obviously depend ( amongst others ) on the nature and duration of government support. but in the absence of further ( and equally steep ) rises in wholesale gas prices, and even without any such support, inflation in retail energy bills is likely to be materially lower a couple of years from now than it is today. inflation in the areas most affected by the pandemic seems already to have peaked. however, it ’ s also because we are relatively unfamiliar with | 1 |
mr. greenspan presents the views of the federal reserve board on some broad issues associated with financial modernization testimony of the chairman of the board of the us federal reserve system, mr. alan greenspan, before the subcommittee on financial institutions and consumer credit of the committee on banking and financial services of the us house of representatives on 13 / 2 / 97. madam chairwoman, members of the subcommittee on financial institutions and consumer credit, it is a pleasure to appear here today to present the views of the federal reserve board on some broad issues associated with financial modernization. the unremitting pressures of technology and the market are drastically changing the financial landscape and eroding traditional positions of competitors, inducing new competitive strategies and participants, forcing new regulatory responses, and building pressures on the congress to shape developments in the public interest. madam chairwoman, i know that you have been an active sponsor and supporter of legislation to modernize the financial system. the board also has been a strong proponent both of expanded financial activities for banking organizations and enhanced opportunities for nonbank financial institutions to enter banking. we continue to support financial modernization because we believe it would provide improved financial services for our citizens. moreover, both our experience and analysis suggest that the additional risks of new financial products are modest and manageable. indeed, technology already has resulted in a blurring of product and service - defining lines so dramatic as to make many financial products virtually indistinguishable from each other and the old rules inapplicable. in the process, we have already seen the public benefits, benefits that removal of old barriers could only enhance. but, as we proceed down the path of reform, reforms both desired for their benefits to the public and required by global markets and new technologies, the board urges that any modifications be tested against certain standards. in particular, the board believes that the changes we adopt should be consistent with ( 1 ) continuing the safety and soundness of the banking system ; ( 2 ) limiting systemic risks ; ( 3 ) contributing to macroeconomic stability ; and ( 4 ) limiting the spread of both the moral hazard and the subsidy implicit in the safety net. thus, if my comments today sound cautious, i want the subcommittee to understand that my observations do not reflect opposition to further freeing of constraints on financial competition. to the contrary. we strongly urge an extensive increase in the activities permitted to banking organizations and other financial institutions, provided these activities are financed at nonsubsidized market rates and do not pose unacceptable | , to fund its parent ’ s nonbank affiliates. however, the evidence appears to be that such transfers generally do not occur. existing holding company powers are limited and do not offer a broad spectrum of profitable opportunities. accordingly, it is not surprising that data for the top 50 bank holding companies indicate that transfers from bank subsidiaries to their parents which, like dividends, embody the subsidy, appear to have approximately equaled holding company net transfers to their own shareholders and long - term creditors. this indicates that few subsidized dollars in the aggregate found their way into the equity accounts of holding company nonbank affiliates from the upstreaming of bank funds. we must, i think, be continually on guard that the subsidy provided by the safety net does not leak outside the institutions for which it was intended and provide a broad subsidy to other kinds of activities. put another way, we must remain especially vigilant in maintaining a proper balance between a safety net that fosters economic and financial stabilization and one that benefits the competitive position of private businesses for no particular public purpose. as i noted, safety net subsidies have costs in terms of distorted incentives and misallocated resources. that is why the congress must be cautious in how the sovereign credit is used. it has been suggested that the bank holding company structure imposes inefficiencies on banking organizations, and that these organizations should thus be given the option of conducting expanded financial activities in a direct subsidiary of the bank. the bank subsidiary may be a marginally more efficient way of delivering such services, but we believe it cannot avoid being a funnel for transferring the sovereign credit subsidy directly from the bank to finance the new powers, thereby imparting a subsidized competitive advantage to the subsidiary of the bank. one can devise rules - - such as 23a and 23b - - to assure that loans from the bank to its own subsidiaries are limited and at market rates. one can even devise rules to limit the aggregate equity investment made by banks in their subsidiaries. but one cannot eliminate the fact that the equity invested in subsidiaries is funded by the sum of insured deposits and other bank borrowings that directly benefit from the subsidy of the safety net. thus, inevitably, a bank subsidiary must have lower costs of capital than an independent entity and even a subsidiary of the bank ’ s parent. indeed, one would expect that a rational banking organization would, as much as possible, shift its nonbank activity from the bank holding company structure | 1 |
. this may even include the managers of the national budget who have learned through experience that taxation through inflation often meets with less resistance from ill - informed tax payers. for the economy as a whole, however, inflation is always bad. an argument is often made for a trade - off between inflation and growth based on the philips - curve analysis in terms of which, at a low level of inflation, real growth can be stimulated through an expansionary monetary policy, even if it should create some higher rate of inflation. there may be some truth in this for the short - term but it is easy to prove that a continuing expansionary monetary policy will eventually lead to an acceleration in the rate of inflation. a little bit of inflation once started can easily gain momentum, get out of control and develop into hyper - inflation. it is also true that with modern electronic forecasting techniques and increasing sophistication in the role of rational expectations, the effective period for the trade - off has become very short. 4. how does the reserve bank achieve financial stability? inflation is a monetary phenomenon, i. e. inflation cannot take place without a more rapid increase in the quantity of money than in output, provided that the velocity of circulation of money remains unchanged. although the causes of inflation are too wide for any individual institution to prevent it from occurring, the reserve bank can at all times use the powers at its disposal to reduce inflationary pressures by influencing the growth in money supply and bank credit extension. the reserve bank can influence money supply and bank credit extension either by influencing overall liquidity in the banking sector, that is, by influencing the supply of money or by influencing the demand for credit emanating from the private sector. liquidity in the banking sector can be influenced through various operational instruments, such as changes in minimum cash reserves for banking institutions, open market - operations and short - term money market interventions through swaps and repurchase transactions. the demand for bank credit is to an important extent interest rate driven. by influencing the general level of interest rates, the reserve bank can exert some influence on the total demand for credit, and therefore on the money supply. the main operational instrument in this case will normally be the repo rate, that is the interest rate at which the reserve bank provides in the liquidity needs of banking institutions. in its objective to establish and maintain financial stability another important responsibility of the reserve bank is to encourage and support the development of sound and well - managed banking institutions | budget. 6. conclusion the south african reserve bank is therefore at present, according to all distinguished principles, a fairly autonomous central bank and fulfils all the main conditions necessary for independence. the constitution of the republic of south africa also formally recognises the independence of the reserve bank. the constitution namely states in section 196 that : “ the south african reserve bank shall, in the pursuit of its primary objective.... exercise its powers and perform its functions independently, subject only to an act of parliament.... provided that there shall be regular consultation between the south african reserve bank and the minister responsible for national financial matters ”. | 1 |
of the world economy. in this sense, and beyond the severe negative effects of the global financial crisis of 2008 – 2009, we must recognize that during the past decade the chilean economy was blessed with a benign international scenario, with extraordinarily advantageous commodity prices and financial conditions. notwithstanding, lately the high commodity price cycle has come to an end, hitting commodity - exporting countries including chile. meanwhile, although international financial conditions are still good, the process of monetary policy normalization in some large developed economies is expected to begin soon. we must not forget that copper, our main export, traded at nearly 4 dollars per pound for an extended period, and now it is closer to 3 dollars and may fall further in the long term. moreover, during the last decade, coincidentally with higher prices and supply shortages, investments in mining have increased significantly around the world. bis central bankers ’ speeches chile was no exception. during the 1990s and early 2000s, mining investment averaged 2 to 3 points of the country ’ s gdp. between 2006 and 2013, this figure rose to 5 points of gdp, peaking in 2012 at 6. 5 percent of gdp. this phenomenon not only allowed the country to enlarge its mining capacity, but also created major productive linkages toward other sectors, including construction, trade, and manufacturing industries. the north of our country, especially cities such as iquique, antofagasta, and la serena, has seen strong development and growth thanks to the positive impact of this phenomenon. however, this investment cycle, as has been noted on numerous occasions, has entered a matured stage, resulting in a decline in the number of projects under way. this is also true of other metal - exporting economies like australia and peru, although differing in intensity and timing, and is symptomatic of this phenomenon. however, the aforementioned maturation of the global cycle of copper investment is not the only reason behind the slowdown in mining investment. delays, postponements and cancellations have also been attributed by industry participants to domestic problems related to water shortages and high energy costs, to excessive delay in the definition of projects and legal issues with some of them, as well as to problems with communities and increased costs. among the factors behind the deceleration, there is also the fact that reconstruction works after the earthquake and tsunami of february 2010, including the associated fiscal boost, have tended to recede as the process is completed, explaining also part of the economic slowdown. | ##endence of pensions and central bank of chile. bis central bankers ’ speeches figure 9 cpi inflation ( * ) ( annual change, percent ) cpiefe inflation ( * ) ( annual change, percent ) - 2 - 2 - 2 - 2 - 4 - 4 - 4 - 4 07 08 09 10 11 12 13 14 15 16 07 08 09 10 11 12 13 14 15 16 june 2014 report sept. 2014 report ( * ) gray area, as from the third quarter of 2014, shows forecast. sources : central bank of chile and national statistics institute ( ine ). figure 10 mpr and expectations ( percent ) mpr fbs, 2nd half august 2014 ees, august 2014 forward ipom septiembre forward, september 2014 report source : central bank of chile. bis central bankers ’ speeches table 1 international baseline scenario assumptions gdp growth 2014 ( f ) report, mar. 14 report, jun. 14 trading partners'gdp 3. 5 3. 7 3. 6 united states eurozone japan china india rest of asia ( excl. japan, china and india ) latin america ( excl. chile ) 2. 2 - 0. 4 1. 5 7. 7 4. 4 3. 9 2. 6 2. 7 1. 2 1. 5 7. 3 5. 4 4. 1 2. 3 lme copper price ( us $ cent / lb ) brent oil price ( us $ / barrel ) terms of trade - 3. 2 world gdp at ppp 3. 1 2015 ( f ) report, mar. 14 report, sept. 14 report, jun. 14 report, sept. 14 2016 ( f ) report, sept. 14 ( annual change, percent ) 3. 4 3. 9 3. 9 3. 8 3. 9 2. 4 1. 0 1. 6 7. 3 5. 4 4. 1 2. 0 2. 1 0. 8 1. 0 7. 3 5. 4 4. 0 1. 7 2. 9 1. 5 1. 1 7. 2 6. 3 4. 5 3. 4 3. 1 1. 7 1. 0 7. 2 6. 2 4. 4 3. 0 3. 0 1. 7 1. 5 7. 2 6. 2 4. 5 2. 6 3. 2 1. 8 1. 2 7. 0 6. 5 4. 8 3. 3 ( levels ) - 0. 9 - 0. 5 - 0. 8 - 0. | 1 |
##ifiers, and a role for authorities in helping develop those standards, is far from new. let me give a recent example. one major lesson from the great financial crisis was the need to be far better at identifying the many entities and organisations operating within the financial system. when the crisis hit, the lack of any uniform international method of identifying the huge number of legal entities scattered across the world added to the crippling uncertainty over who owed what to whom. we all remember that uncertainty causing panic on the financial markets. so was born the legal entity identifier, or lei – a 20 - character alphanumeric code that uniquely identifies a legally distinct entity. it allows data relating to a single bank, insurer or whoever, to be combined. over one and a half million entities in over 200 countries have now registered for an lei. and it has had a wide range of benefits. it has supported the portability of data between organisations. it has aided the fight against money laundering. and it has been helpful in our data collections : for example, when we ask firms to submit counterparty exposure data to us, it provides a clear way for us to compile data about each entity. so the lei is a growing success. but it also demonstrates that the adoption of standards is a long journey, with a continued need for public sector involvement. the g20 endorsed the lei system as a global standard back in 2012. it has come a long way since then, but it still has further to go, and we will continue to support it. its adoption so far has in part been due to the push from regulators, but it needs to be used by a wider set of participants – we at the bank are continuing to support that wider uptake, including for corporates beyond the financial sector. it needs to be included in new areas such as payment messages – we will soon be mandating the use of leis in payments through our chaps system. more broadly, lei systems and processes need to continually evolve to ensure they can meet the demands of a digital world. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice the lei shows that standards take time to be designed, refined and adopted, and so reaping their benefits requires patience and persistence. that will be the case for our collective journey, too. our approach to developing standards so how do we plan to go about expanding and improving the use | spending operating, although exports, production, and business sentiment have been affected by the slowdown in overseas economies. the assessment of the underlying trend as a whole is unchanged from the previous outlook report released in april 2019, but the slowdown in overseas economies seems to be affecting not only exports and production, as has been seen to date, but also the business sentiment of some firms as well as manufacturers'machinery investment, among others. in the meantime, domestic demand, such as business fixed investment, has maintained its firmness, mainly in nonmanufacturing, and private consumption has been increasing moderately, albeit with fluctuations ; thus, the output gap has remained positive and the real gdp growth rate for the april - june quarter of 2019, which was released in august, was 1. 3 percent on an annualized quarter - on - quarter basis, registering a positive figure for the third consecutive quarter. looking at developments by major expenditure item, with corporate profits staying at relatively high levels on the whole, the uptrend in business fixed investment has been maintained, mainly in investment intended for domestic capacity expansion, that aiming at saving labor in order to deal with labor shortage, and that in research and development for growth areas. especially in nonmanufacturing, an increase has been observed in construction of logistics facilities, reflecting the expansion of e - commerce business, and of accommodation facilities to meet the demand of inbound visitors. meanwhile, according to the financial statements statistics of corporations by industry, quarterly, business fixed investment by manufacturing firms for the april - june quarter of 2019 was minus 6. 9 percent on a year - on - year basis, falling below the previous year's level for the first time in two years, due mainly to the effects of trade issues. private consumption has maintained its moderate increasing trend with labor market conditions remaining tight and the income situation continuing to improve, albeit with fluctuations resulting from weather conditions. exports have continued to show some weakness, mainly reflecting the effects of the slowdown in overseas economies. as a result of this situation, production mainly of export - related goods has exhibited some weak developments, but industrial production as a whole has been more or less flat. in these circumstances, business sentiment has been weakening somewhat, mainly in manufacturing. 2. baseline scenario of the outlook for economic activity japan's economy is likely to continue on an expanding trend throughout the projection period, which covers from fiscal 2019 through fiscal 2021. in fiscal 2019, exports are projected to continue showing some weakness | 0 |
felipe m medalla : creating a resilient financial system amid interconnected risks - balancing growth and inflation while minimizing disruptions speech by mr felipe m medalla, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the release of the 2022 financial stability report, manila, 9 january 2023. * * * good afternoon, everyone, especially all my colleagues in government. and it is still not too late to say, " happy new year! " as we release the 2022 financial stability report, i am pleased to note that the economy has demonstrated its resilience despite a year of challenges and global turmoil. over the past few months, we have returned to some form of normalcy. of course, the " new normal " is quite different from the " old normal, " but it is still normal : businesses are opening ; the malls are full again that parking has become a challenge ; students are trooping back to schools ; consumers are spending more ; and tourist arrivals are increasing. what we have today, some of it is called " pent - up demand " or " revenge spending. " the people who did not buy cars because they were not needed during the lockdowns are now, of course, catching up. but while we cherish all these positive strides, we cannot overlook the challenges to the global market and, of course, geopolitics. indeed, if you listen to the most pessimistic people, they are thinking, " what if something happens to iran? what if north korea becomes a problem again? what if globalization, as we know it, is completely gone? " we have terms like reshoring and friend - shoring. where you locate is now also affected by geopolitics. moreover, inflation remains a problem worldwide. in our case, as the joke goes, " sibuyas could now serve as your earrings. " as the authorities respond with higher policy rates, which are necessary to control second - order effects, what we in the central bank want is that the supply - side effects do not generate inflationary expectations that make inflation keep rising - even after the supply shocks have gone. there are risks to the real economy, which, thankfully, we [ the economy ] were able to absorb, and we do believe we will be able to absorb this [ impact of the bsp's rate hikes ] as well. but these spill | programs now help educate a broad spectrum of the population including teachers, migrant workers, and farmers. we have made substantial progress, but there is still work to do. as highlighted in the bsp activities during the visit of the united nations secretary general's special advocate for inclusive finance for development, queen maxima of the netherlands, we are focusing on making digital payments more affordable. so affordable in fact, that people will make it a habit to use digital payments. as you can see, we are trying to go digital when it comes to financial inclusion. open finance we are advocating open finance, particularly in the area of financial health. open finance facilitates consent - driven sharing of customer data among financial institutions and third - party providers. it also gives customers more access and more choices when it comes to financial services. we believe that open finance holds significant potential to extend the reach of financial inclusion. it will do by fostering innovations in financial services. at the center of open finance is the customer who must be served and protected at all times. this is why we, at the bsp, are implementing our financial consumer protection framework. this would ensure that the rights and needs of consumers always comes first and that their trust and confidence in the financial system is preserved. so, thank you, our partners, for making this event possible and for advancing financial inclusion in markets like ours. i hope you find your time in manila rewarding. magandang umaga po at mabuhay tayong lahat. 2 / 2 bis - central bankers'speeches | 0.5 |
expectations. we want to see a payments system that is a hotbed of innovation and competitive tension, driving efficiency up and costs down. and we want to see a payments system that is safe and resilient – one that australians can rely on. as we contemplate what shape the payments system of the future might take, my colleagues and i at the rba and on the payments system board are committed to working constructively with auspaynet and the wider industry. we are in this together. there is much to celebrate in the australian payments system, but as i ’ ve made clear today, also much to do. on that note, i look forward to taking your questions. thank you. endnotes * i would like to thank my colleagues in payments policy department for their valuable assistance in the preparation of these remarks. all errors of omission and commission are my own. more formally, the payments system board ’ s responsibilities and powers are set out in four separate acts. these are : reserve bank act 1959 ; payment systems ( regulation ) act 1998 ; payment systems and netting act 1998 ; and cheques act 1986. the reserve bank act, as amended, gives the payments system board responsibility for determining the rba ’ s payments system policy. it must exercise this responsibility in a way that will best contribute to : controlling risk in the financial system ; promoting the efficiency of the payments system ; and promoting competition in the market for payment services, consistent with the overall stability of the financial system. council of financial regulators ( 2024 ), ‘ quarterly statement by the council of financial regulators – december 2024 ’, media release no 2024 - 05. bullock m ( 2023 ), ‘ modernising australia ’ s payments system ’, speech to the australian payments network summit, sydney, 12 december. bulk payment functionality allows payment instructions to be grouped together and sent as a single payment file, supporting efficient processing of large volumes of payments ( compared with sending each payment individually ). bulk payments are widely used by government departments and companies for regular payments such as welfare, salary and dividend payments and the payment of bills. becs is a technologically simpler solution than modern payment rails. while this simplicity means that it is no longer fit for purpose for many payment use cases, it does have some desirable features. in particular, end users do not expect instant payments processing across becs. when operational issues affect availability of the service, the payments can be delivered in a subsequent batch settlement without | v e b a n k o f au s t r a l i a cross - border payments i ’ ll now turn to the topic of cross - border payments. australian businesses and households that undertake international activities need efficient and safe ways to send and receive money. but cross - border payments services are still more expensive, more opaque and slower than their domestic counterparts. enhancing cross - border payments is therefore one of the payments system board ’ s strategic priorities and an international commitment for australia under the g20 roadmap. a recent review by the financial stability board indicated that much more progress is needed to move toward the g20 roadmap cost targets. 10 lowering the cost of cross - border payment services has proven challenging almost everywhere. in australia, we estimate that the average cost of sending a $ 1, 000 to other countries still significantly exceeds the relevant g20 targets ( graph 5 ). 11 graph 5 international money transfer costs * as a proportion of a a $ 1000 transfer from australian accounts % % advanced economies developing economies average * * banks non - banks average * * banks non - banks retail average cost target remittance average cost target * estimates based on quotes from online calculators at september 2024 ; sample includes 22 currencies, 4 major banks and 10 non - banks. * * weighted by market share. sources : accc ; online calculators ; rba. however, the cost of sending money overseas from australia can vary significantly across providers. banks are generally more expensive than non - bank providers, reflecting the size of the mark - ups they typically apply to the wholesale foreign exchange rate. by contrast, there are some non - bank digital providers offering prices that are around, or a bit below, the g20 target levels. these differences highlight the importance of transparency over prices and of customers shopping around. 12 the speed of cross - border payments is another area where more progress is required. bank - intermediated cross - border transactions often take a day or more to reach the recipient. slow processing reflects a range of factors including differing operating hours, inconsistent payments messaging practices, and complex compliance checks. making use of the new npp international payments service, which allows the final australian dollar leg of inbound cross - border payments to be processed on a near real - time 24 / 7 basis, will help. there are also a range of iso 20022 messaging initiatives where more progress is needed. 13 achieving international consistency in the data carried in payments messages will reduce the need | 1 |
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