text1
stringlengths 1
3.21k
| text2
stringlengths 1
3.21k
| label
float32 0
1
|
|---|---|---|
catch up to the price level increases that have already occurred and also the improvement in the labour market β is also a significant contributor to higher and more persistent inflation, while exchange rate depreciation has also added to price pressures. at the same time, the staff projections continue to see a steep reduction in inflation over the projection horizon. while core inflation is expected to remain at elevated levels until the middle of 2023, it is expected to decline thereafter as re - opening effects subside and as supply bottlenecks and energy input cost pressures ease. the projected decline in inflation is also supported by the indicators that suggest that most measures of longer - term inflation expectations currently stand at around two per cent, although recent above - target revisions to some indicators warrant continued monitoring. in terms of the risk assessment, the risks to the inflation outlook are primarily on the upside. the major risk in the short term is a further disruption of energy supplies. over the medium term, inflation may turn out to be higher than expected because of a persistent worsening of the production capacity of the euro area economy, further increases in energy and food prices, a rise in inflation expectations above our target, or higher than anticipated wage rises. however, if energy costs were to decline or demand were to weaken over the medium term, it would lower pressures on prices. this inflation outlook forms the context for the setting of monetary policy. last week β s decision is closely linked to our monetary policy strategy, which stipulates that the appropriate monetary policy response to a deviation of inflation from the symmetric two per cent target is context - specific and depends on the origin, magnitude and persistence of the deviation. in the context of a long projected period with inflation far above target, the net upside risks to inflation and taking into account that the current setting of the key policy rates is still highly accommodative, it was appropriate to take a major step that frontloads the transition from the prevailing highly - accommodative level of policy rates towards levels that will support a timely return of inflation to our target. moreover, all else being equal, in calibrating a multi - step transition path, the appropriate size of an individual increment will be larger, the wider the gap to the terminal rate and the more skewed the risks to the inflation target. at the same time, it is crystal clear that the appropriate monetary policy for the euro area should continue to take into account that the energy shock remains a dominant driving force | sabine lautenschlager : europe - past, present and future speech by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, at a meeting with students at copenhagen university, copenhagen, 14 may 2018. * * * it β s always nice to visit universities. they are special places, meant for the free exchange of ideas β places where bold thinking is encouraged and the orthodoxy challenged. so today i β m going to step back from the technical aspects of my day - to - day work. i β m going to take some time to reflect instead on the big picture. i will first talk about some of the eu β s historical milestones. after that, i will tell you a bit about my work. and once i β ve finished my brief remarks, i look forward to answering your questions β and to asking you some of my own! looking back to look forward as students of economics, many of you will, i β m sure, have read articles and books about the future of european economic and monetary union. some of you may even have read about the new system for banking supervision and resolution β the banking union. i hope you have enjoyed learning about these topics. but i also think it β s important for students to look beyond technical policy debates. from time to time, it β s good practice to go back to the fundamental questions. things like : what has the european union achieved in the past 60 years? and what would we like it to achieve in the next 60? we insiders would also benefit from this kind of reflection. in the humdrum of meetings, papers, non - papers and briefings, i feel that we do not take enough time to reflect on the achievements of the past. nor, perhaps, do we think enough about the strategic, long - term perspective. so today i hope that, together, we can do just that. let us start by travelling back in time. let β s try to put ourselves in the shoes of a european citizen in 1945. whether we imagine this person living in paris, berlin, rome or copenhagen, we know they are living in a country scarred by war. now, if this person were able to see what the future would hold from 1945 to 2018, they would find it in many ways almost miraculous. for one thing, anyone over the age of 27 in 1945 had lived through two world wars. so | 0.5 |
the guidelines for account aggregator ( aa ) in 2016, are examples rbi's proactive developmental role. the focus of the digital lending guidelines ( dlg ) on fair treatment of customers demonstrate the prioritisation of innovation with suitable guardrails. it is important to recognize that regulation plays a crucial role in managing the pace of change and allows the financial system to adapt to new innovations without threatening the stability of the system. self - regulation as regulators continue to contemplate, implement, and refine regulations for the orderly development of the fintech sector, self - regulatory organizations ( sros ) could play a pivotal role in the fintech industry by promoting responsible practices and maintaining ethical standards. these industry - led bodies establish guidelines and codes of conduct that foster transparency, fair competition, and consumer protection. sros can facilitate collaboration between fintech firms, regulators, and stakeholders, creating a framework for innovation with guardrails. by proactively addressing issues like market integrity, conduct, data privacy, cybersecurity, and risk management, sros help build trust among consumers, investors, and regulators. their voluntary compliance mechanisms contribute to a more sustainable and reputable fintech ecosystem, ensuring growth while minimizing potential risks and negative outcomes. in the context of a new and evolving sector like fintech, it is the industry participants who possess the deepest understanding of the processes and practices within the trade. therefore, they are bestsuited to establish common rules, enforce them, and effectively handle disputes that may arise from non - compliance with these rules. conclusion in conclusion, it is crucial for fintechs to continue collaborating and innovating to enhance the effectiveness of the financial sector. collaborating and competing with fintechs is essential for traditional financial entities too, in order to adapt. while innovation is vital, it should also support social and economic goals. regulation should play the role of guiding the sector to those goals. self - regulation needs to play a far more active role too. together, industry participants β fintech and banks alike -, regulators, and self - regulatory organizations can work harmoniously to shape a vibrant and resilient financial landscape that promotes inclusivity and progress for all. 3 / 4 bis - central bankers'speeches thank you for your attention and wish you all the best. 1 chapter 7 : extracting value through the innovation economy in the value of everything by mariana mazzucato 4 / 4 bis - central bankers'speeches | system ( cgfs ). 11. in india, analysis of monetary policy transmission was constrained due to absence of effective lending rate data of banks. in this context, in a research paper, the department provided a comparable annual time series data on weighted average lending rates ( walr ) bis central bankers β speeches for bank credit for major sectors in india for the period 1992 β 2010 based on the comprehensive account level bsr database. this information bridged an important data gap for empirical assessment of the bank lending rate channel of monetary transmission. 12. in the current macroeconomic scenario, the issue of wage price spiral and inflation has resurfaced and has been a topic in public discourse. in this context, the department compiled a long time series data on rural wage rate based on the data contained in the labour bureau journal for 18 occupations for all the major states as well as at all india level. this is a monthly data base starting from july 1995 to november 2012 ( latest ) and is available to the public in a user - friendly format in the data warehouse. 13. regional market intelligence or statistical intelligence plays a pivotal role in providing important inputs to monetary policy and many central banks have established statistical system for gathering regional information. with its reorganised structure and wider presence of regional offices in major centres, the department has put in place a similar system of gathering relevant statistics and market intelligence, particularly in the area of prices of essential commodities. this system is potentially useful to gauge an early signal of price pressure across commodities before the official data release. also this data is useful in validating the price trends as available in official price indices like wpi and cpi. 14. the reporting of purpose code under foreign exchange transactions electronic reporting system ( fet - ers ) was extended to all foreign exchange transactions, including small receipt transactions, on a census basis from april 1, 2012, as suggested by the central board. the resultant transition helped india to become one among the pioneer countries to implement bpm6 standards for bop reporting. information on international investment position, co - ordinated direct investment survey ( cdis ), co - ordinated portfolio investment survey ( cpis ) ( for mutual funds, insurance and private corporate sector ) are dissemination as a part of the commitment in adherence to the sdds framework of imf and g - 20 data gaps initiatives. 15. the xbrl project under the high level steering committee ( chairman : shri anand sinha, deputy governor ) on standard | 0.5 |
klaas knot : a global europe to meet global financial stability challenges speech by mr klaas knot, president of the netherlands bank, at the eurofi high level seminar 2022, paris, 25 february 2022. * * * thank you didier, it is great to be back. as you indicated in your kind introduction, this time i am speaking here in my capacity as chair of the financial stability board, although with a nod to my other hat, as president of de nederlandsche bank. but whether you stand on top of the bis tower in basel β where the fsb is housed -, the eurotower in frankfurt, or the toorop building in amsterdam, the view is not fundamentally different. in fact, many financial stability risks we face today are not only common across europe, but are global in nature. and these global issues require global cooperation, which is why they are at the top of the fsb β s agenda. today i want to talk about these global issues, what the fsb is doing, and how europe can play its part. i will be discussing these issues against the backdrop triggered by the russian invasion of ukraine. developments keep evolving as i am speaking, and i do not want to engage in any speculation about what might happen. but we need to be alert that the dramatic shift in the geopolitical landscape may also affect the functioning and resilience of the global financial system. one of the first priorities for policy makers worldwide is to navigate their economies out of the covid pandemic. the economic fall - out of the pandemic seems to be subsiding, and the extraordinary fiscal and monetary support measures that kept economies afloat are being gradually unwound. but, as the economic recovery is proceeding at an uneven pace across regions, this unwinding process is increasingly likely to be asynchronous. this creates the potential for cross - border spillovers. moreover, since the onset of the pandemic, both public and private sector debt have increased, while asset valuations have grown amid a continued search for yield. this has made the global financial system more vulnerable to a disorderly tightening of financial conditions. a concern that has been accentuated lately by the return of high inflation. the job of the fsb here is to monitor and analyze developments closely and facilitate global coordination of policies, where necessary, to minimize the risk of a disorderly exit. at the same time as we need to chart a | less accommodative monetary policies in the major economies and the occurrence of a number of shocks could have resulted in disorderly adjustments in asset prices by exposing β stretched β asset valuations in some markets and β overextended β balance sheets. this did not happen. the gradual shift to less accommodative monetary policies in all major economies proceeded smoothly. the system endured several shocks over the past six months. for instance, there was a bout of volatility across a broad range of financial markets during may and june but the markets comfortably absorbed the disturbances and no major financial institution was significantly impacted by the event. it should also be recalled that there had been some anxiety that disruptive asset price dynamics could have been triggered by an idiosyncratic collapse of a large hedge fund. however, the plunge into financial distress in september 2006 of amaranth advisors had little discernible impact on markets. against this background, in the euro area over the past six months, conditions for raising funds in the credit and equity markets remained favourable, there was a further and broad - based improvement in the profitability of banks, and the balance sheets of insurance companies were strengthened further. in addition, key financial infrastructures β including payment systems such as target, and securities clearing and settlement systems β remained robust and continued operating smoothly. iii. overview of the main risks and vulnerabilities iii. 1 external environment turning to the current assessment and starting with the external environment, a global source of medium - term risk for the stability of financial systems continues to be the large global financial imbalances, despite some rebalancing of global growth patterns and recent declines in oil prices [ see slide 3 ]. while there are indications that global financial imbalances have been widening at a slower pace than before, they are not expected to narrow significantly in the short term. the prolonged accumulation of expanding us current account deficits has been a source of unease because the financing of these deficits relies on the continuation of capital inflows from surplus emerging market economies and oil - producing countries [ see chart on the left of slide 3 ]. commodity price swings, especially in the oil markets, can also pose risks for financial stability through various channels both indirectly and directly. indirect effects pass through macroeconomic channels as high and volatile oil price levels pose risks for economic growth and inflation with potential adverse effects on asset prices. as regards direct effects, there are indications that speculative activity in the markets for derivatives on | 0 |
has become too strong β and is partly why european banks are so weak compared with their us peers. do you think that β s true? the profitable us banks are in any case leaving european banks further behind. i find that idea quite amusing. conversely, it means that the weaker the supervision, the stronger 1 / 4 bis central bankers'speeches the banks. the truth is that strict supervision leads to strong banks. institutions become more resilient when supervisors require them to hold adequate capital to cover their risks and insist on sufficient liquidity and better risk management. the us institutions received comprehensive state aid during the crisis. and now the united states is even rolling back regulation. both of these represent a disadvantage for domestic banks. up to now, the us authorities have generally only revoked rules that went beyond international standards. but you do have a point. it β s important that large international institutions meet the same standards, particularly in trading. that is why we need to have the new basel rules implemented in all major financial centres. moreover, let β s not forget that the united states managed to quickly return to a growth path. that has of course been of great benefit to the us banking system too. we were much slower in that regard, also in tackling structural problems. one outcome of the financial crisis was the ecb β s controversial asset purchase programme. the governing council has indeed decided to stop purchases, but only very slowly. meanwhile german social security funds have been suffering enormously from the negative interest rates for a long time. shouldn β t you be moving more quickly? ending the asset purchase programme is a major first step. but i agree that the side - effects of an extraordinarily loose monetary policy increase over time and i have pointed that out repeatedly. but after pursuing such an expansionary monetary policy, it would be wrong to now move abruptly in the other direction. that wouldn β t help either the economy or price stability. but rather? i am very much in favour of normalising monetary policy. that implies that we should gradually increase interest rates again. however, we can only do that if we are on a sustainable path towards price stability. moreover, we should not forget that the social security funds would be in a much weaker financial position today if economic growth had been held back by very tight monetary policy and higher unemployment. and german savers too sometimes forget that they can only save if they have a job. the trick therefore is to move steadily towards the exit without disrupting | sabine lautenschlager : interview with welt am sonntag interview by ms sabine lautenschlager, member of the executive board of the european central bank and vice - chair of the supervisory board of the european central bank, with welt am sonntag, conducted by ms anja ettel and ms anne kunz on 30 july 2018 and published on 5 august 2018. * * * 15 september marks the tenth anniversary of the collapse of the us investment bank lehman brothers. you were then the chief banking supervisor at the federal financial supervisory authority ( bafin ). do you remember that day? yes, i can remember it vividly. i was in the bafin that weekend and participated in the crisis calls with the international supervisors. i saw at first hand how things came to a head that weekend. in the night from sunday to monday, the us colleagues decided not to rescue lehman. three of us were holding the fort at the bafin that night. were you immediately aware of the magnitude of what was happening? we knew that the collapse of such a bank would not leave the financial world unscathed. nonetheless, we all underestimated the severity of the fallout. nobody foresaw a crisis of confidence that would bring whole markets to a standstill. would lehman still be possible today? i would never say that there will never be another crisis. but there β s no doubt that institutions and supervisors are now better prepared. banks hold much more capital and liquidity. their risk management and corporate governance are better too, albeit not yet good enough at every institution. one theory has it that the financial crisis would not have unfolded as it did if more women had been on the banks β boards. is there some truth in that? i don β t know about that β but there is good reason to believe that mixed teams come up with better results. unfortunately, women are still under - represented at board level. not in supervision though. there have always been more women in supervision. but i would resist any attempt to attribute certain behaviours solely to gender. people at the top need to have qualities such as assertiveness and decisiveness β that goes for men and women. and that applies in supervision too. for example? as a supervisor i have to state unpleasant truths and take tough decisions ; i have to fight my corner time and time again. and that leaves its mark. people are shaped by their profession. how do you react to the criticism that supervision | 1 |
to address this issue, sbp has introduced a livestock insurance scheme for borrowers to mitigate risk of loss of livestock due to disease, natural calamities & accidents. to ensure diversity of agri. financing institutions, sbp has included microfinance banks and islamic banks into the agri. indicative target scheme of sbp. the agricultural credit advisory committee ( acac ), which is the apex consultative forum for agri financing with representation from all the relevant federal & provincial departments, farming community, banks and experts, has been re - activated. the acac met on 17th february 2014 which supported my six - point agenda to boost agri financing. this includes : β launching of the 2nd round of financial innovation challenge fund ( ficf ) under the ukaid - sponsored financial inclusion program, to promote innovative techniques in agri and rural financing ( for which we have gathered today ). β further, the acac approved my proposal of upward revision in the agri credit disbursement target from rs. 360 billion to rs. 380 billion for the current year, which is 13 percent higher than the actual disbursement of rs. 336 billion in last year. bis central bankers β speeches β sbp is going to launch a country - wide internship program for 100 top graduates in agriculture to be funded under the adb β s improving access to financial services endowment fund. β banks have been assigned targets for outstanding agriculture portfolio and number of borrowers to have high impact of financing at grass roots level from the current year. β sbp has made agricultural finance a key indicator of performance of banks which will be reflected in their supervisory ratings. β and, finally a working group of acac has been formed to review the state of affairs of small farmers financing and make recommendations for improving financial access to small farmers. recognizing the economic significance of rural smes, state bank has revised the prudential regulations for sme financing to put focus on β s β part of smes. further, following incentives for sme exporters have been introduced in the export finance scheme ( efs ). β banks will allocate at least 10 % of their efs limits for smes. β for smes availing export finance under the performance - based system, the mark - up rebate has been increased by 0. 5 percentage point. β further, to incentivize banks to provide more financing to smes their spread has been increased from 1 % to 2 % | of board members, senior management are in sync with value demonstration in actions. the board β s oversight over compliance function should not be limited to framing policies, and its periodic review. a bank β s compliance policy will not be effective unless the board of directors promotes values of honesty and integrity throughout the organisation. the board should also formulate and maintain a quality assurance and improvement program that covers all aspects of the compliance function. accountability β the bank β s senior management is responsible for effective adherence to the compliance policy of the bank by the management and staff ; and to for ensuring that compliance risk is minimised. culture of owning the responsibility individually and collectively by board ; clear demarcation of accountability of senior management, functional head and operational head ; role of business unit as first line of defence and role of internal audit as third level of defence in facilitating robust compliance culture are all important. communication : clarity and transparency should be promoted by making a distinction between general standards for all staff members and rules that only apply to specific groups of staff. an effective compliance culture requires continuous communication of expectations on risk and compliance and practices across the bank ; compliance awareness channels for existing and new board members, senior management and employees ; process for containing conduct risk and whistle - blower mechanism. incentive structure : an adequate incentive structure should be in - built in the bank β s decision making systems and processes to achieve the desired compliance culture. ex ante and forward looking : compliance is distinct from other assurance functions viz., risk management and internal audit. the focus of the compliance function should be preventive compliance. by definition, preventive compliance would assess the activities of the bank before hand and prevent non - compliant activities / transactions from being carried out. compliance should be an ex ante activity and forward looking. compliance organsiation, authority and resources : a bank should organise its compliance function and set priorities for managing its compliance risk in a way that is consistent with its own risk management strategy and structures. for instance, some banks may wish to organise their compliance function within their operational risk function, as there is a close relationship between compliance risk and certain aspects of operational risk. others may prefer to have separate compliance and operational risk functions, but establish mechanisms requiring close cooperation between the two functions on compliance matters. regardless of how the compliance function is organised within a bank, it should have sufficient authority, stature, independence, resources and access to the board. its responsibilities should be clearly specified, and its activities should be subject to periodic and | 0 |
and cooling housing markets in several parts of the euro area. however, the growth of loans to non - financial corporations has remained very robust. bank borrowing by euro area non - financial corporations grew at an annual rate of 14. 6 % in the year to january 2008. overall, bank loans to the domestic private sector have grown at around 11 % on an annual basis for the past two years. for the time being, there is little evidence that the financial market turbulence since early august 2007 strongly influenced the overall dynamics of broad money and credit aggregates up to january 2008. in addition, according to the available data, the turmoil has not led to substantial portfolio shifts into monetary assets, as were observed between 2001 and 2003. notwithstanding the tightening of credit standards reported in the bank lending survey for the euro area, continued strong loan growth to non - financial corporations suggests that the supply of bank credit to firms in the euro area has not been significantly impaired by the financial turmoil thus far. further data and analysis will be required in order to obtain a more complete picture of the impact of the financial market developments on banks β balance sheets, financing conditions and money and credit growth. to sum up, a cross - check of the outcome of the economic analysis with that of the monetary analysis fully confirms the assessment that there are upside risks to price stability over the medium term, in a context of very vigorous money and credit growth. the economic fundamentals of the euro area are sound. incoming macroeconomic data point to moderating but ongoing real gdp growth. yet the level of uncertainty resulting from the turmoil in financial markets remains high. we emphasise that the firm anchoring of medium to longerterm inflation expectations is of the highest priority to the governing council. we believe that the current monetary policy stance will contribute to achieving this objective. the governing council remains strongly committed to preventing second - round effects and the materialisation of upside risks to price stability over the medium term. we will continue to monitor very closely all developments over the coming weeks. regarding fiscal policies, the governing council welcomes the fact that the berlin eurogroup agreement of april 2007, including the consolidation targets, was confirmed in the ecofin council β s opinions on the latest stability programme updates. there is no justification for delaying structural fiscal consolidation in countries with remaining fiscal imbalances. on the contrary, the challenges ahead call for particularly prudent and stabilityoriented fiscal policies to support private sector confidence. achieving and maintaining sound fiscal positions will also allow the free | the region. saarcfinance : the journey saarcfinance was established in 1998 as a network of our central bank governors and finance secretaries to facilitate dialogue on macroeconomic policies and the exchange of mutual experiences and ideas. saarcfinance received formal recognition in january 2002 at the 11th saarc summit held in kathmandu, nepal. over the last two decades, cooperation between our central banks has expanded and strengthened. the swap facility, which has been the cornerstone of this cooperation, has played a vital role in helping to manage external sector pressures during the pandemic. india has also extended financial support in the form of a number of credit lines to saarc partners. policy interface, technical assistance, capacity building and knowledge exchange have all played a vital role in deepening this engagement. in particular, research and policy driven collaborative studies, and symposiums and seminars such as this one, have facilitated this whole endeavour by bringing about greater appreciation of the issues, challenges and successes experienced by each country and the region as a whole. to cite some fulfilled deliverables under the belt of saarcfinance, the governors β group meetings have formalised our cooperation and dialogue on macroeconomic conditions and policies. the saarcfinance website was developed and launched in 2011. the saarcfinance database went live on may 26, 2016 at the governors'symposium held in mumbai. the first issue of the half - yearly saarcfinance e - newsletter was published in december 2006. during india β s chair in 2020 - 21, the portal called β saarcfinance sync β was created as a network of connectivity among our central banks. the scope and coverage of the scholarship scheme was expanded by including more universities, more central banking related courses and by increasing both the scholarship amounts and the number of scholarships that may be granted in a year. efforts have also been made to revamp the saarcfinance newsletter with a new design and format and by expanding its ambit to topical articles. our virtual seminars kept alive our engagement through the pandemic. the financial inclusion platform, a repository of initiatives taken by saarc central banks to promote financial inclusion and financial literacy, has also facilitated policy making by enriching it with pan - regional perspectives. the measures we have taken to deepen cooperation on capacity building are also noteworthy, especially the collaborative studies on a variety of topics. macroeconomic developments : opportunities and challenges our countries have come together | 0 |
over the past few years, we have started to see this happen : with their large populations and extensive resources, these countries are developing rapidly and catching up rapidly. as a result of these economies entering into the world market, there have already been periods during which they have fostered disinflation, i. e. very low or falling prices of manufactured goods, which have then been followed by periods where they have triggered inflation through energy and commodity price increases. this of course has a strong, as well as complex, influence on monetary policy. the same applies to the second challenge of scientific and technological progress : a significant increase in productivity triggered by the advent of new technologies means that costs and prices change in the economy, as does the assessment of inflation risks by the central bank. the third challenge is the ageing population. because price stability is particularly important for pensioners? that β s not what i mean. we have to ensure price stability in line with our definition of price stability in every situation. however, monetary policy must take into account the fact that the age structure of a population influences savings and investments, and thus is an important factor for real interest rates in any given economy. this has to be taken into account by monetary policy and this is why intensive research into these issues is being conducted at universities and central banks. the fourth and final challenge for central banks is the fragility of the financial system which has come to light during the present financial crisis. this calls for all appropriate lessons to be learned without any complacency. and the two ecb - specific challenges? the fifth challenge is that the single market with its single currency is not yet achieved. we are still significantly changing the structure of our own euro area economy. unlike elsewhere, a look into the euro area β s past provides hardly any indications for the future. and the sixth challenge for the ecb is enlargement. we are currently 15 members, soon to be 16, but the treaty stipulates that we must be ready to be 25 one day and we have to manage this historic enlargement process in the most professional and successful way possible. how is the ecb preparing itself for these challenges? excellent staff! both at the ecb and in all national central banks of the eurosystem β in germany at the deutsche bundesbank. there is the feeling that we are all working together on a task of historic proportions. the world in which we are living is changing very rapidly, requiring | philipp hildebrand : developments in the current financial crisis summary of a speech by mr philipp hildebrand, vice - chairman of the governing board of the swiss national bank, at the swiss funds and asset management forum, berne, 2 april 2009. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * the financial market turbulence, which began some 20 months ago, has grown into the largest and most complex crisis since the 1930s. the real world economy is now feeling the full force of this financial crisis. we are currently experiencing a very difficult period, although there are a few signs that the global economy could possibly be close to the cyclical trough. however, the route to recovery is unlikely to be straightforward, and the downside risks to growth remain considerable. throughout the world, governments and central banks have taken steps to stabilise the financial system. in addition, a large number of countries are pursuing fiscal policies aimed at stimulating demand. central banks have lowered interest rates rapidly and sharply, and, in some cases, taken exceptionally far - reaching measures to alleviate the economic downturn. cumulatively, these measures will ultimately help to ensure that the global economy returns to a growth path. the swiss national bank ( snb ), too, has made decisive use of conventional monetary policy tools and innovative, far - reaching monetary policy measures. we will deploy these measures aggressively for as long as this remains appropriate, both within the context of our monetary policy strategy and with a view to our inflation forecast. we are aware that long - term risks are associated with the option we have chosen for fighting this crisis. yet the snb is profoundly convinced that the risks associated with the option of β doing too little β, let alone the option of β doing nothing β, would have been far greater. as soon as a return of the swiss economy to its long - term growth path can be foreseen, the snb will certainly not hesitate to redirect its monetary policy accordingly. | 0 |
solvency i. fair - value accounting under solvency ii would probably lead to even worse results. it is therefore important to configure the transition to solvency ii in a way which is compatible with stability. banks under pressure when it comes to germany β s banks, part of the job of this year β s financial stability review is to look at the credit risks which confront us at the present time. to an extent, these risks reflect back on credit policies pursued in the past, such as in ship finance and securitisations. we also direct our attention to the future. for example, a constant watch needs to be kept on the business cycle, since a recession, for instance, would obviously have an impact on banks. it is particularly important to us that loans for german residential property do not turn into a new source of conflagration. a model calculation reveals risks in the event of another severe recession in germany comparable to the one in 2009. the calculation covered the years 2013 to 2015. it is mainly the 12 major german banks with an international focus which would be affected by this simulated economic downturn. they would be faced in particular with value adjustments and write - downs. compared with the baseline scenario, operating earnings would drop by almost β¬15 billion for 2014 and by over β¬5 billion for 2015. by way of comparison : in 2012, the banks in question recorded combined operating income of β¬11 billion. thus, this recession scenario would bring the threat of losses, at least if the banks did not succeed in reducing their costs accordingly. to be clear : this is a model calculation. it is not a stress test aimed at establishing recapitalization requirements, and has nothing to do with the forthcoming eba and ecb stress test. i can only recommend to germany β s banks that they review their options for reducing risk and for building up capital resources and put these options into practice where necessary β and the sooner the better. default risks for banks could arise in the medium term from mortgage lending. however, there appears to me to be a distinct public awareness in germany that a spiral of rising property prices, lax lending standards and continued strong lending would undeniably lead to problems. i believe the bundesbank has played its part in creating this awareness, for instance through articles in last year β s financial stability review and in the current october monthly report. we have also taken a look at the german housing market this year. in seven major cities β berlin, | the maturity and the currency of loans may be. i greatly appreciate the fact that the institute of international finance actively buttresses efforts to bring about greater transparency among creditors. after all, this also implies a certain extra workload on creditor banks. but the responsibility for crisis prevention naturally rests on both sides - on the multilateral organisations and the private financial institutions alike. and if a crisis does erupt despite all the efforts at prevention, it can mostly only be overcome if private investors, too, pull their weight - pull their weight, that is, in a spirit of enlightened self - interest. charles dallara was therefore undoubtedly right when he wrote : β in this era of globalization, both market participants and multilateral institutions have crucial roles to play ; the more they understand each other, the greater the prospects for better - functioning markets and financial stability. β of course, both sides have their own rules and responsibilities. but they have their common interests and responsibilities too. in the market - based financial world of today and tomorrow multilateral institutions can only play a limited role. bailing out the private investors would not only be beyond the limits of the available reserves ; it would - and this is even more important undermine the proper functioning of the private markets. i am happy to mention that the iif - members seem to share this view. | 0.5 |
de portugal β s participation in the european system of central banks ( escb ) and the legal committee ( known as legco ), which has played a crucial role in developing the emu. on 7 july 1998, the ecb approved the rules of procedure, which laid down the establishment of escb committees β composed of representatives of the ecb and of the national central bank of each participating member state β to assist in the work of the escb. the legal committee is one such committee. the committees established under this regulation assist in the work of the decision - making bodies of the ecb, specifically the executive board and the governing council and are composed of representatives of each of the national central banks and the ecb. different committees have different compositions, depending on whether matters fall within the field of competence of the eurosystem, the escb or β since 2014 β the single supervisory mechanism. 1 / 4 bis central bankers'speeches the establishment of these committees was the expression of a true conceptual system that was behind the preparatory work conducted on the monetary pillar during stage three of emu. this committee structure β different from the technical committee procedure present in other european decision - making bodies β invokes the idea of a participatory decision - making process which benefits from the sharing of experience and know - how among national central banks, under the aegis of the ecb. the ecb β s legal committee is a genuine example of the identity of the eurosystem and the escb. taking over from the working group of legal experts, which operated under the emi, legco is a committee with privileged insight due to its cross - cutting nature, whose assistance is invariably requested by all other eurosystem committees, the executive board and the governing council of the ecb. this is also the reason why, 20 years after its creation, it is no exaggeration to say that this committee acts as a repository that is a vital tool to understand and interpret developments in the eurosystem and the escb, and will certainly be called upon during the implementation of potential reforms. 2. regardless of one β s opinion on the merits of the european monetary union, the creation of the ecb was a major historical landmark β which had a significant effect on europe and each of its countries and a profound impact on international monetary relations and consequently on the economy and international politics. several generations of banco de portugal employees have participated in the construction of emu at different times : first, | ago, β it is abnormal that the supervision responsibility is collective but the consequences, if something goes wrong, go back to the national authorities. β 4. as can be seen in the revealing title of professor jean - victor louis β address, reforming the emu and the european banking union is a very difficult task. i would add that it is as difficult as it is necessary, given that the changes that have been introduced so far β although generally positive β are not enough to ensure the long - term sustainability of the emu and to guarantee the financial stability of both the union and the countries that belong to it. there is no time to lose. we have the duty to prevent the next crisis from finding us in the current situation, only halfway there and possibly having already exhausted a number of tools. the debate has long been underway and there is a need to refocus it around what really matters, overcoming non - existent issues that only lead to paralysis. indeed, as professor jean - victor louis clearly demonstrated, in a view shared by many, establishing a relationship of priority between reducing and sharing risks is a true argumentational fallacy on a number of levels. the main challenges are known : to complete the banking union ; to incorporate the european stability mechanism into european law ( overcoming its intergovernmental character ) ; to find a way of providing the emu with a β fiscal capacity β ; and to create a capital markets union are crucial steps to enhancing the stability of the emu. divergences have been listed and possible paths have been identified. now we must have the courage to make decisions. but we must also be aware of the divisions between and within member states and, for this reason, we must be realistic. what i mean by realism is having the ability to implement solutions which will effectively address the problems that have been identified in the functioning of the emu, but in a spirit of compromise and mutual understanding. the worst thing we could do would be to pretend we are reforming the emu while leaving key issues with no prospect of a solution. notwithstanding the gradual approach that has historically characterised the union, we must take concrete steps to solve the imbalances that exist within the union. if we don β t, the emu might even be jeopardised eventually. the emu is not an end in itself. it was designed to contribute to improving the lives of eu citizens and to strengthen the role of the european union β and consequently of each eu member state | 1 |
prevented from rising. over the past six months, that is from 31 october 1996 up to 30 april 1997, the situation stabilised and the rand appreciated by 10 per cent as more foreign capital started flowing into the country again. against the background of the expansion in the domestic economy, and particularly the sharp increases in private sector domestic expenditure, pressures developed in the financial sector and total bank credit extended to the private sector increased by about 17 per cent during each of the past three years. this caused the m3 money supply to increase by about 15 per cent per annum, well above guidelines indicated by the reserve bank for an acceptable rate of increase in m3. the reserve bank was initially very tolerant with the relatively high rates of expansion in the financial aggregates, particularly with a continuous decline in the rate of inflation, which came down from 14 per cent in 1992 to 7Β½ per cent in 1996. inflation turned around from 5Β½ per cent over the twelve months up to april 1996 to almost 10 per cent in april 1997, mainly because of the depreciation of the rand in 1996. this forced the reserve bank to switch to a more restrictive monetary policy and to accept a substantial increase in interest rates. at this stage, the prime overdraft rate of banking institutions at 20 per cent is about 10 per cent above the current rate of inflation. the rates of increase in both bank credit extension and in the money supply are also beginning to show signs of a slow - down. a further important development in the south african economy was an almost explosive increase in the volume of activity in all the financial markets. the average daily turnover in the market for foreign exchange is now exceeding $ 7 billion. last year, a total turnover of $ 703. 5 billion was registered on the bond exchange of south africa, and of $ 27. 3 billion on the johannesburg stock exchange. foreign participation played a very important part in the development of the south african financial markets, but also contributed to greater volatility in these markets. it should finally be noted, as far as economic developments over the past three years were concerned, that, contrary to many predictions made at the time of the election of the new government, three successive ministers of finance succeeded in reducing the deficit in the budget of the central government from 8. 5 per cent of gross domestic product in 1993 to 5. 6 per cent in 1996 / 97. in the budget for the fiscal year 1997 / 98, the minister provided for a further decline in the deficit to only | in a tightening phase of the interest rate cycle. while price stability remains the primary focus of monetary policy, the bank has indicated that this objective will be pursued in a manner so that economic growth outcomes are not unduly undermined. as we explained in the july mpc statement, monetary policy is on a β gradual normalisation path β, which will be highly data - dependent. the sarb remains committed to its mandate of maintaining price stability in the interest of balanced and sustainable economic growth in south africa. in this regard, it is important to note that despite the 75 basis point increase in the repo rate since the beginning of the year, the real repurchase rate is still marginally negative thus ensuring that monetary policy remains supportive of the domestic economy. 3. the new financial services regulatory regime in south africa the great recession, which began in 2008 has shown that imbalances between the real and financial sectors of the economy could increase the vulnerability of the financial system. in addition, with hindsight, we now know that such vulnerabilities may not become evident solely through the supervision of individual institutions. for this reason, macro - prudential aspects of financial stability have gained traction in policy circles around the globe. south african policymakers have also engaged in a process of reviewing and revamping the regulation of the financial sector. in february 2011, the minister of finance announced that south africa would be shifting to a β twin peaks β model of financial regulation. at the end of last year, the national treasury published the draft financial sector regulation bill ( twin peaks bill ), which provides some detail around the architecture of the twin peaks model. in terms of the twin peaks model, a prudential authority ( pa ) will be established within the sarb to oversee the safety and soundness of banks, insurers, financial conglomerates and key financial market infrastructures. the fsb will become the market conduct authority ( mca ) and will promote integrity and efficiency of financial markets in order to safeguard the interests of south african consumers of financial services. it goes without saying that co - ordination between the two regulators will be crucial to ensure the overall stability and robustness of the south african financial system. the exact date of twin peaks implementation will be finalised once the necessary legislative processes have taken place. it is envisaged that the twin peaks model of regulation will come into effect by the end of 2014 although this is dependent on the parliamentary process and the final enactment of the bill | 0.5 |
net outflow of capital from the region. the facts i have mentioned may lead outsiders to regard the nordic region as one group, made up of similar economies. however, there are also some striking differences. nordic countries β institutional differences eu - membership monetary policy regime sweden yes inflation target of 2 per cent ( + / - 1 percentage points ) denmark yes erm ii finland yes member of emu iceland no ( eea - agreement ) inflation target of 2Β½ per cent norway no ( eea - agreement ) inflation target of 2Β½ per cent sg 240802 we differ in our relations to the eu and with respect to monetary policy regimes. sweden, denmark and finland are members of the eu. finland is also a member of emu. the danish krone is linked to the euro through a fixed exchange rate, while sweden, iceland and norway have inflation targets and a floating exchange rate. our financial markets differ in size and structure. bonds outstanding, march 2002. per cent of gdp government private us iceland denmark sweden finland norway source : bis, imf sg 240802 government bond markets are generally small, even in relation to gdp. there is, however, a relatively large market for private bonds, especially in denmark. the bond market in denmark is twice the size of the stock market. stock market values. per cent of gdp end 1999 sep 2002 finland iceland denmark source : national central banks, imf sg 240802 finland has the largest stock market relative to the economy. this reflects, i believe, the rise of nokia as the world β s leading mobile phone company. we see that the finnish and swedish markets have followed the us market more closely than the other nordic markets. this also reflects differences in industry structure. the sector composition of the three scandinavian stock exchanges provides an illustration. the oslo stock exchange is heavily dominated by the energy sector, which is practically absent on the other nordic exchanges. norway has small traditional industries, but the it and telecom sector is comparable to the other countries β in relative size. the different sector composition of the stock exchanges also illustrates the potential for diversification by investing across the nordic countries. the difference in sectoral composition may in part explain the differences in correlation of nordic stock exchanges with the world economy. sector composition of norex exchanges. september 2002 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 % stockholm industrials and materials financial services copenhagen oslo it / telecom energy consumer goods and services other source | years, and will reach approximately 90 per cent of gdp by the end of this decade, according to estimates from the ministry of finance. this implies further investments of considerable amounts, also in the us market. while the us economy has always been an important trading partner, our investments abroad and the globalisation of the financial system will further increase our interest in the us economy in the years ahead. the links, already important, will expand further. | 1 |
suggested that unemployment has continued to fall back a little from its peak, it has not moved much. and nominal regular pay growth ( which strips out bonuses, but includes merit related increases in pay ) has remained subdued over the past year, averaging around 2 %. assuming that the potential growth rate of the economy has not been damaged by the financial crisis ( and there is no compelling evidence to suggest that it has ), then this level of wage growth would be too low to be consistent with the inflation target in the medium term. looking ahead, it is most likely that there will remain a reasonable margin of slack in the labour market, which should help contain any pressure on nominal wages and hence price inflation. but this is unlikely to persist indefinitely. historical analysis of the uk labour market shows that the longer individuals are unemployed, the lower their chances of getting a job become. hence, persistently high actual unemployment tends to be followed by an increase in the level of structural unemployment. theory and empirical evidence predict that the structurally unemployed exert less downwards pressure on wage inflation. major shifts in the pattern of employment β as we are likely to see from the shifts in growth from services to manufacturing, and from the public to private sector β tend to reinforce that effect. if structural unemployment rises sufficiently, then the downwards pressure on inflation from spare capacity will eventually start to dissipate. for now, contacts of the bank β s agents confirm that the margin of slack in the labour market should continue to restrain wage growth in the coming months. in my view, that should continue for the next few years, even if structural unemployment begins to rise : the latter is a relatively slow process. given the inflation outturns so far in 2011 and the prospects for nearterm inflation outlined in the may inflation report, the squeeze on household real incomes is likely to be intensifying in the short term. overall, it could be quite some time before we start to see rising real take - home pay. the marked decline in household confidence since the start of the crisis might also have played a role in the weakness of consumer spending during 2010. for a given level of income, households may decide to spend less ( and hence save more ) if they are uncertain about the outlook for the economy and, especially, about the security of their job. although survey measures suggest that households β unemployment expectations have fallen slightly, bis central bankers β speeches the fiscal consolidation now underway might encourage greater precautionary savings among some households β indeed, | production. third, by their very nature, economic frameworks can only provide a summary description of the economy and thus do not incorporate all relevant information. in particular, some information is not easily integrated into the framework used to produce the projections or may change after they are finalised. fourth, expert views are inevitably incorporated into projections and there can be good reasons at any moment of decision - making to deviate from the particular views or approaches on which they are based. the two - pillar approach chosen by the eurosystem - including a prominent role for money as the first pillar - is, to some extent, a reflection of these general limitations of forecasts and projections. i should stress that, because of these limitations, the second pillar of the ecb β s strategy also includes other forms of analysis in addition to macroeconomic projections. first, the ecb β s projections are cross - checked and compared with forecasts produced by others, such as international organisations and private sector entities. second, the forward - looking information and expectations embodied in financial prices and yields is thoroughly analysed and evaluated. this information can also be compared with the staff projections. finally, any information that is not contained in the staff projections for practical or timing reasons - such as the latest available outturns of certain data series must also be incorporated into the overall assessment. developments in individual indicators are also closely followed outside the framework of the forecasting exercise. it follows from this discussion that the governing council does not use its staff projections as the main tool for organising and communicating its assessment. rather, the governing council evaluates them alongside - and compares them with - many other pieces of information and forms of analysis organised in the two - pillar framework. in the context of the ecb β s strategy, macroeconomic forecasts and projections therefore play an important - albeit limited - role. two important points follow from the role of projections in the ecb β s strategy and the procedures used to produce projections within the eurosystem. first, the projections are produced by staff experts and do not embody the policy judgement of the governing council. they therefore represent one input into the policy - making process and not the outcome of the governing council β s deliberations. the governing council must exercise a policy judgement in evaluating the projections it receives, alongside all other analyses, when drawing implications for policy decisions. second, since policy decisions are based on a broad range of analyses conducted under the two pillars of the ecb β s monetary | 0 |
##ed economists until john maynard keynes offered an explanation that was to influence policy practitioners for generations to come. he argued that, contrary to the tenets of smith and his followers, market systems did not always converge to full employment. they often appeared to settle at an equilibrium in which significant segments of the workforce were unable to find jobs. in the place of smith's laissez - faire approach arose the view that government action was required to restore full employment and to rectify what were seen as other deficiencies of market - driven outcomes. a tidal wave of regulation soon swept over much of the american business community. labor relations, securities markets, banking, agricultural pricing, and many other segments of the u. s. economy became subject to the oversight of government. the apparent success of the economy during world war ii, which operated at full employment in contrast to the earlier frightening developments during the depression years, led to a considerable reluctance to fully dismantle wartime regulations when the hostilities came to an end. however, cracks in the facade of government economic management appeared early in the post - world war ii years, and those cracks continued to widen as time passed. at the macro level, the system of wage and price controls imposed in the 1970s to deal with the problem of inflation proved unworkable and ineffective. and at the micro level, heavy regulation of many industries was increasingly seen as impeding efficiency and competitiveness. by the early 1980s, the long - prevalent notion that the centrally planned economy of the soviet union was catching up with the west had begun to be discredited, though it was not fully discarded until the collapse of the berlin wall in 1989 exposed the economic ruin behind the iron curtain. 1 / 6 starting in the 1970s, u. s. presidents, supported by bipartisan majorities in the congress, responded to the growing recognition of the distortions created by regulation, by deregulating large segments of the transportation, communications, energy, and financial services industries. the stated purpose of this deregulation was to enhance competition, which had come to be seen as a significant spur to productivity growth and elevated standards of living. assisting in the dismantling of economic restraints was the persistent, albeit slow, lowering of barriers to cross - border trade and finance. as a consequence, the united states, then widely seen as a once - great economic power that had lost its way, gradually moved back to the forefront of what joseph schumpeter, the renowned harvard professor, | the secretariat to the esrb and give analytical and organisational support. the crisis is forcing us to undertake careful analysis to identify where mistakes were made, and to correct them, even in the face of resistance from the political domain. at the same time, however, we should also identify what has proved itself to be of worth and what should be maintained as is. at the macroeconomic level, as i have already said at another occasion, there is one conclusion that should certainly not be drawn from the financial crisis, namely that higher rates of inflation should be targeted in future. there are no discernible macroeconomic benefits that would compensate for the obvious costs of increased inflation β higher risk premia and higher long - term interest rates, to name just two. and we should never forget that low inflation preserves the purchasing power of our most vulnerable and poorer fellow citizens. the financial crisis has not brought about any change in this fundamental assessment : contrary to the fears of some critics, the non - conventional monetary policy measures taken by the ecb had exactly the desired effect, even in an environment of temporarily negative inflation rates, so that they can now β given the normalisation of the outlook for inflation and the prospect of a general market recovery β be phased - out, step by step. the ecb will uphold its definition of price stability. one characteristic of the ecb and the national central banks of the eurosystem is that their activities are oriented towards the long term. in an environment generally characterised by short - term horizons, the ecb β s long - term approach differentiates it from what occurs in both general politics and the private financial sector. it is not surprising that political behaviour in democracies is strongly dependent on election cycles. in the field of fiscal policy in particular, this might encourage short - term action focused on election dates, resulting in a tendency to engage in deficit spending and growing government debt. as emphasised in the political economy literature, this short - term approach is, in fact, built into the political process itself, which demands that political actors are re - legitimised by means of elections at regular intervals. however, short - termism can and should be corrected through fiscal rules that work towards the sustainability of public finances. examples of this include the stability and growth pact and the recently agreed, and much to be welcomed, β debt brake β built into german law. activity in the private sector is often governed by the quest for short - term profits. seeking profits | 0 |
. decline in lfpr most notable at lower levels of education attainment male labor force participation by educational attainment, ages 25 to 54 percent female labor force participation by educational attainment, ages 25 to 54 percent bachelor β s degree some college high school degree bachelor β s degree some college high school degree source : bureau of labor statistics. less than high school degree less than high school degree figure 10. productivity growth has slowed business - sector productivity growth percent change 7. 0 6. 0 4 - quarter 5. 0 5 - yr average * 4. 0 3. 0 1961 - 2018 avg. 2. 0 2018 : q3 - 2. 0 - 3. 0 * centered 5 - year moving average through 2015, trailing average thereafter. source : bureau of labor statistics. - 1. 0 0. 0 1. 0 | the decline of computers as a general purpose technology : why deep learning and the end of moore β s law are fragmenting computing, β available at https : / / papers. ssrn. com / sol3 / papers. cfm? abstract _ id = 3287769. - 9we need policies that support innovation and create a favorable environment for investment in both the skills of workers and the tools they have. indeed, the recent tax reforms were designed in part to boost capital investment and thus productivity. once again, my goal tonight is to highlight the importance of growth - enhancing policies. because these policies are not the province of the fed, i will not advocate for particular approaches. instead, i will just observe that researchers and policy analysts have proposed many promising ideas that may be capable of attracting wide support. policies that succeed in enhancing productivity growth would greatly benefit future generations of americans. conclusion to conclude, the united states is currently in the midst of one of the longest economic expansions in our history. unemployment is low and inflation is close to our 2 percent objective. my colleagues and i on the fomc are focused on using our monetary policy tools to sustain those favorable conditions. tonight i have also highlighted some longer - term challenges we face, including low labor force participation by prime - age workers and low productivity growth. by promoting macroeconomic stability, the fed helps create a healthy environment for growth. but these longer - term issues require policies that are more in the province of elected representatives. the nation would benefit greatly from a search for policies with broad appeal that could promote labor force participation and higher productivity, with benefits shared broadly across the nation. recent economic developments and longer - term challenges jerome h. powell chair board of governors of the federal reserve system at the citizens budget commission 87th annual awards dinner new york, new york february 28, 2019 figure 1. unemployment is near historic lows percent unemployment rate jan. source : bureau of labor statistics. figure 2. improvement in unemployment is broadly shared unemployment by education, age 25 and over unemployment by race and ethnicity percent source : bureau of labor statistics. jan. jan. less than hs degree high school degree some college bachelor's degree white hispanic asian black percent figure 3. wage growth has picked up, but it is still moderate nominal compensation percent change from year earlier 6. 0 5. 0 avg. hourly earnings, prod. workers employment cost index ( eci ) avg. hourly earnings, all workers 3. 5 | 1 |
the federal reserve, we continue to foster more - accommodative financial conditions and, in particular, lower mortgage rates through our monetary policy actions. we also continue to monitor mortgage credit conditions and consider the implications of our rulemakings for credit availability. for your part, i urge you to continue to develop new and more sustainable business models for lending to lower - credit - score borrowers that lead to better outcomes for borrowers, communities, and the financial system than we have experienced over the past few years. staff calculations are based on the federal reserve bank of new york consumer credit panel. first - time homebuyers are measured as consumers who have no record of ever having a mortgage at the end of the second quarter of a given year and opened a mortgage in the third quarter. this estimate includes all types of mortgages but excludes first - time homebuyers who purchased their homes with cash. the credit score was generated from the equifax 3. 0 risk model and measured the credit score as of the end of the second quarter. consumers without a credit score are excluded from the analysis. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | to suggest that a person β s appreciation increases in parallel with the knowledge he or she has about the way in which these two factors interact. a number of studies indicate that economic education has β to put it diplomatically β some room for improvement. the bundesbank has therefore expanded its economic education programmes in recent years. by using educational materials and organising various types of events, we want to improve to the best of our ability the general public β s understanding of monetary and foreign exchange policy issues. for example, our regional offices provide teacher training, visit school groups and organise public lectures under the motto β forum bundesbank β. the feedback that we have received on these initiatives has been very positive. bis central bankers β speeches i myself meet once a year with teachers and once with pupils. time and time again, i see when young people visit the bundesbank that they are very interested in our work and ask intelligent questions. we should, of course, be aware that the impact that such measures can have is limited in terms of both breadth and depth. such was the account recently given by the senior business editor of the frankfurter allgemeine zeitung concerning her own offspring : β it is a positive thing that [ the bundesbank ] goes into schools to raise awareness about monetary stability and to provide insights into the secrets of interest rate policy. it really is never too early to start tackling such topics in times such as these. however, it should be under no illusions as to the success of its efforts. my child took precisely one term away from the talk given by a bundesbank representative to a year 12 class : marginal lending facility. β incidentally, this technical term is even on the sixth form curriculum in bavaria. that being said, it is also clear that the jargon that we have become accustomed to as central bankers should not detract from the essentials. the principle of liability as a guide but it is not just vocabulary that detracts from the essentials. nowadays, economists β reasoning is highly mathematical and model - oriented, which often makes it difficult for noneconomists to comprehend. however, institutional rules and regulations have also become so complex nowadays that often only a few experts are able to fully understand them. consider the federal financial equalisation system, for example. addressing this subject, peer steinbruck once said, β there are only three people that really understood this concept. the first is dead. the second is in a mental asylum. | 0 |
lower in the euro area than in the united states ( see chart 7 in masuch, k. et al. ( eds. ) ( 2018 ), β structural policies in the euro area β, occasional paper series, no 210, ecb, june ). these factors may limit the euro area β s relative capacity to bounce back from a recession. 21. if the yield curve gets unanchored it becomes harder for the central bank to deliver inflation at target and minimise side effects on the economy. 22. we have a medium - term orientation in pursuing price stability to account for the lags in the transmission of monetary policy to the economy and to inflation. the definition of medium term, however, is flexible because the appropriate monetary policy response to a deviation of inflation from the target depends on the origin, magnitude and persistence of the deviation. see ecb ( 2021 ), β an overview of the ecb β s monetary policy strategy β, july. 23. battisti, l. ( 1970 ), emozioni. | ##er of the security. the premium will then depend on the scarcity of the underlying 3 / 10 bis central bankers'speeches asset and their holding structure : many of the residual government bond holders are unwilling to sell them, or will sell them at a higher price due to regulation or their own asset - liability management rules. you can see this on my next slide. our asset purchases have coincided with a notable increase in the share of german bonds that trade β special β in the repo market, meaning they trade at a premium over gc rates. before we started our purchases, typically less than 5 % of bonds in the german repo market were trading special. in the second half of last year, this share increased to more than 50 %. year - end events, which i will come back to later, pushed their share even higher. you can also see that specialness did not increase immediately with the start of our purchases under the public sector purchase programme ( pspp ) in march 2015. the reason might be related to potential non - linearities in the way supply changes affect market outcomes. that is, price effects from the flow of purchases may only become visible the moment supply effectively starts to constrain demand. reverse supply effects are also clearly visible on the same chart. when the ecb governing council, in december last year, decided to also accept cash as collateral in our securities lending facility, we effectively increased the supply of bonds available in the repo market, thereby swiftly reducing the share of bonds trading special. 7 the price effects of this decision can be seen on the next slide. before we accepted cash as collateral, there was a strong positive relationship between the level of excess liquidity and repo rates, not only for trades backed by german collateral, but also for those involving french and, to a lesser extent, italian securities. the moment we amended our securities lending facility in december last year, the relationship broke down, as you can see on the right - hand side. 4 / 10 bis central bankers'speeches recent ecb analysis confirms the intimate relationship between cash and repo markets and the impact of supply and demand effects. 8 the authors estimate that a 1 % reduction in the effective supply may increase specialness, on average, by up to five basis points. studies for the us market come to qualitatively similar conclusions. 9 in other words, whether a bond trades special, and by how much, depends crucially on its effective supply, which is itself | 0.5 |
, sharing insights and feeding into consultations and dialogue. to meet the fsb targets there is also a practical role for the industry to respond to the building block actions and reports, with some requiring direct action. this might include : ( i ) investing in new technologies, ( ii ) preparing for changing operational procedures and ( iii ) adapting business models. the role of public authorities and there is a crucial role for the wider public authorities. central banks changing systems and policies and industry investing in changing operational procedures are just two pieces of the puzzle. there are also important regulatory, legislative and other barriers that overcome on a national and international level. for example, finance ministries will need to prepare legislative change to deliver the benefits of the roadmap ( e. g. on aml / cft standards, data frameworks and settlement finality protections ). and international standard setting bodies will need to ensure that these standards are aligned on a global level. the financial system is global, with many of the most important issues requiring the involvement of international public authorities. the fsb, cpmi, the bis innovation hubs, and a range of other standard setting bodies will have a continued important role to play to reach the quantitative targets for cost, speed, access and transparency of cross - border payments. they will need to enable best practice sharing between different jurisdictions, monitor the progress achieved on the roadmap and set out clearly what industry needs to do, and to explore what structures could achieve real change. the imf and world bank could also help by encouraging involvement and collaboration of non - cpmi countries and offering technical assistance. conclusion i want to leave you with three key messages today : enhancing cross - border payments is crucial to the global economy ; tangible progress is already being made ; and to really change the dial we need work collaboratively. and β we β means the three groups of stakeholders - central banks, industry and public authorities β working towards a common vision. the one difference to the trireme is that there may be different starting points reflecting the nature of individual jurisdictions. i look forward to continuing to work with you all on this important mission to enhance cross - border payments : collaboration will be the key to our success. i would like to thank paul bedford, michaela costello, sophie dalzell, john jackson, anna koch and karin oldham for their help in preparing these remarks. 1. cross - border payments outlook 2022 : trends, challenges, and opportunities 2. trading economics : remit | remarkably β the uk is no more productive than it was back in 2005 β before jake bugg got his first guitar. the critical questions are how much and how quickly productivity improves. the mpc β s central view is that productivity growth is likely to pick up only slowly in the early phase of recovery, but that there is potential for growth to accelerate as the recovery takes hold. the slow pickup in productivity means unemployment could initially fall quite rapidly, but fall short of 7 %. over the next three years productivity is expected to grow at around 1. 8 % per year, below its pre - crisis trend3 of 2. 2 %. while even that modest productivity recovery is not assured, it is hardly an aggressive forecast. it implies that productivity reaches its 2008 level only in 2015. and it means that productivity doesn β t catch up any of its current 15 % shortfall relative to its pre - crisis trend. were any productivity catch - up to happen, unemployment could take even longer than three years to reach the threshold. a rebound in productivity, if accompanied by higher output growth, would be no bad thing. it would boost the incomes of those in employment and is an essential part of improving the uk β s competitiveness. moreover, in such a scenario, you would know to expect interest rates to stay lower for longer, encouraging household spending and business investment. our forward guidance is a stabiliser β securing the scale and duration of recovery that is needed to bring unemployment down. the prospect that interest rates might stay at their low level for longer will not be welcome for savers. i have tremendous sympathy for them β after all they have done the right thing, set money aside, and now they are earning returns that are substantially below what they would have expected. but raising interest rates now is not the answer β instead what savers need is a stronger economy. that will mean higher asset prices, and will allow interest rates to return to normal levels in a sustainable way. a strong economy is in all of our interests, as it will deliver better job prospects for our friends, neighbours, children and grandchildren. the last thing savers want is for the uk to follow japan by raising interest rates before recovery is secured, only to find that we are condemned to decades more of low interest rates and lost opportunities. our forward guidance is about setting the path of inflation to return to target let me reassure you that our mandate to deliver price stability has not changed. our inflation target of 2 % was rec | 0.5 |
at 2 per cent, the midpoint of a 1 to 3 per cent target range. let me stress a few points about our inflation - targeting system. first, our commitment to inflation control is the best way that the bank of canada can contribute to high sustainable growth of output and employment. in other words, inflation targeting is a means to an end, not an end in itself. the second key point is that we operate in a symmetric way. we care just as much about inflation falling below target as we do about inflation rising above target. if demand for goods and services pushes the canadian economy against the limits of its capacity, and inflation is poised to rise above the target, the bank will raise interest rates to cool off the economy. and when the economy is operating below its production capacity, and inflation is poised to fall below the target, the bank will lower interest rates to stimulate growth. finally, inflation targeting is very important in terms of the bank β s accountability to the canadian public. if inflation persistently deviates from the target, we must explain why this has happened, what we intend to do to bring inflation back on track, and how long we expect the process to take. with the adoption of inflation targets, we have gained all the expected benefits, and even gained some that we weren β t expecting! let me list some of them. inflation has become more stable, averaging very close to 2 per cent, and private sector inflation expectations have become well anchored. importantly, our symmetric approach has also worked as an economic stabilizer, helping to smooth the peaks and valleys of the business cycle. businesses and individuals can make long - term economic plans with increased confidence about the future. and scarce economic resources are no longer wasted in efforts to hedge against the threat of either high inflation or deflation. moreover, with inflationary expectations well anchored, we have found that movements in the exchange rate have much less impact on inflation than in the past. this is because markets know that the central bank is committed to protecting the domestic value of the canadian dollar. because we have a clear objective, and because we explain publicly how we plan to meet that objective, financial markets can now better predict how the bank will react to different circumstances. at the same time, inflation targeting has brought increased discipline and clarity to policy deliberations inside the bank. let me make two more points about our inflation - targeting framework. first, our experience with inflation targets has also allowed us to see the importance of having an | ##217 will add value in terms of the proposed additional financial reporting. we certainly can provide that additional information but, in our view, it is not evident that providing that information would satisfy a cost - benefit analysis. the bank of canada is not a commercial enterprise. our balance sheet is structured to enable us to carry out two main responsibilities : the conduct of monetary policy and activities related to our role as lender of last resort. in terms of revenues and expenses, in 2006, we remitted $ 1. 9 billion to the government through seigniorage. in the same year, our operating expenses were $ 264 million. it is not evident that providing, for example, a cash - flow statement or statement of retained earnings would contribute to meeting the objectives of bill s - 217. in summary, the bank of canada very much supports the objectives of this bill : the promotion of sound financial management, openness, and accountability. as the bill says, " canadian taxpayers need to feel confident that public monies are being managed prudently. " what is not self - evident in the case of the bank of canada, given our mandate, is whether the benefits of providing the additional information outweigh the costs. this bis review is available on the bis website at www. bis. org. | 0.5 |
, the appropriate financing of the economy and taking into account the very significant rebalancing of inflationary risks ; second, they can be easily unwound once the financial crisis attenuates and when we see any risks of a future rise in inflation. these two features ensure that all measures taken are fully consistent with the ecb β s primary objective, which is to preserve price stability in the euro area over the medium term. beyond monetary policy, i see two policy priorities going forward. first, governments need to spell out how they envisage unwinding the crisis - related fiscal stimulus measures to return to sustainable fiscal positions in the medium term. this is particularly important as substantial support for the financial sector might still be needed. while this support often does not directly affect fiscal balances, it creates contingent liabilities that may have to be catered for. second, the urgent need for reform of the global financial architecture should not distract from the need for further progress with labor and product market reform in the euro area. rigorous implementation of the lisbon reform agenda remains as pressing as ever, as increased productivity and efficiency will not only foster the development of the private sector, but also facilitate the return to sustainable fiscal positions. in my remarks today, i would like first to recall the origins of the crisis. i will then explain in detail the various actions the ecb has taken to support the euro area economy and the financial system. before concluding, i will also say a few words on the specific challenges currently facing the spanish economy. the roots of the financial crisis and its propagation over the past ten years, we have witnessed a dramatic shift of focus in large parts of the financial sector β away from facilitating trade and real investment towards unfettered speculation and financial gambling. to be clear, i do not deny that financial liberalisation and financial innovation over the past two decades have made important contributions to the overall productivity of our economies. for example, the securitisation of assets β the transformation of bilateral loans into tradable credit instruments β had tremendous potential for the diversification and efficient management of economic risk. but the way securitisation was implemented also meant that banks and non - banks were able not only to sell loans, but also often to place them fully off - balance sheet immediately after they had been extended. this weakened their incentives to conduct prudent screening and constant monitoring of loans. this is true only for the most recent product innovations in the field of securitis | health. this, in turn, would worsen the quality of banksaβ¬β’ balance sheets. policy support remains essential to prevent balance sheet strains and tightening financing conditions from reinforcing each other. conclusion summing up, the euro area economy is clearly rebounding. however, the speed of the recovery continues to depend on the course of the pandemic and progress with vaccinations. the current rise in inflation is expected to be largely temporary and underlying price pressures will build up only gradually. the slight improvement in the medium - term inflation outlook and the current level of financing conditions allow favourable financing conditions to be maintained with a moderately lower pace of net asset purchases under the pepp. our policy measures, including our revised forward guidance on the key ecb interest rates, are key to helping the economy shift to a sustained recovery and, ultimately, to bringing inflation to our two per cent target. we are now ready to take your questions. 3 / 3 bis central bankers'speeches | 0 |
the stock market as a wealth creation opportunity, unlike in many countries where this section of the population is very actively participating in the stock market ; 3. an under developed brokerage community ; and 4. a business community apprehensive of listing for various reasons. what can be done to mitigate these challenges? it is important that the business enablers ( such as the reserve bank, commercial banks, ftib, firca and other regulatory agencies ) and the private sector players like yourselves, view the capital markets, and by extension the spse, as a mechanism for business and economic development in fiji. the reserve bank will do whatever it can to ensure the development of the capital market and will play a pivotal role in public education and investor awareness programs to foster confidence in the markets. we will also spearhead initiatives, whether with government or other agencies, which seek to develop the market and raise these issues at the political / ministerial level so that these reach successful conclusions. here, i wish to mention that following cabinet approval, reviews are currently underway to amend the capital markets and unit trusts legislation. government has offered a reduced corporate tax of 20 % to companies who list on the spse which would not only facilitate economic development but improve the governance structures of companies. so why haven β t more companies grasped this opportunity to grow their businesses? i hope we can discuss some of these issues today. ladies and gentlemen, today we have present in this room, investment advisers, brokers, lawyers and accountants, and also firca, who can assist you and answer your questions in relation to the capital markets and the stock exchange. we have purposely also included presentations from people and companies who have successfully utilised the capital markets to take their companies to the next level so that you all have the opportunity to hear it from the β horse β s mouth β. i urge you to use this opportunity to get the information you need and make contact with our licensed intermediaries. ladies and gentlemen, thank you very much for your time and attention and i wish you a good evening. | barry whiteside : recent developments and outlook for the fijian economy address by mr barry whiteside, governor of the reserve bank of fiji, at the asco motors appreciation luncheon, suva, 13 july 2016. * * * the chief executive officer of asco motors, mr jai kumar distinguished guests staff of asco motors ladies and gentlemen introductory comments bula vinaka and warm greetings to you all! i wish to thank mr kumar for his kind invitation. it is a pleasure to be here this afternoon to share with you some recent developments and our outlook for the fijian economy. but before i do so, i understand that this is asco motors β 27th year of operations under its current trading name, and that it has been 53 years since the first toyota passenger vehicle was shipped to fiji in 1963. i still have visions of those early box - like models ( and yes i do go back that far! ). i distinctively remember that it was a time when anything japanese was notably cheaper, with the connotation of being qualitatively inferior than models imported from australia and other parts of the world. this is definitely not the case now, when anything manufactured in japan seems to attract quite a high premium price! this clearly is a reflection of the drive to quality and efficiency over the years and the philosophy to be the best! akio toyoda, the chief executive officer of toyota motor corporation, famously said, β when consumers purchase a toyota, they are not simply purchasing a car, truck or van. they are placing their trust in our company. β today β s event, while labelled a customer appreciation day, can just as easily mark the many milestones achieved by asco motors over the years. the company has become an important cog in our automotive industry which, as a whole, has contributed immensely to the fijian economy and continues to play an important role towards lifting our growth potential. the fijian economy my brief indicated that i should say a few words on the fijian economy. over the past three years ( from 2013 β 2015 ) fiji has grown, on average, by 4. 7 percent. this easily exceeds the historical trend and is something i feel we should all be quite proud of, given the global trend has been moving in the opposite direction. recently we have seen fiji flourish in an environment of consistent and accommodative fiscal and monetary policies, strong credit growth, improved investor and consumer confidence and, with the return to parliamentary | 0.5 |
employment by industry - change since march quarter 2020 preliminary research also indicates that downturns in employment last a lot longer than downturns in output. even if economic activity picks up over 2021, unemployment will remain 19 monetary policy statement november 2020 page 11 of 17 elevated for quite some time. 20 and certain demographic and ethnic groups are more likely to experience the lingering negative effects of the current recession than others. this effect occurs due to location, skills training, experience in the labour market, and broader roles in society such as caring for dependents. for example, we already observe that : the pandemic shock has disproportionately affected the service sector in many economies, with new zealand as no exception. it is the service sector that employs most youth. younger workers are also likely to have lower wages and less savings ( figure 13 ). 21 and their labour market separation rates ( redundancy or leaving the workforce ) are considerably higher than those of older people. 22 23 there is a greater impact on female than male unemployment during economic downturns ( figure 14 ). 24 and, maori and pasifika are much more negatively exposed to labour market fluctuations than europeans ( figure 15 ). 25 26 figure 13 : covid - 19 employment impact by age ( change march quarter 2020 to september quarter 2020 ) figure 14 : covid - 19 employment impact by sex ( change march quarter 2020 to september quarter 2020 ) 20 covid - 19 and the labour market : what can history tell us, markham, s., ozbilgin, m., robinson, f. rbnz discussion paper, 2020 ( forthcoming ) 21 monetary policy statement november 2020 22 the job - separation rate is the probability of an employed person losing their job in a given quarter. these rates have been adjusted to account for flows in and out of the labour force. 23 industry, age and unemployment risk during a pandemic recession, graham, j., ozbilgin, m., rbnz discussion paper, 2020 ( forthcoming ) 24 monetary policy statement november 2020 25 covid - 19 and the labour market : what can history tell us, markham, s., ozbilgin, m., robinson, f. rbnz discussion paper, 2020 ( forthcoming ) 26 maori and pasifika bear a disproportionate impact of labour market fluctuations relative to their population share. source : rbnz estimates based on ministry of social development ( msd ) and stats nz data. population shares | leading to increased housing activity and house prices. we will respond to the letter with careful consideration, outlining the trade - offs that exist and what we can do to assist. the monetary policy committee takes asset prices ( household wealth ) into consideration when assessing its policy decisions. the β consumption β of housing is also captured in the 32 economic welfare and a dual mandate for monetary policy in a small open economy, jacob, p., ozbilgin, m., 2020 ( work in progress ) 33 philip bunn, andrew g haldane & alice pugh, β has monetary policy made you happier? β, staff working paper no. 880 ( july 2020 ). 34 hon. grant robertson, letter to rbnz governor, 24 november 2020 https : / / www. beehive. govt. nz / sites / default / files / 2020 - 11 / letter % 20to % 20rbnz % 20governor. pdf page 14 of 17 consumer price index, including rents, rates, construction costs, and housing transaction costs. 35 and, we acknowledge that lower real interest rates make residential mortgages more affordable, tempting increased housing purchases and building. however, there are many other factors impacting on house prices outside of the monetary policy committee β s influence. a historic undersupply of housing and restrictions on land supply are two widely acknowledged issues. more recently, with the impact of covid - 19, employment prospects have also tended to remain more positive for the traditional homeowning age group, compared to youth. and, kiwis who were living overseas returned home in the early stages of the covid - 19 pandemic, and fewer have left since, hence more housing demand. 36 access to affordable housing is an important issue for new zealand β s economic wellbeing, and we are pleased to be requested to assist the government β s thinking on this issue. distributional impact of monetary policy the impact of monetary policy decisions on wealth and income equality is another important topic for considering overall economic wellbeing. as janet yellen recently noted, despite the fact that the tools of monetary policy are generally not well - suited to achieve distributional objectives, it is nevertheless important that policymakers understand and monitor the effects of macroeconomic developments on different groups within society. 37 here at the bank we have undertaken an assessment of the international literature on the distributional impacts of monetary policy on wealth and income. our work highlights that it is unclear whether looser monetary conditions | 1 |
misguided path. in particular, the significant efforts made in the region over the recent decade to bolster financial sector efficiency and innovation, which in turn promotes financial integration, could be disproportionately curtailed. in addition, it has only been recently that the global attention has also turned to enhancing supervisory intensity and effectiveness as an essential component of the financial reform effort. this is a welcome move and will add a critical dimension to the consideration of future reforms by national authorities. in asia, financial reforms were already accompanied by a significantly strengthened supervisory approach and safety net arrangements, which served to check unfettered innovation and reckless risk - taking behaviours and promote strong incentives for prudent risk management. for these reasons, our banking systems have been resilient through the global financial crisis and have continued to remain strong since, despite continued risks in the global economy. as we contemplate the raft of reforms that will continue to occupy the global agenda in the next few years, our considerations should be to pursue domestic and regional solutions that will deliver a more resilient financial system without impairing the continuous provision of efficient financial services that are vital for our economies. let me conclude my remarks. while many challenges remain, asia is at the cusp of experiencing significant collective economic growth and development. asia should however significantly draw important lessons from the global financial crisis and recognise the implications of greater interdependence. in addition, the sovereign debt crisis in europe relates not only to fiscal matters but to debt management which has significant implications for financial markets. while fiscal issues may remain a national matter, its financing and its broader consequences needs to be addressed. given the positive environment in asia, the opportunity needs to be taken to put in place the necessary arrangements to best address these challenges. the world is increasingly now looking towards asia. with these enabling conditions, asian economies would be better positioned to collectively strive and work towards achieving the shared vision of financial and economic integration that will not only unlock our potential but also enhance the prospects to contribute towards a more balanced and sustainable global economy. bis central bankers β speeches | in the euro area and, as jorg has said, expectations there have remained very well anchored. but as in japan, people in europe are talking about a lost decade. cΕure : there is a risk of a lost decade in europe, if the right reforms are not undertaken. but the challenges and answers are very different from those in japan. it is true that the crisis has been a step backwards [ a setback ] for the european economy, but the underlying problems, such as declining trend growth and unsustainable social promises, were there before. the crisis has only uncovered them and has shown the need for answers more clearly and more urgently. but the high level of unemployment is certainly worrying β¦ asmussen : yes, the level of unemployment is unacceptable. but the question is what we can do about it. we have a strategy in europe that is based on stable prices, sound fiscal policies bis central bankers β speeches and growth and employment - enhancing structural reforms. it will take some time to see the positive effects, but i don β t see any viable alternative. cΕure : the high level of unemployment, particularly youth unemployment, shows the urgency of taking forward - looking reforms at the national level and, collectively, at the euro area level. with the crisis, differences between countries are becoming clearer and larger. is it a challenge for friendship between european nations? asmussen : we must acknowledge the resurgence of national stereotypes. that is worrying. the cliche that the greek people are lazy, whereas all germans are hard - working, is simply false β¦ reality is more differentiated. cΕure : we see the risk of nationalism in european discussions as well, with the temptation to defend narrow national interests. but politicians can overcome this temptation and make progress. take the banking union, for example. it is the most important step to be taken in european integration since the inception of the euro, perhaps more important than the single currency itself. it will have far - reaching consequences for national economic models and national legislation. so there is room for optimism if we succeed in taking that quantum leap forward. isn β t that overly optimistic? what can germany and france do to overcome these challenges? asmussen : you have described the challenges rightly, but the answer to them can only be more integration. france and germany have a leading role to play, because they stand at the core of european integration. they jointly, but only jointly, fulfil the definition of a superpower : if | 0 |
of risks is not a negative thing. risks will always be present. the good news is that the present reality imbibes confidence in us. the philippine economy is strong. we continue to deliver gains amidst monetary policy divergence and uncertainty. our macroeconomic fundamentals are robust and sound. further, our financial system is more sophisticated, disciplined, and resilient. real gdp has registered positive growth for 76 consecutive quarters, covering a span of 19 years since 1999! in 2017, gdp grew by 6. 7 percent, making the philippines one of asia β s fastest and most consistently growing economies. this growth performance is in line with the economy β s potential output, currently estimated at around 6. 0 - 7. 0 percent. the improvement in potential output reflects declining incremental capital - output ratio, rising total factor productivity, and improving workforce capacity. as we pour in more investments in physical infrastructure under build, build, build, and more soft investments in our young population to provide better health, high quality education, and skills development, we can expect further accelerated growth in potential output. these investments are sustainable because they are supported by a prudent fiscal position characterized by lower national government debt - to - gdp ratio of around 42 percent and additional revenues to be generated from the recent tax reform ( train ). there is thus strong basis for asserting that the economy can sustain its growth momentum. likewise, higher output capacity should allay concerns of potential overheating. the country β s external position is manageable despite global headwinds. the country β s overall balance of payments ( bop ) for the year 2017 posted a deficit of us $ 863 million. this is just 0. 3 % of gdp. the underlying widening of the trade - in - goods gap stems from rising imports of 2 / 5 bis central bankers'speeches goods that support domestic capital formation and production. this development is consistent with the country β s growth narrative. one should expect that the economy β s expansion will be accompanied by stronger demand for imports. over time, investment led economic activities will support needed infrastructure development, raise domestic competitiveness, increase goods exports, and alleviate the trade gap. the sustained resilience of foreign direct investments, overseas filipino ( of ) remittances, and business process outsourcing ( bpo ) receipts provide additional buffers to the domestic economy. external debt metrics have also improved as reflected in the continued decline in the external debt - to - gdp ratio to around | bets to anyone. mindful of the potential build - up of systemic vulnerabilities, we have also deployed and continue to develop various macroprudential measures. currently, we have exposure drafts on the countercyclical capital buffer, the debt - to - earnings borrowers test ( debt ) that is akin to the existing real estate stress test ( rest ), and the borrowers interconnectedness index. furthermore, we continue to enhance our surveillance tools. we are also exploring new technologies such as big data analytics to further improve our surveillance. finally, we are reinforcing our model - based assessments with qualitative and expert judgments on current macroeconomic and financial conditions. other game - changing financial sector reforms part of our transformative policy reform agenda is to accelerate financial market development. we give particular focus to foreign exchange ( fx ) and local currency debt markets. we envision a more balanced financial ecosystem where the banking system is complemented by a deep and liquid debt market. our bold financial sector reform agenda includes ambitious fx reforms toward a more organized fx market that supports a flexible and market - determined exchange rate. this includes further liberalizing fx rules to reduce the cost of doing business and to improve data capture. 4 / 5 bis central bankers'speeches in addition, we will enhance governance and oversight over the fx markets, including the usd / php market. this will further improve transparency, price discovery, and market conduct. we are currently drafting the governance framework for fx markets with a set of general principles that shall apply not only to the existing usd / php market, but also to any third currency / php market that may be established in the future. we have initiated engagement with the industry so that existing trading markets can conform to the new framework within a mutually agreed timeframe. as you know, the bsp is also collaborating closely with other government agencies and industry associations such as mart, to implement the philippine local currency debt market development roadmap. immediate focus is on deepening liquidity, enhancing price discovery and strengthening regulatory oversight. recently, the bureau of the treasury released the implementing guidelines for the enhanced government securities eligible dealers ( gsed ) program outlining incentives and accountability of market - makers. we count on your continued support in this endeavour, including providing effective two - way quotes to support market liquidity. even as we move towards further liberalization and increased market incentives, we likewise expect responsible behavior among market players, by adhering to market standards and rules in order to | 1 |
to further strengthen the culture of openness and of diversity within the bank. for i am convinced that we can benefit from different perspectives, experiences, skillsets and lifestyles. i therefore wish to promote diversity within the bank and leverage the opportunities it presents. 4 safeguarding stability throughout its history and thanks to the commitment of its staff, the bundesbank has always managed to adapt to a changing environment. this is how it has fulfilled its mandate and remained true to its core. stability is the bundesbank β s mission and its core. this includes stable prices, stable banks, a stable financial system and stable payments β digital payment systems as well as a reliable supply of safe cash. stability is not at odds with change and a forward - looking approach, either. you see, the economy and society have to be built on stable and reliable foundations if they are to successfully evolve. we are living in a time of profound change. digitalisation is transforming the way we live and work. the economy needs to be restructured in response to climate change. and various developments might even pick up speed due to the pandemic. all these changes also have an 2 / 5 bis central bankers'speeches impact on our tasks and how we go about fulfilling them. the bundesbank must rise to this challenge, and it will do. like my predecessors before me, now it is i who must build on the tried and tested culture of stability to find contemporary answers of my own. the bundesbank should be a modern, efficient institution that rises to the challenges that change brings and harnesses the opportunities it offers. 4. 1 price stability our primary objective is clear : to ensure price stability for the people of the euro area. inflation rates have risen steeply in the past few months, climbing to their highest levels since the beginning of monetary union. rates of up to 5 % were recorded in the euro area, and in germany even higher. this means households have significantly less money in their pockets. many people are concerned about this loss of purchasing power. it is true that the high rates are partly attributable to one - off effects that will expire automatically. but there are other reasons as well. and the medium - term outlook for prices is exceptionally uncertain. while prices might also rise by less than projected in the forecasts, right now i see more of a risk that the inflation rate could remain elevated for longer than expected at the current time. in any case, monetary policymakers | its voice heard as an advocate for a culture of stability. i can reassure them that it will. we will contribute our expertise and our convictions to the discourse with confidence. however, making a case with confidence does not mean disparaging the validity of others. i am looking forward to fruitful discussions on the ecb governing council and to working with you, christine. as a long - standing member of the market operations committee, i always enjoyed working together with colleagues from the eurosystem and benefited from a variety of views and experiences. we are all striving to achieve our common goal of safeguarding price stability for the people of the euro area. likewise, i am looking forward to working together with the other members of the bundesbank executive board as well as with my colleagues throughout the entire bundesbank : in the branches, the regional offices and at central office. and i am already looking forward to getting reacquainted with old friends as well as getting to know new faces. together, we can achieve a great deal. 5 / 5 bis central bankers'speeches | 1 |
amando m tetangco, jr : crafting a regional agenda for child & youth finance speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the asia and the pacific regional meeting on β child & youth finance β, manila, 4 december 2012. * * * secretary imelda nicolas of the commission on filipinos overseas ; cyfi managing director jeroo billimoria ; distinguished resource persons ; child and youth representatives callista ( 12 years old ) from indonesia, sam ( 11 years old ) from uganda and jessie from the philippines ; fellow advocates of financial inclusion from asia and the pacific ; our media partners ; special guests, good morning and welcome to the bangko sentral ng pilipinas, the philippine central bank. we at the bangko sentral are happy that you have come to the philippines to discuss child and youth finance in asia and the pacific β where it is said roughly 60 % of the world β s youth reside. here in the philippines alone, about half of our total population are young. it is important for our country therefore to ensure that our youth are given proper basic education that will allow them to grow into responsible self - reliant adults. indeed, to us at the bangko sentral, finance education is for everyone. thus, when a 2006 survey indicated that less than 5 % of the filipino youth save regularly, we made a decision to place child and youth finance education high on our agenda. this is important to us. after all, we have roughly 25 million students in both elementary and high school levels. and as philippine national hero dr. jose rizal once said β ang kabataan ang pag - asa ng ating bayan. β the youth are the hope of our future. furthermore, the 2006 citibank financial quotient survey indicated that filipinos have a financial intelligence quotient of 47. 8 points, less than half the maximum score of 100. while there were other countries that had lower scores, the result was disturbing for us nevertheless. it was an indication that over the long term our countrymen may miss out on the opportunities that development brings. or worse, be unprepared to weather financial uncertainties that may arise in the future. these results provided us with the strong resolve to broaden and deepen our financial education program. since then, the bangko sentral ng pilip | benjamin e diokno : philippine identification system - paving the way towards financial inclusion speech by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the roundtable discussion on " championing and accelerating good digital id for all " during the world bank group / imf annual meetings, washington dc, 17 october 2019. * * * good morning! it is a privilege and honor to be speaking before a chosen group of eminent dignitaries on a very important and growing topic across the globe. the innovation, development and advancement of technologies has ushered us to a new digital world, and reshaped mindsets, perspectives and decisions of government officials and regulators. technologies have greatly influenced the way we go about our normal ways and they continue to do so as we speak. the journey for a national id for the philippines started 30 years ago. but it failed to pass one congress after another. finally last year, the philippine id system act was past last year. and i am happy to announce that on 07 october 2019, we had a milestone as the central bank of the philippines signed the memorandum of agreement ( moa ) with the philippine statistics authority that starts the implementation of the β philippine identification system ( philsys ) act. the law, which promulgates the policy of the state to establish a single national identification system, mandates the issuance of a unique, non - transferable card to all citizens or resident aliens registered under the philsys. the law is beneficial for all filipinos as it provides β a means of simplifying public and private transaction β through a reliable and nationally - accepted proof of identity. having this proof of identity has far - reaching benefits, particularly in promoting financial inclusion. with the β philippine id β, unbanked filipinos will have a proof of identity which is a key requirement in opening a bank account. it will be easier for unbanked filipinos to open bank accounts and avail of financial services β a win for our financial inclusion agenda. this will enable more of our marginalized countrymen to enjoy gains from and participate more actively in the country β s growing economy. as such, the central bank of the philippines is glad to take part in this game - changing reform as we join the other countries in providing a foundational platform for the delivery of services. the central bank of the philippines, as the national security printer for the philippine currency, has the | 0.5 |
this year, the international oil price continued what seemed to be an inexorable ascent. this was driven to a large degree by the successful implementation of the agreement to restrict output by the organization of petroleum exporting countries ( opec ) and some nonopec countries. the result was a steady increase in the price of brent crude oil, from us $ 50 per barrel in july last year to around us $ 80 by june this year. although some moderation has been evident recently, the outlook remains uncertain, with mixed views by analysts in this regard. to date, the impact on domestic petrol prices and on inflation has been significant. the second development was a marked escalation in the changes to us trade policy. initially, tariff increases were focused primarily on china, but have subsequently been broadened to encompass some traditional allies of the us as well. it is still unclear whether these actions and countervailing reactions will evolve into a full - blown trade war. however, the rise in protectionism has already had a moderating impact on the optimism for global growth, and has also already contributed to risk - off scenarios in global financial markets. of concern is that the sharp contraction in world trade that was recorded in april would be protracted. this was the worst performance in world trade since may 2015. page - 2 - of 9 the net result of all of these recent global developments has been a generally deteriorating environment for emerging markets. during the second half of last year, the domestic economic outlook was overshadowed by heightened political uncertainty in the lead - up to the african national congress ( anc ) elective conference. business and consumer confidence were at extremely low levels. although the 1. 3 % growth rate for the year exceeded the post - crisis low of 0. 6 % recorded in 2016, it was in stark contrast to the average emerging market growth rate of 4. 7 %. the low growth and deteriorating fiscal position exacerbated the risk of rating agencies β downgrades that could have seen south african bonds falling out of some of the major global bond indices. in response to these developments and risks, the rand remained under pressure for much of that period and reached its weakest level of r14. 47 against the us dollar during november. renewed optimism following the outcome of the anc β s elective conference set in during the early part of 2018. consumer confidence reached a record high in the first quarter of the year and remained high, although slightly lower in the second quarter. | monetary policy and macroprudential policy β, published on 25 january 2013. bis central bankers β speeches in principle, macroprudential policy tools can reduce the risks linked to household indebtedness in two different ways. first, one can increase the resilience of the financial system through, for instance, higher capital levels in the banks. it reduces the risk of a macroeconomic shock, for instance, a sharp fall in swedish housing prices, developing into a banking crisis if the banks have more capital to absorb loan losses. second, one can try to directly slow down growth in household indebtedness through, for instance, different types of limits to how much household are allowed to borrow. however, sweden has long lacked a framework for macroprudential policy, with clear guidelines as to which authority should take action and what tools they should use. i and several of my colleagues have called for such a framework on many occasions. now we have this framework in place. i now intend to describe the framework, the measures that have been taken and what remains to be done. the allocation of responsibility for the tools and the establishment of a financial stability council the government announced last autumn that finansinspektionen would have the main responsibility for decisions on macroprudential policy measures and that a financial stability council would be established. the riksbank β s mandate remains unchanged. we shall continue to safeguard financial stability. we shall therefore continue to analyse and oversee the financial system, to inform and warn of risks and to make recommendations regarding measures to take. as i mentioned earlier, financial stability is also an important condition for monetary policy to function. the new framework also entailed establishing a forum for representatives of the government, finansinspektionen, the swedish national debt office and the riksbank to meet and discuss questions of financial stability, what is known as the financial stability council. the council meets regularly, normally twice a year, and the information provided and discussions held at these meetings are publicised in the form of minutes no later than two weeks after the meetings. the meetings give us the possibility to discuss how the policy areas interact and what types of measure are needed to avoid new financial crises as far as possible. the authorities represented on the council then make decisions independently within their fields of responsibility, as to which measures should be taken. figure 12 illustrates the new framework for macroprudential policy in sweden. this spring β s work in the | 0 |
been a little more conservative in their move towards financial liberalisation. in hong kong, where our commitment to maintaining open markets is strong, in addition to our unconventional market operation, we had to introduce measures that have effectively built us a big cushion. the purpose of this cushion is to help us to absorb the spasmodic international financial shock waves of mammoth dimensions that can now be generated by the international financial system. some others, regrettably, have had to suffer the debilitating consequences of financial meltdown, and to face the often unjust accusation that these were entirely of their own making. domestic responses by economies in this region cannot on their own address the root of the crisis or lessen the chances of another international financial shock wave. one thing that we have learned from this episode of financial turmoil is that, no matter how well maintained the domestic financial environment may be, problems remain in our increasingly liberalised international financial system that cannot be resolved by individual jurisdictions alone. there is a need for regional and international co - operation. hong kong has not, of course, been alone in this view. there is now international consensus that something needs to be done, if not on what exactly should be done, in reforming the international financial architecture. financial crisis : local, regional or international the financial crisis is basically an international one, and i think it is now generally accepted as such. but, when the financial crisis erupted nearly two years ago in thailand, and even when it was already spreading rapidly throughout the region, the explanations put forward by the experts then were largely local ones : macro - economic imbalances in the crisis - hit countries, cronyism, poor regulation, policy errors, and so on. consistent with these explanations, the assumption was that the international monetary fund ( imf ) and the multilateral development banks would fix it country by country, as they had done before in other localised crises elsewhere in the world. we therefore saw a series of policy adjustment programmes and financing packages targeting specific economies. these international financial institutions deserve much credit - far more than they have received - for mobilising, sometimes in a matter of days, financing packages totalling us $ 400 billion. but in a new and rapidly changing international financial system, the instruments that the international financial institutions have at their disposal seem to be increasingly inadequate. they soon found out that they can no longer use traditional strategies to deal with novel and unprecedented problems thrown up by constantly changing technologies and ever more sophisticated market practices. | macroeconomic, fiscal and monetary policies, and all of them had paid a heavy price for their past mistakes. the fact that the latest series of crises erupted in the developed world does not mean emes are immune from the spillover effects. more fundamentally, the emerging market economies, including hong kong where household debt to gdp ratio saw a record high, must learn from the latest mistakes of the developed world and take extra care in not getting into the mind - set or habit of spending beyond our means, whether at the household, corporate or government level. hong kong should in particular guard against the temptation of β collective irresponsibility β by pushing for or condoning public policies that entail spending that cannot be sustained in the medium to longer run, or else we would be mortgaging the future of our children and grandchildren. this again is easier said than done, and requires considerable wisdom of hong kong people and the courage and skills of our leaders to resist increasing pressure and temptations for unrestrained public spending. hong kong β s population is aging, and aging fast. at present, the elderly bis central bankers β speeches dependency ratio of hong kong is 5 : 1. this means that hong kong now has 5 persons within the age group of 15 β 64 supporting each person over the age of 65. however, in over two decades β time, the ratio will deteriorate significantly to 2 : 1, which means that there will only be 2 persons in the age group of 15 β 64 supporting one elderly person. the government has already made it clear that, while we are having budget surpluses, structural budget deficits will occur within a decade mainly due to changing demographic structure. 20. ladies and gentlemen, i have just made a long speech and now i would like to leave you with several key takeaways. first, it is very easy for governments to fall into the trap of going down the path of fiscal unsustainability as a result of the collective irresponsibility syndrome as well as population aging. second, it is very, very hard and immensely painful to try to get out of a government debt crisis. third, more likely than not, it is the next generation and the next and the next that will have to shoulder the costs and to suffer the pains for excessive spending and stock piling of debts by the current generation. if we don β t want to mortgage the future of our children and grandchildren, try not to leave with them a pile of debts as in | 0.5 |
that matter for the main economic decisions that the central bank wants to influence. how is it then that monetary policy can have an impact on the economy? well, one can think of long - term interest rates as comprising two elements : expectations regarding the future evolution of short - term rates ; and premia. premia relate to the compensation investors demand for holding on to an asset for a specific period of time ( the term premium ). moreover, they relate to the compensation for risks, such as the possibility of incurring capital losses due to difficulties they may encounter when selling the asset back to the market before maturity and at short notice ( the liquidity premium ). changes in the current policy rate are typically interpreted by markets to also signal changes for short - term rates in the future. that is, they affect market expectations for future short - term rates and therefore, long - term rates. in normal times, this signalling channel works well and market expectations tend to be in line with monetary policy makers β intended long - term rates. when, however, short - term nominal rates are at zero or close to zero, this signalling channel loses its potency. the risk is that long - term rates may drift away from the central bank β s intended path, in which case financing conditions in the economy will not properly reflect the stance of monetary policy. some academic economists have advocated that, particularly in such a situation, the central bank should engage in active communication regarding the future path of policy rates. 6 this communication would serve as a commitment device for the central bank to follow in the future the announced path of short - term rates, possibly conditional on actual developments in the economy. 7 if this commitment is sufficiently credible, it will be effective in steering expectations regarding future interest rates and so influence the first component of long - term interest rates to which i was referring before. this is turn, will allow the central bank to deliver accommodative financing conditions in the economy over a certain horizon. a number of central banks around the world β most recently including the us federal reserve β have adopted some version of this approach. but the decomposition of long - term rates i mentioned a few moments ago suggests that there is also another possible way for the central bank to deliver appropriate financing conditions in the economy. this second approach is to exert influence on the premia, to the extent that they are unwarranted and reflect dislocations in markets. i would argue that the the argument was originally | has said that time is of the essence for approaches at the european level to address aggregate demand, such as the juncker plan. we are still waiting for the results of a β¬315 billion plan that is leveraged 15 times. are you worried? it is not just about having a common european plan. it is also about asking countries to reprioritise their budgets in terms of public investment and taxes, which is admittedly not easy to do. should countries with fiscal space use it? you need to have fiscal space. when i look at aggregate values for the euro area, it is even better than those for the united states or united kingdom. it is not as if the euro area is in a danger zone. you cannot reason only on aggregate, because one also needs to assure fiscal sustainability in each country. moreover, the spillovers across the countries are relatively limited. so countries could use their fiscal space without compromising sustainability. there should be no illusion that a big demand shock will come from fiscal expansion. without that demand shock, either with public or private money, qe will not work, or will it? financial conditions are much easier and will support aggregate demand. also, structural reforms in a number of countries have started to produce positive effects. in addition, you have to consider the oil supply shock, which is positive for growth, provided that inflation expectations remain anchored. this is important. why? when inflation expectations are threatened by a shock, you may get negative impacts owing to possible delaying of consumption or investment. this is why qe comes at the right time. bis central bankers β speeches why doesn β t the central bank just print money and send a check to every household until september 2016. that would probably have an effect, wouldn β t it? this point is made in some academic circles, but how should this money then be distributed? it would be up to parliaments to decide how to distribute it, but then the ecb would be directly involved in the monetary financing of governments, which it is not allowed to do. wouldn β t it be possible to find a solution whereby the exact money that is printed finds its way to the private sector without affecting the budget directly? but what would you do? would you, for instance, give each person, rich or poor, a cheque for the same amount? this option, at least from what we have learned from others β experiences, also has a redistributive effect through a wealth effect : | 0.5 |
monetary base target. 4 second, the views of the bank and other central banks differ in regard to long - term inflation expectations. forward guidance issued by the federal reserve assumes that longer - term inflation expectations have been anchored at around 2 percent. the bank of england ( boe ) includes a similar view in one of its conditional forward guidance β knockouts. β therefore, one of the main tasks for these central banks is to continue with monetary easing measures to seek economic recovery, while ensuring that the anchored inflation expectations are maintained. in contrast, the bank has not yet successfully anchored long - term inflation expectations at around 2 percent. thus, the bank must focus on first transforming the deflation - oriented mindset and then increasing inflation expectations to a higher level than the current one. third, federal reserve and boe forward guidance includes employment - related thresholds. the federal reserve has a dual mandate of promoting price stability and maximum employment, so the reason for this is clear. the boe sees price stability as its primary mandate ; however, the inclusion of employment - related conditions may have reflected the need to clarify its views on the trade - off between inflation and unemployment. in contrast, there is a relatively small need for the unemployment threshold to be used in the bank β s guidance. the unemployment rate for december 2013 was 3. 7 percent, close to the lowest point in recent years of 3. 6 percent, which was attained in july 2007. some labor issues exist, such as the differential treatment of regular and non - regular workers and firms β demand for increased flexibility over labor market regulations. however, these are structural issues that are beyond the scope of monetary policy. 2 percentage points for fiscal 2014 and by 0. 7 percentage point for fiscal 2015, respectively. when assessing the inflation rate, the bank disregards the effects of these increases as they are temporary. the bank has charged 0. 1 percent on excess reserves since october 2008. thus, this interest rate functions largely as a floor for the interbank market interest rates. bis central bankers β speeches iii. performance of qqe in light of communication on monetary policy next, i would like to focus on the current performance of qqe in light of the public β s perceptions of monetary policy and price developments. a. households β understanding of the qqe framework and inflation expectations households are important economic entities that undertake consumption and residential investment. thus, understanding their current and future behavior is essential to examining the transmission mechanism of monetary easing. moreover | for the next quarter. in addition, the difference between this di and the correspondent di for input prices is often used as a proxy for profit margins ( chart 10 ). it is known that the di for output prices tends to be downward - biased and the di for input prices tends to be upward - biased, so the interpretation of these indicators needs to take these tendencies into account. 11 the drawback of this approach is that the data are only available for the next quarter, so only very short - term inflation expectations can be measured. the chart shows that there are some signs of an increase in firms β inflation expectations based on the di for output prices, but the indicator has leveled off very recently. fortunately, the bank will begin publishing a survey of firms β longer - term inflation expectations ( looking one, three, and five years ahead ) beginning with the march 2014 tankan survey. it is expected that this will promote a better understanding of firms β inflation expectations and their price - setting behavior. regarding factors contributing to firms β inflation expectations, the annual report on the japanese economy and public finance 2013, compiled by the cabinet office, conducted an interesting survey in february 2013. it showed that firms tend to raise their outlook for sales the respondents covered 367 listed firms. approximately 56 percent were nonmanufacturing firms, 41 percent were manufacturing firms, and the remainder were financial institutions. the survey population encompasses about 210, 000 firms ( excluding financial institutions ) that have at least 20 million yen in capital. more than 11, 000 firms are sampled in each survey. see, for example, koichiro kamada and kentaro yoshimura, β kigyo no kakaku mitoshi no kochokusei : tankan di wo mochiita bunseki ( rigidity in firms β price expectations : an analysis based on the bank of japan β s tankan [ short - term economic survey of enterprises in japan ] di ), β bank of japan working paper series, no. 10 - j - 3, 2010 ( available only in japanese ). bis central bankers β speeches prices of goods and services over the next year when they project that market prices over the same period will increase. 12 this response was provided by approximately 70 percent of manufacturing respondents and more than 50 percent of nonmanufacturing respondents. in other words, if an increase in demand for goods and services leads to a rise in market prices, this may induce firms to raise their sales prices. this situation is | 1 |
in the midst of the crisis, these gains must not be forgotten. the multilateralism of bretton woods at the end of the second world war, 45 countries agreed to establish a new international financial and economic order with the bretton woods institutions, the imf and the world bank, at its center. in his inaugural speech to the bretton woods conference in 1944, us treasury secretary henry morgenthau noted the following : β we know that economic conflict must develop when nations endeavor separately to deal with economic ills which are international in scope. to deal with the problems of international exchange and of international investment is beyond the capacity of any one country, or of any two or three countries. these are multilateral problems, to be solved only by multilateral cooperation. they are fixed and permanent problems, not merely transitional considerations of the postwar reconstruction. they are problems not limited in importance to foreign exchange traders and bankers but are vital factors in the flow of raw materials and finished goods, in the maintenance of high levels of production and consumption, in the establishment of a satisfactory standard of living for all the people of all the countries on this earth. β 3 these wisely spoken words are as relevant today as in 1944. when the imf and the world bank were established, it marked the beginning of a period of international economic and financial cooperation which over time embraced virtually all the countries of the world. the bretton woods institutions have served their membership well. when needed, their policies have adapted promptly and timely to changes in the world economy and the global financial system. the imf, with its crucial competence, has been a key forum for policy collaboration. its surveillance and lending activities are unique. i strongly believe that global cited inter alia in harold james : international monetary cooperation since bretton woods, the international monetary fund, washington d. c., 1996. governance is best served by a statutory - based international economic order, with effective and legitimate multilateral institutions where all countries are represented. in the recent decade, the rapid expansion of many large emerging economies has greatly altered the global economic landscape. most dramatic is the re - entry of china as a major economic power. at the same time, the growing imbalances in the world economy became and continue to be a source of instability, in addition to spurring protectionist tendencies. it is perhaps time to honor some fundamental principles, such as the one noted in an imf pamphlet from 1992 : β the philosophy of the articles of agreement | the imf in particular, to permit it to play an effective role in tackling the the unique nature of the responsibilities of the international monetary fund. imf pamphlet series no. 46, 1992, footnote 54. how economics managed to make amends, by arvind subramanian, peterson institute for international economics. op - ed in the financial times december 28, 2009. crisis. indeed, the g20 increasingly uses the imf as an instrument of its policy implementation. the governance structures of the imf have received considerable attention, as they are not deemed to adequately reflect recent important changes in the global economy. misgivings about the legitimacy of these structures have played a role in prompting the g20 member countries to β β¦ designate [ d ] the g20 to be the premier forum for our international economic cooperation β as agreed by the g20 leaders at their summit in pittsburgh last september. with his presence at the world economic forum meeting in davos last month, the chair of the g20 aimed to β drum up support for the idea of making the summit [ in korea later this year ] a β premier forum β where all major discussions on worldwide economic cooperation will take place β. 6 therefore, the current ambition of the g20 may not only be driven by the global crisis. it may also reflect the frustration of some key countries with what they see as a slow evolution of the decision - making bodies of the imf in response to changes in the composition of the world economy and the rise of new economic powers. international policy cooperation has thus moved out of statutory bodies and into groups of a select few, bypassing established channels and fora. other countries do not participate, directly or indirectly, but are called upon to contribute to efforts that others have agreed. the g20 discusses and aims to agree on changes in imf governance. the vast majority of the membership of the imf has no voice or representation in these discussions, including all lowincome countries and most emerging economies. if they are not addressed effectively, the large and growing global imbalances that contributed to the current crisis are likely to widen anew. this would again put at risk the stability of the global economy. linked to these prospects are the continued rigidity of important exchange rates and excessive reserve accumulation leading to the build - up of unsustainable debt. i agree with those who have said that in recent years, the international monetary system failed to promote timely and orderly economic adjustment. 7 | 1 |
. investments like these boost social mobility, and they have the added benefit of improving skills in the workforce, which in turn helps potential output growth. this hits home for me, and i β ll bet for many students in the audience. i haven β t stopped learning since i left university in the last century. way back then, many things i β ve worked on β including blockchain and cryptocurrencies β didn β t even exist. i β d also like to put strengthened competition and antitrust policy on the table, particularly when it comes to global tech giants. and the reforms to international tax policies led by the organisation for economic co - operation and development and g20 are needed so that globally active digital companies contribute their fair share. 12 statisticians and academics can help inform the debate in this area β with better data on the digital economy and more research into how digitalization affects different groups in society. 13 10 among others, see i. a. ibarra, l. goff, d. j. hernandez, j. lanier and e. g. weyl, β should we treat data as labor? moving beyond β free, β β american economic association papers and proceedings 108 ( may 2018 ) : 38 β 42 ; m. farboodi, r. mihet, t. philippon and l. veldkamp, β big data and firm dynamics, β american economic association papers and proceedings 109 ( may 2019 ) : 38 β 42 ; and c. i. jones and c. tonetti, β nonrivalry and the economics of data, β american economic review 110, no. 9 ( september 2020 ) : 2819 β 2858. 11 see c. a. wilkins, β a look under the hood of canada β s job market β ( speech to the toronto region board of trade, january 31, 2019 ). 12 among others, see organisation for economic co - operation and development, tax challenges arising from digitalisation β interim report 2018 ( march 16, 2018 ). 13 for examples of existing work, see international monetary fund, β chapter 3 : understanding the downward trend in labor income shares, β world economic outlook april 2017 ( imf, 2017 ) ; and g. michaels, a. natraj and j. van reenen, β has ict polarized skill demand? evidence from eleven countries over twenty - five years, β review of economics and statistics 96, no. 1 ( march 2014 | innovations β including the home - grown invention of marquis wheat β allowed a growing population to be fed by fewer workers. today, the share of workers in agriculture is less than 2 percent. all those jobs weren β t simply lost. new positions were created in the manufacturing and service sectors as the economy grew, and these now account for the majority of employment in canada. the same dynamic with innovation is true today in that more jobs are created than destroyed. a recent study by statistics canada finds that canadian firms that adopted robots over the past two decades tended to hire more people overall. 8 what conventional wisdom glosses over, however, is the significant transition costs that are borne unevenly across households. even as the economy as a whole benefits from technological advances, sectoral shifts can leave certain groups without jobs and facing obstacles to finding new work. the study i just mentioned links the adoption of robots with higher turnover and net layoffs for some groups of workers. other research finds that the decline in canadian manufacturing since the early 2000s took a disproportionate toll on men in terms of employment and wages. 9 we know that individuals, their families and communities can often struggle for years during transitions triggered by technological change. 8 see j. dixon, β the effects of robots on firm performance and employment, β statistics canada economic insights no. 2020024 ( november 2, 2020 ). 9 see statistics canada, β study : the impact of the manufacturing decline on local labour markets in canada, β the daily ( january 15, 2020 ). - 7innovations in recent decades in advanced economies have also contributed to the rise of superstar firms with considerable market power. we β ve seen this before : think of the railways well over 100 years ago. the modern winner - takesall effect is magnified because user data have become a new source of monopoly power. 10 that β s good news for shareholders and workers who have the special skills that superstar firms need. however, it may mean that a handful of firms now account for an outsized share of the jobs in a given industry or town, leaving many other workers with less bargaining power and stagnant wages. this dynamic has likely contributed to weak wage growth in many countries over recent years. 11 i think digitalization should be embraced, but we also need to decide how best to help those individuals who are adversely affected. as i said earlier, investing in education is at the top of the list for many. that includes investing in continuous learning | 1 |
ve never really seen anything like the hits to real income the economy has had to endure over the past couple of years. and absence of evidence isn β t evidence of absence. this uncertainty about the potential scale of second - round effects has some bearing on how monetary authorities, including the mpc, have responded to this surge in inflation. there β s long been a debate about how quickly policy should react to news about the economy. should interest rates be adjusted immediately to a level that β s likely to be appropriate for some time? if so, one wouldn β t expect to have to make any further changes at the following few meetings ( in the absence of any incoming news that alters the outlook ). or should they respond to inflationary news only by degrees, in which case there β s a natural upward slope to the near - term path of interest rates? even having tightened policy at one meeting, there would need to be negative news about the outlook not to do so again at the following one. in the data, there does appear to be a degree of β smoothness β in the way official interest rates behave. rather than jumping from one level to another, factoring in all the news at once, the policy rate usually seems to respond to it over time. two explanations have often been suggested. one is uncertainty about the impact of changes in official interest rates. if there β s a degree of imprecision in estimates of policy multipliers there β s a case for moving a little more gingerly than otherwise. another, offered by the economist michael woodford, is that smoothing the spot interest rate gives the central bank better control of medium - term interest rates, which may matter more in the transmission of policy. in this case i think a third factor may be at play, namely the need to learn about the extent of these β second - round effects β. we have inevitably had to learn about them and, therefore, to respond to signs of more persistent domestic inflation as and when they emerge. bank of england the response to demand shocks this is less the case when it comes to plain - vanilla shifts in aggregate demand. these are more common and the appropriate response is well understood : an inflation - targeting monetary authority has to lean against them. indeed, one additional reason for caution, in the face of these big rises in import prices and their impact on domestic inflation, has been the likelihood that they will also weigh significantly on domestic demand. employing again the simple ad / as framework, | saying that i, too, prefer optimal solutions, but β to put it bluntly β regulators and central banks do not live in the β land of make - a - wish β. the scope and complexity of the individual and mutually dependent issues which have had to be, or remain to be, solved in an overall package are sometimes like a gordian knot. unlike alexander the great in the legend, however, the g20 states have no magic sword to cut through the knot, and a reasonably timely approach that can be implemented at the global level is perhaps only a first step that may be followed by others at a later point in time. 2. 2 establishment of a designated resolution authority for financial institutions one end of the rope forming the gordian knot involves the institutional set - up for national resolution regimes. in adopting the key attributes, the g20 states committed to establish a designated resolution authority for financial institutions so that the particularities of crisis situations in the financial sector, such as the danger of runs on banks, can be taken into consideration. this new authority will be given a strong mandate. in particular, its tasks will be to promote financial stability, ensure continuity of systemically important financial services, protect depositors, although this could be done β as in germany β in coordination with the deposit guarantee schemes, seek to minimise the overall costs of resolution in home and host jurisdictions and duly consider the potential impact of resolution actions on financial stability in other countries. to fulfil its role, the resolution authority will be equipped with far - reaching instruments. for example, it will be able to remove senior management and replace it with an administrator to take control of the firm, transfer or sell assets and liabilities to a third party or a bridge bank and impose a moratorium with a suspension of payments to unsecured creditors. bis central bankers β speeches implementing the key attributes will lead to a gradual alignment of the national legal frameworks for resolution regimes. i am convinced that this will most certainly have a positive impact on financial stability. 2. 3 strengthening international cooperation between national supervisory and resolution authorities a further cluster of problems β the other end of the rope forming the gordian knot β concerns the handling of crisis situations at large complex financial institutions. i don β t need to explain to you that insolvency proceedings are currently carried out on a national and territorial level. however, the 30 largest systemically important banks hold on average 53 % of their total assets abroad, according to | 0 |
about financial stability, fiscal space and central bank independence. and, looking ahead, new financial technologies could affect the implementation and transmission of monetary policy. so, we are most fortunate to have with us today a very distinguished group of speakers to enlighten us with their thinking on these and other challenging issues. please let me close by thanking them, and all conference participants, especially those who have come some distance to be with us today. it promises to be a very stimulating workshop, and my colleagues and i are very much looking forward to listening and discussing with you. bonne journee. 2 / 2 bis central bankers'speeches | a share of sector output continued to climb and reached almost 11 percent in the third quarter of last year. this share lies above its long - run average over the past few decades and well above the cyclical trough of 7 percent in 2001. to be sure, the profit share likely will slip a bit from its high level as the expansion gains steam and businesses hire new workers more aggressively. but some decline in the profit share is to be expected and will not, in my view, significantly impair the financial health of companies. this favorable view is reflected in risk spreads on corporate bonds, which have dropped dramatically from their historic highs in the fall of 2002. and firms that have turned to capital markets for financing have found them to be accommodative. a remaining financial hurdle for some companies is the underfunding of defined benefit retirement plans, though this burden is notably less than it was two years ago. at the end of 2002, the majority of s & p 500 plans were underfunded, with a net shortfall that had grown to more than $ 200 billion, as stock market losses from 2000 - 02 eroded the value of assets and declining interest rates raised the current value of plan liabilities. since then, companies have made large cash contributions to shore up these plans and equity prices have risen, reducing the aggregate underfunding for s & p 500 companies to around $ 125 billion at the end of 2004. in addition, plan sponsors received some temporary relief from federal legislation passed early last year that allowed firms to use a discount rate for their liabilities based on corporate bond yields rather than one based on treasury yields. the replacement effectively reduced the stated value of liabilities and thus estimates of underfunding and required cash payments for tax purposes. nonetheless, important longer - term issues regarding defined benefit plans remain. in decades past, workers might spend most or all of their careers at a single firm and might receive generous preset benefits from traditional defined benefit plans, with a guaranteed benefit to be provided by the pension benefit guaranty corporation ( pbgc ), the government entity that insures defined benefit plans, if the firm were to go bankrupt. as workers began to change jobs more frequently, however, they increased their demand for defined contribution retirement plans because of their portability and the more - even pattern of benefit accruals over a worker β s career. also, many companies were attracted to these plans as a way to limit their future funding obligations for traditional defined benefit retirement | 0 |
characteristics of the two financial crises are different, let me share 3 common themes that run through both crises. the first has to do with the tendency of the market to assume that current market conditions can be extrapolated into the long term. before the asian financial crisis, most investors extrapolated the rapid growth in asia and the currency pegs maintained by some countries without factoring in the sustainability of such trends. this time round, the strong credit market from 2003 to 2005 have lulled investors into placing big bets in high - yielding structured credit instruments, on the assumption that such favourable credit conditions will continue unabated. the second point is on proper risk assessment. back in 1997, lenders were providing funds without executing necessary scrutiny or appropriately balancing the risks against returns. likewise, the recent credit turmoil has highlighted the importance of assessing risks. the distribution of risk through leveraged structured vehicles or conduits, and complexities in the structures have made it extremely difficult for investors to disaggregate the risks in times of stress and volatility. as a result, over - reliance has been placed on financial models and ratings without full comprehension of the risks of the product and misunderstanding the scope of the ratings that measures default risk. third, excessive leverage in both crises has exacerbated the problems triggered by the mounting default rates. excess liquidity led to massive domestic lending ; at the same time, investors geared up aggressively and bet on continually rising asset prices as collateral. when the crisis broke, the use of leverage accentuated the losses, which led to widespread risk aversion and uncertain market sentiments. the loss of confidence along with the repricing of credit risk have intensified the volatility in the financial markets ; and this contagion spread rapidly beyond the structured credit space and across markets. so what does all this mean for asia? the inter - connectedness of global financial markets and capital flows has been amply demonstrated. the resilience and current strong economic growth in asia have therefore to battle against the strong headwinds and challenges from the global financial landscape. the sub - prime - triggered credit turbulence has, undoubtedly, created a lot of uncertainty. the adverse impact of the potential slowdown in the us economy is likely to be felt in asia as the region β s economies are generally export - oriented. large and volatile capital flows into the region have also placed pressures on exchange rates. this has posed risks of inflationary pressures, intensified by the recent high | and the state. second, legal provisions to facilitate debt restructuring agreements by reducing the liability of the individuals involved. and third, after many delays, a framework for electronic auctions for the recovery of claims. an electronic auction platform has become increasingly important as physical auctions have essentially come to a standstill, which has caused significant losses for creditors, debtors and the economy as a whole. let me now briefly turn to the liability side of banks β balance sheets. deposits are the cornerstone of any sound banking system. a stable deposit base allows banks to engage in maturity transformation and to extend credit to the real economy. so far, however, there is no evidence of a sustained return of private deposits in greece. since the summer of 2015, when capital controls were imposed, private sector deposits have only recorded a modest 2. 5 % increase. they remain some 25 % below their levels at the end of 2014 before deposit outflows accelerated noticeably. the upshot is that greek banks still rely to a significant extent on central bank funding. although recourse to our facilities, including emergency liquidity assistance, has fallen from 41 % of total assets in june 2015 to around 21 % of assets today, total central bank funding still amounts to more than 35 % of greek gdp. part of the reduction in central bank funding is attributable to improved access to wholesale financing. this is certainly good news. greek banks have gradually returned to the interbank market and were able to perform repo transactions with a wide range of mostly international counterparties β also thanks to the ecb, in june last year, reinstating the waiver affecting the eligibility of greek government - related assets for eurosystem monetary policy operations. 2 / 4 bis central bankers'speeches but for credit to become a vital source of economic growth in greece again, a lot will depend on banks being able to regain the trust of private depositors and rebuild stable funding lines in wholesale funding markets. of course, this is not only in the hands of banks. broader macroeconomic stabilisation is essential, as i will explain in a second. but banks need to contribute actively to this process by making further progress in repairing the asset side of their balance sheets β that is, by reducing the amount of non - performing loans. debt sustainability and the public sector purchase programme restoring confidence, of course, also means dispelling uncertainty about the sustainability of greek government debt β and this brings me back to my opening remarks. i think we | 0 |
the confirmation requirements of the bsp. our β fit and proper β standard covers not only competence, education and experience but makes specific reference to integrity, probity, as well as physical and mental fitness. in addition, we have mandated the creation of board - level committees that will oversee risk, audit and governance. we have also institutionalized a compliance system that should have the authority and independence to address the bank β s business risks. these are check - and - balance type structures which are integral to a bank β s governance, alongside its own culture on the management of articulated risks. equally important, disclosure and transparency requirements continue to be enhanced. among others, disclosure requirements cover potential conflicts of interest, basel 3 - eligible capital instruments with loss - absorbency features and cross - selling. in other words, ensuring good governance is never - ending ; it is always a work in progress. bis central bankers β speeches ladies and gentlemen. the strategic nature of corporate governance has tactical elements which are inherently actionable. this is what we aspire for : on one hand, we want to institutionalize the public β s awareness of the value of corporate governance ; on the other, we want corporate entities to practice what is globally preached and to build a philippine brand that can stand side by side with other corporates in the region. to do just that, we need to monitor the execution of these standards at the institutional level. this is where we are today. i trust therefore that this forum can contribute towards greater understanding of the acgs. we in the fsf also would like to see our corporates β banks and non - banks, listed and not listed β to be able to apply best practice standards and to hold themselves against the bar of providing a value proposition to the general public. while the philippines has made big strides to move our economy forward and achieve investment grade rating, certainly we should strive for high standards of governance to ensure sustained and inclusive growth for our people. ladies and gentlemen, having a successful and productive forum today on the asean corporate governance scorecard is one more step forward in our continuing efforts to make the philippines fulfil its full potential in the midst of regional integration. thank you all for joining our forum. mabuhay po tayong lahat! mabuhay ang ating mahal na bansang pilipinas! maraming salamat sa inyong lahat! bis central bankers β speeches | by side with general education. we need engineers, accountants, pilots, of course lawyers, actuaries, doctors, nurses, scientists and other specialised technical skills for a an increasingly services sector driven economy. and how can i forget economists! mathematics education is fundamental to this. alongside these structural changes in our economy has been the process of global integration of the south african economy. whilst in the 1960s we were mainly an extractive economy, by the 1990s the south african economy was fairly integrating broadly into the world economy. with sanctions out of the way, imports and exports of goods and services amounted to about 44 % of the economy. currently this has increased to 55. 6 %. the manufacturing sector, despite its challenges from time to time saw its exports rise to 29. 6 % in the 1990s to about 37. 9 % in the period 2000 - 2004. one of the most notable features about the globalisation of the south african economy is to be found in the banking sector. south african banks as a percentage of gdp averaged 77 % during the period 1965 - 1994. in 2004, this share of gdp by south african banks was 109 %. the equity market averaged r2 billion in the period 1970 to 1985., r21 billion per year for the period 1986 - 1993, the annual turnover in the equity market was r62 billion in 1994 and in 2004, the annual turnover was about a r1 trillion. market capitalisation on the jse increased from an annual average of r40 billion for the period 1970 - 1980 to r2 trillion in 2004. further more compelling evidence of globalisation is to be found in the performance of the bond market. between 1970 and 1985, turnover in this market was about r8 billion, in 1995 this had increased to r2. 3 trillion and in the year 2004 turnover was r8. 4 trillion. finally the foreign exchange market which interests so many people has also seen some remarkable evidence of globalisation. to cut a long story short, in 1987 the average daily turnover in this market was 1. 1 billion us dollars and during the course of 2005 the average daily turnover in this market in some 12 billion us dollars. so there is a lot of activity going on there. the only conclusion i can come to is that we are coping well with globalisation. we have seen some benefits but yes there has also been some costs such as the impact of globalisation on the gold mining sector. let me conclude by saying that there has been a remarkable achievement in | 0 |
to receive funds at an earlier time than the usual end of banking day. with this enhanced feature, we hope that consumers will be incentivized to use pesonet for greater convenience, faster settlement, and better liquidity management. this enhancement also stands to improve person - to - government payments made through egov pay, which is another facility that runs through the pesonet. with pesonet mbs, payments for taxes, permits, fees, and other obligations to the government using egov pay will be faster. as more filipinos embrace digital payments, we are optimistic that pesonet mbs would bring 1 / 2 bis central bankers'speeches us closer to our strategic objectives under the bsp β s digital transformation roadmap : namely, first, digitalizing 50 percent of retail payments volume, and second, onboarding 70 percent of adult filipinos to the formal financial system by 2023. they say, β teamwork makes the dream work. β hence, i would like to commend our partners in the payments industry for helping us turn this vision into reality. despite the challenges from the pandemic, we, at the bsp, remain committed to closely collaborate with the various stakeholders in the payments industry, as well as in the public and private sectors to deliver safe, convenient and responsive digital payment services that help our fellow countrymen thrive in the new economy. together, let us continue to work towards achieving our shared goal of building a vibrant and inclusive digital philippine economy where every filipino can have meaningful participation. once again, congratulations to all the men and women who worked tirelessly to make the pesonet mbs launch a success! 2 / 2 bis central bankers'speeches | benjamin e diokno : message during the launch of pesonet multiple batch settlement message from mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the launching of pesonet multiple batch settlement, manila, 23 january 2022. * * * a pleasant afternoon to everyone! let me begin by congratulating the philippine payments management, inc. ( ppmi ), the pesonet mbs team, the philippine clearing house corporation ( pchc ), stakeholders in the payments industry and colleagues from the bsp β s payments and currency management sector for achieving yet another milestone in philippine retail payment system development : the launch of pesonet multiple batch settlement service or pesonet mbs. about a decade ago, retail payments in the country was dominated by physical cash or checks. to encourage e - payments adoption, the bsp, together with ppmi, embarked on strategic initiatives in building a safe, efficient, reliable, and inclusive payment system. these joint projects were pursued as part of the national retail payment system framework under which pesonet was established. these proactive efforts to lay down interoperable digital payment rails prior to the covid - 19 pandemic turned out to be crucial. digital channels made it possible to carry out essential transactions of households, businesses and the government in the face of mobility restrictions. in fact, a growing volume of pension, social security benefits and government aid have been disbursed digitally through pesonet. in 2021, the value of sss disbursements coursed through pesonet reached p158. 47 billion and there is room for further growth with the launch of these digital initiatives. the numbers showing the use of digital payments and those with financial accounts are encouraging. the bsp exceeded its target of digitalizing a fifth of retail payments by end 2020. along with higher digital payments usage, we also expanded financial inclusion with the increased number of filipinos who opened e - money accounts. by the first quarter of 2021, more than half or 53 percent of filipino adults own a transaction account in a financial institution, a sharp increase from only 29 percent back in 2019. today, we welcome another landmark achievement with the launch of the pesonet multiple batch settlement β an improvement that allows more frequent settlement of pesonet fund transfers, from one to two cycles within a banking day. pesonet recipients will now be able | 1 |
in europe. this was followed by the establishment of takafol s. a., 6 a life insurance company in december 1982. 7 those initiatives paved the way for future successful islamic development which was continuous since then. according to the most recent statistics, there are today 15 sukuk listed in luxembourg for a combined value of eur 5 billions. 8 luxembourg is the first jurisdiction in a non muslim country 9 for the domicile of shari β ah compliant funds with nearly 40 funds managed and promoted by leading global investment companies1. earlier this year, a major german bank launched its new platform, domiciled in luxembourg, called al mi β yar to facilitate the issuance of shari β ah compliant securities. some of the features of shari β ah - compliant investment are designed to attract western investors looking for socially responsible investment schemes and who are not only interested in the risk / reward relationship of their investment, but who are also concerned with christian noyer ( 2009 ), β global stability, the future of capital markets and islamic finance in france β, euromoney seminars, islamic paris conference, paris, 29 september. β 3rd islamic financial services forum : the european challenge β, jointly organised with the financial stability institute and hosted by banque de france on islamic liquidity management, paris, 3 march 2009. now denominated solidarity takafol s. a, based in luxembourg. parker ( 2009 ), β luxembourg promotes as domicile of choice for funds β, arab news, 18 may. amount and number as of 28 october 2009, source bourse de luxembourg. for information, on 12 august 2009, the luxembourg stock exchange has listed a β¬1. 5 billion sukuk issued by petroliam nasional, malaysian state owned oil company. luxembourg is the 4th domicile for shari β ah compliant funds in the world with 7 % of them following malaysia ( 23 % ), saudi arabia ( 19 % ) and kuwait ( 9 % ) β see ernst & young β s islamic funds & investment report 2009, page 72. issues of accountability and social responsibility. as you all know, based on the precepts of the shari β ah, islamic funds invest in ethical and non leveraged enterprises which for those reasons have a low risk profile. despite the relative success of islamic financial services in luxembourg regarding notably the investment funds and the sukuk, not all of the regulatory challenges raised by these islamic institutions have been resolved β challenges that | much steeper. therefore, we need to double efforts and take action early on. as the central bank, the pbc will assess the impact of climate change on financial stability and monetary policy. we are looking at the possibility of including climate change factors in the stress test of financial institutions. in foreign exchange reserve investment, we will further increase the share of green bonds, limit investment in carbon - intensive assets, and incorporate climate factors into our risk management framework. meanwhile, we will encourage financial institutions to get prepared as early as possible and proactively deal with the climate challenge. the pbc has guided pilot financial institutions to measure the carbon emission and climate risks of their projects. besides, we are making quarterly green credit assessments of our banks and exploring the development of a national carbon accounting system and an evaluation system of green credit and green bond performance of financial institutions. 1 / 2 bis central bankers'speeches having said that, we still have more work to be done. for example, some asset pricing can β t reflect the negative externalities for the environment. this is possibly due to the inadequate information disclosure by firms and many industries not performing carbon pricing yet. therefore, we will request financial institutions to pursue an orderly and gradual green transition, putting safety first, making energy conservation a priority, and speeding up transition after adequately considering the lifespan and depreciation of existing infrastructures. the above two issues both call for international cooperation. there is broad consensus on the green transition in asia. major economies are already on the move. japan has issued green bond guidelines, south korea launched the β green new deal β last year, and indonesia, malaysia, the philippines, and singapore all have announced emission reduction targets. regional cooperation is also gaining momentum. under the executives β meeting of east asia and pacific central banks ( emeap ), we are discussing the investment in local green bonds through asian bond fund ( abf ). under asean + 3 finance process, we are studying green and sustainable infrastructure financing. recently, asean finance ministers and central bank governors decided to set up a green financial classification standards committee to develop a multi - tier green financial classification system tailored to local needs. all this reflects the strong demand for green transition and huge potential for cooperation in asia. strengthening international cooperation will promote green finance in asia. resumed under the italian g20 presidency this year, the g20 sustainable finance study group has been upgraded to a working group. from our perspective, two major tasks require continuous efforts. first, we | 0 |
against one bank branch ; however, being a developing economy, the availability of atms in pakistan is low. presently we have only 5600 atms across pakistan, just about one atm against two bank branches. therefore, there was a strong need for the central bank to come up with some policy initiative to improve this position. as such, sbp has recently issued policy instructions to all banks binding them to expand their atm network in a phased manner so as to achieve a target level of one atm for each bank branch. once this target is achieved, we have plans to gradually raise the bar so as to come close to the international levels. ladies and gentlemen, the banking industry of pakistan has tremendous growth potential and can deliver a lot more than what it is delivering right now. the driving force behind the efficiency and dynamism of the banking business today is the use of technology. the significance of e - banking and e - commerce cannot be overemphasized because of the bis central bankers β speeches fact that both have brought about remarkable changes in the ways people think and do their banking business today. the outcome of e - banking in pakistan will be gradual but the trends towards adoption of information technology are quite encouraging. transformation from traditional banking modes to modern ways of banking is taking place at a fast pace. a number of alternate delivery channels for provision of banking services like atms, credit cards, pos ( point of sale ) terminals, internet banking, debit cards already exist in our country to benefit the masses. currently, 93 % of the total bank branches are offering real - time online services. ladies and gentlemen, we are now leveraging the mobile phone technology and agents network, that has resulted in the development of branchless banking to a higher tier of accessibility and resource utilization. branchless banking is now helping in reaching out to the low income groups and unbanked people through more than 30, 000 access points across the country. following trends are noteworthy : β’ nearly 30 million transactions worth rs. 115 billion have been processed through branchless banking during the fourth quarter of last fiscal year. β’ the average daily transactions have been reported to be 315, 178. β’ total number of branchless banking accounts have also increased to over 1. 7 million. according to the world bank β s consultative group to assist the poor ( cgap ), pakistan is the fastest growing branchless banking market in the world. the banking architecture for such services is being developed in a robust manner in collaboration | kazi abdul muktadir : branchless banking in pakistan speech by mr kazi abdul muktadir, deputy governor of the state bank of pakistan, at the karachi press club, karachi, 9 october 2012. * * * ladies and gentlemen! assalam o alaikum! let me first thank the organizers for inviting me to share my thoughts with the distinguished guests at the opening of atm being installed by summit bank at the karachi press club. it is an opportune moment for me to be here amongst an august gathering of writers and journalists. i would like to place on record my appreciation to the important role played by the members of the karachi press club in the struggle for freedom of expression in the country. karachi press club and the media have always tried to uphold their professional integrity, strength and commitment despite facing a lot of challenges. their untiring effort to provide latest news and write ups and opinions on current issues is the prime responsibility of journalists and in my experience the thirst of media somehow always seems to be unquenched and remains unfulfilled. this in turn has contributed to information explosion and mass awareness that is one of the basis of active democracy. ladies and gentlemen! as press is the part of service sector, banking is also a service provider of financial produces. banking thrives on standards and service rendered by it. standard and consumer protection have to be regulated in order to ensure quality. as banks operate on commercial considerations ; their branch expansion has traditionally been skewed towards big cities and commercial centers. therefore, sbp under its branch licensing policy has made it compulsory for banks to open at least 20 % of their new branches in rural localities and under - served areas. these regulatory measures are bearing fruit and branch penetration in rural areas has started to improve. state bank of pakistan as a supervisor and regulator of the banking industry, is trying to make banking services available at the door step of the people. promoting access to banking services is the corner stone of state bank of pakistan β s policy framework. as opening of physical branches, entails substantial costs and is time consuming, sbp has always been encouraging adoption of alternate delivery channels for providing financial services to clients by the banks. access to branch banking is limited by time. the availability of automated teller machines ( atms ) is a convenient and efficient tool to access accounts by clients for cash withdrawals and other related services on a 24 hour 7 day basis. in developed countries, there are three atms | 1 |
european central bank : press conference - introductory statement introductory statement by mr jean - claude trichet, president of the european central bank and mr lucas papademos, vice - president of the european central bank, frankfurt am main, 3 february 2005. * * * ladies and gentlemen, it is our pleasure to welcome you to this press conference. the vice - president and i will now report on the outcome of today β s meeting of the governing council of the ecb. all in all, the information which has become available since the last meeting of the governing council means that our assessment of price stability over the medium term is unchanged. while short - term hicp inflation rates remain subject to certain volatilities, particularly in relation to oil prices, there is no significant evidence of underlying domestic inflationary pressures building up in the euro area. accordingly, we have left the key ecb interest rates unchanged at their historically low levels. however, upside risks to price stability over the medium term remain. continued vigilance is therefore of the essence with regard to those risks. i shall now explain our assessment in more detail. turning first to the economic analysis, recent data on economic activity, as well as survey information, suggest ongoing moderate growth in the fourth quarter of 2004 and a broadly unchanged situation around the new year. looking ahead, the conditions remain in place for economic growth to pick up and become more self - sustained in the course of the year. global growth remains solid, providing a favourable environment for euro area exports. on the domestic side, investment is expected to continue to benefit from very favourable financing conditions, improved earnings and greater business efficiency. moreover, consumption growth should develop in line with real disposable income growth. high and volatile oil prices and persistent global imbalances pose downside risks to growth. on the domestic side, reducing uncertainties associated with the extent and pace of fiscal and structural reforms would support consumption, as such uncertainties seem to be limiting private sector expectations of future real disposable income growth. as regards exchange rates, we confirm our position, expressed when the euro rose sharply, that such moves are unwelcome and undesirable for economic growth. turning to consumer prices, annual hicp inflation stood at 2. 4 % in december, up from 2. 2 % in november. data for january are not yet available, but there are indications of a decline from december β s inflation rate. over the coming months, volatility in | andreas dombret : an overview of the cre ( commercial real estate ) market contribution by dr andreas dombret, member of the executive board of the deutsche bundesbank, as lead discussant at the fsb ( financial stability board ) workshop on commercial real estate underwriting, frankfurt am main, 8 may 2013. * * * ladies and gentlemen i am delighted to welcome you to the fsb workshop on commercial real estate underwriting practices on behalf of the deutsche bundesbank. we are very happy to host this important fsb event here in frankfurt. i am very pleased that so many dedicated real estate experts from a variety of fsb member countries and institutions, from standard setting bodies and from the private sector participate today. i am sure that the gathered expertise will lead to fruitful discussions and provide for interesting insights. let me now start this session by sharing my views on global commercial real estate financing. i will touch on two issues in the following minutes : first its relevance for banks and other participants in the financial markets and second its implications for financial stability. one of the reasons for the financial crisis was the us sub - prime crisis caused by lax lending practices and overheating residential real estate markets. the fsb has completed considerable work in this area, which mounted in fsb principles on sound residential mortgage underwriting practices. the question about the other and perhaps even more important part of the real estate lending business will be dealt with in this workshop : could excessive risks from commercial real estate financing negatively affect financial stability? ( slide ) the global stock of commercial real estate is estimated at 31. 2 trillion u. s. dollars as of 2011. about two thirds of global total stock is considered to be investable. the majority of investable stock is already invested and accounts for more than 12 trillion u. s. dollars. this part is in the primary focus of this workshop. taking into account the market share of commercial banks it is not surprising that for example european banks have an estimated total cre lending exposure of 2. 4 trillion euros. but let me stick to the cre markets for a few more moments before i will turn to the lenders and banks. ( slide ) since 2007 we have seen a divergent development of cre prices among the g20 countries. south africa, canada and korea are the only countries that show an increase of cre prices since 2007. contrary to them most other countries suffer from a more or less strong deterioration of cre prices. | 0 |
of authentication of the person requesting the services ( 75 % β 99 % in the figure ). stage 4 β full electronic case handling : the publicly accessible website offers the possibility to completely treat the public service via the website, including decision and delivery. no other formal procedure is necessary for the applicant via " paperwork " ( 100 % in the figure ). more information available in online availability of public services : how is europe progressing? web based survey on electronic public services. report of the fifth measurement, capgemini for european commission, october 2004. | value - added services on top of the sepa products. it is worth referring here to regulation no 2560 / 2001 of the european commission, which established the principle of equal charges for cross - border payments and comparable domestic payments within the eu, which in turn has created an imbalance between bank fees and costs of cross - border payments. this imbalance can only be overcome if the handling of cross - border payments is reorganised to become as efficient and inexpensive as the handling of national payments, which is the primary goal of sepa. an aspect which deserves particular attention in the discussion on sepa is the harmonisation of the law within the payment area. the proposed payment services directive ( psd ) establishes the necessary legal framework for sepa payments and will also apply to existing national payment products. the aim of the directive is to harmonise the market access requirements for non - bank payment service providers. this will create a level playing field with enhanced competition in national markets. the directive will provide clarity and certainty with regard to the core rights and obligations of users and providers of payment services. it will also provide the necessary legal framework for sepa, as it will harmonise existing, and differing, national legal requirements. please note that the eurosystem sees sepa as β an integrated market for payment services which is subject to effective competition and where there is no distinction between cross - border and national payments within the euro area. β over the long term, all euro area payments will become domestic, reaching a level of safety and efficiency that is at least on par with the best performing national payment systems today. let us consider together the potential benefits of sepa for the polish market participants. the following questions seem to be of particular importance here : β’ what β s the role and place of polish payment infrastructure in the sepa world? β’ will sepa increase the consolidation of the polish banking sector? β’ will sepa reinforce the competitiveness of polish entrepreneurs? β’ what roles are there to be played and who should play them so as to ensure that sepa contributes to the success of the polish economy and increased consumer satisfaction? β’ what benefits may the polish payment market participants gain before poland joins the euro area? now, let me ask the presidents to take the floor. | 0.5 |
economic terms. thus, only in the late 1980s new progress was made that led to the treaty of maastricht more than 10 years ago ( on february 7, 1992 ). the exact timetable and the name for the new currency were determined by the heads of state at the end of 1995. finally, the euro was introduced to financial markets in 1999, and three years later at the retail level as a physical currency. as a result of these decisions, and in order to get in shape for the proposed monetary union, the member countries embarked on a remarkable process of economic convergence. fiscal policy was tightened, inflation declined to low single digits, and the legal systems were brought in line. the creation of emu was a careful process that built on international best practices, and on a large body of economic research. it was of utmost importance to ensure the trust of the markets in as large and diverse a geographical area as the euro area. thus, in order to foster the marketΒ΄s trust in " monetary stability, " the eurosystem was built around the principle of price stability. its framework was laid down in international treaties and enjoys constitutional status in all member countries. of its many features, i would like to stress the following five principles, which i consider essential for the success of emu : 1 ) independence of the central bank first of all, the treaty of maastricht has endowed the european system of central banks ( escb ) with a very high degree of political independence. this came as a recognition of the empirical evidence that good inflation performance around the world is linked to central bank independence. while the economic profession had started to subscribe to this view a long time ago, the issue was more contentious at the political level. the european monetary union comprises countries with very different macroeconomic policy traditions. in some countries, the objective of price stability was subordinate to other economic goals, and often the financing needs of the state dominated monetary policy. this was not the case in a second group of countries, where price stability ranked high in the eyes of the public, and legal systems set barriers to fiscal incursions into the central bank. the last decade saw a remarkable convergence around this second, stability - oriented approach, which is fully reflected in the design of the escb. the governing council of the ecb is the central decision - making body of the independent eurosystem. it brings together the 6 members of the executive board of the ecb and the 12 governors of the national | said, β if you had asked people what they wanted, they would have said a faster horse β. the industry needs to lead development. as a regulator, we want our financial sector to benefit from continuous progressive development, but without creating undue financial or monetary stability risks. our message to investors and fintech players would then be, keep innovating with these perspectives in mind. rest assured, we will play our part in promoting a safe and conducive environment for innovation. as part of our initiative, we also from time to time, organise challenge events to recognise innovation and impactful solutions through incentives and awards. the most recent being during myfintech week. but later in the year, we will have another event and recognition series. i would thus like to invite you to participate in the royal award for islamic finance impact challenge prize 2022. this is a new initiative that aims to reward innovative creations and solutions that strengthen the economic and social resilience of financially impacted communities globally through the application of shariah principles. but you β ll have to hurry as applications have been open awhile and will close on 25 march 2022. with that, i wish you success and a productive engagement today. thank you. 1 various publications of fintech malaysia report mckinsey article, june 2021, β financial data unbound : the value of open data for individuals and institutions β [ link to article ] 4 / 4 bis central bankers'speeches | 0 |
monetary policy should aim to avoid such risks and keep the expansion on a sustainable track. the second issue is how best to integrate balance sheet policy with interest rate policy. the fomc has indicated that the federal reserve will, in the longer run, hold no more securities than necessary to implement monetary policy efficiently and effectively β which will require us to reduce the size of our balance sheet substantially. but that statement leaves open the question of when we should begin that process. because the tools i mentioned earlier β the payment of interest on reserve balances and the overnight reverse repurchase facility β can be used to raise the federal funds rate independent of the size of the balance sheet, we have the flexibility to adjust the size of our balance sheet at the appropriate time. with the federal funds rate still quite low and expected to rise only gradually, there is some benefit to maintaining a larger balance sheet for a time. doing so should help support accommodative financial conditions and so reduce the risks to the economy in the event of an adverse shock. consistent with this view, the committee has decided to continue to reinvest principal payments from its securities portfolio until normalization of the federal funds rate is well under way. the decision about when to cease or begin phasing out reinvestment will depend on how economic and financial conditions and the economic outlook evolve. 3 with that background, i thank you for listening, and look forward to continuing the discussion, initially with dan yergin. see the committee β s policy normalization principles and plans ( see note 3 ) as well as the discussion under the heading β system open market account reinvestment policy β in the minutes of the september 2015 committee meeting ( www. federalreserve. gov / monetarypolicy / fomcminutes20150917. htm ). bis central bankers β speeches | - asset activities perform functions and, hence, carry risks, that strongly resemble those of traditional financial activities. think, for example, of the similarities between staking and deposit - taking, or between crypto - lending and securities financing transactions. and so, we believe they should be regulated as such. a number of our recommendations have to do with the vulnerabilities of centralized crypto - asset intermediaries. and i stress'centralized'because, however'de - centralized'the crypto - asset ecosystem claims to be, economic reality tells a different story. in fact, some of these intermediaries already seem to play a systemic role within the cryptoecosystem. that is why we recommend that authorities require a number of things from these entities. for instance to have in place robust governance frameworks and to set up risk management practices. of course, i know that implementation takes time. but i also know it's high time β as i have often heard my british colleagues say β to'crack on '. so, let's prioritise the full and consistent implementation of our high - level recommendations. because in the meantime, people investing in crypto - assets continue to run serious risks. in the meantime, linkages between the crypto - ecosystem and traditional finance may very well continue to grow. so, in the meantime, risks to financial stability can still escalate. 2 / 4 bis - central bankers'speeches there are several ways through which we can prevent crypto - asset volatility from spilling over to the traditional financial system. one important way to do this, is with the full and consistent implementation of the bcbs prudential framework for the treatment of banks'crypto - asset exposures. putting this global framework into practice limits the chance that crypto - volatility reaches banks and hence becomes a threat to financial stability. to keep a close eye on the progress made, the fsb will start monitoring implementation. our first review should be finalized by the end of 2025. and the fsb will not only monitor progress. if we are serious about regulating what is essentially a cross - border phenomenon, we also need to be serious about cross - border cooperation. about information sharing. about working together. this also means that we need to venture outside of the fsb jurisdictions. because several jurisdictions with material crypto - asset activities are not members of the fsb. nevertheless, global financial stability ties all of us together | 0 |
andrew sentance : sustaining the recovery speech by mr andrew sentance, member of the monetary policy committee of the bank of england, at the british american business council in association with rsm tenon, london, 13 october 2010. * * * i would like to thank tomasz wieladek and abi hughes for research assistance and i am also grateful for helpful comments from other colleagues. 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. i am delighted to be giving this speech this evening here in the heart of westminster and i am grateful to the british american business council for hosting this event and to rsm tenon for sponsoring it. as an active member of the church of england, i am also very pleased to be giving this speech at its headquarters in church house. the church of england plays a vital role in supporting the spiritual health of our nation, just as the bank of england has a key responsibility in underpinning its economic and financial health. a healthy economy is normally a growing economy. so ensuring the right conditions for a sound and sustained recovery is a key challenge for uk monetary policy at present. and it is that challenge that i want to discuss in my speech to you this evening. the current recovery in context the uk economy has been recovering for about a year now. so it is relatively early days to pass judgement on how the current recovery is proceeding. however, the performance of the british economy over the first year of this recovery does provide some grounds for encouragement. the recovery has been somewhat uneven. as chart 1 shows, after a couple of quarters of rather subdued growth at the end of last year and early this year, gdp picked up strongly in the second quarter β producing the largest quarterly rise in gdp for nearly a decade. we do not yet have an official estimate of growth for the third quarter, but the national institute of economic and social research estimates that gdp rose by 0. 5 % in this period. that would produce an annual growth rate of 2. 5 % for the first year of the economic recovery β in line with the historical average growth trend and somewhat stronger than the rebound we saw in the early stages of the previous two economic recoveries, in the early 1980s and early 1990s. 1 the fact that growth has been uneven from quarter to quarter should not be a great surprise as uneven growth is not unusual as an economy begins to recover from recession. this return to economic growth must be | insurers to transfer longevity risk through reinsurance. the risk margin is our first priority as part of the solvency ii review. we are working in eiopa to achieve a sensible outcome. to be clear, though, we are not opposed to use of longevity reinsurance, including to non - uk counterparties, provided risks are properly managed. we set out our expectations in a director β s letter more than a year ago. it asked insurers to pre - notify the pra of new longevity risk transfer and hedging arrangements, including the insurer β s proposed approach to risk management. we consulted on the content of the letter and published supervisory statement 18 / 16 on β solvency ii : longevity risk transfers β. this allowed us to track activity and has been a source of useful information to supervisors. our supervisory approach has not changed since. through a programme of in - depth supervisory reviews, we are gaining assurance on insurers β risk management. we will then review our expectation to be notified ahead of transactions. with insurers transferring more longevity risk and the associated returns, the profitability of writing annuities depends increasingly on the mix of assets chosen to back them. yields on government bonds are low and spreads on corporate bonds narrow. insurers are therefore searching for yield in less liquid, direct investments. these include equity release mortgages, commercial property and infrastructure financing. based on supervisory information, around 25 % of annuities are backed by such direct investments currently. but insurers have plans for that proportion to increase to 40 % by 2020. these assets can be a good match for long - term annuity liabilities. moreover, increasing investment in real assets may have wider economic benefits. however, they often lack observable market prices and external credit ratings. it is therefore more source : record of the november 2016 financial policy committee meetings published 6 december 2016 http : / / www. bankofengland. co. uk / publications / documents / records / fpc / pdf / 2016 / record1612. pdf http : / / www. bankofengland. co. uk / pra / pages / publications / ss / 2016 / ss1816. aspx all speeches are available online at www. bankofengland. co. uk / speeches difficult for insurers to assess credit and other risks. investing in and managing these assets also requires different skills. for example, when bonds are downgraded | 0.5 |
sharon donnery : financial markets and institutions - collaboration and knowledge dissemination welcome address by ms sharon donnery, deputy governor ( central banking ) of the central bank of ireland, at the policy research meeting on financial markets and institutions, dublin, 15 june 2017. * * * good morning to you all and a very warm welcome to our new campus here at north wall quay in dublin. our official opening took place in late april, with staff on the ground since january, so you really have come here at a time of renewal and great excitement for us as an institution. i hope that you enjoy your time here. we are delighted to be welcoming such an eminent group of speakers to the bank today. i would particularly like to thank our colleagues from the federal reserve who first initiated this event, which has been running since 2012 with previous workshops having taken place in turkey, luxembourg, the netherlands, belgium, rome and stockholm, along with the proceedings in helsinki earlier this week. special thanks also to wayne passmore and scott frame who have provided the impetus, helped shape the program, and ensured the participation of such a distinguished group of speakers from across the federal reserve system. cross - institution collaboration and knowledge dissemination is of critical importance in central banking. the coming together of people with a rigorous background in empirical research, yet with such a keen focus on the ways in which research, data analytics, empirical evidence and policy decision making are interwoven is fundamental to the development of evidence based policymaking. this is entirely consistent with the type of working environment that we continually strive to develop here at the central bank of ireland. i hope that we will all leave here tomorrow having learned a great deal. i am impressed by the breadth of topics being discussed over the two days of this event. the discussions about the implementation and effects of unconventional monetary policy are taking place at a historic time for central banks. the differing paths faced by the united states and euro area economies over the past half - decade mean that we find ourselves at an extremely interesting juncture. a stock - take of the effectiveness of unconventional policy, the risks associated with tapering and the differing experiences in the american and european systems is highly important for the calibration and effectiveness of monetary policy on both sides of the atlantic. at the nexus between unconventional monetary easing and the legacy impairments of the previous crisis lies the issue of bank profitability, which will be the subject of a session that i will chair later this morning. given my work on the issue of | non - performing loans across the euro area, i take a great interest in this topic and look forward to hearing the thoughts of our spanish and italian guests on the dynamics underlying bank profitability in their countries. 1 in the area of financial regulation, the changes experienced on both sides of the atlantic since the crisis have been dramatic. the crisis response in all of our jurisdictions has involved a wide range of regulatory interventions, from enhanced stress - testing capabilities and communication strategies to the development of the macroprudential toolkit. the speed with which these features have been conceived and implemented is of course to be applauded and many of the people in this room have been important contributors to the rolling - out of this new central banking architecture. however, such rapid and large - scale responses often leave us vulnerable to β blind spots β, unintended consequences and implementation challenges. discussions such as those that will take place over the next two days are an important part of our attempt to fine - tune and enhance our performance as macroprudential authorities and regulators. 1 / 2 bis central bankers'speeches the importance of the housing market as a driver of the credit cycle as well as the status of mortgages as the chief source of debt and financial vulnerability for most households has meant that in ireland we have paid a particularly strong focus on macroprudential measures. in this context, we are delighted to have a number of focussed sessions on this topic. we underwent an extensive review of the first 18 months β experience with loan - to - value and loan - to - income restrictions in november last year. we are committed to reviewing the measures using a wide evidence base on an annual basis. 2 we hope to be able to both learn from you and inform you as we share experiences tomorrow. apart from our own experience here in ireland, the focussed sessions on housing finance and the interaction between government, lenders and the mortgage borrowers in the united states promises to be particularly illuminating. despite the timing on a friday, i encourage you all to stay until tomorrow afternoon to hear the insights of our four guests from the united states on this topic. www. centralbank. ie / news - media / press - releases / non - performing - loans - workout - in - the - euro - area - deputygovernor - central - banking - sharon - donnery - at - bruegel 2 see for example the central bank β s macroprudential mortgage measures 2 / 2 bis central bankers'speeches | 1 |
spillover effects of the three rounds of tariffs have already been experienced by various asian economies, as we have seen exports slowing in a number of economies. here in hong kong re - export volumes destined for china or the us that are on the tariff lists fell in the fourth quarter of 2018. while we β re all hopeful that a resolution is on its way, we should also be prepared for further damage to businesses and confidence if the conflict continues to linger. another near - term risk is the recent shift in the stance of monetary policy in the advanced economies from tightening to accommodative. in principle, this could be beneficial to asian currencies and investor sentiments ; but it could also be the impetus to new rounds of capital flow β surges - and - flights β. it β s therefore imperative for our region to manage and allocate the surges efficiently with the view that there may be a potential reversal later on. turning to longer - term challenges, a key one for asia is adaptation to china β s ongoing economic transformation. we have already seen some economies in the region benefitting from this transformation in recent years, by stepping into certain manufacturing sectors that china has exited, while others have boosted participation in china β s value chain, especially in high - tech 1 / 4 bis central bankers'speeches sectors. the continued opening up of capital markets means that financial linkages between china and other asian economies will also become tighter. but amid this transition is the possibility that an economy ends up being left out because it didn β t adapt effectively. i β d imagine, for example, that economies overly dependent on exports geared toward filling china β s investment demand may lose out to those that focus on supplying consumption goods and providing financial services. so while i don β t see china β s economic transition leading to β black swans β for asian economies, the risk would be for economies to β fall behind β in the process. another longer - term challenge β and one that β s perhaps most important β is the chance that some economies in our region might fall into the so - called β middle income trap β. the middle income trap is the phenomenon that many emerging economies slow markedly as per capita income approaches a certain level, typically estimated to be around us $ 20, 000. many important economies in asia are already approaching that level, so we should all be thinking about this challenge before it β s too late. trends such as population ageing, a slowdown of urbanisation, low productivity | as a result of overinvestment, and the lack of financial market development are generally cited as the causes of the middle income trap. one would think that the reversal of these trends could help economies evade the trap, but this of course is easier said than done. crucial role of financial market development while issues such as population ageing are probably best left to other forums, those of us here today are well - suited to think about how financial market developments can help asian economies overcome the two longer - term challenges. informed by hong kong β s blueprint as an international financial centre, let me share a few thoughts on this issue. first, both longer term challenges β navigating china β s economic transition, and evading the middle income trap β require asia β s financial institutions to be tech - forward. around the world, we have seen fintech play a key role, with innovations ranging from the digitalisation of traditional banking activities, to ones aimed at promoting financial inclusion. at the hkma, we have been proactive in using technologies to make financial services more accessible, especially for consumers and smes. over the past year, we have launched open api, a framework that allows third party providers to aggregate information about the products and services offered by different banks for the benefit of end - users. licences have now been granted to three virtual banks, with potentially more on the way, which will enhance the spectrum of products and services available to retail customers and smes. another application launched was faster payment systems or fps, a 24 / 7 retail payment platform that offers cross - bank, cross - ewallet transfers in hong kong dollar or rmb. all that β s needed is the recipient β s phone number or email address. we have also introduced applications that help corporations : the etradeconnect platform, for example, uses dlt - based technology to bring the paperwork - heavy trade financing business into the digital era. other asian economies have also been actively engaged in fintech solutions that help make access to financial services easier for their constituents. without a doubt, a lot more work still needs to be done on fintech, especially when compared with other areas such as e - commerce and social networking where the impact of technology has been and continues to be immense. second, asian economies need to continue to promote long - term investments and stable capital markets. research has firmly established that well - functioning financial systems are crucial to economic development, and that capital mobility in particular is | 1 |
on banking supervision, the federal reserve and other us and foreign bank supervisory agencies are working actively to design a more accurate, risk sensitive capital standard for credit risk than the one we have now. full credit risk modeling seems currently beyond our reach, since industry practices have not sufficiently evolved. the basel committee expects, though, next year to propose an approach built on internal credit risk ratings of banks. such a new standard would be a major step for bank supervision and regulation and will also have major implications for banks around the world. it is also a necessary step, we believe, if we are to keep pace with market practices and address developments that undermine current standards. let me emphasize that the new credit risk approaches being contemplated will be applicable only to the larger, more sophisticated and complicated organizations. the vast majority of banks need not have their capital requirements modified in significant ways as we move away from a one - size - fits - all structure. in order to spur industry efforts in measuring risk, the federal reserve this past summer issued a new supervisory policy directing examiners to review the internal credit risk rating systems of large banks. that statement emphasized the need for banking organizations to ensure their capital was not only adequate in meeting regulatory standards, but also that it was sufficient to support all underlying risks. we issued the guidance recognizing the need to make clear progress in developing new capital standards and also with the view that the industry has important steps to take. our earlier discussions with major institutions about their own processes for judging their capital adequacy supported that view. too often they rely on the regulatory measure, itself, and on those calculations for their peers. the role of internal measures of economic risks in evaluating the level of firm - wide capital seemed generally weak and unclear. the need for a stronger connection between economic risks and capital is particularly great at institutions actively involved in complex securitizations and in other complex transfers of risk. we do not expect immediate results for most organizations, but we want to see clear and steady progress made by them. the other β pillars β regulatory capital standards are important, but they are only part of a complete oversight process. to that point, the basel committee is building its approach on three so - called pillars : capital standards, supervision, and market discipline. each pillar is important and connected with one another. given the pace of transactions and the complexity of banking products, the federal reserve and other authorities need to rely increasingly on internal risk measures, information systems, and internal controls of banks. | as i mentioned above, strong, more risk - sensitive capital requirements built on a bank β s internal model must also be reviewed periodically for their rigor and effectiveness. with the varying and somewhat subjective nature of internal measures, the matter of consistency among banks becomes important, both to banks and their supervisors. additional public disclosures by banks and market discipline can help in that respect. bank supervision. in supervising banks, us regulators have recognized the need for an ongoing, more risk - focused approach, particularly for large, complex and internationally active banks. we constantly need to stay abreast of the nature of their activities and of their management and control processes. for these institutions, point - in - time examinations no longer suffice, and they have not sufficed for some time. we need assurance that these institutions will handle routine and non - routine transactions properly long after examiners leave the bank. we also need to tailor our on - site reviews to the circumstances and activities at each institution, so that our time is well spent understanding the bank β s management process and identifying weaknesses in key systems and controls. nevertheless, the process still entails a certain amount of transaction testing. to accommodate this process, the federal reserve has established a separate supervisory program for large, complex banking organizations, or lcbos. we believe these institutions require more specialized, ongoing oversight because of the size and dynamic nature of their activities. the program is more, though, than simply enhanced supervision of individual institutions. it involves a broader understanding of the potential systemic risk represented by this group of institutions. currently, there are about 30 institutions in the group, although the figure can change. they are typically both major competitors and counterparties of one another and, combined, account for a substantial share of the systemic risk inherent in the us banking system. management of this process revolves around a supervisory officer, designated as a β central point of contact β, and a team of experienced staff members with skills suited to the business activities and risk profile of each institution. in large part, they will focus on internal management information systems and procedures for identifying and controlling risk. they will need to understand the risk management process as each institution implements it - by major business line, by type of risk, and so forth - in reaching overall judgments about corporate - wide risks. we believe this approach will best help supervisors keep abreast of risks and events and that it will also help us identify and strengthen weak areas within banks. the principal risk in banking relates | 1 |
gent sejko : address on remittances of the albania diaspora welcome address by mr gent sejko, governor of the bank of albania, at the high - level meeting on the remittances of the albanian diaspora, tirana, 14 december 2018. * * * your excellency, minister majko, dear guests and colleagues, it is a special pleasure to open today β s meeting, which takes place after a year of intensive coordinated effort between our institutions toward the achievement of common objectives in relation to remittances of the diaspora, and other important issues. today, a year after the memorandum of understanding was signed, i have the pleasure of noting that the materialization of these efforts has been reflected in the undertaking of a number of commitments and projects in pursuit of the objectives set out below. the importance of remittances to the albanian economy, to family welfare and to development in general is highlighted in many communications of the bank of albania. in this context, during 2018, the bank of albania engaged its resources in developments aimed at creating the necessary prerequisites for an efficient channelling of such incomes into the albanian economy. international initiatives in the field of remittances underline the importance of reducing the costs and increasing the efficiency of remittance services, thus implying the need to intervene in the retail payment market, in both remittance - sending and remittance - receiving countries. for this reason, the bank of albania, as we have pointed out at the beginning of this cooperation, has engaged in a series of projects aimed at analysing the domestic market with a view to identifying and addressing the needs for intervention. these projects are assisted by the world bank and funded by the seco. i take this opportunity to once again thank these institutions for their contribution and support. moreover, the bank of albania and the national payment systems committee has already adopted and is implementing the national strategy for the retail payments market. this strategy aims to create a contemporary and comprehensive market of retail payments, supported by secure and efficient infrastructures, as well as by a wide range of payment instruments and services that meet the needs of financially capable individuals to make payments across the country. incorporating financial inclusion into the bank of albania β s objectives, this strategy has set ambitious quantitative targets aimed at doubling the number of bank account holders ( from 38 % in 2014 to 70 % in 2022 ) and increasing the number of electronic payments per capita ( from 4. | statistics on remittances. an important step in the framework of financial education was also undertaken by the albanian association of banks. in june, a memorandum of cooperation was signed on establishing the albanian network for financial education and fostering inter - institutional cooperation and coordination in the field of financial education. however, there is still much to be done, despite the developments i mentioned earlier. in this context, i would like to invite you all to continue with the efforts made so far, with the same intensity, in order to modernize the domestic payment market. in the medium term, the bank of albania will focus its efforts on a number of initiatives, notably on further legal developments and infrastructure improvements. an important step in the medium term is the drafting of the bill β on the payment account ". the bill will transpose the european union directive β on the payments account β and promote transparency by creating a public register to present all commissions applied by institutions, which can be easily compared. at the same time, during this period, the bank of albania will engage in a number of infrastructure developments that support financial inclusion, reduce the costs of using these instruments and is estimated to have an impact on the remittance market, mainly from the point of view of remittance receivers and their use. here we can mention the creation of a national platform for processing payments in real time ( instant payment and processing of card payments ). the platform creates conditions for the development of innovative and low - cost services and also aims at market segments that create ample volumes by targeting state institution payments as well as daily payments that albanian citizens make. last but not least, i would like to thank the government of albania for the importance it places on this matter and its continuous support. in particular, i would like to thank the ministries such as the ministry of diaspora and the ministry of finance and economy for their support and fruitful cooperation. i am confident that we will continue, with the same intensity, our joint efforts to integrate this very important factor into the albanian economy at the fastest and broadest extent possible. 2 / 3 bis central bankers'speeches thank you! 3 / 3 bis central bankers'speeches | 1 |
global inflation expectations appear to be well anchored. the growth outlook for switzerland remains constructive, supported by an expansionary monetary policy stance. the rise in oil prices has, however, dampened domestic demand. weakness in germany and, more recently, in france are exacerbating the situation. economic growth is unlikely to accelerate into 2005. upward pressure on the exchange rate may exert additional unwelcome downward pressure on aggregate demand. some slack in swiss labor and product markets is likely to prevail. the output gap will close in 2006 at the earliest. in such an environment, it will take time for the unemployment rate to decline from the current 3. 7 %. real wage growth is well contained with growth rates fluctuating around 1 % per year since 2001. core inflation rates remain moderate at around 1 %. despite substantially higher oil price related cpi and ppi inflation since august of this year, longer - term inflation expectations remain firmly anchored as swap spreads and consensus forecasts confirm. the growth rates of swiss monetary aggregates and the development of credit confirm the overall picture of a moderate inflation outlook. the key challenge for monetary policy authorities - in switzerland and elsewhere - will be to continue to firmly anchor these longer - term inflation expectations. as i mentioned earlier, notwithstanding high oil prices, circumstances are favorable. price stability has been all but achieved in much of the developed world. even developing countries are enjoying relatively low and stable inflation rates. various forms of credible monetary policy frameworks are anchoring future inflation expectations. higher oil prices appear to feed through to higher headline inflation more rapidly than in the past but the magnitude of the effect appears to have declined. finally, the world economy is hardly overheating. indeed, judging by the oecd β s global leading indicator, the recent growth momentum is abating. moreover, to the extent that the recent oil price shock is to a significant extent demand driven, dampening global growth will at least to some extent be self - stabilizing with regard to underlying inflation pressure. compared to the time of the last great oil shock in the late 1970s, monetary authorities operate under a different paradigm to the extent that they can afford to β look through β what are likely to be temporary spikes in headline inflation associated with what is likely to be a demand driven level shift in the equilibrium price range of oil. indeed, in some cases, monetary policy may find itself in a position to be able to respond to the output loss associated with higher oil prices | this process. this asset allocation shift is reflected in a marked increase in the liquidity of oil futures contracts together with upward trending prices ( see figure 6 ). there is some evidence that hedge funds have been particularly active in the oil futures market. in a recent study, the bis notes a high correlation ( 0. 8 ) between the weekly oil price changes and changes in long positions of non - commercial traders of oil futures. 1 market estimates suggest there could be a single digit dollar per barrel speculative premium on the oil price. 2 3. what does market tell us? oil price development in the past decade has been characterized by short - term spikes in the spot price ranging from 11 to 40 usd per barrel for wti crude. meanwhile, futures prices remained well anchored around 20 usd per barrel. the recent run - up in oil spot prices however was part of a shift of the entire curve. market estimates of the long - run marginal cost of oil nearly doubled and now stands bis quarterly review, september 2004, p 6. for a survey on the literature on speculators and their impact on price developments in the oil market, see weiner, r, ( 2002 ) : β sheep in wolves β clothing? speculators and price volatility in petroleum futures β, quarterly review of economics and finance, 42 ( 2 ), 391 - 400. at 35 usd per barrel for wti delivery in 5 years ( see figure 7 ). moreover, despite the most recent sharp correction in spot prices from 55 to 46 usd per barrel wti, long - dated futures prices have receded only marginally. since 2002, prices of oil futures are generally quoted below expected spot prices - a state labeled backwardation. backwardation implies uncertainty about production and supplies and effectively favors further inventory draw downs ( see figure 8 ). price information extracted from the market appears to confirm that at least for the time being, average oil prices are likely to remain elevated compared to historical price ranges. forecasting market prices is an inherently difficult endeavor. immense uncertainties on the supply side make oil price forecasts particularly challenging. reserve figures can be increased rapidly by the discovery of new oil fields or by exploitation at greater margins due to new technologies. proven oil reserves in the middle east, for example, increased from 16 billion barrels in 1944 to 116 billion barrels of meanwhile extracted or still available reserves in 1975. in 1984, 200 additional barrels were added to the proven reserves in the middle east, which now stand at | 1 |
main distinction is the fact that macro - prudential instruments are activated as a function of the cycle or structural characteristics of the system as a whole, and not according to the specific risk profile of a given institution. over the recent years extensive work has been undertaken [ by macro - prudential authorities, the esrb, and the academia ] to operationalise the instruments for the implementation of macro - prudential policy. this includes : identifying a set of indicators or risk parameters to trigger the activation of the instrument ; analysing their transmission mechanism and impact in order to allow a more precise calibration and ; identifying possible loopholes or unintended effects that could undermine their efficacy. many of today β s presentations covered these topics and i am very grateful to carsten detken, javier suarez, gabriel galati, deniz igan, caterina mendicino and ola melander for sharing with us the conclusions of their work. if there is an area of research with great value for policy - making theirs is definitely one. despite this progress, the task is far from concluded. the limitations in systemic risk measurement also condition the implementation of macro - prudential policy, namely concerning the estimation of the parameters of an equation linking the activation of the instruments to a systemic risk measure. this is particularly relevant for time - varying instruments, such as the countercyclical capital buffer, which rely in the timely identification of the phase of the credit cycle. in addition, the still limited experience with macro - prudential instruments confers a significant degree of uncertainty to their impact. furthermore, policy - making needs to take into account that the transmission mechanism of policy instruments may not be static, but evolving with innovation and the structure of the financial system, and that the impact of policy measures can be undermined by unintended effects. these can emerge from the interaction and substitutability between the regulated and non - regulated sector ( i. e. shadow banking ) and from the resulting possibility of regulatory arbitrage. in addition to the more traditional macro - prudential instruments, there are other tools β perhaps, more appropriately categorized in a middle - ground between risk analysis and policy tools β that can also be very useful for macro - prudential purposes. stress tests and funding and capital plans can be helpful with decisions concerning the activation and calibration of both micro and macro - prudential policies, to the extent that they help to identify potential vuln | seong - tae lee : increasing capital flows among countries and monetary policy effectiveness opening address by mr seong - tae lee, governor and chairman of the bank of korea, at the 15th central banking seminar, seoul, 18 september 2007. * * * opening remarks ladies and gentlemen, let me extend a warm welcome to all of you, central bankers gathered from around the world to attend the bank of korea's " central banking seminar ". i would especially like to express my deep gratitude to our keynote speaker dr. mark spiegel, vice president and director in the federal reserve bank of san francisco. this seminar, now in its 15th year, is held to allow the sharing of diverse experiences and ideas relevant to major monetary policy issues. at the same time, we hope it serves to broaden relationships among central bankers. the theme of this year's seminar, " increasing capital flows among countries and monetary policy ", is likely to be of great interest to us all. it is very closely related to the recent international financial market environment, in which price variables are showing heightened volatility triggered by the turmoil in the us sub - prime mortgage market. the impact of the increase in cross - border capital flows cross - border capital flows have increased very rapidly this decade, bolstered by the development of information and communication technology, the progress of financial innovation, and the integration of the global economy. the scale of cross - border capital transactions, including those in bonds and shares and direct investment, increased almost threefold between 2002 and 2005, from about 2 trillion us dollars to some 6 trillion us dollars. this expansion of international capital transactions has brought us a number of beneficial effects. first of all, it has acted to heighten the vitality of the global economy by allowing investors to disperse investment risk and borrowers to reduce their costs of capital. it has also helped bring about an upgrading of the financial markets of emerging market countries as well as developed countries, in conformity with global standards. the meltdown of the us sub - prime mortgage market is of course having a great impact on international financial markets. however, in contrast to the case during the asian currency crisis of the late 1990s, there are now no nations experiencing severe difficulties. this is one example of how the financial systems of almost all countries have been further strengthened. on the other hand, we must not be blind to the negative aspects of these expanding capital flows. the economies of countries around the world have become closely interlinked | 0 |
risk management structures in nbfcs. urban co - operative banks 16. let me now turn to co - operative banks. they contribute significantly in credit delivery and in bringing other financial services to the people. the performance of some of these institutions, however, has been hampered due to operational and governance issues. the recent unearthing of fraud in one of the urban co - operative banks ( ucbs ) has brought up issues relating to their governance, prudent internal control mechanisms, and adequacy of checks and balances to the forefront. 17. turning back to history, the urban co - operative banks were brought under the ambit of the banking regulation ( br ) act, 1949 with effect from march 1, 1966. certain provisions of the br act, however, were not made applicable to them, limiting the scope of regulation and supervision over them1. broadly speaking, banking - related functions of cooperative banks are regulated by the reserve bank and management - related functions are controlled by the concerned state / central government. the reserve bank β s regulatory control over ucbs is affected due to this duality of control. rbi has made concerted efforts in the past to mitigate the adverse impact of dual regulation in the form of mous with state / central governments and setting up of a statelevel task force for co - operative urban banks ( tafcub ). however, challenges still persist. at present, the reserve bank is working with the government to amend the act governing cooperative banks. we have suggested several legislative changes to the central government for better regulation and supervision of ucbs. on our part, we are reviewing the existing architecture of regulation and supervision of ucbs and shall carry out necessary changes in sync with the evolving requirements. 18. going forward, ucbs are likely to increasingly face competition from players such as small finance banks ( sfbs ), payments banks, nbfcs and micro - finance institutions ( mfis ). it is, therefore, necessary for them to adopt robust technology to enable them to provide banking services at lower costs and with adequate safeguards. the reserve bank has been taking proactive steps to assist these institutions to adopt a robust it infrastructure. the proposed national level umbrella organisation ( uo ) is expected to provide liquidity and capital support to member co - operative banks, and will therefore contribute to the strength and vibrancy of the sector. new frontiers of banking 19. the emergence of new banking models, in the form of payments | elizabeth genia : the papua new guinea economy and managing fx demands in papua new guinea's domestic foreign exchange market speech by ms elizabeth genia, governor of the bank of papua new guinea, at the australia - png business forum, gold coast, australia, 14 may 2024. * * * daba namona, morning tru, and good morning olgeta. i would like to recognise the traditional owners of the land on which we meet, the yugambeh [ yug - um - bay ] people, and pay respect to their elders, past, present and emerging. i extend this acknowledgement to all indigenous leaders here today, from australia, papua new guinea and beyond. i also thank the australia png business council for your exceptional efforts in arranging this forum every year. i am delighted to be part of this session and to be sharing the stage with professor chand for this discussion. let me start with a quick review of the economy and recent developments. the latest estimates from the imf and the world bank anticipate growth for png of 4. 6 percent and 4. 8 percent respectively for 2024. this growth is expected to be driven by agriculture prices and, importantly, by the reopening of the porgera mine. but the slow return of porgera to pre - production levels and the civil unrest in january have moderated the otherwise positive expectations of growth. agricultural exports continue to receive a boost from the increase in global commodity prices in 2022. while prices moderated in 2023, cocoa prices are experiencing significant increases this year following a drought in west africa, a region that normally supplies up to 80 % of global cocoa demand. coffee prices have also risen sharply, in part due to excessively dry conditions in brazil impacting on coffee harvests and supply from that region. the climate will continue to impact the prices of key food crops, and climate change will see changes in producing regions. this is something png will need to monitor, as we will be affected just as surely as other growing regions, and this underscores the need for sustainable farming practices and green finance initiatives. 1 / 7 bis - central bankers'speeches but for now, we are benefitting from negative climate outcomes in other regions. we know that at least 80 percent of our population are directly affected by the performance of our agricultural sector, which in turn makes up 20 percent of papua new guinea's gdp. our agriculture exports are the life | 0 |
. the geographic pattern of lending can matter, as certain areas of the country are experiencing much more difficult conditions in their housing market than other areas. neighborhoods ; in fact, foreclosure filings have increased at a faster pace in middle - or higher - income areas than in lower - income areas that are the focus of the cra. 11 two key points emerge from all of our analysis of the available data. first, only a small portion of subprime mortgage originations are related to the cra. second, cra - related loans appear to perform comparably to other types of subprime loans. taken together, as i stated earlier, we believe that the available evidence runs counter to the contention that the cra contributed in any substantive way to the current mortgage crisis. conclusions our findings are important because neighborhoods and communities affected by the economic downturn will require the active participation of financial institutions. considering the situation today, many neighborhoods that are not currently the focus of the cra are also experiencing great difficulties. our recent review of foreclosure data suggested that many middle - income areas currently have elevated rates of foreclosure filings and could face the prospect of falling into low - to - moderate income status. in fact, 13 percent of the middleincome zip codes have had foreclosure - rate filings that are above the overall rate for lowerincome areas. helping to stabilize such areas not only benefits families in these areas but also provides spillover benefits to adjacent lower - income areas that are the traditional target of the cra. recognizing this, the congress recently underscored the need for states and localities to undertake a comprehensive approach to stabilizing neighborhoods hard - hit by foreclosures through the enactment of the new neighborhood stabilization program ( nsp ). the nsp permits targeting of federal funds to benefit families up to 120 percent of area median income in those areas experiencing rising foreclosures and falling home values. in conclusion, i believe the cra is an important model for designing incentives that motivate private - sector involvement to help meet community needs. the cra has, in fact, been helpful in alleviating the financial isolation of many areas of concentrated poverty, but as our report illustrates, there is much more that could be done in these communities. contrary to the assertions of critics, the evidence does not support the view that the cra contributed in any substantial way to the crisis in the | change will force business and government to continuously reevaluate previously held assumptions and adapt to change. there is no static, optimum model either for financial service providers or for financial regulators, as both are engaged in a continuously evolving process. i am optimistic that recent financial reforms and continuing innovations will translate into more useful financial products and services to a broader spectrum of consumers and businesses and, in turn, fuller participation by all segments of our society in the kind of economic progress we have experienced to date. | 0 |
##ted come from the outside. maybe inevitably, they come with a certain disinterested detachment. as if the outside β spectators β are not affected by what is happening. and they come with a dangerously narrow and exclusive perspective on the economics of the monetary union. but if the profound political commitment of eurozone countries to the historical project of β ever closer union β is neglected, the assessment remains superficial and partial. and the suggested policy responses may be biased or naive. why does it matter? because the discourse influences some of the most important financial markets for the eurozone. if expectations that have been built up are not fulfilled, if alleged certainties do not materialise, if actions from politicians or central bankers are not forthcoming as anticipated by the β market consensus β, the reaction can be grave : volatility, contagion, all the way to complete market dysfunction. the systemic impact can be major, driving financial institutions, as well as sovereign borrowers into real difficulties. the result is a situation where policy - makers β including the central bank β may feel compelled to react to market developments with ever more powerful responses, in order to contain the a systemic risk and avoid a meltdown. what is the lesson? central banks have to face up to the public and market discourse β especially because they are independent. we have to participate in this debate. we have to take on the critics, understand their points, and argue our case. we have to listen, explain, and convince. naturally, we will ultimately do what we judge to be the correct cause of action, in full independence and in line with our mandate. actions speak louder than words. especially when they are timely, measured and effective. this is what creates confidence. precisely for that reason, financial markets, as well as politicians, have been looking to the ecb as a kind of β saviour of last resort β. this creates maybe an even bigger communication bis central bankers β speeches challenge : we must explain what the limits of our powers and mandate are. the ecb cannot compensate for what others β notably political authorities β fail to do. there is no substitute for good policies. saying this is not always popular. but β to be trusted is a greater compliment than being loved β 6. when market pundits forecast the β inevitable β, they insinuate a degree of certainty about the future which is simply not there. this brings me to my last point β how to deal with uncertainty, with a world | . ownership and compliance will give credibility to debt relief, especially given the economic developments of the last ten to 12 months. wouldn β t it have made sense to have had this kind of debt relief at the beginning of the programme or when the primary surplus was achieved? there are two answers to this. first β and i have been asked this question in respect of other programme countries that have faced similar situations in the past β it is very difficult to look at a reality that existed four, five or six years ago with today β s eyes. at the time in question, circumstances were very different : for example, there was no crisis management framework, there was no banking union and the ecb shields were not in place. second, until a year ago, the rate of growth of the greek economy was such that debt sustainability was not completely out of the question. since then, things have changed ; some for the better and some for the worse β including the policy slippages and the resulting deterioration in the country β s economic outlook. how can greece return to growth? can we compare greece with ireland? greece will return to a growth path if it undertakes all of the structural reforms that have been discussed. i think that is the key point. when we speak of structural reforms, we are referring to a change in the structure of the economy that will make it more competitive. and more competitive does not necessarily mean just in terms of exports. it means that people who want to open up a new business should be free to do so, and without any problems. it means much greater competition in the product and services markets. it means perhaps a more flexible, more open and more competitive labour market. in a sense, that is the message from countries like spain and ireland. both countries have shown that, with the right reforms, it is possible for the economy to bounce back rapidly. so the bottom line is : yes, it is doable. so, do you think that greece could return to growth in 2016? remember that, in 2014, growth was positive and that, in the first half of 2015, the greek economy showed strong resilience to worsening business sentiment. this was partly a result of robust growth in the tourism sector and partly because of one - off factors. for 2015 as a whole, the outlook is less favourable and more uncertain. but i am quite confident that, if there is strong commitment to the programme, which aims at ensuring economic growth, fiscal sustainability and financial | 0.5 |
interest rates will produce better outcomes. for instance, william white, of the bank for international settlements, has said that " monetary policy might rather be used in a highly discretionary way to respond to growing imbalances that were judged by policymakers to threaten financial instability. " 2 although central banks have generally not argued that interest rates should be raised aggressively to burst asset price bubbles, statements suggest some central bankers believe some leaning against the wind might be warranted. for example, in the second half of 2003 and the first half of 2004, a minority of members of the monetary policy committee of the bank of england argued for raising interest rates more than could be justified in terms of the bank of england's objectives for inflation over its normal policy horizon. they said that such a move would help lower the probability of house prices rising further and make it less likely that a house price collapse would occur later. mervyn king, the governor of the bank of england, did not advocate leaning against the wind but did suggest that, to prevent a buildup of financial imbalances, a central bank might extend the horizon over which inflation is brought back to target. statements from officials at the european central bank also have suggested that the possibility of an asset boom or bust might require longer than the usual one to two years in assessing whether the price stability goal was being met. the recent case of the sveriges riksbank, the swedish central bank, is particularly interesting. i studied the riksbank in a report on monetary policy written with francesco giavazzi for the swedish parliament before i came to the federal reserve board. 3 we found that communications by the riksbank suggested to market participants that it was actually adjusting monetary policy to lean against the wind of rapid increases in home prices. on february 23, 2006, the executive board of the riksbank voted to raise the repo rate 25 basis points ( 0. 25 percentage points ). this monetary policy action was accompanied by a statement acknowledging that the inflation forecast was revised downward. in fact the inflation report published on the same day also showed that inflation forecasts had been revised downward and were below the 2 percent target at every horizon. the executive board's statement pointed out that " there is also reason to observe that household indebtedness and house prices are continuing to rise rapidly. " 4 it then said : " given this, the executive board decided to raise the repo rate by 0. 25 percentage points at yesterday's meeting | recent notable example among industrial countries being that of japan. in principal, in the event of such a crash, monetary policy might become less effective in restoring the economy's health. yet there are several reasons to believe that this concern about burst bubbles may be overstated. to begin with, the bursting of asset price bubbles often does not lead to financial instability. in research that i conducted with eugene white on fifteen stock market crashes in the twentieth century, we found that most of the crashes were not associated with any evidence of distress in financial institutions or the widening of credit spreads that would indicate heightened concerns about default. 5 the bursting of the recent stock market bubble in the united states provides one example. the stock market drop in 2000 - 01 did not substantially damage the balance sheets of financial institutions, which were quite healthy before the crash, nor did it lead to wider credit spreads. at least partly as a result, the recession that followed the stock market drop was very mild despite some severely negative shocks to the u. s. economy, including the september 11, 2001, terrorist attacks and the corporate accounting scandals in enron and other u. s. companies ; the scandals raised doubts about the quality of information in financial markets and ultimately did indeed widen credit spreads. there are even stronger reasons to believe that a bursting of a bubble in house prices is unlikely to produce financial instability. house prices are far less volatile than stock prices, outright declines after a run - up are not the norm, and declines that do occur are typically relatively small. the loan - to - value ratio for residential mortgages is usually substantially below 1, both because the initial loan is less than the value of the house and because, in conventional mortgages, loan - to - value ratios decline over the life of the loan. hence, declines in home prices are far less likely to cause losses to financial institutions, default rates on residential mortgages typically are low, and recovery rates on foreclosures are high. not surprisingly, declines in home prices generally have not led to financial instability. the financial instability that many countries experienced in the 1990s, including japan, was caused by bad loans that resulted from declines in commercial property prices and not declines in home prices. in the absence of financial instability, monetary policy should be effective in countering the effects of a burst bubble. many have learned the wrong lesson from the japanese experience. the problem in japan was not so much the bursting of the bubble but rather the policies that followed. the problems | 1 |
burhanuddin abdullah : reflections on the changes in the region a decade after the asian crisis speech by dr burhanuddin abdullah, governor of bank indonesia, at the international symposium β ten years after the asian currency crisis : future challenges for the asian economies and financial markets β, hosted by the center for monetary cooperation in asia ( cemcoa ), bank of japan, tokyo, 22 january 2007. * * * honorable governor of bank of japan, mr. toshihiko fukui, honorable managing director of the imf, mr. rodrigo de rato, fellow governors, ladies and gentlemen, good morning. first i wish to join others to express our appreciation to thank the bank of japan for organizing this important event. it is indeed an opportune time to reflect on the recent developments and progress that we have achieved following the crisis. i believe that through a frank and candid discussion we can share from each others β experience during this symposium in the spirit of cooperation especially on how we have fared through the turbulence period of unprecedented economic crisis of the late nineties. we expect that we can capitalize on the recent progress and cope with the future challenges for the benefit of our economies. in this session, allow me to briefly express my reflection on the changes in the region a decade after the asian crisis to identify factors that would influence the economic dynamism and prospects of east asia in general and asean in particular. fellow governors, in my observation, i notice that a number of remarkable changes have occurred in the region. first is the heightened regional cooperation with the objective of establishing a regional self - help. unlike most of their counterparts in other parts of the world, the latest financial crisis, among other factors, provides strong impetus for the monetary and financial cooperation in east asia. the initiative to create a set of bilateral swap arrangement, to develop asian bond markets, and to conduct regional surveillance are our collective means to maintaining greater stability in the region, particularly in the face of highly volatile flows. i surely hope that this kind of cooperation will continue and be widened in the future so as to positively affect the economic dynamism in east asia. second, in the aftermath of the asian crisis, countries in east asia have become more conscious in protecting their own national interests and of strengthening their sense of security amidst greater global economic uncertainties. this is shown by the fact that countries in east asia have accumulated the bulk of the world's foreign - exchange reserves. in the past | the impact of exit policies in advance economy which will differ in term of speed and magnitude, depending on each country β s specific economic character. given this, a faulty exit strategy of the advanced economies could easily spill over into smaller economies, swamping our efforts to deal with the slowdown. managing an exit from the current policy settings as growth recovers poses another test for emeap central banks to that hard - won credibility. with inflation in the process of bottoming out and the recent data flow in emeap countries suggesting a clear recovery in economic activity, we all find ourselves pondering the risk that the economic stimulus provided by fiscal and monetary policy makers might be withdrawn earlier compared to advance economy. in this regard, i believe that monetary policy credibility is particularly crucial to the countries β growth risk premium, which is judged by historical inflation volatilities. for some countries, given the inflation volatilities are historically high, a more pre - emptive monetary policy response is warranted in order to anchor inflation expectations. provided that improving balance of payment positions, for countries which historically have strong pass - through from exchange rate changes to inflation expectations such as in indonesia, stronger exchange rates will also be important to keep inflation expectations well - anchored without necessitating to aggressively increase interest rates and hurting the growth recovery. in other words, a strong exchange rate can serve as an effective anchor to inflation expectations. this will be important throughout as higher global commodity prices in 2010 could begin to translate into higher inflation expectations. finally, every country has a stake in the sequencing and magnitude of the strategies of the large economies. the impact of global exit on smaller economies could manifest in a return of recessionary tendencies as well as balance of payments ( bop ) problems, which have generally not been a significant feature so far. imf programs have conventionally been oriented to dealing with bop crises. in the current scenario, the larger resource base may have to be deployed with much more flexibility to help particularly smaller economies to deal with the potentially recessionary impact of exit β a kind of global macroeconomic safety net. some operating guidelines for such a program need to be quickly developed. thank you. | 0.5 |
. so it β s all the more important that productivity grows. and that makes reforms necessary. 3 / 5 bis central bankers'speeches often productivity improves because of innovations. but for that, it β s vital that innovations spread. this occurs, for instance, through competition : new businesses, which can produce better and at lower cost thanks to innovative methods, squeeze out older companies. the economist joseph schumpeter called this β creative destruction β. for that to happen, the environment has to be right. in many countries, for instance, entrepreneurs still have to overcome major bureaucratic obstacles simply to set up a business. once they have done that, they need capital and labour in order to grow. that brings us back again to flexible markets, which can react to new and changing demand. and finally, businesses need markets on which they can sell their products. in that context, it is important to complete the common european market. that applies particularly to the digital market, which is set to become even more important in the future. growth and prosperity ladies and gentlemen, we need reforms for the economy in the euro area to grow sustainably. hardly anyone questions that. but is that the end of the debate? will people regain confidence in europe and in the euro when the economy is growing again? i think growth plays an important role, but we also have to look beyond that. theodore roosevelt said : β the test of our progress is not whether we add more to the abundance of those who have much, it is whether we provide enough for those who have little β. translated into the language of economics, it means : we must not only pay attention to growth but also to the distribution of the wealth it generates. compared with other regions, income and assets in western europe have traditionally tended to be quite evenly distributed. but as in many other countries, inequality is rising β and has been for decades. there are many reasons for this, ranging from rising unemployment, a larger number of single parents, reduced spending on education through to steady de - industrialisation. rising inequality is a complex phenomenon. some people therefore seek to explain it in simplistic terms by referring, for instance, to globalisation or european integration. that β s how we then have a link between the distribution of wealth and criticism of europe, as i mentioned at the start my speech. and indeed, studies are showing that there is a relationship : increasing inequality provides fertile ground for euroscepticism. and inequality is not a | gan kim yong : keynote speech - institute of banking and finance 50th anniversary distinction evening gala keynote speech by mr gan kim yong, deputy prime minister and minister for trade and industry, and chairman of the monetary authority of singapore, at the institute of banking and finance ( ibf ) 50th anniversary distinction evening gala, singapore, 13 september 2024. * * * chairman, council members and ceo of the institute of banking and finance ( ibf ), distinguished guests, ladies and gentlemen, good evening. i am delighted to join you today to celebrate the ibf's golden jubilee and the achievements of our award recipients. this is a significant milestone for the ibf. over the last five decades, the ibf has been an integral part of the growth story of singapore's financial sector. singapore's development as a financial centre looking back, singapore has come a long way to become the leading global financial centre in asia. a. the creation of the asian dollar market in the late 1960s was the first pivotal step that put singapore on the map of international finance. b. this was followed by the progressive removal of foreign exchange controls in the early 1970s, as singapore opened its economy to foreign investments. c. we further liberalised the financial sector in the 1990s, starting with the deregulation of interest rates, relaxation of restrictions on foreign investors in our capital markets, and allowing more foreign banks to operate here. d. more recently, we have taken moves to foster greater financial innovation, with the aim to establish singapore as a leading hub for both fintech and sustainable finance. today, singapore is the leading financial centre in asia and the third most competitive financial centre in the world1. we are home to more than 2, 500 licensed financial institutions. a. the financial sector is a key pillar of singapore's economy, accounting for about 14 % of our gdp in 2023. i. from 2021 to 2023, the financial sector recorded real value - added growth of 3. 1 % per annum. b. many good jobs with good pay have been created. 1 / 7 bis - central bankers'speeches i. in 2023 alone, total employment in the financial sector grew by 4, 800, even though economic growth was restrained due to the global tightening cycle. residents2 accounted for 85 % of this employment growth. ii. the number of singaporeans in senior roles3 has also grown more than threefold in the past few years, from less than 2, 000 in 2016 to | 0 |
damages of 3, 400 trillion korean won ( us $ 2. 6 trillion ) 1. as the effects of global warming intensify, natural disasters such as heatwaves, wildfires, floods and droughts are becoming more frequent and widespread, causing immeasurable damage. the longer the delay in the climate change response, the more these crises and health emergencies will pose a serious threat to our daily lives. in a national awareness survey on climate change's impact on health, approximately 63 % of respondents considered it " serious. " however, in the future, the number of people who perceive the climate crisis as a health crisis will increase even more. 2 1 / 4 bis - central bankers'speeches second, the republic of korea has an industrial structure that makes it difficult to achieve short - term greenhouse gas reductions, and any failure to respond proactively could severely restrict exports due to global environmental regulations. the fossil fuel dependency rate of the republic of korea ( as of 2021 ) is high, at 64 %, while the renewable energy proportion is low, at 7 %. in comparison, the united states, germany and japan all have renewable energy levels between 20 % and 40 %. furthermore, across all industries, the republic of korea has a high share of carbon - intensive sectors, such as oil refining, chemicals, cement, and steel, which ( as of 2021 ) account for 5. 3 % of our economy, a high number compared to major advanced countries like the united states ( 2. 5 % ), germany ( 2. 8 % ) and france ( 1. 7 % ). 3 with such energy and industrial structures, the transition to a low - carbon economy poses a burden for export - oriented companies. however, considering the rapid introduction of global environmental regulations, delays in changing the business paradigm are no longer feasible. examples of these new regulations include the european union's carbon border adjustment mechanism ( cbam ) 4, the united states'inflation reduction act ( ira ), the re100 campaign by global it companies like apple and microsoft, and the strong measures taken by major asset management companies like blackrock and vanguard to exclude environmentally harmful companies that do not meet esg standards. financial institutions that support exporting companies are no exception. the glasgow financial alliance for net zero ( gfanz ), comprised of banks, investment firms and others, is urging financial institutions to demonstrate tangible results in achieving the targets they have voluntarily disclosed for carbon neutrality. as we approach 2030 | , the pressures of global regulations and goal attainment related to environmental issues will only intensify. in line with this, the republic of korea has made a commitment to reduce greenhouse gas emissions by 40 % from 2018 levels by 2030, and to increase official development assistance ( oda ) for green projects. while our economy may face challenges during this transition, when we fulfill our responsibilities as members of the international community, we will then be able to actively demand that advanced countries, which have historically emitted significant amounts of greenhouse gases during their development process, fulfill their technological and financial support responsibilities to developing countries. third, tackling climate change presents both risks and opportunities. the covid19 pandemic has caused a global health crisis, but it has also presented unprecedented growth opportunities for bio - tech companies such as biontech and moderna, who have successfully developed vaccines. the climate change crisis will also present opportunities for companies that are prepared. global climate venture companies like opower in the u. s., a provider of big data for energy conservation, or like climateworks in switzerland, which converts carbon dioxide into solid carbon for sale, or like rubicon, also in the u. s., which creates resource circulation platforms, are all experiencing rapid growth. globally, climate tech investment funds have grown threefold in two years, reaching us $ 45 billion in 2021. innovative technologies in the fields of environment, energy, agriculture, and geographic observation are being commercialized at an astonishing pace. this will provide challenging business opportunities for the young itsavvy generation in korea. the bank of korea is also making multifaceted efforts in response to climate change. we are continuously expanding research and conducting stress tests to evaluate the 2 / 4 bis - central bankers'speeches impact of climate change on financial institutions. this includes the development of stress test models. 5 additionally, we are actively expanding our efforts in foreign exchange reserve management by incorporating esg investments, along with other initiatives, to address climate change. moving forward, we intend to explore market creating measures to promote green finance and policy tools to alleviate the transition burden on small and medium - sized enterprises ( smes ) in collaboration with financial authorities. supporting smes in green finance is an important policy task because if smes fail to transition smoothly to environmentally friendly practices, large corporations connected through export supply chains will also find it difficult to evade global environmental regulations. however, these smes face difficulties in benefiting from green finance due to their low credit | 1 |
of chicago press, pp. 195 β 215, clark, t ( 2001 ), β comparing measures of core inflation β, economic review, second quarter, federal reserve bank of kansas city, eckstein, o ( 1981 ), β core inflation β, englewood cliffs, n. j. : prentice - hall. friedman, m ( 1974 ), β inflation prospects β, newsweek, 4 november, p. 84 gordon, r. j ( 1975a ), β alternative responses of policy to external supply shocks. β brookings papers on economic activity, 1975, no. 1 : 183 - 206. gordon, r. j ( 1975b ), β the impact of aggregate demand on prices. β brookings papers on economic activity, 1975, no. 3 : 613 - 70. johansson, j, lof, m, sigrist, o, tysklind, o ( 2018 ), β measures of core inflation in sweden β, economic commentaries no. 11 nessen, m and soderstrom, u ( 2001 ), β core inflation and monetary policy β, international finance vol. 4 ( 3 ), pp. 401 - 39. roger, s ( 1998 ), β core inflation : concepts uses and measurement β, reserve bank of new zealand schreder, h, x ( 1952 ), β impact of business conditions on investment policies. β journal of finance, may 1952, 7 ( 2 ), p. 138 - 73. sprinkel, b, w ( 1975 ), β 1975 : a year of recession, recovery and decelerating inflation. β journal of business, january 1975, 48 ( 1 ), p. 1 - 4. 18 wynne, m, a ( 2008 ), β core inflation : a review of some conceptual issues. β federal reserve bank of st. louis review, may / june 2008, 90 ( 3, part 2 ), pp. 205 - 28. 19 | 0 3. 0 fuel 7. 2 3. 2 2. 5 gas and electricity, rented and tenant - 7. 2 4. 4 1. 1 fruit and vegetables, imported 6. 3 2. 8 0. 7 dental fees 6. 3 4. 8 0. 9 books 6. 3 1. 6 0. 4 sources : statistics sweden and the riksbank. note. the calculations are made using monthly data expressed an annual percentage change. the weights for all groups included in the calculation add up to 100. 19 the calculations are based on annual percentage changes for 68 components that the riksbank usually studies. the components have been ranked from the one with the highest standard deviation to the one with the lowest. the period analysed is 1995 to 2019. 11 table 2. components of the cpif with the lowest volatility 1995 - 2019 sub - index of the cpif standard average weight deviation rent 1. 0 1. 9 9. 6 alcohol, restaurant visits 1. 2 2. 3 1. 0 personal hygiene ( services ) 1. 3 3. 3 1. 8 garage costs 1. 3 2. 1 0. 2 water and sewerage, refuse collection, 1. 3 2. 7 1. 0 food ( outside the home ) 1. 4 2. 6 5. 4 lottery, pools 1. 4 1. 3 1. 1 alcohol, purchased in store 1. 5 1. 1 2. 1 fizzy drinks, light beer 1. 5 0. 9 0. 8 entertainment and recreation 1. 6 2. 0 3. 5 personal hygiene ( goods ) 1. 7 1. 0 1. 3 capital stock 21 1. 9 4. 6 3. 3 funeral, home insurance, bank, education 2. 0 2. 8 2. 6 diverse leisure goods 2. 0 0. 3 0. 5 furniture, carpeting and lighting 2. 0 0. 2 2. 0 sources : statistics sweden and the riksbank. note. the calculations are made using monthly data expressed an annual percentage change. the weights for all groups included in the calculation add up to 100. figure 6 shows the fifteen components with the highest volatility according to the procedure above, aggregated into an index ( see dark blue line ). the total weight of these goods and services in the cpif is close to 17 per cent. the red line in the figure also shows an aggregate measure for the components with the lowest volatility. their weight in the | 1 |
with industry and market participants to identify those areas of legal uncertainty with potentially adverse impacts, and, second, by working with market experts to propose solutions. one area in which the fmlc has been active in recent years is in encouraging the development of a smoothly functioning legal framework for cross - border transfers of intermediated securities. in 2005, the committee undertook a thorough analysis of the advantages and disadvantages of harmonisation of the private international law in this area, as reflected in the hague convention. it was, and still is, widely accepted that such harmonisation would contribute to legal certainty by facilitating a clear identification of the law governing the holding and transfer of indirectly - held securities. this is particularly important in the context of the cross - border use of collateral : a key element of banks β global liquidity management strategies. early in 2006, the fmlc published a paper that undertook a full analysis of the convention and expressed strong support for its central propositions. the fmlc β s work in this ( and other ) areas has been well received and has contributed to the decisionmaking process for government at the national and supra17 national level. indeed, overall, the committee has had some notable successes in addressing and ameliorating legal uncertainty in the financial markets context. concluding remarks to conclude, the rapid structural change in global financial markets is providing considerable benefits to users of financial services, by lowering the costs of financial intermediation and improving the ability to manage and hedge financial risks and tailor financial products. but recent developments also provide new challenges and sources of vulnerability as financial markets become increasingly integrated, and as participants place increased reliance on sustained market liquidity to manage their risks. while financial institutions are in a strong financial position, risk taking has increased and the vulnerability of the financial system as a whole to a sharp change in conditions has risen. against this background, and given the considerable uncertainty regarding how many new complex financial products would perform in more strained market conditions, it is important to improve the analysis and understanding of tail risks through systemic stress tests and thereby strengthen risk management, to ensure that financial institutions retain strong buffers of capital and liquidity, and that investment in the financial and legal infrastructure keeps pace with market developments and thus ensures that it remains robust and resilient. | by companies and by all of us to buy houses. but it makes banks inherently illiquid. if all depositors decided to ask for their money back at the same time the bank would struggle to pay - out and survive. this is because the bank will generally find it difficult to realise its assets in time. northern rock represented the most extreme case of this, the bank run, starting with wholesale creditors and then on to a full - scale retail creditor run. and it follows from this assessment that banks depend upon maintaining the confidence of their depositors that they will over time be able to meet claims on them. a very important part of maintaining confidence in banks is that the value of their assets β the loans they make, to simplify β has not fallen below their sustainable value in the accounts of the bank. in order to prevent this happening, banks maintain buffers of their own funds β capital β which can be used to maintain the claims of depositors. liaquat ahamed : β lords of finance β ( windmill books, 2009 ), p14. carmen reinhart and kenneth rogoff : β this time it is different : eight centuries of financial folly β. princeton university press, 2009. bis central bankers β speeches here then we have the two fundamental elements of the safety and soundness of banks, liquidity and capital. banks are often said to fail either because they are insolvent ( lack of capital ) or because they are illiquid ( lack of funds to meet the claims of depositors to be repaid ). my own experience of dealing with banks that get into trouble suggests that the reality is somewhat different β it isn β t a case of either one or the other. on the whole, banks lose deposits for a reason β depositors worry that there is something going on that they do not like. the film β it β s a wonderful life β illustrates this point well. rumours spread fast, depositors queue to get their money out while the bank still has funds available. in the film of course james stewart came to the rescue, and he did that by convincing the queuing depositors that they should have faith in his bank. loss of deposits is a symptom of a wider problem β in other words, typically a bank becomes illiquid because its depositors fear a problem which is more often than not to do with the expected future solvency of the bank. i want to put the emphasis here on the word β expected | 0.5 |
yves mersch : virtual currencies ante portas speech by mr yves mersch, member of the executive board of the european central bank, at the 39th meeting of the governor's club of the central asia, black sea region and balkan countries, bodrum, turkey, 14 may 2018. * * * new innovations based on distributed ledger technology ( dlt ) and blockchain have brought about wide - spread euphoria. their use to create β cryptocurrencies β or β virtual currencies β ( vcs ) β to denote their lack of legal recognition β is often touted as something that could fundamentally change the financial sector. the spectacular rise in the market valuation of vcs over the past year suggests that many people shared this belief. in the course of 2017 the global vc pool both deepened, from usd 30 billion to usd 400 billion, and widened, with the proliferation of β initial coin offerings β or β icos β β virtual fundraising facilities for start - up investors. 1 but in my view, the subsequent market plunge rather points to a fading fad. from december to february the price of bitcoin, the top dog among vcs, fell from almost usd 20, 000 to below usd 7, 000. don β t get me wrong : i am an ardent believer in progress through innovation. technological progress can provide us with significant efficiency gains and increases in general welfare. perhaps dlt and blockchain can do just that2 but i am very sceptical towards the use of these technologies to create currency. although they combine decentralised payments and label them as currency, vcs are still not legitimised by any authority. moreover, vcs rely on financial intermediation via exchanges and wallet providers to reenter the real economy. any fiat money requires trust to gain and maintain the acceptance of those who use it. indeed, history has shown that confidence in public money is best provided by a trusted issuing authority, that is, an independent central bank issuing safe and stable liabilities that people can access and hold. trust in a central bank, in turn, is created and sustained via legal safeguards, a clear price stability mandate and a sufficient degree of democratic accountability. in contrast, nobody is liable for vcs, nor are they backed by any trustworthy authority. under these circumstances, it may well be that vcs will fail, as so many other earlier forms of money did. there are, at present, | campaign ". this campaign focuses on four main themes : the visual appearance of the banknotes, their security features, their denominations and the common changeover modalities. it is designed to complement the other information campaigns on the euro, particularly those run by the national authorities in each euro area country. naturally, and as i mentioned earlier, we are also relying on the efforts of the banking community in this regard. at the end of the day, no television advertisement or billboard can replace the direct and immediate advice which competent bank employees can give to their customers. ladies and gentlemen, roughly a year from now, we shall finally be using the new euro banknotes and coins and our national currencies will no longer be in circulation. however, even then, the euro area will still not completely function as a truly unified currency zone. as i mentioned earlier, euro area financial markets are not yet fully integrated. i would also like to draw your attention to another area, which directly concerns the banking community, and where the potential benefits of the euro have yet to be fully exploited. i am referring to the price differential that continues to exist between cross - border retail payments within the euro area and those within individual member states. like the cash changeover, this is another area where the banking community has a crucial role to play in securing the full benefits of the common currency. i appreciate that this also represents a substantial task. however, once european businesses and citizens are using the euro for their everyday transactions, the provision of low - cost, efficient cross - border retail payment services will undoubtedly become a clear policy priority. finally, returning to the title of my speech " where are we 11 months before e - day? ", i would say that so far we are well on track. even before the introduction of euro banknotes and coins, the euro has already delivered much of what was expected. we regard these achievements with some satisfaction. nonetheless, this does not mean that we are complacent. the enormous challenge of the cash changeover still has to be met and, despite all past and ongoing work, a lot remains to be done. even after the changeover, the ecb does not anticipate settling down to " business as usual " anytime soon. our objective is to make the euro a lasting success. i am confident that - by also building on our good working relations with the banking community - we shall continue to succeed in this endeavour. thank you ladies and gentlemen. | 0 |
##termediation is significant, banks will be taking back on to their balance sheets conduit and investment vehicle paper or just holding onto loans for longer than usual before they can be sold onto the capital markets. perhaps nothing illustrates this as cleanly as the advent of credit derivatives. derivatives of any kind unbundle funding ( and so liquidity risk ) from the underlying risk to which an agent is seeking exposure via a particular contract. so a credit derivative unbundles credit risk from funding. this further complicates interpretation of the bank lending data ( m4l ). imagine that, due to their customer networks and screening capability, banks originate all credit, but that they use credit - default swaps to shed a great portion of the credit risk via cds to non - bank financial institutions. in the limit, this would be a world in which m4l correctly measured ( bank ) lending and m4 was one useful measure of β liquidity β. but it would also be a world in which shocks to credit conditions from capital and risk appetite worked largely through non - bank lenders, and in which shocks to liquidity worked largely through depositor confidence in the banking system. in the real world, this story underlines the need to look at total credit, and to analyse the monetary data with finesse. see bank of england inflation report, november 2007, section 1 on β money and asset prices β, pages 16 - 17. it cannot be ruled out that, for a while, the m4l growth rate may deceive as to the underlying pace of credit expansion in the economy. that is important because, in a nutshell, the turmoil in financial markets is not just a β city β event. how potent it will be macroeconomically will depend on how long current conditions persist, and the feedback loop between the financial economy and the real economy. as to its persistence, necessary conditions for an alleviation of the current strains in credit markets are probably at least twofold. first, that the us housing and household debt markets stabilise. second, that banks and other financial intermediaries recognise impairments to asset values, so that uncertainties about counterparty credit risks begin to reduce. on the financial - real economy interaction, we must try to avoid a vicious circle in which tighter liquidity conditions, lower asset values, impaired capital resources, reduced credit supply, and slower aggregate demand feed back on each other. a variety of policy responses are | savenaca narube : productivity and ethics opening address by mr savenaca narube, governor of the reserve bank of fiji, at the rotaract club of suva β s business seminar, suva, 28 february 2009. * * * introduction ms roshika deo, immediate past president of the rotaract club of suva members of the rotaract club ladies and gentlemen good morning and a very warm welcome to everyone. this is the second time that i have addressed your rotaract club early on a saturday morning! the first was in september 2007. a lot has happened since then in fiji and the world. back then everyone thought that the sub prime problem was virtually over perhaps with a short tail. how very wrong we were. as you know, the crisis has deepened and widened beyond anyone β s imagination. what is happening around us is unprecedented. while fiji is isolated from the financial mess, we unfortunately cannot avoid its economic fallouts. then the heavens opened up last month and flooded most of fiji. the impact is widespread and devastating. there is a lot of rehabilitation work to complete to rebuild livelihoods, businesses and industries. these two events have significantly effected our livelihood and we must do all we can to address them. if ever a time that the country needs to work together to build our economy this is one of them. the economy is our bread and butter. it is our livelihood. it puts food on the table. it pays for our children β s education. it protects the future of our grandchildren. so we should all play a part in building this economy right now. we should avoid the blame game. we should focus all our energy in getting things done in a coherent and consistent fashion. productivity if i may then ask, β what is the role of rotaract in economic building, and perhaps on a wider scale, in nation building? β how are you going about executing this role? productivity is an obvious way that your organisation can help lift the economy. i have talked at many productivity conferences. i have always emphasised that one of the easiest way to grow the economy is to raise productivity. fiji β s rate of productivity growth is extremely disappointing. my estimate is that if we raise productivity growth by 1 percentage point it will raise gdp by at nearly twice that. i β m very pleased that productivity is a theme of your seminar today. productivity is first a way of thinking and second a mechanical process. you can have | 0.5 |
1990s, changes in the key rate were also linked to large currency inflows or outflows that might indicate substantial imbalances in our economy. in the past 10 β 12 years this has changed completely. norges bank operates a target set by the government authorities, and interest rate changes are nearly always small and rarely come as a surprise to economic agents. while these changes may appear to be important, it would be to inflate the wording to characterise them as matters of special importance. when in more critical situations, such as autumn 2008, a need arises for more pronounced changes in interest rate and liquidity policy, the bank has without a doubt an obligation to submit the matter to the ministry. there must always be a good flow of information from norges bank to the ministry of finance. norges bank has a special position in public administration. this is expressed, for example, in the instructions section of the norges bank act. while ministries in norway, in contrast to sweden for example, can easily issue instructions to their subordinate agencies, this provision sets strict formal requirements for instructing the bank. this power cannot be delegated by the council of state to the ministry of finance. the bank shall be consulted in advance and the storting shall forthwith be notified of the reason for the instruction. former supreme court justice carsten smith has stressed that the act must be interpreted to mean that this must be set out in a separate report and under full transparency. 39 the following is stated on page 3 of the recommendation from the standing committee on finance and economic affairs concerning the act relating to norges bank and the monetary system etc. ( recommendation no. 50 ( 1984 β 85 ) to the odelsting : β a new norges bank act should be able to be adapted to various scenarios. in line with this, the committee proposes a general clause for the bank β s activities and that the council of state be authorised to lay down further guidelines in a number of areas β. carsten smith ( 1992 ) : rettstenkning i samtiden [ contemporary legal thinking ], p. 410. universitetsforlaget. in its consultation statement on the new norges bank bill, the ministry of justice through its legislation department expressed the view that the right to issue instructions should be in closer keeping with ordinary rules relating to government administration, adding : β we note for the record our agreement that there are strong arguments for limitations on instructing norges bank on | associated with monetary policy and more effectively anchor longterm inflation expectations. in his view, however, the introduction of a long - term inflation target is fully consistent with current us monetary policy 1. there has been little interest in us political circles in changing the monetary policy framework 2. pursuant to the regulation of march 2001, the mandate for monetary policy stipulates that monetary policy shall be aimed at stability in the norwegian krone β s national and international value, and at the same time underpin fiscal policy by contributing to stable developments in output and employment. the operational objective of monetary policy is low and stable inflation, with annual consumer price inflation of approximately 2. 5 % over time. the mandate implies that inflation targeting shall be flexible, so that weight is given to both variability in inflation and variability in output and employment. the concrete target for inflation varies somewhat among central banks. the inflation target may be formulated as an interval, for example 1 - 3 per cent, as in new zealand or, as in norway, as inflation of close to 2. 5 per cent over time. partly owing to various disturbances to the economy, inflation cannot be expected to remain at target constantly. central banks have somewhat varying formulations as to how rapidly inflation should be brought back to the target. some central banks state that inflation should be brought back to target within a β reasonable time horizon β or β over the medium term β. others have quantified that the inflation target should normally be attained within two years, as in sweden, or as in norway, where the interest rate is set with a view to stabilising inflation at the target within a reasonable time horizon, normally 1 β 3 years. in practice, the monetary policy conducted by most central banks is nonetheless similar. they orient monetary policy towards maintaining low and stable inflation. all central banks will reduce their policy rate when there are prospects of low inflation in the medium to long run and raise it when there are prospects of high inflation. what distinguishes norges bank from other central banks? monetary policy in norway is in line with the monetary policy conducted by a number of central banks in the oecd area. one difference, however, is that norges bank is conducting monetary policy in an oil economy. as a result of the high level of earnings and fluctuations in these petroleum revenues, the most important contribution fiscal policy can make to stabilising the norwegian economy is to provide a sound, longterm strategy for the use of petroleum revenues. in other words | 0.5 |
h. genberg, j. lipsky and s. wadhwani ( 2000 ), β asset prices and central bank policy : what to do about it? β, geneva reports on the world economy 2. christiano, l., r. motto and m. rostagno ( 2003 ), β the great depression and the friedmanschwartz hypothesis β, journal of money, credit and banking 35 ( 6 ), pp. 1119 - 1197. christiano, l., r. motto and m. rostagno ( 2008 ), β monetary policy and stock market boombust cycles β, ecb working paper no 955. curdia, v. and m. woodford ( 2008 ), β credit frictions and optimal monetary policy β, nbb working paper 146. de fiore, f. and o. tristani ( 2008 ), β credit and the natural rate of interest β, ecb working paper no 889, april. de fiore f. and o. tristani ( 2009 ), β optimal monetary policy in a model of the credit channel β, ecb working paper no 1043, april. de fiore, f., o. tristani and p. teles ( 2009 ), β monetary policy and the financing of firms β, manuscript, european central bank. detken, c. and f. smets ( 2004 ), β asset price booms and monetary policy β, in h. siebert ( ed. ), macroeconomic policies in the world economy, springer. ecb ( 2005 ), β asset price bubbles and monetary policy β, monthly bulletin, april, pp. 47 - 60. faia, e. ( 2008 ), β optimal monetary policy with credit augmented liquidity cycles β, mimeo, goethe university frankfurt. faia, e. and t. monacelli ( 2007 ), β optimal interest rate rules, asset prices and credit frictions β, journal of economic dynamics and control, vol. 31 - 10, pp. 3228 - 3254. gerdesmeier, d., b. roffia and h - e. reimers ( 2009 ), β asset price misalignments and the role of money and credit β, ecb working paper no 1068. gertler, m. and p. karadi ( 2009 ), β a model of unconventional monetary policy β, mimeo, new york university | although monetary data contain information which is important for monetary policy decision - making, monetary developments alone will clearly not constitute a complete summary of all the economic information necessary to take appropriate policy decisions. the governing council recognises that it is important, in parallel with the assessment of monetary growth, to look at a wide range of financial and other economic indicators, including economic forecasts. this systematic analysis of all other relevant information about economic and financial conditions will ensure that the governing council is as well informed as possible when taking monetary policy decisions. by fulfilling the unequivocal commitment of the governing council of the ecb to maintaining price stability in the euro area, we shall ensure that the single monetary policy contributes as much as possible to economic welfare in the broadest sense. at the same time, national fiscal authorities and general economic policies also have to demonstrate their commitment to the maintenance of price stability in the euro area over the medium term. in this context, the stability and growth pact is a crucial element. its aim is to encourage the pursuit of disciplined and sustainable fiscal policies in the euro area. in so doing, it can make a significant contribution to the establishment of favourable conditions for sustained economic growth and high employment in the medium to long term. it would be counterproductive if national fiscal policymakers did not continue their efforts in the light of the achievement of monetary union and the currently positive price outlook. i am not fully convinced that consolidation efforts are currently being undertaken with sufficient determination in all participating member states. the ecb cannot commit itself to take into account, in its overall assessment, any announced, but as yet uncertain, fiscal consolidation in some of the member states. in line with its clear mandate, enshrined in the treaty, and for sound economic reasons, the ecb has to decide which monetary stance best serves the maintenance of price stability over the medium term and then act accordingly. at the same time, the treaty also emphasises the need for sound fiscal policies. this clear separation of responsibilities is both efficient and transparent. monetary policy alone β even if it is well designed and fully successful in monitoring price stability β cannot solve europe β s economic problems. appropriate structural reforms implemented by national governments are of the utmost importance. much progress is required in this broad area. moreover, responsible wage settlements in both the public and private sectors are necessary to reduce the unacceptably high level of unemployment in many parts of the euro area. recent wage agreements in some parts of the euro area do not | 0.5 |
portfolio in these sectors. bis central bankers β speeches islamic capital markets, mutual funds and takaful industry are also very important components of the islamic financial system and need to be nurtured and developed along with islamic banking. we are working closely with the securities and exchange commission of pakistan ( secp ), regulator of capital markets to help develop these non - bank financial institutions. we appreciate and acknowledge the important steps taken by secp, including review of mudaraba guidelines, issuance of sukuk guidelines, establishment of central shariah advisory board etc, and believe that these are likely to help in development of the overall islamic finance industry. lastly, i would like to emphasize the critical importance of investment in research and development particularly for the evolving sectors of islamic finance. unfortunately we are not making adequate investment in this area, which is limiting our capacity to develop shariah based solutions for various business and economic needs of the real economy. the research and development is also needed to develop solutions for bringing monetary and fiscal policies and practices in conformity with shariah principles. the strategic plan for the next five years has envisages a number of such initiatives and i hope that the collaborative efforts by the regulator and practitioners would be instrumental in improving investment in r & d and developing better solutions for serving the financing needs of the real economy. in conclusion, i thank all the speakers and participants for coming here and hope that the deliberations and discussions during the road show will help the industry in moving towards more inclusive growth and equitable distribution of gains in the economy. bis central bankers β speeches | to be limited so as to make the rules of the game clear for global investors. the council approach gives the resolution authority powers to discretionarily exclude any type of liability for reasons of impossibility within a certain time frame, or to avoid wide - spread contagion. in our view, there would have been a benefit in defining ex ante the categories of liabilities that could have been excluded. this means that investors will lack certainty about how the new framework will be used, and in my view it may slow down the process of reducing financial fragmentation. for instance, there will inevitably be a political economy dimension to how national resolution authorities decide to exercise their discretion, with creditor classes that have particular importance in different national contexts likely to be favoured. this will affect the level - playing field between member states. moreover, the brrd foresees that after 8 % of a bank β s liabilities have been bailed - in, the national resolution authority has the option to use its resolution fund to bail - out a further 5 % of the bank β s liabilities. however, some countries will have larger resolution funds than others, for instance if they have more banks paying into the fund. this means that these bis central bankers β speeches countries would be able to bail - out more domestic banks before they exhaust the fund than those with less resolution resources available, who would need to use more bail - in. this will also not help reduce fragmentation. the single resolution mechanism ( srm ) β comprising of a european resolution authority and a single resolution fund β could remedy both these fragmentation problems of the brrd, which is a further reason why it is so essential. first, a central authority would not be influenced by national preferences when applying discretion. second, a single resolution fund, financed by levies on the whole banking sector and with a european backstop, would be effectively de - linked from national budgets. however, these benefits will of course only apply to countries that join the ssm and srm. moreover, it is essential that the european resolution authority will be in a position to act swiftly β if needed over a weekend for example β in order to avoid uncertainty about its course of action with a specific bank. as you know, we await the release of the com - mission β s proposal on the srm which is expected tomorrow, and i expect it goes in this direction. as to its institutional structure, the first - best option would be to entrust a newly established | 0 |
aaron, james lindsay, and pietro nivola ( eds. ), agenda for the nation ( the brookings institution, 2003 ). see also the general accounting office, truth and transparency : the federal government β s financial condition and fiscal outlook ( september 17, 2003 ) and rudolph g. penner and c. eugene steuerle, budget crisis at the door ( the urban institute, october 2003 ). see, for example, peter hooper, karen johnson, and jaime marquez, β trade elasticities for g - 7 countries β, princeton studies in international economics, vol. 87, ( august 2000 ). even this claim may be overoptimistic. see, for example, thomas laubach, β new evidence on the interest rate effects of budget deficits and debt, β finance and economics discussion series working paper ( april 2003 ). among other things, laubach has an interesting way to remove cyclical effects from his dependent variables, interest rates. portfolio shifts, perhaps even including increasing their stock of dollar - denominated debt. this denomination effect would not permanently prevent any relative price adjustment, but it could lengthen the process. beyond that, for pragmatic reasons this conventional adjustment process could be extended or distorted even further. by way of illustration, asian central banks have now accumulated more than a trillion dollars of international currency reserves - largely in dollar - denominated assets - equal to roughly half of the outstanding net debt of the united states. these central banks are not traditional wealth - holders motivated by expected risks and returns. instead, they seem motivated more by the prospect of preserving low domestic currency values for their exporters. 10 to pursue this objective, they can print money to buy u. s. securities. this monetary expansion could generate domestic inflation unless it is sterilized with other open market sales of securities - and the mere scale of present and expected future debt stocks may make continued sterilization impossible. but if these central banks continue behaving this way, the so - called credibility range could be extended significantly. while trade deficits should ultimately correct themselves, perhaps after a long trek through the credibility range, there are really no natural self - corrective mechanisms for budget deficits. once the u. s. economy gets through the credibility range, interest rates on the increasing government debt will have to rise to induce people to hold the debt. this rise increases the interest burden and causes total deficits to rise further, all the time subtracting | alan greenspan : financial literacy remarks by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the federal reserve bank of chicago β s money smart conference, chicago, illinois ( via videoconference ), 13 may 2004. * * * this morning i should like to broaden the focus of financial literacy to the education you are going to need more generally in the years ahead. within the next several years the vast majority of you will have completed your formal schooling and begun careers in private business, government, or the nonprofit sector. i suspect most of you have not as yet figured out what career you would like to pursue. but as with all the generations of teenagers that have gone before you, something will grab your interest and engage you. with me it was music. i was entranced with sound and visualized myself playing with the likes of the glenn miller orchestra or becoming another benny goodman. i practiced clarinet and saxophone three to five hours a day and, following graduation from high school, toured the country for a couple of years with a dance band. i was a good amateur but only an average professional. i soon realized that there was a limit to how far i could rise in the music business, so i left the band and enrolled at new york university. during my dance band years i spent the twenty - minute breaks from playing in reading. i became intrigued by books on finance, and, hence, at nyu i majored first in finance and, as my interest broadened, in economics and in what was then called mathematical statistics and now econometrics. in retrospect, that choice probably was not surprising since math was my most engaging course in high school. i graduated and joined an economic research organization. but my education did not stop. i earned a masters degree and went on to further studies at night at columbia university. at the age of twenty - seven i joined a very small wall street firm as a partner and was essentially in charge of making it grow. it did, and i eventually became the senior partner. but twelve hours a day at work left little time for school, and my aspirations to earn a ph. d. faded, at least for a time. however, the pursuit of my profession as an economist and the head of a consulting firm required that i broaden my knowledge, and i proceeded to read books, not only on economics and mathematics but also on philosophy, history, physics, and astronomy. i was | 0 |
. norwegian government authorities receive substantial revenues from the extraction of oil in the north sea. norway is the world β s second largest exporter of oil, and the budget surplus is currently approximately 11 % of gdp. oil revenues increase consumption possibilities. however, it is a challenge to manage these resources in a way that increases welfare for both current and future generations. a rapid expansion of the sheltered sector based on uncertain and perhaps temporary increases in petroleum revenues may lead to the situation called dutch disease. to manage its resources, norway has created the government petroleum fund, which receives revenues from the petroleum sector, transfers the amount necessary to produce a balanced government budget and invests the surplus abroad. as long as the increase in petroleum income is kept outside the domestic economy, there will be less need for structural change and thus less need for exchange rates to change. a one dollar increase in the oil price gives an increase in gdp of almost 1 % and most of it arrives as increased budget revenues. with large and varying budget revenues, the basis for determining central government expenditure and taxes from one year to the next may easily be impaired. if budget expenditure is allowed to fluctuate in step with oil prices, the result may be abrupt shifts and instability in the norwegian economy. changes in oil prices may then quickly influence wage and price expectations, the exchange rate and long - term rates. in that case it will be very demanding to achieve nominal stability. short - term interest rates would have to be changed frequently and sharply and would generally reflect a high risk premium for the norwegian krone. it is therefore important that the annual budgets are anchored in a long - term strategy that takes into account that oil revenues may fluctuate from one year to the next. in addition, it is advantageous if fiscal policy can be used to counter fluctuations in demand and production. final words by hosting this workshop, we hope to take part in an exchange of new knowledge about the conduct of monetary policy. we hope that the workshop will be a fruitful experience for both researchers and monetary policymakers. | jorgovanka tabakovic : taking knowledge to a higher level in serbia speech by dr jorgovanka tabakovic, governor of the national bank of serbia, on the occasion of signing of the memorandum of cooperation between the national bank of serbia and the faculty of economics in belgrade, belgrade, 27 january 2016. * * * dear colleagues, esteemed mr. boricic, esteemed members of the press, allow me at the beginning to answer four simple questions. why is this memorandum signed today by mr. boricic, as the dean of the faculty of economics, and myself, as the governor? because, by definition, it is the top manager's task to be in command of the future, finance and human resources. this is and has been the responsibility of the head of an institution. why are we signing this memorandum today, three and a half years into my term in office? because all informal channels, personalities, letters of reference have so far turned out to be an insufficient guarantee that we would get the best people. yes, some came and have stayed, but there are also many who came and left. many of those for whom the nbs was just a stepping stone, a training ground, and, in the worst - case scenario for this country, a reference for a future elsewhere, outside serbia. after signing this memorandum, we will have a chance to select β the best of the best β and ensure they stay with the national bank of serbia. how did the memorandum come about? it was at the initiative of the young people from the faculty of economics who are here with us today. they knocked on our doors introducing themselves as the team for serbia. the team. and for me, this was the key word. because, the solution lies not in genius individuals, but in the genius of a team of individuals. a team with a leader β yes, a team at the top β no, and this is why we are here today and why we are signing this memorandum. this meeting is motivated by the basic needs of men : to learn, to progress and to create. and why do we need each other β the faculty of economics in belgrade and the national bank of serbia? because there is no alternative to knowledge. and because in order to add value and improve by practice, you must have something of value to start with. during summer practice in the nbs, students are given a chance to improve on the qualities they already demonstrated during | 0 |
: how sensitive are answers to variations in elicitation design? β journal of applied econometrics 26, no. 3 ( april β may ) : 479 β 97. engelberg, joseph, charles manski, and jared williams. 2009. β comparing the point predictions and subjective probability distributions of professional forecasters. β journal of business and economic statistics 27, no. 1 : 30 β 41. gine, xavier, and stefan klonner. 2007. β technology adoption with uncertain profits : the case of fibre boats in south india. β mimeo, world bank. guiso, luigi, tullio jappelli, and daniele terlizzese. 1994. β earnings uncertainty and precautionary saving. β in albert ando, luigi guiso, and ignazio visco, eds, saving and the accumulation of wealth : essays on italian household and government saving behavior. cambridge : cambridge university press. guiso, luigi, and giuseppe parigi. 1999. β investment and demand uncertainty. β quarterly journal of economics 114, no. 1 ( february ) : 185 β 227. hurd, michael. 2009. β subjective probabilities in household surveys. β annual review of economics 1 ( september ) : 543 β 64. leiser, david, and shelly drori. 2005. β naΔ±ve understanding of inο¬ation. β journal of socioeconomics 34, no. 2 : 179 β 98. likert, rensis. 1932. β a technique for the measurement of attitudes. β archives of psychology 22, no. 140 : 1 β 55. mahajan, aprajit, alessandro tarozzi, joanne yoong, and brian blackburn. 2008. β bednets, information, and malaria in orissa. β mimeo, stanford university. mankiw, gregory, and ricardo reis. 2002. β sticky information versus sticky prices : a proposal to replace the new keynesian phillips curve. β quarterly journal of economics 117, no. 4 : 1295 β 328. manski, charles. 2002. β identification of decision rules in experiments on simple games of proposal and response. β european economic review 46, no. 4 β 5 : 880 β 91. manski, charles. 2004. β measuring expectations. β econometrica 72, no. 5 ( september ) : 1329 β 76. mckenzie, david, john gibson, and steven stillman. 2013. | gent sejko : transparency, communication and the importance of the media partnership address by mr gent sejko, governor of the bank of albania, at the end - of - year meeting with the media and the governor β s award ceremony, tirana, 13 december 2019. * * * dear ladies and gentlemen, welcome to the bank of albania, to spend some time together as the year end approaches. sadly, the atmosphere at the end of this year is different from previous ones, following the devastating earthquake, which hit albania in late november. in the aftermath, we are all heartbroken by the tragic loss of 51 lives, with hundreds of others injured and many buildings, which have collapsed or have been heavily affected by the strongest quake in decades. yet, beyond the material consequences and psychological shock, this tragic event foregrounded another β somewhat dormant β dimension of our society : solidarity and unconditional support for each other. we all witnessed an impressive demonstration of voluntary support from fellow citizens to those affected by the devastating earthquake. in this extraordinary situation, the media played a key role in promoting solidarity and alleviating the human pain caused by this natural disaster. in light of this event, and in retrospection of 2019, let me express my sincere thanks and heartfelt gratitude to the media, to those who are present here tonight, and those that were unable to attend, for their invaluable work, reporting news truthfully and in real time. staying on the media, but shifting to another, concrete contribution of it, professionalism and integrity in covering news related to economic and financial developments in albania increased notably this year. let me emphasise. we are glad to say that we find your work has advanced in all its dimensions. the language you use as well as the breadth and depth of your analysis in presenting our reports to the public reflect a serious approach and professionalism. thanks to you, our decisions have been passed on in a timely fashion. further, they have been translated and adapted using simple and easy - to - assimilate language, not only for market actors, but also for the general public. the media is a unique ally in our efforts to enhance the effectiveness of our decision - making. please allow me to thank you once again for your work, filled with passion and dedication during the course of this year. i am confident that in the coming year your dedication, truthfulness and objectivity in reporting economic and financial news will continue to characterise | 0 |
booms. over the last decade new entry and regional economic integration have combined to spur competition in the financial services industry in uganda. furthermore, banks are embracing information technology to offer innovative financial products, such as mobile money, as well as improve the efficiency of their operations. several new banking products are on the market. innovation and growth in the banking market are essential for meeting the needs of consumers and businesses for financial services, but they also generate new sources of risks. bis central bankers β speeches traditionally credit risk was the major type of risk facing banks in uganda. the adoption of it increases the importance of operational risk, while the increasing integration of the uganda financial sector into global financial markets, through cross border banking and capital flows, also creates new sources of risk. the evolution of technology has made possible the issuance and innovation of many varied banking products including the visa, mastercard, online banking, mobile money and e - commerce. all these facilitate modern banking. it is a key driver of new banking products like mobile money transfers. today, it innovations have influenced our ways of living in many fields including banking industry and we all benefit from the new technologies. however, the growth of it investments and sophisticated products as well as advanced services in the banking industry comes with a concern on β security β and new risks which is the challenging key to propel the sustainability of such growth. what is the role of the central bank in the financial sector? the primary responsibility of the bou is to regulate the financial sector. regulation has two objectives. the first is to protect the interests of depositors. we do this by imposing prudential requirements on banks, under the framework of the financial institutions act ( fia ), 2004 such as minimum capital requirements and liquidity requirements and restrictions on risk taking such as limits on large loan and foreign exchange exposures. we also intervene in distressed banks, again under the framework of the fia, to ensure that banks do not collapse with insufficient funds to repay their deposits. the second objective of regulation is to preserve financial stability ; to prevent financial crises. this also involves ensuring that banks comply with the prudential regulations in the fia. but we are also intending to introduce additional regulatory measures, which are informed by the macroprudential approach that i mentioned earlier, which are aimed specifically at mitigating systemic risks. lessons learnt from the past crises have taught and reminded us not to ignore what adverse effects may come afterwards. admittedly, bou is just catching up with | . financial stability involves different tools. as far as we are concerned, it β s a question of bank regulation and β macroprudential β tools. there is one effect you didn β t mention : this policy cuts governments β interest rate costs and potentially gives them room for fiscal manoeuvre again. that is not our objective. monetary policy serves to guarantee price stability and support the productive economy. where countries have room for fiscal manoeuvre, lowering rates increases the scope that can be used to support growth, particularly by increasing investment. where countries do not have this room for manoeuvre, such as france, my advice would be to use the lower rates to lend credibility to debt reduction, rather than to bis central bankers β speeches increase spending or cut taxes. however, that β s not a matter for the ecb to decide. it β s the european commission that is the guardian of the fiscal policy framework in the euro area. is sustainability of public debt one of the objectives of qe? no, it is not! first, it would be wrong to judge the sustainability of government debt, which is a long - term concept, using current yields and growth rates. the only way to make public debt sustainable is to cut deficits in a sustainable way and improve the productivity of the economy. also, this is clearly not the philosophy enshrined in the treaties ; these actually contain a whole series of provisions aimed at protecting the ecb from fiscal dominance, or in other words ensuring that monetary policy is not subject to the objectives of fiscal policy. omts and qe are monetary policy tools and have a number of safeguards to stop them from becoming fiscal policy instruments. with qe, for example, the ecb cannot buy more than one third of a country β s debt. this cap is intended to preserve market mechanisms and market discipline, and also to ensure that the ecb does not become the states β lender of choice. monetary policy always has a distributive impact on all economic agents, whatever the tool used. but every decision about qe, whether it be starting it or increasing or decreasing its scale, or its duration, will only be taken in line with the objectives of monetary policy, primarily the medium - term inflation outlook. if countries are counting on qe to gain some time, they are making a mistake. they need to make use of it to push through essential reforms so growth is sustainably higher. the ec | 0 |
financial stability, the exchange rate and the economic cycle. we will comment further on the sovereign money initiative in due course. ladies and gentlemen, thank you for your attention. it is now my pleasure to give the floor to fritz zurbrugg, who will present our financial stability assessment. bis central bankers β speeches | activity. the snb is a bit of a special case. in summer 2011, switzerland was confronted with an excessive appreciation of the swiss franc as a result of the euro area crisis, an appreciation that continued to the point where it posed a serious threat to price stability. as a result, we resorted to a range of unconventional tools to increase swiss franc liquidity and β eventually β introduced an exchange rate floor of 1. 20 swiss franc per euro in september 2011. so, are central banks doing too much in terms of unconventional policy? the answer is β again β β no β, but less categorically than in the case of conventional policies. on the one hand, being the only ones left to react to weak economies and high unemployment forced many central banks to take further action β action that was justified by their mandates. on the other hand, the jury is still out on the overall assessment of unconventional policies. for one thing, while evidence suggests that quantitative easing in particular succeeded in lowering long - term borrowing rates, its effect on the real economy is less certain. 6 for another thing, such policies may have important side - effects : they may lead to additional risktaking in financial markets and thus contribute to financial instability, 7 and they can create spillover effects to the rest of the world β notably emerging markets, where capital flows in search of higher yield can fuel asset prices and currency movements. 8 a complete assessment of the positive and negative effects of these measures will thus have to wait until we have data on the full experience, that is, until the complete exit from these policies. an assessment of the effectiveness of the snb β s minimum exchange rate is clearer : this measure has played a decisive role in addressing the imminent risk of deflationary developments and has thus been successful. given the still weak economic environment, it remains the central tool to ensure that monetary conditions are appropriate and that the snb β s primary objective of price stability is fulfilled. the period since the collapse of lehman brothers has also underlined the value of central banks being able to respond flexibly to unexpected circumstances. on 30 november, the swiss electorate will vote on the so - called β gold initiative β ( β save our swiss gold β, in full ), which, paradoxically, would severely constrain the snb β s room for manoeuvre in a future crisis. let me digress for a few minutes to explain why the snb is opposed to this initiative. the | 0.5 |
even increase slightly around the turn of the year. despite the recent decline in oil prices, changes in administered prices and some adverse base effects on the most volatile components could have some upward impact and delay the return to inflation rates below 2 %. however, these developments should be temporary. looking further ahead to the prospects for inflation, let me start by reviewing the liquidity situation, as evidenced in monetary developments, which is an important part of our analysis of risks to price stability over the medium term. at present, there is more liquidity in the euro area than would be needed to finance sustainable, non - inflationary growth. this is due in part to the low level of interest rates in the euro area, which is fuelling the demand for liquid assets. however, the continued strength of monetary growth is also due, to a large extent, to portfolio shifts into m3. these shifts occur for precautionary reasons in an environment of high financial market uncertainty. in view of this, and given the current environment of subdued economic activity, we do not see a high risk of this translating into inflationary pressure in the near future. the continuing strengthening of the euro since early this year together with the weak pace of economic growth in the euro area are in fact dampening inflationary pressure. however, for annual inflation rates to fall below 2 % in the course of 2003 and for them to remain in line with our definition of price stability thereafter, it is crucial that oil prices do not significantly increase again and that the upward movement in labour cost indicators in the euro area, which has been taking place over recent years, does not continue. these indicators have shown a notable inertia despite the subdued economic expansion. at the last meeting of the governing council of the ecb on 7 november, in view of the high uncertainty on future economic growth and its implications for medium - term inflationary developments, we discussed extensively the arguments for and against a cut in the key ecb interest rates. the overall view was to keep interest rates unchanged. in the same statement, however, we also said that we will monitor closely the downside risks to economic growth in the euro area, in view of their potential dampening effect on inflationary pressures. let me now briefly turn to fiscal policies, an issue that is currently receiving particular attention in europe. let me remind you that that the principle of budgetary discipline enshrined in the treaty and the stability and growth pact establishes that member states should maintain over the | medium term fiscal positions close to balance or in surplus and ensure that they do not breach at any time the ceiling on the fiscal deficit of 3 % of gdp. it is the governing council's view that these rules are indispensable for economic and monetary union and are also in the interest of the member states. the stability and growth pact has been successful in promoting sound public finances in the euro area. as a result, 8 of the 12 euro area countries have reached budget positions which are " close to balance or in surplus ", a development which has helped to support the maintenance of price stability and growth in employment and real gdp. these 8 countries are now in a position to let the automatic stabilisers work in full, as envisaged by the pact. the other 4 countries still have to make progress to achieve the medium - term requirements of the pact. these countries now need a credible consolidation policy that will be supportive to the outlook for economic growth, as direct short - term effects on demand should be counteracted by a higher credibility for the conduct of fiscal policy, boosting confidence and thus private spending. in this regard, the full implementation of the stability and growth pact is particularly important at the current juncture. in this same vein, the euro area should implement the reforms needed to reduce the structural rigidities in its labour and goods markets. this would not only increase trend potential growth over the medium term, but also make the euro area economy more resilient to economic shocks. under the current circumstances, rapid and decisive action would be a very important contribution to support confidence in the euro area. thank you. | 1 |
sector, which is not in good health. so unless we restore the banking sector β s health, monetary policy action is going to take time. q we β ve had a partial recapitalization of banks and some say there β s still not enough. we are moving towards the aggregator bank in the us or a good bank / bad bank where the toxic assets β¦ italy has never really been infected by toxic assets. that probably didn β t β¦ that β s a blessing now. a i mean, let me say something about the banking sector in general. market place people, public opinion have lost confidence in the banks β balance sheets. so the prerequisite for any action should be that we have a very significant transparency operation there going on. i think that several of the ideas that have been designed in the last year, like the tarp, the very same bad bank, the idea of segregating toxic assets within banks β balance sheets are all good ideas that could somehow produce the conditions for doing this transparency operation. but unless that is done, when i say transparency, i mean full recognition of the size of what is toxic ; but let me finish, unless that is done no significant private flows will go into the banking industry. q by saying that you clearly believe that we have not had full transparency yet of the level of toxic assets still outstanding. a well, let me tell you, let me give you an example. as late as the fall of 2008 major banks β and i will not name the country where this was happening β were having the same toxic assets posted at figures ranging between 50 and 90 cents per dollar, so that is a good example of lack of transparency. q i asked governor draghi whether he expected ever in his career to have to deal with a crisis like this. he told me, β frankly no. β | on a small set of elementary series, even if they are well known and widely used, invariably produce much poorer results in terms of smoothness and reliability than those obtained by carefully constructing the β common factors β as is done with β¬ - coin ( see figure 4 ). figure 4 : β cherry picking β the second advantage of using many series in a formal way to construct β¬ - coin is the possibility of assessing in continuous time the impact of the news contained in any of these series on the indicator. this can best be seen by referring to a real episode, such as, for example, the recent turmoil in monetary and financial markets and the surge in uncertainty it has produced. since most forecasts are typically derived from quarterly macro - econometric models, they are still necessarily based on information gathered to a very large extent ahead of the recent financial crisis. recent news are typically incorporated in a judgmental way and can usually be reflected in the forecast only as β downside risks β, and even then only rarely with probabilities clearly spelled - out, for instance with the help of a fan - chart. with the information at hand, almost all forecasters have suggested in the last few weeks that the short - term economic outlook for the euro area remains broadly in line with the picture we had before the summer, i. e. the cyclical expansion will continue in the second half of 2007 at a pace only slightly lower than what was expected in the spring. however, an issue worth investigating could be whether the initial conditions underlying these projections have changed or not, perhaps reflecting effects from the recent financial developments. what information does β¬ - coin contain in this respect? first of all it confirms the overall positive outlook pointing to an underlying growth rate still between 2. 5 and 3 per cent for the euro area as a whole. the modest increase in june and july, that interrupted a weakening trend that started in the first half of the year, was followed in august by a return to a lower growth rate. however, the underlying growth is still higher than what was observed until the first quarter of 2006. to assess the impact of the august news on the state of the euro - area economy, we compared the estimate of β¬ - coin obtained at the end of august with an alternative estimate obtained assuming that we had no august data concerning survey expectations and financial markets, thus replacing the actual data with their forecasts, as it is the case for those components of β¬ - coin that are not yet available when the | 0.5 |
david dodge : global challenges, canadian opportunities remarks by mr david dodge, governor of the bank of canada, to the office for partnerships for advanced skills annual visionary seminar, ottawa, ontario, 17 november 2003. * * * good afternoon, ladies and gentlemen. let me begin by congratulating opas for its work in advancing partnerships between industry and universities. these partnerships will be increasingly important for canada in the years ahead. let me also say how honoured i am to receive the opas visionary award for 2003. when i look at the list of distinguished business leaders who have received this award in the past - charles baillie and john cleghorn, ted rogers and mike lazaridis, john sheridan and jean monty - i must say that i am absolutely delighted to join them. it β s a particular pleasure to receive this award since it marks the first time that it is being given to a person who has made a career in the public sector. this award recognizes that the public sector has an important role to play in promoting the economic health of a country. far too often, people think that the private sector is solely responsible for creating wealth, and that the best the public sector can do is to redistribute that wealth. the reality is far more complex. that β s what i want to talk about today : how those complexities give rise not only to challenges, but also to opportunities. in particular, i want to talk about the challenges posed by the globalization of the world economy, and how canadians in the public and private sectors can take advantage of the opportunities that the global economy presents. it is certainly nothing new to say that economies have become increasingly globalized. in his 1962 book, the gutenberg galaxy, marshall mcluhan observed that the electronic mass media were collapsing time and space barriers. this enabled people to communicate on a global scale. he coined the term β global village β to describe this change. of course, even mcluhan couldn β t have foreseen the developments in transportation and communications that have taken place over the four decades since his book was published. these developments have converted mcluhan β s abstract concept into reality. satellite technology gives us live broadcasts from anywhere in the world. ideas are available simultaneously to those who have access to the internet - and that number continues to grow at an exponential rate. as i stand here today, i can talk to, and hear from, thousands of people across the country at the same time. more to | wide variety of cultures, each with its own perspective and ways of doing things. we canadians need to continue to broaden our horizons, and to think of ourselves as citizens of that world. that means getting as much global exposure as we can. canadians are fortunate to have much of the world β s diversity reflected across our country at large, and in our universities. six continents β worth of culture can be found here in one country, sometimes in one city. that diversity allows for mutual enrichment that benefits us all. it is important for those from different backgrounds to learn about the strengths and rich traditions of this country. it is equally important that those of us who were born here, into families with deep roots in canada, to learn from the backgrounds and cultures of those who come from other continents. by listening to each other, we learn how to listen to the world. by speaking to each other, we learn how to speak to the world. that two - way learning adds a new dimension to the metaphor of the canadian mosaic - the colours in the mosaic remain distinct, but they blend together to create a vibrant and dynamic picture. in short, canada β s diversity is a real strength, and it will fall to you, the next generation of leaders, to ensure that we use this strength to our advantage. so that β s the first message i have : think globally, act globally, and experience the world β s diversity. the importance of finance during my career, i have spent a lot of time working with the financial sector in one way or another. from a global perspective, i have seen how people β s lives can be made better when countries choose to open their economy to outside investment. so let me now take a few minutes to talk about my second point - the opportunities that lie within the financial sector, in the context of increased openness and globalization. nowhere have the advances in communication and information technologies had a greater impact than in the financial sector. technological advances and increased openness have led to greater flows of capital and new methods of financing development. capital flows have become global, as investors look across national boundaries for the best opportunities for their savings. this has benefited not only countries that receive investment, but also allowed our aging society to generate higher returns on its savings, both private and public. of course, a country that truly embraces openness in its markets leaves itself open to increased risks. we have all seen what can happen when investment flows into countries with unreliable or underdev | 1 |
proposal is a promising step in the right direction. by strengthening investment in new and sustainable technologies, the euro area can accelerate its transition towards a digitalised and low - carbon economy. the covid - 19 crisis forcefully demonstrates that digital transformation is not an option, but a must. the medium - term implications of covid - 19 for monetary policy when prospects for the economy and inflation are highly uncertain, central banks essentially have to act as risk managers : they need to take action before the risks materialise to shelter the economy from further and deeper harm. tail risks, in particular, may cause the economy to react in a non - linear and disruptive way. in spite of the receding stress in financial markets, there was therefore unanimous understanding at the june meeting of the ecb β s governing council that further strong policy support was needed to prevent medium - term inflation from moving further away from our inflation aim of below, but close to, 2 %. two broad decisions had to be taken. the first was the choice of the appropriate instruments. the second was the calibration of the instruments, taking into account potential side effects. these two decisions are, of course, interrelated. the choice of instruments ultimately hinges on the assessment of which instruments can address the risks to the outlook most effectively. instrument effectiveness, however, is often highly state and time dependant. persistent periods of market stress, for example, may weaken the transmission of changes in our key interest rates. the logic is easy to see : a reduction in short - term risk - free rates typically leads yield - oriented investors to rebalance their portfolios towards riskier assets, either along the yield curve or across asset classes. this channel is even more powerful when rates are negative : it sets strong incentives for investors to move away from short - term assets so as to ensure non - negative income flows ( see slide 4 ). market stress considerably weakens this portfolio rebalancing channel. and although markets have calmed gradually, both in the euro area and in the united states, stress indicators remain at an elevated level compared to the pre - crisis period ( see slide 5 ). in such conditions, two sets of policy measures tend to be most effective : those acting directly on banks β funding conditions, and those, such as asset purchases, that alleviate investors β balance - sheet constraints. the bank - based measures materially reduce the potentially adverse impact of tightening marketbased funding conditions on lending to firms and households. in the | . founding ideologies aside, countries'economies are more connected by virtue of increased trade of products and services. free markets, technological innovation, and instant communications are the watchwords of the global economy. and the dissemination of financial innovation has gained new converts. london, hong kong, singapore, and shanghai increasingly seek to challenge new york as the center of global financial markets. competitive national ambitions, perhaps, have demanded an embrace of economic liberalism to build wealth even among those regimes that may prefer something closer to autocracy in their non - economic dealings. democratizing credit to enlarge the global middle class, efficiently allocating capital, and dispersing risk exposures β these remain compelling practices for private market participants throughout the world. these financial market tailwinds bolstered worldwide economic growth, which is near record levels. in 2006, the u. s. economy grew 3 percent, while growth outside the united states averaged nearly 4 percent as all major regions racked up solid gains. so far this year ( through the third quarter in the united states and through the second quarter elsewhere ), u. s. output growth managed to continue apace, while growth for the rest of the world picked up to more than 4 percent. clearly the global economy has been firing on all cylinders, with emerging asia taking the lead. there can be little doubt that this macroeconomic performance is due, at least in part, to the increased adoption of liberal economic practices around the globe. perhaps, then, the case for the end of economic history is not without some evidentiary backing and persuasive appeal. evolution of monetary policy and financial stability in a recent survey paper, david laidler identifies three tenets that embody the current consensus on the conduct of monetary policy in advanced economies ( laidler, 2007 ). first, market economies are inherently self - righting ; second, open economies perform best under flexible exchange rates ; and third, central bankers should focus on price stability as their long - run objective. 4 monetary policy in the past couple of decades can, almost assuredly, claim far more successes than failures. look no further than measures of consumer price inflation in the the federal reserve's dual mandate is not inconsistent with laidler's third tenet. advanced economies. median inflation ( as defined by the international monetary fund ) has held near 2 percent for the decade. this performance has helped anchor inflation expectations, which, in turn, has helped damp the pass - through of | 0 |
and it became considerably difficult to push inflation expectations down to levels consistent with the previously set inflation target of 4 percent. although not attaining inflation targets stems from factors beyond the domain of monetary policy, overshooting of inflation target for two consecutive years and also the expectation of overshooting 2008 target have undermined the role of inflation targets as an anchor for inflation expectations. in fact, studies within our bank indicate that gradually more weight is attached to past inflation in forming expectations and as of mid - 2006 inflation expectations have become more susceptible to variables like exchange rate and risk premium. according to the central bank, if this situation becomes permanent, the cost of fighting inflation will increase. therefore, in an open letter to the government in june 2008 the central bank proposed setting new targets for the medium term in order to control inflation expectations and to re - establish the reputation of the implemented regime. the government accepted this proposal and the inflation targets for 2009 to 2011 were revised as 7. 5, 6. 5, and 5. 5 percent, respectively. hence, the inflation targets to be used as a reference by economic agents to form their expectations were set with the objective of containing inflation expectations and reducing the cost of the fight against inflation. bearing in mind that altering inflation targets might lead to the deterioration in the inflation expectations in the short run, the central bank implemented the target revision along with monetary tightening. thereby, the negative impact that might be created by the upward revision of targets has been contained. as a matter of fact, during the period of target revision, a slight deterioration was observed in the medium - term inflation expectations but with diminishing political uncertainties and monetary tightening, inflation expectations have been contained ( chart 3 ). in the last quarter of 2008, the aggravated lack of confidence in the global financial markets had unfavorable effects on the global liquidity flow and created an extraordinary demand especially for us dollar liquidity. this led to significant depreciation of the try, as was the case for currencies of other developing countries. despite these developments in the exchange rate, slowdown in total demand and the decline in commodity and food prices affected inflation outlook positively, which provided room to maneuver for monetary policy. against this backdrop, the central bank has taken several measures to support the liquidity of the financial system and to ensure the efficient functioning of the credit markets. chart 3. inflation expectations for the next 12 and 24 months 12 months target revision 24 months kas. 08 eyl. 08 | thursday 15 october, thursday 19 november, thursday 27 october, tuesday 24 november, tuesday 17 december, thursday | 1 |
##ciation. in the past three decades the nominal exchange rate has weakened about 90 per cent. more than half of this deterioration can be attributed to the higher inflation in sweden compared with the rest of the world in the 1970s and β 80s. mostly of the remaining part of the real deprecation can be explained in terms of relative gdp growth and worsening terms of trade in the same period. but neither of these two factors is relevant to the period since 1992 with a flexible exchange rate : inflation, growth and terms of trade have been at least on a par with the rest of the world. various flows may have played a part in the short run. looking back, it is evident that export growth and rapidly rising swedish share prices may have contributed to the high exchange rate with the euro twelve to eighteen months ago. during the past year the opposite has applied. another factor has been large investments in foreign shares when earlier barriers to risk diversion were removed from the pension system. in september there was also general financial unrest. however, variables such as these have proved to be of little value for forecasting. so personally i do not think it has always been hard to understand the direction, upwards or downwards, of exchange rate movements in recent years. it is the tendency for the krona β s average value to be unduly low that has been more difficult to interpret. to some extent, this has presumably been a consequence of the american dollar being generally over - valued against european currencies. i also believe that some part may have been played by various structural factors, for example the construction of the tax system, the internationalisation of the corporate sector with the attendant relocation of certain functions, the status of the swedish krona as the importance of the euro grows in europe and so on. some of these notions are supported both by arguments from principle and by somewhat anecdotal information. there is reason to believe, for instance, that the taxation of both capital gains and wealth has had effects. moreover, at least a part of the residual item in the statistics could have to do with a tendency for firms not to repatriate export receipts to the same extent as before, which in turn may be a consequence of a larger proportion of their central functions now being located abroad. but we do not know how quantitatively important these factors are and i believe that perhaps one should be wary of exaggerating them. still, these are questions that deserve further scrutiny and we intend to pursue them. to | many of the low - hanging fruit from the ict revolution have already been picked. diminishing returns to r & d may have set in. and other secular forces β including adverse demographics and rising inequality β may have acted as additional headwinds to growth. this view sometimes goes by the name secular stagnation. an alternative school of thought believes we may instead be on the cusp of a new great wave of innovation, a fourth industrial revolution. this revolution in innovation will, it is said, be jet - propelled by a set of potentially new gpts, among them ai, big data and robotics. for technology optimists, the story is one of secular innovation, not stagnation. and on this view, the potential gains in productivity and growth could be as large as any of the earlier industrial revolutions. schumpeter ( 1942 ). gordon ( 2012 ), fernald ( 2014 ). summers ( 2013 ) and rachel and smith ( 2015 ). secular stagnation theory was originally proposed by hansen ( 1938 ) in the aftermath of the great depression brynjolfsson and mcafee ( 2014 ) discuss β the second machine age β. brynjolfsson, rock and syverson ( 2017 ). all speeches are available online at www. bankofengland. co. uk / speeches typically, the two sides of this argument are taken to be in a secular struggle : the dark forces of secular stagnation pitted against the dynamic forces of secular innovation. yet in practice, both arguments have merit. they are certainly not mutually incompatible. it is perfectly possible to imagine a world of rapid innovation which nonetheless leaves large swathes of society in its slipstream. more than that, recent research suggests this is a likely outcome of the fourth industrial revolution. there are good conceptual grounds for thinking the displacement effects of the fourth industrial revolution may be larger than ever - previously. every industrial revolution has resulted in a hollowing - out, typically of mid - skilled tasks. historically, that has meant largely manual, labour - intensive tasks. machine has replaced human in activities that are routine and repetitive. the future could well be very different. for example, the dawning of ai means that humans will no longer having the cognitive playing field to themselves. thinking or non - routine tasks may increasingly be taken up by machines. they will be able to process more quickly, more cheaply and with fewer errors than their human counterpart, at least in some activities. that could | 0 |
susan schmidt bies : the basel ii accord and house resolution 1226 testimony of ms susan schmidt bies, member of the board of governors of the us federal reserve system, before the subcommittee on domestic and international monetary policy, trade, and technology and the subcommittee on financial institutions and consumer credit, committee on financial services, us house of representatives, washington, 11 may 2005. * * * chairman bachus, chairman pryce, and members of the subcommittee on financial institutions and consumer credit and the subcommittee on domestic and international monetary policy, trade, and technology : it is a pleasure to join my colleagues from the other banking agencies to discuss the current status of basel ii in this country, as well as the federal reserve's views on h. r. 1226. the continued discussion among the congress and the regulators - and, of course, the banking industry and other members of the public - is critical to the final implementation of the new capital accord. the focus of recent attention has been the agencies'announcement that they will delay the notice of proposed rulemaking ( npr ) for basel ii, originally scheduled for midyear 2005. in my remarks today, i will discuss the reasons for the delay and the board's views regarding the timetable for implementation of basel ii in this country. but, first, i believe it may be useful to remind the members of the subcommittees why the agencies thought it wise to explore and then develop a modernization of the current capital accord ; those factors have become, if anything, more important than they were when we began the process. our banking system is becoming more concentrated, with a number of very large entities operating across multiple business lines and national boundaries, each entity with positions and exposures that are both complicated and difficult for third parties to understand. these entities have outgrown the current regulatory capital regime, which is still adequate for most banks. but the current rules simply cannot keep up with the complex business of the global banking organizations toward which basel ii and its infrastructure prerequisites are directed. these organizations represent significant risks to the financial system should they develop substantial problems in a period of stress. basel ii offers the opportunity to work with these large entities to develop quantitative risk - measurement and risk - management systems that can both measure their risk more accurately and become the basis for more risk - focused capital requirements and prudential supervision. we would also require, as part of the basel ii approach, more public disclosures to improve market discipline and supplement supervisory efforts. | developing easily understood disclosures as they introduce more innovative and complex products that can be confusing to consumers. as you may know, the u. s. banking agencies recently issued proposed guidance on nontraditional mortgages. the comment period for this interagency proposal closed on march 29, so we are now in the process of reviewing comments and determining how to proceed. nontraditional mortgages allow borrowers to defer payment of principal and, sometimes, interest. while the proposed guidance focuses on banks'ability to adequately identify, measure, monitor, and u. s. money laundering threat assessment released control the risk associated with these products, it also addresses consumer protection. nontraditional mortgages, including " interest - only " mortgages and " payment - option " adjustable - rate mortgages, have been available for many years, and are beneficial for some borrowers because of the payment flexibility they offer. although these products were initially designed for higher - income borrowers, today these products are being offered to a wider spectrum of consumers, including borrowers for whom these types of mortgages may be ill - suited. moreover, institutions are combining these nontraditional loans with other practices, such as reduced documentation of income and assets in evaluating applicants'creditworthiness. many borrowers may not fully recognize the risks of nontraditional mortgages, particularly " payment shock " when the loan's interest rate increases, or when the consumer is required to make fully amortizing payments. negative amortization coupled with flattening, or even lower, housing prices could make it difficult for some borrowers to refinance or sell the property to avoid payment shock. in addition to ensuring that institutions comply with the truth in lending act and other applicable laws, the draft guidance urges institutions to ensure that their advertisements, promotional materials, and oral communications are consistent with the product terms and that these communications provide clear, balanced, and timely information about the risks. this is important so that consumers have the information they need at critical decision times, such as when selecting a loan product or choosing a specific payment option each month. the board's truth in lending regulations require creditors to provide consumers with disclosures about the loan terms, including a schedule of payments. for interest - only and payment option arms, the payment schedule shows consumers how their payments will increase to include amortization of the principal. the proposed interagency guidance describes how institutions can use their promotional materials to provide better information about the features | 0.5 |
. furthermore, it is important to determine how the task of preventing asset market bubbles from developing should be shared between macro prudential and monetary policy, if at all. ensuring that policy makers are willing and able to act on any information that suggests that financial stability may be at risk is crucial. tightening macro prudential policy will never be popular since the costs of doing so are obvious and the benefits much harder to pin point. clarity regarding the objective of macro prudential policy, where responsibility lies for policy and what the accountability arrangements are, as well as the independence of the decision makers are all essential features of a strong macro prudential framework. references bank of england, ( 2011 ), β instruments of macroprudential policy β, discussion paper, december. http : / / www. bankofengland. co. uk / publications / other / financialstability / discussionpaper111220. pdf barrell, ray, e. philip davis, dilruba karim and iana liadze, ( 2010 ), β bank regulation, property prices and early warning systems for banking crises in oecd countries β, national institute of economic and social research, discussion paper no. 330, february. http : / / www. niesr. ac. uk / pdf / dp330. pdf borio, claudio and mathias drehmann, ( 2009 ), β assessing the risk of banking crises β revisited β, bis quarterly review, march. http : / / www. bis. org / publ / qtrpdf / r _ qt0903e. pdf bis, ( 2010 ), β macroprudential instruments and frameworks : a stocktaking of issues and experiences β, cgfs papers no. 38. http : / / www. bis. org / publ / cgfs38. pdf bis, ( 2011 ), β central bank governance and financial stability : a report by a study group β, may. http : / / www. bis. org / publ / othp14. pdf bis - fsb - imf, ( 2011 ), β macroprudential policy tools and frameworks β, progress repost to g20, october. http : / / www. imf. org / external / np / g20 / pdf / 102711. pdf bordo, michael d. and olivier jeanne, ( 2002 ), β monetary policy and asset prices : | ed sibley : prudential regulation, the international financial services sector, and priorities in ireland for 2018 remarks by mr ed sibley, deputy governor ( prudential regulation ) of the central bank of ireland, at the fsi financial services forum, dublin, 8 december 2017. * * * in my remarks today, i will cover three broad areas relevant to internationally focused financial services firms. firstly, i will describe our objectives and approach to prudential regulation, secondly, i will consider some of the key challenges the international financial services sector faces, and thirdly, i will outline some of our priorities for 2018. within these broad areas, you will hear : the central bank β s prudential regulation priorities for delivering on its mandate of safeguarding stability and protecting consumers ; that while much progress has been made in improving the safety of the financial system, more work is required to address issues that still remain ; and that even as we are still dealing with legacy issues from the last financial crisis, significant headwinds and risks are on the horizon. regulatory and supervisory approach the core work of the central bank is focussed on delivering a financial system that is wellmanaged, well - regulated, and sustainably serves the needs of the economy and consumers over the long term. given the international nature of much of the irish financial services system, this objective includes consideration of our responsibilities regarding european financial stability. indeed, in comparable ways to your firms, the central bank is also part of the complex european financial services ecosystem β playing an active role in the european framework of regulation and supervision1. within that framework, the central bank operates a robust and effective approach to supervision that underpins our aim of enhancing the standing and reputation of the central bank ( such that it is trusted by the public and respected by our peers ), and the wider reputation and long - term attractiveness of ireland as a financial services centre. delivery of our overarching vision for the financial services system requires that we deliver effective, intrusive, analytical and outcomes - focused supervision. this is risk - based and anchored by our prism supervisory methodology. our supervisory effort involves our day to day supervisory team engagement with regulated firms ; in - depth and intensive inspections ; and high quality analysis designed to support and challenge the supervisory work. we undertake this work with the aim of ensuring that regulated firms : have sufficient financial resources, including under a plausible but severe stress ; have sustainable, capitally accretive business models, over the long | 0.5 |
2 it is worth emphasising that the purchase of a property by a foreign citizen or temporary resident may not contribute one for one to net housing demand in australia. for instance, there would be little effect on net demand if the property purchased is used to house foreign students who would otherwise have needed to rent during their stay here. similarly, net demand for housing would be little changed if an investment property is subsequently rented out. there is no comprehensive information on the magnitude of these types of transactions. so, while it seems likely that foreign residential purchases have added somewhat to net housing demand in australia, there is no way of knowing the exact extent to which this has been the case. whether an increase in net housing demand β be it from foreign or domestic sources β leads to higher housing prices depends on the responsiveness of supply. this subject has been see rba ( 2014 ), β submission to the inquiry into foreign investment in residential real estate β, 9 may. see gauder m, c houssard and d orsmond ( 2014 ), β foreign investment in residential real estate β, rba bulletin, june, pp 11 β 18. bis central bankers β speeches especially topical of late, with housing prices nationally rising by close to 10 per cent over the past year. the rise in prices has primarily reflected increased housing demand from australian residents and citizens, partly owing to low interest rates. the supply of housing is responsive to a rise in housing demand but, given the time needed to plan and build new housing, this typically occurs with some lag. however, several factors can accentuate this lag, including : β’ a shortage of well - located land and geographical constraints in our capital cities β’ the complexity of the planning and approval process, which adds to the time and costs of new housing developments β’ concerns of existing residents in regard to new development projects in their vicinity. these are not easy issues to address, although it is widely agreed that an appropriate balance needs to be struck if housing is to be provided at a reasonable cost. through the bank β s business liaison, we hear from housing market participants that impediments to increasing the supply of housing in some greenfield areas have eased in recent years. also, there has been interest in converting some of the older office buildings in central business districts into residential use, which may ease the shortage of land in highly sought after areas. however, our contacts also report that more could be done to increase the responsiveness of housing supply to demand. | what information can be conveyed to counterparties and other market participants. while it is clear ( or at least should be ) that disclosing the details of a client β s order book to a counterparty is not acceptable, market participants have noted that there is much less clarity around what level of aggregation, say, is necessary in order to convey market colour appropriately. 2 / 5 bis central bankers'speeches as a result, it appears some market participants are being very conservative in sharing information, which can have implications for the effective functioning of the market. this is notwithstanding the guidance provided in this area in the global preamble put out by the global fxcs, in march 2015. 5 the global code takes the material in the global preamble and fleshes it out a bit more, including with some examples of what is, and isn β t, appropriate communication, and why. similarly, there have been diverse opinions around what is appropriate behaviour in terms of order handling. there have been some very public instances of inappropriate behaviour around order handling that have come to light in recent years. the market is seeking greater guidance as to what principles should be followed, including the different standards that may apply depending on whether an intermediary is functioning as principal or agent. this is one area that was not adequately covered in the pre - existing codes that the various fxcs had endorsed for the fx market. it is an area where we have provided the sought - after guidance. but we are not writing a procedures manual for order handling. rather we are articulating principles that need to be taken into account. individual firms may then take these principles and reflect them in their own procedures manual. our aim in articulating these principles is to provide market participants with the framework in which to think about how they handle stop - loss orders. the emphasis here is very much on the word β think β. the global code will not provide the answers to all your questions, but it should help you ask the right questions. adherence to the code alongside drafting the code, we have also been devoting considerable time and effort to thinking about how to ensure widespread adoption of the code by market participants. clearly, that has been an issue with the various existing codes that have been in place in a number of markets over many years. it is evident that they were ignored on occasion, wilfully or otherwise. one of our central aims in drafting the code is for it to be principles - based rather than rulesbased. | 0.5 |
francois villeroy de galhau : monetary and fiscal policy - mix addressing the disease of inflation speech by mr francois villeroy de galhau, governor of the bank of france, at the eurofi financial forum 2023, santiago de compostela, 15 september 2023. * * * ladies and gentlemen, it is a great pleasure to be here for this final day of the traditional september eurofi meeting, and i extend my warmest thanks to didier cahen and david wright for organising this event, this time in the holy city of santiago de compostela. let me start with good news about a favourite eurofi topic : banking regulation and basel 3. i say it as bis chair and former chair of ghos : we had in monday an important ghos meeting in basel, and we unanimously welcomed the decisive progress made this year in the implementation of basel 3. by 2025, all jurisdictions β including europe and β yes β the us β should have implemented it in a broad compliance with the standards. i know each banking industry, on both sides of the atlantic, tends to consider that the other side has undue advantages. it's simply not right, and our motto is now straightforward : let us now close this page, and implement the european compromise, no less and no more. no less as some banks would perhaps still dream of, and no more as some theoreticians of regulation would perhaps imagine. and we should now turn to the priority learned from the banking turmoil : " strengthening supervisory effectiveness " i rather than focusing on further regulation. let me now turn to my theme which is the policy mix to fight our main economic disease : inflation. well, santiago has not yet produced a miracle for inflation, but there is indeed some encouraging news : headline inflation has passed its peak since the beginning of 2023, and it seems that core inflation is following suit. indeed, the latter started to recede, to stand at 5. 3 % in august ( down from 5. 5 % in july and 5. 7 % in march ) in the euro area. obviously, these inflation rates remain too high : we must and we will bring inflation back towards our 2 % target by 2025. i reiterate this morning this clear commitment which is fully consistent with our latest ecb forecasts. monetary policy is the first line of defence, and the main remedy for this disease. i won't make comments about yesterday's governing council and monetary decision | to ensure fiscal discipline. in other words, in the famous rules / discretion debate, we need indeed more discretion - but not too much ; and we need less mechanical or obscure rules, but we still need rules. the set - up should indeed ensure binding thresholds for the minimal annual adjustment of public finances. let me add that the more we progress effectively on national fiscal discipline, the easier we could envisage a common fiscal capacity β which we badly need. mario draghi eloquently advocated it recently, v and i wish it will be part of his new mission on competitiveness in europe. to conclude, let me borrow a fundamental principle from physics, stated by isaac newton : " when two forces unite, their efficiency double ". well, it is time to combine the two forces of our monetary and fiscal policy, towards a greater efficiency of our euro area economy and to the benefit of our citizens. thank you for your attention. i press release : governors and heads of supervision endorse initiatives in response to the banking turmoil and reaffirm priority to implement basel iii. ii eurogroup statement on the euro area fiscal stance for 2024, press release, 13 july 2023. iii c. bouthevillain, s. debu, towards a much - needed reform of eu fiscal rules : the european commission's proposals, banque de france bulletin no. 246 : article 2, 21 june 2023.. iv x. debrun, l. jonung, under threat : rules - based fiscal policy and how to preserve it, european journal of political economy. v the economist, mario draghi on the path to fiscal union in the euro zone, 6 september 2023. 3 / 3 bis - central bankers'speeches | 1 |
. it is expected to grow to 20 % in 2020. what this suggests is that asia is no longer just a recipient of investments from us and europe. increasingly, asia will become a major source of fdi for the rest of the world. in terms of private wealth, a 2006 merrill - lynch study noted that asia - pacific contains 27 % of the global population of high net worth individuals ( hnwi ) and 23 % of global hnwi wealth. merrill - lynch expects private wealth in asia - pacific to exceed us $ 10trillion by 2010, growing at an annual growth rate of 6. 7 %, outpacing the global rate. these are vast resources which can be harnessed to finance future growth. strategic stability within the region politically, i expect the strategic environment in asia to be stable. on a bilateral level, the key relationships which underpin the region β s stability β us - china, us - india, china - japan and china - india β are sound. the major players will compete and cooperate over a range of issues. there will be occasional tensions over trade, history and territorial disputes but these will be managed as the major players want stability and growth, not conflict and instability. they have also taken steps to strengthen their relations. although slow, progress is being made to resolve the crisis over north korea β s nuclear programme. tensions may arise in cross - strait relations should taiwanese politicians play the independence card as taiwan heads for elections in 2008. but so long as the us maintains its clear stand that it will not support taiwan β s independence, the situation will not get out of hand. i do not expect major military conflicts to break out in asia. all countries in asia understand that any such conflict would set themselves and the region back. this will detract from everyone β s focus on economic growth and building cross - national and cross - regional ties. there is strong optimism that asia can make it in this century and strong determination to succeed. i therefore expect a stable strategic environment to provide the backdrop for the region to grow. deepening economic integration and interdependency within asia, economic integration is deepening, and we are becoming more and more interdependent. intra - asian trade as a share of the region β s total trade has grown from 34 % in 1980 to more than 50 % today. asia is being woven together by trade and investment flows, mncs spreading their production chains and a growing web of bilateral and multilateral | banking system. since capital is the last line of defence against bank insolvency, regulatory capital requirements are one of the fundamental elements of banking supervision. this is why the basel committee has devoted so much effort to developing the so - called basel ii capital framework, which was released in june 2004. the new capital framework is built on three mutually reinforcing pillars. the first pillar aligns minimum capital requirements more closely with banks β actual underlying risks. the menu - based approach means that qualifying banks may also rely partly on their own measures of those risks, which will help to create economic incentives to improve those measures. in concept the first pillar is similar to the existing β basel i β capital framework in that it provides a measure of capital relative to risk. what is new are the second and third pillars. the second pillar β supervisory review β allows supervisors to evaluate a bank β s assessment of its own risks and determine whether that assessment seems reasonable. it is not enough for a bank or its supervisors to rely on the calculation of minimum capital under the first pillar. supervisors should provide an extra set of eyes to verify that the bank understands its risk profile and is sufficiently capitalised against its risks. the third pillar β market discipline β ensures that the market provides yet another set of eyes. the third pillar is intended to strengthen incentives for prudent risk management. greater transparency in banks β financial reporting should allow marketplace participants to better reward well - managed banks and penalise poorly - managed ones. basel ii, in my view, is fundamentally about better risk management and corporate governance on the part of banks, as well as improved banking supervision and greater transparency. thereby, it is also about increasing the stability of the global financial system, to the benefit not only of banks, but also consumers and businesses. this is especially critical in markets where banks are the primary source of funding and therefore key drivers of sustainable development. how will basel ii contribute to financial stability? allow me then to take a few minutes to elaborate on several areas where i believe basel ii will foster financial stability. first, i believe that basel ii is a major step forward in strengthening the incentives for the ongoing improvement of banks β risk measurement and management systems. the new capital framework is both incentive - based and risk - based. it therefore offers us the opportunity to ensure that supervision and regulation takes a forward - looking view on risk, that it remains up - to - date with sound practices in the industry and that our supervisory framework motivates responsible | 0 |
last but not least, i am also aware that if inflation comes down it will happen only β thanks to the tough fiscal stance of the government β but if it remains high it will be β due to the not restrictive enough monetary policy β. but i do not care about the comments, only results! however, i do get more than annoyed when instead of appreciation i hear accusations from some government representatives that did not do their fair part and, in addition to that, even criticize the central bank for being hyperactive! recently i have been hearing a lot of tenuous criticism of the national bank of serbia regarding bank privatisation. let me set it clear : i / we did not cause the interruption of the saa talks with the eu, i did not contribute to the substantial increase of both usd and eur yields on serbia β s debt, nor did i say that serbia does not need a new imf arrangement. these are the crucial reasons that may prompt a bank to come or not to come to serbia, and not reserve requirements on short - term foreign borrowing up to two years! i definitely communicate differently with the industry compared to my predecessors. i do not like oneon - one meetings and do not give oral promises ; neither do i suggest to general managers what they need to do! i have no problems admitting that some events between the commercial banks and the national bank of serbia could and should have been avoided. but this is transition and do not underestimate the role of the journalists that love to create headlines! last but not least, the exchange rate. β more float and less management β has been emphasized and carried out by the national bank since september last year. the events of the last days of 2005 and the recent week are just a proof of the need to hedge foreign currency positions β the sooner the better. the exchange rate is not even mentioned among the 3 goals the national bank of serbia should pursue! it will take some time to enter the eu, and thereafter the eurozone, so we do not have an alternative. the central bank will not allow excessive daily fluctuations either way, but the rate is being increasingly determined by the market! so do not fall into the β good old serbian β habit : all gains from depreciation are, so to say, normal extra profit and are automatically pocketed, while in the case of appreciation the blame is on the central bank! if you are gambling, you cannot accuse the casino of losing your money! i would like | radovan jelasic : overall goals of the national bank of serbia speech by mr radovan jelasic, governor of the national bank of serbia, at the business luncheon on " dialogue critical for economic stability and progress ", american chamber of commerce, belgrade, 10 july 2006. * * * dear ladies and gentlemen, it is my pleasure to welcome all of you on behalf of the national bank of serbia and just before the start of the summer break period. i am sure that we will all have an eventful time period after the summer break, so enjoy every minute of your vacation! before i start to answer some of the questions i was asked to focus on during my speech today, i would like to emphasize some issues regarding the overall goals of the national bank of serbia during the time to come : 1. bring down inflation to single digit level without using exchange rate as the main anchor it is going to be a tough ride but we will succeed, as usual, despite the fact that this room is full of people that would be able to give dozens of reasons why this cannot happen ( history, euroization, lack of confidence, etc. ). all of these reasons against reestablishing the dinar i have heard, discussed and answered before. therefore, i would like to emphasize once more that the national bank of serbia will bring down the inflation rate and that is not going to be painless! just like in the region, traditional populism will be loud here as well : β lower economic growth β, β unreal exchange rate will hurt exporters β β¦ but instead of trying to convince me why this cannot happen in serbia as well, please help us with advice regarding the tools needed in order to make it happen and, parallel to that, hedge yourselves! 2. build up an efficient financial system the goal of the national bank of serbia is to build up an efficient financial system that, in addition to a stable capital base and first class owners, is also characterized by a ) low margins and cheap services, b ) high level of public confidence, c ) efficient intermediation. we have come a long way during the last five years but it is far from being enough! we can and should do more, much more in improving the efficiency of the financial system, for which we need more transparency of the financial services and more public education of the citizens. the ultimate goal of the financial sector restructuring is not privatisation but to build up an efficient | 1 |
importance of protecting private property rights if growth is to be dynamic. still others note the importance of human capital, and highlight the role of education as a determinant of economic growth. and of course there are many other relevant factors, such as the rules and regulations which may make undertaking new investments a slow and cumbersome process. getting policies in all of these areas right is crucial if trend growth is to be increased, and none of them are policies susceptible to central bank influence. conclusion so in conclusion, in these β interesting times β β’ first, the reserve bank is as committed to avoiding deflation as to avoiding inflation, and that means that we will always be leaning against the wind to the best of our ability, tending to tighten policy if inflation looks likely to rise in the future, and tending to ease policy if inflation looks likely to fall below the bottom of our target. β’ second, the new zealand economy is well - placed to weather the international slowdown, with moderate growth, low unemployment, an exchange rate which is providing useful support for export and import - competing industries, and ample scope for further easing of monetary policy if that should prove necessary. β’ third, even with the best will in the world, the best economists in the world, the most regular contact with companies up and down the land, monetary policy can never provide you with complete protection against the vagaries of life, whether these vagaries come in the form of international crises or in the form of some dramatic domestic development. β’ and fourth, monetary policy doesn β t determine the economy β s long - term growth rate - that is determined by a whole range of factors which have nothing directly to do with the reserve bank. sometimes the reserve bank will need to leave monetary policy unchanged for months on end. sometimes we will need to adjust interest rates in small incremental steps, as earlier in the year. and sometimes we will need to adjust rates more aggressively, as over the last couple of months. different circumstances will require different responses. but what i can say is that, in β interesting times β as in normal times, the role of monetary policy is to help and not to hinder, and that is what we are committed to doing. | go negative, you can be sure we would be very active indeed in stimulating the economy. it β s been said that any fool can keep inflation down, and that β s true, but our task is much more demanding than that. i know our rhetoric is mostly about the economic and social costs of inflation, rather than about the economic and social costs of deflation. that β s because, at least in new zealand, inflation has been much the more common problem, certainly for the last 60 years. also, because new zealand went through a period of quite high inflation in the seventies and eighties, we have had to work hard to persuade people that we are serious about keeping inflation down, in order to bring down inflationary expectations. but make no mistake. inflation going below zero would be just as much a breach of the reserve bank β s inflation target as having it go above 3 per cent. deflation causes its own set of economic problems and distortions, doing social and economic damage. and our policy deliberations are always, without exception, mindful of both risks. we are always trying to find the policy setting - the interest rate - which will deliver an inflation outcome which is neither too hot nor too cold. preventing deflation is also part of the law under which i operate. the reserve bank act 1989 makes it clear that monetary policy must deliver β stability in the general level of prices β. and the policy targets agreement which i have with the minister of finance, a requirement of the reserve bank act, defines β stability in the general level of prices β as inflation measured by the consumers price index of between zero and 3 per cent. deflation is not β stability in the general level of prices β, any more than inflation is. this means that, once price stability has been achieved, and as a very rough rule of thumb, the reserve bank β s monetary policy will be seeking to restrain inflationary pressures by raising interest rates roughly half the time, and will be seeking to restrain disinflationary pressures by lowering interest rates roughly half the time - as we did in the second half of 1998 and as we have been doing through most of this year. new zealand goes into this world slowdown in a strong position secondly, although new zealand will be affected by the world slowdown, we are not completely hostage to external events. it is important that we don β t talk ourselves into a gloomy frame of mind just because the slowdown in the world economy could be | 1 |
masaaki shirakawa : globalization and population aging β challenges facing japan speech by mr masaaki shirakawa, governor of the bank of japan, to the board of councillors of nippon keidanren ( japan business federation ), tokyo, 22 december 2011. * * * introduction i am honored to have this opportunity to address the representatives of japan β s economy gathered here today. we have just over a week left in a year in which the most notable event for our nation was definitely the great east japan earthquake of march 11. speaking only about the economic impact of this terrible event, japan β s economy suddenly faced enormous downward pressures arising from damage to production facilities, disruptions in supply chains, and shortages in electricity supply. thanks to tremendous efforts by company managers and by employees in the field, these supply - side problems were resolved by the summer, which was faster than expected. however, just as the prospects gradually began to look good for japan β s economy to overcome the problems caused by the disaster, the sovereign debt crisis in europe triggered new problems β a slowdown in overseas economies and the appreciation of the yen. as a result, after a sharp rebound, the pick - up in japan β s economic activity has gradually slowed and is currently at a pause. according to the tankan ( short - term economic survey of enterprises in japan ) released last week, business conditions deteriorated for large manufacturing enterprises, as has been extensively reported in the newspapers, but improved for large nonmanufacturing enterprises ( chart 1 ). as for smes, business conditions improved both for manufacturing and nonmanufacturing enterprises. as such, although overall business conditions have improved, the pace of improvement has slowed. as can be seen from the results of the tankan, there are currently two opposing forces in operation : on one hand, exports and production remain more or less flat due to a slowdown in overseas economies and the appreciation of the yen ; on the other, in terms of domestic demand, private consumption remains firm and postearthquake rebuilding and reconstruction demand is expected to materialize. the bank of japan judges that japan β s economy will be more or less flat for the time being as the former force prevails. beyond that phase, it is our judgment that the economy will gradually return to a moderate recovery path, reflecting a pick - up in growth of overseas economies, especially emerging economies. having said that, we are fully aware that this outlook is attended by various uncertain | unprecedented economic bubble in the late 1980s. the effects of that bubble were considerable. prior to the lehman shock, an optimistic view prevailed among economists and policy authorities in the united states β that a significant economic downturn following a bubble period could be avoided through implementation of powerful monetary and fiscal policies once the bubble burst. that optimistic view is no longer prevalent today. economic activity remains stagnant until excesses in production capacity and debt that have been built up during a bubble period are resolved ( chart 5 ). such balance - sheet adjustments, however, no longer acted as constraints on japan β s economy at least by sometime between 2003 and 2004. the more essential reason for the subsequent downturn in japan β s economy was japan β s delayed response to the significant changes in the environment, namely, globalization and population aging. going back to my earlier reference to 1995, japan around that time was desperately looking for ways to recover from the collapse of the bubble economy. at that stage, i recall that not many of us understood the significance of globalization and population aging for japan β s economy as well as we later came to realize. in other words, it is better to attribute the delay in responding to an inability to fully recognize the seriousness of the problem itself than to difficulties implementing solutions despite knowing what they were. i believe the same could happen in the next 15 years ( chart 6 ). for instance, how will japan β s rapid population aging alter the course of japan β s future economic growth and fiscal conditions? will japan β s economy be able to maintain its longstanding current account surplus? ii. setting the agenda for japan β s economy serious consequences of leaving situation unchanged regarding the first question, even if we focus on demographics, which are relatively easy to predict going forward, we can confirm that the conditions that the underlying factors affecting japan β s growth are going to change dramatically. the average growth rate has declined from 4. 3 percent in the 1980s to 1. 5 percent in the 1990s and further to less than 1 percent in the 2000s ( chart 7 ). the economic growth rate consists of two components : the rate of growth in the number of workers and the rate of growth in labor productivity, which represents an increase in the value added by each worker. we can project future growth rates by forecasting these two components. of the two, the rate of growth in the number of workers started to decline in the 2000s, and decreased at an annual rate of 0. 3 percent on average during that decade | 1 |
powerfully incentivised to avoid enforcement action by being more diligent in respect of regulatory compliance. this raises standards generally in the financial services sector. it shows that there are consequences for non - compliance. and it is an efficient use of resources. rather than trying to individually mark all the firms that we supervise, the risk of enforcement action has a multiplier effect across the regulatory population in terms of encouraging compliance and good practice. it is, for example, particularly useful for the large population of smaller, low impact, firms where we cannot have a routine supervisory interaction. the benefits of enforcement are therefore very clear in terms of raising standards. these benefits are not only recognised in ireland but, of course, across many other jurisdictions in europe and more generally internationally elsewhere. enforcement actions are taken by supervisors in ireland, in the uk and the us, and also across the european union including france, germany, sweden, malta and luxembourg for example. so, i think concerns over the competitiveness impact of taking enforcement actions, which is a point sometimes put to me, is somewhat overstated. bis central bankers β speeches and to be clear, i don β t think it makes sense to somehow ring fence international firms from the scope of potential enforcement action. we see weaknesses in governance, systems and controls and other breaches amongst international firms, just as we do for domestic ones. protecting ireland β s reputation as an international financial centre is important and means that both firms and the central bank need to be vigilant about standards in this sector. what about the argument that it β s not fair to take enforcement action for mistakes? or that when a management team self - reports a breach they should get an exemption from enforcement? these are, frankly, well - trodden and somewhat hackneyed arguments. these are certainly relevant factors to consider during the enforcement process, and typically would be given consideration when assessing the correct sanctions. but the clear international practice is that enforcement still takes place in such circumstances. it is important that the deterrent effect still applies to inadvertent breaches and to self - reported ones as well. to do otherwise, would be to effectively turn a blind eye to the requirements which we are required to uphold and would encourage a culture of slackness that would sow the seeds of significant detriment to consumers and damage the financial stability. so, let me be clear, enforcement in the financial sector in ireland is here to stay. we aim to be transparent about | matthew elderfield : effective enforcement β encouraging compliance and good practice opening remarks by mr matthew elderfield, deputy governor of the central bank of ireland, to the central bank enforcement conference, dublin, 11 december 2012. * * * i would like to welcome you to the first conference on enforcement that we are hosting at the central bank of ireland. we are very glad to be hosting this event and that you are able to join us here today. enforcement is an important element of our regulatory strategy at the central bank. our approach of assertive, risk - based supervision is underpinned by having a credible enforcement deterrent in place. effective enforcement certainly has a corrective element that is designed to ensure accountability for non - compliance with regulatory requirements, both by firms and β as i would like to talk about briefly in a moment β ideally also for individuals. but effective enforcement is much more powerful than simply being about bringing a particular firm or its management to account. the broader benefit, which supports supervision, is the deterrent effect of enforcement. if firms think there is a credible risk that their own non - compliance with regulatory standards would lead to sanctions from the central bank, then that provides a very powerful motivation to boards of directors and senior management teams to ensure a high standard of conduct. the fact that the central bank has sanctioned firms and has published details of these sanctions has made some in the industry uncomfortable and leads to pleas to ease up on the use of the enforcement tool. we do not apologise for taking enforcement actions or publicising them. there is no deterrence value unless firms, investors, consumers and the public are aware that we will respond with enforcement action where behaviour and practices fall short. i am firm in my belief that this is a necessary and best practice element in the regulatory toolkit of the central bank. and, unless these sanctions are published with enough detail about what occurred and the sanctions imposed the deterrent effect will be diluted. we have purposefully made an effort to be more explicit and detailed in the publicity statements involving enforcement sanctions. the purpose of this is to provide greater transparency to industry, the markets and the public about the nature of breaches that have been committed. the publication of the enforcement action has a reputational impact on the firm and management concerned. a consequence of this approach is that the impact of our enforcement efforts is greater because, frankly, the message is clearly communicated to industry and the public that breaches will not be tolerated. consequently all firms are | 1 |
thomas j jordan : approaching the finishing line β the too big to fail project in switzerland speech by mr thomas j jordan, vice chairman of the governing board of the swiss national bank, at the international center for monetary and banking studies, geneva, 17 may 2011. * * * i would like to thank dr. claudia strub and till ebner for their valuable support in drafting this speech. introduction eighteen months ago, we here in switzerland tackled a major challenge : the search for a solution to what is known as the β too big to fail β problem in the current financial system. β too big to fail β means that the state has no choice but to rescue a company because its demise would seriously affect the entire economy. in good swiss tradition, a broad - based committee of experts1 presented the federal council with a proposal supported by all involved parties and the implementation of which would significantly alleviate the β too big to fail β problem. this proposal was, in essence, approved by the federal council and has been put before parliament in the form of a draft law. at this point, i should like to deliver an important message. the package of tbtf β too big to fail β measures is not intended to hurt the big banks or the banking sector in switzerland. rather, it aims to protect state and taxpayer from incurring an unwanted and unacceptable risk, while also creating the necessary framework conditions for the banking sector to be able to develop sustainably and successfully over the long term. the decision is now up to the politicians. in the coming weeks and months, parliament will decide whether the proposed measures will actually be implemented. the final, decisive phase of the project is thus underway β we are approaching the finish line! in the swiss system of direct democracy, the electorate essentially also has the final word in the legislative process. it is therefore important to ensure that the public clearly understands such a complex topic as the regulation of systemically important financial institutions. the snb has the statutory mandate to contribute to the stability of the financial system. it thus played a significant role in drafting the solution put before the federal council. allow me to explain the considerations behind the proposed legislation. the cost of financial crises the latest crisis highlighted the fact that big, globally interconnected financial institutions present a particularly large risk to an economy. if they fail, systemically important functions vital to the smooth running of the economy β such as the lending business or executing payment systems β can no longer be carried out. it is for this | nominal long - term interest rates, it is useful to think of them as the sum of two elements, the real long - term interest rate and the inflation premium. economic theory tells us that the real interest rate is the price that matches the supply of savings with the demand for capital used for investment. supply and demand for funds, in turn, are determined by fundamental economic factors such as the time preference of households to consume today relative to consuming tomorrow, as well as the productivity of capital and demographic factors which determine future growth prospects. to arrive at market - quoted nominal interest rates, one must add to the real rate an inflation premium, which compensates the investor for the potential loss in the purchasing power of money over the term of the security. bis central bankers β speeches so, to shed light on the movement towards lower nominal interest rates since the 1980s, let us examine how these two components β the real interest rate and the inflation premium β have changed over that period. a secular downward shift a considerable part of the secular decline in nominal rates is the result of lower and more stable inflation rates in advanced economies, translating into reduced inflation expectations and a lower inflation premium ( chart 2 ). reduced volatility of inflation rates since the mid1980s β a development associated with the β great moderation β β has probably contributed to this. 1 this reduction in the inflation premium and in volatility can, at least partly, be attributed to the success of central banks β policies and their credible commitment to low and stable inflation, a commitment which has become the hallmark of modern central banking. realised real rates β calculated as observed nominal rates minus the realised inflation rates β have also declined, and have been substantially lower in the 2000s than in the 1980s ( chart 3 ). there are several potential explanations for this development. a first explanation is the β global savings glut β hypothesis, which states that the decline in real interest rates was the result of an increase in savings from emerging economies and oilproducing economies. it is argued that this increase was driven by, among other things, an accumulation of foreign exchange reserves, elevated oil prices and precautionary savings ( chart 4 ). 2 but the decline in real rates could also result from a decrease in growth prospects β itself caused, for instance, by a decline in the growth of productivity or population, or by demographic shifts, particularly a reduction in the working population relative to the nonworking population ( charts 5 and 6 ). 3 none | 0.5 |
met. currently, virtually all new member states outside the euro zone lack a euro adoption target date, which is indicative of a substantial shift in approaching the euro changeover as a whole rather than their inability or difficulty to comply with the reference values of nominal convergence. how did this change come about? this shift in approach occurred amid euro adoption benefits becoming less obvious, to which added the increasingly evident costs. this is also reflected by the flash eurobarometer, which indicates a significant decline in the number of those who believe that adopting the euro is beneficial for their country. figures differ across countries β with the lowest numbers in the czech republic ( around 20 percent ) and the highest in romania ( above 50 percent ) β but the tendency is the same. referring to the benefits of euro adoption, one of the prominent ones, namely the lower financing costs, is no longer obvious. the incomplete institutional setup of the european project in general and the european monetary union in particular β weak fiscal rules and the lack of any transnational instruments that would have enabled monitoring cross - border private capital flows β gave rise to a number of vulnerabilities which the recent crisis has exposed. to be more specific, what sets the european union apart from the other industrialized economies is precisely the fact that the initial banking crisis which hit everybody here gave birth to fears of sovereign default, which reinforced banking system vulnerability and sapped investor confidence further, thus deepening the recession. the consequence of all that was the financial fragmentation issue, which is precisely the reason why the lower financing cost benefit of euro adoption, seems to have vanished. another unfortunate consequence was that the benefits brought about by commercial integration were significantly diminished by lack of growth in the euro area. the fixes proposed to the institutional architecture of the european monetary union, such as the setup of the european stability mechanism and even that of the banking union, brought bis central bankers β speeches about direct costs of adopting the euro. the issue here is not only the financial effort involved, but also the difficulty, from a political perspective, to explain to the public the need for a financial contribution to mechanisms benefiting wealthier countries for the time being. a case in point is the fall of the radicova cabinet in slovakia in 2011. euro adoption β a conclusion in my view, euro adoption is in the best interest of eu member states in the long run β given the high degree of business cycle correlation and market integration β, but several essential preconditions, added to the nominal | mugur isarescu : relations between euro and non - euro countries within the banking union speech by mr mugur isarescu, governor of the national bank of romania, before the unicredit 15th international advisory board, rome, 10 july 2014. * * * ladies and gentlemen, let me first thank unicredit and mr. romano prodi for inviting me to make this address in front of such a distinguished audience. i was asked to talk about the soon - to - be - operational banking union, specifically about the relations between the euro area and non - euro area members and, generally, its anticipated impact on investor confidence across the european union. as you probably know, in my capacity as governor of the national bank of romania, i have argued in favour of the banking union project. i see the banking union as a substitute for the fiscal counterpart of the monetary union required for the proper functioning of the latter. it is hardly imaginable that a consensus on fiscal union is achievable, particularly in today β s europe, where both payers and recipients are known beforehand. consequently, to target first the banking union has the distinct advantage of actually being feasible. in this context, i am in favour of romania β s entering the banking union before joining the euro area through the close cooperation arrangement with european central bank. my speech will endeavour to outline the arguments that support the opt - in decision for romania, but i believe that, despite the slightly different circumstances, the reasoning also holds true for other non - euro area countries β such as poland, hungary, the czech republic or bulgaria. general remarks before dealing with the arguments underpinning our position regarding the banking union, let me give you a short account of romania β s recent economic history that should enable all of you to better understand our particular circumstances. no doubt the crisis has taken its toll on romania β s economy, given the large imbalances which had been steadily accumulating during the boom years. whether the crisis has ended or not on the european level is still a matter of debate. what may be said for certain is that romania undertook the necessary adjustments during the 2009 β 2012 period and the preconditions for sustainable growth are now in place. indeed, the outcome of these adjustments may already be seen in the 2013 economic performance, which hopefully marks a turnaround in romania β s economic development : β’ rapid ( judged by the current standards in the european union ) economic growth, namely 3. | 1 |
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 | of textbooks for secondary and higher level as well as the preparation of the national strategy for financial education. dear media, allow me, on my own behalf but also on behalf of the central bank of the republic of kosovo, to thank you for following the activities and events that the cbk organizes every year and that has never lacked your support and presence. this is especially important in conveying informational and educational messages to the kosovar public. | 0.5 |
against climate change will be won or lost. energy demand in asia is expected to double by 2030 on the back of economic growth, urbanisation, and rising affluence. some 45 million people in southeast asia still do not have access to electricity. fossil fuels will continue to play an important role in meeting the energy demands of asia, at least for the next few years. the key to addressing the tension between development and decarbonization lies in credible and inclusive transition pathways, based on strong public - private partnerships. transition plans should enable progressive decarbonisation that is aligned to net zero goals while taking account of developmental needs and providing support for communities to pivot to new growth opportunities in a green economy. the gfanz asia - pacific network has the potential to spearhead this effort in asia, mobilising banks, insurers, asset managers, and service providers in this part of the world, and facilitating alignment in a credible and inclusive transition towards net zero. i am pleased to be part of this effort as chair of the advisory board of the gfanz asiapacific network, from two perspectives. first, as chair of the network of central banks and financial supervisors for greening the financial system ( β ngfs β ), i look forward to opportunities for collaboration between the ngfs and gfanz, exploring further how financial regulators and financial institutions can work together to address climate related risks and advance the net zero agenda. second, from the perspective of the mas, which is actively working with the financial industry to develop green finance solutions, markets, and infrastructure, i look forward to opportunities for partnership between mas and the gfanz asia - pacific network to promote a vibrant green finance ecosystem here in asia. the task ahead is daunting. asia is diverse β across stages of economic development, and across a variety of climate related risks and transition challenges. but the task is hugely purposeful, and if we succeed, transformative. for if we can successfully help asia transition to net zero, it will go a long way in getting the world to net zero. thank you very much. * * * * * | ##dependence is necessary for the smooth operation of the single monetary policy, because it facilitates the transmission of monetary policy throughout the euro area. β’ the prevailing view was that persistent capital flows from the north to the south, which financed the current account deficits of the south during the early years of emu, were an equilibrating force β capital moved from countries where the rate of return on investment was low to those where it was high. β’ the elimination of exchange rate risk was interpreted by markets and institutions as an elimination of all risks. credit risk was essentially ignored. β’ with the outbreak of the global financial crisis in 2008 and the re - pricing of risk, the ample capital inflows to the eu periphery were suddenly reversed. β’ this sudden reversal led to a negative feedback loop between banks and public finances, exacerbating the effects of financial instability on the real economy. β’ in some countries, such as spain, the sudden reversal led to a collapse in demand, a collapse in asset prices and bank distress. the bank distress then fed back into a fiscal and, ultimately, sovereign crisis. a similar narrative can be told for ireland. in other member - states, such as greece, the sudden reversal initially affected the refinancing of debt and subsequently inflicted damage on the banking system following the haircut of greek government debt. β’ as a result, the crisis revealed important weaknesses in the eu architecture and inadequacies in the implementation of the structures that had been put in place. bis central bankers β speeches β’ first, the existing framework of economic governance was not sufficient to prevent the creation of imbalances. the stability and growth pact was not properly enforced and there was no mechanism in place for monitoring external imbalances. β’ second, the increased interdependence between financial institutions and markets, which was the result of the monetary union and the ensuing financial integration, was not accompanied by a more unified regulatory framework. β’ third the link between financial stability and the financial cycle had been largely ignored. the architects of monetary union chose to keep financial sector supervision and regulation largely at the level of the nation state, with insufficient coordination of macro and micro - prudential supervision. policy responses to the crisis β’ in this unprecedented global crisis, governments, central banks and international organizations reacted with coordinated actions. these actions included first, direct monetary and fiscal interventions, aiming at enhancing liquidity to maintain system stability and support the economy ; second, a broader mobilization to res | 0 |
, risk preference has shifted from safety to riskier assets with the improved global sentiment. particularly, global stock markets have rallied far beyond the modest global recovery. this can be seen in the msci world index which surged by almost 25 % during the last 9 months while global growth remains at low level. 5. rallies in stock prices on the back of over optimistic sentiment may sow the seeds of potential bubble. although the market realizes that a further rise in the asset price would virtually compress yield, the market appears to be less concern about a bubble in asset prices. therefore, there is a risk of a sharp correction which we all witnessed in the recent episode in the thai stock market last week. 6. the second dimension of the great rotation is the global fund flow, which is one of the greatest challenges emerging markets are experiencing. the continued monetary easing in advanced economies, economic growth differential and protracted low interest rate environment are key factors pushing investors to search for yield ; fund flows have therefore switched from advanced to emerging economies. 7. this second dimension of the great rotation is a concern to policymakers in the region and has called for wider public discussions among academics, businesses and policymakers. discussion typically centred on the potential recourse to macroprudential or bis central bankers β speeches unconventional measures on the part of recipient countries, given that such practice has been adopted by the source countries of the fund flows. as market participants, we all recognize the benefits of capital inflows that provide a two way view for the market, thus adding depth and breadth to emerging financial markets. therefore any considerations on the use of capital flows policies need to be carefully thought out with consideration of potential unintended consequences and impacts. needless to say, there is greater acceptance for these measures to be part of the toolkit of the authorities and central banks are continually monitoring the markets and ready to take actions in cooperation with regulators and market participants. 8. to respond to the surge in inflows, the bot has chosen the route of capital account liberalization as the most natural counter to encourage the outward flows of capital. we believe that this measure will help lessen the pressure from the rotating fund flows as well as provide the opportunity for thai enterprises to secure new markets in preparation for the asean economic community ( aec ). the roadmap includes relaxation in outward direct investment and portfolio investment. in addition, the bot has allowed thai corporates to issue foreign exchange denominated bonds domestically. there | . bank of thailand has experience in employing several macroprudential tools since 2002 to prevent financial instability that may stem from, for example, excessive credit card loans to sub - par debtors, excessive foreign exchange speculation, and a formation of real estate bubble. i would like to refer to another of our policies to maintain financial stability. to ensure capital flows and exchange rate stabilities, the bank of thailand uses a managed float on exchange rates. the policy allows the thai baht to adjust via market mechanism, helping to stabilize against volatile capital flows. it also allows flexibility for the bank of thailand to influence the exchange rate in extreme events in order to avoid excessive volatility. all the mentioned policies have helped to keep the current economy in good balance. today, capital flows, private sector balance sheets, as well as real estate values remain healthy, which should allow private spending to return with confidence and enable fast recovery. however, there are risks we must closely monitor over next year. as the u. s. economy continues to recover strongly, earlier timing of the u. s. interest rate normalization is anticipated, which could result in capital flow volatility. at the same time, household debt, at 83 % of income, is also a factor to be monitored with caution. we have now covered growth, price, and financial stability. the central bank aims to maintain all three facets of stability for continuity in order to support growth potential. with a promising recovery prospect, minding the future risks to financial stability and being equipped with stability tools tested and refined over time, the monetary policy committee will carefully weigh the tradeoff between short - term gains and longer - term risks and ensure that the economy will be provided with enough financial ease to recover sustainably to its potential. ladies and gentlemen, apart from the deviation from potential i mentioned earlier, the current economy shows symptoms that potential growth, which depends on labor, productivity and infrastructure development, may have reached its limit. at this stage of our discussion, let me refer to some prominent symptoms. thai labor supply has started to gradually decrease due to the trend of aging society. research has shown that increasing labor supply by increasing retirement age and reliance on foreign labor will not be sufficient. since we must accept the aging workforce trend, we must rely on increasing productivity and efficiency through structural changes to lift growth potential, a task which requires supply - side policies. thailand β s productivity growth has declined since the asian financial crisis due to the misall | 0.5 |
economic institutions and prevailing economic cultures and social models? since the late 1990s, increasing attention has been paid by economists and policy - makers to finding answers to these questions. recent economic research β both analytical and empirical β is seeking to further explore how the economy β s performance is influenced by institutions and values ; and, more generally, how the economy β s functioning may change if we relax some of the simplifying assumptions about ( 1 ) the behaviour of a seemingly β valueless β, perfectly rational homo oeconomicus ; and ( 2 ) the functioning of markets that are β perfect and complete β, characterised by full information, rational expectations and largely unaffected by cultural and social values. in my presentation, i will address some of these issues by examining how and to what extent institutions and values may be affecting the performance of the european economy. to this end, i will first sketch out a simple conceptual framework indicating how economic performance, the functioning of markets, institutions and human values relate to each other. second, i will show how the growth performance of the european economy β compared to that of the united states β can be accounted for by differences in the trend growth rates of productivity, labour utilisation and population ; and then i will discuss β on the basis of the empirical evidence available β the role of economic institutions, social preferences, values and attitudes in explaining, at least partly, these differences. a key issue of practical and policy relevance is whether european economic performance can, in fact, be improved without giving up values or preferences that are considered to be quintessentially european. but since there is no unique β european social model β, i will then explore how differences in economic institutions, reflecting different cultural values and social models, may explain the divergence in the growth performance of european countries. finally, i will focus on the other important dimension of economic performance and a central policy objective : price stability. i will demonstrate the crucial role of the institutional frameworks for central banking and fiscal policy implementation in ensuring the preservation of price stability and the sustainability of economic growth. ii. economic performance, markets, institutions and values : a simple conceptual framework before addressing the issues i have raised, it will be useful to define the various concepts more precisely and to specify a simple framework that describes their likely relationships and potential effects. needless to say, the aim is not to formulate a comprehensive theory but to sketch out a conceptual structure that can help organise our thinking and analysis. this is illustrated in slide 3 | one basic reason : the prime concern of any regulator is not to close a bank for the wrong reason but to save an ailing bank from collapsing. the regulator β s challenge is to turn an ailing bank into a really good and performing bank. in this challenge the board of directors of the ioib and the sbi team have played an instrumental - indeed a decisiverole. non - performing loans in the books of banks are an animal that the bank of mauritius has been combating since july 1999. one of the many reasons that motivated the bank to combat this animal in the balance sheets of banks is the need to prevent lending rates of banks from rising inordinately. you will appreciate that the bigger is this animal in the books of banks the higher the lending rates. good and productive borrowers pay for bad borrowers. and lending rates have never been generous in mauritius. you may wish to note that in 1999 housing loans made by banks carried an interest rate of between 14 and 15 per cent. today such loans carry interest rates that are below 10 per cent. i suspect the reduction in the size of non - performing loans in the books of most banks has had some positive impact on the level of lending rates. hopefully with the reduction of non - performing loans on an industrywide basis would eventually help bring down lending rates in mauritius thereby alleviating interest cost burden to the real sector of the economy. prospects for improving loans quality are bright more so when there are 900 to 1000 queries per day by banks at the mauritius credit information bureau. only yesterday i was given to understand that a habitual delinquent borrower had applied for additional credit facilities from a bank. rather than obtaining an additional credit facility, the delinquent borrower was made to repay a large chunk of his debt β thanks to information culled from the mauritius credit information bureau. i am confident that the ioib along with all the other banks operating in the country would successfully bring down the level of nonperforming loans thereby creating scope for bringing down lending rates to realistic levels. the ioib, in particular, has made important strides in this area. may i wish the board of directors, the management and the staff of the bank the very best of success in their new endeavour. | 0 |
to 1335. these data bring out the spurt in urban retail lending in recent time β but this has not been matched by similar growth in savings accounts in both rural and urban areas or growth in loan accounts in rural areas. on the other hand, there are 93 million mobile users today β the cagr since 1999 is 85 %. the number of mobile phones currently is more than the number of borrowers from the banking system. there is a clear need to increase the outreach and scale up operations at existing outlets. use of technology the use of it is inevitable to improve the usage of existing branch infrastructure. increasing outreach and up scaling number of accounts at each branch will require bankers to move out of their branches and source clients and then look at low cost delivery alternatives once the account relationship is established. opening a no frills account with a small overdraft or gcc is only the first step in building the relationship which would require sustained efforts to ensure that the banking relationship with the customer is fashioned to meet his needs. it can reduce cost and time in processing of applications, maintaining and reconciliation of accounts and enable banks to use their staff at branches for making that critical minimum effort in sustaining relationship especially with new accountholders. in rural areas customers cannot be expected to come to branches in view of opportunity cost and time and hence banks will have to reach out through a variety of devices such as weekly banking, mobile banking, satellite offices, rural atms and use of post offices. in urban and even in rural areas where mobile phones have penetrated, banks could use mobile technology for facilitating banking transactions. mobile phones can be used to transfer funds real time from and to bank accounts and could make remittances and payments at very low cost. once the data base and track record is established, a multitude of financial services can be offered including savings, remittance, transaction banking such as receipt of salaries, pensions and payments for utilities, loan including home loans, insurance and mf products. here the branches can render more business and variety of products to existing clientele as also source new customers within the area of operation. financial inclusion offers a huge potential for business in terms of resources and assets and banks therefore need to take aggressive steps to use technology, business processes and personnel to be able to exploit this potential in innovative and creative ways. in a branch banking model, local community based organizations or respected persons could be used to deal with the information asymmetry problem by leveraging the knowledge about customers | international standard - setters are not automatically legally binding in the united states. they do not go into effect unless they are adopted by a u. s. authority acting under u. s. laws following an administrative process. they are also subject to a period of public notice and comment. when appropriate, u. s. authorities have adopted different standards than those proposed in international forums. finally, following the financial crisis, the federal reserve developed a capital stress testing supervisory program β known as the comprehensive capital analysis and review ( ccar ). ccar has become an integral part of ensuring appropriate capital levels. by imposing a discipline of forward - looking capital assessment on our largest firms, ccar helps protect the safety and soundness of the largest financial institutions β and therefore the stability of the entire financial system. the ccar process consists of two parts. first, the quantitative assessment evaluates whether a firm holds a sufficiently large capital buffer so that it can continue to be a viable financial 3 / 6 bis central bankers'speeches intermediary even in a stressed market and macroeconomic environment. second, the qualitative assessment evaluates whether the firm β s risk management and capital planning processes are well - developed and well - governed. ccar has helped to strengthen the capital levels of the largest financial institutions, and has pushed these firms to steadily improve their risk management and capital planning processes. while appropriate capital and liquidity standards are necessary, they must be augmented by a supervisory regime that can assure the quality of a firm β s governance, controls, risk culture and compliance with applicable laws and regulations. as we saw with jpmorgan chase in the β london whale β episode and with wells fargo more recently, effective risk management and governance is a necessary complement to having adequate capital and liquidity buffers. resolution we also must have an effective resolution mechanism that allows a firm to fail without threatening to bring down the entire financial system. we are not quite there yet β given some of the challenges in executing resolution on a cross - border basis β but we have made significant progress. in particular, i would point to two developments that are especially important. the fdic and the federal reserve have used the authority provided by title i of the dodd - frank act to oversee the so - called β living will β process β the resolution planning that large financial firms must do as a contingency for their potential failure. developing living wills necessitates that firms and regulators consider, in advance, how bankruptcy can serve as | 0 |
amount of the program in february and april so that the amount outstanding of the program will reach about 70 trillion yen by the end of june 2013. the current amount outstanding of the program is 53 trillion yen. we are now in the process of increasing the amount outstanding of the program toward 70 trillion yen and the effects of monetary easing will strengthen in a continuous manner day after day as the process continues. in retrospect, the bank β s monetary policy stance since the lehman shock has been changing according to the state of japan β s economy. initially, inclusive of the lehman shock and the subsequent earthquake disaster, the policy stance was geared toward mitigating repeated downward pressure on economic activity and underpinning the economy. afterwards, japan β s economy gradually escaped from such shocks and reached a situation in which an outlook of returning to the sustainable growth path with price stability can be shown. the bis central bankers β speeches reason the bank strengthened monetary easing in february and april nevertheless was to, together with the cumulative effects of past monetary easing, further ensure the outlook to materialize. at present, while daily purchasing assets under the increased total amount of the program, the bank is deliberately examining the effects of monetary easing as well as the outlook and risks for economic activity and prices. of course, due to some shocks, when the outlook turns out to be weaker than expected or the risk associated with it intensifies, the bank will not hesitate to implement additional monetary easing. the bank will continue to strive for proper monetary policy conduct. as i mentioned earlier, to overcome deflation, in addition to the measures i have mentioned, efforts to strengthen growth potential by private firms, financial institutions, and also by the policy authorities will be necessary. in that regard, the bank has been implementing a β fund - provisioning measure to support strengthening the foundations for economic growth, β a measure extraordinary for a central bank. it is a measure for the bank to provide financial institutions making investments and loans that contribute to japan β s economic growth with long - term and low interest rate funds. the measure was introduced two years ago, expanded sequentially, and, in march 2012, small - lot investments and loans less than 10 million yen, which used to be not eligible, were made eligible for the bank β s support. in addition, the bank decided to provide u. s. dollar loans for financial institutions β investments and loans denominated in foreign currencies. as a result, at present, the total size of | the end of 2011, when there was an elevated sense of crisis. while those responses are essential as a first aid to stem the adverse feedback loop, it will not be a fundamental solution of the european debt problem. if one goes back to the cause of the problem in the peripheral countries, it is necessary for those countries to carry out drastic fiscal consolidation as well as economic structural reform toward strengthening their medium - to long - term growth potential. europe as a whole is also faced with a challenge that, while using a single currency β euro, β stability of the economies and financial systems can be achieved with each country β s fiscal policy and bank supervision remaining separate. while this might be a somewhat crude analogy, you might be able to understand the difficulty of the problem if you imagine a situation in which each local government totally independently carries out fiscal policy and bank supervision in japan where the same currency yen is used. having said that, the problem is an essentially fundamental one of how to draw a future picture of political, economic, and social integration in europe. given the size and complexity of the problem and difficulty in each country β s political decision making, we have to be prepared that it will take some time. on the other hand, markets request conclusions in haste. they will not wait. while such difference in time frames has been leading to jittery responses by the markets, at the same time it might bring forward the solution of the european debt problem. the policy authorities are aware that tepid measures, if announced, will immediately induce disappointment in the markets and will be pressed for further measures. the international community that will be affected substantially by the european debt problem has been increasingly keeping a close eye, and japan and many other countries have been requesting a swift solution of the problem at international conferences and other opportunities. above all, through past discussions, the common recognition of not to let the euro fall apart has nurtured in europe as a whole. given such a situation, while the path is still rough, i hope that there might be progress toward the solution of the european debt problem in the not so distant future. iii. fiscal problem and long - term interest rates : importance of efforts toward fiscal consolidation i have so far talked about the european debt problem. in relation to the problem, let me touch on japan β s fiscal condition and the recent developments in long - term interest rates before moving on to japan β s economic developments. the ratio of gross government debt outstanding to gdp in japan is now | 1 |
sound financing of the french economy during a slowdown in other countries, banking sector profitability and profits are even higher than those currently being observed in france. indeed, these record profits are attracting criticism and windfall taxes elsewhere : i believe it is fortunate that this is not the case in france. however, the soundness of the banking system must be accompanied by the effective financing of our economy. 2. 1 businesses are still well financed as far as businesses ( including smes and vses ) are concerned, access to credit appears to be relatively well preserved. driven by investment loans, outstanding loans are continuing to grow for all sizes of business at a rate that is gradually slowing down ( 3. 0 % year - on - year to the end of september ), reflecting lower demand for credit from non - financial corporations. compared with our european neighbours, access to bank loans also continues to be more favourable in france where interest rates on new loans are lower on average ( 4. 6 % in france in september, compared with 5. 05 % in the euro area ) ; the share of approved loans has remained stable β both for financing investment and cash flow β according to our quarterly business survey published yesterday evening. page 8 of 12 credit mediation, which is available in all of the banque de france β s departmental branches, is still not very widely used, with an average of around a hundred requests per month over the past year. nevertheless, the steady slowdown in outstanding business loans means that we must remain vigilant. 2. 2 housing loans are a more sensitive area housing loans are a more sensitive area. new housing loans ( excluding renegotiations ) fell to a low of eur 9. 2 billion in september, a level almost identical to the monthly average recorded prior to 2015 and the introduction of ultra - accommodative monetary policies. this slowdown in new housing loans is only natural given our position in the interest rate cycle. after making massive use of housing loans up to mid - 2022, french households are now adopting a wait - and - see attitude in the face of higher interest rates - even though they remain lower than in neighbouring european countries - and, correlatively, of house prices that have only just begun to come down since the start of the year at national level. page 9 of 12 however, aside from a wait - and - see approach, there is a big question mark over supply, and the fact that " banks appear to have stopped | through private financial institutions based on the government's support and the bank's fund provisioning totals about 52 trillion yen. these loans will have a significantly positive effect since they serve as a support for firms that are having difficulties raising funds. on the other hand, these effectively interest - free loans are equivalent to almost 20 percent of the amount outstanding of loans to small and mediumsized firms provided by private financial institutions. therefore, interest - free and unsecured loans currently provided to support corporate financing might put downward pressure on spreads on the ordinary loans that will be made, even after the impact of covid - 19 subsides. in this case, the narrowing of lending margins would become more prolonged. the second factor inducing a decline in financial institutions'profitability is the decrease in investment income. as financial institutions have fulfilled the functioning of financial intermediation by responding to the need for support of financing, mainly of firms, the amount outstanding of bank lending rose significantly for july, by 6. 4 percent from the previous year. meanwhile, the annual growth rate in the amount outstanding of deposits was higher, marking 8. 3 percent, due mainly to an expansion in fiscal spending. in terms of value, while lending increased by 30 trillion yen, deposits rose by 60 trillion yen, exceeding the increase in lending by 30 trillion yen. financial institutions invest such excess deposits in, for example, treasury discount bills ( t - bills ) or current account deposits at the bank, but their estimated by using financial institutions'average contract interest rates on new loans and discounts ( 0. 78 percent ) and overhead cost ratios in the domestic business sector ( 0. 80 percent ; compiled by the regional banks association of japan ). profitability declines because the yields on t - bills and the interest rates on these deposits are extremely low. the third factor is the increase in credit costs. as financial institutions provide active support for firms whose financial positions have deteriorated due to covid - 19, a certain proportion of their loans could become nonperforming, leading to a rise in credit costs. the increase in these costs does not so far seem to be as serious as that observed after the global financial crisis ( gfc ). however, if the impact of covid - 19 expands, along with potential second or third waves, credit costs could increase to almost the same level seen at the time of the gfc. with the narrowing of lending margins and further declines in jgb yields, financial institutions have actively extended | 0 |
and we are already one step closer to moving to the ostend, the ecb β s new neighbourhood. special thanks go to the construction companies, especially to all members of zublin and spannverbund and their subcontractors. their continuous work and strong commitment to delivering the required quality on time has made it possible for us to have this celebration here today and to be able to gaze up at this impressive structure. it is a great achievement that we can already use all three of the main elements of the building complex : β’ entering here via the entrance building, the future main entrance of the ecb, and β’ celebrating the topping out in the grossmarkthalle, actually in the future cafeteria, β’ while enjoying the view of the double office tower. bis central bankers β speeches the vision of the architect mr wolf prix and his team was to create a new and unique landmark, combining β old and new β and his vision has now come to fruition for the ecb, a truly european institution. let us look back on some of the milestones that have been accomplished so far. the double office tower has almost reached its final height of 185 metres. the last office floor was laid a few weeks ago, while the various platforms and steel structures within the atrium are currently being completed. the restoration of the grossmarkthalle is another remarkable element of the ongoing construction works. the former splendour of the facades and the concrete roof shell structure is slowly being restored, evoking again the vision of its architect, martin elsaesser. i would like to thank the company torkret, which built the original market hall in the 1920s, for their excellent work and for being able to find suitable solutions β together with the architects and planners β for any surprise the old building fabric threw up. the next steps will also be important. since the beginning of this year a myriad of technical equipment has been on site and hundreds of workers are busy installing the necessary technical infrastructure to ensure everything runs smoothly from an operational perspective once we move to our new premises. fit - out works and the installation of walls and floors are also continuing in parallel, all taking place behind the newly completed facades of the high - rise and the restored grossmarkthalle. most visibly, the antenna and the technical areas will be installed at the top of the double office tower by the end of this year. we are monitoring the construction progress, costs and price developments very closely, adjusting and adapting | luis de guindos : speaking notes on climate - related risks speaking notes by mr luis de guindos, vice - president of the european central bank, at roundtable event on climate - related risks at bloomberg, washington dc, 17 october 2019. * * * general remarks the ecb agrees that we need a deeper understanding of climate - related risks and a common language for discussing economic activities that can be considered environmentally sustainable. in particular, we welcome the development of a taxonomy of sustainable activities and support harmonised, firm - level reporting of carbon emissions related to corporate activities. at the international level, we are engaged in discussions with other supervisors and central banking authorities as a member of the network for greening the financial system. and in europe, we are actively involved in the work on an eu taxonomy as a member of the commission technical expert group on sustainable finance. we also agree on the need for credit rating agencies to develop standards or guidelines on integrating environmental, social and governance ( esg ) information into their ratings or other scores. this would enable financial and non - financial firms β exposures to climate - related risks to be better priced and monitored. in this regard, we welcome a recent initiative from the european securities and markets authority to draw up guidelines for credit rating agencies to disclose whether and how esg factors are reflected in their ratings. we need a clear and common understanding of how climate - related risks are defined and measured, and we should redouble our efforts to empirically measure these risks and close knowledge gaps. improved disclosure is an essential first step. disclosures by firms, and financial institutions in particular, tend to be incomplete and inconsistent. market data providers have developed scores that seek to consolidate companies β quantitative and qualitative environmental information. but they have a significant amount of discretion as to how they construct these metrics. 1 / 1 bis central bankers'speeches | 0.5 |
, two - thirds of external financing β and even a larger share for small - and medium - sized enterprises β originates from banks. our measures included the provision of unlimited funding support to banks at maturities up to three years, the extension the japanese experience since the 1990s was widely seen as an exception. although it helped understanding the potential risks and developments during the crisis, it did not serve to identify the imminence and the depth of the global financial crisis. in greece it were public finances that placed a burden on the domestic banks. in a later stage, due to the deteriorating valuations of greek sovereign bonds, financing of the government become more difficult due to impaired bank balance sheets. bis central bankers β speeches of the list of eligible collateral, and outright purchases of covered bonds and debt securities through the securities markets programme. the two long - term refinancing operations ( ltros ) with a maturity of three years implemented in december 2011 and february 2012 allowed banks to satisfy their additional liquidity needs. they relaxed banks β funding constraints and β owing to their long maturity β addressed impairments in the monetary policy transmission mechanism to longer rates. beyond the direct effect of averting a major credit crunch, the full effects of the three - year operations will unfold over time and may be gauged only as time proceeds due to the usual lags in monetary policy. the securities markets programme was initiated back in may 2010 and offered necessary support to the monetary transmission but did not address the incentives for governments to engage in the necessary reforms and to rebalance their public finances. while the smp counts for a significant share of the ecb β s balance sheet, it did not stabilise the situation in a sustainable way. in addition, the smp had unintended side effects such as a perceived preferred creditor status of the ecb vis - a - vis other creditors. the governing council therefore decided last thursday to terminate the smp. nevertheless, the current situation in sovereign bond markets continues to be characterised by a ) heightened aversion of non - resident investors to hold sovereign bonds of some euro area countries, b ) extreme illiquidity and yield volatility in these bond markets and c ) widespread concerns over redenomination risks. this all reflects a general fragmentation in financial markets ; but excessively high and volatile risk premia hinder the effective working of monetary policy. in this environment, monetary policy signals do not reach all parts of the euro area in the same way | ##t do not impinge on the status of private investors. the aim of the programme is to accompany countries and their sovereign to regain stable access to capital markets. β’ the programme focuses mainly on the shorter end of the yield curve and in particular on sovereign bonds with a maturity between one and three years. steering short - term market rates falls squarely into the realm of monetary policy. the interventions address disorderly market conditions and are aimed at reducing excessive market volatility. β’ the governing council will monitor the conditions for interventions based on a large set of indicators and will assess their effectiveness to decide on the continuation of interventions. i am convinced that the new elements in sum make the omt a much better programme than the smp previously was. this new programme is a clear example of how far the ecb fulfils contemporaneously the role as a stability guardian and as crisis manager. by guarding the stability of the euro in the entire euro area and countering redenomination risks, the ecb plays a central role in managing expectations in the crisis. a question remains : what will be the role of central banks after the crisis? the role of central banks after the crisis from a central bank β s perspective three lessons can be drawn that appear to be crucial for its future role in crisis prevention and resolution. first, in a financially integrated market like the euro area, contagion risks are large with financial instability rapidly spreading to other market segments. second, the sudden materialisation of financial instabilities can lead to strong recessionary forces that carry downside risks for medium - term price stability. this has taught policy makers that β cleaning β rather than β leaning β against financial imbalances can simply become a very costly strategy. and third, a stable macroeconomic environment with stable prices β though being a necessary condition β is not a sufficient one for the preservation of financial stability. neither the implemented β ex - ante β policy measures by national authorities nor those by central banks were enough to deal with the build - up of risks and imbalances that led to the current crisis. so, what does this imply for the future role of central banks as stability guardians and their role as crisis managers? the future role of central banks : financial stability and supervision the importance of financial stability for central banks has been acknowledged in the european treaty. article 127 / 5 reads : β the escb shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prude | 1 |
where the inflation rate does not rise easily has continued. the main reason for this is that the formation of inflation expectations is largely adaptive in japan. in other words, such expectations are susceptible to the observed inflation rate. this implies that it will take time for them to rise when the observed inflation rate is low. the adaptive formation of expectations reflects not only actual prices at the time but also people's past experiences, as well as norms that were cultivated through those experiences. studies have shown that the adaptive expectations formation therefore is relatively complex and sticky. this means that changing people's mindset and behavior based on the assumption that prices will not increase easily, which have become deeply entrenched under prolonged deflation, will take time. in addition, elastic labor supply and an enhancement of firms'labor productivity are positive for japan's economy as a whole but have constrained inflation ( chart 9 ). as i have mentioned, labor force participation, mainly of women and seniors, has accelerated since the mid - 2010s with labor shortage intensifying, and this is desirable for japan, which faces the problem of a declining population. many new workers have entered the labor market without a significant increase in wages, due partly to improvement in their working environment. moreover, firms have enhanced labor productivity, mainly through labor - saving and efficiency - improving investments. while these efforts are favorable in terms of raising productivity of the overall economy, they have absorbed upward pressure on costs, and thus prices have not increased easily. although it may take time, the situation where the inflation rate does not rise easily is likely to eventually head toward a resolution as economic activity improves. since the labor supply has a limitation, upward pressure on wages will increase if labor shortage continues. in addition, the fact that the adaptive formation of inflation expectations is entrenched implies the following : when people actually experience inflation, it likely will be incorporated in the assumption on which their mindset is based, suggesting that inflation expectations also are highly likely to rise. in short, it is appropriate for the bank to persistently maintain accommodative financial conditions under the current framework of monetary policy, with a view to achieving the price stability target of 2 percent. b. enhancement of the sustainability next, let me talk about the second point that underlies the assessment, which is policy conduct aimed at enhancing the sustainability of monetary easing, by taking yield curve control as an example. under yield curve control, even amid intensifying upward pressure on jgb yields | , mainly stemming from a rise in interest rates abroad and an increase in issuance of jgbs, an appropriate shape of the yield curve that provides accommodative financial conditions has been formed in a stable manner through flexible purchases of jgbs. it has been possible for the bank to control short - and long - term interest rates because it has conducted meticulous purchases of jgbs. the bank has made use as necessary of a powerful tool called " fixed - rate purchase operations, " through which it purchases an unlimited amount of jgbs at a certain yield level. stabilizing short - and long - term interest rates at extremely low levels under yield curve control inevitably brings about side effects on the functioning of jgb markets ( chart 10 ). in fact, many indicators suggest that the functioning has decreased since the introduction of yield curve control. in conducting yield curve control in a sustainable manner, it is important to strike an appropriate balance between maintaining market functioning and controlling interest rates. the bank believes that it can find more ways to achieve this balance because, although significant fluctuations in interest rates could lead to undesirable consequences, fluctuations within a certain range could have positive effects on the functioning of jgb markets without losing the effects of monetary easing. to this end, the bank made clear at the july 2018 mpm that interest rates might move upward and downward to some extent, mainly depending on developments in economic activity and prices. there is no change in this stance even though there have been times when the range of actual fluctuations in interest rates has become narrow again. there also is no change in the recognition that an excessive decline in super - long - term interest rates could have an impact of lowering the rates of return on insurance and pension products, for example. that said, with the economy hit by the impact of covid - 19, what is important now is to maintain the stability in the bond market and stabilize the entire yield curve at a low level, and it is necessary for the bank to bear this in mind in conducting yield curve control for the time being. c. nimble and effective responses lastly, i will talk about the third point, which is nimble and effective responses to counter changes in the situation. in order to persistently continue with monetary easing, it is important for the bank not only to ensure the sustainability but also to be nimble in making effective responses when needed, such as in the wake of a large shock to the real economy and financial | 1 |
fit their livelihood. secondly, to ensure quality of usage, we need to enhance financial literacy. with higher financial literacy, the poor could utilize the services more efficiently and productively, for example, having the ability to turn received credits into income and savings and so on. finally, we need a good system of consumer protection in order to ensure fair and transparent provision of financial services. i believe that financial regulators have an important role to play in all three areas. the fact that we are all here today, already signifies our commitment to addressing such issues, thus ascertaining the success of financial inclusion. not just for our own sake, but also for the sake of our friends around the world. after having seen this morning β s agenda, i am certain that there will be plenty of great discussions among us today. i myself am very interested to hear us take the current policy challenges further, arriving at how best we think afi can play a role in tackling such issues. of course, us working together to ensure the sustainability of the afi community together with our policy impact would also be key. i look forward to discussing our proposals of potential afi flagship projects, all of which, i believe would make significant contributions to the global efforts on financial inclusion. in this connection, the bank of thailand will be presenting our proposal on β using survey data to design financial inclusion policy β for your consideration. the project findings would not only provide a useful international research contribution in the area of financial inclusion, but also an easily replicable exercise for anyone to conduct and repeat over time, thus adding to the stock of critical grass - root information on financial access. finally, i also look forward to discussing with you on the governance and other related issues of our start - up committee. without further ado, let us now give our attention to alfred who will be updating us on afi β s latest progress and lead us through the rest of today β s agenda. thank you for your attention. alfred, the floor is yours. | , economic forecasting is difficult and imprecise. in practice, it can sometimes be hard for the forecasters to make a confident call that higher or lower inflation is on the cards until it is imminent or even under way. similar problems characterise forecasts for other variables. this is just inherent in the forecasting process. one reason is that there are a host of potential factors which cannot be incorporated easily in a numerical forecast. unexpected changes in exchange rates, bond rates, property prices and share prices, the effects of financial structure changes, and so on can have important effects. typically, they are assumed not to occur for the purposes of making formal forecasts. even when changes are observed, their effects can in some cases be particularly difficult to quantify. hence, they are normally listed under β risks β. this doesn β t mean we should disregard forecasts or try to make policy without them. but it does mean that policymakers cannot assume that the forecasts will give a signal which is sufficiently reliable on its own to be the sole basis for policy. it also means that risks often feature more prominently in policy deliberations than do the forecasts themselves. in principle, the central bank is seeking to solve a dynamic optimisation problem in which the variability of the whole path of prices around the target ( and the variability of output ) is minimised, in expectation, by the path of interest rates we choose. this is an appropriate moment at which to deal with an argument which is sometimes heard, that our 2 - 3 per cent average inflation target means that we should tighten policy if, but only if, our forecast for inflation exceeds 3 per cent. by the same logic, we should ease policy if, and only if, the forecast is less than 2 per cent. this interprets the 2 - 3 per cent specification not so much as a target to be achieved on average, as a zone of inaction for policy : do nothing until a trigger point is reached, regardless of the level of interest rates currently in place. i think this is not the right way to operate policy. to see why, remember that it is the level of interest rates which matters. to be sure, changes in interest rates make the news, and may well have some announcement effect in themselves - mainly if they shift expectations about the level of interest rates in the future. but monetary policy does not stop working when the changes in interest rates stop. a persistently higher or lower level of interest | 0 |
insurance services to lower - income people, particularly in those areas where traditional financial services are hardly there or do not exist. microfinance is also increasingly being seen as an effective tool for poverty reduction. moreover, when microfinance is provided in an environment where there are sufficient alternatives for diversified household income generation, and where access to information, appropriate physical infrastructure, and integrity in loan repayments are present, can be and it is a key success factor in reducing poverty. ladies and gentlemen, looking back through history, one of the best - known microfinance success stories is perhaps the grameen bank of bangladesh. its success may be expressed in terms of its staying power and that it has offered to help disadvantaged groups to enable them meet basic needs. this has been attributed mainly to its concentration on lending to women groups. around the world, various grameen models have been replicated, especially in south america. within africa, microfinance organizations have emerged in bukina fasso, the gambia, ghana, kenya, malawi, south africa, tanzania, uganda, and zimbabwe, to mention a few. however, what appears to be the common factor in all these areas is the lack of adequate supervision for the sector. in the zambian case, the principal financial legislation, the banking and financial services act of 1994 ( bfsa ) did not provide for the regulation and supervision of microfinance organizations until the 2000 amendment. chairperson, ladies and gentlemen, in most developing and transitional countries, microfinance institutions are using field - based β best practices β that have emerged from many years of world - wide experience in providing credit and savings to lower - income groups. however, best practices alone cannot guarantee the success of microfinance programmes in the absence of an appropriate legal and regulatory framework. practioners and policy makers worldwide now realize that without appropriate regulatory and supervisory framework, support from commercial banks and appropriate infrastructure, most microfinance services will continue to be donor - dependant and will remain limited in outreach. ladies and gentlemen, since i have been given the floor i now wish to take this opportunity to briefly share with you the zambian experience with regard to the microfinance market. despite its land - based wealth, zambia faces very significant development challenges. the rapid structural adjustment process that took place during the 1990s has had a harsh impact on our people, with the result that poverty is now widespread in our country. currently, a significant number of the 10 million or so zambians | the current legislation is limited to the financial sector. in view of this, the bank of zambia is currently developing a comprehensive credit reference law that, amongst other things, will have jurisdiction over all credit providers and data sources and will provide for the treatment of credit data. chairperson, allow me to share with you some of the key regulatory and supervisory issues that the bank of zambia is addressing with regards to the regulation of the financial system in zambia and the need to address the supervisory challenges posed by the global financial crisis. these issues include : the adoption of a risk based supervision ( rbs ), enhancing the legislative framework, the determination of capital adequacy, the introduction of a deposit insurance scheme, the enhancement of our lender of last resort regime, and the enhancement of cross - border cooperation through consolidated supervision of financial institutions. risk based supervision is a structured, forward - looking process designed to identify key risk factors to which individual banks are exposed. this approach entails closer interaction with banks and allows early identification of risks as well as close monitoring of the nature and direction of risks as they emerge. the banking industry has recorded notable rapid growth in the last ten years. this growth comes with heightened risk levels. the rbs provides robust mechanisms to ensure that banks have adequate risk management systems to mitigate risks. rbs systematically considers all key functional activities ( business lines and operational areas ) and, within each key functional area, evaluates the level of risk, quality of risk management, and direction of risk. the resulting risk profile of the bank, which is dynamic, will therefore change during the supervisory cycle. this paradigm shift in supervisory approaches requires a permissive legal and regulatory framework. in order to ensure timely and credible information for the effective supervision of banks and other financial institutions, the bank of zambia has been playing a key role in developing the bank supervision application system ( bsa ), which is a southern african development community ( sadc ) region initiative. the bsa is a standardized tool designed for capturing supervisory information, financial and risk analysis and provides a workflow mechanism for communicating the different aspects of the supervisory process. distinguished delegates, the legal and regulatory framework governing the supervision of the financial sector must provide for a fast and flexible way of adapting the banking system to the constantly changing financial landscape. the legal and regulatory frameworks in zambia comprise of the banking and financial services act, chapter 387 of the laws of zambia ; the bank of zambia act, chapter 360 of the laws of zambia ; | 0.5 |
. it is sometimes claimed that even the current eu fiscal rules do not work. however, evidence from recent years tells a different story. slide 3 β fiscal deficit in the eu countries, budget deficits have been reduced during the recent period when fiscal policy supported by the reformed rules has been effectively applied. this is not to say that the rules are perfect. perfect rules may not even exist. creating rules that ensure optimal countercyclical fiscal policies and fiscal sustainability is inherently difficult. still, i would argue that eu fiscal rules can work, do work β and they can and must also be further improved. in the future, the economic and monetary union can work smoothly only if the public finances of all member countries are credibly on a sustainable footing. a functional combination of fiscal policy rules and market discipline is necessary to achieve this. fiscal rules should be sufficiently well - designed and simple to ensure that, in normal circumstances, we can expect that they will be adhered to when budgets are prepared. rules that support sustainability have become commonplace since the 1990s. according to the imf, nearly 100 states apply national or supranational fiscal rules. fiscal rules have been linked with a more steady development of budget deficits. when fiscal rules operate correctly, they do indeed support the conduct of responsible fiscal policy, long - term sustainability of public finances, and the objective of keeping public debt financing costs low. the goal of the eu β s fiscal rules is to ensure the sustainability of public finances and, within that framework, to enable sufficient fiscal room for manoeuvre to stimulate the economy in a member state in recession. not enough attention was paid to the level of public debt before the financial crisis. during the ensuing recession, debt levels rose sharply due to stimulus measures and weak macroeconomic developments. in the most vulnerable countries, risk premiums rose sharply. this led to a negative spiral in which a number of countries ultimately had to tighten fiscal policy, even though economic conditions were difficult. this should be avoided in the future. the eu β s fiscal rules have last been revised relatively recently, in 2011. while the body of rules has produced results, it has become rather extensive and sometimes inconsistent. interpretation of the rules, with all the flexibility options, has become complex and difficult to predict. more simple fiscal rules would probably serve debt sustainability better, and also increase transparency and facilitate ex - post verification of policies. in the best case scenario, the predictability of fiscal policy and its credibility in | ##tails no permanent costs in terms of lower economic growth or job losses, for instance. research however stresses the importance of a number of price rigidities affecting the economy, which weaken the ability of monetary policy to control short - term inflationary developments and possibly cause interest rate movements to exert even major temporary effects on overall demand and economic growth. the conclusion from this has been that it is worthwhile for monetary policy to aim at price stability over the medium term, but not to strive for a short - term steering of the price level, which would require the conduct of a very aggressive, stop - and - go interest rate policy, leading to unnecessary shocks to employment and economic growth. in situations where price stability is exposed to threats from fluctuations in overall demand, monetary policy aimed at price stability also directly evens out cyclical fluctuations. historical experience shows that consistent monetary policy aimed at price stability has brought about beneficial effects. in the last decade, inflation and its costs have been brought down significantly the world over. meanwhile, monetary policy has been able to make an ongoing contribution to growth and it has been possible to formulate monetary policy so as to have a dampening effect on cyclical fluctuations. the difference with regard to the widespread economic instability of the 1970s is absolutely startling. the global average rate of increase in consumer prices has fallen from about 14 % in the period from 1980 to 1984 to less than 4 % in the period from 2000 to 2005. at the same time, a number of countries have witnessed a definite moderation in inflation and output volatility. this experience denies the idea of a contradiction between price stability and stability in the real economy. although the orientation of monetary policy towards curbing inflation has clearly been a major international success, it must be admitted that monetary policy has not been the single determinant of the strongly falling inflation. another driving force with a similar effect has been the much discussed globalisation. tightening international competition has changed corporate pricing behaviour and also trade unions'objectives of negotiation towards a more moderate stance. this has led to the weakening of the wage - price spiral in a number of old industrial countries. monetary policy institutions another area where the interaction between monetary policy theory and monetary policy practice is clearly visible is the development of institutions. since the end of the 1980s, an increasing emphasis has been laid on central bank independence within the institutional arrangements for monetary policy. this derives from the fact that credibility has been understood to constitute a precondition for a successful monetary policy. central bank | 0.5 |
relating to the application of the so - called β floor clauses β to variable - rate mortgages ( in 2013 - 2014 ) and those relating to the payment of mortgage loan arrangement costs, which peaked in 2017, with 23, 040 claims. as you all know, the most paradigmatic case in terms of media coverage and social and economic impact has been that of the floor clauses. the number of claims for this reason and the scale of the figures meant extra - judicial avenues had to be used, so as to pave the way for the refund of the amounts unduly paid, in keeping with supreme court jurisprudence. specifically, royal decree - law 1 / 2017 obliged banks to set in place a pre - claim system. on the latest figures released ( september 2020 ), more than 1, 220, 000 individuals had submitted claims, with almost β¬2. 4 billion refunded. special courts were also set up, with over 570, 000 claims received to date, of which more than 250, 000 are still pending resolution. you are all no doubt aware that these high litigiousness figures entail a most considerable 2 / 6 bis central bankers'speeches workload for our already overburdened legal system, as well as involving a high economic and reputational cost for financial institutions. but i would further stress that the uncertainty associated with litigiousness may ultimately restrict or raise the cost of access to credit, harming bank customers. the lack of legal certainty prevents anticipation of the costs and risks associated with a transaction, which particularly affects very long - term operations, such as mortgage loans. unsurprisingly, banks build into prices the costs associated with such uncertainty. i believe we can concur that legal certainty is well worth protecting, given that it is to everybody β s benefit. the regulations must guarantee this certainty, which is perfectly compatible with the proper protection of bank customers. in this respect, i believe the law on real estate credit is fit for purpose, as it straddles both elements. law on real estate credit the starting point for the rules in question here is the asymmetrical position of the lender and the borrower in the contractual relationship. in that light, the law considers that it does not suffice to provide information to and warn the customer ; rather, it demands of the professional party, which dominates the relationship, even more accountability in its behaviour towards the borrower. accordingly, the mandatory documentation to be | would like to stress that these measures are really necessary. not only to prevent further harm, but also to restore trust in the financial sector. trust is an extremely important aspect of any services sector, and the financial sector is a services sector pur sang. if a feeling of uneasiness remains among clients and investors, or financial institutions cannot trust each other as they should, then financial ( and consequently economic ) development grinds to a halt. so restoring trust in the financial sector is an absolute priority and we have to go great lengths to achieve this. at the same time it seems as if the sense of urgency for change among bankers and politicians has somewhat diminished lately, now that we see the first signs of recovery. opposition against the proposals from the basel committee is growing, through lobbies from the financial sector. for this reason, we, as supervisors, have to do our utmost best to uphold these proposals, because otherwise countries may be forced to implement measures on their own. the result of this will be a distortion of the international level playing field, which in the end will not benefit the financial sector. it is for this reason that we will organise a comprehensive quantitative impact study in the first half of this year. with this impact study we can see what the impact of all individual proposals will be, as well as the aggregate impact of all proposed measures combined, so that we can implement measures with care, in a responsible and well - considered manner. and all of these measures will be considered in the light of the economic recovery, making sure that they will not harm the recovery process. i am aware of the current debates about reducing the size of the sector, adding taxes, cutting bonuses, and the like. it is true that there are indeed excesses which are not acceptable anymore, and these have to be dealt with. at the same time, we should refrain from overreacting and take care to not implement measures which we have not fully thought through. beside all these new regulatory measures we have realised that there is also an urgent need for closer international supervisory cooperation. the rapid development in cross border banking has shown us supervisors that our current organisational structure is no longer adequate and limits our ability to rapidly respond to developing situations. a shift towards a more unified regulatory framework has therefore slowly been set into motion, for instance in europe with the new structures for cebs or ceiops, or through the intensified use of supervisory colleges. crucial, though, in this process, is full and mutual | 0 |
on the potential risks of rising bank exposures to real estate, among other sensitive sectors based on the incurred loss method. however, what we did have was a clear trend in significant year - to - year increase in aggregate bank credit. the indian financial system is still largely a bank - intermediated system and for this reason, the bank credit channel becomes a key monetary policy transmission instrument. thus the aggregate bank credit growth has always formed an important variable in the conduct of monetary policy. the credit - deposit ratio, particularly on an incremental basis, has been an important indicator. 13. in view of the rapid credit expansion in the period 2003 β 2006, in addition to the countercyclical measures being taken, it was explicitly indicated by the rbi in april 2006 that growth of non - food bank credit, including investments in bonds / debentures / shares of public sector undertakings and private corporate sector and commercial paper, will be calibrated to decelerate to around 20 per cent during 2006 β 07 from a growth of above 30 per cent. inflationary expectations had also started firming up and as part of monetary management, the repo rate was increased by 175 basis points in stages to 7. 75 per cent by april 14, 2007 from its level of 6. 0 per cent in september 2004. further, the crr was raised by 200 basis points in stages from 4. 5 per cent in september 2004 to 6. 5 per cent. specific case of real estate 14. from a regulatory perspective, the key observable features that tilted the balance in favour of some kind of pre - emptive sectoral action, aimed primarily at preparing the banking sector to better manage the potential downsides, were the following : ( i ) the onsite inspections of banks had started giving indications of the negative fallouts of the euphoria evident in lax underwriting standards and a few frauds that came to light ; ( ii ) there were emerging signs of underpricing of risks as the real estate prices were spiralling fuelled by ample liquidity and the dominant wealth effect transmittal from the stock market boom. there were clear tax incentives at work here which made utilisation of stock market gains into real estate an extremely tax - efficient arrangement. ( iii ) a new factor in the housing credit market that was emerging was the mortgages for investment purposes β the trend for second homes, particularly in metros having a rising population of young, skilled job owners with salaries | ##ters to reconsider and, most importantly, overhaul the then - prevalent incurred loss model by assessing alternative approaches for recognising and measuring loan losses. accordingly, the fasb and the iasb reacted by issuing two new accounting standards to determine credit impairment and how to measure credit risk. in particular, the iasb issued the ifrs 9 based on the expected current loss model while the fasb issued its own standard introducing the notion that provisions should cover the whole expected loss of the loan from inception. regardless of the technical differences between the two, the crucial element is that both use as a key element the expected loss concept to account for credit losses. in any event, it is fair to say that the new provisioning standards introduce major changes compared to pre - crisis practices. one important change refers to the way that credit loss provisions should be recognised in a timely fashion because it was perceived that the incurred loss model, in force when the crisis took place, considered credit losses β too little 3 / 7 and too late in the cycle β, and that affected directly the amount of provisions set aside by banks ( deemed very small and highly insufficient ). a direct consequence of the implementation of the expected loss model is a more timely recognition of credit losses together with an envisaged improvement in banks β credit risk management. these two elements are expected to positively and significantly contribute to the stability of the banking system. nonetheless, this assumption largely depends on banks β awareness and commitment in terms of their ability and willingness to appropriately capture the risk embedded in their loan portfolio. all in all, to understand the performance of the loan book, one has first to look at the specific process of granting loans. here, the following elements are crucial : ( i ) setting appropriate credit standards, ( ii ) proper valuation of collaterals and ( iii ) development of sound credit risk models. as to credit standards, pricing policies are crucial as they should be oriented to cover, at least, the costs of financing, structure and credit risk inherent to each type of operation. banks should calculate the cost of the credit risk for different homogeneous risk groups in a manner consistent with their history of recognition of defaults and associated losses and recoveries, as well as with expected economic developments. data integrity, reliable documentation of losses and adequate modelling to project expected losses ahead all play a key role in this respect. the setting of global limits to credit as a means of controlling the volume of the risks incurred, their evolution over time, their maturity | 0 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.