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try to assess its particular contribution to our improved inflation performance, we run into all the usual difficulties of isolating the impact of our inflation targeting regime from all of the other influences at work over this period. in making that assessment, we could place a high weight on the shifts in political priorities which dated from july 1984, on the sweeping reforms that have occurred generally in new zealand β s macro and micro policies, or on the shift in our trading partners β inflation performance. it could be argued that the shift in political attitudes towards inflation was, ultimately, the only change that really mattered. we could also argue, reasonably, that the major changes in new zealand β s monetary policy came with decisions to float the exchange rate and commit to market funding of the government β s fiscal deficits. to accept those arguments, however, would miss some important points. certainly, the political will to adopt a price stability target was an essential pre - requisite to any serious attack on well entrenched inflation. but as my counterpart at the bank of england, mervyn king, recently observed in reviewing the performance of their monetary policy committee, β institutions matter. β what our inflation targeting regime has done is to give the initial political commitment to price stability a degree of durability that transcends the particular politicians or central bankers in place in 1989 when the rbnz act was passed into law. the framework has shifted the incentives from an acceptance of inflation arising from all the familiar pressures towards a more robust resistance to any future re - emergence of inflationary tendencies. references bernanke, ben s ; laubach, thomas ; mishkin, frederick s ; posen, adam s. 1999. β inflation targeting. lessons from the international experience β. princeton university press. brash, donald. 1999. β inflation targeting : an alternative way of achieving price stability β. a speech delivered on the occasion of the 50th anniversary of central banking in the philippines. reserve bank of new zealand bulletin, vol 62 no 1. brook, anne - marie ; collins, sean and smith, christie. 1998. β the 1991 - 97 business cycle in review β. reserve bank of new zealand bulletin, vol 61 no 4. drew, aaron and orr, adrian. 1999. β the reserve bank β s role in the recent business cycle : actions and evolution β. reserve bank of new zealand bulletin, vol 62 no 1. hawke, gary. 1993. β between governments and banks. a history of the reserve bank of | serve as a test of the new framework β s effectiveness and renewed progress towards achieving sound medium - term budgetary positions. let me emphasize, that it should be of the highest priority, especially if combined with a comprehensive economic reform strategy! with a view to the third pillar, eu policy makers are well aware of the importance of structural reforms and they did commit to action when the european council adopted the lisbon strategy five years ago. some encouraging structural reforms notwithstanding β let me mention here as examples the liberalisation of the electricity market and the progress in pension and labour market reforms β the lisbon strategy fell short of its initial goals. even if we consider the time lag between the implementation of reforms and their taking the intended effects, the increase in potential growth was disappointing. in addition it has obviously proven difficult to communicate the benefits of long - term growth effects of structural reforms to the general public. social and economic progress often entails significant changes in the life of individuals, with risks as well as benefits. these legitimate worries need to be taken seriously and addressed appropriately. as a new start for the lisbon strategy, in spring 2005 the european commission presented the β community lisbon programme β focusing on two principal tasks β delivering stronger, lasting growth and more and better jobs. the idea is to modernise our economy in order to secure the european 2 / 3 social model in the face of increasingly global markets, technological change, environmental pressures, and an ageing population β a difficult challenge! but we need to invest more in the young people, education, research and innovation. we also need to further open markets, to invest in modern infrastructure and to take the necessary steps to develop a skilled and entrepreneurial workforce. some of the policy actions will take time to show visible effects, others will deliver early benefits. in all cases they must be approached with a strong sense of urgency and collective responsibility of all the member states of the european union. due to the recent enlargement of the eu the necessity of ongoing structural reforms became more stringent also for the old member states. moreover, the new member states demonstrated in many areas that even unpopular reforms, like pension reforms, can be accomplished when tackled right. increased competition from within and the will to further the competitiveness of the eu as a whole are surely very nice side effects of the enlargement and an incentive to take the revival of the lisbon strategy seriously. although emu represents a highly successful achievement it cannot be considered as the end - point of the european integration process | 0 |
we need to take all facts into account and assess them case by case, and not against a single yardstick. in short, we must be proportionate. imagine a bank breaches capital requirements. then we have to ask how severe that breach is and whether it might just be temporary. if it β s just a marginal breach which could be healed within a reasonable period of time, it might not be proportionate to declare the bank β failing or likely to fail β. we also need to take into account that a bank depends on the markets. so how do they react? a bank in trouble might quickly lose the trust of the markets. this could lead to a bank run, which requires supervisors to act differently. 4 / 9 bis central bankers'speeches so, to sum up : β failing or likely to fail β decisions are not taken automatically but are based on expert judgement. at the same time, they have to be taken case by case and in a proportionate manner. all in all, they are the most difficult decisions a supervisor has to take. and i can assure you that we do not take them lightly. how to resolve a bank imagine that we have declared a bank failing or likely to fail. what happens next? well, at that point the resolution authority takes over. in europe, this is the single resolution board, or srb for short. the srb then has to answer two basic questions. first : are there any measures, private or otherwise, that could restore the viability of the bank? if the answer to this question is β no β, the second question is : should the bank be resolved or liquidated? and the answer to this question depends on a number of things. the objective should always be to ensure that the financial system is not disrupted. if the bank performs critical functions, these need to be continued one way or another. in addition, measures need to be taken to prevent the bank from β infecting β other banks or the markets in general. and finally, public funds and the bank β s insured depositors, for instance, need to be protected. so, it is crucial to conduct what we call a β public interest test β. if all these goals can be met by liquidating the bank, then that β s what will happen under national insolvency law. and this is something of a weak spot, because these laws still differ significantly across the euro area. a minimum level of harmonisation is thus called | sabine lautenschlager : the banks and the market 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 lecture at the florence school of banking and finance, florence, 15 march 2018. * * * almost ten years ago to the day, the world of finance was shaken by a strong tremor. on 16 march 2008, jp morgan offered to buy the investment bank bear stearns. and it was time. bear stearns was in deep trouble : its share price had fallen by two - thirds since the beginning of that year ; it was bleeding money ; and it was basically shut out of the funding market. at the time, the failure of bear sterns was considered a major event. no one knew that the big quake was still to come. it happened half a year later, on 15 september 2008, when another investment bank failed : lehman brothers. it pushed the financial system close to the abyss. trust evaporated, markets dried up, and around the globe, banks were sent reeling. all in all, it was the biggest financial crisis in decades. it dragged down the real economy, which fell into what we now call the great recession. in the euro area, economic output went down by almost 4. 5 % in 2009, while unemployment jumped by more than a quarter to 9. 6 %. three years later, it reached 12 %. in italy, for instance, output fell by more than 5 % in 2009, while unemployment peaked at almost 13 % in 2014. these figures are alarming, but they tell us little about the people who lost their jobs, their homes and their future. taking all this suffering into account, the crisis turned into a tragedy. as for its causes, i admit that the story i β ve just told is far too simple. of course, it was not the failure of a single investment bank that caused all this mayhem. the full story is much longer and much more complex. however, no one can deny that banks played a crucial role. it became obvious that they can pose a huge risk to financial stability and the economy. but at the same it β s an inescapable truth that we need banks. or, to be more precise, we need the services they provide. why we need banks who does an investor turn to when she needs money to start or expand a business, when she needs to | 1 |
supply - side constraints that had remained in some areas, such as semiconductors ; as well as ( 4 ) an expected expansion in business fixed investment due to japanese manufacturers transferring their production sites back home and to labor - saving investment to address labor shortages. concerning risks to the outlook, overseas economies and global financial conditions warrant attention. as i mentioned earlier, overseas central banks have so far been raising their policy interest rates at a high pace in order to contain rapid inflation. issues surrounding some financial institutions in the united states and europe since march 2023, however, show that some overseas financial sectors have not necessarily been able to adequately respond to the recent changes in financial conditions ( chart 5 ). such issues have not led to affecting the whole financial system, due in part to swift responses taken by the respective authorities. however, given that global macroeconomic conditions, triggered by the covid - 19 pandemic, have undergone a rapid change from a low - inflation, low - interest rate environment to a high - inflation, high - interest rate environment, there is a risk that some kind of financial shock would occur in an unexpected manner. meanwhile, as high inflation has continued, mainly against the background of wage increases, central banks have not been able to change their monetary tightening stance. such a situation is likely to make policy responses more difficult and create increasing uncertainties for the global economy. b. price developments turning to japan's price developments, the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food continued to rise, exceeding 2 percent in april 2022, reaching 3 percent in september, and 4 percent in december ( chart 6 ). what triggered this inflation was a surge in energy prices that occurred in the process of a global recovery from a downturn caused by the pandemic. moreover, since spring 2022, imported goods prices have risen across the board due to such factors as a further rise in international commodity prices that mainly reflected the situation in ukraine, as well as the yen's depreciation during a situation of high global inflation and rising interest rates. initially, the effects of such factors emerged mostly in the form of a rise in producer prices. however, since last summer, a passthrough of cost increases to selling prices at the retail level has also started to be observed, and moves to raise prices, particularly of food, have rapidly become widespread ( chart 7 ). the year - on - year rate of | minus 0. 1 percent. thereafter, given that market transactions were sluggish because of the narrow range of yield fluctuations, in july 2018, the bank decided that the yields may move upward and downward to some extent, mainly depending on developments in economic activity and prices, with a specific figure of " about double the range of around plus and minus 0. 1 percentage points " in mind. moreover, given the findings of the assessment for further effective and sustainable monetary easing conducted in march 2021, the bank made clear that the range of 10 - year jgb yield fluctuations from the target level would be " between around plus and minus 0. 25 percentage points. " in december 2022, it was further expanded to " between around plus and minus 0. 5 percentage points. " in this way, the bank has been expanding the range of 10 - year jgb yield fluctuations from the target level under the yield curve control policy. this is because, while long - term interest rates need to be kept stable at low levels in order to achieve the 2 percent price stability target, holding down such rates also could affect market functioning. meanwhile, in the case where the range of 10 - year jgb yield fluctuations from the target level is expanded so as to ensure market functioning, long - term interest rates could rise as a result, leading to a less accommodative monetary environment and a delay in economic recovery. the management of 10 - year jgb yield fluctuations therefore needs to be considered based on the judgment of the trade - off between monetary easing effects at a macroeconomic level and effects on market functioning, among others. the bank's decision to expand the range of 10 - year jgb yield fluctuations from the target level in december 2022 also was made based on such judgment. in 2022, as a result of economic recovery in various countries and regions, inflation accelerated and interest rates rose globally. these developments also affected japan, as was seen in the 10 - year jgb yields approaching 0. 25 percent - - the upper limit of the yield curve control policy of the time - - in march 2022. the bank subsequently took measures, such as devising its conduct of jgb purchase operations, and prevented a heightening of long - term interest rates, which potentially could have hindered japan's economic recovery. at the same time, these measures caused marked distortions in the yield curve. the shape of the jgb yield curve, however, is now generally smooth due to the | 1 |
2000, the nominal effective exchange rates in august 2012 were 41. 4 percent and 17. 4 percent higher, respectively ( chart 4 ). secondly, we also need to consider the fact that higher inflation will erode competitiveness. in other words, further information could be derived from the real exchange rate, which is the nominal rate adjusted for inflation. when a higher nominal exchange rate is offset by lower inflation, the real exchange rate stays at the same level. actual calculation of these rates is admittedly difficult because of issues involved with comparing inflation between economies, but the rates fluctuate considerably over the long term. for example, between january 2000 and august 2012, the real effective exchange rates for switzerland appreciated by 12. 5 percent, whereas japan β s depreciated by 19. 3 percent ( chart 5 ). more recently, between december 2007 and august 2011, the real effective exchange rates for switzerland and japan moved in tandem with each other, appreciating by 16. 9 percent and 23. 3 percent, respectively. these movements of the last few years are to an extent representative of the fallouts from the great financial crisis. the prevalent mood of risk aversion resulted in the unwinding of carry trades. both countries are now also confronted by the so - called flight - to - safety capital flows. the appreciation of the two currencies coincided with the most severe financial and economic dislocations in the advanced economies. with regard to interventions in the foreign exchange market, in switzerland, the swiss national bank has the power to intervene. in japan, the government β not the central bank β bis central bankers β speeches is mandated by law to direct such interventions. the bank of japan is conscious of the effects that the rapid appreciation of the yen could have on japan β s economy and inflation outlook in terms of the conduct of the bank β s monetary policy. concern over these effects of exchange rate developments has been one of the factors that influenced the bank β s series of decisions to further ease its monetary policy. while both switzerland and japan suffer from strong exchange rates, i am also struck by the dynamism of the swiss economy. the u. s. dollar value of exports in switzerland increased by 192 percent between 2000 and 2011, a threefold increase, whereas the comparable figure for japan was an increase of 74 percent. meanwhile, the domestic currency values increased by 53 percent and 28 percent, respectively ( chart 6 ). exports by the pharmaceutical, precision machinery, | masaaki shirakawa : reviewing the economies of switzerland and japan remarks by mr masaaki shirakawa, governor of the bank of japan, at the 30th anniversary luncheon of the swiss chamber of commerce and industry in japan ( sccij ), tokyo, 10 october 2012. * * * before i begin, i would like to thank chairman thomas jordan for his detailed and informative presentation on the state of the swiss economy and the issues faced by the swiss national bank. i believe that everybody in this room would agree that we have learned a great deal. in the next five minutes, instead of commenting directly on what thomas has just explained, let me offer you some thoughts that come to my mind when i look at the swiss and japanese economies. switzerland and japan are very different. switzerland is land - locked. it is in effect an island in the sea of the european union, where about 60 percent of its exports are headed and 80 percent of its imports derive ( chart 1 ). japan is far more populous. the japanese economy is about nine times as large as the swiss economy. nevertheless, there are similarities. for example, both countries enjoy, or even suffer from, very stable prices. the average annual inflation, measured by headline cpi, over the twenty years from 1992 to 2011 was 1. 1 percent in switzerland and 0. 1 percent in japan ( chart 2 ). in august this year, the year - on - year change was β 0. 5 percent in switzerland and β 0. 4 percent in japan. consequently, interest rates are also low ( chart 3 ). in recent weeks, the yield on ten - year government bonds has been hovering around 0. 5 percent in switzerland, slightly below japan β s 0. 7 to 0. 8 percent range. both currencies, as thomas has explained, are at historically elevated levels. in this regard, the news media and the public are usually focused on a specific traded exchange rate between currencies, such as the swiss franc to the euro or the yen to the u. s. dollar. these rates are important, but there are additional indicators for exchange rates. in order to understand what would happen in an economy when exchange rates fluctuate, exchange rates for all the trading partners must first be taken into account. from this viewpoint, we must look at the nominal effective exchange rate, which is a trade - weighted index of exchange rates. in the case of switzerland and japan, compared with january | 1 |
proposals. in the meantime, the business recovery and insolvency practitioners association of sri lanka ( bripasl ) has had a series of discussions and formulated draft legislation for the revival of sick industries. i appreciate the co - ordination between the two committees and their efforts in arranging this important workshop. i understand that the keynote speaker today, mr. sumant batra from india who has acquired wide knowledge on restructuring of sick industries in india would elaborate his experience on corporate turn - around and insolvency, and respond to similar proposals that would be made at this workshop. i am confident that the eminent speakers from various fields who are present at this forum, would provide an opportunity to the distinguished participants to share and rationalize ideas, thus ensuring the formulation of sound principles to be incorporated in the draft legislation on the restructuring of sick industries. a comprehensive law on this aspect would help enterprises to become viable in the medium to long term while enabling the banks to recover the debt and be viable financial institutions. i hope today β s deliberations would guide the relevant committees and those who are associated in policy formulation to take this important initiative forward. thank you. 2 / 2 | will be encouraged among lfcs / slcs to sustain strong financial institutions, while minimising unstable small scale finance companies in the sector. the finance business act is also being currently revamped to strengthen the regulatory framework with due consideration to the evolving characteristics of the sector. accordingly, it is being revised to incorporate provisions related to the resolution of lfcs and slcs and unauthorised establishments. it will also focus on an improved litigation mechanism for fraudulent activities, while ensuring rapid prosecution of those who have misappropriated public funds. in line with this, a customer charter has also been issued recently to improve consumer protection and prevent associated malpractices. there has been widespread concern regarding non - bank financial institutions engaging in unethical lending practices, especially in the north and north central provinces and increased indebtedness of the public. we have been actively engaging with such institutions and other public stakeholders, including government agencies, to curtail such activity and to emphasise that these issues will be dealt with in a firm manner, while enhancing awareness among the public. we strongly believe that public awareness can also prevent such social mishaps and so will continue to undertake awareness programmes to educate the populace about the dangers of engaging in unauthorised investment schemes, while stressing the benefits of investing only in institutions that are authorised by the central bank to accept deposits. further, we expect to develop a supervisory mechanism to assess the risk of primary dealers β transactions on a regular basis. we are also engaged in active macroprudential surveillance to constantly monitor developments in the broader economy and assess their impact on the overall financial stability of the country. these surveillance efforts have highlighted issues such as excessive lending for non - productive sectors, continued deceleration in the growth of total assets of the non - bank financial sector, and reduced capital buffers and presence of weak finance companies. accordingly, over the next few years, we will continue to strengthen the institutional framework for macroprudential surveillance through analysing liquidity and interest rate gaps and multicurrency foreign exchange risks, monitoring leverage of financial institutions, and enhancing credit risk assessments of the financial sector. as part of our macro prudential surveillance, a systemic risk survey is being conducted on a biannual basis to identify systemic risks to the domestic financial system. as part of a more complex monitoring system, a framework is to be developed to facilitate the identification and analysis of financial cycles and business cycles. multivariate | 0.5 |
norman chan : hong kong's pivotal role in infrastructure financing keynote speech by mr norman t l chan, chief executive of the hong kong monetary authority, at the forum - cum - dialogue on β belt and road initiative : infrastructure financing β, hong kong, 15 october 2018. * * * carrie ( leung ), susie ( cheung ), tony ( neoh ), distinguished guests, ladies and gentlemen, 1. i am pleased to be invited to attend today β s forum. before i talk about what role hong kong can play in facilitating the financing for infrastructure projects, it would be useful if i refer to the enormous gap between the gigantic funding needs of infrastructure projects in the emerging market economies ( emes ) and the huge pool of global capital looking for investment opportunities. 2. it is beyond doubt that many emes do have a desperate need to bring in foreign investments in infrastructure, such as power plants, ports, airports, roads, railways, etc., all of which will certainly help them raise not only their living standards but also their capability in production and external trade. there is also no doubt that on the other side, there are billions or trillions of dollars eagerly looking for investment opportunities, especially those that can bring in steady long - term returns to the investors. when i ask investors or bankers why they are not putting their money into infrastructure projects that are waiting to be built and financed, the answer is there is a lack of β bankable β or β investible β projects. this may well be the true answer or reality, but it is rather disappointing if not frustrating that the wide gap between demand and supply has continued to exist. 3. so the natural question for us would be how we can close that gap and bring about a winwin outcome for project proponents and operators on the one hand and financiers or investors on the other. and in this connection, i should say that hong kong is uniquely well positioned to play a pivotal role in facilitating and catalysing investment flows to infrastructure projects in the region. we have well - developed capital markets and a deep pool of professional talents, in addition to hong kong being a leading centre in arbitration and dispute resolution, all of which are essential building blocks in support of infrastructure investments and their financing. it was against this background that the hkma set up the infrastructure financing facilitation office ( iffo ) in july 2016. iffo has the following mission : ( a ) provide a platform for the key stakeholders to | and experience, and the track record of the asset manager is a key assessment criterion of rating agencies as well as prospective investors ; the risk appetite of many long - term investors may need to adjust over time. over the past few years, we have seen an increasing interest among conventional long - term investors like pension funds and insurance companies in infrastructure - related ( d ) assets, possibly because the conventional fixed income instruments have failed to provide a decent return amidst the long - depressed yield environment. however, the appetite of such investors tended to focus on the small set of prime quality, investment grade - tranche of infrastructure loan assets, whereas many infrastructure loans may fall in the sub - investment grade domain. 8. ladies and gentlemen, the reputation of financial derivatives was badly damaged during the global financial crisis. the mortgage - backed securities, cdo, cdo2 and cdo3, etc. all got a bad name, for good reasons. while there are still widespread skepticism and even resentment to the label of financial derivatives or financial engineering, i think it is important for us to be able to differentiate between those structured finance products that are linked to and supportive of the real economy from those that have no useful links to the real economy. clearly ordinary mortgage - backed securities with proper underwriting standards, not the kind of sub - prime mortgages in the us, are one of this kind of useful financial derivatives. infrastructure loan backed securities can be another kind of useful structured finance because, if properly organised, they can bring about a win - win outcome for the investors, the recipient countries, the intermediaries and the capital markets. as i said earlier, infrastructure investments are one of the most difficult kind of asset class and to create a structured finance for these investments is not going to be an easy or short process, but as the chinese saying β ε ι δΉ θ‘ οΌ [UNK] [UNK] [UNK] δΈ β goes, no matter how long the journey is going to take, one has to make a start somehow. so here we are, the hkmc is going to take the first step in pursuing the securitisation of infrastructure loans in order to facilitate a more efficient flow of capital into infrastructure investments. 9. i note that in the afternoon there will be a session focusing on the prospects of structured finance in infrastructure investments. this is highly relevant and timely and i look forward to hearing the perspectives and insights from the experts on this subject. finally, let me thank the forum for inviting me and wish all the participants a | 1 |
are playing fair. for six years i was a member of the emerging issues task force of the financial accounting standards board, which provides the accounting industry with guidance in areas where financial reporting practices are diverging. during that time, i developed a better appreciation for the challenges that standard - setters face when dealing with topics that are becoming increasingly complex. informed and objective professionals can legitimately disagree on the best accounting standard to apply to new types of transactions. that is part of the challenge of keeping accounting standards current. the rapid pace of business innovations makes it impractical to have rules in place to anticipate every business transaction. rather, the more complex and dynamic the business world becomes, the more important it is that accounting be based on strong principles that are sufficiently robust to provide the framework for proper accounting of new types of transactions. at the core of such accounting principles should be professional standards that every corporate accountant and every outside auditor must follow. in part, auditors should be required to ask themselves whether a particular accounting method adequately represents the economics of the transaction and whether it provides readers with sufficient information to evaluate the risks. if not, it is likely that the procedure is not the best accounting method to apply. rules alone, however, do not ensure good financial reporting. at enron and other companies, weak corporate governance practices apparently permitted sham transactions and misleading financial reporting. outside auditors erred in trying too hard to please an important client. they forgot that their professional role is to assure users of financial reports that the statements fairly represent the condition of the corporation and that they communicate, not conceal, the level of risk. some observers have asserted that new accounting standards are needed. in some minor ways that may be true. but judging from publicly available information, i believe that what we need most is to restore the integrity of corporate accountants and the quality of the audit process, rather than impose extensive new rules. one reason that accounting in the united states has become so rule - based is that we tend to add new accounting standards when abuses occur even when the abuses resulted from accounting and audit failures. rather than creating new rules, forming the new public company oversight board established by sarbanes - oxley may provide a better approach and help to refocus public accountants on core principles and away from more aggressive and misleading practices. given human nature and the complexity of many accounting issues, we must expect that rules will sometimes be broken or misapplied. but a new, authoritative oversight board - | duration, of bank securities portfolios - - and of many loan portfolios as well - - has been extended. clearly, i am not about to forecast interest rates - - something i β ve already learned that central bankers never do. my point is that banking organizations, and investors generally, should recognize that domestic interest rates are historically low and that the possibility for a rising rate environment should not be overlooked. even stable rates could present increased risks, if savings and money market deposit accounts flow out of banks as quickly as they came in when equity markets declined. we should all ask ourselves how long depositors would be content to earn the currently low rates when those markets stabilize or improve or interest rates rise once again. at some point, even loyal customers - - those on fixed incomes, in particular - - may blink and take steps to improve their own yields. managing risks the health of financial institutions today is also a result of improvement in the risk - management process that has been ongoing at banks for years. increasingly, the entire risk management process has become more quantitative, reflecting not only the enhanced ability to collect and process data at lower cost, but also improved techniques for measuring and managing risk. as you are aware, bank regulators are working to develop a more modern international approach to bank capital - - called basel ii. although those standards, in the first instance, are being designed to address changing practices at large, internationally active banks, we can expect the lessons learned about risk management to have much broader effects. we do not anticipate, for example, that large numbers of banking organizations in the united states would formally adopt the data and analytically intensive and sophisticated processes to determine regulatory capital under development today. the costs and resources to develop such systems and frameworks are beyond the resources of all but a limited number of very large banks. we would expect, though, that the effort would eventually strengthen risk management and provide best practice examples industry wide. in quantifying credit risk, larger banking organizations are taking the lead, measuring a borrower β s probability of default, the bank β s loss given default and its likely exposure to the borrower at the time of default, taking into consideration future draw downs. the greater use of credit scoring in retail transactions provides a stronger framework to assess risk and ensure that loan pricing reflects the credit quality. such tools should perform even better as the effects of the most recent economic slowdown are incorporated into bank statistics. most consumer credit models were developed after the 1990 - 91 | 1 |
, mainly owing to energy and commodity prices. this has not so far affected our assessment that price developments will remain in line with price stability over the policy - relevant horizon. at the same time, very close monitoring is warranted. recent economic data confirm the positive underlying momentum of economic activity in the euro area, while uncertainty remains elevated. a cross - check of the outcome of our economic analysis with that of the monetary analysis indicates that bis central bankers β speeches inflationary pressures over the medium to long term should remain contained. inflation expectations remain firmly anchored in line with our aim of keeping inflation rates below, but close to, 2 % over the medium term. the continued firm anchoring of inflation expectations is of the essence. turning to fiscal policies, it is now essential that all governments fully implement their fiscal consolidation plans in 2011. where necessary, additional corrective measures must be implemented swiftly to ensure progress in achieving fiscal sustainability. beyond 2011, countries need to specify concrete policy measures in their multi - year adjustment programmes so as to underpin the credibility of their fiscal consolidation targets. experience shows that expenditure restraint is an important step towards achieving and maintaining fiscal soundness, notably when enshrined in binding domestic policy rules. such a commitment helps to strengthen confidence in the sustainability of public finances, reduces interest rate risk premia and improves the conditions for sound and sustainable growth. the implementation of credible policies is crucial in view of ongoing financial market pressures. substantial and far - reaching structural reforms, complementing fiscal adjustment, should be urgently implemented to improve the prospects for higher sustainable growth and employment. major reforms are particularly necessary in those countries that have experienced a loss of competitiveness in the past or that are suffering from high fiscal and external deficits. increased product market competition and labour market flexibility would further support the necessary adjustment processes in the economy. all these structural reforms should be supported by the necessary improvements in the structure of the banking sector. sound balance sheets, effective risk management and transparent, robust business models remain key to strengthening banks β resilience to shocks and to ensuring adequate access to finance, thereby laying the foundations for sustainable growth and financial stability. we are now at your disposal for questions. bis central bankers β speeches | vision for the oversight of the payments system β one that helps to ensure its safety and soundness, its efficiency and its security. and third, a coordinated approach for achieving this dual vision β one that calls on the payments industry and regulatory agencies to work together to attain this collective goal. bis central bankers β speeches a vision for the payments system in considering a vision for the payments system, let β s take a holistic perspective. 1 the oftenused distinction between retail payment systems, which involve many end - users and smaller transactions, and wholesale or interbank payment systems, may not be appropriate when considering a vision for the future. instead, a more comprehensive view reflects a future in which technological change will allow retail and wholesale systems to offer similar services and thereby compete more directly for a share of the same payments pie. my vision for the payments system draws from work that has already been done in canada and in other jurisdictions to map out a desirable path for the future evolution of payments. we are not alone in wanting to move toward an innovative, safe and secure payments system that evolves to meet the needs of consumers and businesses. this vision maintains the best characteristics of our legacy system, while allowing for the advantages that innovations promise. such a payments system has six essential attributes : 2 ( i ) high speed β end - to - end processing in near real time ; ( ii ) low cost β efficient and convenient ; ( iii ) open access and ubiquitous usage ; ( iv ) improved cross - border functionality ; ( v ) safe, sound and reliable ; and ( vi ) secure β to protect the private information of users. i will consider the first four attributes now and leave the last two for the discussion of the vision for oversight. 3 comparing canada β s existing payments system to this vision, it is clear there are many gaps. 4 in particular, in this era of instant communication, canadians expect to be able to send and receive payments faster, at any time, and at low cost, without having to know the recipients β banking information. some progress has been made, however. the wider use of digital payments technology has increased speed, lowered costs and broadened access to the payments market. for example, between 2008 and 2011, the number of credit and debit card payments rose by 23 per cent and 17 per cent respectively. 5 an example of an all - encompassing definition of a payments system is : a set of β arrangements that allow consumers, businesses and other organizations to transfer value from one party to | 0 |
alejandro diaz de leon : introductory remarks on regulating big tech remarks by mr alejandro diaz de leon, governor of bank of mexico, at the bank for international settlements conference β regulating big tech : between financial regulation, anti - trust and data privacy β, 7 october 2021. * * * i would like to thank the bis for inviting me to participate in this panel on bigtech and data in finance, and discuss what does the entry of big techs in payments mean for competitiveness and financial ecosystem and the challenges it represents for central banks. recent advances in technology and innovation have created the potential for a structural transformation in payment and financial services ( platform payments and platform finance ). the inclusion of networks with a wide customer base in the financial ecosystems, the so - called bigtechs, seeks to link customers with financial services, either provided by financial intermediaries or themselves. this raises key issues for public policy, in terms of competition, consumer protection and financial stability. an open finance ecosystem could have several benefits, better services, lower costs and deeper financial inclusion, but authorities should be careful and avoid potential suboptimal results ( concentration, vertical integration, lack of interoperability, etc. ). an open finance ecosystem without adequate regulation will not deliver the desired public goods. bigtechs providing payment and financial services are clearly part of our financial ecosystem. we must work on the necessary technological and regulatory conditions to avoid regulatory arbitrage. it must be clarified that a level - playing field is not against innovation. instead, it is a response by policymakers to avoid the β winner takes all equilibrium in networks β and β too big to regulate β problems, as conditions needed to promote competition, sound risk management and public interest. to promote a well - functioning payment systems and a more inclusive and efficient financial system and to make a good use of the opportunities offered by new technologies, we have identified seven public policy anchors to guide this process : 1. same risk / same regulation : o align incentives to achieve maximum social benefits, o addressing market failures and o promoting an environment for competition. level playing field on aml / cft requirements, legal, financial and operational risks. 2. interoperability and neutrality : need to avoid large networks using their condition as a competitive advantage to carry financial transactions exclusively through their networks. 3. no kingmakers : large networks joint - venturing with specific financial institutions could extend the former β s market power and concentration to financial markets. 4. ensure business continuity | remarks by alejandro diaz de leon, governor of banco de mexico, at the 13th annual conference by the central reserve bank of peru, the re - inventing bretton woods committee, and the interamerican development bank β the next global financial cycle in a divergent global economy, panel : central banking in a new era? β july 23, 2021 introduction β’ first, let me thank the organizers of today β s conference. it is an honor to share this panel with my colleagues. β’ to address today β s panel β central banking in a new era? β i will make some remarks on four topics : i ) monetary policy ; ii ) financial stability ; iii ) payment systems, and iv ) climate change. challenges for monetary policy β’ regarding monetary policy, central banks in emerging economies face a more complex set of trade - offs than their counterparts in advanced economies. β’ in small, open economies, which supplement domestic savings with external financial resources, it is essential to preserve a sound policy mix to foster an orderly adjustment of the economy to adverse shocks and to attract capital inflows. β’ in these economies, external and idiosyncratic shocks not only affect the demand side, but also the supply side and financial markets, which tends to increase policy trade - offs. β’ in advanced economies, in the last decades, several structural factors and demographic trends have induced lower potential gdp growth, lower inflation, and a lower real neutral interest rate. β’ this has resulted in a sustained trend of low - and below - target inflation for long periods of time. this allows advanced economies β central banks to be extremely patient in the wake of higher inflation. β’ emerging markets are not in the same position. we have less policy space, price formation has not been dominated by chronically low inflation, and inflation expectations have not been persistently below target. we need to be mindful of a more flexible and agile price formation process. β’ in addition, as we have been recently reminded, emerging market economies continue to be exposed to different types of adverse idiosyncratic factors that limit investment, growth, and hamper development. β’ furthermore, the complex post - pandemic environment poses significant challenges : 1. the global economy is highly heterogeneous and in uncharted territory. 2. fiscal support, mainly in the us, is currently at unprecedented levels, helping the recovery but adding inflationary pressures. 3. post pandemic price and wage dynamics are highly uncertain. 4. recent changes in | 0.5 |
indicator of the progress already made in the integration of euro area stock markets. the euro area capital market is larger and more open than any of the domestic markets and provides investors with more varied opportunities for investment, but it is not yet fully integrated. there are still some barriers : for example different traditions and local market practices, national regulations and tax regimes. one major obstacle to the efficient functioning of financial markets is also the prevailing segmentation of financial markets in europe. so, while the introduction of the single currency was a major step towards integration, the high degree of segmentation in europe β s securities markets remains one of the primary reasons for structural weaknesses. allow me to illustrate this by providing an example : there are currently more than 20 different securities settlement systems in the euro area operating on different trading and clearing platforms. in other words, the euro area lacks a sufficiently integrated system for the clearing and settlement of securities and for managing collateral at the cross - border level. but market pressure is growing and the securities settlement systems are faced with increasing demands for consolidation. β¦ the euro, in tandem with technological progress and continuing globalization, has put more pressure on european exchanges to strive for structural improvements. we should also be aware that the process of consolidation of stock exchanges is taking place within the context of the integration of capital markets in the euro area. this allows exchanges to benefit from increased economies of scope and scale they may obtain by using new information and telecommunication technologies. since the introduction of the euro several initiatives have been launched by stock exchanges with a view to forming alliances or merging activities. the recent flurry of excitement about the future of the london stock exchange gives an indication of just how important the push to consolidate europe β s stock exchanges has become. the increase in m & a activity is a sign of the competition between business and financial locations due to changing market conditions and the increasing competitive pressures to which the different financial intermediaries are exposed. further efforts must be undertaken to remove the remaining segmentation and harmonize market architectures, accounting rules and tax treatment. several initiatives are already under way and progress is being made on the harmonization of market practices ; here, eg the β financial market action plan β of the european commission comes to mind, and national governments and european market organizations have been working towards these goals. an important recent initiative was the decision of the ecofin - council to establish a committee of wise men in order to identify the obstacles which stand in the way of a single market in securities and consider | of eurocurrency reserves held worldwide amounts to some 13 %. moreover, approximately 50 states already use the euro as their nominal anchor currency. but also trade transactions will over time increasingly be switched over into euro, thus sheltering european businesses from international currency fluctuations. ladies and gentlemen, for economic policy makers, the euro provides a strong incentive to reinforce economic reform. let me just quote two examples : fiscal policy and structural reform. as you know, before entering the euro area, a country has to satisfy strict economic convergence criteria. the latter include the observance of limits on the government deficit and debt. governments strengthened this unique arrangement already ahead of the start of the euro by agreeing on the so - called stability and growth pact. this pact stipulates, among other things, that governments commit themselves to achieving balanced budgets or fiscal surpluses over the medium run. in practice, the stability pact has so far been taken very seriously, and the majority of eu countries already exhibits budget surpluses. also austria has commited itself in its so - called stability program to achieve a balanced budget by next year. let me emphasize : the firm adherence to stability and growth pact is key to europe β s and austria β s long - term attractiveness as a business location, and therefore for growth and employment. the second example of a policy area, where the euro exerts strong reform pressure, is structural reform. with a single currency across the euro area, divergent economic developments among the euro area countries need to be absorbed by adjustments in goods and labor markets. the more flexible and the faster these markets react to economic disturbances, the better for growth and employment. economic reforms which aim for such flexibility are thus high on the agenda. european politicians have therefore taken a number of important initiatives in the past three years to foster structural change and adaptability of the european economy. the so - called " luxembourg process " calls for employment guidelines to be issued on an annual basis, which recommend actions to raise the flexibility and the skill level of the work force. the " cardiff process " aims at structural reforms in the product and capital markets by establishing best practice models and benchmarking. finally, in lisbon 2000 the european union set itself the goal to become the most competitive and dynamic knowledge - based economy in the world, inter alia by further liberalisation of network industries and an extension of benchmarking in new policy areas. ladies and gentlemen, to be sure, living with the euro is not just plain | 0.5 |
remarks by luigi federico signorini at the presentation of the bank of italy β s report on economic developments in lombardy luigi federico signorini deputy governor of the bank of italy milan, 5 july 2017 italy has emerged from the longest and deepest recession in peacetime memory. slow and hesitant at first, the recovery is gradually strengthening, and for two years now the trend has been clearly positive. of course, the road ahead is still long and fraught with uncertainty. notwithstanding its recent growth, italy β s gdp remains seven percentage points below the level of early 2008. spain β s is about to reach that level, while france and germany have already outstripped it by five and eight points respectively. nor should the risks on the horizon be underestimated. and yet, even taking account of the lost ground that will be difficult to make up, recent economic developments have been undoubtedly favourable. in the first three months of this year italy β s gdp grew by 0. 4 per cent, exceeding the expectations of the leading forecasters. exports have continued to expand. in the last few years the growth in italian export sales has outpaced that in demand from outlet markets. this was not the case between 1999 and 2009, when italian firms struggled to keep up with competition from emerging economies and even from the other developed countries. the improved export capacity of italian firms has been especially important as it has supported gdp growth in the most testing times of the crisis. since 2010 italy β s market shares have stabilized. since 2013 there has been a surplus on the current account of the balance of payments. italy β s net foreign debtor position has diminished rapidly in recent years, from 25 per cent of gdp in 2013 to 15 per cent at the end of last year. the investment - to - gdp ratio had shed five percentage points since 2007, when in 2014 it hit a postwar low of 17 per cent. the fall in investment was one of the most conspicuous signs of the crisis : the poor economic outlook discouraged it and its collapse in turn lowered gdp and productivity, making the outlook even worse and triggering a vicious circle. years of low investment led to fixed capital not being renewed, lowering production capacity and contributing to weak gdp growth on the supply side too. however, little by little since 2014 investment has recovered, though the trends by sector and type vary greatly. purchases of capital goods β machinery, equipment and transport equipment β have risen by almost 11 per cent in the last three years : as a share of gdp | 28th assiom forex congress speech by the governor of the bank of italy ignazio visco parma, 12 february 2022 economic outlook, inflation and monetary policy in 2021, the world economy recovered more than expected. economic activity delivered a positive surprise in italy as well, with gdp growing by 6. 5 per cent. in recent months, growth has been curbed by the new wave of infections, but it is expected to pick up again starting in the spring with the gradual improvement in the health situation. at global level, according to the latest scenario published by the international monetary fund ( imf ), gdp will expand by 4. 4 per cent in 2022, half a percentage point less than was forecast in october. in the short term, risks are mainly on the downside ; besides being influenced by the course of the pandemic, these risks stem above all from the ongoing geopolitical tensions and the impact they could have on the cost of commodities, especially energy products, and on trade in intermediate inputs along global value chains. according to our latest estimates, italy β s gdp growth will near 4 per cent this year on average, and will then slow in the next two years. since the second half of 2021, a significant, and for the most part unexpected rise in inflation has been observed in several countries. on the supply and cost side, this has been due above all to the steep increase in fossil fuel energy prices, supply chain bottlenecks and the rise in international transport costs. in the united states, a role was played by the strong growth in demand and the rise in wages, in part connected with the exit of many previously employed persons from the labour force. pressures on the final prices of goods and services will likely be stronger than initially estimated, but should abate in 2023. in the euro area, twelve - month inflation reached 5. 1 per cent in january, the highest level since the start of the monetary union. rising energy prices contributed directly for more than half of this figure : even net of the most volatile components, the increase recorded since the second half of 2021 has largely reflected higher energy costs. differently than in the united states, consumer price pressure due to the recovery in production activity, which today is not far from 2019 levels, has been modest so far. the rise in natural gas prices has been exceptional ; though they declined after peaking in december, in europe they are still almost seven times what they were in early 2020. this is a | 0.5 |
importance of strengthening financial literacy, skills, attitudes and behaviours. in fact, this conference is organised in the context of the global money week in cyprus for 2023. also, the cbc has recently become a full member of the international network on financial education ( infe ) of the oecd, in which it aspires to have an active role in the network's activities. finally, i would like to mention that the cbc continues to devote resources on research of this topic, particularly in examining the link between financial literacy and financial stability. according to preliminary findings from the 4th wave of the household finance and consumption survey in cyprus, financially illiterate individuals are 7 - 11 % more likely to have late loan payments, providing evidence on the negative correlation between the level of financial literacy and financial stability risks. the analysis is still work in progress. more extensive results on the issue are expected from further analysis as well as from the new more elaborate survey on which we are collaborating with the oecd. concluding remarks 3 / 5 bis - central bankers'speeches let me conclude by reiterating that this conference is a milestone event and sets the pace for a new era in cyprus. an era whereby all efforts for the promotion of financial literacy and education in cyprus are coordinated under the national strategy umbrella, so as to enhance the well - being and prosperity of cypriot citizens and to support the financial resilience and sustainable economic growth in the country. as governor of the central bank of cyprus my promise is to assist the new permanent committee's role in implementing the national strategy, as we also ensured that the cbc prioritises and leads this initiative since the very first establishment of the committee in december 2020. in this conference, we brought together a top - notch group of experts from both cyprus and abroad, that can exchange expert views and share with us their knowledge on best practices from other countries'experiences. i would like to mention by [ surname ] alphabetical order, professor panayiotis andreou from the cyprus university of technology, dr sophia anyfantaki from the bank of greece, professor adele atkinson from the university of birmingham, dr maria demertzis from bruegel, professor michael haliassos from goethe university frankfurt, professor alexander michaelides from imperial college london, professor andreas milidonis from the university of cyprus, dr elena miteva from the organisation of economic co - operation and development ( oecd ), professor dennis philip from durham university and dr | of last year and is currently in a moderate cyclical upswing underpinned by more favourable external conditions. merchandise exports increased markedly in the first quarter of this year and survey indicators point to a sustained improvement in economic sentiment. tourism activity also seems to be recovering. the latest unemployment rate β 6. 9 % in march 2010 β is one of the lowest in the euro area, where the average stands at 10 %. looking ahead, forecasts by the central bank of malta and the european commission ( ec ) anticipate gdp growth of 1. 1 % and 1. 2 %, respectively this year, followed by 1. 7 % and 1. 8 % in 2011. 6 domestic demand is expected to be the main engine of growth, mainly driven by a pick - up in investment, but the contribution of net exports is thought to be negative in both years, as imports are projected to grow at a faster pace than exports. labour market conditions are expected to remain soft, reflecting the usual lagged response to the recovery in output. the unemployment rate is thus foreseen to stay slightly above 7 % in both years. inflation is also projected to remain subdued at around 2 %, but it will still be somewhat higher than the euro area average. similarly, compensation per employee is forecast to rise by around 2 %. as this increase in nominal wages is more reflective of inflation developments rather than productivity gains, it could put pressure on cost competitiveness. 7 forecasts are of course subject to uncertainty at the best of times. in the present period of renewed crisis, the risk to the projections is clearly on the downside, mainly because of the clouded outlook for demand in malta β s main trading partners and the likely spillover from the deflationary fiscal policies being adopted in many countries. the recovery in europe is also constrained by the deleveraging process currently underway in the banking sector and in the private sector generally. together with the fiscal tightening, this balance sheet consolidation largely explains why the ec is forecasting only a modest recovery in the euro area and the eu this year, with growth rates of 0. 9 % and 1. 0 %, respectively. lessons learned and the way forward several lessons can be drawn from the crisis, but two come to mind more readily. the first is that those countries which entered the recession already burdened with imbalances β both internal and external β have performed more poorly than those with sounder economic fundamentals. the second is a universal law that often | 0 |
seong - tae lee : global stagflation threat and monetary policy opening address by mr seong - tae lee, governor and chairman of the bank of korea, at the 16th central banking seminar, seoul, 21 october 2008. * * * opening remarks ladies and gentlemen, let me extend a hearty welcome to all central bankers gathered here from around the world to take part in the bank of korea β s β central banking seminar β. i would like to express my special thanks as well to our keynote speaker, professor dr. hermann remsperger of the executive board of the deutsche bundesbank. this seminar, now in its sixteenth year, is held to promote exchanges of experience and opinion among the staff of central banks of various countries. we hope as well that it will lead to a consensus among us on major monetary policy issues. at the present time, countries around the world face a very grave situation. economic slowdown and inflation are occurring simultaneously and the worldwide financial turmoil is worsening. in this context the theme of this week's seminar, the " global stagflation threat and monetary policy " merits deep interest and close attention of all central banks. global economy facing triple whammy after enjoying a long period of prosperity under low inflation, the global economy is now experiencing acute difficulties in the three areas of economic activity, prices and finance. the global economy is shrinking fast, led downward by the advanced economies, due to the combined shock of persistently high oil prices and the us subprime mortgage meltdown. emerging economies, too, which had for some time seemingly decoupled from the advanced ones, are now also showing signs of slowdown. what is more, inflation rates around the world continue to run at high levels due to the knockon effects of the sharp rises in prices of international commodities including oil and grains. in the midst of all this, counterparty risks are emerging starkly in the international financial markets and the volatility of price variables such as share prices and exchange rates has grown greatly. a severe credit crunch has thus erupted in response to credit risk reappraisal and the ongoing deleveraging by financial institutions. in consequence, emerging countries now face difficulties in securing foreign currency liquidity, as they are perceived to have relatively higher credit risk. central bank policy tasks ladies and gentlemen, when a cost shock occurs, such as a steep rise in oil prices, it is widely acknowledged that the central bank β s policy options are constrained | domestic markets. and, as we have seen during the global crisis, they are thus extremely vulnerable to the impacts of an external shock. looking at the degrees of export dependency ( exports / nominal gdp ) of various major countries in 2008, we see those of the usa and the uk standing at 0. 3 to 0. 7 times the worldwide average, whereas that of korea was 1. 7 times the world average, that of china 1. 2 times, and that of the major five asean members combined 2. 0 times the world average. domestic economic activities in countries with high export dependency of course react very strongly to external demand shocks. empirical analysis shows the usa, the uk and the euro zone exhibiting gdp elasticities of 0. 3 β 0. 4 % to a 1 % increase in external demand ( world gdp minus its own gdp ), in comparison to which korea β s is for example about 1. 0 %. 5 asian economies consequently tend to show high degrees of economic volatility. asian economies are in addition at risk of possible financial and foreign exchange market unrest owing to large in - and outflows of global funds. this risk accompanies their pursuit of economic development on the principle of increased market opening and liberalization policies. while causing domestic liquidity to swell, excessive inflows of global funds may at the same time generate steep rises in the prices of assets such as shares, bonds and real estate. in the event of what is termed a sudden stop, i. e. the halting of global fund inflows and their abrupt outflows instead, the domestic financial and foreign exchange markets will be thrown into turmoil. during the global financial crisis, despite holding adequate levels of foreign exchange reserves, a number of asian countries including korea underwent severe crises, due to increased foreign currency liquidity risk and steeply rising exchange rates caused by these sudden fund outflows. apart from this, it must be said that the structures of many asian economies are characterized by fragility, as they are still stuck in the early stages of development. compared to the advanced countries, productivity here is low and the service sector lacking in competitiveness, while the environmental problems arising from our long period of rapid growth until now impose constraints on our abilities to continue growing at reasonable levels in the future. challenges to the further advance of the asian economy transition to a sustainable growth framework the asian economies must move a further step forward if they are to remedy these weaknesses. and as a first step | 0.5 |
laws in the world, the digital euro will, of course, comply with all eu rules on data protection. this is essential for the necessary political and societal support. let me wrap up. i started my presentation with a question. β why do we need a central bank digital currency? β after what i have just told you, the answer could be summarised as follows : to keep up with society. to pursue strategic autonomy. and to maintain access to public money in a digital world. banknotes belong to all of us. they have stood the test of time, and β if you ask me β will continue to do so. and as we prepare them for what lies ahead, we will keep an eye on financial stability risks and leave it to politics to decide. we will not venture into a vacuum. the digital euro will not exist in isolation, but will take its place in an integrated european payments landscape. Β© dnb & shutterstock and with this conclusion, i find myself paying tribute to our host β s β the european houseambrosetti β s β tagline. this tagline says : β proud of our past. propelled towards the future. β well, let that be exactly how i feel about our european currency. thank you. | than in the past. this is because the transmission channels of shocks, such as fdi and trade flows, have increased over time and will probably continue to do so. however, this is not to say that we should aim at reducing these international linkages. let me elaborate on this. first, one should not forget that international trade and other linkages may transmit economic disturbances, but have beneficial effects as well. fdi has become an important mechanism for the transfer of technology, including management techniques. in this way, fdi supports a smooth adoption of technologies that can make an economy less vulnerable to cyclical factors. for example, scale economies may drive multinational firms to apply state - of - the - art ict - technology or management models in different countries. i will not conceal that there also have been mistakes in this respect there have been clear cases of overinvestment during the global boom in mergers and acquisitions. however, there is reliable empirical evidence that technology transfers through fdi have stimulated the rate of technological progress. second, the negative effect of international shocks may be kept in check by ongoing improvements in the resilience of the financial sector. this month, the imf reported ( in its weo ) that the global financial system is in its strongest shape over the past three years. finally, there are structural changes in the economy that indicate that firms are becoming more flexible and are less affected by cyclical developments. let me illustrate this by focussing on the dutch economy ; however, similar developments have been found for the us economy. a remarkable development can be observed in the sectoral pattern of employment changes. more than before, sectors or industries may be denoted as either structurally shrinking or structurally growing ; independent of the state of the business cycle. less than before, industries that shrink in a downturn can expect to grow again in the next upturn of the cycle. consequently, employees are made redundant in sectors which are subject to structural shrinking, and must find new jobs in growth sectors. during the 1995 - 2002 cycle, these sectors accounted for 96 % of employment, as compared to 71 % during the 1987 - 1994 cycle. this changing pattern of sectoral employment indicates that labour and product markets have become more dynamic and flexible. a flexible labour market is conducive to labour productivity growth in the long term. moreover, the ongoing changes in the sectoral composition of employment indicate that companies are forced to carry out ongoing restructuring, for example, as a result of increasing competition and | 0.5 |
ewald nowotny : a changing role for central banks opening remarks by prof dr ewald nowotny, governor of the central bank of the republic of austria, at the 41st economics conference of the central bank of the republic of austria, vienna, 10 june 2013. * * * ladies and gentlemen, i would like to welcome all of you to the 41st economics conference of the oesterreichische nationalbank here in vienna. my warmest regards to state secretary of finance andreas schieder, and our keynote speakers, benoit coeure, member of the ecb executive board, and harold james, professor at princeton university. i am delighted and honored to welcome very prestigious speakers among us, who will enrich this conference with their insightful ideas and novel research. β a changing role for central banks? β is the question addressed at this year β s conference. during the 19th century central banks were very closely interlinked with national governments. only in the late 20th century did we observe a shift in emphasis toward the institutional autonomy of central banks. one can safely say that the status, reputation and self - image of central banks have considerably improved over the years. today, central banks alongside parliaments, governments and judiciary are among the pillars of modern democratic nations. at our conference we will discuss what kind of a pillar of the democratic system a central bank is or should be. in my short introduction, i want to emphasize two interconnected issues that are relevant to this discussion : 1 ) the role of a central bank in the general context of economic policy, and 2 ) the concept of central bank independence. in the period after the great depression of the 1930s and in the first decades after world war ii, the mandate of central banks usually reflected the traumatic experiences both of high inflation and mass unemployment. this is e. g. reflected in the broader mandate of the u. s. fed and also applied to the mandate of austria β s central bank before austria joined emu. in the period following the oil price shocks and up to the β great recession β β the economic crisis we have been experiencing for five years now β the role of central banks seemed to be clear cut : central banks should focus on price stability, should operate mainly with one instrument β the policy rate β and should be independent in their actions. this was also the leading perspective when laying the foundation of the european central bank β the maastricht treaty in 1992. it reflected a strong position of economic theories | the bretton woods institutions should be reflected in a declining trend of the overall number of fund - supported programs over time. there are legitimate cases which require access to fund resources. however, the fund β s financing role should and can only be catalytic, given its limited resources. while policies, such as the exceptional access framework, are in place to safeguard fund resources, they are often not adhered to. i am also concerned about the prolonged use of fund resources which is out of line with its mandate. countries that run imf - supported programs over many years or decades are probably not a demonstration of success. thus, the imf should strive to prevent that countries become dependent on imf financing. during the debt crises of the early 1980s, the imf acted more as a crisis manager or the official agent in charge of concerted bank lending. this role has shifted over the years, with the fund now practically resolving countries β financial crises on its own. an important initiative to reposition the fund once again as a crisis manager came to be known as the private sector involvement ( psi ) initiative. psi encapsulates the official sector β s attempt to engage the private sector in crisis resolution more effectively. the private sector has to assume responsibility for its investment decisions. this is grounded in my firm conviction that a collectivization of private sector losses would distort the allocative efficiency of capital markets and would lead to moral hazard via increased risk - taking. another important initiative, which the imf started to discuss in late 2001, proposed to establish an international bankruptcy procedure for unsustainable sovereign debt ( sdrm ). i believe that this mechanism would have made the psi initiative more operational. however, the time may not have been ripe yet for such a comprehensive framework for the restructuring of sovereign debt. nevertheless, public and academic awareness has been raised. the debate has helped in that many emcs have introduced collective action clauses ( cacs ) in their sovereign bond contracts and major emcs and the private sector are discussing a code of conduct. this notwithstanding, i am firmly convinced that we need an international arrangement which would facilitate the orderly resolution of sovereign debt crises. such an arrangement would also help shift the function of the imf from its current role as crisis solver to crisis manager. 5. economies in transition, developing countries and poverty reduction in addition to finding more effective mechanisms for crisis prevention and management, the international community faces another major challenge, the eradication of poverty. one | 0.5 |
closing remarks fourth annual joint conference of the deutsche bundesbank, european central bank and federal reserve bank of chicago on ccp risk management 22. 03. 2022 | virtual | burkhard balz 1 introduction 2 challenges for ccps in the face of amid turbulent financial markets 3 farewell 1 introduction ladies and gentlemen, on behalf of the deutsche bundesbank, the european central bank and the federal reserve bank of chicago, i would like to thank you for participating in the fourth joint conference on ccp ( central counterparty ) risk management. a very interesting conference day with lively debates on current and future challenges in ccp ( central counterparty ) risk management is coming to an end. i now have the honour of concluding today β s conference. 2 challenges for ccps ( central counterparties ) in the face of amid turbulent financial markets although we can look back on what has certainly been an eventful year for ccps ( central counterparties ), recent developments surrounding russia β s invasion of ukraine overshadow everything. who could ever have imagined that we would see another war in europe? for most of us, that was a very distant and absurd idea. while the eu ( european union ), the us ( united states ) and other states are adopting a raft of unprecedented sanctions against russia, the humanitarian crisis in ukraine is taking its course. my thoughts are with the ukrainian people and their immeasurable suffering. and indeed, this crisis comes immediately in the wake of the pandemic, with its risks, challenges and unexpected workload, such as the development of new vaccines within a very short space of time. now geopolitical complexities have gained the upper hand, bringing with them economic consequences. for instance, energy prices, which were already strained, are continuing to rise, producing high volatility in financial markets. in uncertain times, calls for reliability and stability become louder still. robust crisis and risk management appears to be more important than ever β this applies in particular to ccps ( central counterparties ), which play a key role in keeping the financial system safe and steady. for this reason, we also came together today to discuss the right way to handle ccps ( central counterparties ) β risk management. recent developments confirm and demonstrate once again the importance of working and standing together. and we should not forget : our current focus on the war should not distract us from another challenge that is already at our doorstep β global heating. with this in mind, allow me to | also the potential risks to financial stability. and when it comes to broadening access to ccps ( central counterparties ) in the market, there are still some obstacles, which need to be eliminated beforehand. although the fee models for ccps ( central counterparties ) have been improved upon, central clearing still seems to be uneconomical for smaller market participants, as ccps β participants have to meet very strict risk management requirements. therefore, we should do more to improve the attractiveness of the access models in general. talking about new risks that ccps ( central counterparties ) need to consider going forward, climate change risks have become increasingly important. while climate effects are becoming more and more visible, global efforts to tackle climate change risks are also on the rise. commodity ccps ( central counterparties ) have been primarily affected by recent developments like the spikes in energy prices and market volatility in the context of current tensions between russia and ukraine, which challenged ccps ( central counterparties ) β stress test models significantly. despite the high levels of market turmoil, ccps β risk models appear to have performed well on the whole. while this is welcome news, ccps ( central counterparties ) need to continuously review their model performance. given the potential impact of climate risks on financial markets and consequently on ccps ( central counterparties ), all ccps need to evaluate how to integrate climate change - related risk adequately into their risk models. by taking climate risks more into account, ccps ( central counterparties ) β in their capacity as intermediaries β could play a role in adequately mitigating the transfer of climate risks to financial markets. the journey has just begun : although a lot has been achieved, there is still a lack of uniform standards applicable worldwide. since climate change is a global issue, local standards and measurements need to be aligned around the world. it is up to governments and regulators to make sure that an assessment of climate risks takes place in an organised manner, and to provide the necessary framework. in order to do so, i see also ample scope for further analytical work. much remains to be done, but i am sure that together, we can shape the future of tomorrow. 3 farewell ladies and gentlemen, colleagues, thank you again for taking part in today β s conference and making it such a success. i am convinced that today β s conference has delivered what it set out to achieve. | 1 |
first quarter of 2004 as the rebound in manufacturing production made inroads into stocks. the continued expansion in economic activity at first seemed to have had the desired effect on employment creation and from 2002 onwards there were some quarters in which increases were recorded in the formal non - agricultural employment in the economy. on balance, employment creation in the non - agricultural sectors of the economy continued to be disappointing and it seems that the total number of persons employed declined in the current upward phase of the business cycle. the creation of employment opportunities will be crucial if we are to improve people's lives in the years ahead. considerably more success was achieved on the inflation front during the past year. the twelve month rate of increase in the cpix declined from a recent peak of 11, 3 percent in november 2002 to 4, 0 percent in december 2003 and then rose to a still low 4, 4 percent in may 2004. a number of factors have been identified in our monetary policy statements explaining this favourable inflation outcome, which i won't repeat again this evening. it is generally expected that the high petrol and diesel price increases at the beginning of june 2004 and increases in the prices of medical products would have caused inflation to rise in that month. this should only be a temporary upward movement, which will probably again be reversed in the subsequent month. projections using the sa reserve bank's econometric models indicate, however, that cpix inflation could move above the upper boundary of the inflation target range towards the end of the year. fortunately, this is also expected to be reversed relatively quickly and is not a significant cause for concern. as already indicated, the increase in domestic expenditure led to a marked rise in the volume of imports during 2003. in the first quarter of 2004 the volume of imports contracted owing to a decline in the imports of oil. the volume of south african exports has fluctuated around a more or less horizontal trend since the second half of 2001, which brought about a substantial deterioration in the real trade balance over this period. this was accompanied by an improvement in the average terms of trade of 2Β½ percent in 2002, 4Β½ percent in 2003 and by a further 2Β½ percent in the first quarter of 2004 in comparison with the fourth quarter of 2003. these favourable price developments were unable to prevent the current account of the balance of payments from moving into a deficit. the improving terms of trade nevertheless kept the deficit on the current account of the balance of payments at a level of about 1Β½ percent of gross domestic | lack of demand for building work. the household sector experienced some financial strain as job losses constrained disposable income. although most indicators show that the decline in the real economy had bottomed out in the first half of 2009, consumers were, until the third quarter of 2009, still somewhat pessimistic about the prospects for future performance of the economy and its impact on their finances. the elevated rate of unemployment continued tight lending conditions and a need to address weaker household balance sheets are expected to continue to impact consumption expenditure negatively. also, on average, the credit standing of consumers has continued to deteriorate. i have briefly highlighted the key issues raised in the financial stability review. more detailed analyses are available in the publication itself, and will be highlighted by the authors β presentations. i trust that you will find these interesting, stimulating and relevant to the current environment and invite you to provide comment as part of the important process of ongoing debate on financial stability. thank you. | 0.5 |
njuguna ndung β u : implications of capital flight for macroeconomic management and growth in sub - saharan africa keynote address by prof njuguna ndung β u, governor of the central bank of kenya, at the senior policy seminar on implications of capital flight and macroeconomic management and growth in sub - saharan africa, south african reserve bank, pretoria, 30 october 2007. * * * honorable governors and colleagues, honorable ministers, honorable ambassadors and excellencies, representatives of external partners and institutions, ladies and gentlemen, i would first like to thank the south african reserve bank, and particularly, my colleague honorable tito mboweni, for hosting this important and timely event on the β implications of capital flight for macroeconomic management and growth in sub - saharan africa β. i would also like to thank all my colleagues, and senior officials who have responded positively and are here to participate in the deliberations and contribute to the success of this important event, which has tremendous potential for investment, economic growth and more generally for the development of our continent. africa is often labeled as the capital - scarce region of the world ; one that has been marginalized in the landscape of global capital flows. the latest statistics published by the world bank flagship report β global development finance β suggest that the region received less than 4 percent of net foreign direct investment ( fdi ) flows to developing countries in 2006. interestingly the totality of these fdi inflows went to 5 countries ( angola, equatorial guinea, nigeria, south africa, and sudan ), all of which are oil and mineral - rich. so these fdis went to extraction sectors. the region is also lagging on the remittances, receiving just 4 percent of total remittances to developing countries β by far the smallest share. the average in other regions is in excess of 25 percent. as a result of chronic shortage of capital, investment prospects have been delayed, leaving the majority of countries in the region undiversified, commodity - dependent, and highly vulnerable to terms of trade and exogenous shocks. over the years, most of these countries have been confronted with chronic balance of payments crises, and relied on external debt to bridge their ever growing financing gap. however, the accumulation of external liabilities over time took africa β s external debt to unsustainable levels, when it reached the critical threshold of us $ 230 billion, about 45 % of gdp in the 1990s. and as external debt | patrick njoroge : central bank of kenya 50th anniversary celebrations speech by dr patrick njoroge, governor of the central bank of kenya, at the central bank of kenya 50th anniversary celebrations, nairobi, 14 september 2016. * * * i am greatly honoured to welcome you this morning to celebrate 50 years of the central bank of kenya β s existence. i am grateful to all guests for honouring our invitation and joining us to celebrate this milestone. i am particularly grateful to your excellency, for graciously accepting to attend this important event despite your extremely busy schedule. i want to pay special tribute to fellow governors and deputy governors from the region, and especially my colleagues from the eac, who have been with us over the last two days, and over the last 50 years. these celebrations accord us an excellent occasion to reflect on the achievements of the central bank, the challenges and opportunities that lie ahead. the history of the central bank is very much intertwined with the history of the country, and most of us here today are a part of that history. it is a rich history, and like any other, it is marked by peaks and troughs, shadows and lights, but it is a history that we are proud of. soon after its establishment, the new central bank had to deal with an economic slowdown in the early 70s and the effects of the oil crisis, which put increased pressure on domestic prices and the balance of payments. kenya β s respite came in the form of a β coffee boom, β following a devastating frost in brazil and the resulting increase in coffee prices. the 1980s witnessed an increase in the number of indigenous kenyans investing in the banking sector. but inadequate capacity, weak internal controls and poor funds management led to market indiscipline. the result was significant distress in the banking sector, with the attendant ramifications on the kenyan population, problems that persisted into the early part of the 90s. highly accommodative policies in the early 90s also lead to runaway inflation, forcing the central bank to undertake massive liquidity mop - up operations to reign - in inflation and restore confidence in the financial system. nevertheless, these challenges presented opportunities for legislative and institutional reforms to improve the effectiveness of the central bank. to this end, a number of reforms were effected, including amending the central bank act to enable the central bank exercise greater operational autonomy in the conduct of monetary policy, while maintaining price stability as one of its primary | 0.5 |
insights on concentration risks into a practical instrument are on - going. one option that is being looked into is a quantitative concentration limit, either absolute or relative. this limit would then be subject to supervisory reporting, disclosure or an additional capital buffer. and in case of a breach of the limit, a range of supervisory measures could be considered, such as a mandatory notification in accordance with the large exposures framework or a deduction of the excess part of the concentrated position from the bank's capital. if this concentration limit were to become part of the prudential framework, it could well be phased in to give you, banks, time to make the necessary adjustments. i do want to stress, though, that our ideas on concentration limits are very much in the proposal phase. de nederlandsche bank is looking forward to comments on this proposal and to the results of any consultation rounds on the eba discussion paper. these could in turn help us to improve the proposal. so far, i have discussed climate and environmental changes as a source of prudential risks. however, some banks also consider these changes, and the related changing stakeholder preferences, as an opportunity to change their strategy and business model. for example, i find it promising to see that a number of banks are committing, 4 / 6 bis - central bankers'speeches themselves, to net - zero initiatives. such as the banks that choose to align with the paris agreement by signing the commitment statement of the net - zero banking alliance. institutions that have signed this statement have 18 months to do a number of things. they need to identify operational and attributable green house gas emissions from their lending and investment portfolios. and then they need to set specific targets, for both 2030 and 2050, so that they can align with the trajectories towards net - zero in 2050 or earlier. to achieve these targets, banks might need to adjust their business model and their range of products and services. or they may need to adjust their decision - making process and thus adapt their governance structure and risk management procedures. it is important that banks provide qualitative and quantitative disclosures to support their commitments. as mentioned earlier, the recent ecb assessment shows that banks do not fully meet ecb expectations on disclosure of c & e risks. and this is where the final risks i want to mention today, occur. reputational and litigation risks. these risks follow from an increased stakeholder awareness for a netzero society | . for instance, if stakeholders feel that a bank is not living up to its commitment, its reputation could be harmed. activist measures or changes in consumption patterns could follow. the goal being, ultimately, to drive banks towards a more environmentally friendly business model. banks may also be exposed to an increasing litigation risk. if a bank, as a signatory to a climate commitment, does not live up to it, not only could its reputation be harmed, it could even be held liable, for example by ngos. and so not living up to a climate commitment, for instance by not providing sufficient qualitative or quantitative disclosures, may lead to reputational and litigation risks that could have financial consequences. i'm wrapping up. today, in talking to you about the risks of global warming, i am not crying wolf. i, and many with me, know that the threat is real. that we need to act. that we need to make significant progress in the pathway to net - zero. as a sort of shepherd of financial stability, i want to do what i can to protect our society against the wolf that is global warming. i want to do what i can within my mandate as supervisor. but global warming knows no borders. not between sectors. not between countries. global warming affects all of us. everyone. everywhere. and so, we will only succeed if everyone, everywhere, does their part β governments, banks, and supervisors. if everyone, everywhere, within their respective mandates or from within their business operations, contributes to achieving our common goals β protecting lives and livelihoods. 5 / 6 bis - central bankers'speeches so with that, comes a different cry. with that, comes a rallying cry. a cry to move from a sense of urgency to a sense of action in the fight against global warming. i hope you are with me. thank you. 6 / 6 bis - central bankers'speeches | 1 |
clear evidence of strong confidence in low and stable inflation over time on the part of economic agents. gradually, as we gain experience with setting interest rates according to an inflation target, the possibilities for placing emphasis on stability in the real economy will probably increase. low and stable inflation is a necessary precondition for stability in the foreign exchange and financial market and the property market. however, there have also been episodes where bubbles have accumulated in these markets, in the form of sharp increases in asset prices, while inflation has been low. the situation in japan in the 1980s is an example. price increases in property and financial markets may have a considerable impact on wage growth and consumer price inflation after a period. when the bubbles burst, the result may be an economic downturn. in this way, developments in financial and property markets may be a source of a more unstable inflation environment. in principle, it would be appropriate to use the interest rate to counter this. in practice, however, it is difficult to assess whether price trends in property and financial markets are sustainable. when norges bank concludes that the key rate should be changed, the change will in most cases be made gradually. this is because there is normally uncertainty about the situation in the economy, potential disturbances to the economy and how fast an interest rate change will affect price inflation. but we will not always take a gradualist approach. a rapid and pronounced change in the interest rate is appropriate if monetary policy credibility is threatened. if special circumstances prompt norges bank to apply a different time horizon than two years, the bank will provide an assessment of this. we will also do so if developments in financial markets or the property market warrant particular attention. the role of the krone exchange rate with the new operational target of monetary policy, norges bank will aim to maintain low and stable inflation. we no longer have a specific exchange rate target for the norwegian krone. nevertheless, developments in the krone exchange rate are still very important when norges bank sets the interest rate. this is due to a number of factors : β’ changes in the krone exchange rate affect prices measured in nok for imported consumer goods and services. bearing in mind that imported goods are used in norwegian production, the rise in prices for imported goods and services combined determines nearly 40 per cent of consumer price inflation. β’ developments in the krone exchange rate have an influence on the earnings of companies that compete with foreign enterprises and that traditionally also negotiate first in the income settlements. β’ changes | the macroeconomic outlook and our assumptions which constitute the basis for our forecasts. first, i will summarize the recent inflation developments, and then compare the short term forecasts in the october inflation report with the actual inflation data regarding the fourth quarter of 2011. there were a few developments in the interreporting period which led inflation to deviate significantly from october forecasts. more - than - envisaged increases in unprocessed food prices were an important cause of this deviation. the ongoing depreciation in the turkish lira amid the deterioration in the risk appetite was another factor leading to a deviation in short - term forecasts ( chart 8 ). bis central bankers β speeches chart 8. october 2011 inflation forecasts and realizations * shaded region indicates the 70 percent confidence interval for the forecast. owing to the lagged effects of the exchange rate pass - through, core inflation indicators remained at elevated levels during the final quarter ( chart 9 ). this mainly stemmed from soaring core goods prices, while the moderate course of the underlying trend of services inflation indicated a benign outlook in terms of second round effects ( chart 10 ). chart 9. chart 10. core inflation indicators sca - h and sca - i prices of core goods and services ( seasonally adjusted, 3 - month average, annual percent change ) source : turkstat, cbrt. ( seasonally adjusted, 3 - month average, annual percent change ) source : turkstat, cbrt. we see that economic activity remained robust in the second half of 2011, despite a slight deceleration. gross domestic product ( gdp ) data pointed that domestic demand proved stronger in the third quarter of 2011 compared to the outlook presented in the october inflation report ( chart 11 ). thus, we revised our output gap forecasts for this period upwards. growth composition became much more balanced as we expected ( chart 12 ). despite the weak course of the global economy, exports continued to increase, whereas the demand for imported goods and services maintained a downward trend. consequently, the contribution of net external demand to growth has been positive for the first time after a protracted period. bis central bankers β speeches chart 11. chart 12. final domestic demand exports and imports of goods and services ( seasonally adjusted, 2008q1 = 100 ) ( seasonally adjusted, 1998 prices, billion tl ) source : turkstat, cbrt. * estimate. source : turkstat, cbrt. indicators regarding the last quarter of 2011 | 0 |
, there could again be unintended consequences that require careful consideration during implementation. in south africa the definition of shadow banking as currently stated would cover credit - extending institutions that address the financial needs of individuals and smes who are not adequately integrated into the traditional banking sector. some of these institutions play an important role in deepening our financial system and advancing financial inclusion. a careful balance therefore needs to be struck between creating an enabling environment on the one hand, and ensuring appropriate market conduct provisions, protection of consumers and guarding against irresponsible and exploitative lending practices on the other. fsb governance review : as part of the process to enhance trust and confidence in the financial system, the fsb has proposed a review of its governance structure to ensure a comprehensive approach to representation in the fsb across all levels. south africa recognises the value of having the widest possible participation when developing global solutions to regulation in a highly globalised financial system and supports the principle of equal and balanced representation. the development of global financial standards, principles and processes require coordination between central banks, prudential and market conduct regulators, as well as policy making institutions such as the ministries of finance. a representative member body, in which each participant is able to contribute effectively, will improve the fsb β s ability to develop standards and rules that are responsive to the needs of key stakeholders in the global regulatory community, and will lead to greater compliance with global financial standards. bis central bankers β speeches before i conclude, let me say that completing the four remaining core reforms is quite an ambitious agenda which if rushed through could result in compromises being made and create its own challenges in the future. the fact that the leading global regulators have not reached sufficient agreement to issue joint regulations is causing divergences and market fragmentation between them. it is also having a big impact on efficiency and financial stability and is increasing the business costs for both the providers and the users of financial services. south africa is suffering direct and indirect consequences from this situation. more impetus and direction to address the current situation of fragmentation and arbitrage and push for a higher level of coordination is required. in the past, we have stressed the importance of national discretion and flexibility and we should continue in this vein. however, the scope, substance and spirit of the global regulatory objective should still be met and demonstrated at all times. 6. conclusion in conclusion, the task of global regulatory reform is complicated by the fact of blurring lines between banking, insurance and capital | daniel mminele : south africa in the global regulatory context β progress, challenges and opportunities keynote address by mr daniel mminele, deputy governor of the south african reserve bank, at the 8th risk and return conference, cape town, 13 march 2014. * 1. * * introduction good morning ladies and gentlemen. thank you to incisive media for the kind invitation and the privilege for me to deliver the opening keynote address for this 8th risk and return south africa conference. this conference provides a good opportunity for dialogue and sharing of experiences as it brings together a wide spectrum of financial market participants, especially risk and investment management professionals, at a time when there are critical, wide - ranging and historic changes to the financial markets landscape. while there does not seem to be any major disagreement around the weaknesses and vulnerabilities that were exposed by the global financial crisis, there have been intense debates around how best to go about strengthening regulatory frameworks to restore confidence in financial systems. these range from appropriateness of certain regulatory standards based on country - specific circumstances ( danger of β one - size - fits - all β approach ), the speed and sequencing of implementation, to possible unintended consequences that could stifle innovation and development, reduce liquidity in certain markets, or affect the flow and cost of credit. i have been asked to speak on the progress, challenges and opportunities of global regulatory developments, and in particular, south africa β s experience. the global financial regulatory reform agenda is a daunting and gigantic project for all involved, and in the limited time available this morning one is unlikely to do justice to the task. following some remarks to set the context, i will talk about the regulatory alignment and supervisory change in south africa, make brief comments about our regulatory architecture reform, then touch on the 2014 g20 priorities for financial regulatory reform and look at where south africa is in relation to that. 2. from crisis to basel iii the costs of the global financial crisis were significant and included substantial job losses and depressed economic activity. the severity of it was compounded by a number of factors, including a pro - cyclical deleveraging process and weaknesses in the banking sector, such as inadequate and low - quality capital, and insufficient liquidity buffers. the interconnectedness of systemically important financial institutions ( sifis ) meant that these weaknesses and consequences thereof, quickly spread to other countries and regions. on the regulatory side, inadequate mandates, autonomy, resources and instances of regulatory | 1 |
in publishing the fsr ; that is, to improve public understanding of financial system developments and trends, to point out potential vulnerabilities in the system, to highlight some of the bank's research, and to promote discussion of financial system issues in general. ultimately, the goal is to help provide the context that will lead to stronger financial system policies in canada. the latest issue of the fsr was published last week, and it deals extensively with the market turbulence that began during the summer. the bank actively works to promote a financial system that is both stable and efficient. i've already mentioned that financial instability can impair the bank's ability to conduct monetary policy. but most importantly, a stable financial system is crucial for an economy to function well. in canada, the responsibility for promoting financial stability is shared by a number of agencies. our partners include the department of finance, the office of the superintendent of financial institutions, the canada deposit insurance corporation, and provincial regulators and securities commissions. the bank is also the ultimate provider of liquidity to facilitate the settlement of financial transactions and is the lender of last resort for financial institutions. despite the importance of financial system efficiency, there is no single body responsible for promoting it. what do i mean when i say " efficiency "? an efficient system is one where scarce economic resources can be allocated to the most productive uses in a cost - effective way. in an efficient financial system, investors can get the highest risk - adjusted returns on their investments, and borrowers can minimize the costs of raising capital. inefficiencies can stunt investment and cut into economic growth. the bank of canada contributes to financial system efficiency through our monetary policy, which keeps inflation low, stable, and predictable. we also have a legislated role to oversee canada's most important clearing and settlement systems. these systems have been designed to provide certainty that large - value payments or securities transactions will settle in real time, while using relatively small amounts of liquidity. this frees up resources that can be put to better use elsewhere. over the past four years, i have tried to highlight some important efficiency issues for canada. in 2004, 1 i spoke of the need to promote efficiency in our financial institutions, arguing that our policy framework should provide greater incentives for innovation by encouraging competition while, at the same time, giving our financial institutions the scope to improve efficiency. there remains much work to do to encourage innovation, competition, and efficiency. i also spoke | needs to be institutionalized. i believe these challenges can be overcome if banks adopt a systematic approach like the one prescribed by the basel committee. let me briefly talk about the spectrum of approaches offered by basel accord to calculate operational risk capital charge. under the two simple approaches ( i. e. basic indicator and standardized approaches ), gross income is used as a proxy for the scale of business operations. this suggests that banks with higher gross incomes are relatively bigger in size and have more operational risk exposure. however, it is often argued that gross income is not always a perfect proxy for operational risk since it may fluctuate with the business / economic cycle. nevertheless, in the absence of any other proxy, income is being used due to its simplicity, comparability and reduced capital arbitrage opportunity. another approach offered under basel ii is the advanced measurement approach ( ama ), wherein banks can develop their own internal assessment techniques. unfortunately, the quantitative techniques for measuring operational risk are evolving and there is no broad consensus on the modeling methodologies of operational risk. thus, it can be said that the quantitative approaches offered under basel accord are still in the process of refinement. however, this is all the more reason for banks to focus on qualitative requirements depending on the regulatory approach they intend to follow. in the past one decade, the awareness of operational risk has improved and resultantly the principles for sound management of operational risk have emerged. banks need to incorporate these internationally agreed principles while implementing any operational risk management framework. these principles mainly focus on the governance, risk management environment, role of supervisors and business resilience. bis central bankers β speeches i will now outline sbp β s expectation on the integrated components of the overall framework for managing operational risk across the enterprise. sound internal governance forms the foundation of an effective operational risk management framework. it is necessary that those at the top of the organization should take the lead in establishing a strong risk management culture. the board of directors needs to regularly review the framework and ensure that senior management is actively monitoring the effectiveness of risk management and controls. for this purpose, the board should establish a management structure based on clear lines of responsibility, accountability and reporting. the board should set the bank β s risk appetite through the approval of operational risk management policy. sbp expects that boards should seek periodic reports from management to the monitor the operational risk profile of the bank in a proactive manner. the role of senior management is to implement the operational risk management framework | 0 |
a reasonable balance between letting automatic stabilisers operate and seeking further consolidation where needed. in some cases, current consolidation ambitions are weak. in order to further boost confidence in the fiscal framework and the economic environment, it is essential that appropriate consolidation plans are implemented in all countries with remaining imbalances. hence, the commitments made in the stability programmes and the requests to further improve fiscal positions, as subsequently agreed in the ecofin council, must be implemented in full. in this respect, the measures should be part of a comprehensive and growth - oriented strategy, which for most countries means putting the focus on both restraining the volume, and reforming the structure, of public expenditure. finally, the outlook for the euro area economy could be significantly improved if governments strengthen their efforts to implement structural reforms in labour and product markets. such reforms are important to ultimately raise the euro area's production potential, improve the flexibility of the economy, and make the euro area more resilient to external shocks. in particular at the current juncture, when economic activity is subdued, taking measures to make the euro area a more attractive place to invest in can contribute substantially to fostering confidence. we are now at your disposal for questions. | the repo rate in their forecasts ( see figure 5 ). 12 although the market's forecasts were better than the riksbank's during the period 2011 β 2013, the pattern is essentially the same β substantial overestimates and inaccurate forecasts. a brief remark is in order here. sometimes one gets the impression from the debate that it is only the riksbank that has produced inaccurate repo rate forecasts, while most analysts, including the market, have been quite successful. apparently, this is not the case. one may perhaps object that the market may not produce forecasts of its own, but merely assumes that the riksbank will follow its reporate path. but the experiences of the period 2011 β 2013 indicate that this is not really the case. i think this is a useful picture to bear in mind. if one wants to implement a makeup strategy in a situation where the repo rate is at the lower bound, it is probably necessary to use a more convincing approach than delphic forward guidance. the alternative to delphic forward guidance is called odyssean forward guidance. this name is also taken from greek mythology and refers to odysseus, who had his men tie him to the mast so he would not be tempted by the song of the sirens and steer his ship towards the cliffs. in terms of monetary policy, this strategy is less dependent on the accuracy of the forecasts ; instead it is a case of committing oneself to not deviating from the interest - rate development one has indicated. but odyssean forward guidance also has its problems. binding oneself to a particular monetary policy no matter what may on the one hand indicate strong determination and thereby have an effect on expectations. but on the other hand, such a policy may appear obstinate and unrealistic. if events occur that cause the policy to appear as inappropriate or directly harmful, it will be difficult to implement it. 13 and once one has deviated from a strategy which one has firmly undertaken to follow, one will hardly appear credible when trying to apply it the next time. when applying a makeup strategy, a less strict odyssean forward guidance might mean that the central bank β in accordance with predetermined and clarified principles β makes it clear that it will hold the policy rate at the lower bound until inflation, or perhaps some measure of the development of the real economy, has 12 for more detailed analyses of the riksbank β s experiences | 0 |
. i have heard about it from the manufacturers and exporters in this region. and the bank has heard about it from the financial community on bay street and from all types of business leaders in southern ontario who participate in the bank β s quarterly business outlook surveys. worst recession since the depression i probably don β t need to tell anyone in this room that the recent global recession was the worst downturn experienced since the great depression. in very short order, global gdp fell more than 3 per cent and millions upon millions of jobs were lost. in canada, 432, 000 jobs were lost and gdp fell 4. 2 per cent. the unemployment rate spiked to 8. 7 per cent. the severity of the global economic and financial crisis delivered a direct, sharp blow to canadian business. canada experienced a particularly deep contraction of investment and exports. the trauma was severe and long - lasting. its impact was felt by businesses across the country, businesses that saw their markets dwindle and their balance sheets deteriorate. in a downturn that lasts, say, nine months, a bank will likely let its clients ride out the recession. but in a prolonged crisis, the story is more complex. credit can become tough to find. anecdotally, we know that otherwise solvent and creditworthy firms were left with considerably less credit than they needed. in too many cases, temporary plant shutdowns were not sufficient to match the fall in demand or the decline in financing. some firms reduced their operations. others simply closed their doors. let β s look at some of the facts. during a normal growth period in canada, there is a steady increase in the number of businesses in operation. in short, creative destruction results in the net creation of new firms. but since the onset of the recession, there has been limited net creation of businesses. canada β s exporters have been particularly hard hit. the group most profoundly affected has been manufacturing exporters, whose ranks have continued to shrink. canada is not alone in this regard. in the united states, the dynamics were similar but even more dramatic. the net number of new establishments fell for three years in a row until 2011, when, finally, the trend turned around. bis central bankers β speeches the reconstruction challenge perhaps there should be no surprise, then, given the decline in global demand, the drop in the number of american companies to trade with, and the related drop in the number of canadian exporters, that canada β s export sector has la | chart 4 ). with household balance sheets becoming increasingly stretched and consumption unlikely to be bolstered by further gains in house prices, household spending is expected to moderate in line with income growth. but even with this moderation, the savings rate is projected to remain near historic lows, household debt near historic highs, and the share of the economy accounted for by household spending well above its historical average ( chart 5 and chart 6 ). prudent consumers should do no more and could well decide to do less. this leaves business investment and net exports to pick up the slack. the prospects for investment are very favourable, reflecting both propitious conditions and business imperatives. the financial positions of canadian firms are strong. borrowing costs for canadian businesses are exceptionally low, access to financing has continued to improve, and the canadian dollar has appreciated making imported machinery and equipment less expensive in canadian dollars. moreover, given the historically large drop in investment through the recession β almost 25 per cent β and the delayed recovery, firms have much depreciated capital to replace. this is reinforced by the imperative to improve productivity amid heightened pressures to become more competitive. surveys of business intentions, such as the bank of canada β s business outlook survey and the conference board β s survey, confirm that firms plan to invest heavily in the year ahead for a variety of purposes, but increasingly to seize new opportunities and improve productivity ( chart 7 ). reflecting all these factors, the bank is expecting a historically strong and sustained rebound in investment, with investment growing at more than 9 per cent this year and next ( chart 8 ). what about net exports? with the united states β our major trading partner β experiencing its worst recession since the great depression, our exports were particularly hard hit, falling more than 16 per cent ( chart 9 ). and with a moderate us recovery through 2010, an appreciating canadian dollar, and relatively strong domestic demand supporting imports, bis central bankers β speeches canada β s trade balance turned sharply negative, subtracting 2. 3 percentage points from growth in 2010. looking forward, the bank expects an improvement in net exports over the next two years as external demand continues to recover and domestic demand moderates from its previous rapid pace. nevertheless, competitiveness challenges are likely to mean that canada will benefit less from improved global demand than in past recoveries. consistent with the strong rebound in investment, this projection assumes a recovery in trend labour productivity growth from 0. 6 per cent in 2010 to 1. | 0.5 |
njuguna ndung β u : kenyan banking sector development over the last six years remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the kenya bankers association 50th anniversary luncheon, nairobi, 7 august 2012. * * * honourable njeru githae, minister for finance of the republic of kenya ; dr. donald kaberuka, president of the african development bank ; mr. richard etemesi, chairman, kenya bankers association ; mr. habil olaka, chief executive officer, kenya bankers association ; members of the kba governing council ; distinguished guests ; ladies and gentlemen : it is a great pleasure for me to join you on this auspicious day to celebrate the golden jubilee of the kenya bankers association ( kba ). allow me at the onset to thank the honourable njeru githae, kenya β s minister for finance and dr. donald kaberuka, president of the african development bank for gracing this occasion. their presence demonstrates the importance they attach to the role that the kenyan banking sector plays in the economy. let me also congratulate the members and management of kba on turning 50. ladies and gentlemen : the choice of the theme for this luncheon, β banking β s role in development, recognizing the achievement while catalyzing greater private - public sector collaboration β depicts the path through which the kenyan banking sector has scaled the heights over the last six years. the current resilience of our banking sector is the outcome of partnership between the regulator and the regulated. this is not a common occurrence in most sectors, but i can confidently tell you that cbk and the kenya bankers association ( kba ) have successfully demonstrated they are agents of development in the financial market. ladies and gentlemen : the tremendous growth in the kenyan banking sector in the midst of financial turmoil in the developed markets has been put to question by parties who may not be aware of the past efforts towards a more sound and resilient sector. allow me to mention just a few initiatives that cbk and kba undertook jointly over the last five years to complete the financial infrastructure set up in the economy and whose outcome is reflected by the unrivalled performance in the region. 1. roll out of credit information sharing : kenya witnessed several unsuccessful efforts by the kenyan banking sector to introduce credit information sharing ( cis ) in kenya since 2003. however, cis became a reality in 2008 when a regulatory framework was developed jointly | for production and consumption decisions for exporters, importers, households and enterprises always adjust, whether the nominal exchange rate is fixed by a group of, hopefully enlightened, civil servants, or set by the markets. but when the exchange rate is allowed to float, relative price adjustment tends to be faster, and the impact of external shocks on quantities, that is to say on income and employment, tends to be smaller than when the nominal exchange rate is fixed. the second point to highlight is that even controlling the nominal exchange rate can be a challenge, and comes at the cost of either the ability to pursue an independent monetary policy or of free capital flows. countries cannot elude this constraint : nominal exchange rate management requires either severing linkages between the home economy and international capital markets, or shadowing some other country β s monetary policy. in sum, adopting a workable nominal exchange rate target ( be it explicit or hidden, for the level or the path ) imposes macroeconomic choices that fewer and fewer countries have been willing to make. it is somewhat heroic to assume that the state would be extremely competent at setting the nominal exchange rate. at least in the brazilian case, there is very little empirical evidence of that. under managed exchange rates brazil suffered recurrent balance of payments difficulties in the 1950s and 1960s, the 1980s debt crisis, which contributed to a dramatic deterioration in macroeconomic performance in the following years, and the slowdown and crisis of the 1990s, before its final collapse in january 1999. letting the market set the exchange rate does not mean remaining inactive when markets become dysfunctional. thus, the central bank has used its reserves, during the current period of global financial turmoil, to ensure that brazilian exporters and importers retain access to trade finance, to help brazilian corporates rollover their debts and to provide liquidity to the spot market. throughout this difficult period our focus has been on contributing to improve the way markets function, not to replace them. this approach is, and will remain, the cornerstone of our action in the foreign exchange market. there is no doubt that the world is currently experiencing an extremely difficult time. but it is also true that brazil is among the countries that are better prepared to cope with the effects of the global financial crisis β a fact pointed out by several organizations in many occasions, such as the last issue of the oecd composite leading indicators, a survey encompassing 35 countries. 1 brazilian fundamentals not only enable us to face the current environment | 0 |
inflation of the 1960s and 1970s and the β new economy β period of the late 1990s. shifting stars and the great inflation while the crisis and its aftermath have been extraordinary in many ways, the shifting of the stars is not one of them. figure 2 illustrates the congressional budget office β s ( cbo ) current estimate of movements in the natural rate of unemployment and potential gdp growth from 1960 to 2000. 5 viewed against the ups and downs observed over these four decades, the recent shifts in longer - run values are not all that dramatic. of course, these cbo estimates benefit from many years of hindsight, whereas monetary policy must be based on assessments made in real time. the great inflation period vividly illustrates the difficulties this difference raises. around 1965, the united states entered a period of high and volatile inflation that ended with inflation in double digits in the early 1980s. multiple factors, including monetary policy errors, contributed to the great inflation. many researchers have concluded that a key mistake was that monetary policymakers placed too much emphasis i am using the cbo β s estimates to reflect a conventional view over that time span since the sep longerrun values have only been reported since 2009. - 7on imprecise - - and, as it turns out, overly optimistic - - real - time estimates of the natural rate of unemployment. 6 figure 3 compares the cbo β s current view of the natural rate of unemployment in that era with an estimate by athanasios orphanides and john williams of the rate as policymakers perceived it in real time. from 1965 to the early 1980s, this real - time estimate of u * was well below where hindsight now places it. the unemployment rate over this period was generally well above the real - time natural rate, and contemporary documents reveal that policymakers were wary of pushing the unemployment rate even further above u * ( figure 4, top panel ). 7 with the benefit of hindsight, we now think that, except for a few years in the mid - 1970s, the labor market was tight and contributing to inflation β s rise ( figure 4, lower panel ). it is now clear that the fomc had placed too much emphasis on its imprecise estimates of u * and too little emphasis on evidence of rising inflation expectations. the great inflation did, however, prompt an β expectations revolution β in macroeconomic thinking, with one overwhelmingly important lesson for monetary policymakers : anchoring longer - term inflation expectations is a vital precondition for | mr ferguson reviews the historical perspective and policy implications of global financial integration remarks by mr roger w ferguson jr, a member of the board of governors of the us federal reserve system, at the annual policy seminar of the national association for business economics, washington dc, on 4 / 3 / 99. global financial integration : historical perspective and policy implications thank you very much for inviting me to speak to this distinguished group of business economists and analysts. as we have discovered over the last eighteen months or so, we live in a rapidly changing global economic and financial environment. today, given the theme of your conference, i would like to put the events of the last few years into a broader historical context, and ask what are the most appropriate policy solutions. yesterday and today let me turn to a previous period of close global linkage in economic and financial markets : the forty years or so prior to world war i. here i will draw on a recent nber working paper by michael bordo, barry eichengreen and jongwoo kim. 1 during this time, capital flowed essentially without restriction, chiefly from developed western europe to regions in the then rapidly developing countries of the americas and to australia. just to put this in perspective, these three economists report that at its peak, the outflow from the united kingdom reached 9 percent of gnp and was almost as high in france, germany and the netherlands. much of this capital was invested in bonds that financed railroads and other infrastructure investments and in long - term government debt instruments, but there was also significant direct foreign investment. bordo, eichengreen and kim find that one element of the pre - 1914 episode of global financial integration is the size and persistence of the current account deficits of capital importing countries, mainly australia, canada, argentina and the scandinavian countries. similarly, the current account surpluses of some capital exporters, particularly the united kingdom, showed considerable persistence. these economic historians indicate that it was not unusual for these countries to experience current account imbalances, deficits for the capital importers or surpluses for the capital exporters, of between 5 percent and 10 percent of gdp lasting for several years. the size and persistence of these capital account imbalances in the pre - 1914 period appear to compare roughly with the size of current account imbalances that have existed in the most recent period of global financial integration. economic historians indicate that during the period from 1971 to 1997, emerging market countries were running, on average, current | 0.5 |
companies β such as the producers of electricity, currently characterised by extremely high emissions β will be the first to determine the fate of the transition. banks and other intermediaries could decide to achieve the decarbonisation objectives of their assets declared in the transition plans by reducing loans to these companies. however, without huge investments in these sectors it will not be possible to produce electricity mainly from clean sources and to electrify transport and heating. it is therefore desirable that lenders might be able to discriminate between the various companies on the basis of their transition plans, thus allowing companies that carry out investments aimed at this purpose to find the necessary financial resources easily and at low cost. as argued above, european legislation does adopt such a multi - pronged approach. by introducing mandatory transition plans for all companies, financial and non - financial, the csddd aims to bring about a virtuous convergence of the entire economic system towards the principles of the taxonomy and the paris goals. in this context, the problem of the conflict of objectives could be assuaged, but might not disappear. investors interested only in yield could look outside europe ( the aforementioned carbon leakage problem ). also, it remains to be seen whether this virtuous convergence will actually take place. the current energy crisis is resulting in huge profits for energy companies that use fossil fuels, and government subsidies for the consumption of energy. this reminds us that today β s technology does not allow an accelerated transition to low - carbon energy sources ; that the investments required are enormous ; that the demand for energy cannot be easily reduced without radical changes in consumption habits and lifestyles which the populations do not seem willing to accept, especially in advanced countries. in such an uncertain framework intermediaries and non - financial companies should liaise to align climate change mitigation policies and climate risk management, with a greater offer of consultancy by intermediaries and greater transparency by companies. initiatives regarding transition plans could be promoted by the sustainability coordination table mentioned in the previous paragraph. in this case as well, the path has been traced by other countries. 30 in the uk an ad hoc task force on transition plans was created recently. it involves representatives of business, financial institutions, regulators, and civil society, and works with international bodies including the gfanz and the issb. 5. conclusions the transition towards a low carbon emissions economy brings risks and opportunities for the financial sector. intermediaries must prepare by accounting for physical and transition risks in their | the financial risks posed by climate change : information gaps and transition plans speech by paolo angelini deputy governor of the bank of italy associazione nazionale per lo studio dei problemi del credito milan, 15 november 2022 1. introduction the consequences of climate change affect the financial system in several ways. the materialisation of the related risks β physical and transitional β can cause damage to buildings and companies, and the obsolescence of entire production chains. the potential negative effects on the stability of individual intermediaries and of the financial system are the main reason why central banks and supervisory authorities have long included environmental sustainability in their work programmes. 1 furthermore, ensuring the adequate management of these risks is instrumental to allocate the resources for the transition towards a sustainable economy. awareness of the importance of climate - related and environmental risks is growing among the banks in the single supervisory mechanism ( ssm ) ; all significant banks have begun to consider how to integrate these risks into their activities. the progresses of the works are heterogeneous. while no bank is fully in line with the ecb β s expectations on this matter, 2 progress is ongoing on several fronts. banks have so far mainly worked on data collection and exercises to assess transition risks. physical risk management practices instead are generally less advanced. only few intermediaries have started to consider other environmental risks, such as biodiversity loss and pollution. overall, italian banks seem to be moving in step with those of other european countries. 3 in my remarks i will briefly survey some key elements of the legal and regulatory framework on esg practices and risks which have a bearing on intermediaries and the concept of sustainability in finance conventionally includes the three dimensions of environmental, social and corporate governance ( esg ). although the three aspects are closely connected, this speech focuses mainly on the environment. ecb ( 2022 ), β supervisory assessment of institutions β climate - related and environmental risks disclosures β, march. angelico, faiella and michelangeli ( 2022 ), β climate risk for italian banks : an update based on the regional bank lending survey β, bank of italy, notes on financial stability and supervision, n. 29. non - financial firms. i will argue that excessive reliance on sectoral sustainability data by lenders ( banks and investors ) can lead to incorrect allocation of finance, to the detriment of the overall transition process. intermediaries and companies should join forces to assemble data at the individual company level | 1 |
tradition continues with the new Β£20. jmw turner will circulate alongside winston churchill on the Β£5, and jane austen on the Β£10. in 2021, alan turing will soon replace boulton and watt on the Β£50. these individuals have advanced british thought, demonstrated exceptional leadership, and more generally helped to shape this diverse society and forge our common values. i β m delighted to be joined today to celebrate turner β s continuing influence by one of our most eminent artists, someone whom turner has influenced and one of margate β s own. as precocious and prolific as turner, a fellow royal academician, the master of confessional art and fittingly, past winner of the turner prize, please welcome tracey emin. book i, chapter 4 β on the origin and use of money β of smith, a ( 1776 ), an inquiry into the nature and causes of the wealth of nations. a moniker used by kocherlakota. see kocherlakota, n ( 1998 ), β money is memory β, journal of economic theory, 81 ( 2 ). all speeches are available online at www. bankofengland. co. uk / news / speeches | too - big - to - fail empowers the federal reserve and the federal deposit insurance corporation ( fdic ) to reduce the effect on the system in the event of a sifi β s failure through tools such as the new orderly liquidation authority and improved resolution planning by firms and supervisors. in particular, the federal reserve is working with the fdic to require sifis to better prepare for their own resolution by adopting so - called living wills. a joint final rule on living wills is expected later this summer. reducing the likelihood of a severe financial crisis also requires strengthening the resilience of our financial markets and infrastructure β a third major objective of the dodd - frank act. toward that end, provisions of the act improve the transparency and stability of the over - the - counter derivatives markets and strengthen the oversight of financial market utilities and other critical parts of our financial infrastructure. we and our colleagues at the securities and exchange commission, the commodity futures trading commission, and other agencies are moving this work forward, in consultation as appropriate with foreign regulators and international bodies. the u. s. agencies are also working together to address structural weaknesses in areas not specifically addressed by the dodd - frank act, such as the triparty repo market and the money market mutual fund industry. to be sure, any sweeping reform comes with costs and uncertainties. in implementing the statute, the federal reserve is committed to the promulgation of rules that are economically sensible, appropriately weigh costs and benefits, protect smaller community institutions, and, most important, promote the sound extension of credit in the service of economic growth and development. a full transition to the new system will require much more work by both the public and private sectors, and no doubt we will learn lessons along the way. however, as we work together to implement financial reform, we must not lose sight of the reason that we began this process : ensuring that events like those of 2008 and 2009 are not repeated. our long - term economic health requires that we do everything possible to achieve that goal. thank you. i would be pleased to take your questions. bis central bankers β speeches | 0 |
inflation? the riksbank act states that monetary policy β s objective is to maintain price stability. partly in order to make the policy intelligible and open for assessment, the riksbank has decided that inflation - measured as the annual change in the consumer price index ( cpi ) - is to be held at 2 %, with a tolerance interval of Β±1 percentage point. motivating low inflation is not difficult. a great deal has been written on the subject. but perhaps it will suffice to recall the swedish experience in the 1970s and 1980s. the high and widely fluctuating rate of inflation had clear negative effects on our economy. productivity gains and investment growth in that period were low. sharply rising prices led to an arbitrary redistribution of income and wealth. in order to rectify the corporate sector β s competitive position, the value of our currency had to be written down on a number of occasions. bit by bit, however, more and more people, regardless of which political party they supported, realised that this economic policy could not be sustained. so in the early 1990s, sweden finally joined the growing number of countries that had chosen to re - focus their policy on low inflation. but while it is not difficult to advocate low, stable inflation, it is less easy to argue that just 2 % is the appropriate rate. when the inflation target was adopted in 1992, it was noted that this was approximately the level of ambition that important countries had chosen. moreover, inflation was currently around that level when the decision was made. alan greenspan has argued that inflation should be so low that people generally do not give it a thought when making economic decisions. that points to 2 % as a reasonable level. there are some objections, however. some argue that an inflation target ought to be higher. one reason has to do with the downward rigidity of nominal wages. we know from experience that wages rise, sometimes so much that they generate inflation. downward wage adjustments are less frequent. seen from this angle, inflation might be regarded as a smooth way of achieving necessary adjustments to real business costs. another risk, according to some observers, is that an unduly low inflation target leaves too small a margin for monetary policy. the economy is liable to land in a situation where the central bank is no longer in a position to influence the development of prices by pushing the real interest rate down. it simply is not possible to reduce the interest rate below zero per cent. as i see it, the | be decisive factors in determining how efficiently a crisis in a cross - border institution is handled. it is also important to hold joint crisis exercises, using different scenarios. we can also observe that the memorandums of understanding in the field of financial crisis management, which have been drawn up between authorities in europe in recent years have proved to be too vague. in future, therefore, we need to have more concrete and binding arrangements. one complicated and important question is how the costs should be distributed when a crisis spreads to several countries. differences in regulation and supervision also complicate the crisis management. greater harmonisation is in actual fact an important condition for both crisis management and crisis prevention work. as a result of the crisis, the eu has begun to look into how its framework for supervision can be improved. my view is that after the crisis it is both essential and possible to take a step towards better joint supervision in europe. but although the supervision issue is important, the systems for deposit guarantees and crisis management must be designed to function when needed, not merely within individual countries, but also between countries. this has not always been the case during the current crisis. monetary policy and the build - up of risks does monetary policy have a role to play in preventing a financial crisis? this has long been a controversial issue, where economists have held differing opinions. however, the financial crisis has undoubtedly given us experiences we should make use of. the predominant view has probably been that one should not use the interest rate to try to counteract a credit boom that is expressed in rapid price increases on houses or financial assets. this view is based on the fact that it is difficult or almost impossible for a central bank to determine whether a credit boom has its base in the real economy or whether it is due to unrealistic expectations of continuing price increases. instead of trying to deliberately burst the bubble, one should use monetary policy to counteract the negative effects that may result if it bursts. the disadvantage of this reasoning is that the negative effects when the bubble bursts may be fairly substantial β which to a large degree is illustrated by the current financial crisis. it is also difficult to deny that the long period of low interest rates in the world prior to the crisis may have contributed to an unreasonably high build - up of credit. with hindsight, this view does not appear so controversial. does this mean that monetary policy can and should be used to prevent financial crises? i believe that monetary policy can be a complement to other | 0.5 |
mark carney : opening statement for appearance before the house of commons standing committee on finance opening statement by mr mark carney, governor of the bank of canada, presented to the house of commons standing committee on finance, ottawa, ontario, 19 august 2011. * * * thank you for this opportunity to appear here today. recent economic and financial developments in recent weeks, several downside risks to the bank β s july monetary policy report ( mpr ) projection have been realised. the european sovereign crisis has intensified, the u. s. credit rating has been downgraded, and a broad range of data has signalled slower global growth. the united states is in the midst of the weakest recovery since the great depression. this is not a surprise as history teaches that recessions involving financial crises tend to be more severe and have recoveries that take twice as long. recent benchmark revisions show that the u. s. recession was even deeper and the recovery from the trough has been even shallower than previously reported. the bank expects that american household spending will remain subdued in the face of high personal debt burdens, large declines in wealth and tough labour market conditions. in addition, fiscal stimulus in the united states will soon turn to fiscal drag. for well over a year, the bank has been concerned about the prospects for resolving internal tensions within the euro area. some of these concerns are now being realised as acute fiscal and financial strains in europe have triggered a generalized retrenchment from risk - taking and could yet prompt more severe dislocations in global funding markets. in response to uncertainties in europe and the evidence of slowing global growth, equity and commodity prices have fallen significantly, and financial market volatility has increased markedly. the spillovers to canadian financial markets have been less pronounced but are still notable. importantly, canadian financial stocks have considerably outperformed their peers in the united states, the united kingdom and europe and our core funding markets have remained orderly. this will help ensure an appropriate flow of credit to canadian households and businesses. recent events serve as a reminder that in a world awash with debt, repairing the balance sheets of banks, households and countries will take years. as a consequence, the pace, pattern and variability of global economic growth is changing, and canada must adapt. in short, the considerable external headwinds that the bank has long identified are now blowing harder. for canadian producers, the persistent strength of the canadian dollar is compounding the sluggishn | per cent target for total cpi inflation. this is a symmetric commitment. that is, the bank cares as much about inflation being below target as above. since the crisis erupted, the bank has demonstrated its flexibility and nimbleness in the conduct of monetary policy. as the canadian recovery has progressed, we have emphasised that we would be prudent with respect to the possible withdrawal of any degree of monetary stimulus. as we highlighted in our most recent mpr, our approach will always be guided by comprehensive, considered analysis and informed judgment rather than mechanical rules. this is particularly important in the current environment of material external headwinds. to state the obvious, if the outlook for growth and inflation changes, the path for monetary policy will be affected accordingly. second, the bank will take the necessary steps to ensure that core funding markets remain liquid. in the event of a major systemic shock, the bank has a wide range of tools to provide exceptional liquidity, consistent with a principles - based framework. at the same time, central bank liquidity should not be a substitute for sound risk management by private financial institutions. accordingly, the bank will continue to work with the office of the superintendent bis central bankers β speeches of financial institutions ( osfi ) to guard against moral hazard by ensuring that private banks maintain adequate liquidity buffers. third, we must continue to build a more resilient financial system in canada and globally. recent events underscore the importance of implementing g - 20 financial reforms, notably the capital and liquidity requirements under basel iii. given the leading positions of our banks and the consistency of the new standards with canada β s, now is not the time for canada to move from the front to the back of the class. moreover, it is in canada β s interests to ensure that others follow our example. this will reduce the risk that another foreign financial crisis sideswipes our economy. fourth, the bank will continue to work with its federal partners to monitor risks to financial stability and to develop appropriate responses. an example has been the measured approach to rising household indebtedness. since 2008, the federal government has taken a series of prudent and timely measures to tighten mortgage insurance requirements in order to support the long - term stability of the canadian housing market. finally, since the biggest risks to our economy come from abroad, the bank must work with international colleagues as they tackle the twin challenges of reducing excessive private and public debt. the situation is most acute in europe where | 1 |
under psd2, banks will be obliged to share their customer information with third parties ; such as payments firms. this will result in increased competition in the financial sector with banks no longer just competing with other banks but also with non - banks and financial technology ( β fintech β ) firms, which will have easier access to the market. a failure by banks to develop strategies enabling them to realise commercial opportunities arising from psd2 could be a risk to long - term viability, particularly with net interest margin, and risk weight pressures incentivising banks to try to generate more fee income, including from this aspect of their business. fintech is blurring boundaries and changing barriers to entry7. new business models, products and services are emerging, driving competition and changing the way users interact with the system. opportunities for innovation are abundant as, fundamentally, the sector revolves around recording, analysing and interpreting transactions and managing associated information flows. with no physical products to manage, these processes readily lend themselves to improvements via digital technologies. fintech presents an opportunity for the financial sector to become more efficient and generate 3 / 7 bis central bankers'speeches value for its customers. this requires business model adaptation. for example, for retail banks, this may result in a further reduction in the branch network in banks across the euro area. i would ask : how are your firms developing technology to truly transform banking for customers? how are your firms adapting their business models to this innovative and - ever changing landscape? 3 ) regulatory drivers of change the crisis and the monetary, financial and indeed regulatory response, has, and continues to have, a profound effect on banks. from a regulatory perspective a veritable β alphabet soup β of regulations, implementing technical standards, accounting and supervisory policies have come down the tracks in recent years. the list of acronyms is long and confusing β crd / crr, brrd, mifid ii, emir, ifrs9, gdpr, trim, psd2, etc. 8 managing and embedding such regulatory change is, i recognise extremely difficult. managing the complexity is, in itself, challenging, and analysing emerging risks across a broad and everchanging financial system is no small task either. some have suggested the pendulum has swung too far, others not far enough. 9 my own view is that given the scale of the financial crisis, radical and far - reaching reform has been required, but not everything has been calibrated perfectly | customer centric, is meaningless if they are not supported by the underlying culture. in other words, the questions that should be most prominent in banks are not ones relating to compliance with regulatory requirements ( important as they are ), but rather : is this sustainable? is it in the long - term interests of our customers? does this fit with our espoused values? is this right? how are my staff incentivised to act? 5 / 7 bis central bankers'speeches conclusion i will conclude here. we live in complex and undoubtedly interesting times. as none of us can predict the future with any degree of certainty, we all need to embrace this complexity, and be as adaptive as the financial services system that we work in is. environmental, cyclical, structural, technological, and regulatory change pressures will continue to drive the transformation of the banking sector. the pressure for cultural change is also sizeable. it is arguably the most important. it is definitively the one that is most in your control. i urge you to act. thank you for your attention. i look forward to the discussion. 1 see esrb, 2016, β macroprudential policy issues arising from low interest rates and structural changes in the eu financial system β november 2016. joint task force of esrb advisory technical committee ( atc ), esrb advisory scientific committee ( asc ), and ecb financial stability committee ( fsc ). available here. 2 see, for example, the imf gfsr : imf global financial stability report, ( 2014 ), β moving from liquidity - to growth - driven markets β, april 2014 international monetary fund. available here. also, ecb, ( 2014 ) financial stability review, november 2014, european central bank. available here. also, central bank of ireland, ( 2014 ), macro financial review 2014 : ii, november 2014. available here. 3 see imf, 2017, global financial stability report : is growth a risk? april 2017, international monetary fund available here. looking at roe ( 2016 underlying, 2019 consensus forecasts, and management medium - term target ) of us versus eu g - sib, figure 1. 8 shows most us g - sibs should reach profitability targets, but european and g - sibs face significant gaps. 4 see imf, 2017, β european banking systems : addressing structural challenges β, global financial stability report : getting the policy mix right, october 2017, international monetary fund. | 1 |
meme le core tier 1 et le common tier 1 ne sont pas toujours definis de la meme maniere par les banques. bis central bankers β speeches levier des principales banques europeennes levier des principales banques americaines source : rapports financiers des banques ( calculs banque de france - semasfi ) 2. impact de la non compensation ( netting ) des operations sur les derives sur le total bilan et les leviers des banques us augmentation du total bilan si non compensation des operations sur derives ( hors repos ) impact du netting sur les ratios de levier des banques source : risk. net ( d β apres credit suisse et fitch ) bis central bankers β speeches | stage for big speculative attacks, which because of the usual overreaction of markets could trigger capital flight. indeed, there are numerous examples, starting with argentina and going backwards, that capital flight on the one hand, deprives the domestic economy of much needed investable funds and, on the other hand, drives the exchange rate to abnormally low levels, which immediately set the stage for a wave of price rises and drive the economy into recession. if this situation is allowed to develop the original anti - inflationary exchange rate policy would ultimately cause much more damage than if a pure free floating policy was followed. anti - inflationary exchange rate policies, which aim to eliminate imbalances and disequilibria, so as to improve domestic economic performance, inevitably entail a cost. there is no free lunch in a global and competitive world, especially when market makers are, sometimes, enticed by speculators and wild rumors. indeed, for almost 4 years the cost, borne by the bank of greece, of sterilizing the excessive short - term capital inflows attracted by the high interest rate policy, in combination with the exchange rate policy amounted to almost Β½ % of gdp per annum. furthermore, the government proceeded with fiscal consolidation and structural reforms as well as other measures which were introduced ( notably extensive privatization ) as a necessary complement to the anti - inflationary exchange rate policy. these policies underpinned the improvement in the functioning of the economy and gave a significant boost to business confidence. the determination with which the three cs were pursued - consistent policies, continuity in policies and confidence building, after two to three years of hesitation, swayed the labor unions, businessman and the public at large to back the stabilization policies with the aim of entering the euroarea as soon as possible. in addition to targeting the exchange rate, the bank of greece always kept a close watch on the growth of m3 and domestic credit expansion and through open market operations absorbed any excess liquidity, which, if it had been allowed to reach the real economy, could have aggravated inflationary pressures. moreover, when necessary, we also imposed stricter terms on banks β obligatory reserve requirement deposited at the bank of greece, which were already relatively tight ( an amount equal to 12 % of deposits with the banking system and it can be noted that they were remunerated at a negative real interest ). however, at the bank of greece we knew that this was not sufficient to ensure a smooth run up before entering | 0 |
spreading throughout asia. in addition, asean is accelerating the process for building the asean economic community ( aec ) by 2015. it will be interesting to see how the present banking and other financial services change when a single market for goods and services is formulated in asean. i hope the governors can provide us with insights into developments of the aec. with the globalization of the world's financial markets, large capital flows will continue to have a strong impact on open economies. this holds true for most of the asian economies including the asean. it is, and will surely be, the most difficult task for any monetary authorities to maintain the stability of foreign exchange rates, the free flow of capital, and the independence of monetary policy simultaneously. the answer to this proposition probably lies in the resilience of markets. in order to increase the ability to absorb external shocks from massive capital flows, the priority seems to strengthen the function of foreign exchange and financial markets in the region as a whole. in this regard, frequent exchange of information, deep analysis and concerted efforts by the emeap central banks will contribute to addressing risks and vulnerabilities in the markets. such collaborative actions may cover the roles of the imf, which commits itself to extensive reform to meet new challenges under the leadership of rodrigo. conclusion it is often said that asia is highly diverse in culture, social framework and the stage of economic development. since the asian economies are in many respects very different from the european, we will probably follow our own process for economic integration. in that process, the better functioning of markets through regional cooperation will help provide a better business environment for industries and financial institutions, and lead to more efficient resource allocation. the more - than - ten - year history of emeap itself proves that cooperation based on mutual understanding and respect is possible in any circumstances. i am sure the guest speakers have various opinions on today's topics, and we will be able to appreciate their visions through our stimulating discussions. i would be delighted if this symposium helps you build insights into the dynamism of asian economies and central bank cooperation in the region for the decade to come. thank you. | be a bit technical, the inflation rate based on the cpi that the bank refers to tends to be higher than actual inflation. given this, aiming at zero inflation in terms of the cpi means aiming at negative inflation, in effect. therefore, in order to ensure price stability, the inflation rate should be sufficiently positive. the next point regards securing policy room for the future. the level of nominal interest rates is usually determined in accordance with that of inflation rates. looking at the interest rate levels around 2007, right before the global financial crisis, whereas the policy interest rates in the united states and europe were around 4 to 5 percent with inflation of around 2 percent, the policy interest rate in japan, or the uncollateralized overnight call rate, was only 0. 5 percent with almost zero inflation ( chart 9 ). in response to the global financial crisis, which exerted a significantly negative impact on the global economy, the united states and europe counteracted this shock with monetary easing that pushed down the policy interest rates by 4 to 5 percentage points to around 0 percent. on that occasion, although japan also reduced the policy interest rate to around 0 percent, as the united states and europe did, it was only able to exert limited monetary easing effects of 0. 5 percentage point. as you remember, the real gdp in japan dropped more significantly than that in europe and in the united states, the epicenter of the crisis. this implies the possibility that the fact that japan had less room for policy responses in lowering interest rates became a contributing factor to the severer downturn of the economy. with the level of nominal interest rates being high, japan's economy will have more policy room to mitigate the impact of future economic downturns, or will be equipped with a sort of insurance for sustained economic growth. so far, i have mentioned a bias in price statistics and securing policy room for the future, but these alone do not give a good enough reason why the target level of inflation has to be 2 percent. there are some proposals advocated overseas that the target level of inflation should be 3 to 4 percent in order to further increase policy room, although these proposals themselves do not seem realistic. so, why is 2 percent considered most appropriate? to answer this question, the third reason, a global standard, is key. central banks in major economies are currently conducting monetary policy with the aim of achieving around 2 percent inflation. given this, the bank of japan's monetary policy conduct with | 0.5 |
speech channels of transmission christopher kent [ * ] assistant governor ( financial markets ) address to bloomberg sydney β 11 october 2023 i want to thank bloomberg for organising this event. it β s great to be back at this venue. since may 2022, the reserve bank has raised the cash rate target by 400 basis points with the goal of bringing inflation back into its target range of 2 β 3 per cent. tighter monetary policy is working to slow the growth of demand and bring it into better balance with supply. this is contributing to the decline in inflation. today i want to show how increases in the bank β s cash rate target are transmitting through to demand and inflation. the most well - known element is the cash - flow channel, whereby a rise in the cash rate leads to higher interest payments for those who have debt, reducing the income borrowers have to spend on other things, leading to slower growth of demand and ultimately a decline in inflation. the cash - flow channel is felt with immediacy by borrowers with variable - rate debt and then with a lag for those with fixed - rate debt. it is this channel that is being felt most keenly at present, with many indebted households and businesses experiencing a painful squeeze on their finances. while this burden falls on only part of the population, there are other channels of monetary policy that spread across a broader range of people. indeed, in economies such as the united states where a sizeable share of borrowing β particularly mortgages β is at rates fixed over very long periods, these other channels of monetary policy do most of the heavy lifting. my talk today will focus on how monetary policy moves through the economy in three steps β from the cash rate to a broad range of interest rates, from those rates to economic activity and from economic activity to inflation. i will discuss the five main channels of monetary policy and the impact these are having in australia to bring down inflation. step 1 : from the cash rate to other interest rates the cash rate is the interest rate paid by banks that borrow from other banks in the overnight market. it is closely linked to other interest rates throughout the economy. when banks borrow at slightly longer terms β of say a month β they pay a similar rate of interest ( to what they expect the cash rate to be over that time ). if they faced a much higher rate, they would be better off borrowing overnight in the cash market and rolling that each day for the month. going the other way, banks can | the source was strong productivity growth, as is evident from the relatively steep slope of the blue line. over these years, we benefited from a noticeable pick - up in productivity growth, partly due to a period of substantial economic reform. however, the story over the past decade is quite different, with productivity growth being noticeably slower. 1 the good news is that this did not lead to slower growth in our living standards ( this is apparent in the two lines moving apart gradually ). the reason for this is the very substantial increase in australia β s terms of trade over this period. with rapid growth in asia pushing up the prices of commodities, australia β s export prices increased substantially relative to our import prices. as glenn stevens has pointed out, over time we have been able to buy more and more flat screen televisions for each ton of iron ore that we have sold overseas. 2 it is this increase in the average value of what we produce per hour of work β not so much an increase in the average amount that we produce per hour β that has been central to the increase in our living standards over the past decade. before i discuss the implications of this, i would like to add one further line to this graph ( graph 2 ). this third line shows how real income per capita ( the orange line ) β as opposed to per hour worked β has increased over time. as you can see, the rise in real income per capita has been even faster than the rise in real income per hour worked, which has been faster than the rise in productivity. since 1993, average real income per capita has increased by almost 70 per cent, or nearly 2ΒΎ per cent per year on average. again, this is much faster than we experienced in earlier decades and faster than in other advanced economies ( graph 3 ). by way of comparison, over this same period, there has been a cumulative increase in real income per capita across the g7 economies of just 28 per cent, or around just 1ΒΌ per cent per year on average. the slowdown in productivity growth is discussed in d β arcy p and l gustafsson ( 2012 ), β australia β s productivity performance and real incomes β, rba bulletin, june, pp 23 β 36, and connolly e and l gustafsson ( forthcoming ), β australian productivity growth : trends and determinants β, australian economic review, december 2013. see stevens g ( 2010 ), β the challenge of prosperity β, address to the committee for | 0.5 |
, " unconventional monetary policies in the euro area, japan, and the united kingdom, " journal of economic perspectives, vol. 32, no. 4 ( 2018 ) : 147 - 72. wages. the number of job openings has increased significantly, with the active job openings - to - applicants ratio currently standing in the range of 1. 6 - 1. 7, a level that exceeds the peak of the bubble period in the late 1980s ( chart 3 ). labor market conditions have been tightening across japan, and the active job openings - to - applicants ratios recently have exceeded 1 in all prefectures, which was not observed even in the bubble period. at the same time, the unemployment rate has declined in a wide range of regions. an improvement in the labor market has been widespread across generations as well. for example, the unemployment rate of the younger generation aged 15 - 24 rose substantially amid the japanese financial crisis of the late 1990s, and declined only moderately for a long time after that ( chart 4 ). however, the situation has changed dramatically in the past few years. the youth unemployment rate has declined to a level below that of the bubble period, and labor market conditions for new graduates have created more of a seller's market than ever before. with the perception of labor shortage heightening further, the number of long - term unemployed workers - - those unemployed for over a year - - has been declining steadily, although it used to be considered quite difficult for them to find a job. in addition, improvement in the employment situation has contributed to providing new job opportunities for those who had not participated in the labor market before. the population aged 15 - 64 that has played a major role in the labor market, or the so - called working - age population, has been declining from the peak in around 2000. on the other hand, the number of employed persons recently has been increasing substantially ( chart 5 ). this is a result of labor participation by women and seniors promoted through improvement in employment together with the development of various labor - related measures by the government. in addition, the poverty rate, which has risen moderately since the 1990s, recently seems to have flattened or declined somewhat. the declines in the youth unemployment rate and long - term unemployment rate, as well as the increase in labor participation by women and seniors, are significant not only in terms of increasing the current employment and production but also strengthening the growth potential of the economy in the future. people acquire skills through actually working each day and thereby | , if the problems become more complex and prolonged, downward pressure on the global economy could heighten not only through the gradual spread of the negative effects on trade activity, but also deterioration in firms'fixed investment stance and cautiousness in financial market sentiment. looking back, the great depression of the 1930s is well known as a period when protectionist policies prevailed around the world. subsequent research suggests that what mainly brought about the significant global economic downturn was severe deflation under fiscal and monetary policies not responding appropriately, rather than protectionist policies. 3 therefore, policy authorities worldwide should bear in mind the importance of fiscal and monetary policy management. furthermore, attention should be paid to the fact that it is difficult to analyze the effects of protectionist moves on the economy. 4 this is partly because trade structure characterized by the network of global supply chains is far more complex compared to that in the 1930s, the share of trade volume in the global economy has increased, and the amount of global capital flows has become massive. the bank will thoroughly examine the consequences of recent developments in the trade friction and their potential effects on japan's economy. b. outlook for prices as for the outlook for prices, the year - on - year rate of change in the cpi in japan is likely to increase gradually with the economy continuing on an expanding trend. the outlook for prices is considered to be determined basically by two factors : the supply - demand balance of the economy as a whole and people's expectations for future price developments. regarding the supply - demand balance, the tendency of demand exceeding supply is likely for example, see douglas a. irwin, clashing over commerce : a history of us trade policy ( chicago : university of chicago press, 2017 ), 397 - 400. while traded goods were mainly primary products at the time of the great depression, the share of manufactured goods in trade is large at present. as the proportion of manufactured goods increases among traded goods, trade volume tends to fluctuate to a larger degree in response to changes in income. for details, see douglas a. irwin, trade policy disaster : lessons from the 1930s ( cambridge : mit press, 2012 ), 167n25. to continue with the economy following an expanding trend. as actual wages and prices increase along with this development, people's inflation expectations are expected to rise gradually, and thus moderate inflation is more likely to be achieved. there are various risk factors to the outlook for prices as well. for example, we cannot deny the possibility | 1 |
ravi menon : powering the next stage of singapore fintech keynote address by mr ravi menon, managing director of the monetary authority of singapore, at the singapore - china ( chongqing ) financial summit, via video conference from singapore, 23 november 2020. * * * mayor tang, minister teo, assistant minister li, distinguished guests, ladies and gentlemen, good afternoon. welcome to the 3rd singapore - china ( chongqing ) connectivity initiative ( cci ) financial summit. let me first thank chongqing for hosting this summit. we are honoured to have with us representatives from all ten asean central banks. the global economy is recovering from one of the deepest recessions in history. with covid19 still raging globally, the recovery has been uneven and remains uncertain. yet, east asia β especially china and asean β has held up relatively well. china reacted decisively to contain the pandemic. its economy has rebounded and gdp has recovered to above pre - covid levels. asean is not far behind, with asean - 5 expected to grow by 7 % q - o - q in q3. trade between china and asean is booming again. as the rest of the world takes longer to recover, we must step up economic and financial integration between china and asean to sustain the economic recovery in the region. financial connectivity can play a particularly vital role in supporting this. taking stock through the cci over the past 5 years, chongqing and singapore have strengthened financial connectivity between the western region and asean. corporates from chongqing as well as the broader western region have found singapore an attractive destination to raise financing. as of april 2020, we have seen 117 cross - border financing deals amounting to usd 11 billion. chongqing enterprises raised usd 7 billion in singapore, while enterprises in sichuan, shaanxi, qinghai, xinjiang, guangxi and yunnan obtained nearly usd 4 billion of financing. cross - border loans from singapore grew 67 % y - o - y to reach rmb 5 billion this year. our financial institutions continue to establish in each other β s markets. a chongqing - based fintech, whalet, obtained a licence in singapore to conduct crossborder remittance this year. i am also pleased that vickers venture partners, a venture capital fund focusing on deeptech, will be establishing a qualified foreign limited partnership fund in chongqing. let us continue to build on the progress we have made. i suggest three areas where chongqing and singapore can work closer together | be even faster through an end - to - end digitalised trade process along the ilstc. harnessing green finance for sustainable development 2 / 4 bis central bankers'speeches the second area where chongqing and singapore can work closer together is green finance. covid - 19 has made us all more aware of the value of protecting the environment. china has committed to ambitious green policy goals including carbon neutrality by 2060. chongqing has the important task of leading sustainable development in the western region and along the yangtze river economic belt. green finance will be a powerful tool to help achieve this. green finance is also a key area of focus in singapore. mas has worked with the financial industry to launch a green finance action plan. it has four key strategies : strengthen the financial sector β s resilience to environmental risks ; develop green financing solutions and markets for a sustainable economy ; harness technology to enable trusted and efficient sustainable finance flows ; and build knowledge and capabilities in sustainable finance. asean too has prioritised green finance. green finance volumes in asean doubled last year and remained robust in 1h 2020, despite covid - 19. as asia continues to urbanise, its demand for affordable and sustainable energy will only grow. there is great opportunity for the western region and asean to collaborate on initiatives to support the large scale of green financing that is needed. last year, chinese and singapore banks jointly issued over usd 2 billion in green bonds and loans in singapore to finance belt and road projects. in may this year, icbc partnered dbs bank and ocbc bank to issue its first green loan in singapore, to the value of sgd 730 million. more can be done to mobilise private sector capital to support the green agenda in asia. strengthening disaster risk insurance the third area for co - operation is insuring against disaster risks, like pandemics, natural catastrophes, and climate change. this is critical as the western region continues to invest in infrastructure development including along the ilstc. the western region is highly exposed to natural catastrophes, and the yangtze river floods this year were the worst seen in decades. understanding risk exposures and strengthening financial risk management helps protect lives, livelihoods and public assets. insurance players and academic experts in chongqing and singapore can work together to better assess and model the western region β s risks. they can develop together climate and disaster risk financing solutions such as : traditional insurance and reinsurance ; regional catastrophe risk pools ; and catastrophe bonds. | 1 |
securities and exchange commission. indeed, it is widely understood that all our activities need to evolve with changing market and technological realities. with the gramm - leach - bliley structure as background, let me turn to what i believe should, as we move forward, be our major supervisory and regulatory priorities in the areas of safety and soundness and competition policy. in my judgment, both the safety and soundness of individual banks and the stability of the overall banking system begin with strong equity capital positions at individual depository institutions. strong equity capital provides a cushion against unexpected losses that can be used without triggering a bank's default. more generally, strong equity capital lowers the probability that a bank will fail. strong equity capital also provides owners with a substantial stake in the future value of the firm and thus helps to control the safety net's moral hazard incentives to take excessive risk. from the perspective of day - to - day supervision, regulatory capital standards, the core of which are standards for equity capital, provide the foundation for nearly all supervisory and regulatory policies. the current set of regulatory capital standards, established in 1988 by an international agreement among the industrialized nations known as the basel accord, is in need of reform. the central role of such standards requires us to give reform a high priority. as you may know, such efforts are well under way. our efforts are focused on reforming the basel accord for those banks for which the current standards are most in need of repair. specifically, reform efforts are concentrated on developing standards that are more risk sensitive and that build upon the internal risk - rating and riskmeasurement systems that have been developed by the relatively small group of the world's most financially sophisticated and complex banks. these banks are engaged in a wide range of traditional and not - so - traditional banking activities, and their risk exposures and risk - management systems are often extraordinarily complicated. i expect that concrete proposals for reform will be forthcoming within a year or so. we must take the time to get these revisions right. i hope that the process, rather than being driven by the calendar, is being driven by a desire both to achieve more risk sensitivity and to acquire a meaningful understanding of the new accord's implications. both can occur only if the industry and the regulators work together to develop and assess the likely effects of the new accord. a second priority for bank supervisors is to continue to develop policies and procedures that ensure that no bank is too big to fail. by | andreas dombret : statement at the workshop on " digital finance regulatory challenges " statement by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the g20 conference " digitising finance, financial inclusion and financial literacy ", wiesbaden, 26 january 2017. * * * mr von weizsacker, ladies and gentlemen, for a first approach when talking about regulatory challenges in the age if digitalisation in finance, i would like to consider three aspects of financial technology and regulation : first, i perceive no general need for separate regulation ; to me it seems even detrimental to treat comparable businesses with equal risks in a different way, second, regulators have to stand ready to propose solutions for emerging risks. we should initially concentrate on the basics, such as setting the right incentives, but β beyond that β should refrain from regulating β theoretical risks ". we should closely monitor fintech evolution to be able to act swiftly, once risks become relevant in practice, third, international exchange about experience with fintechs is very fertile to set the right course for future regulation from the outset. the way we perceive financial technology has transformed over the last years. when the buzzword β fintech β emerged a few years ago, everybody was excited : is there a better way ahead for doing finance β maybe even without banks? i also remember regulators in a state of anxiety : is traditional financial regulation unsuitable for high - tech financial innovations? today and up to now, we have a far more relaxed view about business disruption and regulatory challenges. in germany, fintechs have not forced us to overhaul existing financial regulation or to consider a new framework. the reason for this lies in the setup of german financial regulation : the rules apply to specific business models and their associated risks β technology is, by and large, treated neutrally. this becomes apparent in our financial services landscape. some digital innovators that actually accept deposits or lend money need to be licensed as credit institutions. for some other business models, the rules for financial services institutions apply. other innovative businesses remain unregulated, but this is for a good reason : they are non - financial in character and only provide auxiliary services complementary to financial services. by treating financial innovations equally under the regulatory framework, german regulators follow the maxim of β same business, same risk, same rules ". but the important strategic question is : does this principle offer enough orientation for the future β given that no one knows how financial innovations | 0 |
inflation rates that are significantly down on their peaks in october, we still have a long way to go to reach our inflation target. moreover, inflation uncertainty remains high. the ecb governing council therefore will continue in its 1 / 3 bis - central bankers'speeches efforts to combat high inflation. in fact : it has already acted decisively. since july 2022, we have increased the key interest rates by a total of 400 basis points in eight consecutive steps. we have stopped net purchases under our app und pepp purchase programmes. and last but not least, we have decided to end reinvestments under the app in july. however, our job has not yet been completed. in my view, three levers must be used. first, our policy rate has to be sufficiently high. as i see it, we still have more ground to cover. we may need to keep raising rates after the summer break. second, once we have reached the peak, we will stay there until we are sure of a safe and timely return of inflation to our 2 % target. and third, we have to support this interest rate policy by reducing our balance sheet. i very much welcome the decisions to increase the pace of this reduction. 4 relationship between monetary and fiscal policy fiscal policy can significantly " support " the fight against high inflation. expansionary fiscal policy would fuel inflationary pressures. i go along with the european commission's recommendation that eu member states should phase out the fiscal measures they took in response to the energy price shock. and what is also important in my view is that governments tackle remaining high structural deficits in a timely manner. public debt that has gone off the rails must be put back on a sustainable path. this way, fiscal policy supports monetary policy beyond the business cycle, in a structural manner. sound public finances are a prerequisite for monetary policy to be able to do its job efficiently. at the european level, a set of rules was meant to take care of this. that didn't work out perfectly well. when considering an update to the fiscal rules, we should do what we can to ensure that the rules become more effective than they used to be. the commission's legislative proposals from april do not fulfil these requirements. 5 three opportunities to strengthen growth potential with sound public finances i have already mentioned one important element for prosperity in the european union. i'd like to add three more structural opportunities for growth. for one, the digital sector is an | donald l kohn : financial markets and central banking speech by mr donald l kohn, vice chairman of the board of governors of the us federal reserve system, at the c peter mccolough series on international economics, council on foreign relations, new york, 28 november 2007. * * * i thought it might be useful to start this session with a few thoughts on some of the issues facing central banks as they deal with the consequences of the recent turbulence in financial markets. 1 this list is not comprehensive : i have concentrated on the issues associated with our roles as monetary policy makers and providers of liquidity β and even in that category i cannot address all the issues in the short time allotted. like every other period of financial turbulence, this one has been marked by considerable uncertainty. central banks, other authorities, and private - market participants must make decisions based on analyses made with incomplete information and understanding. the repricing of assets is centered on relatively new instruments with limited histories β especially under conditions of stress ; many of them are complex and have reacted to changing circumstances in unanticipated ways ; and those newer instruments have been held by a variety of investors and intermediaries and traded in increasingly integrated global markets, thereby complicating the difficulty of seeing where risk is coming to rest. operating under this degree of uncertainty has many consequences. one is that the rules and criteria for taking particular actions seem a lot clearer in textbooks or to many commentators than they are to decisionmakers. for example, the extent to which institutions are facing liquidity constraints as opposed to capital constraints, or the moral hazard consequences of policy actions, are inherently ambiguous in real time. another consequence of operating under a high degree of uncertainty is that, more than usually, the potential actions the federal reserve discusses have the character of " buying insurance " or managing risk β that is, weighing the possibility of especially adverse outcomes. the nature of financial market upsets is that they substantially increase the risk of such especially adverse outcomes while possibly having limited effects on the most likely path for the economy. moral hazard central banks seek to promote financial stability while avoiding the creation of moral hazard. people should bear the consequences of their decisions about lending, borrowing, and managing their portfolios, both when those decisions turn out to be wise and when they turn out to be ill advised. at the same time, however, in my view, when the decisions do go poorly, innocent bystanders should not have to bear the cost. in | 0 |
remain manageable by the individual enterprise and by the market as a whole. specific banks will withdraw from the market in future, too ; the propensity to withdraw might even increase. it is therefore essential for credit institutions, supervisory authorities and policy makers to safeguard the stability of the european financial system effectively. only then can the european banking and financial sector discharge its macroeconomic duties, that is to say, bolster economic growth and employment efficiently. thank you very much for your attention! | related administrative services to individual retirement accounts and pension, retirement, and other similar benefit plans. in this area, as well, the commission has interpreted the exception in a manner that is inconsistent with the language and purposes of the act and that prevents or significantly disrupts the customary banking relationships and activities that congress sought to preserve. in particular, as i noted a moment ago, the act explicitly permits banks to continue providing custodial and related administrative services to iras and benefit plans. this language was added to the bill during the house - senate conference to resolve any ambiguity concerning the ability of banks to continue to provide securities execution services to their custodial ira customers and to benefit plans that receive custodial and administrative services from the bank. bank - offered custodial iras provide consumers throughout the united states with a convenient and economical way of investing for retirement on a tax - deferred basis, and banks have long executed securities transactions for these accounts subject to irs requirements and the supervision and regulation of the banking agencies. banks also provide benefit plans with custodial and administrative services, including securities execution and recordkeeping services, under the direction and supervision of the plan's fiduciaries. these bank - offered services allow plan administrators to obtain securities execution and other administrative services in a cost - effective manner, thereby reducing plan expenses and benefiting plan beneficiaries. the commission, however, has stated that the custody exception does not allow a bank to effect securities transactions for its custodial ira or benefit plan accounts. this position essentially reads the explicit authorization adopted by the congress out of the statute, is completely contrary to the purposes of the act, and would disrupt long - standing relationships between banks and their customers. in addition, the interpretation of the custody exception adopted by the commission would prohibit banks from executing securities transactions for their custodial customers on an accommodation basis. banks, as part of their customary banking activities, have for many years effected securities transactions as an accommodation to their custodial clients. these customer - driven transactions occur only upon the order of the customer and allow the customer to avoid having to go through the unnecessary expense of establishing a separate account with a broker - dealer to effect occasional securities trades associated with the customer's custodial assets at the bank. in an effort to mitigate the adverse impact of these interpretations on the banking industry, the commission proposed two exemptions that would permit small banks, on one hand, and all banks, on the | 0 |
by central banks. indeed, commercial bank digital currency already exists. it will remain dominant in payments and is generally perceived as being as safe as central bank currency, however, this confidence is rooted in its full and direct convertibility with the public money issued by the central bank. losing this public anchor - in a world of digital payments without cbdc - would ultimately mean jeopardising this private trust. * the decision here will rest with the public authorities, with a β sovereign β dimension, but today, i would really like to get beyond a mere discussion about the digital " retail " euro. taking a partnership approach to innovation, our common challenge as europeans is to leverage β all together β the tremendous potential for innovation opening up before us : in commercial banking, the phased launch of the european payments initiative ( epi ) β which has our full backing β will provide a modern, european payment solution, and what would appear to be a viable solution for circulating the digital euro alongside the commercial euro. french and european commercial banks could also develop tokenised bank deposits with enhanced features. in a remarkable report, vi the bis recently stated its clear preference for these tokenised bank deposits that will offer greater security, rather than for stablecoins ( all of which are issued by non - european players and mostly backed by the dollar ). issuing and trading of financial assets is also being modernised through tokenisation underpinned by new distributed ledger technologies. page 6 of 6 in addition, in central banking, the development of β wholesale β cbdc would appear to be just as important as the digital retail euro in extending the anchoring role of central bank money in the tokenised sphere, by securing interbank settlements and financial transactions. the banque de france has played a pioneering role here through twelve experiments conducted with the private sector : we will be publishing the results this summer. we have demonstrated that wholesale cbdc could facilitate interoperability between different dlt platforms developed by the public or private sector as well as with existing settlement systems. following on from these ideas, the ecb has also announced a series of experiments across the euro areavii which could begin in 2024. as part of this process, we are prepared to support the new european pilot programme directly by making cbdc available as a settlement asset. providing a tokenised settlement asset could also be rounded out by a european infrastructure β in the euro area - that would bring together all tokenised assets ( cbdc, deposits, financial assets ) | ##due. the diversification, properly understood, of the investments of french savers towards more equity - based, long - term savings is in everyone β s interest. and today there are additional incentives for life insurers to offer new products that break away from the dual cash - liquidity guarantee, due to the lesser solvency ii capital requirements. and this brings me to the issue of regulation. here too, insurers have an essential role to play, i n preparing the review of the solvency ii directive β s new regulatory framework. the directive came into force almost two years ago now and you have implemented it with a great deal of professionalism. in many respects, solvency ii represents a very significant step forward for the insurance sector. but this does not mean that it β s perfect : we must analyse its impacts closely, particularly its effects on investment behaviour and the financing of the economy, in order to propose the adjustments that prove necessary. progress has already been made on the financing of infrastructure projects and businesses, thanks to two amendments that came into effect in april 2016 and september 2017, respectively, which adapted the calibration of capital requirements. more generally though, the reviews of the standard formula and long - term guarantee package measures planned for 2018 and 2020, respectively, are important opportunities to make essential improvements. the work is already underway, and the more you 2 / 3 bis central bankers'speeches actively participate, alongside your european colleagues, the more our chances of success will be enhanced. iii. the role of insurers in the digitalisation of our economy it is essential for our economy to adapt to the digital revolution : it creates incredible opportunities, but with them, new risks against which the insurance sector, once again, can bring stability and protection. i would like to discuss two subjects in particular : firstly, cyber - insurance. the cyber - insurance market is still underdeveloped. insurers can and should take inspiration from their own experiences in tackling cyber - risk, and use it to develop a more mature french and european cyber - insurance offering. the coverage against cyber - risk is a very real concern that affects all companies β both small and large β as cyber - attacks are becoming increasingly frequent and costly : according to figures from euler - hermes, 57 % of french companies were victims of these attacks in 2016, compared with 32 % in 2015. we at the banque de france, alongside the eurosystem and our g7 colleagues, | 0.5 |
utilisation around a normal level. the question then is which measures of the two target variables, inflation and resource utilisation, we should use. although the inflation target is expressed in terms of the cpi, i believe that the most appropriate operational measure of inflation is the cpif. i also believe that the most appropriate measure of resource utilisation is the unemployment gap ; that is the gap between the actual rate of unemployment and the sustainable rate of unemployment. let me explain why i think that the existing framework for monetary policy could be improved with these specifications. the cpif is the most appropriate operational measure of inflation the riksbank β s inflation target is expressed in terms of the rate of change in the consumer price index, the cpi. this has advantages as it is measured often and is seldom revised. it also means something to consumers as it corresponds to the price of an average basket of consumer goods. the cpi is also the measure of inflation that is most well - known to the general public. however, the cpi also has a well - known disadvantage, which in my opinion makes it less appropriate as a direct, operational target for monetary policy. this disadvantage is that the cpi is directly affected by interest rate changes through their impact on housing costs. this short - term effect also has the reverse sign to the medium - term effect. this means that the riksbank β s own repo rate increases contribute to an increase in cpi inflation in the short term but reduce it in the slightly longer term. the major interest rate changes during the crisis have led to considerable fluctuations in the cpi. i believe on the whole that it is better to consistently use the cpif as an operational target for monetary policy and disregard the direct effects of interest rate changes on the cpi when assessing whether monetary policy is well - balanced. by stabilising the cpif around 2 per cent, the cpi will be stabilised around the target in the slightly longer term. it would then be important to consistently use the cpif to rank various monetary policy alternatives and not change back and forth between the cpif and the cpi. if we sometimes refer to the cpif and sometimes to the cpi, monetary policy will become unclear. the unemployment gap is the most appropriate measure of resource utilisation there are many ways of measuring resource utilisation, for example the output gap, the hours - worked gap, the employment gap, capacity utilisation or the riksbank β s ru indicator. as there are so | muhammad al - jasser : compliance and combating money laundering speech by his excellency dr muhammad al - jasser, governor of the saudi arabian monetary agency ( sama ), at the symposium on compliance and anti - money laundering, institute of banking, riyadh, 23 β 24 march 2010. * * * in the name of allah the merciful, and blessings and peace be upon his prophet and messenger, dear audience, i am pleased to welcome you to this symposium, which is organized by the institute of banking ( iob ) and deals with two important and interrelated issues : compliance and combating money laundering. decision - makers and legislators have paid increasing attention to the issue of compliance with regulations, criteria and guidelines because of its importance to financial institutions in achieving better performance, avoiding risks and enhancing their success. at the same time, compliance maintains the reputation and credibility of financial institutions and protects them against regulatory sanctions. it also protects the interests of shareholders and depositors. compliance is a comprehensive and multifaceted responsibility, and achieving compliance is a duty that all employees in any financial institution have to undertake, each according to entrusted powers and tasks. recognizing the importance of compliance, the basel committee on banking supervision, with the participation of the saudi arabian monetary agency ( sama ), approved and issued the paper pertaining to principles of compliance and its function at banks, in april 2005. the paper was designed in the form of fundamental principles of compliance with the regulations, covering a number of areas, the most important of which are the responsibilities of the board of directors and senior management, controls on the independence of compliance function at banks, support of compliance department and its work program, and the relationship of compliance department with internal audit department. in may 2005, sama directed banks operating in the kingdom to adopt the principles stated in this paper and incorporate them with the procedures and programs regarding risks of noncompliance that have already been applied and developed by banks under the instructions of sama. dear audience, you are also dealing in this symposium with an important topic, which is combating money laundering. as you know, money laundering is one of the most serious crimes at the security, economic and moral levels. this heinous crime is carried out by organized networks practicing crime as a profession and having a high potential for coordination, planning and deployment throughout the world. these networks take advantage of the globalization of capital markets and technological developments in the banking industry. because of the negative impacts of | 0 |
the workers could negotiate. there is simply no room for any wage mark - ups. frictions in the capital market are a less debated area. yet they play an important role not only in financing the investments of existing firms, but also in the reallocation of capital from less productive to more productive uses. this is a part of the β creative destruction β by which the economy adapts to changes in the environment and raises its total factor productivity. there has been a lot of debate and analysis of financial integration. we know the euro has catalysed substantial integration in markets closely linked to monetary policy. in particular, the interbank markets are well integrated β or at least they were, and hopefully will be again, once the turmoil passes β as are the government bond markets and, increasingly, also the corporate bond markets. however, much still remains to be done in other areas. the infrastructure supporting the bond and equity markets is fragmented and hinders competition. retail banking continues to be mainly national, except in our two countries and some others. we know from experience that protected sectors seldom develop, because they lack incentives. and so it is also in financial services : it is the pressure of cross - border competition that will motivate innovation and productivity improvement within the financial sector. the best way to guarantee a high level of financial services for eu citizens is to remove the remaining obstacles to competition. financial development goes hand in hand with financial integration. financial development is, in turn, an important determinant of competition, innovation and, thereby, productivity in the whole economy. without well - functioning financial markets, economic power would be in the hands of those who have liquid wealth, collateral and connections, not in the hands of those who have ideas. that would be a recipe for stagnation. financial markets create the opportunities for newcomers to dislodge the incumbent, to leapfrog them by innovating. competition increases, monopoly rents fall and productivity rises. the finnish perspective finland's road to emu finland was among the first group of countries that moved to the third stage of emu at the beginning of 1999. finland had been a member of the eu for three and a half years at that time. the currency had been part of erm2 for less than two years. at the time of finland's accession to the european union in 1995 it was not yet certain that emu would become a reality. the likelihood that finland would be in the first group of countries | services ; and key third party contracts. β’ finally, firms should have inventories of key legal information, including legal entity types, purpose and relevant licenses, physical location, regulator, senior management and directors ; and applicable resolution regime and authority, as well as sufficient information on legal agreements, such as parties to the agreements, key terms of agreements, and any relevant interdependencies. arrangements for shared or outsourced services β’ the final area for additional work is ensuring robust arrangements for the continued provision of shared or outsourced services needed to maintain operations. β’ firms should understand and have sufficient information available on its internal and external dependencies, including continuity or replacement strategies for each service, as well as contingency arrangements in place to retrain or replace personnel or services needed to maintain operations. β’ while there are many areas that supervisors / regulators and legislators need to continue to work on to make cross - border resolution a reality, these five areas are ones that we have highlighted for near - term focus by firms. β’ and just a note for firms in the next tiers, including the wave two and three filers β as i know that concerns have been raised about the depth and breadth of work required β particularly for the β non - systemically important β foreign banking organizations ( fbos ) : bis central bankers β speeches β 2. as we β ve indicated in our discussions, our reviews of your plans, which we are conducting jointly with the fdic, will be a learning experience for us β as much as it is for you. we are viewing this process as iterative β as it has been for the first wave filers, and we expect to learn quite a bit through the reviews, including much more about your u. s. operations, that will help us and you ensure a robust planning process that works for each firm. challenges of coordination turning now to the second area where i think more work needs to be done β coordinating the supervision and oversight of the large systemically important institutions. while the crisis has provided a great opportunity to enhance our dialogue across supervisory boundaries, there are still impediments to realizing a more seamless and coordinated approach. among the impediments are the challenges in information sharing, where there continue to be barriers to freely sharing information among supervisors. while some of these impediments are cultural β or trust - related β ones, there are still legal barriers to sharing information that need to be addressed. we need to address the legal | 0 |
that by the time men born in 1935 reached age 30, about 97 percent of them were in the labor force. in contrast, only about 92 percent of 30 - year - old men born in 1976 were in the labor force. although not shown in the exhibit, a roughly similar pattern exists for men older than 30, and, all else equal, the gradual reduction in labor force participation of men has put downward pressure on the overall participation rate. exhibit 3 also shows that, until recently, the decline in the labor force participation rate of successive generations of men had been more than offset by a steady increase in the participation rates for each new generation of women. women born in the 1920s and 1930s had low participation rates at age 30, but three - fourths of 30 - year - olds born in 1960 were in the labor force. however, participation rates for more recent generations of 30 - year - old women have not risen any further. economists at the federal reserve have developed a model that combines information on the decline in labor force participation at older ages, shown in exhibit 2, with information on the changes in labor stephanie aaronson, bruce fallick, andrew figura, jonathan pingle, and william wascher ( 2006 ), β the recent decline in the labor force participation rate and its implications for potential labor supply, β brookings papers on economic activity, 2006 : 1, pp. 69 - 154. the baby boom is generally taken to be children born from 1946 through 1964. the census bureau estimates that roughly 78 million american baby boomers were alive as of july 1, 2005, and that approximately 2. 9 million americans turned 60 in 2006. u. s. census bureau ( 2006 ), β facts for features : special edition, oldest baby boomers turn 60, β press release cb06 - ffse. 01 - 2, january 3, www. census. gov / press - release / www / releases /. this projection combines the latest estimates of population from the bureau of the census for 2006 ( http : / / www. census. gov / popest / estimates. php ) with the census bureau β s projections of population growth by age through 2015 ( http : / / www. census. gov / ipc / www / usinterimproj ). force participation across generations, shown in exhibit 3. exhibit 4 shows the actual participation rate, the model β s estimate of the underlying trend in the total participation rate between 1995 and 2006, and β under | donald l kohn : the aging workforce testimony by mr donald l kohn, vice chairman of the board of governors of the us federal reserve system, before the special committee on aging, us senate, washington dc, 28 february 2007. * * * chairman kohl, senator smith, and members of the committee, i am pleased to be here today to discuss some recent research at the federal reserve on the effect that population aging may have on the growth of the labor force. 1 the research is careful and important, but i would like to emphasize that it is a staff product and so does not necessarily represent the views of the federal reserve board. as we all know, the united states is at the front edge of a massive and important shift in the demographic composition of the population. the onset of the traditional retirement years for the oldest members of the baby - boom generation, 2 coupled with a trend toward greater life expectancy and relatively low fertility rates, will cause the share of older individuals in the population to rise markedly in the years ahead. how our society responds to the challenges associated with demographic change will have important consequences for the longer - run prospects for economic growth, average living standards, and the distribution of income and consumption across generations. the main demographic story is in exhibit 1, which shows that around 2003, the population of those aged 62 and older began growing as a share of the population aged 16 and older. age 62 is important as the time at which individuals become eligible for social security retirement benefits under current law. according to projections from the bureau of the census, shown in the shaded area of exhibit 1, the upward trend in aging will steepen noticeably in the next few years. the share of the adult population that is aged 62 and older, now at about 19 percent, is projected to rise to more than 22 percent by 2015. 3 a subset of the adult population is the labor force β that is, those who are either actively looking for work or have a job. because the participation of men and women in the labor force declines sharply after age 55, as shown in exhibit 2, the rising share of older individuals has important implications for the nation β s labor supply. in particular, the aging of the population will put significant downward pressure on the total labor force participation rate in coming years, provided the basic pattern of participation over the lifecycle is maintained. changes in labor force behavior within age groups also have the potential to add to the downward trend in labor force participation. exhibit 3 shows | 1 |
the beginning of the second phase of reform, which rests on three basic pillars : the banking union, further fiscal integration and greater economic policy coordination. as to the ecb, it has contributed to providing stability to the euro area both through its more conventional remit, i. e. setting interest rates, and through its less conventional facet, namely supplying exceptional amounts of liquidity through unorthodox channels. but the roots of the current crisis in the euro area are not of a monetary nature and, consequently, monetary policy alone cannot resolve those problems. monetary policy can, however, provide more time for the remedies aimed at resolving the underlying problems to be effective. on 2 august the governing council of the ecb adopted a new non - conventional measure : the so - called outright monetary transactions. this programme of purchasing government bis central bankers β speeches debt on secondary markets, subject to compliance with certain macroeconomic conditions, aims to repair the monetary policy transmission mechanism, thus ensuring that the effects of the expansionary conventional measures adopted from the onset of the crisis reach european households and firms alike, irrespective of their country of residence. this ecb decision has had a stabilising effect on markets and eased the pressure on the spanish economy, although financial conditions remain very tight and uncertainty continues to weigh on households β and firms β spending and investment decisions. as stated, euro area measures should contribute to restoring the transmission channels of monetary policy and, thereby, reduce financial tensions. they should also help to sever the problematic public finances / banking system feedback loop, a vicious circle which contributes to prolonging the climate of uncertainty and makes it difficult to resolve the problems facing the euro area. nevertheless, it should not be forgotten that the scope of these actions is limited and that definitively overcoming the crisis in spain will depend on the progress achieved in other domains, including those which depend on our own economic policy. the spanish economy the challenges facing the spanish economy are well - known : reducing its high dependence on external financing, sustainably correcting the budget imbalance and strengthening the drivers of medium - and long - term growth through substantial and lasting improvements in competitiveness. naturally, completing the clean - up and restructuring of the banking system is also a key factor in this strategy, and i will briefly refer to this later on. significant steps have been taken in addressing these challenges. nonetheless, the ongoing adjustment of the spanish economy is at a delicate juncture, since there are no perce | 253. frankfurt : european central bank, january, https : / / www. ecb. europa. eu / pub / pdf / scpops / ecb. op253 ~ 5a3d5de1d1. en. pdf. maggiori, matteo, brent neiman, and jesse schreger ( 2019 ). β the rise of the dollar and fall of the euro as international currencies, β american economic review, vol. 109 ( may, papers and proceedings ), pp. 521 β 26. pierce, justin r., and david yu ( 2023 ). β assessing the extent of trade fragmentation, β feds notes. washington : board of governors of the federal reserve system, november 3, https : / / doi. org / 10. 17016 / 2380 - 7172. 3387. weiss, colin r. ( 2023 ). β financial flows to the united states in 2022 : was there fragmentation? β feds notes. washington : board of governors of the federal reserve system, august 4, https : / / doi. org / 10. 17016 / 2380 - 7172. 3322. | 0 |
francois villeroy de galhau : insurance in a world of disruption speech by mr francois villeroy de galhau, governor of the bank of france, at the 9th international insurance conference, paris, 27 october 2017. * * * ladies and gentlemen, i am very happy to be here today as supervisor in my capacity as president of the acpr, and also as guarantor of the smooth financing of our economy in my capacity as governor. in these two respects, the insurance sector is both close to me and important to me. thank you for inviting me to speak on this theme of disruption. to put it more clearly, and as you have pointed out, mr. president [ bernard spitz ], the world is in turmoil in many ways. this undeniably represents a challenge for insurers, but also a motivation : the raison d'etre of insurance has always been to be a vector of protection and stability in the midst of uncertainty. this morning, i would like to stress the essential role that insurance must play in our economy, by emphasising two areas : its financing and its digitalisation. but before that, i would like to mention the very recent developments in monetary policy. i. our monetary policy is in itself a source of stability yesterday, at the governing council presided by mario draghi, we took the important decision to reduce our net monthly asset purchases by half β to eur 30 billion β until september 2018. this is an essential step towards their possible end later ; a step that is justified by our confidence in the gradual convergence of inflation towards our target of 2 % over the medium term : we consider the economic recovery in europe to be β increasingly robust and broad - based ". in parallel, we said that we will continue to ensure β ample β monetary support, rather than β very substantial β support as mentioned in our previous statements β thanks to the whole range of our instruments, including the sizeable stock of assets that we will continue to hold in line with our policy of reinvestment, and our forward guidance on interest rates. in this new paragraph, the governing council stresses an essential point that i have often referred to over these past few weeks : our non - standard monetary policy is not a solo β it is not simply about net monthly purchases, and we shouldn β t focus too much on them β ; it is a group of instruments that we can play, by following a predictable sequence, as part of our gradual normalisation strategy | ##due. the diversification, properly understood, of the investments of french savers towards more equity - based, long - term savings is in everyone β s interest. and today there are additional incentives for life insurers to offer new products that break away from the dual cash - liquidity guarantee, due to the lesser solvency ii capital requirements. and this brings me to the issue of regulation. here too, insurers have an essential role to play, i n preparing the review of the solvency ii directive β s new regulatory framework. the directive came into force almost two years ago now and you have implemented it with a great deal of professionalism. in many respects, solvency ii represents a very significant step forward for the insurance sector. but this does not mean that it β s perfect : we must analyse its impacts closely, particularly its effects on investment behaviour and the financing of the economy, in order to propose the adjustments that prove necessary. progress has already been made on the financing of infrastructure projects and businesses, thanks to two amendments that came into effect in april 2016 and september 2017, respectively, which adapted the calibration of capital requirements. more generally though, the reviews of the standard formula and long - term guarantee package measures planned for 2018 and 2020, respectively, are important opportunities to make essential improvements. the work is already underway, and the more you 2 / 3 bis central bankers'speeches actively participate, alongside your european colleagues, the more our chances of success will be enhanced. iii. the role of insurers in the digitalisation of our economy it is essential for our economy to adapt to the digital revolution : it creates incredible opportunities, but with them, new risks against which the insurance sector, once again, can bring stability and protection. i would like to discuss two subjects in particular : firstly, cyber - insurance. the cyber - insurance market is still underdeveloped. insurers can and should take inspiration from their own experiences in tackling cyber - risk, and use it to develop a more mature french and european cyber - insurance offering. the coverage against cyber - risk is a very real concern that affects all companies β both small and large β as cyber - attacks are becoming increasingly frequent and costly : according to figures from euler - hermes, 57 % of french companies were victims of these attacks in 2016, compared with 32 % in 2015. we at the banque de france, alongside the eurosystem and our g7 colleagues, | 1 |
to any individual variable that will alone be a determining factor in an interest rate decision. prior to each interest rate decision we weigh together all of the new information received since the previous decision. but employment is of course an important element ; when, for example, we said in february that economic activity was now on firmer ground one of the things we were referring to was the stronger labour market. it was a contributing factor to the marginal adjustment in the repo rate path we made then ; with a first repo rate increase coming slightly sooner than implied in the repo rate path from december. our most recent repo rate decision entails both the repo rate and the repo rate path being held unchanged. a weaker gdp outcome for the fourth quarter could on its own have been a negative signal and made us more doubtful about the timing of the coming interest rate increase. but we also had surprisingly positive information on the labour market, which provided support for the assumption that the economy is moving in the right direction. our forecasts are based on employment only increasing at a slow rate in the future and on resource utilisation being lower than normal for the greater part of the forecast period. but the situation is that the crisis has hit the export industry particularly hard, while the services sector has escaped relatively lightly. we have a β division β in the swedish economy, which complicates the situation for monetary policy. we are unable to distinguish between the different sectors ; our interest rate changes affect all sectors in the same direction. when we deliberate on monetary policy in the coming period we must of course be observant of the driving forces behind the different sectors and how these can affect inflationary pressures in the economy. | ##p is making all out efforts to boost economic activities at small and medium level : our initiatives in this arena include : introduction of sme financing targets for banks / dfis ; credit guarantee scheme for small and rural enterprises ; efforts for putting in place a secured transaction registry in the country ; and separation of prudential regulations for small and medium enterprises. while concluding, i would like to draw your attention to the recent interest shown by foreign investors in the country β s economy. corporate deals have been either concluded or are under discussion in sectors as varied as power generation and distribution, food processing, and automobiles. these examples offer just a glimpse of the huge investment potential that is available in the country. so, by utilising the financing facilities that are available, as well as record - low interest rates and low inflation, the private sector can take the lead role in the country β s economic development. with the strong domestic demand and improving business climate, the private sector has more reasons than ever before to take the driving seat. i thank you for your time! economic policy review department | 0 |
ben s bernanke : celebrating 20 years of the bank of mexico β s independence remarks by mr ben s bernanke, chairman of the board of governors of the us federal reserve system, at the β central bank independence β progress and challenges β, a conference sponsored by the bank of mexico, mexico city, ( via prerecorded video ), 14 october 2013. * * * it is a pleasure to offer a few remarks at this conference marking the 20th anniversary of the bank of mexico β s independence. in august 1993, mexico β s congress approved changes to the country β s constitution that granted policy autonomy to the bank of mexico and made price stability its primary mandate. over the past two decades, these actions, along with a number of other constructive steps taken by mexican policymakers, have paid substantial dividends in terms of improved economic performance. at the time that the mexican congress changed the status and mandate of the central bank, the nation β s economy had been suffering periodic bouts of economic instability for many years. the 1970s through the mid - 1990s in particular were marked by episodes of high inflation, boom - and - bust cycles, and financial crises. indeed, shortly after the new bank of mexico law went into effect in april 1994, the mexican economy entered the throes of the socalled peso crisis. however, the changes to the monetary policy framework, along with greater fiscal discipline and the adoption of a more flexible exchange rate, soon bore fruit. notably, inflation fell to single - digit levels by the early 2000s. and in 2001 the bank of mexico formally adopted an inflation - targeting regime, which β outside of some temporary fluctuations β has succeeded in keeping inflation at around 4 percent. importantly, the improved monetary policy framework, together with other reforms, has thus far helped reduce mexico β s susceptibility to financial crises. when the recent financial crisis in the united states and other advanced economies threatened to spill over to mexico, the inflation credibility enjoyed by the bank of mexico allowed it to counter economic weakness by easing monetary conditions, even though headline inflation was running above its target range at the time. the bank β s rate cuts helped stabilize the economy, and mexican output returned to its pre - crisis level by late 2010. strong countercyclical policy actions of this type were unlikely to have been feasible in mexico a few decades ago ; with little in the way of inflation - fighting credibility and an immature financial sector, the monetary authority in earlier years was often forced | this component of business costs, would result in a subsequent increase in headline inflation. however, this risk is more evident in emerging countries than in developed ones, where the weight of food products in cpi is lower. in latin america, inflation will remain the dominant theme and the risks on this front will remain skewed to the upside. in argentina the monetary and financial regime has faced the most significant challenge since the crisis of 2001 - 2002, but when we look at the results it is clear that we definitely managed to rise to it. for the first time in decades regardless of external and domestic disruptions, as the ones seen in the last days, the central bank is providing monetary and financial stability, two essential public goods for sustainable development. we know that the country has a long history of macroeconomic instability. monetary regimes have unsuccessfully shifted from one extreme to the other. therefore, in an economy with precedents such as confiscation of deposits ( 1989, 2001 ), hyperinflation ( 1989, 1990 ), megadevaluations ( 1989, 1990, 1991, 2002 ), and a default on the public debt ( 2001 ), the monetary system cannot set itself an exclusive goal, ignoring the economy β s idiosyncrasy and vulnerabilities. to achieve long - term monetary and financial stability, this historical evolution needs to be taken into account. hence, the central bank must have an β across the cycle β view rather than a short - term one. our country is still going through a transition phase typical of post - crisis periods. and these transition stages β where key macroeconomic variables converge to their long - term values β take time and raise enormous challenges. the chilean case shows that it takes time to become a normal country. unlike the cases of brazil, mexico or southeast asia, the abandonment of the convertibility regime included simultaneously an institutional breakdown, a huge devaluation, the destruction of the financial system and the default on the public debt. there are several examples of the normalization phase that is still taking place : monetary transmission channels are just being rebuilt, since credit to the private sector accounts for only 12 percent of the economy ; far below the latin american average. the experience of other emerging economies shows that consistency and gradualism in both policy design and implementation are the adequate approach during this phase. therefore, patiently rebuilding the power of monetary policy is a key step towards stability. it is then clear that the argentine economy is simply at a different | 0 |
, in the formerly accepted framework guiding discretionary economic management β. 4 hayek β s view about these developments becomes clear from, for example, an excerpt of his nobel lecture, delivered in december 1974 : β economists are, at this moment, called upon to say how to extricate the free world from the serious threat of accelerating inflation which, it must be admitted, has been brought about by policies that the majority of economists recommended or even urged governments to pursue. we have indeed at the moment little cause for pride : as a profession we made a mess of things. β he expanded upon this in 1976 : 5 β practically all governments of history have used their exclusive power to issue money in order to defraud and plunder the people β. it was against this background that hayek proposed his radical solution. it called for no less than the complete abolition of the government β s monopoly over the issue of fiat money, leaving the way open for comprehensive competition in its supply by the private sector. in his hobart paper special no. 70, he spelt out his philosophy with respect to free competition in the supply of money : β the purpose of this scheme is to impose upon existing monetary and financial agencies a very much needed discipline by making it impossible for any of them, or for any length of time, to issue a kind of money substantially less reliable and useful than the money of any other. as soon as the public became familiar with the new possibilities, any deviations from the straight path of providing an honest money would at once lead to the rapid displacement of the offending currency by others. and the individual countries, being deprived of the various dodges by which they are now able temporarily to conceal the effects of their actions by β protecting β their currency, would be constrained to keep the value of their currencies tolerably stable β ( p. 125 ). although his proposal was not implemented, his contribution kindled a lively and far - reaching debate on the role of government in the monetary system, a debate that addressed the choice between a free market monetary regime and government management of the monetary system via a central bank. the proposal was so profound and radical in its conception that some leading advocates of a laissez - faire approach to most aspects of economic life ( milton friedman, for example ) were put on the defensive. as it happened, hayek also held some pretty strong views on monetary union in europe, an idea which was still only in a rather embryonic | , free banking in britain, theory, experience, and debate, 1800 β 1845. institute of economic affairs, london, 1995 ). it should be noted that, in hayek β s proposal, equilibrium is assumed to exist and to be stable, and information is complete, symmetric and acquired at no cost. see charles goodhart, the evolution of central banks, mit press, 1988. this is the assumption made by milton friedman in his seminal paper, β the optimum quantity of money β in β the optimum quantity of money and other essays β, aldine publishing company, chicago, 1969. advantage of the market order is that prices will convey to the acting individuals the relevant information, only the constant observation of the course of current prices of particular commodities can provide information on the direction in which more or less money ought to be spent. money is not a tool of policy that can achieve particular foreseeable results by control of its quantity. but it should be part of the self - steering mechanism by which individuals are constantly induced to adjust their activities to circumstances on which they have information only through the abstract signals of prices. it should be a serviceable link in the process that communicates the effects of events never wholly known to anybody and that is required to maintain an order in which the plans of participating persons match β ( p. 192 / 193 ). nevertheless, despite hayek β s claims for this discovery process, most economists would argue that free competition with respect to money couldn β t guarantee either a stable or an efficient outcome. this is the fundamental point. in order to try to understand and assess hayek β s proposal, it is essential to take a closer look at money and its role in the economy. this is best done by, as it were, first breaking money up into its constituent functions. the classic textbook treatment of the functions of money is still valid : money fulfils three functions, namely that of ( i ) a unit of account, ( ii ) a means of payment and ( iii ) a store of value. the use of money as a unit of account is, arguably, the most basic monetary function. it is the numeraire, that is, the unit for quoting prices, for drawing funds, for negotiating contracts, and for performing economic calculations. in this regard, money is a basic convention of society, such as the language and the standards for measurement. this seems to be a very hayek - like way of looking at money. indeed | 1 |
2022 ). 6 ireland β s home ownership rate is around the eu average of 69. 9 %. however, there are some significant differences across the eu, for example : germany 49. 5 %, france 64. 7 %, italy 73. 7 % and spain 75. 8 %. 7 see lydon, horan and mcindoe - calder ( 2021 ) for an in - depth analysis of changes in the distribution of wealth since 1987. 8 see, for example, table 6. 1, page 87 in lawless, lydon and mcindoe - calder ( 2015 ). 9 in just the last decade, there has been a significant shift towards fixed - rate mortgage loans in ireland. in 2010, for example, just 13 % of outstanding loans were on a fixed rate ; by 2022 this had risen to around 55 % of outstanding mortgages, with 88 % of new loans opting for a fixed rate period. 10 see, for example, hansen, lin and mano ( 2020 ), lenza and slacalek ( 2018 ), and slacalek, tristani and violante ( 2020 ). 11 in a recent paper presented at a central bank of ireland seminar, professor joseph kopecky from trinity college, dublin highlighted very similar issues, albeit in the context of ageing populations in the likes of the us, japan and other european countries. 12 see colciago and samarina ( 2019 ) for a review 13 see lenza and slacalek ( 2018 ). 14 see casiraghi et al. ( 2016 ). 15 makhlouf, gabriel. social capital and the living standards framework. address to university of auckland ( 27 march 2018 ) 16 makhlouf, gabriel. growing our economic capital : investing in sustainable improvement in our wellbeing. speech delivered at victoria university of wellington ( 3 november 2016 ). 17 elderson, frank. proportioning policy action to the evidence : making the monetary policy strategy of the ecb concrete. address to the institute of international & european affairs ( 24 march 2022 ) Β©2022 central bank of ireland | in 2002 β 2003, efforts to dampen inflationary pressures resulted in a strong krone appreciation, with strong impacts on the economy. later, in the mid - 2000s, when inflation was low while at the same time growth was strong, low interest rates at home and abroad contributed to amplifying the cyclical upturn in norway. in the light of our experience, it is fair to say that our inflation targeting regime has become more flexible over time. the third criterion is that the interest rate path should reflect a robust monetary policy. by this we mean that the interest rate should be set so that monetary policy mitigates the risk of a build - up of financial imbalances. moreover, acceptable developments in inflation and output should be likely under alternative assumptions about the functioning of the economy. implementing these concerns analytically is not straightforward, however. we are working intensively to refine our approach to these concerns in our analytical framework. [ chart : criteria for an appropriate interest rate path ] this chart illustrates how the forecasts for the key policy rate, output and inflation evolve when the various criteria are taken into account. the illustration is from our third monetary policy report in 2012. if monetary policy at that time had given weight only to the low level of inflation, the key policy rate should have been lowered sharply and kept close to zero for some time, as indicated by the red dotted line in the upper left panel. inflation would then have been predicted to pick up relatively fast, partly owing to a weaker exchange rate. taking into account our second criterion for an appropriate interest rate path, the key policy rate would have been somewhat higher in the short term, as indicated by the blue dotted line. inflation would have been predicted to take somewhat longer to rise towards the target, but developments in output and employment would have been more stable. finally, taking into account considerations of robustness ( criterion 3 ), we reached the interest rate forecast indicated by the black dotted line. [ chart : decomposition of change in the interest rate path ] our communication of interest rate decisions is aided by a decomposition of changes in the interest rate path. this is a model - based illustration of how the change in the interest rate forecast from one report to the next can be decomposed into contributions from exogenous disturbances. the intention is to communicate the driving forces behind any changes in the interest rate path. the chart illustrates the different forces behind the change in the interest rate path from the last report in 2012 to the | 0 |
, useful and relevant to the sector. third, encouraging effective business models. continued resilience of banks can only be realised when banks ensure that their business models are sound. the business models should be strengthened to accommodate new business lines and innovations rolled out by the banks. this informs the drive by cbk to ensure that they maintain sufficient capital to cater for existing and potential risks they are exposed to and their market niche. this informed the introduction of a 2. 5 percent capital conservation buffer effective january 2015. cbk also required banks effective 2013 to develop internal capital adequacy processes ( icaap ) to inform their capital management. though most of the banks have embraced the requirement, we have noted that there is wide disparity on the icaap documents submitted to cbk. to this end, cbk will shortly be issuing a proposed icaap guidance note for comments. the guidance note is expected to strengthen icaap management with capital holdings that are aligned to banks β risk profiles and business requirements. as i conclude, it is also worth touching on brexit. while the economic impact thus far has been muted, brexit has created a lot of uncertainty in the financial markets globally. we are also aware of the likely impact on trade, since countries such as kenya may be required to negotiate new bilateral agreements with the united kingdom once it exits the eu. this may have an impact over the medium term, with reduced foreign direct investments as well as export earnings from the uk and eu. cbk is keenly following these developments and is ready to take appropriate actions to safeguard the stability of our economy and the banking sector in particular. with these remarks, ladies and gentlemen, it is now my distinct honour to invite the cabinet secretary, national treasury, mr. henry rotich to officially open the workshop. karibu bwana waziri! bis central bankers β speeches | christian noyer : public and private debt β imbalances of global savings introductory speech by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, at session 3 β public and private debt β imbalances of global savings β, aix - en - provence economic forum, aix - en - provence, 6 july 2012. * * * in introduction to this session, i would like to make seven remarks. my first remark is inspired by the very title of this session. in advanced countries, the average public debt to gnp ratio is 100 %. in emerging countries, the figure is 30 %. this is a very wide gap, and it represents one of the global economy β s largest imbalances. and one of the least mentioned. it also represents a complete reversal of the situation compared with just over twenty years ago. at that time, i remember well, i was chairman of the paris club, and emerging countries came to ask for the rescheduling of their debt. second remark, global demand is still fairly concentrated on the advanced countries. not only is their debt higher, but their savings ( as a ratio of gnp ) are lower. the g7 countries alone still account for 56 % of global consumption. the problem is clear. how can we hope to raise our level of consumption if we need to reduce our level of debt and increase our savings? and if the advanced countries β consumption stops growing, what will happen to global economic growth and particularly that of emerging countries with entirely export - oriented economies? which brings me to my third remark : we need the emerging countries to continue investing their savings in advanced countries. we therefore need properly functioning international financial markets. in a world where the savings and financing needs are so geographically dislocated, properly functioning financial markets are a prerequisite for economic growth. but, today the capital markets appear very unsettled and full of anomalies, and not just in europe. β’ for example, certain sovereigns ( the usa and uk for example ) borrow today at historically very low nominal interest rates and at negative real interest rates despite the fact that their deficits are around 10 % of gnp and that doubts exist regarding the future evolution of their debt levels. β’ another anomaly : large corporations have accumulated unprecedented cash reserves ( several trillions of dollars ) despite numerous highly profitable and unexploited investment opportunities around the world, unsatisfied | 0 |
at present. my colleague jean - pierre danthine will discuss the snb β s liquidity measures and their effects in more detail. both domestic mortgages and corporate lending in the real economy have continued to see robust growth. in the third quarter of 2011, lending standards and conditions for mortgages remained largely unchanged. by contrast, banks reported a slight tightening of lending standards and conditions for corporate loans β especially loans to large companies. low interest rates continue to have a favourable effect on the demand for loans. in addition, the robust growth in real estate prices, particularly prices for owner - occupied apartments, continued unabated in the third quarter. in this context, the snb welcomes the recent advances achieved in switzerland with the introduction of macroprudential instruments. my colleague thomas jordan will report on developments in the area of financial stability and macroprudential policy. chart of conditional inflation forecast the ( dashed ) red curve on the chart represents the new conditional inflation forecast. it shows the future path of inflation, assuming that the three - month libor remains unchanged at 0 % over the next twelve quarters, and it covers the period from the fourth quarter of 2011 to the third quarter of 2014. for purposes of comparison, the ( dash - dotted ) green curve shows the conditional inflation forecast published in the previous quarter, which was also based on the assumption of a three - month libor of 0 %. until the second quarter of 2012, the snb β s new conditional inflation forecast is below the previous quarter β s forecast. this is because the earlier swiss franc appreciation impacted on prices more quickly than expected. from the third quarter of 2012, inflation rises above the previous forecast, because at this point the negative base effect of price declines since mid2011 disappears. the muted course of inflation from the end of 2012 stems from the marked deterioration in the economic outlook for the euro area. overall, despite the expansionary monetary policy, there are no signs of inflation risks over the forecast horizon. bis central bankers β speeches bis central bankers β speeches | companies a sounder basis for their investment planning. this notwithstanding, the situation for a big part of the economy remains difficult. waning global demand will continue to hold back export growth. economic uncertainty, coupled with a difficult earnings situation for many companies, will curb corporate investment. moreover, since october, the seasonally adjusted unemployment figure has risen again slightly. the deterioration in the labour market should constrain both consumer spending and investment in residential construction. it is likely that the swiss economy will stagnate in the fourth quarter. for 2011 as a whole, real gdp growth of 1. 5 β 2. 0 % can be expected. this is only because of the favourable economic development in the first half of the year. for 2012, the snb is expecting economic growth in the order of 0. 5 %. monetary and financial conditions in october and november, inflation turned negative, a development largely driven by the strong appreciation of the swiss franc during the summer. prices for a large number of tradable goods fell markedly. following the introduction of the minimum exchange rate, the snb is expecting temporarily negative inflation rates, but not a sustained decline in the general price level. moreover, surveys also show that medium - term inflation expectations are still positive. as a result of the substantial expansion of liquidity to combat the strength of the swiss franc in august, some short - term interest rates turned negative. they have been close to zero since the previous monetary policy assessment. long - term interest rates also declined further. the yield on ten - year confederation bonds reached a new low. the expansionary effects of monetary policy are also evident in the growth of the money supply and in real interest rates, which have remained at a low level. since the introduction of the minimum exchange rate on 6 september 2011, the swiss franc exchange rate to the euro has been above chf 1. 20. compared to august, the swiss franc has even depreciated more against the us dollar than against the euro. nevertheless, even at the current exchange rate, the swiss franc is still high. in august, the snb had substantially expanded swiss franc liquidity, in order to weaken the heavily overvalued swiss franc. since then, banks β sight deposits with the snb have been at historically high levels. the snb will continue to maintain liquidity at exceptionally high bis central bankers β speeches levels, but has decided not to set a specific target level for sight deposits | 1 |
to innovation. this has also paved the way for greater financial inclusion among filipinos through the build - up of an inclusive ecosystem, the creation of compelling use cases, and fostering of financial literacy and trust in the financial system through consumer protection. we are confident that digital innovation can co - exist alongside bsp β s key mandates of maintaining monetary, financial stability and the efficiency and safety of payments and settlements systems. likewise, the bsp will continue to support financial products and services that are suitably designed, priced, and tailored to diverse market segments, including the unbanked and 1 / 2 bis central bankers'speeches underserved markets, through pioneering delivery channels. while the bsp will continue to champion initiatives promoting responsible innovation in the delivery of financial products and services, all stakeholders must join the journey of transformation into a digital economy that is robust, secure, and resilient that β s accessible to all. digital is no longer a matter of convenience, but it has, in fact, become a matter of necessity. and the current pandemic has clearly emphasized the need to democratize access to financial services and address exclusion, benefiting those most hit by the pandemic β s effects to the economy. ultimately, my hope is that the bsp β s enabling regulatory environment would continue to foster a healthy cooperative competition or β coo - petition β among fintechs and traditional banks. when the advantages of traditional banks, with their market size and operational scale, are coupled with fintechs β organizational agility and technical know - how, the resulting synergies could substantially improve the delivery of financial services to all filipinos, especially the underserved. indeed, fintech can be a massive driver of our financial inclusion agenda. and so i hope you have you all here as a partner in this pursuit. together, let β s bring financial services closer to the filipino people. thank you and i hope that all of us remain healthy and well during these trying times. 2 / 2 bis central bankers'speeches | benjamin e diokno : keynote message - eccp ai + financial services future of fintech keynote message by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), during the during the eccp ( european chamber of commerce of the philippines ) ai + financial services future of fintech, 21 july 2021. * * * friends and colleagues from the european chamber of commerce of the philippines and fairs and more, inc., esteemed guest speakers, ladies and gentlemen, a pleasant afternoon to all. i β m glad to be a part of the ai + forum series wherein we hope to have more strategic discussions about financial technology and how the financial services industry can leverage on technological advancements such as artificial intelligence, machine learning, and robotics, among others, in designing and providing more customer - centric financial products and services. in just the last ten ( 10 ) years, we β ve all witnessed how technology has dramatically advanced and elevated our day - to - day living. from augmented reality games to self - driving cars ; from voicecontrolled home devices to life - saving medicines ; from office productivity tools to space exploration journeys ; the possibilities are indeed limitless. personally, i was astonished to recently learn about deepfakes. such advances in artificial intelligence are both exceptional and admittedly, disturbing at the same time. after the initial disbelief and amazement wears off, you soon realize how destructive this technology might be if used for ill purposes. perhaps this is the reason why there is still some resistance in fully embracing technology when it comes to providing financial services, particularly in banking. because banking, at its very core, is built on trust between the financial institution and its customers. trust is not built overnight, but is diligently earned over a period of time. despite the apprehensions, we cannot fully dismiss the potentials that financial technology has to offer, especially in bridging the financial inclusion gap. what good is it to have the perfect financial system if only a handful in society gets to benefit from it? thus, we need to set aside our fears and prejudices and transform existing challenges to life - changing opportunities by striking the right balance between innovation and regulation. the bsp has fervently sought to capitalize on such development. our goal has always been to enable a conducive environment for both incumbent banks and fintechs to harness their full potential with regard to their journey | 1 |
money in particular, will not arise in the first place if we at the central bank ensure that the technology behind payment transactions is always up to date. this is why the eurosystem is working flat out to ensure that banks will be able to conduct payment transactions in central bank money in real time by the end of the year. the target instant payment system will enable payments to be transferred between individuals in a matter of seconds, all day, every day, regardless of where their accounts are held. this would mean that delivery - versus - payment transactions could be settled in commercial bank money, ie without the buyer or seller having to pay or deliver upfront. 4. conclusion the economist john kenneth galbraith is credited with the following quote, which i think sums up cash perfectly : " money is a singular thing. it ranks with love as man β s greatest source of joy. and with death as his greatest source of anxiety. " we needn β t fear for the future of euro banknotes and coins. however, it is our duty as eurosystem central banks and your duty as a player in the cash cycle to always maintain the public β s trust in euro cash. we can do this together by continuing to provide the public at all times with the amount of stable - value, high - quality euro banknotes and coins that they need. thank you for your attention. 1 s ingves ( 2017 ), do we need an e - krona?, swedish house of finance, 8 december 2017. 2 m goodfriend ( 2016 ), the case for unencumbering interest rate policy at the zero bound, paper presented at the economic policy symposium at jackson hole. 5 / 5 bis central bankers'speeches | both papers covered by the panel provide useful thoughts on the trade - off between data use and data protection. 2 data are considered the most valuable commodity of the 21st century. and, in principle, there is nothing wrong with people paying for services with their personal data. provided they know who is using which data for what purpose and they explicitly accept those uses. however, many people aren't happy about their data being used commercially. they don't want people to be tracking their consumption behaviour. and they are perfectly entitled to have their data protected. so if you were to go to a winery in eltville to buy some bottles of riesling and pay with the digital euro, only the bank that operates your wallet would have full visibility of the transaction. but it is not allowed to use that information commercially without your consent. the eurosystem will not be able to assign the transaction to you personally. and if you pay offline, no personal information whatsoever is shared with anyone else. like with cash. 3 5 conclusion ladies and gentlemen, there is still a long way to go before we can issue the digital euro. exchanging views and opinions with experts from outside the eurosystem is very important and valuable in this regard. 1 deutsche bundesbank ( 2024 ), bundesbank survey : widespread acceptance of digital euro among general public, press release, 4 june. 2 agur, i., a. ari & g. dell'ariccia ( 2023 ), bank competition and household privacy in a digital payment monopoly, imf working paper wp 23 / 121 ; tinn, k. & c. dubach ( 2024 ), ( central bank ) digital currency with asymmetric privacy - theory model, mimeo. 3 european central bank ( 2024 ), progress on the preparation phase of a digital euro - first progress report ( europa. eu ). 4 / 4 bis - central bankers'speeches | 0.5 |
restrictions regarding participation of various economic entities in the currency and interest rate markets and the related derivatives. yes, there indeed these markets are tightly regulated. but what is the underlying philosophy behind these regulations? instead of talking about market regulation in abstractions, it would be useful to understand what it actually entails. bis central bankers β speeches 12. let us take currency markets. the markets have traditionally been otc, seeking to cater to the genuine hedging needs of the entities. given the capital account management framework, obviously there are guidelines of who can participate in what kind of products. these guidelines have been significantly liberalized over the years and newer products have been introduced on the exchanges. now, the question here is at what stage do we move to a completely open capital account which would, in turn, result in freeing up the restrictions on participation in these markets. the latter follows from the first, not the other way round. this is institutional - structure agnostic. 13. another structural factor with regard to an efficient bcd nexus is the nature of institutional market. in a bank - centric financial system, it has been the experience that even the task of developing non - bank channels, particularly through market - based mechanisms, falls ultimately on the banks themselves. whether it is expecting banks to provide credit enhancement for bond markets or acting as market - makers in various market segments, the role of banks becomes critical. this reflects the underlying structural makeup of the financial system and implies that any attempt at relaxing market regulation ultimately comes unstuck at the altar of prudential regulation. the same, to a lesser extent, applies to other regulated entities as well, such as, insurance companies, pension funds, etc. which are seen as natural participants in some market segments, such as, corporate bonds, interest rate derivatives, credit default swaps but the prudential regulatory framework, perhaps for very valid reasons, is more conservative. again, it is a matter of regulatory philosophy than the institutional structure. 14. as regard debt markets, the regulations essentially entail specification of broad product features and participation norms. while the considerations behind regulating interest rate markets are different form exchange rate markets, the objective still remains systemic stability. large sovereign borrowings impact the yield curve through the expectation channel. apart from direct balance sheet effects on the financial sector, interest rate volatility has a critical bearing on sovereign balance sheet which could translate onto financial sector balance sheets. it, therefore, becomes imperative to be watchful of | market infrastructure like reporting platform for corporate bonds, repo in corporate bonds, cps and cds. further, fimmda has been appointed as the accrediting body for brokers in the otc interest rate derivatives market. in the immediate future, fimmda will have a greater role to play in the rollout of cds in india. this has widened the scope and responsibility of fimmda and it has been successful, so far, in fulfilling these responsibilities. now it is time to reflect upon the past achievements and have a vision for the future. one such vision could be conferring sro status to fimmda. 55. changing nature of financial markets necessitate that organisations that are not from traditional regulatory structure participate in bringing orderliness in activities. selfregulation is an important part of the regulatory structure of securities markets. selfregulation and self - regulatory organizations ( sros ) are considered important in improving the effectiveness of securities regulation and market integrity. use of sros may lead to more efficient financial markets, thus enhancing businesses β access to public equity and debt markets for accessing capital at a reasonable cost, which supports business expansion and economic development. the regulators designate sro as a β competent authority β, to implement certain rules and regulations. 56. sros exercise certain regulatory authority over an industry or profession, which could be in addition to existing government regulations or fill the vacuum of absence of regulations. fimmda was created as a voluntary body for the interest rate market, and is a not - for - profit organization. the activities of fimmda and its role in the underlying market clearly indicate its self - regulatory role in the concerned markets and it could be termed as a β quasi - sro β. certain activities typical of a sro like prescription of code of conduct for members, oversight over brokers, and arbitration of disputes ( in a limited way ) are already being carried out by fimmda. presently fimmda, through the financial benchmarks india bis central bankers β speeches ltd ( fbil ), is also part of benchmark administration which is vital to market integrity. there is, however, an urgent need for fimmda to strengthen itself and broaden its mission to carry out tasks commensurate with the developments in the market and the role envisaged by the reserve bank of india. in this regard, there is a need for active participation from all the members of fimmda, especially the public | 1 |
building the right capabilities. some insurers do investment in - house and others outsource. all insurers need people with sufficient market knowledge in all three lines of defence. that includes underwriting, risk management and potentially work out. 3. developing appropriate management information, including for the board. 4. appropriate valuations, internal ratings, and matching adjustment and solvency capital requirement calculations. on this final point, we have provided considerable guidance on our expectations in supervisory statement 3 / 17 ( ss3 / 17 ), particularly in relation to restructured equity release mortgage portfolios. one thing that has become clear to me is the importance of internal ratings. these can drive both asset valuations ( if insurers use the approach of mapping to valuations of similarly - rated traded assets ) and the matching adjustment benefit. we said in ss3 / 17 that : β an internal credit assessment should consider all possible sources of credit risk, both qualitative ( eg due to strength of the terms and conditions in the loan agreement or a lack of default data ) and quantitative ( eg due to economic stresses ), and how these may interact. an internal credit assessment will then need to be mapped onto a credit quality step ( cqs ). the pra β s view is that the cqs to which an internal credit assessment maps should lie within the plausible range of cqss that could have resulted from an issue rating given by an external credit assessment institution ( ecai ). broad consistency between the cqss resulting from firms'internal assessments and ecai issue ratings will help to mitigate the risk of undue bias in the resulting fundamental spreads. β this does not mean that we want insurers simply to adopt rating agency models across the board. we want firms to develop their own rating models that take into account all possible sources of credit risk. i am mindful here of the financial stability board standard against mechanical reliance on ratings. 7 β the goal of the fsb principles is to end mechanistic reliance on ratings provided by http : / / www. fsb. org / work - of - the - fsb / policy - development / additional - policy - areas / reducing - reliance - on - credit - ratings / all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx ecais by banks, institutional investors and other market participants by reducing the β hard wiring | β s why a phrase such as β the 2018 stress test shows the uk banking system is are resilient to deep simultaneous recessions in the uk and global economies that are more severe overall than the global financial crisis and that are combined with large falls in asset prices and a separate stress of misconduct costs β has become β¦ all speeches are available online at www. bankofengland. co. uk / speeches β¦ β banks can lend to households and businesses in bad times as well as good β. and it β s why those of us who make the decisions are hosting citizens panels around the country. these are groups of 20 - 30 citizens from all walks of life and a diverse range of backgrounds. we β re very grateful to those in the north east, northern ireland, yorkshire & the humber, london, scotland, the west midlands, and the south west who, in recent months, have spent an evening with me or my colleagues. they β ve given us much to chew on about how the economy and the financial system really look from where they sit in different parts of the country and society. they β ve challenged us on the financial crisis, quantitative easing, interest rates, living costs and more. and most importantly, they β ve held us to account, forcing us to explain every aspect of our work. and some. while that β s not easy, it β s essential. because it β s their economy, their financial system and their lives that we influence. we are simply citizens in their service. all speeches are available online at www. bankofengland. co. uk / speeches | 0.5 |
mugur isrescu : nvestments in challenging times - how can romanian firms thrive in the new context? opening speech by mr mugur isrescu, governor of the national bank of romania, at the conference " investments in challenging times : how can romanian firms thrive in the new context? ", bucharest, 16 march 2023. * * * vice - president pavlova, chief economist revoltella, distinguished audience, ladies and gentlemen, welcome to this year's conference organized by the european investment bank in partnership with the national bank of romania, titled " investments in challenging times : how can romanian firms thrive in the new context? ". i am glad that we are able to meet again at the national bank of romania, after 2 years in which we had to host this event exclusively on - line. please allow me to extend a warm welcome to the eib representatives that are joining us : vice - president pavlova, chief economist revoltella and ms. tasan zanin, head of the eib office in bucharest, and to all our colleagues and guests that are with us today, in person or online. i commend eib's continuous involvement and support in engaging with stakeholders in romania through these valuable series of events. there is already a tradition, today's conference being the sixth we have co - organized and hosted. romania and the european investment bank share a long and fruitful partnership that has resulted in projects in important sectors of our economy. i am certain we will be able to continue to build on this important partnership, tackling variable challenges and opportunities. this year's conference will feature a very important topic, given the current economic context marked by a sharp increase in energy prices and the uncertainty regarding the war in ukraine and the related sanctions. as a sad digression, i recall that last year's nbr - eib conference was on the eve of the war, on february 23rd. coming back to the effects that can already be seen in the households'and investors'confidence, there is a deterioration of the economic climate expectations, there are pressures in the economies of our major trading partners and the risk perception towards economies in the region, with impact on the financing costs. 1 / 3 bis - central bankers'speeches as we know, this event centers on the eib's investment survey, an excellent country analysis conducted by the bank. the conclusions of this survey are relevant for both companies and authorities, including the | about future developments, and growing debt service due to higher interest rates, ( ii ) the close link between the banking sector and the government sector, and ( iii ) the polarization of credit institutions by size. the slowdown in lending, which started in the second semester of 2022, was also due to the rise in financing costs amid the tightening of both monetary policy stance and 2 / 3 bis - central bankers'speeches credit standards. in the second quarter of 2022, banks tightened credit standards for loans to non - financial corporations and to households, and were expected to continue to do so in the third quarter of 2022. the prolonged energy crisis, the heightened geopolitical tensions and the mounting uncertainty about the economic outlook prompted banks to reassess the level of risk. in respect with challenges raised by climate change and energy efficiency, as of may 2022, the nbr started collecting information on green loans from banks. the data shows that, between may and september 2022, companies took out green loans totalling 976 million lei ( 0. 56 percent of the corporate loan portfolio ). the composition of these green loans was dominated by credit for green buildings ( 42 percent ), followed by loans for electricity and heating and cooling systems ( 24 percent ) and those for energy efficiency ( 13 percent ). last but not least, a word on economic growth. for 2022, the annual real gdp growth is estimated to reach about 5 percent, which is lower than the one recorded in 2021. for the past year, growth was driven by the substantial advance during the first part of last year. in 2023 domestic economic activity is projected to lose significant momentum, due to certain substantial adverse influences, as previously mentioned. a favourable contribution to economic growth is expected to come, particularly over the medium term, from european funds, including the next generation eu programme. with these in mind, i now invite vice - president pavlova to take the floor. afterwards, i wish you all fruitful discussions, stemming from the eib investment survey findings. thank you. 3 / 3 bis - central bankers'speeches | 1 |
, which are not receding. quite to the contrary. the events that amplify volatility in the commodity and financial markets reinforce the importance of natural risks to which humans have been contributing to. these are all shared risks, and, to the extent that each of us individually successfully conducts our economy through all this turbulence, we as neighbours will be better off as well. of course, it is best when we preserve the stability that is given to us by law together. i believe that we succeeded in that, and i want us to continue doing so. 1 / 4 bis - central bankers'speeches where are we now in serbia? we keep the exchange rate of the dinar against the euro at a relatively stable level despite all the challenges. i start with that because the stability of the dinar exchange rate is one of the key pillars of the overall macroeconomic and financial stability of the country. this is the conclusion of rating agencies, the international monetary fund, european officials, and investors in serbia. but, for me, its contribution to the growth and development of serbia is of key importance. a stable exchange rate of the dinar against the euro is a pillar of trust of our citizens and corporates in the policy makers in serbia. in us. and no one has the right to take that pillar away from them by doing or not doing. thanks to the strong regulatory and macroprudential framework for banks, as well as the fact that we implemented the tightening of monetary conditions in a gradual and well - calibrated way β our banking sector has remained stable, highly liquid and profitable. the key indicators of banks'operations are well above regulatory values, while the share of npls in total loans is close to a historical low. however, the conditions are such that we have to choose between price stability, economic growth and financial stability. i claim that we can do everything, with well - measured policies! an example of this is our measure to cap interest rates on variable - rate housing loans. the effect of this measure on the financial results of the banking sector does not in any way threaten the banking sector's operations, and it contributes to the preservation of financial stability by preventing the growth of npls. so, financial stability. this measure helps increase the disposable household income, but to the extent which does not threaten the strong downward trajectory of inflation, as it makes up around 0. 3 % of the total household consumption in serbia in one year. | therefore, the inflation target has not been jeopardised. finally, this measure can contribute to the recovery of consumption, which is necessary for us to achieve the desired economic growth. and that is the third goal β economic growth! dear colleagues, all of us here today know that our job never ends, just like no policy can work on its own! hence, the preserved business confidence and a stable banking sector resulted from the overall economic policy, and this ensured a significant rise in employment amid such circumstances, as well as an increase in real wages in both the private and public sector. only this synergy of the real and financial sector can ensure the lasting success of both! an illustration is the assets of commercial banks operating in serbia of around eur 50 bn, over 80 % higher than in 2012. the synergy as well as trust effect. that there is confidence in our system is illustrated by the fact that fx savings of households rose by over 70 % in the last ten years, while dinar savings increased around seven times. up until ten years ago, the only two sources of investment financing in serbia were a modest inflow of fdis and modest capital investments of the government of around 2 % of gdp. in the meantime, both sources of financing increased fourfold, and we gained two more, maybe even more important pillars of investment financing β profitability of domestic companies and investment loans of banks. for example, in 2014, domestic companies recorded a loss of around eur 2 bn, and investments could not be financed from own sources. since then the serbian economy's net financial result has been improving every year, by around one billion euros on average annually, and in 2022 corporate profitability reached around eur 5 bn. this broadens the base of good 2 / 4 bis - central bankers'speeches clients of the banking sector and credit risk is reduced. thus, macroeconomic stability and structural reforms are both our key challenge and potential, and our crucial heritage for the coming generations. heritage is also a unique technological revolution in which we can be the leaders or followers and which brings changes particularly to the financial sector. we decided to be at the forefront of this process, without ever losing sight of system security and stability. i can freely say that today we are at the edge of the revolution that is taking place by means of bits and bytes. the fact is that our payment methods, loan applications, signing of contracts with financial institutions, transactions time, technologies used β are changing | 1 |
june 2014 continue to point to subdued underlying growth in broad money ( m3 ), with annual growth standing at 1. 5 % in june, compared with 1. 0 % in may. the growth of the narrow monetary aggregate m1 stood at 5. 3 % in june, up from 5. 0 % in may. the increase in the mfi net external asset position, reflecting in part the continued interest of international investors in euro area assets, remained an important factor supporting annual m3 growth. the annual rate of change of loans to non - financial corporations ( adjusted for loan sales and securitisation ) remained negative at β 2. 3 % in june, compared with β 2. 5 % in may and β 3. 2 % in february. lending to non - financial corporations continues to be weak, reflecting the lagged relationship with the business cycle, credit risk, credit supply factors and the ongoing adjustment of financial and non - financial sector balance sheets. at the same time, in terms of monthly flows, loans to non - financial corporations have shown some signs of a stabilisation over recent months, after recording sizeable negative monthly flows earlier in the year. this is consistent with the results of the bank lending survey for the second quarter of 2014 in which banks reported that credit standards for loans to enterprises had eased in net terms. however, they remain rather tight overall, when seen from a historical perspective. in addition, banks reported an improvement in net loan demand by non - financial corporations and households. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) was 0. 5 % in june, broadly unchanged since the beginning of 2013. against the background of weak credit growth, the ecb β s ongoing comprehensive assessment of banks β balance sheets is of key importance. banks should take full advantage of this exercise to improve their capital position, thereby supporting the scope for credit expansion during the next stages of the recovery. to sum up, the economic analysis indicates that the current low level of inflation should be followed by a gradual upward movement in hicp inflation rates towards levels closer to 2 %. a cross - check with the signals from the monetary analysis confirms this picture. as regards fiscal policies, comprehensive fiscal consolidation in recent years has contributed to reducing budgetary imbalances. important structural reforms have increased competitiveness and the adjustment capacity of countries β labour and product markets. these efforts now need to gain momentum to enhance the euro area β s growth potential. structural reforms should | the correction of imbalances. numerous historical episodes have shown that financial markets tend to be too slow and weak in penalising profligacy in normal times, and can suddenly turn disruptive and cause overshooting during crises. in order to contain moral hazard and prevent disruptions, the stability and growth pact was agreed as a complement to the maastricht architecture. the pact set budgetary rules and procedures to reinforce fiscal discipline at the national level. it was intended to avoid gross fiscal policy errors, through peer monitoring and peer pressure, as well as through the threat of sanctions. however, implementation of the pact was rather weak in emu β s early years. tensions emerged already in the early 2000s, and in november 2003, when action should have been taken against both france and germany, the ecofin council decided not to act, overruling the european commission. this unwillingness to apply the rules was a β mortal sin β : a clear message was sent to the other euro area members that the pact was not there to β bite β. weak economic governance in the euro area had three major consequences : β first, inadequate domestic fiscal policies were tolerated, leading to unsustainable fiscal positions in some countries and tensions in the conduct of the single monetary policy ; β second, insufficient attention was devoted to losses of competitiveness and the accumulation of current account imbalances within the euro area ; β third, and probably most important, the correlation between the ability of the financial sector and of the sovereign states to obtain financing was largely ignored. 3. the european challenge : stability, solidarity and prosperity looking ahead, there is no easy or quick way to solve the problems of the european union. these are undoubtedly very challenging times for us all. we have to learn from the past to safeguard our present and build our future. we need stronger and more resilient institutions and rules, better enforcement and control mechanisms and, above all, we must avoid making the same mistakes. from what i have already said, it is easy to conclude that it is paramount to strengthen the economic pillar of emu and to ensure that this pillar is robust and consistent to support the single currency. the single currency and the close integration of european markets have increased the interdependencies among member states and hence the potential for cross - border contagion. the emu must have rules and these rules have to ensure that the policies of one member state do not impact negatively on other member states via the increased | 0 |
and perceived inflation started to diverge after the introduction of the euro. while this is a feature which should not be ignored, since what consumers decide to spend depends on their perceived real income, it is now important to acknowledge that it was a temporary phenomenon, and that during the last year and half the gap between actual and perceived inflation has narrowed significantly. notwithstanding the many adverse shocks that hit the euro area in the past years, price stability has prevailed in the euro area. the success of the single currency in delivering price stability and stabilizing inflation expectations in the euro area can be explained by the european institutional framework and the principles followed by the european central bank. first, the european central bank is independent and has a clearly defined mandate given by the treaty to pursue price stability. second, the ecb has provided and made public an arithmetical definition of price stability corresponding to inflation rates below and close to 2 %. third, the medium - term orientation and the very nature of our concept of monetary policy contributes to a solid anchoring of medium and long term inflation expectations, in line with our definition of price stability. the best contribution that monetary policy can provide to economic growth is to maintain price stability. price stability ensures the transparency of the relative price mechanism, thus enhancing the efficiency of resource allocation. stable and low inflation supports private consumption via its positive impact on the real value of households β income and wealth. price stability reduces the borrowing costs for individuals and firms. as we all know, inflation erodes the purchasing power of the nominal return on long - term loan contracts or bonds. in case of high and uncertain inflation, savers or those who lend their liquid funds would require a higher rate of return from borrowers, in order to compensate for the higher risks related to the uncertainty about future inflation. this inflation risk premium implies that in an economy with high inflation, less investment projects will be profitable. in such circumstances, capital accumulation will be lower than it could have been in a situation of price stability and the potential output growth rate is consequently reduced. the challenge of economic growth let me now turn to some issues which still need to be addressed. the economic and monetary union has secured macroeconomic stability, has promoted financial integration and led to convergence of inflation and interest rates to low levels. the key question that naturally arises is the following : why has economic growth, nonetheless, remained subdued? in my introduction i have already hinted at my answer by referring to the need for completing structural reforms. let me now | few observations on the use of the euro as a parallel currency in some countries in europe. iii. 1. the international private use of the euro the euro is today the second most widely used currency internationally, in capital markets, in foreign exchange market trading and in international trade. in international capital markets, our data for early 2004 show that the share of the euro in international debt securities gradually increased to around 31 %, compared with a share of less than 20 % for the legacy currencies prior to the launch of the euro. 1 by comparison, the share of the us dollar has decreased slightly ( from 47 % in 1999 to 44 % in 2004 ), and that of the japanese yen has also declined ( from 17 % in 1999 to 9 % in 2004 ). what is particularly noteworthy is that the euro, both as an international financing and investment currency, has a strong regional focus. an analysis of the geographical breakdown of the outstanding stock of euro - denominated international debt securities shows that european countries near the euro area account for the largest share of issues of these securities. moreover, the increase in the use of the euro as an investment and financing currency, relative to other currencies, has also been highest among residents of countries neighbouring the euro area. by contrast, borrowers in asia, latin america and the middle east have continued to issue only a small fraction of their international bonds in euro. holdings of euro - denominated debt securities are very small in portfolios held in the united states. they are also small in asia, but growing. it is in the countries neighbouring the euro area, such as the uk, switzerland and non - euro area nordic countries that such holdings are particularly high. the city of london is one of the main financial centres using the euro and corporations often use london - based specialised intermediaries to issue euro - denominated bonds outside the euro area. a third feature of the role of the euro in international capital markets is that it is partly driven by the euro area residents themselves, as investors ( both retail investors and banks ) from the euro area have bought a significant share of euro - denominated bonds issued in international markets. this is especially the case in international debt markets. likewise, a significant share of euro - denominated financial activity in the city of london originates from euro area - owned banks. these hold around 40 % of euro - denominated assets of uk - resident banks. let us now take a closer look at the | 0.5 |
across the atlantic, the federal reserve, has advanced in normalisation with four rate rises in 18 months, which have brought the target rate on the federal funds to 1. 25 per cent, from a target of 0 - 0. 25 per cent in the seven - year period to december 2015, and an announcement to cautiously start the normalisation of its balance sheet already in october this year.. despite the β somewhat reluctant β tightening of the fed, the us monetary policy could actually be assessed as still being rather loose. the global capital flows from the emerging markets that are invested in the us contribute to this easing. turning now to the bank of england, in the aftermath of the brexit referendum ( summer 2016 ), the bank cut its interest rate to a record low of 0. 25 % after more than 7 years of static interest rates. it also boosted its qe scheme, while committing extra funds to encourage banks to lend. the rhetoric however has become more aggressive over the past few months, notably due to 4 / 9 bis central bankers'speeches surging inflation β brought on by the weakened pound since the referendum β despite a slowdown in the economy as the country prepares to leave the european union. with respect to normalisation strategy, the bank of england has in the past given indications that rate rises would precede any asset sales. according to governor carney back in 2013, the first move would be to tighten conventional monetary policy, for some time, or to some degree, before considering adjustments to the size of the balance sheet. overall, in the context of the ongoing global economic recovery, the major central banks can adjust the parameters of their policy stance at a rather small cost in terms of market disruption / dislocation. as markets anticipate the first tightening steps from the major central banks, a channel that is likely to show some volatility is the exchange rate channel. this adds to uncertainty, as β among other things - it has implications for the medium - term outlook for price stability. in addition, a possible overshooting in the foreign exchange market could lead to fluctuations in the trade imbalances, including those of the euro area. the outcome of the normalisation process is likely to be determined by the interplay and the relative stance of the policies of major central banks as they move towards a less accommodative stance in the coming years, as well as by several structural features of the different economies. in any case, appropriate communication is vital | central bankers'speeches i. 3 alternative paths to normalization and potential impact overall, the policies aiming to contain deflationary pressures have been effective in stabilising the financial system and thereby preventing a deep economic downturn. some ten years later, the world economy has entered a synchronised growth phase. all three of the world β s economic powerhouses β north america, europe and china β are growing in unison. with the global recovery firming up and global inflation rising, some major central banks might now be looking to gradually reverse course. the key challenge for monetary policy is how to unwind this accommodation in the least disruptive manner in terms of inflation, output and financial market stability. in terms of the broader alternative strategies to normalisation, the following paths could be envisaged : first seeking to guide policy rates higher, before initiating downward balance sheet adjustments ( as in the united states ) ; starting to downsize the balance sheet before initiating a tightening of interest rates ; undertaking both in tandem. the sequence in the implementation of balance sheet and interest rate measures, as well as the relative weights, could have a differing impact on the domestic economies, as well as crossborder spillovers, including through exchange rates and other financial channels. looking at specific central banks, the continued discrepancy between strengthening economic activity and subdued inflation dynamics poses a puzzle for the monetary policy of the ecb. in the absence of sufficient evidence of progress towards a durable and self - sustaining convergence in the path of inflation, a scaling - back of the exceptional degree of monetary policy accommodation is not warranted. deliberations on the future course of the ecb monetary policy are ongoing, especially regarding considerations about its asset purchase strategy beyond december 2017. adjustments in the monetary policy stance should be prudent and gradual, so as to ensure that any withdrawal of stimulus does not undermine the recovery amid the lingering uncertainties. in this vein, clear and timely communication of the governing council β s assessment is of utmost importance. given that markets can be sensitive to incoming information, timely communication is key to avoiding an extreme reaction, or β taper tantrum ", as experienced following the first announcements by the fed that it would taper its qe purchases back in 2013. the recent experience warrants caution. even hints at policy normalisation may cause an unwarranted tightening in financial conditions, as evidenced by the market movements after the speech of president draghi in sintra on 27 june 2017. | 1 |
set out the uk β s approach to cryptoassets and distributed ledger technology in financial services4 ; examining challenges in cross - border payments with colleagues from the bank of canada and monetary authority of singapore 5 ; exploring how as set out by mark carney in his 2018 mansion house speech, β new economy, new finance, new bank β, available at https : / / www. bankofengland. co. uk / speech / 2018 / mark - carney - speech - at - the - lord - mayors - bankers - and - merchants - dinner - mansion - house. β a platform for innovation β, available at https : / / www. bankofengland. co. uk / speech / 2019 / mark - carney - speech - at - innovate - financeglobal - summit - 2019. i set out our ambitions for the fintech hub in my speech β open to fintech β, available at https : / / www. bankofengland. co. uk / speech / 2018 / dave - ramsden - speech - hmts - international - fintech - conference. see https : / / www. gov. uk / government / publications / cryptoassets - taskforce see https : / / www. bankofengland. co. uk / news / 2018 / november / boe - boc - mas - joint - report - digital - transformation - in - cross - border - payments all speeches are available online at www. bankofengland. co. uk / speeches financial services might evolve over the next decade as part of the bank β s future of finance project6 ; and analysing everything from the potential role of bigtechs in financial services to the implications of open banking and psd2. but instead of looking back, i want to stay faithful to the spirit of today β s session and look forward to the contributions the bank can make to the future of finance. fintech is one of the bank β s seven strategic priorities for 2019. in particular i β ll discuss three key areas of fintech hub focus in 2019 : payments ; unbundling ; and artificial intelligence. 7 payments the first area i β ll focus on is payments. while the bank is not nearly as old as the guildhall, this year we are celebrating 325 years as the uk β s central bank ; that includes 325 years of providing foundational payments services. payments have become increasingly digital in recent years, and there are now | one big win is the ability to produce structured data from a range of sources, the analysis of which traditionally required significant manual effort. over time it may be possible, for example, to train tools to recognise business lines via their numerical characteristics and patterns, and their unstructured data alongside structured regulatory returns. ml also allows documents with similar characteristics to be classified together and analysed, either within or across banks. for example, it could be used to follow the escalation trail from the most junior to the most senior committees. this sort of work is labour intensive when performed by humans : aided by machines, supervisors could in future devote time to those areas where humans have a comparative advantage. setting a supervisory strategy without effective communication is pointless, as we rely on the firms to take actions to mitigate the risks. to achieve complex supervisory outcomes β which often require significant, multi - year remediation by firms β boards and senior management of firms have to understand the context and rationale for what we are trying to achieve, as well as what we would deem to be a successful outcome. so getting our communications right is key. but how clear are those communications? firms have developed a wide range of more - or - less polite methods for providing us with feedback on the letters we write to them. but letter writing is an art rather than a science, and evaluating objectively how clear we are does not lend itself easily to traditional forms of quantitative methods. advances in ml, all speeches are available online at www. bankofengland. co. uk / speeches however, are helping. we recently analysed the letters we write to firms on the key risks they face and our supervisory strategy. we quantified a number of qualitative features of these letters, for example, how blunt we are in our messaging, how personal we are in terms of to whom we address the letter, and the overall sentiment expressed by the letter. we then used an ml model called random forests to detect whether, for example, the pra writes to firms differently than the prior regulator, the fsa. ( we do. ) 10 on the back of that project, we have built an app that now enables supervisors to analyse their written communications. supervisors can use the app to analyse any of their draft documents before they are sent to firms. iv. conclusion advanced analytics, machine learning and ai seem to be everywhere now β from image and voice recognition software to driverless cars and health | 0.5 |
policy coordination in areas such as fiscal policy. putting all the countries using the euro on a clearly sustainable fiscal path would help restore market confidence. assuming that europe ultimately succeeds in managing this situation, a stronger union will emerge that will be viewed as more robust and resilient. this would be a welcome development for the u. s. if, in contrast, europe were not to be fully successful in charting an effective course, this could have a number of negative implications for the u. s. in particular, there are three possibilities that i would like to highlight for the subcommittee today. first, if the european situation were to deteriorate, then the euro area would face even more serious fiscal and economic challenges. as a result, growth within the euro zone would bis central bankers β speeches weaken and this would lead to less demand for u. s. goods and services that are exported to europe from companies and workers here. this would hurt growth here in the united states and would have a negative impact on u. s. jobs. it is important to recognize that the euro area is the world β s second largest economy after the u. s. and an important trading partner for us. also, europe is a significant investor in the u. s. economy, and vice versa. thus, what happens in europe has significant implications for our economy. second, if the european situation were to deteriorate, this could put pressure on the u. s. banking system. the good news is that u. s. banks are much more robust and resilient than they were a few years ago. u. s. banks have bolstered their capital significantly, built up their loan loss reserves and have significantly larger liquidity buffers. also, the direct exposures of u. s. banks to the countries in europe that are facing the most intense fiscal challenges are actually quite modest. the bad news is that the exposures of the u. s. banks climb quite sharply when one also considers the exposures to the core european countries and to the overall european banking system. this means that if the crisis were to broaden further and intensify, this could put greater pressure on u. s. banks β capital and liquidity buffers. third, if the european situation were to deteriorate further, financial markets would likely become more stressed. this could tighten the availability of credit to u. s. households and businesses. it could also cause equity prices to fall and this would | be able to continue to finance their u. s. dollar assets. if the access to dollar funding were severely impaired, this could necessitate the abrupt, forced sales of dollar assets by these bis central bankers β speeches banks, which could seriously disrupt u. s. markets and adversely affect u. s. businesses, consumers and jobs. one way we can help to support the availability of dollar funding is by engaging in currency swaps with other central banks. this has been used as a policy tool dating back to 1962. recently, the federal open market committee decided to re - launch this tool, cooperating with five other central banks. our intention is to create a credible backstop to β but not supplant β private markets. banks with surplus dollars are more likely to lend to banks in need of dollars if they know that the borrowing bank will be able to obtain the dollars it needs to repay the loan, if necessary, from its central bank. this action is designed to support financial stability, avoid an unnecessary tightening in financial conditions and support economic activity and jobs in the united states. in particular, by reducing the cost of dollar funding via the swap lines last month, we reduced the pressure on banks in europe to abruptly liquidate their u. s. dollar assets. thus, this step will help to insulate u. s. markets from the pressures in europe and support the availability of credit to u. s. households and businesses. european banks are particularly active in areas such as trade finance, project finance, energy lending and municipal finance β a sharp contraction of the financing they provide would be harmful for the u. s. economy as a whole including for u. s. exporters, firms working on infrastructure projects, the energy industry and hardpressed state and local governments across the country. u. s. financial institutions currently do not face difficulty obtaining liquidity in short - term funding markets. however, were conditions to deteriorate, the federal reserve has a range of tools available to provide an effective liquidity backstop for such institutions and is prepared to use these tools as needed to support financial stability and to promote the extension of credit to u. s. households and businesses. in sum, i am hopeful that europe can effectively address its current fiscal challenges. the federal reserve is actively and carefully assessing this situation and the potential impact on the u. s. economy. at this time, although i do not anticipate further efforts by the federal reserve to address the | 1 |
account two fundamental constraints. one is the ageing of the population. according to the stability programme update 2018, the size of the 65 - plus cohort is set to nearly double between 2016 and 2040 ( from 629 thousand to 1. 21 million ), with a corresponding increase in the old - age dependency ratio from 20. 9 to 37. 1. the ageing of the population has implications for the aggregate growth rate of the economy, in addition to posing challenges for public and private pensions, the provision of long - term care, the healthcare system and the education system. the other is the imperative for the world to make the transition to a low - carbon economy, requiring the contraction of carbon - intensive activities and the expansion of environmentally - sustainable activities. with sufficiently - early action, the costs of this transition may be quite limited, whereas a delayed transition would increase adjustment costs and run the risk of failing to cap the increase in global temperatures within an acceptable range ( european systemic risk board 2016 ). accordingly, the debate about long - term priorities should focus on the optimal mix of developmental policies to deliver sustainable growth, while recognising the financial constraints imposed by the legacy of high public and private debt levels and the imperative of managing the implications of an ageing population and a successful transition to a low - carbon global economy. central bank of ireland - unrestricted figure 3. national income : 1995 - 2017. 300, 000 euro millions, nominal 250, 000 200, 000 150, 000 100, 000 50, 000 - gdp gni gni * note : gni * adjusts gross national income to strip out the depreciation of foreign - owned intellectual property assets. data from central statistics office. figure 4. household disposable income 60, 000 us dollars, per capita, gross 50, 000 40, 000 30, 000 26, 400 20, 000 10, 000 lva grc pol est svk svn cze prt kor esp irl ita eu uk ea nld dnk jpn fin can swe bel fra aut aus deu nor che lux usa source : oecd central bank of ireland - unrestricted note : oecd ( 2018 ), household disposable income ( indicator ). doi : 10. 1787 / dd50eddd - en ( accessed on 20 july 2018 ). i will not attempt to offer a comprehensive analysis of these issues. let me make three points. first, | ; the 1980s fiscal crisis ; and the most recent crisis that ignited in 2008 ( o β grada 2011 ). furthermore, the vast international literature on economic and financial crises has identified many cases, with the causes and consequences of these episodes much debated ( kelly 2007, reinhart and rogoff 2009, laeven and valencia 2013 ). a primary lesson from the literature is that crises can emerge for many reasons. while some busts indeed follow boom phases, it is also possible to experience a negative shock that pushes a normally - functioning economy into crisis conditions within a short time period. in addition, not all booms are followed by busts β the infamous β soft landing β scenario sometimes plays out. from a policy perspective, it is clearly important to reduce vulnerability to crises by refraining from adverse macro - financial patterns such as persistently - excessive credit growth or unsustainable fiscal imbalances. in addition, especially since crises can arise even if domestic credit and fiscal conditions are in reasonable shape, it is also important to ensure the macro - financial system is resilient even in the event of severe external shocks. central bank of ireland - unrestricted currently, the international risk factors that are at the top of our monitoring list include : ( i ) the risk of an unexpectedly - sharp tightening in international financial conditions, as might be triggered by an increase in risk aversion among investors ; ( ii ) a downgrading of future global growth prospects, with an international trade war one possibly catalyst ; ( iii ) a shift in global tax practices that adversely affects small countries that host global multinational firms ; and ( iv ) hard brexit scenarios. while the first two risk factors are common across all economies, ireland is especially exposed to the second pair of risk factors. while it is tricky to attach a probability to any of these scenarios, the potential adverse impact on the irish economy and irish financial conditions calls for the accumulation of financial and fiscal buffers that would help to limit the damage. in relation to financial - sector buffers, the central bank is working to ensure that the capital positions of banks are sufficiently strong to withstand the losses that could be triggered by a negative shock. our policy interventions include the recent activation of the counter - cyclical capital buffer : in the event of a downturn, this capital buffer can be released, thereby avoiding a pro - cyclical withdrawal of credit supply under adverse conditions. i in relation to new mortgage lending, our borrower - based | 1 |
in the last two years also, the cbn has consistently intervened in the forex market through the increased sale of foreign exchange as an instrument of liquidity management ( the so - called special auctions ). in december 2006, the cbn introduced the monetary policy rate ( mpr ) with the corridor, and this has eliminated the high volatility in the money market interest rates. the money market is deepening, and the bond market is also evolving. the above conditions indicate that the private financial markets are getting deeper and sophisticated enough to warrant further steps on the part of the central bank to gradually withdraw as a dominant player in the forex market. the inter - bank forex market is now the dominant segment of the market, and needs to be deepened. consequently, the monetary policy committee ( mpc ) of the cbn has approved the sharing of part of the federation account allocation to the federal government and the state governments in us dollars. the local governments are excluded in this phase. for the central bank, this could also provide an additional instrument for effective liquidity management as we migrate to inflation - targeting framework. the proportion of the federation account to be distributed in dollars will be determined from time to time, but largely dependent on the assessment of the forex market as well as the liquidity management requirements of the cbn. both the states and federal government will be required to open β special domiciliary accounts β with commercial banks of their choice. the special account can only be accessed by monetizing the balances into naira. in other words, the governments cannot withdraw dollar cash but may also utilize part of their domiciliary accounts for settlement of external obligations ( e. g. opening of letters of credit ). from september 2007, the exchange rate that will be applied in the monetization of federation account as well as the β special domiciliary accounts β will be the inter - bank rate on that day. as the market deepens, the cbn will gradually withdraw from the wdas, and only intervene in the market ( buy or sell forex ) as may be required to achieve defined policy objectives. this new policy thrust is expected to deepen the forex market, promote financial market development, and improve the degree of integration among the domestic markets and with international markets. this policy will complement the ongoing programme of allowing nigerian banks to manage part of our external reserves in collaboration with foreign asset managers. the net effect of these will be to create and deepen | will adopt inflation target as the nominal anchor for monetary policy with effect from january 1, 2009. low and stable inflation will be our monetary policy β s primary long - term goal. focusing on inflation targeting does not mean that the cbn will not be interested in other broader objectives of macroeconomic policy β output growth, employment, exchange rate, and balance of payments. rather, an inflation - targeting framework will enable cbn to pursue these objectives in a more disciplined and consistent manner rather than the ad - hoc processes of the past. locking - in inflationary expectations is one effective way of ensuring that the currency re - denomination will be sustainable. the outcome of this new framework will greatly improve the credibility of the cbn as the monetary authority, as well as deepen the financial markets and promote rapid development of a private sector - led economy. we will use the next 16 months to fully prepare for the introduction of this framework especially in the light of the deep technical issues involved. the cbn would collaborate with the national bureau of statistics in significantly improving the availability of high frequency and reliable data especially those of the gdp and more robust measures of the price indices. c : sharing part of the federation account allocation in us dollars to deepen the forex market and for liquidity management : to commence from september given the structure and development of the financial system, the underdeveloped nature of the forex markets, as well as the restrictions on foreign exchange transactions, the cbn has traditionally fully monetized the foreign currency receipts in the federation accounts, to be shared by the three tiers of government. initially, the cbn also maintained the accounts for all the tiers of government β as part of the liquidity management framework. subsequently, as the banking system developed, the cbn allowed the share of the states and lgs to be deposited with the commercial banks. recently, following the reforms in the banking sector and the further liberalization of the forex market, both the financial system and the forex market have deepened and become increasingly sophisticated. since 2006, the cbn adopted the wholesale dutch auction system ( wdas ) in the forex market and significantly liberalized the forex market. furthermore, nigeria has exited the debt trap, built up significant external reserves, and the autonomous inflows into the forex market are such that the cbn has become a marginal player in the forex market. the forex market has become so efficient that nigeria no longer has multiple currency practices ( as defined by the imf ). | 1 |
certainty when a firm gets into trouble and they ensure that failure is orderly ; and macroprudential policy looks beyond individual institutions and deploys tools to target systemic risks. a recovery and resolution regime is particularly important for central counterparties ( ccps ), which have become critical hubs in the financial system. legislation in this area is progressing, and the esrb continues to identify areas of refinement to better address macroprudential considerations. 21 this includes the need for cooperation and coordination between resolution authorities for banks and ccps, as distress of a ccp would typically be triggered by distress in one or more banks that are clearing members of the ccp. creating a harmonised recovery and resolution framework for the insurance sector across the eu is also important. ordinary insolvency procedures may not always be consistent with policy holder protection and financial stability objectives. this means that they may not suffice to manage the failure of a large insurer or the simultaneous failure of multiple insurers in an orderly fashion. for example, romania developed a comprehensive recovery and resolution framework of this kind following difficulties faced by two large insurers in 2014 and 2015. and the netherlands and france are in the process of developing such frameworks after experiencing the near - failure of some financial conglomerates during the global financial crisis. 22 addressing systemic risks requires macroprudential tools that public authorities can use. 3 / 5 bis central bankers'speeches reflecting this, the esrb recently noted that there is a need to establish a comprehensive macroprudential toolkit beyond banking, which to date is lacking. 23 of course, specific tools still need to be developed. the esrb has done preliminary work assessing what those tools might be. one example is the macroprudential use of margins and haircuts, on which i updated the european parliament earlier this year. 24, 25 conclusion let me conclude. much has been achieved since the global financial crisis. in particular, banks in europe are more resilient and the banking union has advanced. moreover, authorities have the mandates and tools to tackle risks in the banking sector and are using them. these improvements have created a financial system that poses fewer risks to the real economy. at the same time, work remains to be done. authorities need to watch out for blind spots, where risks can build up unnoticed, and use the tools at their disposal. and legislators need to be mindful that authorities require a broad range of tools to be able to tackle | ##ctuate, they are set in currency markets according to the demands and supplies of forward - looking traders, and they can be very volatile, often overshooting long - term values. this volatility can destabilize trade and impart significant uncertainty to international lending. borrowers may borrow in international markets expecting to repay at one exchange rate, and when the bill comes due, the exchange rate may differ, by a lot. lenders and borrowers can both hedge, but hedging is costly, and institutions providing this hedge can go broke. β’ financial institutions. financial institutions engage in what is known as maturity transformation. they take deposits from you and me, which deposits can be redeemed any time we take out our check book, and make long - term loans to mortgage borrowers and businesses. there are fantastic efficiencies in this process - consumers can get higher returns on their saving, and business can borrow and invest in productive equipment. indeed, banks and other financial institutions play the same role in allocating domestic saving to its best uses that the international capital market plays for international capital. but as with capital flows, there are risks. if the banks β loans go bad, the institution is in trouble and may not be able to redeem deposits. within a country β s borders there are often institutions such as deposit insurance to protect savers, but internationally the risks can be greater. given that banks are involved in the domestic saving, investment process, it is not surprising that they have become heavily involved in the international saving, investment process. in general this process too has led to worldwide efficiencies, but here too there are risks. in japan, for example, the banks have been hurt by a massive decline in real estate and other values, which have put many nonperforming loans on their books. in korea and indonesia, the banks were hurt by the foreign currency exposure of their borrowers. β’ incentive effects. incentive effects are always important in economics, generally complicating the analysis of policy measures. nowhere is this as true as with international capital flows. one incentive problem involves what is known as moral hazard. suppose national governments do intervene to protect the safety and soundness of banks. that intervention might seem sensible, but it could inspire more risky lending by the banks, to let the government pick up the tab if things go bad. a second problem involves unilateral default on loan payments or currency obligations. defaults would | 0 |
bank lending will play a crucial role in switzerland β s economic development, especially in the coming weeks and months. the new crf is intended to support banks in these efforts, as is the raising of the exemption threshold for the negative interest rate announced by the snb last week. furthermore, after consulting with finma, the snb has submitted a proposal to the federal council requesting that the countercyclical capital buffer for mortgage loans on residential real estate be deactivated. this integrated package of measures gives banks maximum latitude for lending. since imbalances persist on the swiss mortgage and real estate markets, it is important that banks take adequate account of risks when granting mortgages. we are confident that the banks are aware of these risks. we are also confident that they will not use the latitude afforded by this access to capital to pay dividends or buy back shares, but rather to fulfil their economic function. in addition to facilitating lending, the snb is helping to stabilise the economic situation through its expansionary monetary policy. to ensure appropriate monetary conditions, we must counteract increased upward pressure on the swiss franc. we have therefore decided to scale up our foreign exchange market inventions β a tried - and - tested instrument β to shield the swiss economy. ladies and gentlemen, within the scope of its mandate, the snb is doing everything it can, in cooperation with the federal council and the authorities, to mitigate the economic impact of the coronavirus crisis on the population and on companies. page 2 / 2 | news conference berne, 25 march 2020 thomas jordan introductory remarks by thomas jordan ladies and gentlemen first, on behalf of the entire swiss national bank, i would like to express our sympathy to all those directly affected by coronavirus. swiss society and our country β s economy face enormous challenges. the snb is working closely with the federal council, the authorities and the business community to overcome this crisis. the measures adopted by the snb complement those of the confederation and are intended to cushion the economic impact of the coronavirus pandemic. monetary policy supplements the various fiscal measures taken by the public authorities. the swiss national bank has set up the snb covid - 19 refinancing facility ( crf ). this instrument is designed to strengthen the supply of credit to the swiss economy by providing the banking system with additional liquidity. there is no upper limit on the amounts available under the crf, and drawdowns can be made at any time. the crf will be available from 26 march 2020. the crf operates in conjunction with the federal government β s guarantees for corporate loans. the facility allows banks to obtain liquidity from the snb, which is secured by these federally guaranteed loans. in taking this action, we are enabling banks to access the required liquidity that will allow them to expand their lending rapidly and on a large scale. the interest rate for these refinancing transactions corresponds to the snb policy rate, currently β0. 75 %. under the crf, the snb can also conduct additional refinancing transactions in order to supply the banking system with further liquidity if required. as i mentioned, the snb β s new refinancing facility operates in conjunction with the federal government β s guarantees for corporate loans. so how does this approach work? page 1 / 2 berne, 25 march 2020 thomas jordan news conference in a stressed situation like the one we are facing, the risk of companies defaulting on loans increases. at the same time, the banks are seeking to hold higher levels of liquidity. these two factors can lead to a credit shortage, even though demand for credit is rising sharply. the confederation β s loan guarantees and the snb β s refinancing facility can unblock the system and get credit flowing again. as the banks have all the necessary client relationships, the loans will find their way to the companies that need them. the approach is simple, effective and makes use of existing structures. | 1 |
expanded unemployment insurance benefits. household spending stepped up in mid - april, coinciding with the first disbursement of stimulus payments to households and a ramp - up in the payout of unemployment benefits, and showed the most pronounced increases in the states that received more benefits. 9 with some of the fiscal support measures either provided as one - off payments or slated to come to an end in july, inflation compensation over the next few years have retraced much of their sharp declines in mid - march but remain below their typical ranges in recent years. the 5 - to - 10 - year measure of longer - term inflation compensation derived from treasury inflation - protected securities, at around 1. 4 percent, remains notably below pre - pandemic levels. this evidence is also consistent with recent research by baker and others, who examine a panel of households using a financial planning app and show that these households responded quickly to cares act ( coronavirus aid, relief, and economic security act ) stimulus payments despite stay - at - home orders and social distancing ; see scott r. baker, r. a. farrokhnia, steffen meyer, michaela pagel, and constantine yannelis ( 2020 ), β income, liquidity, and the consumption response to the 2020 economic stimulus payments, β nber working paper series 27097 ( cambridge, mass. : national bureau of economic research, may ). other recent studies, including kargar and rajan as well as chetty and others, find similar responses to the cares act using different data. see ezra karger and aastha rajan ( 2020 ), β heterogeneity in the marginal propensity to consume : evidence from covid - 19 stimulus payments, β working paper series 2020 - 15 ( chicago : federal reserve bank of chicago, may ), https : / / www. chicagofed. org / publications / working - papers / 2020 / 2020 - 15 ; and raj chetty, john n. friedman, nathaniel hendren, michael stepner, and the opportunity insights team ( 2020 ), β how did covid - 19 and stabilization policies affect spending and employment? a new real - time economic tracker based on private sector data, β opportunity insights working paper ( cambridge, mass. : opportunity insights, may ), https : / / opportunityinsights. org / wp - content / uploads / 2020 / 05 / tracker _ paper. pdf. analysis | lael brainard : strengthening diversity in economics speech by ms lael brainard, member of the board of governors of the federal reserve system, at the conference for the 2017 summer training and scholarship program, sponsored by the american economic association and the national science foundation and hosted by the department of economics, michigan state university, east lansing, michigan, 28 july 2017. * * * i am grateful to john maggs for his assistance in preparing this text. the remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. let me begin by expressing my appreciation to the american economic association ( aea ), the national science foundation and the other organizations and institutions sponsoring this conference, which for nearly 20 years has focused attention on the benefits of diversity and the need for continued progress in ensuring that the best and the brightest have the opportunity to advance and contribute to the field of economics. i want to especially thank lisa cook for giving me the opportunity to be here today. i am particularly pleased to be able to speak with students participating in the aea β s summer and mentoring programs. at the fed, we share the goal of making sure the group of students who go on to practice economics look more like america. so if you are interested in pursuing economics, we want to make sure you have an opportunity to contribute to the field. perhaps more than any other profession, it is in the dna of economists to believe that equality of opportunity is important not only as a matter of fairness, but also to our country β s vitality. in addition, economists like to base conclusions on hard numbers. the numbers make clear there is a persistent lack of diversity in the economics profession, which indicates we are falling short of our ideals. the quality of the economics profession and its contributions to society will be stronger when a broader range of people are engaged. we now have substantial empirical evidence documenting the benefits of diversity in broadening the range of ideas and perspectives that are brought to bear on solving problems, and thereby contributing to better outcomes, both in research and in policy. studies suggest that increased diversity alters group dynamics and decisionmaking in positive ways. as amanda bayer and cecilia rouse have noted, microeconomic experiments and other research have confirmed these ideas. one experiment found that greater racial diversity helped groups of business students outperform other students in solving problems. and another found similar benefits from gender diversity. a study of 2. 5 million research papers across the sciences found | 0.5 |
rate and real interest rates. that could become the prelude to costlier adjustments in the future. our monetary policy has already given proof of its high capacity to adapt to drastic changes in macroeconomic conditions and this latest shock will not be the exception. thank you very much. figure 1 output gaps gdp ( percent ) ( annualized quarterly change, percent ) - 2 - 2 - 4 - 4 - 4 - 4 - 6 - 6 - 8 - 8 - 8 - 12 - 12 - 8 ii iii iv ii iii iv dec. β 09 report ii iii iv ii iii iv mar. β 10 report ( 1 ) fourth quarter of 2009 indicators correspond to forecasts in the baseline scenario. ( 2 ) closing of national accounts as published in march. source : central bank of chile. figure 2 retail sales and new car sales ( indices, 2003 = 100, seasonally - adjusted series ) 03 04 05 06 07 08 09 10 non - durable goods ( 1 ) new cars durable goods perception indices ipec current situation ipec situation in 12 months imce current situation imce situation in 6 months ( 1 ) sold during moving quarter. ( 2 ) figure above ( below ) 50 points indicates optimism ( pessimism ). sources : adimark, car association asociacion nacional automotriz de chile, central bank of chile, chamber of commerce camara nacional de comercio and icare / universidad adolfo ibanez. figure 3 lending interest rates ( * ) loans to firms and households ( moving four - week average, percent ) commercial 30 - 89 days ( * ) weighted average rates. consumer over 3 years ( annualized change in the moving quarter of the nominal seasonally - adjusted series, percent ) - 10 02 03 04 05 06 07 08 09 10 consumer housing commercial sources : central bank of chile and superintendence of banks & financial institutions. figure 4 nominal exchange rate ( indices, jan / 2 / 2006 = 100 ) real exchange rate ( indices, 1986 = 100 ) mer mer - 5 oer 88 91 94 97 00 03 06 09 1995 - 2009 average 1990 - 2009 average rer source : central bank of chile. figure 5 inflation indicators ( annual change, percent ) - 3 cpi cpix cpix1 - 3 cpi w / o foodstuffs and energy sources : central bank of chile and national statistics bureau ( ine ). figure 6 world growth ( annualized quarterly change, percent ) commodities prices ( indices jan / 2 / 2006 = 100 | measuring the economy β s productive capacity and, therefore, trend gdp, the output gap and inflationary pressures. according to the survey of damages from the earthquake and tsunami delivered by the government on march 23, the cost to replace the destroyed capital stock amounts to 20. 94 billion us dollars. following the reasoning described above, this figure is the equivalent to the gross value of the lost capital stock. how then can we estimate the net value of the capital destroyed? estimates in our national accounts indicate that between the years 2000 and 2008 the net value of the capital stock was around 63 percent of the gross stock. applying this percentage directly, we estimate that the damage to the net capital stock, consistent with the figure disclosed by the government, is 13. 2 billion us dollars. if we consider that the net capital stock amounted in 2009 to an estimated 435 billion us dollars, the aforementioned loss is equivalent to nearly 3 percent of the total. therefore, given a loss of 3 percent in the net capital stock, the board estimates that during this year the level of trend gdp will fall 1. 0 % to 1. 5 % because of the catastrophe. the magnitude of the short - term impact of the natural disaster depends on the share in national gdp of the hardest hit regions, the sectoral composition of production by region and the duration of downtime in productive processes, among other factors. in 2008, regions vi, vii and viii produced nearly 16 % of national gdp, mostly concentrated in the manufacturing sector. as for the labour market, the three regions generate almost one fifth of national employment. the board estimates that the disaster had a negative effect of about 3 percentage points on first - quarter gdp growth. in the second quarter, assuming a gradual normalization of productive processes, the effect is reduced to around 2 percentage points. these assumptions are based on a scenario in which the reduction in output is concentrated in regions vi, vii and viii, and primarily affects the manufacturing sector. it is important to consider that the difficulties caused by the catastrophe in the making of spending decisions may hold down demand, and it is likely that some short - term effects will be seen in consumption and inventories. with respect to inflation, problems in production or distribution will probably increase the price level immediately, an effect that should be temporary for the most part. the usual economic statistics for march could give a better approximation of the immediate effects of the earthquake and tsunami. overall, the complexity of an accurate reading of the data must be taken into account | 1 |
cross - function process that is devoted to the identification and analysis of these trends to provide early warnings on emerging consumer problems for our examination team, and enhance our messaging to consumers and nonprofit support organizations. additionally, we are leading a robust and informed dialogue among community and financial industry stakeholders on ways to modernize the 1977 community reinvestment act ( cra ) to reflect changes to the financial landscape and new delivery mechanisms for financial products. how we function the board's division of consumer and community affairs ( dcca ) has primary staff responsibility for carrying out our consumer protection program. but the division draws substantially on resources and expertise from other functions of the board and the federal reserve system. the board's experience is that the most effective programs require a multidisciplinary approach that draws on a deep understanding of consumer behaviors and interests, as well as financial markets and industry operations. recognizing that, key elements of the division's program include : β’ rulemaking as a pillar of our consumer protection program that utilizes a team of attorneys to write regulations that implement legislation, update regulations, respond to a changing marketplace, put useful and effective disclosures in place, and prohibit unfair and deceptive acts and practices ; β’ consumer testing to develop effective disclosures that are meaningful to consumers ; β’ supervision and enforcement of state member banks and bank holding companies and their nonbank affiliates to ensure that consumer protection rules are being followed ; β’ consumer complaint and inquiry processes to assist consumers in resolving grievances with their financial institutions and to answer their questions ; β’ consumer education to inform consumers about what they need to know when making decisions about their financial services options ; β’ research to understand the implications of policy on consumer financial markets ; β’ outreach to national and local government agencies, consumer and community groups, academia, and industry to gain a broad range of perspectives, and to inform policy decisions and effective practices ; β’ support for national and local agencies and organizations that work to protect and promote community development and economic empowerment to historically underserved communities. interconnections between consumer protection and prudential supervision as early as the 1970s, the board recognized the need for dedicated experts to conduct consumer compliance examinations. since that time, the board has had a separate examination force, specially trained in the intricacies of consumer compliance laws and regulations. at the same time, there is recognition that consumer protection supervision is connected in important ways to prudential supervision. as a result, the board's separate divisions for consumer protection and prude | housing and mortgage markets. the federal reserve supported placing fannie mae and freddie mac into conservatorship to help stabilize an important source of housing finance. more recently, the federal reserve has announced that it will purchase $ 600billion in debt issued by the housing - related government - sponsored enterprises and in mortgage - backed securities backed by fannie mae, freddie mac, and ginnie mae, which could reduce funding costs for mortgages. it also is supporting foreclosure prevention and neighborhood stabilization efforts, which help reduce unnecessary foreclosures and their costs on communities. limiting foreclosures will also help reduce the risk that house prices will sink significantly below the level justified by fundamentals. the events of the past year and a half have highlighted the need for changes in our financial system. presumably, such changes may include a different balance between bank - based and market - based financial intermediation. as regulators of banks and thrifts, our job is not to determine what this balance should be. rather, our job is, and has been, to create an environment in which, in the short run, banks can step up to fill as much of the gap as possible that has been left by still - dysfunctional markets, consistent with a strong, stable banking system. over time, of course, we will need to work with the congress and the new administration to construct a system of oversight over both markets and institutions that better protects the stability of the financial system and the u. s. economy. see board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, and office of thrift supervision ( 2008 ), " interagency statement on meeting the needs of creditworthy borrowers ", joint press release, november 12. | 0.5 |
across the full spectrum of market participants. i ask you all as participants in the foreign exchange market to familiarise yourself with the principles of the code and verify that your operations in the market align with them. that said, the process does not really end, because as the foreign exchange market continues to evolve, the code will need to evolve with it. the work to date has reflected a very constructive and cooperative effort between the central banks and market participants. i would particularly like to acknowledge the enormous time and energy contributed by david puth and the market participants group as well as the team of my fellow central bankers. all of us recognise the need to restore the public β s faith in the foreign 4 / 5 bis central bankers'speeches exchange market and the value of the global code in assisting that process and also in helping improve market functioning and confidence in the market. let me finish with three things to take away with you : read the fx global code when it is released on may 25th. adapt your business where appropriate to conform with the principles of the global code. ask your fx counterparties whether they are committed to the principles of the global code. 1 see < www. bis. org / mktc / fxwg / gc _ may16. pdf >. 2 see < www. bis. org / press / p150511. htm >. 3 see < www. rba. gov. au / afxc / about - us / pdf / global - preamble. pdf >. 4 see < www. bis. org / mktc / fxwg / am _ may16. pdf >. see also c salmon ( 2016 ), β rebuilding trust through the β fx global code β : reasons for optimism β, available at < www. bankofengland. co. uk / publications / documents / speeches / 2016 / speech924. pdf >, speech at the aci uk square mile debate, london, 21 september ; and s potter ( 2016 ), β the role of best practices in supporting market integrity and effectiveness β, remarks at the 2016 primary dealers meeting, federal reserve bank of new york, new york city, september, available at < www. newyorkfed. org / newsevents / speeches / 2016 / pot160907 >. 5 see < afxc. rba. gov. au / news / afxc - 26052016. html >. 6 see < www. bis. | 3 / 20 / 2019 property, debt and financial stability | speeches | rba speech property, debt and financial stability michele bullock [ * ] assistant governor ( financial system ) urban development institute of australia ( wa ) perth β 20 march 2019 thank you for the invitation to speak to you today. it is great to be here and to hear your perspectives. as assistant governor ( financial system ) i oversee the bank's work on financial stability. but what is financial stability and what is the reserve bank's role in it? the wellbeing of households and businesses in australia depends on growth in the australian economy. and a crucial facilitator of sustained growth is credit β flows of funds from people who are saving to people who are investing. credit provides households and businesses with the ability to borrow on the back of future expected income to finance large outlays, for example, the purchase of a home or equipment to establish or grow a business. a strong and stable financial system is important for this flow of funds. there is no universal definition of financial stability but one way to think about it is to consider what is meant by financial. my colleague luci ellis suggested that this is best thought of as a disruption in the financial sector so severe that it materially harms the real economy. [ 1 ] this leaves unsaid where the disruption might come from, but we would all recognise the outcomes of financial stability when we see it. for example, while australia was spared the worst impact of the global financial crisis, internationally it demonstrated the impact that financial instability can have on growth and hence the wellbeing of households and businesses in the economy. instability most of you will know about the reserve bank's role in conducting monetary policy. but another key role of the reserve bank that you might be less familiar with is promoting financial stability. in this area, we share responsibility with the australian prudential regulation authority ( apra ). but it is apra that has responsibility for the stability of individual financial institutions and the tools that go along with that. so how does the bank contribute to financial stability? https : / / www. rba. gov. au / speeches / 2019 / sp - ag - 2019 - 03 - 20. html 1 / 14 3 / 20 / 2019 property, debt and financial stability | speeches | rba there are a number of things we do. we undertake analysis of the economy and the financial system through the lens of financial stability, looking for financial | 0.5 |
##j - net is the planned development of the new bojnet system. the current boj - net system went live in 1988 and has been serving the industry with highly reliable and stable operation for more than twenty years. during this period, the environment surrounding the system has gone through significant change, including increasing interconnectedness among payment and settlement infrastructure and globalization of financial markets. the bank believes that the new boj - net system should have the capability to respond to ongoing and future developments in both payment and settlement industry and technologies supporting the industry, and that this should be achieved by migrating to the latest information processing technology, adopting a system architecture with greater flexibility for future changes, and enhancing accessibility from its participants and external systems to the new boj - net systems and services. the bank decided to fully review the configuration of the boj - net system, and last month released the principles guiding development of the new system and the implementation schedule. 10 this was done following a public consultation process, with many valuable opinions received from relevant parties. some of the possible changes under the new bojnet system include ( 1 ) expanding the range of transactions that can use the liquidity - saving features, ( 2 ) facilitating interoperability with other systems β for example, by adopting xmlbased messages β and ( 3 ) improving connectivity with other securities settlement infrastructure. the bank believes that the enhanced boj - net system will underpin the activities of financial institutions in japan as they pursue new opportunities in response to developments in financial markets and services. the bank will continue to closely consult with relevant parties as it develop the detailed functionalities and specifications of the new system. b. oversight of private - sector payment and settlement systems in addition to the operation of boj - net, the bank conducts oversight of private - sector payment and settlement systems. oversight involves monitoring the design and operation of individual systems and encouraging improvements where necessary, with primary focus placed on systems that are systemically important. oversight is widely recognized around the world as a critical function of central banks, although its legal basis may vary from country to country. financial stability, together with price stability, supports sound development of the national economy. central banks have attached importance to their oversight activities to ensure that payment and settlement systems do not become a source of instability, and to lay the foundation for further enhancement of the financial system. one issue that the bank has worked on over the years as part of its oversight activities is preparing arrangements for coping with participant default. in | course, without the integrated financial system, deficit countries would not have been able to maintain the persistently high private and public spending we observed in the decades before the financial crisis. by implication, export - oriented countries accumulated unprecedented amounts of wealth abroad, even though the underlying mechanisms were quite different. naturally, in this global setting, financial innovation went hand in hand with the transfer of huge amounts of funds from surplus to deficit countries. it is important to note that the emergence of current account deficits and surpluses is not bad per se. for an economy with an ageing population, for example, current account surpluses and the associated accumulation of net foreign wealth might well be a reasonable and efficient market outcome as its consumption rate is expected to grow in the future. as long as the global distribution of production and consumption reflects undistorted saving and investment decisions that put capital to the most productive use, it contributes to global growth and prosperity. in the same vein, financial innovation generally has positive effects, as it provides access to high - yield investment projects and thereby allows better risk sharing and lifecycle consumption smoothing. however, we know that in reality both processes have not always functioned that well. the undervaluation of exchange rates due to fixed exchange - rate regimes in some emerging market economies as well as the false perception of wealth which accompanied the emergence of asset price bubbles have distorted the global distribution of production and consumption and caused a build - up of global imbalances. in addition, the financial crisis has revealed serious deficiencies in the process of financial innovation and international risk sharing, which were not only harmful and inefficient per se but also further promoted the build - up of global imbalances. instead of reducing risk and increasing transparency, the process of global capital transfer via highly structured products encouraged savers to accumulate more risk than they were aware of and than they could afford, which in turn reduced borrowers β discipline rather than ensuring it. the paper by mendoza and his co - author β financial innovation, the discovery of risk and the us credit crisis β presented at this conference sheds light on the underlying mechanism by which insufficient knowledge about the true riskiness of the financial environment β which was, as we know today, the rule rather than the exception in the years preceding the financial crisis β can lead to a period of over - optimism in the financial markets. in this situation, investors are inclined to underestimate the deterioration of economic fundamentals and to over - borrow. the following read | 0 |
difficulties in the short term, but in the medium and long term, it enhances the efficiency of resource allocation and accordingly has positive impacts on employment and economic growth. and if economic resilience is strengthened by structural reform, we can avoid excessively accommodative macroeconomic policy and thereby minimize its negative side effects. ladies and gentlemen, i have talked about the challenges and policy tasks that small open economies currently face. it seems that monetary policy measures alone cannot resolve these multi - faceted difficulties. i would stress that we need to pursue efficient mixes of monetary, macroprudential and structural reform policies, as well as strive for international cooperation. i hope that today β s conference serves as an excellent venue for lively discussion and the free exchange of ideas regarding how to address these challenges. thank you. bis central bankers β speeches | when individual european countries secure fiscal consolidation through a recovery of their respective growth trends. bailout of heavily indebted countries ( billion euro ) greece 1st round ireland 2nd round1 ) portugal eu imf total note : 1 ) including those not carried out in the first found source : eu commissions at another point, a global financial crisis originating in the us and the euro area and the consequent policy responses in advanced countries have negative spillover effects on emes through the financial and real channels. the export momentum of emes weakened at the time of the financial crisis due to sluggish import demand in major countries amid the economic slowdown. in addition, as uncertainty over economic conditions mounted due to the global financial market unrest, the sentiment of economic agents turned sour and, consequently, consumption and investment also weakened. bis central bankers β speeches exports of asian emes1 ) note : 1 ) period - on - period annualized rate stock price volatility of asian emes1 ) note : 1 ) standard deviation of daily volatility of stock price indices of 50 major enterprises in emes source : imf source : bloomberg in addition, as the burgeoning global liquidity created by the monetary easing of the central banks in major countries, exchange rate volatility in emerging market countries increased and international commodity prices such as those of oil rose sharply. government bond yield ( qe1 ) frb ( qe2 ) $ 1, 725 purchase of agency ~ 2010. 3 billion securities, mbs, etc. 2010. 11 $ 600 purchase of long term ~ 2011. 6 billion treasury securities 2011. 12 β¬ 489. 2 oil price providing ltro1 ) billion ecb 2012. 2 β¬ 529. 5 providing ltro1 ) note : long - term refinancing operation source : bloomberg the role of the asian economy is important for the recovery and sustainable growth of the world economy in the future and global financial resources, in this respect, should flow into emes with relatively high productivity and a heavy demand for capital. emes have been less affected by the crisis than advanced countries and are relatively sound fiscally. therefore, they have sufficient latitude in macroeconomic policy to promote growth in the short - term. in addition, although asian emes achieved high growth thanks to export - oriented strategies, intraregional trade continued its upward trend even after the financial crisis as countries turned to stable growth policies through domestic demand expansion. bis central bankers β speeches government | 0.5 |
at between 1 and 1. 5 percentage point for the period 2014 - 18. what is more, since 2013 the euro area has created 11 million jobs. you may not like low rates ; indeed the markets anticipate, reasonably in my view, that short - term rates are close to bottoming out. but there can be no doubt about two very real facts that unite us on the governing council. our decisions are guided solely by our mandate of price stability, in the face of inflation that is currently too low at less than 1 %. given the recent slowdown in economic activity β starting with germany β these low short - term rates must and will remain in place : it would undeniably be a mistake to raise ecb rates now. we are all realists here, so we should focus on two issues : - the first is clarifying the definition of the ecb β s inflation target, and above all sharing it better with economic agents β businesses and households. this is crucial to allow them to better adjust their inflation expectations ; that is precisely the aim of the strategic focus we are going to launch with christine lagarde. - the second issue is limiting the negative effects of low rates on financial stability, and in particular on banks and insurers. we do not lack the tools to do this β you with your strategic adaptation, and us with our β macroprudential β policies. but this brings me to my second part. ii. meeting three major challenges to strengthen euro area banks. i would like to share with you a strong belief : europe needs strong banks. a dynamic economy requires a strong banking industry ; it's true in france, and it's also true in germany. undeniably, euro area banks are stronger than they were ten years ago. as a result of regulations and of their streamlining efforts, they page 5 sur 7 were able to significantly shore up their balance sheets. in particular, their solvency and liquidity have improved, while the weight of npl has drastically declined : their common equity tier 1 ratios ( cet1 ) rose from 9 % at end - 2009 to 14. 6 % in june 2019. in addition, the major german banks themselves have seen their npl amount fall more than twofold over the past five years, sliding from eur 81 billion at end - 2014iii to eur 33 billion at end - march 2019. euro area banks are nevertheless experiencing a serious problem of profitability, which is | . access through the portal is simple and quick ; in three clicks users can access free content carefully chosen for its educational qualities, neutrality and freshness. we have opted for a similar approach to the dutch " money wise " platform, in that it is both practical, with a limited amount of entries and materials, as well as cooperative, offering a variety of sources from all of our partners. in order to ensure that the national strategy is rapidly implemented, we rely on the operational committee, which i chair, and which is responsible for management and coordination. our roadmap for 2017 is clear : during the first half of the year, operational objectives will be defined and available resources will be identified ; and during the second half, a robust and effective assessment methodology will be developed. we are already actively working on introducing specific mechanisms for people in financial difficulty and students. to help those experiencing financial difficulties, we are working closely with social service providers to produce practical educational materials covering seven concrete subjects : budgeting, relationships with banks, credit, bank payment incidents, banking inclusion, overindebtedness and complaints. from june 2017, these materials will be made available to social workers and associations so that they can be used with people in financial difficulty. by the end of the year, the banque de france's teams have planned to hold nearly 900 meetings to present in detail these educational materials, as well as the " mes questions d'argent " portal, to 14, 000 social service providers. for students, in december 2016 the ministry of education set up a group of experts in which the banque de france and the french institute for public financial education actively participate. the group's objective is to develop appropriate educational materials that help teachers to introduce primary school pupils to the concepts of money, budgeting, credit and savings, and then to build on that knowledge in secondary schools and, if possible, up to the age of 18. the first information kits approved by the group of experts will be supplied to teachers for the beginning of the new school year in september 2017. the banque de france will promote their use to teachers in academies in accordance with its brief defined by the ministry of education. * * * 2 / 3 bis central bankers'speeches allow me to conclude by quoting the american musician, pete seeger, who had these wise words : " do you know the difference between education and experience? education is when you read the fine print ; experience is what you get when you don β | 0.5 |
on the board and top management of banks, especially in the areas of display of professionalism and high ethical standard shall not be compromised. in addition, we will put in place a code of conduct for regulators to ensure that our own staff live up to the high expectation of the nation. meanwhile, the on - going assets β quality audit by the cbn and ndic would ensure that appropriate policies are put in place to address identified lapses. it should be emphasized that the determination of the health of banks is a continuous exercise. the cbn on its part will continue to monitor developments in the sector and proffer appropriate policies to ensure that the nigerian banking system remains sound and stable. the decision of the mpc this morning to guarantee inter - bank exposures and pension funds administrators ( pfa ) placements in the banks is aimed at reassuring the market and stabilizing the system while the reform process continues over the next 6 - 9 months. this should stop the current overheating in the system and exert a downward pressure on interest rates. conclusion to conclude, let me reiterate that the conduct and implementation of monetary policy will continue to be dictated by the prevailing domestic economic conditions. thus, the monetary policy framework will continue to be transparent and market - driven using standard monetary policy instruments, like cash reserve requirements, appropriate interest rate policy, open market operations, discount window operations, foreign exchange market intervention, amongst other market - related tools. furthermore, while achieving a low interest rate regime remains the principal target of monetary policy, the determination of interest rate will continue to be flexible and driven by market forces β demand and supply conditions, amongst other factors. similarly, our exchange rate policy will be transparent and dictated by our economic fundamentals while remaining market - driven at all times, but with due cognizance of ensuring that instability does not creep into the various segments of the foreign exchange market. overall, our ultimate goal is to establish a credible monetary policy regime that will facilitate the attainment of our two key mandates of ensuring price and monetary stability and promoting financial soundness and stability, to support government β s macroeconomic objectives of high and sustainable economic growth and low unemployment, in the mediumto long - term. | sanusi lamido aminu sanusi : assessment of current development in the nigerian economy and the cbn policy action speech by mr sanusi lamido aminu sanusi, governor of the central bank of nigeria, at the maiden press conference, central bank of nigeria ( cbn ), abuja, 7 july 2009. * * * it is with great pleasure that i welcome you all to my maiden briefing on the activities of the cbn in addressing the challenges faced by the financial sector owing to the downturn in the global economy. i, therefore, take this opportunity to appraise the cbn monetary actions in the recent past and indicate the way forward in the immediate future. as someone just coming from the other side of the aisle of the financial sector ( the regulated ), you will appreciate that my remarks today as a regulator must be viewed as one that is not bereft of the first - hand knowledge of what regulation means. as you are well aware, the primary objective of the cbn is to promote sustainable output and employment while maintaining price stability over time. these goals are not unique to this country. indeed, most central banks pursue the same objectives. the pursuit of these objectives is central to eliminating uncertainties and distortions of high and variable inflation, thereby, providing an economic environment that is conducive to growth. the central bank of nigeria has in recent times pursued these goals by influencing financial conditions, that is, the cost and availability of credit as well as asset prices. the growth performance of the nigerian economy, has until recently, been sustained at a relatively high level due largely to the sustenance of macroeconomic stability β a product of effective conduct of monetary policy, financial sector reforms and relative improvement in fiscal prudence. the current global financial melt - down has weakened growth considerably in the first quarter of 2009 to 4. 85 per cent from 5. 75 per cent estimated for 2008 and projections for the future are not encouraging. to ameliorate the situation, cbn took measures to encourage the flow of credit for productive investment. the mpr was reduced by 175 basic points in april 2009 while the liquidity and cash ratios declined from 30 per cent and 2 per cent to 25 per cent and 1 per cent respectively. as these actions did not seem to have yielded the desired economic outcomes in time, the bank resorted to direct control measures involving interest rate caps and the re - introduction of exchange control measures. the failure of the economy to respond favourably | 1 |
β the significant stock of acquired assets and reinvestments of the maturing principal payments β can have implications for market functioning and price formation. while the short - term economic impact of the crisis is substantial and requires ample monetary policy support, the longer - term outlook is much less certain. it depends in particular on the extent to which the effects of the crisis exert prolonged pressure on supply and demand conditions, and on the strength and speed of fiscal and structural policy responses. fragmenting world trade is likely to redirect the focus of supply chains from short - term efficiency to increased resilience. this will lead to a shortening of supply chains and a reshoring of production. at the same time, a surge in corporate indebtedness could make firms riskier and weigh on their capacity for investment. while these combined effects could act as a brake on productivity growth, they can be effectively offset if firms and policymakers use this crisis to modernise our economies. this includes promoting the digital transformation and refocusing supply chains to fully exploit the allocative efficiency offered by the single market. such reform efforts will be crucial to smooth the sectoral reallocation which could result from the damage that even mild distancing measures inflict on labour - intensive service sectors. while a countercyclical fiscal push can help sustain aggregate demand in the transition, fiscal space 1 / 2 bis central bankers'speeches may not be available in the countries most affected by the crisis. policymakers should therefore use the current window of opportunity and create levers at the european level to reduce the risk of individual countries emerging from the crisis excessively scarred. the european commission β s proposal for a major recovery plan, including the largest joint issuance in euro to date, is seen as a major step towards increasing the resilience of our union. if decision - makers can ensure that all countries emerge from the crisis stronger, with more modern and dynamic economies, the recovery will be stronger and more sustainable. this would reduce the burden on monetary policy and the need for further easing of the policy stance. 2 / 2 bis central bankers'speeches | ##b in particular, are doing everything they can to support the functioning of the financial system. moreover, market participants and other actors should be assured that the cooperation within the global network of central banks has been excellent and highly conducive to addressing the ongoing challenges. thank you for your attention. | 0.5 |
in fact, extending maturities and reducing interest rates on the outstanding debt may improve the growth outlook of the greek economy and, hence, provide further support to public debt sustainability. bank of greece staff estimates that a permanent reduction of the interest payments β togdp ratio by 0. 6 percentage points can lead to an increase in real gdp by a total of 4 β 7 % over the next ten years, depending on the fiscal policy mix. this corresponds to a boost in real gdp growth of Β½ percentage point per year on average for a ten - year period. the economic rationale that debt relief of this form can provide a β growth dividend β is that reducing the debt servicing costs can free up resources which can be used for investment, job creation and economic growth. the growth dividend is more pronounced if such debt relief is combined with a credible expenditure based fiscal consolidation programme. however, broadening the tax base and fighting tax evasion should not be expected to weigh negatively on growth performance. alternative options could also be considered to improve the sustainability of greece β s public debt. however, they might be more contentious as they likely involve some costs for euro area partners. bis central bankers β speeches concluding remarks concluding, the immediate challenges of the government are to : consolidate fiscal achievements, further specify and agree with the institutions the full list of specific reforms by the end of april 2015, implement the agreed reforms in order to allow for a speedy and successful conclusion of the current evaluation procedure. this would allow greek banks to regain full access to the ecb β s monetary operations, alleviating liquidity pressures, reducing the funding costs for the greek financial system and the greek economy as a whole, and exploiting the accomodating monetary policy applied by the ecb in the eurozone. the conclusion of the current evaluation procedure by the end of june 2015 will pave the way for a final agreement on the follow up arrangement between greece and the eu partners. this should involve a credible medium term fiscal and structural reform programme, backed up by a reliable credit line, as well as further debt relief along the lines of the november 2012 eurogroup decision. these actions are prerequisites for strengthening both economic growth and employment and for greece β s return to international financial markets, thus, signaling the definitive exit from the crisis. the new greek government has a unique opportunity to implement bold structural reforms, which would be backed by a large majority of political forces in the country. this is in my view a historical | the identification of the most appropriate workout solutions and, where possible, ease the burden on cooperating borrowers facing temporary difficulties in servicing their debt. apart from effective npl management, the consolidation of positive growth rates will obviously contribute significantly to improving the npl recovery rate, by generating a self - reinforcing process of npl reduction as the debt servicing capacity of households and businesses increases. ( h ) securing the smooth financing of the greek economy. the capacity of the banking system to finance the real economy does not depend on capital adequacy alone, but also on its liquidity. following the recent capital increases, greek banks have a sufficient capital base, but their liquidity has come under considerable strain, especially in the last few months. the stock of outstanding deposits is significantly lower today than it was before the crisis, plus the banks still have no access to money markets. after the recent decision by the ecb β s governing council ( 4 february 2015 ) to exclude securities issued or guaranteed by the hellenic republic from the list of collateral acceptable for open market operations, the value of eligible securities held in greek bank portfolios dropped significantly. greek banks can still obtain liquidity from the bank of greece through the emergency liquidity assistance ( ela ) mechanism, but, as entailed by the rules of the eurosystem, at substantially higher cost. hence, there is need for greece to fulfil its recent agreement with our partners as soon as possible, so that this decision can soon be revoked. * * * in the past few years, we have covered some very rough ground at high cost to the whole of greek society. if we can address the relatively few issues still pending and complete the first phase of the effort launched in 2010, we will then be able to move on to the next phase, in which the growth potential of the economy will be considerably enhanced. rapid growth will enable the implementation of more effective policies for restoring social cohesion which has been eroded by the crisis. the priorities of these bis central bankers β speeches policies should be geared towards reducing unemployment and correcting inequality in the distribution of the burden from the adjustment effort. for this to happen, we must remain firmly committed to the country β s european course and fulfil the recently concluded agreement as soon as possible. bis central bankers β speeches | 0 |
this catalyst role is important in the field of retail payments. commercial bank money is the predominant settlement asset in france, even though the use of banknotes and coins remains significant in this country, as in most of the european union. this variety of means of payment, based on settlement assets that can be exchanged at any time at par, is an advantage that i believe should be preserved for several reasons : on the one hand, because of the financial inclusion responsibility, since the most vulnerable populations are also the least banked ; but also with a view to diversifying risks, in the event of a widespread failure of electronic payment systems. however, it is commonly believed that in europe there is a risk of a fragmentation of cashless means of payment and a dependence on dominant foreign players that benefit from the effects of global networks. this is particularly true of international payment schemes in the area of card payments ( visa, mastercard ), through which nearly two - thirds of card payments made in the european union, especially cross - border transactions, are routed. eighteen countries depend entirely on international schemes for the processing of their domestic transactions. mobile payments, whose share is increasing, depend largely on mobile operating system developers such as apple or samsung. in addition, private systems entering in the instant payment sector are multiplying β paypal, lydia, and also alipay, which will soon be launched in france, for example β at the risk of undermining bank interoperability and competition. restrictions on the use of certain proprietary technical solutions such as nfc sensors, or payment card acceptance software for example, may also constitute an obstacle to free competition. hence, the importance, in this context, of including collective interest projects in the european strategy for retail payments, which has reiterated the need for the eu to ensure the independence of its range of payment solutions. a key example of this is the project conducted by a group of banks to propose a solution, known as the european payment initiative ( epi ). this is why the banque de france and the eurosystem as a whole are encouraging and supporting this market initiative, which would represent a further major milestone in the creation of an integrated european payment area since the creation of the sepa area. b - central banks may also contribute as providers of settlement services in central bank money, particularly with regard to financial intermediaries. indeed, central bank money is the cornerstone of settlements between financial intermediaries and has every reason to remain so in the future : | the consumer wishes to make long - term investments. in a highly complex economic environment, the advisory duty is an essential link in the chain between household satisfaction and the economic efficacy of their investments. the numerous questions concerning life - insurance received by the legal specialists on the acp information platform bear witness to this reality. the marketing of financial products also raises questions of consumer protection. the financial services provider must take into account the client β s profile including his / her age, assets, investment horizon and degree of risk aversion, and adapt the investment opportunities offered accordingly so that the recommended investments are tailored to the client β s wishes and needs. guaranteeing that savers receive the right information is therefore indispensable. beyond this, at a time when savers seem to be turning towards more liquid products, how can the industry cater for savers β longer - term financing needs and for the financing requirements of other economic agents? should these needs and requirements be taken into consideration in the way financial products are marketed? this will be the theme of our second session. iii. lastly, what role should regulators play? regulators carefully monitor changes in household savings patterns and the marketing conditions of financial products. bis central bankers β speeches the evolution of household savings decisions can impact the soundness of financial institutions. in fact, any sharp switch from one form of saving to another can potentially destabilise the financial system and therefore the economy as a whole. the same is true for badly calibrated financial products that can have negative consequences on the profitability of institutions, especially when the remuneration of the product clearly deviates from prevailing market interest rates. as regards product marketing, it is, i repeat, a key factor in consumer confidence, particularly with respect to longer - term investments which play such an important economic role. the acp and the amf will make sure that these longer - term investment opportunities are preserved and, in this context, the development of aggressive and abusive sales practices is not acceptable. more generally, we will ensure that credit institutions and insurance entities behave prudently in their quest to gather client resources and rigorously in their respect of consumer protection laws. this will be the theme of the round table in the third session that will close this symposium. * * * i thank you for your attention and hand the floor to antoine frachot who will assume the role of moderator for the first session. bis central bankers β speeches | 0.5 |
the return of protectionism policymakers in many countries are increasingly concerned at the smooth functioning and security of global supply chains. the covid - 19 pandemic and heightened geopolitical tensions following russia's war on ukraine and its people have exacerbated these issues. the imposition of sanctions on russia by a number of countries suggests that a more fragmented international system could replace previous norms of ever more open markets and increasing interconnectedness. in particular, strategic geopolitical rivalries may decrease the weight that policymakers place on economic gains from global integration. this dynamic, along with factors such as natural disasters, climate change - induced volatility and terrorism mean that supply chain disruptions could be a new normal. such disruptions have fostered a narrative that countries and regions could be better off by reducing their exposure to foreign shocks, which propagate into their economies through integration into global value chains. there is a renewed focus on the efficiency - resilience trade - offs inherent in international trade. that is, whether the gains from lower - cost imports adequately compensate for greater susceptibility to shocks transmitted across borders. i have previously highlighted that resilient systems are in the interest of the community as a whole, and particularly during a time of disruptive change. our ability to respond to the pandemic was a clear illustration of the benefits of building - up stocks of resilience. in order to increase security of supply and reduce β excessive dependencies β, the eu has recently enacted legislation to spur the local production of key manufacturing inputs. these initiatives seek to help europe achieve open strategic autonomy, or the ability to protect its interests and adopt its preferred economic, defence and foreign policy without depending heavily on other foreign states. this is a stated policy objective of the european commission. similar legislation is being enacted around the world, such as the inflation reduction act in the us. these legislative initiatives underscore the shift towards an emphasis to reduce exposure to global supply chains including through the greater use of domestic inputs, the shortening of value chains and through the further diversification of input sources. the potential effects of global fragmentation the imf and other international institutions are warning that there are potentially considerable negative effects from a fragmentation of global trade along geopolitical lines. in an early study, the oecd estimate that greater localisation increases vulnerability to both external and domestic shocks. this is contrary to proponents of localisation, who believe that any increase in suscept | β certainly ambitious, but realistic all the same - have formed the basis for successive governments β budget plans. these recommendations go even further than strict respect for eu rules, since they take into account future requirements stemming from the ageing population. moreover, the high council of finance, which also comprises experts appointed by the communities and regions, contributes to ensuring the necessary coordination between the various levels of power that make up the country β s system of government. it effectively transposes the general objectives for all the public authorities into specific recommendations for each entity. these are given a formal setting in cooperation agreements between the federal government and the communities and regions, a sort of internal stability pact. we could look at it as an example of good practice. besides, the beneficial role of the nai and the high council of finance in preparing the ground for consolidation of public finances is acknowledged in recent imf and ec publications. 2. unlike the budgetary procedures, the automatic wage - indexation mechanism used in belgium meets with almost unanimous disapproval by the international institutions, because of the nominal rigidities it risks causing. along with luxembourg, belgium is certainly in good company here, but we are quite isolated among the european countries, even if several of them have partial indexation systems. are belgium and luxembourg right to go it alone or not? in my view, in the belgian case the question calls for a carefully weighed - up response. the wage - indexation mechanism has been around for a long time in belgium. the first collective agreements on the subject were concluded as early as 1920, notably in the mining industry, and, after a wage freeze during the second world war, they were widely reinstated at the end of it. the wage - indexation mechanism has become an essential element of a wide social consensus, but at one time, it also risked undermining business competitiveness. index - linking was also temporarily suspended following the devaluation of the belgian franc in 1982. the need to keep a competitive edge led to a thorough reform in 1994. the government laid down a new requirement for the so - called health index to be used as a reference for indexation rather than the general consumer price index. a number of products like tobacco, alcoholic drinks, petrol and diesel are not taken into account in calculating the health index. in this way, any increase in taxes and excise duties on these products, especially tobacco and petrol, is no longer passed onto wages and prices and, on the other hand, second | 0 |
anselmo l s teng : macao β s financial sector β exhibiting steady development speech by mr anselmo l s teng, chairman of the monetary authority of macao, at the 2008 amcm spring cocktail reception, macao, 11 march 2008. * * * the honourable secretary for economy and finance, mr. francis tam, the honourable director of the economic affairs department of the liaison office of the central people β s government in the msar, mr. zhou zhikui, the honourable chairman of the macau association of banks, mr. ye yixin, the honourable president of the macau insurers β association, mr. si chi hok, the honourable president of the macau insurance agents and brokers association, mr. tou kam seng, the honourable president of the federation of macau professional insurance intermediaries, mr. frank ip, the honourable president of the macau financial markets association, mr. chan kam chun, the honourable president of the association of macau financial employees, mr. ng chi peng, distinguished guests, friends of media, dear colleagues, good afternoon, first of all allow me to give a warm welcome on behalf of the monetary authority of macao ( amcm ), to mr. francis tam, mr. zhou zhikui and the honoured guests who attend this cocktail reception. at the same time, i would like to express my gratitude for all the help and support you have rendered to amcm in the past year. only those who have survived the harsh winter appreciate the warmth of spring. after a severe winter which can happen only once in half a century, we gather gaily today when flowers bloom in the mellow march air. we look back and forward to celebrate the arrival of the year of the rat. 2007 is an eventful year. global economic growth has slowed down due to the reverberations arising from the subprime crisis originated in the us. at the same time, financial risk which has hidden under years of economic prosperity starts to take its toll. there is the bank run of a financial institution in the uk, heavy losses have been incurred by giant multi - national financial groups. all these fiascos have created shock and uncertainties in international financial markets. however, despite all these turmoils in the international financial environment, macao continues to enjoy a burgeoning economy. financial risk is under proper control while the financial sector exhibits steady development. we can attribute all these successes to the endeavour | supervise all authorized institutions by conducting on - site inspections, off - site surveillances and prudential meetings. in 2007, amcm issued β guideline on management of country risks β and β determination of market risk adjusted capital adequacy ratio β to be adopted by financial institutions which will no doubt enhance the stability of our financial system. in the domain of insurance supervision, we emphasized on the revision and perfection of related legislations. at the same time we strengthened our inspection efforts, bashed illegal insurance activities. in perfecting related legislations, we revised β mandatory automobile civil liability insurance β and β mandatory labour civil liability insurance β. simultaneously, we enhanced inspection of aml measures implemented by insurance institutions. in 2007, amcm carried out on - site inspections on insurance institutions operating in macao, accentuating our efforts in regulating the operation of our insurance market. we strive to maintain a stable exchange rate. in 2007, china achieved record high trade surplus. there was a hefty increase in exchange reserves. the yuan continued to appreciate against us dollar which gave rise to depreciation of the pataca against the yuan. it fueled the pressure on inflation in macao. against such a backdrop, amcm adhered to rules of currency board and link rate, maintained the relative stability of the pataca, which facilitated stable operation of the macao economy. amcm promotes actively cross border financial cooperation. in 2007, as usual, amcm participated in activities relating to financial cooperation with the mainland, our neighbouring regions, countries and international organizations and encouraged the financial industry of macao to communicate and cooperate with overseas entities. for instance, we promoted closer cooperation between our financial sector and portuguese speaking countries and actively participated in meetings with relevant international and regional organizations. we hosted related international activities and successfully hosted the ogbs 2007 annual general meeting. we advocated and deepened financial cooperation between macao and guangdong as well as between macao and shenzhen. we reinforced cooperation with various financial regulatory bodies with a view to effectively bashing illegal financial activities through execution of cross border supervision. we actively encouraged the enlargement of rmb business in macao, promoted further development of rmb business, propagate the circulation of pataca on the mainland, reinforced cross border settlement and cooperation in financial infrastructure and opened up the clearing system for hong kong dollar cheques. in retrospect, we are proud to say that 2007 was again a fruitful year for the macao financial sector. i would like | 1 |
operate the irish deposit guarantee scheme. finally, the regulation of the conduct of financial firms and the operation of financial markets is a vital part of the overall regulatory architecture in order to protect consumers and investors. within the general european - level regulatory policy framework, conduct regulation is primarily carried out at the national level and our mission statement of β maintaining stability, protecting consumers β conveys the priority attached to consumer protection in the regulatory work of the central bank of ireland. i hope that this brief overview gives you a basic understanding of the post - crisis european monetary - financial landscape and the important role played by the central bank of ireland, both at the national level and through our contributions at the european level. 2 / 2 bis central bankers'speeches | gabriel makhlouf : opening remarks β β enterprise financing and investment in ireland β tackling the challenges of covid - 19, digitalisation and climate change β opening remarks by mr gabriel makhlouf, governor of the central bank of ireland, at the webinar β enterprise financing and investment in ireland β tackling the challenges of covid - 19, digitalisation and climate change β, jointly hosted by the central bank of ireland, economic & social research institute ( esri ) and european investment bank ( eib ) and held in partnership with the kemmy business school, university of limerick, 19 april 2021. * * * good afternoon, it is a pleasure to welcome you all to this webinar on enterprise financing and investment in ireland, with a particular focus on the challenges of covid - 19, digitalisation and climate change. we in the central bank are delighted to host this event with our colleagues from the economic and social research institute ( esri ), the european investment bank and the kemmy business school from the university of limerick. and i would like to thank all of our speakers today including minister for finance, pascal donohoe, minister of state for business, employment and retail, damien english, and christian kettel thomsen, vice - president of the european investment bank. an event like this highlights the wide range of actors and agencies that have an interest and a stake in the success and the resilience of the enterprise sector. indeed, our own presentation today is of work undertaken jointly with the esri, using data collected by the department of finance, highlighting just how important collaboration is in addressing the key problems facing our economies and our societies, and in navigating the uncertainty of the pandemic. the presentation of the eib and participation in our panel from a range of international institutions is also extremely welcome, allowing us to gain insights into the irish economy and wider issues facing the business sector from those observing from a distance. i would of course much prefer to meet you all in person, but nonetheless i am looking forward to our β virtual β discussions. small and medium enterprises ( smes ) in ireland while our event today will touch on issues relating both to smes and larger corporate businesses, i will focus my remarks on the sme sector. we are all aware of the enormous impact covid - 19 has had on our societies and our economies. smes have certainly not been spared, particularly with many businesses having to close their | 0.5 |
which gives banque de france teams a support for thinking β out of the box β and imagining their business ; - the acpr fintech - innovation unit, which facilitates the relationship between fintechs and the authority, especially with respect to the authorisation process, and studies in particular new challenges to financial regulators and supervisors that arise from innovations ; a recently appointed start - up contact person [ maurice oms ], and in the coming weeks, a network of start - up correspondents in the regional french tech capitals, which will help liaise with the start - up ecosystem. lastly, i wish to mention the creation of the bis innovation hub, with a triple mission of studying critical trends in financial technology, exploring the development of solutions that could enhance the functioning of the financial system, and mobilising central banks on innovation issues. the eurosystem has decided to be part of this journey, with two innovation centres in paris and frankfurt. all these new and innovative tools enable the banque de france to actively experiment new 3 / 5 bis central bankers'speeches technologies, with a view to identifying both the opportunities and the risks they may bring. it would take too much time for me to elaborate on all our experiments in the fields of datascience and ai, blockchain, cyber security, etc. let me just take a few examples. i would like first to talk about the workshops conducted by the acpr on the use of artificial intelligence in the financial sector as an example of what experimentation can bring, not only to a supervisory authority, but also to the entire ecosystem. indeed, these concrete experiments enabled the acpr, based on specific use cases, to examine algorithms from inside, their intrinsic performance, their integration into operational processes, and their control and governance environment. drawing on this experiment, the acpr published a report last june outlining what the framework for the proper use of these future tools could look like. this illustrates how experimentation allows us to send the right signals for the ecosystem to realise the potential of new technologies without fearing a delayed and unexpected β backlash β from the supervisory authority. the banque de france β s ongoing programme of experiments on wholesale cbdc constitutes further tangible evidence of our active support for innovation. among the challenges brought by innovation, there is one of special interest for central bankers : that of preserving the anchor role of central bank money in particular in financial markets. to this extent, the digitalisation trends in financial markets and in payments, as well as the | β 157. bergman, m. 2010. β har finanspolitik omvanda effekter under omfattande budgetsaneringar? den svenska budgetsaneringen 1994 β 1997 β, report to the swedish fiscal policy council, 2010 / 2. imf world economic outlook, october 2010. jansen, w. and nahuis, n. 2003. β the stock market and consumer confidence : european evidence β, economic letters, 79 ( 1 ) : 89 β 98. kremer, m. and westerman, t. 2004. β consumer confidence and stock prices in the euro area : is there a relationship β and does it matter β, paper presented at the 27th ciret conference. statistics sweden. aktieagande i bolag noterade pa svensk marknadsplats, 2011. the riksbank β s company interviews, september 2011. bis central bankers β speeches | 0 |
william c dudley : lessons of the crisis β the implications for regulatory reform remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the partnership for new york city discussion, new york, 20 january 2010. * * * it is a pleasure to have the opportunity to speak here today. i will focus on the important lessons of the recent crisis and how those lessons should inform the regulatory reform effort. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee or the federal reserve system. in my opinion, this crisis demonstrated that a systemic risk oversight framework is needed to foster financial stability. the financial system is simply too complex for siloed regulators to see the entire field of play, to prevent the movement of financial activity to areas where there are regulatory gaps, and, when there are difficulties, to communicate and coordinate all responses in a timely and effective manner. effective systemic oversight requires two elements. first, the financial system needs to be evaluated in its entirety because, as we have seen, developments in one area can often have devastating consequences elsewhere. in particular, three broad areas of the financial system need to be continuously evaluated : large systemically important financial institutions, payments and settlement systems and the capital markets. the linkages between each must be understood and monitored on a real - time basis. second, effective systemic risk oversight will require a broad range of expertise. this requires the right people, with experience operating in all the important areas of the financial system. in this regard, i believe that the federal reserve has an essential role to play. the federal reserve has experience and expertise in all three areas β it now oversees most of the largest u. s. financial institutions ; it operates a major payments system and oversees several others ; and it operates in the capital markets every day in managing its own portfolio and as an agent conducting treasury securities auctions. also, as the central bank, it backstops the financial system in its lender - of - last - resort role. compared with where we were in late 2008 and early 2009, financial markets have stabilized, and the prospect of a collapse of the financial system and a second great depression now seems extremely remote. even with this progress, however, credit remains tight, especially for small businesses and households. economic growth has resumed, but unemployment has climbed to punishing levels. so while circumstances have improved, they are still very far from where we want them to | followed by similar actions around the world β substantial independence for the central bank in the conduct of monetary policy is now widely regarded as international best practice. policy independence does not absolve the federal reserve from accountability for its monetary policy decisions and the need to clearly explain why they were taken. but it avoids the politicization of monetary policy decision - making. and this is good because politicized central banks generally do not have enviable records with regard to inflation, economic growth or currency stability. risk premia on financial assets are typically much higher in countries with politicized central banks. of course, a reversal of congress β s earlier decision would not amount to legislative control over monetary policy decisions. that β s not the issue. the issue is that a reversal of congress β earlier decision could create the appearance that the legislature seeks to influence monetary policy decisions by establishing a mechanism to publicly second guess those decisions. such a move would blur what has been a careful separation of monetary policy from politics. market confidence here and abroad in the federal reserve would be undermined. asset prices could quickly build in an added risk premium, which might lead to tighter credit conditions. these unintended consequences would undermine the legislation β s intent. i β m also concerned about those proposals under consideration that would move the regulatory and supervisory functions now held by the federal reserve to other agencies, new or existing. at present, the federal reserve is the consolidated supervisor for bank holding companies, a group that has expanded recently as investment banks and other companies formerly outside the federal reserve β s purview have been brought under federal reserve oversight. in my view, further disaggregation or fragmentation of regulatory oversight responsibility is not the appropriate response to our increasingly interconnected, interdependent financial system. funneling information streams into diverse institutional silos leads to communication breakdowns and too often to failure to β connect the dots. β in addition, there are clear synergies between the supervisory process and the federal reserve β s monetary policy and financial stability missions. the information we collect as part of the supervisory process gives us a front - line, real - time view of the state of the financial industry and broader economy. monetary policy is more informed as a result. only with this knowledge can a central bank understand how the monetary policy impulse will be propagated through the financial system and affect the real economy. similarly, involvement in the supervisory process gives us critical information in fulfilling our lender - of - last - | 1 |
. what we aim to capture by trend growth is the rate of growth, which is sustainable in the medium term, which, according to our analysis, has been estimated as falling in the range of 2 - 2Β½ %. let me also emphasise the fact that estimates of potential output ( and thus of the output gap ) are surrounded by considerable uncertainty. therefore, these indicators should be treated with great caution. we are currently observing a strong cyclical expansion supported by strong productivity growth. however, we need more compelling evidence before it can be concluded that this upturn will be followed by higher growth potential, which is above trend growth, as it has been estimated so far. it is too early to tell, but we are monitoring and analysing developments closely. we will take our findings into account when reviewing the reference value and taking monetary policy decisions. nevertheless, i should like to stress that it is hard to imagine that the current growth in m3 could be justified by an upward revision of potential growth. i should also like to point out that the analysis of monetary and credit developments conducted under the first pillar of our strategy is more complex than simply comparing actual m3 growth with the reference value. the challenge to turn the current expansion into a prolonged period of non - inflationary growth clearly requires further efforts in all policy areas. reforms in the labour market will be a major factor contributing to sustained non - inflationary growth in the euro area. the current level of unemployment in the euro area, despite some decline, is still too high. in this respect, both appropriate wage settlements and structural reforms will be important contributions to continued employment growth and to maintaining low inflation. with a view to fiscal policies in the euro area, it is important that the opportunity of the current economic environment is seized to improve the soundness of public finances. member states should take advantage of the current cyclical position in order to achieve and maintain budgetary positions, which meet the requirements of the stability and growth pact. more ambitious fiscal positions than those targeted in member states β updated stability programmes should be achieved, particularly in countries with high debt ratios and especially if economic growth develops more favourably than expected. in addition, we welcome initiatives to implement tax cuts in a number of countries, provided that these measures are consistent with the progress to be achieved in the area of fiscal consolidation. at the same time, more emphasis should be placed on structural reforms on the expenditure side of budgets leading to stricter expenditure restraint. at the current juncture, | . the ecb supports the swift action taken by national macroprudential authorities, which released or reduced capital buffer requirements. in parallel, fiscal actions, the first line of defence at this point, provide essential support to the non - financial sector. these actions include tax breaks, public investment and generous fiscal backstops, such as public guarantees and credit lines. while national support schemes are very welcome, the differences in their size and design could distort competition, as they have not been sufficiently coordinated at european level. loan guarantees also strengthen the nexus between banks and non - financial corporations on the one side, and their sovereigns on the other. as we move forwards, a european approach is important to ensure a level playing field and avoid fragmentation and the re - emergence of the banksovereign doom loop. overall, the euro area financial system has weathered much of the recent turmoil. but the loss of economic output and higher debt burdens increase the medium - term risk to financial stability in the euro area. key vulnerabilities remain, in both the banking sector and the non - banking sector. it will therefore be crucial to ensure that banks remain as robust as possible. the crisis should be seen as an opportunity to develop a vision for addressing pre - existing weaknesses in the banking sector and the crisis management framework for banks. at the same time, the deteriorating profitability outlook for insurers, liquidity risk in investment funds and higher risk exposures of non - banks raise the risk of renewed strains on the financial system. these risks may warrant sector - specific policy action. further reflections are also needed to develop an adequate macroprudential toolkit for this important and growing part of the financial system. the road to recovery allow me to conclude with a few words on the road ahead, namely on the policy action that will be needed during the recovery. ecb monetary policy will continue to provide the necessary support so that liquidity gets through to the people of europe and the real economy. but our response will be made more powerful if all policies reinforce each other. it is thus vital that the fiscal response to this crisis is sufficiently forceful, in all parts of the euro area. people and companies should be able to contribute to europe β s recovery wherever they are located. there now needs to be a political agreement to build the appropriate instruments for this 3 / 4 bis central bankers'speeches common response, and i look forward to the upcoming discussions on the basis of the european commission β s | 0.5 |
, changes to tax credits and bands, increase in excise duties, a 2 percentage point increase in the vat and the introduction of a property tax in 2013. on the spending side, current savings achieved to date include paybill reductions, covering pay rates and headcount, a public sector pension levy, and reductions in social welfare rates. despite these significant adjustments, however, the budget deficit remains very large. the most recent forecasts suggest that the deficit in 2012 will be somewhat below 8 per cent of gdp. although this is less than the target of 8. 6 per cent, public debt is continuing to accumulate rapidly and is expected to peak in 2013 at 121 per cent of gdp. 4. the current situation but while many measures have been taken by the irish authorities to overcome the crisis and to prepare for the exit from the programme, concerns remain. two are readily apparent. the first arises from the high level of mortgage arrears ; the second is the risk to sovereign debt sustainability arising from the high debt - to - gdp ratio. 4. 1 mortgage arrears as a consequence of the crisis, mortgage arrears have risen sharply, with some 15. 1 per cent of mortgages now in arrears for more than 90 days. a key determinant of mortgage arrears is the unemployment rate which stands at just under 15 per cent, three times the level at the start of 2007. mortgage borrowers who become unemployed may rely on savings to meet debt repayments for some period of time. however, the long - term unemployment rate has increased more than six - fold, with the effect that large numbers of people have experienced sharply reduced incomes for more than a year, raising arrears rates. for the banking sector, the combination of mortgage arrears and negative equity is major determinant of loss rates. while borrowers that become unemployed and therefore are unable to service their mortgages but who are not in negative equity can in principle sell their houses and repay the loans, those that are in negative equity cannot. moreover, it is difficult for banks to assess the repayment capacity of distressed borrowers. some borrowers may be experiencing temporary financial difficulties, from which they will recover relatively quickly. these borrowers may need some breathing space until they, for instance, find a new job. other borrowers may be experiencing a permanent decline in income, and require a more extensive modification of their mortgages, while others still may never be able to service | particularly so in dublin. for example, the percentage of respondents expecting national house prices to increase over the next three years has declined by 14 percentage points. the share expecting prices to rise in dublin over the next three years is down over 17 percentage points. furthermore the extent to which prices, nationally and in dublin, are expected to increase is notably lower than in similar surveys carried out in the second half of 2014, with national prices for one year and three years ahead expected to increase by 5 and 10 per cent respectively. the corresponding figures for 2014q4 were 8 and 15 per cent. nonetheless, it is important to note that at 5 per cent, house prices are expected to grow faster than inflation generally in the next year, implying that there is still plenty of demand for housing. the suggestion that macro prudential measures can mitigate speculative forces in the housing market is not new. the imf has presented an analysis on survey - evidence from korea, a country which has employed several forms of macro - prudential tools for some years. 7 its igan and kang ( 2011 ). bis central bankers β speeches analysis indicates that tightening ltv caps reduces households β expectations of price increases. despite these shifts of house price expectations, current credit availability in ireland appears to be largely unaffected in the first half of the year. while it is too early to assess precisely the short - term impact of the measures, data on the volume and value of mortgage drawdowns from the banking and payments federation ireland ( bpfi ) indicate an increase in mortgage lending in 2015q2, as do data on loan approvals, despite a slowdown in august. finally, property services regulatory authority data indicates that the level of property transactions has continued to grow in the first half of 2015. furthermore, any problems with the functioning of the property market highlighted by these measures are better addressed by policies in other areas. for instance, do building regulations impose unnecessary additional costs and thus constrain supply? 8 and to what extent is the demand for owner - occupied housing reflecting a poorly functioning rental market? clearly, permitting risky lending is not a good solution for problems originating elsewhere in the housing market. conclusion earlier this year, the central bank of ireland brought in macro prudential measures for residential mortgage lending. the motivation for doing so was to limit lending of the type that was shown to be particularly risky in the financial crisis, and thereby enhance the resilience of both households and banks. the measures were not very different | 0.5 |
seen to be excessive and a sign of overshooting. however, the longer these weaker levels persist, the greater the risk that the relatively benign impact on inflation will end. some prices are also impacted far quicker than others : for example petrol prices where the pass - through is very quick. we have been fortunate that the impact on petrol prices has been moderated to some extent by the weaker international oil price. nevertheless, should current levels of both product prices and the exchange rate persist, we can expect a sizeable increase in the petrol price in july. in essence, while monetary policy remains tolerant of inflation at the upper end of the target range or of temporary breaches, the increasingly risky outlook for inflation, and its possible impact on inflation expectations, does constrain further accommodation. more importantly, monetary policy cannot deal with structural constraints. all too often it seems easier to place expectations on monetary policy to respond and thereby avoid the more difficult task of dealing with these constraints. while the trade - offs between output and growth are well - understood, the bigger challenge comes from the expanding financial stability mandates. prior to the crisis, in many countries financial stability was an implicit objective of central banks, and in many instances was conflated with the health of individual banks and the stability of the banking system. in retrospect this is quite surprising, given that monetary policy is intermediated through the financial system, and therefore a dysfunctional financial system would effectively block the transmission mechanism of monetary policy. bis central bankers β speeches in the early part of the 2000s there was disquiet about emerging asset price bubbles with some voices, most notably at the bank for international settlements ( bis ) arguing that central banks should lean against these developments. the standard central bank response at the time was that, with inflation generally under control, low interest rates were appropriate. furthermore, it was argued, central banks were not well placed to recognise bubbles, let alone prick them, but were best placed to clean up in the event of a bubble popping. unfortunately, central banks are still cleaning up from the on - going global crisis. having recognised that price stability is not sufficient for financial stability, the need to focus on financial stability is clear, given that the fall - out of the crisis has been so protracted and costly. cleaning up is no longer the only option. the focus is now on macroprudential oversight, which focuses on the financial sector as a whole, rather than on individual banking institutions, which is the | stefan gerlach : macroprudential policy in ireland address by mr stefan gerlach, deputy governor of the central bank of ireland, at the seminar on β reform in the aftermath of the crisis β, university of limerick, limerick, 19 september 2013. * * * i am grateful to mark joy for his help in preparing these remarks. thank you very much for the invitation to speak at this seminar on reform in the aftermath of the crisis here at the university of limerick. this is my first visit to limerick so i am particularly pleased to be here. as all of you know, the central bank of ireland regulates and supervises individual financial institutions, that is, we are the microprudential supervisor, here in ireland. this is an area that fiona muldoon, who will speak later this afternoon, and her colleagues on the bank β s regulatory side have done much to strengthen in recent years. the motivation for microprudential policy is that by seeking to reduce the risk of failure of individual financial institutions, the health and stability of the overall financial system can be promoted. but we know from the financial crisis that the financial system is more than the sum of its parts. unfortunately, it is easy to imagine a situation in which individual market participants appear safe and sound, but the system overall is not. for instance, consider a situation in which financial institutions β individual balance sheets look healthy but they hold similar market positions. if for some reason these institutions decide to limit their exposures by reducing their positions, by selling collectively they might cause the market to become one sided and prices to fall rapidly. as that happens, they may redouble their efforts to get out of the market, leading to fire sales, massive valuation losses and to contagion to other investors. the risk that markets may herd, and for financial institutions to have similar positions, may thus cause problems that microprudential supervisors may not spot. what is less well known is that the central bank is also the macroprudential policy maker in ireland. 1 as such we monitor developments in the financial system to limit the likelihood of another financial crisis. macroprudential policies are very much a response to the financial crisis and an example of how central banks and financial regulators are drawing the lessons from the crisis and reforming the way they go about ensuring financial stability. since the notion of macroprudential policy is much less well known among the public, today i will take the opportunity to talk about it | 0 |
members. our central bank will obviously be a major player in successfully reaching these objectives β sustainable nominal convergence, preparedness for euro adoption and strengthening financial stability through participation in the banking union. by doing this, it should contribute to providing the stable business environment that is required from the perspective of micro level decisions. czech companies are already present as investors in romania, with names such as cez, zentiva, hame, and hopefully following this forum more companies will join them. this should work both ways, as investment opportunities identified during the forum discussions may also prompt romanian companies to invest in the czech republic. having said all this, i wish you to turn this event to good account and start fruitful business ventures. for instance, organising this forum in bucharest might be an opportunity for us to persuade our guests to get a flavour of the romanian wines. as far as the czech beer is concerned, romanians do not need much convincing β they are already into it. i do wish you all excellent and productive discussions. thank you! bis central bankers β speeches | florin georgescu : challenging the status quo in management and economics opening remarks by mr florin georgescu, first deputy governor of the national bank of romania, at the strategica international academic conference " challenging the status quo in management and economics ", bucharest, 11 october 2018. * * * distinguished guests, ladies and gentlemen, i am glad to welcome you at the national bank of romania, as we host today the 6th edition of this prestigious international conference, together with the national university of political studies and public administration, and the romanian academic society of management. the debates today will be held under a generous and timely topic : β challenging the status quo in management and economics β. we couldn β t have a better moment to discuss challenges to the status quo than today, as we witness a whole range of economic, social and political forces pushing for change all over the world. if this change is in the sense of progress or not, that remains to be seen. i trust that your presentations and insights will shed more light on these trends. i confess that i had a look at the titles of the presentations in both days of the conference, and the word that appears most frequently in these titles is knowledge. and i realize that not less than 50 years ago, peter drucker, the philosopher and management guru, launched the concept of knowledge economy. since then, economists and management specialists of all doctrines, put knowledge at the forefront of their views of the world. the surprise is that after 50 years, we still feel that there are missing elements in our economic and institutional constructions, which should be knowledge - based. instead of having more and more educated and informed people in society, we see a widening knowledge and information gap. partially this comes from economic inequalities, another increasing challenge, but partially from ignorance. the nobel prize this year was recently awarded to professors william nordhaus and paul romer for achievements in the economics of climate change, but also for the role of technology in economic progress. for both distinctions, the nobel committee mentioned that research informed government policies and international cooperation are decisive for sustainable economic growth. what we see in this year β s nobel prize award, is the supreme recognition of the fact that knowledge and research are essential inputs for policies. on the other hand, we notice that in many cases, in everyday practice, policies ignore the findings of research and academia, not to mention that sometimes they even ignore the basic laws of economics. at the other end of the transmission mechanism | 0.5 |
christian noyer : does europe face the prospect of a lost decade? speech by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, at the international economic forum of the americas, conference of montreal, montreal, 9 june 2014. * * * it is always a privilege to speak alongside larry. but it is also a challenge. i will make the most of it by referring often to salient remarks made by larry in recent months. i will address three questions : is the euro crisis over? does europe face the prospect of a lost decade? what short - term policy challenges are we facing today? i / β is the euro crisis over? less than two years ago, the euro area was fighting for its existence. euro pessimists were questioning its ability to survive. not anymore. analysts may be questioning europe β s ability to grow. but the challenges that we are facing are different. they are macroeconomic, not existential or systemic. thanks, mainly, to the eurosystem β s actions, financial conditions are normalising. spreads in peripheral countries have been dramatically reduced. soon, budgets will be reasonably balanced and there will be no more fiscal drag on the economy. households and corporates have strong balance sheets. recent forecasts put german growth at more than 2 %, italy in positive territory, and the outlook for france has improved markedly. growth of business activity in the euro area in april was the highest in the past three years. but the crisis has left an important legacy : β’ money and financial markets remain excessively segmented. the monetary transmission mechanism is severely impaired and credit conditions are still very different across countries and sectors. β’ deleveraging in the banking sector still acts as an impediment to recovery and growth. bank credit remains flat in the euro area as a whole, and smes β financing is a major concern, especially in stressed countries, where the percentage of financially constrained but viable borrowers is estimated at 25 % vs 1 % in β core β countries. we are very aware that balance sheet repair is a prerequisite for credit to resume and for monetary policy to be efficient. so, we are addressing the problem as a priority. 1. we are building a safer and more robust system of financial intermediation. a major step has been the creation of a banking union that, as you all know, will delink bank and sovereign risks and ensure a harmonised | will be withdrawn after a peaceful settlement of the geopolitical situation. in addition to this public β or geopolitical β fragmentation, there is a risk of β private β fragmentation through the disorderly development of crypto - assets, among which the somewhat misnamed β stablecoins β. as demonstrated by the turmoil on financial markets in recent weeks, they are possibly very unstable. we have long stressed the risks of such speculative investments. but it β s not enough : this must be taken as a powerful wake - up - call for a global regulation, which is urgently needed. mica on the european side paves the right way. crypto assets could disrupt the international financial system if they are not regulated, overseen and interoperable in a consistent and appropriate manner across jurisdictions. this is why i have spoken of the danger of fragmentation in payments akin to the middle age, with so - called β cryptocurrencies β having limited constituencies and acceptance. 3. but do we agree about the solutions? in principle yes : in order to avoid repeating past mistakes, we would need a collective momentum towards a stable and market oriented multipolar international financial system. a more multipolar ifs would help deal with the modern version of the triffin dilemma : the supply of usd global safe assets is limited by the fiscal capacity of the us, while demand for them is bound to page 4 sur 7 increase. it could also offer more monetary policy independence to emerging markets, by reducing the influence of us financial and real cycles spillovers. that said, the political conditions for such a major shift are not very favourable, to say the least : imagining the us, china and other major emerging economies converging today on a new ifs, while they didn β t for decades, could appear as utopian. let me be more positive : we need to keep this concept of a more balanced multipolar system on the horizon, at least as a β creative frontier β. and we europeans need to be active and committed on what depends on us. to move towards a more resilient global system, the euro should play a more important international role. it is a currency in a jurisdiction with solid democratic and stable institutions, including independent central banks and the rule of law. the euro is relying now on a more than 20 - year old solid track record of stability : it is backed by a soft power based on the respect of international rules, multilateralism and openness. | 0.5 |
achieved through interest policy. although the rule applied to the price level rather than to inflation and was not forward looking, it is a clear parallel to the rules of thumb that are used today by those central banks that target inflation. sweden β s price stability norm in the 1930s lasted only a few years and was followed by a return to a fixed exchange rate regime. during those years, however, it performed the central function of stabilising expectations as well as prices. this was important not least because to some extent it helped shield sweden from the global economy β s depressive impulses and thereby contributed to the recovery being speedier than in most other countries. here i should perhaps add that although this swedish price stability β experiment β attracted a good deal of attention at the time, it certainly did not leave any deep or lasting mark on the modern approach to inflation targeting. in the aftermath of the depression and the second world war, keynesianism gained ground. the introduction of inflation targeting in sweden in the 1930s was therefore not as pioneering as when this kind of regime was introduced in the early 1990s, first by new zealand and later by others. a great advantage with a regime that explicitly targets inflation, is that the central bank adjusts the interest rate continuously in the light of inflation prospects. compared with a fixed exchange rate regime, imbalances can then be prevented from building up to the same extent. a slight upward adjustment of the interest rate at an early stage, to reduce the risk of inflation picking up, is something quite different from having to hike the short - term interest rate in order to defend a fixed exchange rate. as a personal reflection i can say that explaining the importance of low inflation is much easier - not least for a central bank governor - than the task of selling the advantages of a stable currency. this is particularly true as the latter task becomes increasingly pressing if the economy has been hit by problems with costs and is facing speculative attacks. some of you may remember that for a few days in the autumn of 1992 the instrumental rate in sweden was raised to as much as 500 per cent. in my view, this is probably one important explanation why sweden is not a member of the erm system - at least not at this stage. the challenge during the 1990s for the inflation targeting countries has been to build a rigorous framework around the new regime. answers have been needed in particular to questions like the following : what rate of inflation should be targeted, what index should be used, are bands around | to make any judgement about the desirability or productive nature of gold consumption to weave the policy around such a value loaded judgement. it would be appropriate to assess the indian reality and the implications of large preference for holding gold and take appropriate policy measures. on the basis of such an assessment, a positive approach will have several dimensions viz. macro policy, financial markets, external sector and protection of consumer interest. in terms of macro policy, the objective of reduced recourse to gold would be automatically served in the long run through economic development, though the immediate effect of increased prosperity could be preference for investment in gold. spread of literacy, particularly female literacy, could also help in reducing the preference for gold. above all, availability and easy access to different forms of financial savings on an extensive scale, particularly for women, to protect the traditional β streedhan β may prove to be the most viable policy option to encourage non - gold form of savings. of particular relevance to monetary authorities, price stability and reasonably low but stable interest rates are in the medium - term, likely to contribute to reduced preference or recourse to gold as a form of savings as well as investment. as regards the role of gold in financial markets, the policy has to recognise that the indian gold market has always been linked to international gold market in view of large requirements of imported gold. recognition of such integration as an inevitable reality and taking appropriate institutional measures, would reduce the transaction cost and impart stability to the indian gold market. further, gold has been virtually insulated from the local financial market in terms of financing of the gold or gold transactions by the banking sector. gold - linked financial instruments are not prevalent in the indian market and forward markets in gold are virtually prohibited. given the inevitable integration between the global and local gold markets, there is considerable merit in following the global practice of integration of gold markets with financial markets. the role of banks in the context of gold market has already been recognised, but banks are playing the role of essentially being canalising agencies. while such a risk free approach is defensible from a prudential angle, banks could fund financial instruments without taking a risk on their own balance sheet, thus improving efficiency in the goldlinked financial markets. in respect of the external sector, the liberalisation of import of gold has helped the removal of nonofficial transactions to a significant degree. however, the export of gold jewellery is still somewhat insulated from the domestic market. the economic | 0 |
of the year. [ but ] we were surprised by developments in the us. we were surprised by the movements in commodity prices due to the ukraine war. these were not part of our forecast. thus, our exit came sooner and bigger [ than expected ]. we started with two 25 bps, an off - cycle 75 bps, and then another 50 bps. if you compare us with thailand and indonesia, we are among the central banks in southeast asia that was the most aggressive. why? if you look at it relative to the original exit plan, we would have done at least 100 bps anyway, but [ we ] could have done it in the last half of the year. 1 / 3 bis - central bankers'speeches in reality, the policy rate is still quite supportive of growth. indeed, this is happening when there are no lockdowns. when you look at google mobility indices, you can see [ the improvement ]. in the bsp, our covid numbers, we noticed, and this is exactly the same [ trend ] as the rest of the nation : low hospitalization. our source of confidence that growth will take place is, first, that people have learned to live with the virus, and second, vaccinations and previous infections make them more resilient. the fact that the virus affects the upper respiratory tract rather than the lower makes it more transmissible but less deadly. in that context, we are quite optimistic that [ economic ] growth is taking place. why the surprise [ slower - than - expected growth ] in q2 2022? i was personally expecting 8 percent ; what happened was much lower. if you look at growth from a seasonally adjusted quarter - on - quarter basis, we're on a slight reduction. the answer has nothing to do with the virus ; it has to do with the fact that when people are spending lots more of their money on transportation and electricity, they have less money for other things. that is what the data shows. when you take out essentials from consumption, what remains is non - essential. the growth of non - essentials already expanded to pre - pandemic levels and is now low again compared to pre - pandemic levels. the slower growth is not due to monetary policy ; it's due to the fact that between driving less, using less electricity, being less likely to go to restaurants [ as people have less to spend after spending for non - discretionary items | ], the economy would slow down. the slow economy is due to the high cost of imports and, unluckily, the high cost of some local agricultural products, [ which ] has reduced money for discretionary spending. this, together with the policy rate increases, give us an even more chance of seeing below 4 percent inflation next year. our policy rates are not in response to the current inflation per se ; they are forward - looking because we take very seriously our inflationtargeting mandate. if inflation is high next year, this would not be due to external supply shocks anymore but due to second - order effects. we notice, for instance, that wages are rising and transport fare petitions. there's very little we can do about this. but absent other shocks, we expect inflation to be below 4 percent next year and closer to 3 percent than to 4 thereafter. my point is we did not take away growth [ with our tightening ]. what we did was create bigger growth opportunities next year and the next. the other way to look at it is : we might have lost a little bit of output this year, but if we had postponed our actions, we would have lost more in the following years because the pressure to raise rates would have been even greater if we had not acted on inflation this year. in tagalog, mas mabuti ang maaga kaysa magaling. don't see our moves as being anti - growth. we're actually laying the groundwork for better growth in the coming years. another point : our banks are in a good position to absorb losses : there's enough provisioning, and capitalization is quite high β much higher than what's required. not all non - financial corporates are healthy, but that's the very nature of capitalism. in any distribution of firms in any capitalist economy, some will be doing much better or worse 2 / 3 bis - central bankers'speeches than average, but on average, [ the banks are ] quite strong. in my experience with the monetary board, never were we told by the government that our policy rate was too high. never were we told by the government to be gentle to a bank. the independence of the central bank is well understood by authorities, most of all by the current secretary of finance. thank you. 3 / 3 bis - central bankers'speeches | 1 |
kevin m warsh : the panic of 2008 speech by mr kevin m warsh, member of the board of governors of the us federal reserve system, at the council of institutional investors 2009 spring meeting, washington dc, 6 april 2009. * * * deterioration in employment conditions. pullback in consumer spending. decline of industrial production. retreat in capacity utilization. falling capital expenditures. these measures are objective, all - too - familiar indicators of recessions. they emerge during periodic troughs in our economic history. they are thought by most observers to be part of the business cycle. the decennial recessions of 1981 - 82, 1991 - 92, and 2001 - 02 were of differing causes and consequences. but they were alike in one key respect : they were extremely disruptive to countless workers, businesses, and communities. in the case of the united states, these periods were endured, and growth resumed apace, matched by new opportunities. the march of growing prosperity, however imperfect and interrupted, continued. 1 fear. breakdown in confidence. market capitulation. financial turmoil. these words are different, not just in degree but also in kind. they are more normative, but no less consequential to the real economy. they are indicative of panic conditions. in panics, once firmly held truths are no longer relied upon. articles of faith are upended. and the very foundations of economies and markets are called into question. some economists, market participants, and historians β not so long ago β were prepared to relegate these highly charged descriptions of despair to the dustbin of history. government policies improved, understanding of economics deepened, and markets found a more sustainable equilibrium, or so it was thought. the period of the past 16 months is already well chronicled in the popular lexicon as a recession. the recent data are consistent with the view that this recession will endure longer and be deeper and broader than most. characterizing the current period as a " recession " is still wanting, insufficient in some important respects. in my view, this period should equally be considered a panic, one that preceded, if not made more pronounced, the official recession. hence, the panic of 2008, which preceded the calendar year, is a more revealing description of the recent economic and financial travails. as i will describe, panics involve generalized fears β often related to financial firms β that magnify economic weakness. the encouraging news, i should note, is that panics end. | janet l yellen : shaping the future of the macroeconomic policy mix remarks by ms janet l yellen, chair of the board of governors of the federal reserve system, at the panel discussion on β shaping the future of the macroeconomic policy mix β, international symposium of the bank of france β central banking : the way forward? β, paris, 7 november 2014. * * * i would like to thank the banque de france for inviting me to take part in what i expect will be a lively discussion. the suddenness and severity of the global financial crisis forced policymakers to respond rapidly and creatively, employing a wide range of macroeconomic tools β including both monetary and fiscal policies β to arrest a steep economic downturn and restart the global economy. given the slow and unsteady nature of the recovery, supportive policy remains necessary. today i would like to briefly review the evolution of monetary and fiscal policies following the global financial crisis both in the united states and in other advanced economies, since we have faced similar experiences and employed similar policy responses. i will try to draw some lessons and provide some thoughts on the policy mix going forward. policy before the crisis prior to the global financial crisis, inflation rates in the united states and other advanced economies were near their target levels and most of these economies appeared to be operating close to their potential. policy interest rates were similarly in the vicinity of levels considered to be normal. fiscal deficits also appeared to be under control before the crisis. according to the organisation for economic co - operation and development ( oecd ), general government deficits in 2007 were less than 4 percent of gdp in the united states and the united kingdom, about 2 percent in japan, and less than 1 percent, on average, in the euro area. still, given relatively buoyant economic conditions, governments probably should have been doing more to prepare for the long - term challenge of aging populations, which will boost pension obligations and health - care expenditures in coming years. moreover, government debt levels were already high in japan and in some european economies and not particularly low elsewhere. in addition, some euroarea countries that appeared to have strong fiscal positions going into the crisis depended partly on revenue from housing booms that soon went bust. the policy response to the crisis when the crisis hit, its global scope and severity were exceptional. central banks in the united states and other countries responded by rapidly and sharply reducing their policy interest rates, lowering them in many cases to near zero. | 0.5 |
markets. i very much welcome this initiative by the ebrd to communicate the modalities of the programme and how exporting and importing firms in greece can benefit from it. i am sure that we will have a fruitful, informative and interesting discussion. bis central bankers β speeches | in the pursuit of this goal gained ground. these ideas underpinned the monetary policy of the bank of greece in the 1990s as it sought to support the effort to satisfy the maastricht treaty criteria and to join the euro area on 1st january 2001. the bank β s ability to attain its goals was considerably improved by the abolition of the monetary financing of the fiscal deficit, mandated under the maastricht treaty, in 1994, and the law, enacted in 1997, granting independence to the bank of greece with a mandate to achieve price stability. in an effort to bring down inflation, in the mid - 1990s the bank adopted a β hard - drachma policy β, under which the exchange rate was used as a nominal anchor. real interest rates were kept at high levels to help ensure the success of this policy. the hard - drachma policy operated, at times, under difficult conditions, yet it proved highly credible and immensely successful. ironically, the source of the difficulty was related partly to the success of the policy. the policy β s credibility led to enormous inflows of foreign capital, complicating the conduct of monetary policy. the bank was able to neutralise these inflows, absorbing excess liquidity and thus buying time for other policies to adjust. within three years of the policy, inflation was more than halved, falling to under 5 per cent, while economic growth accelerated sharply. the fiscal consolidation that took place beginning in the mid - 1990s, and moderation in wage increases, contributed importantly to an increasingly - sustainable policy mix, enhancing the credibility of monetary policy. with the outbreak of the asian financial crisis in late 1997, and its spread to other parts of the world, there were pressures on the drachma. the bank of greece initially raised interest rates to stem these pressures. then, in march 1998, the drachma entered the exchange rate mechanism of the european monetary system, so that it could satisfy a maastricht criterion, and was devalued to help maintain international competitiveness. unlike the currency devaluations in many other countries around this time, the drachma β s devaluation was not followed by the aftershock of a banking and financial crisis. a well - supervised greek banking sector, with adequate prudential regulations in place, limited the exposure of commercial banks to foreign currency risk and, therefore, safeguarded the financial system. in the years following the drachma β s entry | 0.5 |
the financial system. but they β ve only tackled tax havens and traders β bonuses. not much of a review, is it? jean - claude trichet : there is a global consensus among industrialised countries and emerging economies, first, that the principles of the market economy remain the best way of creating wealth, second, that the global system has to be a lot less fragile and much more robust and resilient and, third, that the best methodology consists in working together in the g20, the financial stability board and, in particular, the basel committee. we have an obligation to achieve results. our democracies would not forgive us if, in the future, we had another crisis as deep as the one we experienced in 2008 and 2009. we β re not looking for scapegoats. we have to strengthen, systematically and methodically, the frailties of the global financial system. those who say that once the storm has passed, we should return to β business as usual β are grossly mistaken. that β s not the way we will achieve growth and create the jobs that are so necessary. le point : would you, for example, be in favour of the creation of a european rating agency? jean - claude trichet : it is true that rating agencies have a great deal of influence. it is not ideal to have a global oligopoly of just three agencies. that said, artificial creations must always be avoided. we are closely monitoring this issue. le point : and the creation of a european monetary fund ( emf )? jean - claude trichet : the governing council of the ecb has not yet taken a position on this issue. i will only say that, if my understanding is correct, this would be a possible source of financing, subject to extremely strict conditions and without constituting any form of subsidy, that would aim to prevent phenomena that could cause financial instability in a euro area country. it would not be a monetary entity, so that adjective does not seem appropriate to me. in any case, i believe that the activity of such a fund, if created, should be strictly controlled and confined to cases of an extremely serious and specific threat. but i would repeat that the governing council of the ecb has not yet taken a position on this issue. le point : could a scenario be envisaged in which a country is no longer able to meet its obligations and leaves the euro area? jean - claude trichet : i have always | of virtual banks in hong kong would also provide additional impetus to the application of fintech in hong kong and offer a new kind of customer experience in mobile and digital banking. given the recent developments in fintech and the evolution of digital banking, we will shortly be consulting the industry and the fintech community on whether and if so how the guide to authorization of virtual banks promulgated in 2000 should be amended to suit the present day circumstances. ( d ) banking made easy another component of the new smart banking era is our β banking made easy β initiative. we will set up a new task force within the hkma and work with the banking industry to identify and, where appropriate, modify or streamline those regulatory requirements or processes that may hinder technological innovations. we will seek to clarify regulatory expectations, review our own guidance and rules to make them more user friendly, thereby facilitating innovations in products and services for better customer experience. remote onboarding of customers and account maintenance are two such examples in which the use of new technology may lower operating costs and improve customer experience. we will also initiate legislative changes in our antimoney laundering laws and regulations so that a more risk - sensitive approach to remote customer onboarding can be undertaken. we and the hong kong association of banks are now studying how to use know - your - customer ( kyc ) utility to conduct customer due diligence processes more efficiently. the hkma is also considering the introduction of multiple tiers of bank accounts so that the process required for opening accounts for the low risk banking services can be simplified. in addition to customer onboarding and account maintenance, banking made easy would seek to facilitate the use of technology in the areas of online finance, online wealth management and robo advisers. ( e ) open api the hkma is currently consulting the banking industry to formulate a framework for facilitating the development of open api. in the context of banks, open api refers to a set of publicly available coding that enables recognised third - party service providers, with the consent of the customers 4 / 6 bis central bankers'speeches concerned where appropriate, to connect to, and conduct data exchange with, the it systems of the banks. open api can serve many purposes. for example, it may allow users of online discussion forums and social media platforms to obtain information about products and services of banks for comparison and analysis. many lifestyle websites and mobile apps may make use of open api to integrate banks β foreign exchange and payment services to offer end - to - end | 0 |
and metals prices have historically moved with the business cycle in the developed world, this relationship has broken down over the past decade. for example, industrial activity in emerging asia now appears to be the dominant driver of oil - price movements, 2 and china alone is expected to become the world's largest consumer of energy by 2010. 3 emerging markets and developing economies have accounted for nearly 95 per cent of the increased demand for oil since see international monetary fund, world economic outlook ( washington : imf, april 2008 ) p. 198 - 99. c. cheung and s. morin, " the impact of emerging asia on commodity prices " ( working paper no. 2007 - 55, bank of canada, 2007 ). international monetary fund, " global energy : increasingly unstable, " finance & development 45, no. 1 ( march 2008 ). 2003. 4 as recently as the 1990s, marginal demand was roughly split between oecd and non - oecd countries. in the face of this demand, the supply response has been disappointing. consider oil. opec's annual production has declined by 2 per cent since 2005 and, with a few exceptions, non - opec supply has failed to meet expectations. among oecd countries, oil output has fallen by 8 per cent since 2002. as a consequence, inventories remain very tight at 31 days, and spare capacity is limited. with inelastic demand in the short term, actual or perceived supply disruptions can lead to sharp price spikes and continued volatility. there are many reasons why the supply response has been limited thus far. first, access to many of the world's most promising regions is often tightly controlled or wholly restricted to state - owned enterprises. second, while nominal investment has surged, so too have costs. 5 many in this room know from direct experience how hard it is to find skilled workers, drilling rigs, and pipeline capacity. exploration and development costs for conventional crude have doubled, and oil sands costs have tripled. across the global industry, surging investment costs have meant that real investment has remained flat. the net result is that a 70 per cent nominal increase in non - opec capital expenditure since 2003 has barely replaced declining production from existing fields. 6 over the medium term, high prices will encourage the development of new supplies and energy alternatives. canada will be one of the most important marginal suppliers of oil. with more than $ 150 billion of new investment in the oil sands proposed or under way | . in 2003 - 04, of course, we saw the reverse flow : investors became concerned about the large u. s. fiscal and current account deficits, foreign demand for u. s. financial assets declined, and the u. s. dollar, on balance, fell against many major currencies, including the canadian dollar. it can be very difficult to determine whether, at a given moment, type one or type two forces are driving the exchange rate. more often than not, shocks of different kinds occur at the same time, posing a challenge for the bank in terms of determining the implications for monetary policy. it's interesting to compare the exchange rate movements over the past few years, and their effects on canada, with those during the asian economic and financial crisis of 1997 - 98. because of that crisis, asian demand, which had accounted for a relatively large share of the growth of world demand for many commodities, weakened considerably. prices of key commodities produced by canada fell, and the growth of canadian aggregate demand was adversely affected. at the same time, and mainly because of the downturn in world commodity prices, the canadian dollar depreciated against the u. s. dollar. this depreciation, together with a strong u. s. economy, partly offset the negative effects of the asian crisis on canadian aggregate demand. the current situation, which in terms of commodities is the inverse of the one during the asian crisis, demonstrates the effectiveness and flexibility of the bank's monetary policy framework. while the particulars of today's situation are different, the monetary policy framework continues to support appropriate adjustments. adjusting to economic change in canada adjustment to economic change is never easy, either for businesses or individuals. over the past three years, changes in relative prices, including the appreciation of the canadian dollar, have contributed to a reallocation of labour and capital from the production of non - commodity tradable goods to the production of commodities. as i mentioned earlier, given the importance of commodities to our economy, and given the improvement in our terms of trade, there have been real economic benefits for canada as a whole. the flexibility and diversity of the canadian economy are also helping to facilitate adjustment to global economic developments. over the past three years, we have seen strong growth in capital spending in commodity - producing industries, as well as substantial gains in both capital spending and in employment in sectors with low exposure to international trade. capital spending has also increased, although at a more | 0.5 |
low and stable levels since the mid - 1990 β s. given the decreasing levels of inflation and inflationary expectations, the inflation premium included in nominal interest rates should have been reduced accordingly. nevertheless, slide 4 shows that this explanation does not suffice. real interest rates1 also show a declining trend, as represented here in the average real return on the 10 year bonds of g7 countries. what is behind this evolution? some attribute the low interest rate environment to a so - called savings glut. the crux of this argument is that there has been an excessive accumulation of global savings relative to the demand for fixed capital formation since the mid - 1990 β s. to quote federal reserve chairman ben bernanke β β¦ the very substantial shift in the current accounts of developing and emerging - market nations β¦ transformed these countries from net borrowers on international capital markets to large net lenders. β 2 indeed, it is interesting to observe that, in the late 1990 β s, in the aftermath of the asian crisis, several asian central banks started accumulating significant foreign exchange reserves in efforts to stabilize their capital flows and their exchange rates, or to be in position to do so, should that prove necessary in the future. meanwhile, some conjectured that mature economies with ageing populations would experience a peak in their savings rates. the β savings glut β hypothesis is contested, however. a first point of contention is that the impact of demographic change on savings and investments may be limited, compared to that of other factors. 3 indeed, the savings rates of industrialised countries did not appear to increase in this period ( slide 5 ). in some cases, they even decreased. a second discrepancy, asserted by john b. taylor and others, resides in the observation that the us savings gap, and the surge in savings in the rest of the world effectively cancelled one another out. 4 finally, despite the significant increase in savings rates in china and other emerging countries, there was no clear upward trend in global national savings. the stable output growth and historically low levels of inflation between the mid - 1980 β s and the onset of the financial crisis, a period often referred to as the β great moderation β, provides an alternative or complementary explanation for the downward trend in real rates. here, the real interest rates were calculated using the observed market nominal rate minus cpi inflation. bernanke ( 2005 ). cf. imf ( 2005 ). taylor ( 2009 ). cf | philip lowe : remarks - launch of asic's national financial capability strategy 2018 remarks by mr philip lowe, governor of the reserve bank of australia, at the breakfast event to launch asic's national financial capability strategy 2018, canberra, 21 august 2018. * * * i am very pleased to be here to participate in the launch of the national financial capability strategy. all of us have to make choices about money every day. do i spend, or save? if i spend, what do i buy and how do i pay for it? if i save, where should i invest ; how much risk should i take? if i borrow, how much should i borrow and how quickly should i pay it back? in many ways these choices have become more complicated over time. we have more options than ever before β which is good β but these options can be bewildering. it is fair to say that many people find it hard to navigate their way through the myriad of possibilities out there. but we all do need to find a way to navigate through these choices. we all need to plan. for our own sake, and that of our families, we need to do this as well as we can. if we go in the wrong direction, it can have a major effect on our families and our welfare, perhaps for years. so it is really important we make well - informed financial decisions. and, we can all do with a bit of help to make sure we are going in the right direction. the strategy that is being launched today can provide that help by providing education, information and support for australians as they manage and make decisions about their money, and plan and save for the future. i would like to congratulate the government and asic for the work they have done in putting this strategy together. at the reserve bank of australia, we are also trying to play our part. as australia β s central bank, the rba has a very strong interest in people being in control of their financial lives and making well - informed choices. i say this from the perspective of the individual and the economy as a whole. at the individual level, each of us will be better placed in our lives if we make good financial choices. and at the collective level, the financial choices that the 25 million of us make about how much we spend, save and borrow can have a major bearing on the health of the overall economy. if enough of us make risky or bad choices, the whole | 0 |
burkhard balz : opportunities and risks of central bank digital currencies keynote speech by mr burkhard balz, member of the executive board of the deutsche bundesbank, at the virtual european payments conference β key trends in the european payments landscape β, virtual event, 17 june 2021. * * * 1 introduction ladies and gentlemen, mr maleki, mr bott, thank you for your warm welcome, and thank you for giving me the opportunity to deliver a keynote speech at today β s conference. the euro football tournament kicked off recently, but things are rather different this year. there will be fewer gatherings in person and no β public viewings β, as we say in germany, with thousands of fans. instead, i have already heard about public viewings taking place in the digital sphere, with fans using virtual conference software to get together and cheer on their favourite team. fortunately, the games themselves are taking place in real life β with a considerable number of fans in the stadium β and not virtually. the same still cannot be said for most meetings in the business world. therefore, i am also speaking to you in a virtual, digital format today. however, digitalisation has also found its way into football, with teams using the likes of big data analytics to improve their performance. and we all know that money plays an important role in football business as well. so there is some common ground with the topic of our panel discussion and my keynote today : it is about rapid change, digitalisation and digital money, and central bank digital currencies in particular. cbdcs are one of the most exciting developments facing central banks today β not just in europe, but worldwide. many questions need to be answered. let me name just three of them : what opportunities are associated with cbdc? is there a need for banknotes to go digital? what features would cater to the demands of consumers and enterprises in both the financial and the industrial sector? maybe today β s conference can shed some more light on the different components of these important questions. market experts in europe and around the world are engaged in a lively debate about these questions, and several central banks are looking into the opportunities and risks associated with central bank digital currencies. a survey among central banks by the bank for international settlements ( bis ) shows a shift away from mainly analytical work on cbdc towards technical experimentation, with more than 60 % of central banks reporting that they are running practical experiments. 1 1 / 4 | andreas dombret : sino - german financial stability forum β introductory statement introductory statement by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the sino - german high level workshop, frankfurt am main, 11 july 2011. * * * welcome remarks, background dear mr yi gang, dear guests, it is a great pleasure to welcome you to this sino - german workshop, which is being held within the framework of the financial stability forum in frankfurt. our goal of an in - depth exchange of ideas and experience relating to financial stability is part of the overall project of closer cooperation between china and germany, as agreed last summer during chancellor angela merkel β s state visit to china. this closer cooperation is evidenced both by the first sino - german intergovernmental consultation in berlin that took place from 27 to 28 june 2011 and by this workshop. both countries share many features. one outstanding common factor is that china and germany occupy the top two spots on the list of leading export nations and, as countries that routinely run up a current account surplus, therefore sometimes hear calls to contribute to global β rebalancing β by strengthening domestic demand. the two countries also display clear differences, especially in terms of the openness, depth and diversification of their respective financial systems and financial markets. germany is part of a monetary union, while the renminbi is beginning to gain in importance as an international currency. this is where an exchange of views on the lessons learned during the current financial crisis is likely to be of particular mutual interest today. the structure of the workshop programme and the range of issues covered ensure that specific aspects of financial stability policy in china and germany will be given sufficient space. in this introductory statement, i would like to focus on the following four points : strengthening the international financial system interactions between monetary policy and macroprudential policy risks of the low - interest rate environment and developments in commodity prices strengthening the international financial system my first point relates to the current debate on potential recommendations and measures to strengthen the international monetary system during the french presidency of the g20 group of countries. as you know, these issues are currently being discussed in a g20 working group, particularly measures to manage international capital flows and global liquidity. public political statements and comments reflect clear differences between some emerging market economies and the advanced countries, although a greater consensus on several of these issues has been achieved in recent months. these relate, in particular, to different assessments of what is the | 0.5 |
luis m linde : key issues on today β s banking industry closing speech by mr luis m linde, governor of the bank of spain, at the 6th santander international banking conference, madrid, 5 november 2013. * * * i would like first to give my thanks to banco de santander for inviting me to take part in this final session of your 6th international banking conference, an excellent opportunity to review and assess key issues on today β s banking industry, which has to face, in the next few years, important regulatory and operational changes. i will comment on several elements of the new basel iii capital framework that remain contentious or are still open to discussion. among those, the leverage ratio, the liquidity ratio and the very important issue of consistency in implementation. then, i will move on to the financial stability board β s work on resolution strategies and, finally, i will comment on the european union bank recovery and resolution directive ( brrd ), and one of the most important elements it contains, the bail - in tool. first, the leverage ratio, the ratio between tier 1 capital and total balance - sheet and offbalance - sheet exposures not deducted from the calculation of tier 1. this ratio is set, in principle, at a minimum of 3 %. its entry into force as an obligatory pillar 1 ratio is foreseen to be in 2018. this new tool has been designed as a simple, transparent measure, not linked to risk, complementing and acting as a floor with respect to the risk - based minimum capital ratio. it seeks to reduce excess leverage in the banking system, and to afford an additional measure of protection against the so - called β model risk β, i. e. against the risks associated with the use of sophisticated models allowed under basel iii. there are still doubts about this ratio as a pillar 1 measure. i understand that the doubts do not concern the concept, but, rather, its final calibration and how it will impact on specific business models, in particular, those most focused on retail activity. moreover, it is not fully clear whether the best option will be a single percentage for all banks, irrespective of their size or business model ; or whether it would be better to opt for different percentages, depending on the type of business or activity of the bank ; or to establish a range within which the supervisor would have discretion to decide which figure applies best to specific institutions. we believe that this new ratio can be a | , the resolution plans and with the involvement of the resolution authorities of the main jurisdictions in which the groups operate. β’ second, a balanced loss absorbing capacity allocation across the group, according to local business risk profile in each jurisdiction. both elements will mitigate the risk of financial fragmentation due to non - coordinated measures taken by the different authorities, namely, β ring fencing β initiatives. spanish g - sibs fully comply with the pre - conditions to be considered β multiple point β groups : they are organised through local retail banking subsidiaries ; critical economic functions, e. g. payment systems, are organized at the local level ; subsidiaries are selfsufficient in capital and funding ; and they rely on separate firms detached from the bank for operational support, for instance, on information systems. so, although there are still many issues to be clarified, we think that the most realistic resolution approach for the spanish international banking groups is the β multiple point β strategy, provided that, in the event of resolution, their organisational and financial structures are suitable for healthy parts to be sold or maintained as a surviving group, split from their distressed sister companies, using other resolution tools such as asset transfers or bridge banks. now, i will go to the second main element of the new framework, the bail - in instrument. bis central bankers β speeches next year, most of the fsb work on resolution will focus on preparing proposals on the adequacy of g - sifi loss absorbing capacity in resolution, namely, what we call β gone concern loss absorbing capacity β or glac. this concept is similar to the minimum requirement of eligible liabilities ( mrel ) set up in the eu bank recovery and resolution directive. this g - sifis loss absorbing capacity is a complex matter, involving the need to clarify or determine a long list of questions, for instance : its characteristics, minimum amount, intragroup distribution and triggers for it, enforceability of bail - in ; regulatory limits on loss absorbing holdings, and disclosure. let me underline that a shared view on the characteristics and levels of this β loss absorbing capacity β is critical for a β level playing field β among g - sifis. also, we must avoid any approach that might be considered as an additional layer of differentiated capital requirements, a sort of differentiated β tier 3 β requirement. as i mentioned before, determination of the appropriate levels of glac must be dependent on the complexities and risk of the activities developed by each institution. | 1 |
ignazio visco : welcome address - β research cluster 2 β welcome address by mr ignazio visco, governor of the bank of italy, at the fourth annual workshop escb β research cluster 2 β, online conference, 23 november 2020. * * * it is my pleasure to open this fourth workshop of the β research cluster 2 β, which every year brings together economists working in the european system of central banks in the fields of international economics, fiscal policy, labour economics, competitiveness and governance of the european monetary union. research clusters were introduced three years ago with the purpose of fostering interactions and collaboration among economists based in national central banks and the ecb. this welcome initiative helps to spur an increasing number of joint studies, encouraging the development of a common view of the problems affecting our economies. if fostering interactions among researchers is important in normal times, it is all the more important in times of crisis and uncertainty, when decision - making processes strongly need timely and high - quality studies, which can benefit from broader cross - country perspectives. today, with the diffusion of covid - 19, we are unfortunately living through one of the worst such periods in our lifetime. the impact of the pandemic on our societies and economies has been unlike anything we have experienced in recent memory. its human and social costs are continuing to mount, with almost 60 million cases confirmed globally and 1. 4 million deaths officially registered. in early october the imf estimated that world gdp would fall by 4. 4 per cent this year, a severe contraction that, in the case of europe, nearly doubles in magnitude. these estimates do not incorporate the effects of the resurgence of the virus and of the measures put into place to address it. recent news on vaccine development offer reason for cautious optimism, but it will take time until widespread immunity is achieved. the outlook remains largely dependent on the evolution of the health crisis, which is likely to continue to weigh on global economic activity well into the next year. the response of central banks, supervisory authorities and governments in the majority of countries has been extraordinary since the early stages of the crisis. central banks have implemented a wide array of instruments, including new asset purchase programmes and liquidity facilities, to make monetary conditions more expansionary, counter the tensions in financial markets and support the essential provision of credit to households and firms. the response of governments has also been vigorous. in europe, in particular, the budgetary plans designed to repair the economic and social damage brought | 20 years, and falling quickly. for these reasons ( and for others that i will come to later ), we always felt optimistic about our medium - term economic prospects. this does not mean that we felt that the strong expansion of the 1990s could continue indefinitely at the average growth rate we were then recording. we were conscious that the business cycle, whether domestic or international, has not been eliminated, even though it may have been ameliorated. this meant that slower growth was to be expected as the cycle unfolded. but we did feel that there was no domestic reason why the economy should undergo anything more serious than a moderate slowing phase within the general context of continued expansion. of course, we recognised that we were not immune to developments in the rest of the world. to the extent that there was a risk of something more serious than a moderate slowing of the australian economy, we identified that risk as coming from overseas. but even here there was an element of optimism in that we felt that in the event of a world downturn, we would be affected less and later than most other countries because of the resilience of our economy i have just outlined. i now turn to the second component of our view referred to earlier. 2. " once - off " developments in 2000 / 01 everyone knew that developments in 2000 / 01, particularly the first half, were going to be difficult to forecast and interpret. this was because economic statistics would be very " lumpy " as they reflected the introduction of the gst on 1 july, and the holding of the olympic games at the end of the september quarter. the introduction of the gst, and associated changes to other taxes, was a major event β structural changes of this type are likely to occur only once in a decade, or even once in a generation, and so are always difficult to forecast. economists had very little to go on in assessing the likely effects, but we all tried to do so by looking at the experience of other countries that had made a similar change. this was not a lot of help, and no - one could be confident what the main effect would be. judging from the questioning i received during this period, the most likely effect was thought to be on inflation, with shifts in consumption being the other factor most often mentioned. i am not aware of anyone who thought that house - building would be the main area affected, although everyone expected a decline. 3. what happened? in the event, the major transition effect of | 0 |
by formal financial sector, namely commercial banks and the kenya post office savings bank, while 8 per cent are served by semi - formal financial service providers such as microfinance institutions ( mfis ) and savings and credit co - operatives societies ( saccos ) and the remaining 35 per cent are served by informal financial service providers ranging from accumulating and rotating savings and credit associations ( ascas and roscas ) to shopkeepers and money lenders. this indicates a big gap in access to financial services by kenyans that i expect deposittaking microfinance institutions ( mfis ) to play a major role in filling it by expanding access. given this scenario the microfinance deposit taking institutions will be playing a major role in narrowing the service gap. ladies and gentlemen, the former un secretary - general, kofi annan stated that β sustainable access to microfinance helps alleviate poverty by generating income and wealth, creating jobs, allowing children to go to school, enabling families to obtain health care and empowering people to make the choices that best serve their needs. β¦ the great challenge before us is to address the constraints that exclude people from full participation in the financial sector. β i couldn β t agree more and this is the challenge before us. a financial system that serves only a minority of a country β s people is biased and unacceptable. all inclusive financial system that provides access for the majority is the central goal of the development of our financial system as envisaged by vision 2030. the government, as envisaged in vision 2030, will strengthen alternative financial service providers including mfis and saccos, among others, to play a major role in savings mobilization and wealth creation, thus contributing to poverty reduction and economic growth. ladies and gentlemen, we expect that when the act and regulations are fully implemented, it will bring, in the not too distant future, a new breed of microfinance institutions, the deposittaking mfis, which will enable these institutions to mobilise savings from the general public. thus, the act and regulations will set in a new era in the growth and development of the microfinance industry by integrating the industry to the formal financial sector, thereby promoting competition, efficiency and access. through this, we expect the microfinance industry to play a pivotal role in deepening financial markets by expanding access of affordable, appropriate and innovative financial services and products to majority of kenyans. these include cellular phone banking, alternative, low cost | 15th east afritac steering committee meeting officially open. thank you all and enjoy the rest of the evening. bis central bankers β speeches | 0.5 |
jean - claude trichet : the great financial crisis β lessons for financial stability and monetary policy introductory remarks by mr jean - claude trichet, president of the european central bank, at the colloquium in honour of mr lucas papademos, vice - president of the european central bank, frankfurt am main, 20 may 2010. * * * ladies and gentlemen, introduction the subject of this colloquium β β the great financial crisis β β could be no other since lucas papademos β tenure will be remembered for the immense challenges for financial stability and monetary policy that have arisen since the trigger of the subprime crisis in 2007. lucas played a key role at both the global and european levels in tackling these challenges. he was among those who were prescient about the considerable build - up of risks in the years before the crisis. he placed significant efforts in developing and adapting financial stability analysis to the fundamental and far - reaching changes in the financial system we have witnessed in the past decade, particularly as a result of increasing financial integration and innovation. when the crisis unfolded, lucas was one of the foremost policy - makers in devising the actions required to stabilise the financial system. he also played a substantial part in setting the ground for regulatory reform, namely through his participation in the financial stability forum, later board, and in several european and eurosystem fora, a number of which he chaired himself. i am therefore delighted that we were able to organise this colloquium with such a set of distinguished speakers, all of which have their exceptional professional standing deeply associated with the financial crisis, either as policy - makers, crisis managers, academics or proponents of regulatory initiatives. my introductory remarks this afternoon are organised around the title of this colloquium. my aim is to review policies in the last few years and draw some policy conclusions. i will first touch upon some of the lessons for financial stability, where lucas β s contribution was especially important, as responsible for the financial stability function, and then turn to the experience with monetary policy. lessons for financial stability the financial crisis erupted in august 2007, when off - balance sheet vehicles that had been set up by banks to manage portfolios of complex structured credit securities ran into funding liquidity problems. although initially a liquidity squeeze, concerns about counterparty credit risks quickly spread as uncertainties intensified about the nature and extent of exposures of banks to what we now call β toxic assets β. and, as | risks to price stability, they ensured that the easing of the monetary policy stance was transmitted into a broader easing of financing conditions. in particular, the ecb expanded scope for central bank intermediation of transactions between banks, thereby offering an alternative to the malfunctioning private inter - bank money market. at the same time, the measures supported financial stability objectives by containing and mitigating the systemic consequences of liquidity tensions in the money market. to conclude, let me say a few words on the recent decisions of the governing council taken on 9 may and announced on 10 may. as i already said publicly, i will sum up in five points the governing council β s position. 1. the ecb is fiercely independent and takes all its decisions independently of governments, social partners and pressure groups of any nature. 2. we are inflexibly attached to price stability, our primary mandate. our successful track record since the inception of the euro is remarkable. 3. our present monetary policy stance is appropriate. our decisions taken on 9 may have confirmed it. we are not engaging in any form of β quantitative easing β. 4. the β securities markets programme β is designed to ensure an effective functioning of the monetary policy transmission mechanism by helping to resolve a malfunctioning of some segments of the euro area debt securities markets. 5. the liquidity provided through this programme is withdrawn in its entirety through tenders of term deposits. conclusion i would like to end my remarks by acknowledging the outstanding contribution that lucas has made to the conduct of monetary policy and the safeguarding of financial stability in these demanding and historic times, as i have just described. i cannot stress enough the important role he has played at the ecb, as well as in europe and globally, to successfully ensure the sound pursuance of these essential policies, ultimately for the benefit and well - being of the societies and citizens which we serve. we are all very grateful to lucas. | 1 |
##tization of mortgages. however, as i will discuss, that government support can take many forms. the future of the gses : improving upon the existing model? how can we ensure that, in the future, mortgage securitization will be feasible even during highly stressed financial conditions? in the remainder of my remarks, i will consider some alternative approaches that focus largely, but not exclusively, on the potential role of the gses. one approach would be to try to return fannie and freddie to their pre - conservatorship status. in considering this possibility, we should remind ourselves of the problems that have surfaced with the traditional gse structure. first, the existing gse model involves an inherent conflict between the objectives of the companies'private shareholders and the objectives of public policy. for example, the gses were reluctant earlier this year to raise capital and to expand their operations, even though this would have helped financial and macroeconomic stability at a time of much - reduced mortgage availability. the gses'disinclination to support the mortgage market was motivated by the fact that raising additional capital would have diluted the values of the holdings of the existing private shareholders. second, during the past 15 years or so, the gses have operated with high leverage compared with other large financial institutions. this relative lack of capital ultimately proved their downfall. of course, to the extent that the debt of the gses is perceived to be guaranteed by the government, it is in the shareholders'interest for the companies to increase leverage whenever possible. third, it is also in the shareholders'interest for the gses to maximize the size of their portfolios to take advantage of the differential between the returns to mortgage - backed securities and the low gse funding costs arising from the perceived guarantee. however, as the federal reserve has argued for many years, the enormous gse portfolios pose risks to financial stability. as a result of the concerns i just outlined, the federal reserve board in the past has advocated a three - part approach to gse oversight : a strong regulator, capital standards adequate for the risks the gses assume, and an explicit and measurable public purpose for the gses'portfolios. 2 progress has been made in meeting some of these conditions. the housing and economic recovery act of 2008 established a strong regulator with the power to establish more - robust capital standards and with some authority over the size of gse portfolios. in particular, the law directs the new | ##b β s marginal lending facility in euros. handling potential liquidity pressures faced by lcfis operating in multiple countries and currencies continues to be a focus of policy attention. third, the uk authorities are improving the procedures and information needed to manage systemwide risks should they crystallise. the bank, the fsa and hmt now conduct regular crisis management exercises to develop the coordination needed to handle operational disruptions and financial crises. market - wide testing of business continuity arrangements takes place annually. it involved some 70 firms and utilities in 2005 and another test is about to start. finally, the changing financial landscape has increased the importance of international crisis cooperation. an mou to develop such coordination in the eu amongst central banks, finance ministries, and regulators has been established and tested. we need to build on that to reach beyond europe and to test crisis management arrangements especially with us authorities. taken together, these measures should help reduce the likelihood of systemic instability in the uk. i hope that my remarks today help make clear that the private sector β through sound individual and collective risk management β has its part to play in lengthening those odds still further. recent work at the bank has been exploring this issue. see, for example, the analysis in wells, s ( 2002 ), uk interbank exposures : systemic risk implications, financial stability review, december, pages 175 - 182, and cifuentes, r, ferrucci, g and h s shin ( 2005 ), liquidity risk and contagion, bank of england working paper no. 264. see tucker, p ( 2004 ), managing the central bank β s balance sheet : where monetary policy meets financial stability, lecture to mark the fifteenth anniversary of lombard street research, 28 july. | 0 |
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