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speech embargo 27 april 2018, 10. 00 am comments on monetary policy and banking regulation 110th ordinary general meeting of shareholders of the swiss national bank thomas j. jordan chairman of the governing board swiss national bank berne, 27 april 2018 Β© swiss national bank ( speech given in german ) page 1 / 8 mr president of the bank council dear shareholders dear guests it gives me great pleasure to welcome you to our annual general meeting. as is customary, the first part of my speech will be devoted to comments on the current economic situation and monetary policy. ten years after the start of the global financial crisis, we can now look back on a year in which economic momentum has been much more positive β both in switzerland and worldwide. the question is : has the global economy now finally completed its unusually sluggish recovery process? as i will show, there are indeed grounds for optimism, but it is still too early for this to give way to euphoria. in the second part of my speech, i would like to look at the state of play in banking regulation. a decade on from the global financial crisis, we should not just be asking whether we have recovered from the consequences of this event ; we should also take stock of what we have done to improve the ability of our banking system to withstand future crises. as i will set out, the regulatory measures put in place have clearly strengthened the resilience of our banking system, and we therefore have reasons to be optimistic in this regard as well. that said, if we are to sustainably safeguard the stability of the financial system, it is imperative that we implement in full the regulatory measures that have already been agreed. we must also continually review them to ensure they are fit for purpose. let me begin with some comments on the current economic situation and monetary policy. the economic situation and the snb β s monetary policy economic situation the swiss economy improved continuously last year. capacity utilisation increased and unemployment declined. real gdp in the fourth quarter of 2017 was up 1. 9 % year - on - year, while inflation also returned to positive territory last year for the first time since 2011. the improved economic situation is not only attributable to the upturn in the global economy. there have also been favourable developments on the foreign exchange markets, as the swiss franc has weakened since the second half of 2017, against the euro in particular. this has boosted the price competitiveness of export - oriented industries and provided welcome relief for | 1 / 5 bis - central bankers'speeches the stickiness of inflation might require current ( high ) rates for longer than previously expected. some sectors in the financial system like commercial real estate or private credit could deteriorate. inflation is receding, and most advanced economies are forecast to reach 2 % by 2025 by the imf. the latest inflation results, e. g. for the us and the uk, point toward fewer rate cuts in 2024, and some market participants in the us even told us that they expect no rate cuts by the fed in 2024 at all. labor markets remain strong, and unemployment is historically low. especially in the us, the labor market is fueled by immigration, and migrants are integrated into the labor market quickly. international trade shows signs of recovering but is still far from prepandemic levels. risks are tilted to the downside, especially if disruptions in the red sea escalate. however, some countries already face high fiscal deficits in parallel with high debt. in addition, 2024 is an important electoral year : 64 countries in the world elect their government. thus, fiscal expenditure might go up and the results of elections, especially in the us, might alter geopolitics, trade and capital flows. besides the near - term challenges already discussed, other longer - term structural challenges remain : weak productivity : total factor productivity is low, as well as innovation efforts. population aging, especially in advanced economies. this puts pressure on the pension and healthcare system, reduces the workforce as well as innovation. geopolitical fragmentation and conflicts, and their effect on movement of trade and capital. these deliberations bring me directly to the first main topic which i want to discuss today : 2. inflation and the normalization of monetary policy as you all probably know, the eurosystem increased interest rates 10 times to 450 basis points in the last two years to fight exceptionally high inflation. the eurosystem's latest inflation number is 2. 4 % ( eurostat flash estimate for march ) and a recent ecb forecast assumes inflation rates of 2. 0 % and 1. 9 % for 2025 / 26. so, we are approaching our target of 2 %. many financial market participants currently anticipate a first key interest rate cut in june. however, let me reiterate that the ecb will continue to follow a data - dependent and meeting - by - meeting approach to determining the appropriate level and duration of restriction. | 0 |
www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 08 - 27. html 6 / 12 8 / 28 / 2019 a balance of payments | speeches | rba graph 5 in 2007, the banking sector accounted for the bulk of australia's net foreign liabilities. their annual borrowing amounted to around about the same size as the current account deficit. this led to the misplaced claim that the banks funded the current account deficit, which ignored the other large capital outflows and inflows that were occurring. [ 5 ] the banking sector's net flows and stocks were the same order of magnitude as the aggregate net flows and stocks. but this wasn't causal. there were large capital flows occurring in both directions in other parts of the economy at the same time. and on the stocks side, there were other large stocks of debt and equity, both assets and liabilities, which all also contributed to the aggregate net foreign liability position in addition to those of the banking system. equity at least as dramatic has been the shift in the net equity position. for most of its modern history, foreigners owned more equity in australian companies than australians owned in foreign companies. but since 2013, that has not been true. since 2013, australians have owned more foreign equity than foreigners have owned australian equity ( graph 6 ). this largely reflects the significant allocation to foreign equity by the australian superannuation industry together with the fact that the superannuation sector is relatively large as a share of the australian economy. currently, australian equity investment abroad exceeds foreign equity investment in australia by 7 % of gdp. that is, the country has a net foreign equity position. this compares to an average net equity position of 10 per cent of gdp between 1990 and 2010. liability https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 08 - 27. html asset 7 / 12 8 / 28 / 2019 a balance of payments | speeches | rba graph 6 the shift to a net foreign equity asset position reflects : the ongoing accumulation of foreign equities by australia's large superannuation sector ( these flows have partially, but not completely, offset continued equity inflows to australia from foreign investors ) asset valuation effects, as foreign equities have outperformed australian equities over the past several years the depreciation of the australian dollar over this period. because foreign equity assets are denomi | between investment and saving has declined to its lowest in a long time, which, if you remember your national accounting identities, is directly equivalent to the current account being at multi - decade lows. but the trade balance story is not just a resources story. there has been strong growth in exports of education and tourism. the share of services in australia's exports has increased from 17 per cent in the 1980s to 21 per cent now. the other noteworthy development of late has been the strong growth in manufactured exports. these include pharmaceutical goods and medical devices, and have grown by 15 per cent over the past two years. the other part of the current account is the net income balance. the net income balance is the difference between how much it costs to service the country's foreign liabilities ( for example, interest payments on foreign debt ) and the earnings on australia's foreign assets ( for example, dividend payments to residents from foreign share holdings ). the income balance has widened a little in https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 08 - 27. html 3 / 12 8 / 28 / 2019 a balance of payments | speeches | rba recent years, but is around the middle of the range it has been in since the late 1980s at 3. 4 per cent of gdp. i will come back to this later. net foreign liabilities each quarter that australia funds its current account deficit with net borrowing from the rest of the world, we gradually add to the stock of net foreign liabilities ( nfl ) we owe to the rest of the world. as australia ran current account deficits through the 1970s, 80s, 90s and 2000s, that stock of nfl grew, peaking at 60 per cent of gdp in 2009. but since then, reflecting the lower levels of the cad and correspondingly lower net capital inflows, the stock of australia's nfl ( as a share of gdp ) has declined over the past decade to be 50 per cent of gdp currently ( graph 2 ). the decline in nfl as a share of gdp masks some significant changes in the composition of both the gross foreign liabilities and gross foreign assets. graph 2 it is important to stress the need to look at the gross flows and stocks, not just the net numbers. there are large capital inflows and outflows all the time, even when the net capital flow ( or the current account deficit ) is low. as a result | 1 |
being detrimental to a return to sustainable economic growth, the adherence of these countries to their medium - term consolidation programmes will strengthen consumer and investor confidence. any deviation from the medium - term orientation could thus only prove counterproductive. countries without fiscal imbalances can, of course, allow automatic stabilisers to operate fully. however, there is no case for fiscal activism in any country. the only way to continue to expand the rate of non - inflationary output growth of the economy in a decisive and long - lasting manner is to deepen structural reform in the labour and goods markets. efforts have been made in this direction in many euro area countries over recent years, but there is still some way to go. in the same vein, governments should pursue determined reforms with regard to the size and structure of public expenditure and revenue, also in order to create room for further tax cuts and to absorb the fiscal costs of population ageing. together with continued wage moderation aimed at sustaining recent labour market gains, these reforms will foster employment and investment, and ultimately contribute in a decisive manner to making the euro a resounding and long - lasting success, underpinned by a stable and dynamic economy. i am confident that the importance of this moment and the need to act resolutely is well understood by policy - makers all over europe. | ##gregious traditional hindu social evils. swami vivekananda was an intellectual leader par excellence. swamiji, as he is popularly known in bengal, not only interpreted hinduism for indians but also deciphered india β s religiosity to the larger world. his inspiring speech at the world parliament of religions at chicago in 1893 that started with β sisters and brothers of america β is considered an epitome of universal empathy. sri aurobindo synthesized eastern and western philosophies, religion, literature and psychology in his writings. gurudev rabindranath tagore, whose 150th birth anniversary we are celebrating this year, was a remarkably influential thought leader whose poignant prose and soul stirring poetry are a testimonial to his humanism and belief in universal brotherhood. netaji subhash chandra bose was a galvanizing force for national unity and inspired profound love and loyalty in the indian national army ( ina ). bengal also produced fearless revolutionaries like kshudiram bose who gave up their lives in the struggle for india β s independence. 9. this great leadership tradition of bengal was carried forward in post - independence india by luminaries like : satyajit ray, one of the greatest auteurs of 20th century cinema, who put indian movies on the world celluloid map. his β pather panchali β set exacting standards for cinematic artistry and will go down in the history of cinema as one of the most poignant tales ever told. mother teresa became a household name the world over for her exemplary humanitarian work, her deep sympathy for the less privileged and less fortunate and her advocacy of the rights of the poor and helpless. bengal β s very own son, nobel laureate amartya sen, is today one of world β s bestknown public intellectuals who has applied a consistent approach in his influential studies on social choice, welfare measurement and poverty. bis central bankers β speeches more questions than answers 10. interestingly, at a conceptual level, all these leaders from bengal who influenced thought and action across space and time, and their diverse leadership styles raise more questions than answers : ( i ) what makes a leader? ( ii ) is there a standard template for leadership? are there any quintessential leadership qualities? ( iii ) are leaders born or made? in other words, can leadership be taught? ( iv ) are leaders contextual β products of space and time? 11. these are, of course | 0 |
is less vulnerable to global economic shocks. ladies and gentlemen. last year our economy posted the best gdp growth in 31 year. one of the reasons for this is strong investor confidence in our country, as a viable emerging economy. this was coupled with the 2. 8 average inflation rate in 2007, which was the lowest in 21 years. other indicators likewise exhibited stronger economic positions such as the country β s balance of payments, which posted a record surplus of usd 8. 6 billion in 2007 and our all - time high level of international reserves. as for the banking sector, it remains fundamentally sound with the average capital level well above the minimum regulatory requirement and the npl ratio that is now almost back to the 1997 pre - crisis level of around 4. 0 percent. the rcbc group in particular, has shown marked improvement in performance as it posted a net income for the year ended 2007 which was 50 percent better than the previous year β s level. further, we take the bank β s recent issuance of p7 billion worth of unsecured subordinated debt as a sign of bank β s commitment to further strengthen its capital base as it assumes new risk exposures. rcbc β s sme lending program is anchored on the theme β banking on emerging corporates. β this signals the belief and confidence of rcbc β s leadership in the future of smes to become growth drivers of the philippine economy. i believe you are on the right track. i hope this will steer the tempo of competition in the banking industry as it opens diversification of possible sources of income for banks. indeed, the challenge of setting a footprint on sme lending is a milestone rcbc and other banks should take, as its contribution in providing a strong foundation for sustained and broad - based economic growth for our country. again, my congratulations to rcbc. mabuhay! | conditions and interest rates that can reach over 1, 000 percent a year. with the csf providing guarantees to banks for loans extended to their coop members, msmes gain access to bank loans at much lower interest rates. as monitored by the bangko sentral ng pilipinas, loans granted under the csf program range from 8 β 12 % a year, a fraction of the cost of borrowing from informal lenders! this is the reason why the bsp has been working on promoting financial inclusion across the country for over ten years now. in july this year, the bsp and 12 other government agencies launched the national strategy for financial inclusion ( or nsfi ). our objective is to avoid duplication and to ensure optimum results from our collective efforts and deployment of resources in extending the reach of our financial system to the unserved and the underserved. this milestone event was also highlighted by the visit of queen maxima of the netherlands who attended the launching with a commitment of assistance and partnership not only from the netherlands, but also from the united nations, in her capacity as the designated un secretary general β s special advocate for inclusive finance for development. as described by queen maxima, β the philippines should be the voice on financial inclusion. β indeed, our bis central bankers β speeches financial inclusion program is considered an international best practice model. through the nsfi, we envision a regionally - responsive, development - oriented and inclusive financial system that provides for the evolving needs of a diverse filipino public. one of the priority areas of concern in the nsfi is access to credit, which is being addressed through this csf program. our survey early this year indicated that about 47 percent of filipino adults borrow money and most of them access loans from informal sources such as family members and informal lenders. only a few obtained credit from formal institutions such as lending / financing companies ( 12 % ), cooperatives ( 10. 5 % ), microfinance non - government organizations ( ngos ) ( 9. 9 % ), and banks ( 4. 4 % ). nevertheless, more than 85 % of respondents indicate that they want to access financial services from formal financial institutions. one restrictive consideration in borrowing money is the lack of collaterals. this can now be addressed through the credit surety fund, which serves as an alternative security in place of conventional collaterals. you will be pleased to know that our csf program is on the agenda of the apec summit. during the | 0.5 |
. s. economy by continuing to add to the federal reserve β s holdings of longer - term securities. accordingly, the committee continued to reduce the pace of asset purchases over the course of the year, ending its purchases in october. that step, however, did not mark an immediate shift toward tighter monetary policy because we also indicated then that we did not expect to raise interest rates for a considerable time after the end of our securities purchases. moreover, as the committee explained in a set of β normalization principles β issued that september, the intention was to maintain the overall size of the federal reserve β s balance sheet at an elevated level until sometime after the fomc had begun to raise its target for the federal funds rate. 9 we decided that maintaining a highly accommodative stance of monetary policy remained appropriate because, while the u. s. economy was stronger and closer to meeting our statutory goals, we saw significant room for improvement. in particular, the unemployment rate still stood above our assessment of its longer - run normal level β that is, the unemployment rate that we expect to prevail when the economy is operating at maximum employment β and inflation remained below the 2 percent objective. because my colleagues and i expected that labor market conditions would continue to improve and that inflation would move back to 2 percent over the medium term, we anticipated that the time was approaching when the economy would be strong enough that we should start to scale back our support. indeed, the fomc β s june 2014 summary of economic projections ( sep ) reported that nearly all fomc participants saw a higher federal funds rate as appropriate in the next calendar year. in contrast, only two participants in december 2013 thought that it would be appropriate to start raising that rate in the next calendar year. 3 / 8 bis central bankers'speeches uneven progress in 2015 and into 2016 in 2015, the unemployment rate fell significantly faster than we generally had anticipated in 2014. however, a series of unanticipated global developments beginning in the second half of 2014 β including a prolonged decline in oil prices, a sizable appreciation of the dollar, and financial market turbulence emanating from abroad β ended up having adverse implications for the outlook for inflation and economic activity in the united states, prompting the fomc to remove monetary policy accommodation at a slower pace than we had anticipated in mid - 2014. u. s. gross domestic product ( gdp ) growth generally surprised to the downside in 2015, reflecting, in part, weak | mode with enhancing efficiency in terms of reduced waiting time at toll plazas. the national automated clearing house ( nach ) system has also facilitated government direct benefit transfers ( dbt ) payments digitally and eliminating leakages in the system. the smooth release of dbt benefits by the prime minister to 8. 34 crore farmers under the pm - kisan scheme is a testimony to the reliance and deliverability of our payment systems. 6. we have taken steps for internationalisation of our payment systems and cross border linkage of fast payment systems of india and singapore i. e. upi - paynow. this linkage is in addition to the qr code based and upi enabled p2m payments already 1 / 2 bis - central bankers'speeches happening in bhutan, singapore and uae. recently, we also enabled the visitors from g20 counties to be onboarded to upi without having a bank account in india. through this initiative, the g20 delegates had a first - hand experience of making merchant payments seamlessly through the upi, during their stay in india. 7. the mission " har payment digital " is aimed at reinforcing the ease and convenience of digital payments and facilitate onboarding of new consumers into the digital fold. various campaigns highlighting the digital payment channels available are being planned by the banks and non - bank payment system operators. this will further encourage and support the adoption of digital payments in the country. i am also happy to note that our regional offices will be taking up jan bhagidari activities to promote the acceptance and use of digital payments under the g20 theme of promoting digital public infrastructure during indian presidency. 8. the message of " digital payment apnao, auron ko bhi sikhao " β " adopt digital payments and also teach others " β under the mission har payment digital β is very relevant and expected to create greater awareness and usage among the people. 9. once consumers are onboarded to the digital payments'ecosystem, its advantages β availability, convenience, speed and safety β would ensure customer satisfaction and lead to furthering digital payments. the message is in sync with the payments vision 2025 of the rbi, i. e. " e - payments for everyone, everywhere, everytime ". significantly, inclusion has been identified as one of the anchors under the vision and various activities proposed now will help facilitate the same. 10. we have also decided to initiate a 75 digital villages programme through adoption of 75 villages and involvement of | 0 |
perfect opportunity for sharing experience, information and insights as well as for discussing issues and challenges at hand. i have no doubt that the topics on the agenda will stimulate enriching discussions and provide participants with key takeaways that will be useful for the benefit of their respective populations. ladies and gentlemen by the nature of our functions and mandates, it is a matter of pride for all of us to see our jurisdiction progress and thrive. unfortunately, the pandemic stymied progress temporarily, claimed millions of lives globally and put a drag on global growth. however, one of its offshoots has been an acceleration in the pace of digitalisation. this has resulted in digital financial services gaining traction globally. while the benefits have been immeasurable in terms of convenience, facilitating access and reducing cost, it is of essence that we also focus on the consumer protection angle. the frameworks in place must be adapted to the changing landscape to foster the buildup of consumer resilience and trust in a digital era. the approach and mechanisms adopted to protect consumers will vary due to the specificities of each jurisdiction and the level of development of the financial system. consideration of country - specific circumstances is important for crafting relevant and effective consumer protection and education infrastructures. individual countries need to customise the consumer protection and education framework to their environment, taking into account factors such as the stage of economic and regulatory development, the structure of the financial system and the level of consumer sophistication. as i speak to you, i am tempted to share a real - life situation that impacted many people in mauritius recently and which exposes the naivety of potential victims. indications are pointing to a potential scam that could have been perpetrated through social networks. with the advent of technology and the speed with which information flows on social networks, wrongdoers are using ingenious means to entice people to invest in unregulated companies by promising spectacular returns. we constantly remind our population to deal with regulated entities and the list of our licensees is updated on the website of the bank on a real time basis. however, some people still fall prey to these scams. the emergence of social network as a means of communication and the possible consequences of its misuse for consumers of financial services could be a topic for finconet to consider in future seminars. ladies and gentlemen while digitalisation remains a formidable tool to expand inclusive access to financial services, it has also introduced new types of risks | harvesh seegolam : market conduct supervision in challenging times speech by mr harvesh seegolam, governor of the bank of mauritius, at the finconet / bank of mauritius international seminar on market conduct supervision in challenging times, pointe aux piments, 24 november 2023. * * * the first deputy governor and chairperson of the financial services commission the second deputy governor members of the board of the bank of mauritius the chair of the international financial consumer protection organisation representatives of the oecd, finconet secretariat chief executive officers of banks and other financial institutions chief executive officer of the mauritius bankers association distinguished guests ladies and gentlemen all protocol observed. i wish you all a very good morning or good afternoon, depending in which geography you currently are if you are attending this event virtually. at the outset, i would like to extend a warm and digital welcome to all of you on the occasion of the finconet international seminar which is being organised in mauritius for the first time. this year represents a special landmark as finconet is celebrating its ten years of existence. i seize this opportunity to congratulate the founders on their vision for the laudable initiative of creating a network dedicated to financial consumer protection. the turnout for this event, both physical and virtual is testimony to the increasing importance of consumer protection in the financial services industry. i am further informed that we have participants from all around the globe. ladies and gentlemen the financial services industry occupies a pivotal position due to its fiduciary nature. consumer protection is, therefore, a linchpin for a safe and sound financial system. this has been epitomised by the united nations general assembly, in its resolution on consumer protection of 22 december 2015 which recognized that " consumer confidence and trust in a well - functioning market for financial services promotes financial stability, growth, efficiency and innovation over the long term and that the recent financial crisis places a renewed focus on consumer protection, calling for effective regulatory, supervisory and enforcement frameworks in the financial sector to contribute to the welfare of consumers ". the un guidelines for consumer protection inter - alia makes reference to the establishment of appropriate controls and insurance mechanisms to protect consumer assets, including deposits. as we all know, the delivery of financial services transcends national borders. countries, therefore, need to take cognizance of developments at international level in 1 / 5 bis - central bankers'speeches strengthening their own consumer protection environment. a forum like the one today is the | 1 |
abstract concept. as a matter of fact, we clearly witnessed the close relationship between financial education and financial stability in the recent global crisis. i believe that the awareness created by this crisis can be interpreted as an opportunity, as highlighting financial education will be beneficial for policy - makers, individuals and financial markets. in turkey, many institutions carry out projects with regard to financial education as a part of their responsibilities. in order to get the expected benefit from financial education programs, individuals β financial education needs that arise in different phases of their lives should be well identified. it is of great importance that financial education programs are devised in a way to meet these needs ; and the effects of these education programs are assessed in order to reshape future needs accordingly. bis central bankers β speeches due to the relationship between financial stability and financial education i have just mentioned, the central bank of turkey attaches special importance to the issue of financial education as other central banks do. as you all know, the cbt law lays down the primary objective of the central bank of turkey as maintaining price stability ; whereas taking measures to ensure stability in the financial system are stated among the main duties. in this respect, the cbt considers financial education from the viewpoint of financial stability. with our biannual financial stability report and other studies and announcements that we share with the public, we strive to raise awareness as regards the financial risks borne by households. meanwhile, we have recently accelerated our efforts on the international platform regarding this issue. the cbt is a member of the international network on financial education ( infe ) established under the auspices of the organization for economic cooperation and development ( oecd ), one of the leading organizations for financial education. within the scope of this platform, the cbt became one of the fifteen members of the national strategy on financial education subgroup, which was established in 2009. similarly, the cbt applied to join the studies of the financial inclusion subgroup under this platform ( established in february 2011 ) and also for membership in the task force on financial consumer protection that was established at the oecd. the central bank of turkey also contributes, via data collection and surveys, to international studies on financial access. within this framework, the cbt supports studies carried out by the consultative group to assist the poor ( cgap ) conducted in collaboration with the world bank. moreover, the cbt β along with other related public institutions β contributes to the efforts of the global partnership for financial inclusion ( gpfi ) initiated | ##b is transparency, already mentioned as one of the keys to greater credibility. transparency means openness about the ecb β s objectives, its policy implementation, its monetary policy deliberations and the forward - looking orientation of its policies. the ecb has explained, clearly and explicitly, that its main goal is maintaining price stability and described the strategies by which it is seeking to achieve it. i have already pointed out the additional issues of growth and unemployment. there is still discussion, but there is consensus concerning the primary objective. discussion of these topics will continue in publications, announcements, speeches by ecb authorities and discussions. this kind of transparency is an important characteristic of the ecb. the ecb will be accountable for its policy changes and for its announced policy intentions. this will contribute to transparency in its daily operations. in addition, for the sake of transparency the minutes of ecb executive committee meetings should be made public. on this issue, the ecb has one concern. if a member of the committee approves a decision that is not advantageous for his own country, it may cause some problems. indeed, the publication of the minutes of meetings years later could create some risks. at this stage, i find this a reasonable objection. maybe in time this problem can be solved. the fourth important characteristic of the ecb is that to reduce uncertainty, policymaking and economic indicators are treated on a forward - looking basis. the bank β s fundamental strategy is to calm down expectations for the future, since uncertainty is the most important ingredient of instability. the main sources of the ecb β s monetary policy, which is based on these principles, are thus determined. these are monetary aggregates, inflation targets and other intermediate objectives such as selected monetary indicators, and finally the conduct of monetary policy in the light of all these elements. the ecb has indicated that even if it has an inflation target, it will not announce it. these monetary policy conditions absolutely guarantee that there will be some uncertainties and questions, and the first question will be whether it will be possible to lower the inflation rate below 2 % when the intermediate targets are indicators calculated using the monetary aggregates of member countries. other questions follow. will the mechanisms of monetary policy transmission still work efficiently? can monetary policy moves made as they are in germany today, using monetary aggregates as intermediate targets, succeed in the euro area as well? which monetary aggregates will be used? what of the money demand function? will there be a | 0.5 |
examine developments in income in relation to those in consumption. for the january β march quarter, the year - on - year rate of change in real compensation of employees registered minus 0. 6 percent, which was significantly lower than the 3. 7 percent increase in real private consumption. in a situation where real wages per employee are likely to continue declining for the time being, the pace of improvement in real compensation of employees is likely to be moderate. in such a case, the uptrend in private consumption may weaken, leading to a slower rise in the inflation rate. thus, careful monitoring of future developments is required. nevertheless, i personally consider that, even if the uptrend in private consumption weakens slightly, this will not necessarily have negative effects on the economy in the long run. this is because a significant imbalance is currently observed among the paces of increase in the variables of prices, wages, and private consumption ; for example, real wages seem to be continuing to decline, even on a basis excluding the temporary effects of the tax hike. in such a situation, if weaker growth in private consumption restrains the rise in the inflation rate, it is expected that real wages will increase and private consumption will continue growing bis central bankers β speeches moderately at a pace in line with this wage increase. if demand increases in this way at an appropriate pace in a situation where supply - side constraints are beginning to be acknowledged, a more balanced and prolonged economic recovery, albeit moderate, will likely be achieved. d. outlook for prices as for the outlook for prices, i take a more cautious view than the forecast in the bank β s baseline scenario. therefore, i formulated a proposal to change the expression regarding the outlook for prices in the april 2014 outlook report, although it was defeated by a majority vote during the monetary policy meeting. specifically, i proposed to change the expression that the year - on - year rate of increase in the cpi β is likely to be around 1ΒΌ percent for some time, follow a rising trend again from the second half of this fiscal year, and reach around 2 percent around the middle of the projection period β to a new expression that it β is likely to remain generally stable around the current level over time β. i consider that, for the time being, developments in prices will depend mainly on the balance between strengthening of trend inflationary pressure β due mainly to the improvement in the output gap β and waning of upward pressure from import prices. on this point, there seems to | andreas dombret : boring banking? opening statement by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the panel discussion, organized by β bundnis 90 / die grunen β, frankfurt am main, 28 may 2013. * 1. * * introduction let me start with some reflections on the slogan of today β s event, β boring banking β. actually, i will argue that banking has become more challenging since the outbreak of the crisis. and i am not at all sure whether making banking boring is exactly what we want to do. regulators are working hard on the β too - big - to - fail β issue. we want to ensure that large banks are resolvable. do we make banking boring when banks can no longer benefit from an implicit state guarantee? do we make banking boring when large banks can no longer rely on the tax payer stepping in when losses pile up? i don β t think that a functioning resolution system makes banking boring. at the same time, we are analyzing how we can best use new instruments to reduce procyclicality in the banking system and to curb exaggerations. do we make banking boring when we raise costs for banks that simply earn money by following and augmenting the market trend? i don β t think that driving back pro - cyclicality makes banking boring. another topic on the reform agenda is remuneration. do we make banking boring when we combat greed and short - termism? i don β t think that aligning compensation more closely to a bank β s longer - term success makes banking boring. finally, we have to distinguish between banking and finance. making banking boring does not necessarily mean making finance boring. only think of the shadow banking issue. 2. simplicity and complexity i was asked to speak about simplicity and complexity. i want to start with the latter. i am deeply concerned about complexity. where does the real risk of complexity lie? with respect to regulation and the change of the landscape it is not so much a single measure or a single initiative that creates complexity. it is more the interplay of different approaches. let me give you two examples : one important strand of regulation is concerned with liquidity. regulation sets new requirement in order to protect the banking system against a shortage of liquid assets. at the same time, a financial transaction tax is envisaged that might have drastic effects on the liquidity on some important markets. how do these measures inter | 0 |
practices too common standards alone are not sufficient because day - to - day work on financial stability requires practical solutions that cannot be implemented in isolation by a single jurisdiction. this does not mean that everything must be unified but bridges must be built between stakeholders, in accordance with their legal remits and constraints. at the european level, we pushed forward this approach through european agencies such as the european banking authority ( eba ), the european securities and markets authority ( esma ) and the european insurance and occupational pensions authority ( eiopa ) to help implement the standards consistently and ultimately by the creation of the banking union. the latter is wholly dedicated to the practical exercise of supervision, resolution and, at a later stage, deposit insurance. more specifically, we welcome the completion of the cooperation agreement guidelines prepared by the eba and mentioned in the last panel today. i stress their importance because they promote a multilateral cooperation framework agreement and set minimum requirements for achieving the rapid and consistent conclusion of the cooperation agreements between deposit guarantee schemes ( dgs ). these cooperation agreements will address operational cross - border challenges, 1 such as ensuring that depositors in eu branches of institutions headquartered in other member states are treated similarly to depositors in the home member state. the h2c ( home - host cooperation ) project, which has just been extensively presented is also a remarkable new step towards finding and experimenting with solutions to shared problems, and this must be encouraged. it is an example of the constructive cooperation between dis operators or authorities despite their diverse regulatory or operational approaches. these guidelines concern ( i ) the modalities for repaying depositors by local dgs at branches of banks established in other european member states, ( ii ) the modalities for the transfer of contributions from one dgs to another in the event of a credit institution ceasing to be a member of a dgs and joining another dgs, and ( iii ) modalities for mutual lending between dgss bis central bankers β speeches from a regulatory perspective, there is the example of the fsb key attributes that have been applied through the crisis management groups, with relevant authorities holding discussions to find ways to tackle the recovery and resolution of gsibs. practice and model diversity is a challenge, but not an obstacle for implementing efficient resolution strategies we have heard today that dgss may still be very diverse in terms of their status, functions, design, size, etc. this is also the case for supervisory and resolution regimes even | welcome, but the disclaimer remains the same : the funds should only be invested in sensible projects. however, the question of whether or not private investors deem an investment project to be sensible very much depends on the future economic prospects of the euro area and europe. and nobody would deny that uncertainty is rife in this regard at the moment β the β brexit β risk is just one source of uncertainty. is this the right time for german fiscal policy to step in β for example, by lifting public investment? while i would not deny that there is scope for some more public investment in infrastructure or education, it is worth noting that fiscal policy in germany is already in expansionary mode due to the cost of accommodating the refugees while the long - term sustainability of public finances calls instead for germany, with its demographic burden, to run a structural surplus. in any case, the sound state of the german economy does not necessitate an additional deficit - financed fiscal stimulus and β if such a measure were taken nonetheless β its positive spillover effects on other euro - area economies would be marginal at best. a simulation exercise conducted by bundesbank economists found that temporarily increasing public investment by 1 % of german gdp over two years would lift gdp in the rest of the euro area by a mere 0. 2 % in the second year. hence, a deficit - financed fiscal stimulus would be neither necessary nor helpful. that said, it is clear that banks need to adapt to the low - interest - rate environment. to use a metaphor coined by my colleague sabine lautenschlager, they β should not try to just hold their breath until they surface from the low - interest - rate phase. they could rapidly run out of air. β banks should scrutinise their business models, they should harness the benefits offered by digitalisation, and they should continue to improve their cost efficiency. with regard to banks β business models, i firmly believe that it is in banks β own interest to strive for high standards. banks should refrain from running questionable business models β those based squarely on exploiting tax loopholes, say. banks have to make sure that their businesses conform not only with the law, but also with ethical standards β indeed, just because something is not explicitly prohibited doesn β t mean it β s necessarily allowed. 5. conclusion ladies and gentlemen if you β re facing a strenuous challenge you should at least make sure your energy intake is adequate. so on that | 0 |
s exposure is not high. of course, this does not mean that policy makers here can be complacent, as the current global financial turbulence is far from being over. furthermore, it is still unclear to what extent financial turbulence has set back the growth outlook of our major foreign trading partners. hungarian monetary policy cannot turn a blind eye to factors such as an increase in risk premia and a deterioration of global growth prospects. the most urgent problem central banks of small, open economies are facing seems to be imported price pressure. although these central banks have influence neither on global monetary conditions nor on the global output gap, with a floating exchange rate regime the importing of global oil and commodity price increases is not inevitable. imported inflationary pressure can be counterbalanced by nominal exchange rate appreciation ; this, however, does not constitute a free lunch, as it can temporarily contract activity in the tradable sector. an appropriate monetary policy response depends on what processes are responsible for global price increases. if the rise in food and oil prices is only a temporary phenomenon, the short - term inflationary effect of the shock can be accommodated. the possible second - round effects and inflation expectations, however, should be closely monitored. the less accumulated credibility monetary policy has, the more likely second round - effects will occur. for a central bank with relatively low credibility, pre - emptive measures may be necessary to stave off second - round effects, even if it does not wish to offset the direct inflationary effects of the external shock. if the change observed in relative prices is the result of lasting, structural causes, monetary policy will not be able to do anything about it in the long run. if the relative price changes remain permanent their effect will, on the one hand, appear directly in the consumer price index and may, on the other, lead to cost - push inflationary pressure on the relevant monetary policy horizon, due to the fact that the goods affected also serve as production input. furthermore, the risk of second - round effects will appear. compared to the transitory case, another difference is that a lasting change in relative prices can also lower potential gdp. because of this the central bank should, with the instruments at its disposal, strive to ensure that the change in relative prices takes place within the lowest possible inflation environment, and that a lasting inflationary pressure or a price - wage spiral will not occur. although creating a low inflation environment may entail some sacrifices in the short term, the advantages | policy and the policy rate without any political constraint and free of any political influence. this freedom of decision should also be supported through institutional and financial independence. in hungary, this framework is ensured by the central bank act. thus the mnb is an independent institution. it is also over the past twenty years that the majority of central banks have started to operate within the framework of inflation targeting. within this, monetary policy regards the explicit inflationary target as the nominal anchor which it commits itself to reaching, thereby striving to influence the expectations of economic agents. decisions about monetary policy will reflect the deviation of projected inflation from the announced target. in hungary, an agreement was reached in 2005 between the mnb and the government, setting the medium - term inflation target at 3 per cent in terms of the headline consumer price index. the majority of central banks pursue, explicitly or implicitly, an objective function which simultaneously takes into account the deviation of inflation from price stability and the evolution of the real economy, with more emphasis on the former. it is important to note that the evolution of the economy in this case represents deviation of current output from its longterm, potential level. the central bank, as i mentioned earlier, is in no position to influence the latter. this approach is entirely compatible with the forecast - based inflation target system. besides the evolution of inflation, central banks pursuing an inflation target also take into consideration real economic processes through various channels. inflation forecasts, serving as the basis of monetary policy decisions, reflect the effect of economic activity on inflation. in the case of an economic slowdown, for example, the output gap will widen and projected inflation will be lower accordingly. another channel is the specific time horizon assigned to a particular monetary policy : by making decisions which usually focus 1 - 2 years ahead, central banks setting inflation goals take into account the fact that counterbalancing temporary inflationary shocks in the very short run would result in unnecessarily high real economic sacrifices. following this brief theoretical introduction, let us move on to the current day - to - day challenges facing central banks. current challenges of monetary policy currently, the world β s central banks have to face two serious challenges. one is the subprime crisis, which broke out in the us and subsequently spiralled into financial turbulence on a global scale. the other is the significant increase in the prices of food, oil and other raw materials, which has led to a worrying inflationary pressure worldwide. global financial turbulence | 1 |
by effective bank regulation. if so, the post - crisis period of fiscal contraction could have been wholly avoided. ( chart ) inequality in boom and bust ( i ) income it β s one thing to say that aggregate economic activity was protected by the irish government as well as might be, but another to say that the income and capital losses were distributed in an equitable manner. at first sight, the situation here might not seem too inegalitarian. for example, while the gini coefficient of market income jumped in 2008 and 2009 and by 2012 was still notably higher than it had been during the boom, the gini for disposable income, after taking account of income - related taxes and social payments, hardly moved and indeed reached a lower level by 2012 than it had eight years earlier. [ charts : gini and poverty ] likewise for relative poverty lines : while the poverty count ( at the 50 % threshold ) measured on market income increased in the crisis ; poverty rates measured on disposable income fell. bis central bankers β speeches the contrasting movements of the gini on gross and net income reflect the degree to which reductions in social payments were limited in the fiscal cutback, and also the progressive tone of income - related tax changes in the downturn. the irish tax - and - welfare system held relative poverty rates to levels comparable to those of the uk, for example, despite a much steeper increase in comparable market divergences in ireland ( likely reflecting the much steeper jump in unemployment to almost 15 per cent in ireland by 2012. ) still, a proportional lowering of income surely means a more severe welfare impact on lower income groups. the fact that the irish macroeconomic correction has not worsened measures such as gini or relative inequality should not be interpreted as saying that the burden has been shared equitably. inequality in boom and bust ( ii ) wealth and these income calculations do not take account of the capital losses incurred especially by those who had leveraged themselves near the top of the market to buy residential property and other assets ( such as bank shares! ) that subsequently slumped in price. there are areas of concentration. households too uncreditworthy to have access to borrowing escaped this dimension of the boom and bust : this dimension to the downturn is not evidently correlated with that of income changes. residential property losses are disproportionately found in certain age groups, notably those now in their late 30s and early 40s. not everyone lost | the risks posed by the nancial system and in turn helps consumers and the nancial services industry understand our approach to regulation. we are undertaking a review of our engagement to identify best practice in this area. we want to ensure we have a consistent, comprehensive and inclusive approach to how we engage and who we engage with. we want to make a step - change in our engagement across the board, covering all of our mandate, from monetary policy, to macroprudential policy, to consumer protection. you will see this in the review of the ecb β s monetary policy strategy. you will see this in the review of the consumer protection code. you will see this in our work on nancial stability. you will see this in our presence around the country. and you will see this in the interactions we have with the nancial services industry as we aim to deliver a resilient nancial system that serves the wider economy. conclusion to conclude, the outlook for the economy remains positive in the short term. some moderation in underlying domestic demand growth is likely while some signi cant risks remain. the focus of my remarks has been about the decade ahead. we all know that the nancial system is evolving and that the challenges for the nancial sector are also evolving. as i said earlier, successful economies need to have stable and sustainable macroeconomic frameworks and sound monetary policy that delivers predictable prices. they also need stable and well - regulated nancial systems and well - functioning markets. the central bank will continue to focus on stable and sustainable frameworks, on sound monetary policy, and on a well regulated nancial system, in ireland and in europe. we will ensure that the nancial system of the future continues to operate in the best interests of consumers and the wider economy. thank you. for details of the event, see here. the deterioration in consumer sentiment in recent years suggests that brexit has weighed on con dence. according to the kbc consumer sentiment index, irish consumer sentiment improved for a second successive month in december, largely re ecting the reduced near term risk that the uk might crash out of the eu. see central bank of ireland quarterly bulletin 2020 q1 for further details. the latest data from the central statistics of ce shows that the unemployment rate was 4. 8 per cent in january 2020. byrne, s. and mcindoe - calder, t., employment growth : where do we go from here?, quarterly bulletin 2019. see central | 0.5 |
aml ), a proposal for a new international ifc forum, tax information exchange agreements ( tieas ) and double taxation agreements ( dtas ) and legislation. the briefs which appear in the newsletter are, as you will see, contributed by your colleagues in the industry, as well as by officials. we urge you to submit your own views and information, in reaction to what you read in the newsletter, as well as original material. the dialogue which this conference permits is very important in helping to craft fruitful responses to the changing international environment. we the regulators need to be continuously updated on the opportunities and interests that you the active agents see for yourselves, and the mechanisms that will facilitate your activities. you all need to understand the requirements for maintaining a first class financial centre, so that you can plan your strategies accordingly. in the end, both sides have the same objective, to cement the international reputation of barbados β financial centre by attracting only the best run companies to our shores. we welcome you all to this second annual ibfs conference. we have an agenda that is focussed on the issues that are most current, and we have an opportunity here to continue our public - private sector dialogue on the way forward. we have the collective will, and today we expect to further dialogue and investigate the ways by which we can further expand the ibfs sector. bis central bankers β speeches | ? β that award - winning scientist and environmentalist, dr. david suzuki, delivered next door. that theme remains of great significance because, as a small open economy, we are very vulnerable to the disastrous effects of fossil fuels. we are especially vulnerable to the environmental degradation that fossil fuels cause. global warning created by fossil fuels makes us susceptible to the hazards of climate change. a recent imf blog quoted scientists as warning that in the absence of mitigating actions, global temperatures may rise by more than four degrees celsius above pre - industrial revolution levels by the end of the century. this phenomenon will lead to inundation of low - lying island states and extreme weather events, the scientists predict. the attendant beach erosion would bode ill for our main industry tourism. indeed, we in the caribbean are among the top 25 most vulnerable nations exposed to shifting 1 / 2 bis central bankers'speeches weather patterns and global climate change. and we have already started to experience the extreme weather conditions about which scientists warn. we only have to flashback to dominica 2017 and recall how irma and maria wrecked our neighbour. those storms wiped out over 200 percent of dominica β s gdp in fewer than two days. that is an astronomical cost to pay and requires sustained coordinated global action to minimise the impact on small island economies like ours. and this is not the only price that comes along with our dependence on fossil fuels. high fuel prices impinge barbados β economic growth, stymie our competitiveness, and erode our foreign reserves, the lifeblood of our economy. in 2008, when oil prices hovered around us $ 90 per barrel, our balance of payments felt the impact. as the cost of fuel imports sky rocketed, shipping costs also rose, pushing up the price of imported goods. these increasing costs had an inflationary effect, while our valuable foreign exchange was used to help pay for these imports. high oil prices do have ripple effects for us. consider the savings in foreign exchange, therefore, if we were to move to renewables, harnessing the sun, wind, water, and now biological resources and organic waste. these savings have the potential to facilitate projects that stimulate greater economic activity and fuel growth. today, the bank is concerned about the current global uncertainty, created in part by geopolitical tensions, surrounding the price of oil. significant increases in the price of oil now that we are stabilising the economy represent a distinct downside risk that could offset our economic | 0.5 |
and unbalanced ( with less liquidity in the longer term issues ). central banks also have a specific interest in the improvement of domestic bond markets, in particular for public sector debt. one reason for this is that more complete markets reflect the relationship between borrowing costs and terms. making an explicit yield curve reveals information about the expectations that the economic agents have, which is essential for business decisions. recent experience has shown that the development of bond markets must be based on placing funds in domestic currency, which is not only relevant for the transmission of the monetary policy but also as a mechanism to reduce external vulnerability. i would say that financial integration in general plays and important role enhancing the power of monetary policy instruments. in particular, when assessing the effectiveness, credibility and commitment of monetary policy in emerging markets to deal with inflation and inflation expectations. the depth of the financial system and its integration with capital markets has a powerful disciplinary effect on monetary policy as it reduces incentives to expand as foreign capital would flow out to other markets with more predictable returns. for this purpose, a precondition is the reduction of the macroeconomic volatility so typical of our region. we need not only to sustain but also to strengthen the pillars of, what i call the new economic paradigm, with several anti - cyclical components : - fiscal solvency. today fiscal responsibility in most of the emerging world is not a feature from the left or the right : it is just common sense. - monetary robustness and consistency. - more flexible foreign exchange regimes. - reduction of net foreign debt and currency mismatches. a lesson from current turmoil is that emerging markets with current account deficits and fiscal deficits were hit the most as they became more vulnerable to foreign capital outflows. - trade dynamism ( diversifying destinations and products ). just as an example, the share of exports to the united states, one of the major destinations of foreign sales, from 2002 to 2006 dropped from 33 % to 27 % of total latin american exports and from 21 % to 18 % of the emerging asia total. this is very important as the us and other developed countries face also significant challenges. - accumulation of international reserves ( insurance against external shocks ). and the later has been, i would say, the common pattern all across the emerging world. today, with no international lender of last resort, there is no good substitute for a sound external liquidity policy at the country level. i am afraid it is the responsibility of every | rules form a developed country to a developing one does not necessarily mean the latter β s progress ), rather, they are endogenous to each society. they are the result of collective decisions where groups with different attributions and preferences take place, whose political power hinges on political institutions ( de jure political power ) and on distribution of economic resources ( de facto political power ). even if this collective decision - making process may take time, the fact that institutional reforms are carried out based on β conviction β rather than on β need β and with the necessary consensus, clearly improves the possibilities of success and its long - term persistence. now policy makers worldwide seem to understand that policy recipes vary from one case to the other in this complex scenario. this progress is, obviously, welcomed. especially for us, emerging markets β policy makers, as we have to catch up with growth, deal with the tensions derived from buoyant economies and, most importantly, build institutions and credibility at the same time. in fact, it is more a synchronic than a sequential two - fold challenge. to implement these policies effectively, the only possible way is to keep a consistent ( i mean consistent with the history and idiosyncrasies of each economy ) and gradualist approach. thank you. | 1 |
break - up of the euro area? christian noyer : by definition, this scenario is totally ruled out : no country is willing to consider this option since it would have an astronomic cost for all euro area countries, the strong and the weak alike. sud ouest : won β t the fiscal austerity measures imposed on euro area countries that have benefited from eu - imf loans have exorbitant social costs? christian noyer : they may be hard to bear. but it would be unrealistic to think that growth and purchasing power can be lastingly sustained if public deficits continue to rise. sud ouest : france has taken over the presidency of the g - 20 group of leading nations. and, on this occasion, nicolas sarkozy would like to pave the way towards a reform of the international monetary system that would reduce the dollar's role. do you see this as a possibility? bis central bankers β speeches christian noyer : the aim is not to reduce the role of the dollar. even though it has already partially lost its sole reserve currency status, the dollar will continue to play a major role in trade. france is approaching this presidency with an open mind, but there is no doubt that the international monetary system is no longer suited to today's world. designed in the 1940s and reformed in the 1970s, this system bears the hallmark of an era when international trade played a much smaller role, and when emerging countries such as china, india and brazil were much less significant players in the global economy. this new configuration must be taken into account. today, we must hold discussions and debates, measure the magnitude of capital flows that could have very destabilising effects on some countries and strive in a united manner to correct the major imbalances that are dampening world growth. bis central bankers β speeches | experience shows that financial players need a risk - free settlement asset. however, with the development of the tokenisation of financial assets, would it be advisable to tokenise their counterpart, the settlement currency? doing this may lead to changes not in what constitutes the very foundation of central bank money β confidence β but in the way it is issued. it is in this context that the opportunity for a β wholesale β central bank digital currency could arise. this requires central banks to invest in the technical innovations underpinning the digitisation of financial assets and their transfer methods, to conduct experiments and take advantage of them in order to improve the performance of the services they provide to the economy. and that is what the banque de france is doing. with the support of its lab, it has been investing in blockchain technology for several years now, and is implementing it on an operational level with its madre project for 3 / 4 bis central bankers'speeches managing the databases for sepa creditor identifiers and bank branches. another recent example is the ecb β s launch of the target instant payment settlement ( tips ), with the aim of ensuring the coordinated development of instant payments. by placing its initiatives within the framework of the eurosystem β s discussions on an β e - euro ", the banque de france will continue and enhance its investment and expertise in the area of innovation in payment infrastructures and means of payment. to this end, it has recently created an infrastructures, innovation and payments directorate. this directorate will enhance its resources in this area and will, i hope, participate in the work carried out within the bis innovation hub. on an operational level, this commitment will soon lead the bank, in close cooperation with market professionals, to conduct experiments with a view to integrating a cbdc into the procedures for exchanging tokenised assets. in this respect, a call for projects will be launched at the end of march 2020. conclusion it is indisputable that the digitisation of the economy has been a source of progress in the field of payments and other areas, as it has diversified and streamlined the services offered to the consumer. however, despite this positive assessment, we must not overlook the growing interdependence of economies, and the sovereignty risks that this greater intermediation is likely to pose in a context of trade tensions. at the banque de france and the acpr, we are ready to assist the market in the transformations necessary to preserve and | 0.5 |
dimitar bogov : republic of macedonia β celebrating monetary independence opening address by mr dimitar bogov, governor of the national bank of the republic of macedonia, at the gala event on the occasion of the 20th anniversary of the monetary independence of the republic of macedonia, skopje, 26 april 2012. * * * honorable president of the parliament of the republic of macedonia, honorable fellow governors of central banks, distinguished guests, ladies and gentlemen, let me wish you all a very warm welcome and thank you for accepting our invitation to attend this gala event on the occasion of our landmark anniversary β twenty years of the monetary independence of the republic of macedonia. on this day, april 26, we recall the numerous challenges that we faced, the numerous difficulties we have gone through in the past twenty years exactly. on this day, we are reminded that the beginnings were not easy and that those beginnings emerged in a period of, i can say without false exaggeration, huge enthusiasm of all individuals involved in creating our own independent state with all attributes that this state should have. in this reminiscence of the persons who were involved in the monetary independence, i especially feel the need to point out the name of the first prime minister of the independent republic of macedonia, the academician nikola kljusev, who played one of the leading roles not only for the monetary independence, but also for many other decisions of that time, important for the completion of statehood. on his initiative, on december 19, 1991, the government adopted a decision which obligated the national bank to start printing value coupons. this decision, adopted in greatest secrecy, was a legal basis for all operational actions that allowed the new currency, the denar, to be presented to the public on april 26, the following year, 1992. on this day, also on the initiative of the academician kljusev the systemic laws were adopted, as well as the document on the anti - inflationary program, which, unfortunately, did not survive the fall of his expert government. on this day, besides recollecting the past, we are called to look towards the future. here we look at the importance of low inflationary expectations for the efficiency of the economy and the role of the national bank in maintaining these expectations. in fact, academician kljusev had devoted his entire scientific work to the issue of efficiency of economic policies. for the central bank, as well as for the commercial | pressures which in themselves would result in faster development of the domestic economy, as well as more positive output gap compared with the countries of the eurozone, would also lead to more pronounced interaction with the increase in unit labor costs. the perception of close coordination between the central bank and the government in dealing with this challenge would mean that both public institutions are aware of the need to adjust to the conditions that the maintenance of price stability through the exchange rate brings. this adjustment would prompt the government, through dialogue with social partners, to advocate a moderate growth of wages, i. e. wage growth which will take into account productivity in both the tradable and non - tradable sectors. this would lead to increased employment, while simultaneously improving the competitive position of enterprises, which would alleviate the emergence of imbalances in the economy as a whole. finally, i would add that we, at the national bank, have learned a lot from the mistakes that economic policy - makers have done in the past. but, as confirmed by the history of our institution, monetary independence is perhaps the decision that best helped us to contribute to the improvement of the efficiency of the economic policies, and thus improve the living standard generally, in a state - making, institutional, economic and practical way. long live this great anniversary! bis central bankers β speeches | 1 |
indicated last week, economic developments will determine the level and term structure of interest rates. of course, we cannot predict exactly how economic events will unfold over the coming year. but, at this point, i still concur with the federal open market committee β s characterization that monetary policy accommodation will become increasingly less necessary over time and can be removed at a pace that is likely to be measured. national center for education statistics, the condition of education 2004, β student attitudes and aspirations : postsecondary expectations of 10th - graders, β u. s. department of education, june 2004. national center for education statistics, the condition of education 2004, β adult learning : adult participation in workrelated learning, β u. s. department of education, june 2004. | profitability has allowed corporate america to achieve the highest level of liquidity in more than a decade. as i noted a moment ago, i find the recent recovery in hiring to be a particularly welcome indication that businesses have become confident about the durability of the expansion. last year, as economic activity began to pick up, the recovery remained even more β jobless β than the recovery of the early 1990s. a good deal of monetary and fiscal stimulus was in place, which we expected over time to show through to a pickup in real economic activity. but firms were unusually reluctant to make commitments to take on new workers in an atmosphere clouded by risks and uncertainties associated with the war in iraq and with the fallout from lapses in corporate governance. my sense, from both my informal contacts in the business and banking communities and the available surveys of business attitudes, is that confidence has recovered noticeably this year. other explanations for the sluggish recovery in employment during 2002 and 2003 focused on developments that may have more lasting effects on the labor market. first, the recovery seemed to be marked to an unusual degree by an ability of businesses to achieve labor - saving efficiency gains. recall that we began to detect an improvement in productivity in the second half of the 1990s. the rate of increase in output per hour in the nonfarm business sector moved up from just 1 - 1 / 2 percent per year between 1973 and 1995 to 2 - 1 / 2 percent per year between 1996 and 2000. that acceleration appears to have been largely the result of brisk business investment. since then, even with the slump in capital spending from 2001 to early 2003, productivity has risen at a stunning annual rate of 4 percent. one of the striking features of the recent acceleration is that the gains in efficiency seem to be the result of organizational changes and innovations in the use of existing resources - perhaps in part the result of learning better how to apply the new technologies that they acquired at a rapid pace in the late 1990s. during the early part of the expansion, when aggregate demand remained weak, the especially rapid gains in efficiency allowed businesses to meet their sales and production goals without having to add workers. but as the pace of the expansion has stepped up over the past several quarters, we have begun to see both sustained advances in output per hour and gains in jobs. i suspect that productivity will eventually slow from the extraordinary pace of the past couple of years - indeed, the recent figures offer some evidence that some slowing has already occurred. nonetheless, i | 1 |
have seen price falls. developments in the sydney market remain concerning, but in the end we did not see these trends as overwhelming a case for a further easing in monetary policy that was made on more general grounds. i note that, on the regulatory front, apra has announced its supervisory approach to managing the potential risks posed by the rise in lending to investors in housing. this involves more intense scrutiny of investor loan portfolios growing at over 10 per cent per bis central bankers β speeches year, with the possibility, ultimately, of additional capital being required if apra deems it necessary. apra has also reiterated its expectations for other elements of lending standards such as interest rate buffers and floors. and asic has begun a review of interest - only lending in the context of consumer protection legislation. the bank welcomes these steps and will keep working with other regulators in these areas. the board is also very conscious of the possibility that monetary policy β s power to summon up additional growth in demand could, at these levels of interest rates, be less than it was in the past. a decade ago, when there was, it seems, an underlying latent desire among households to borrow and spend, it was perhaps easier for a reduction in interest rates to spark additional demand in the economy. today, such a channel may be less effective. nonetheless we do not think that monetary policy has reached the point where it has no ability at all to give additional support to demand. our judgement is that it still has some ability to assist the transition the economy is making, and we regarded it as appropriate to provide that support. the forecasts published last week in the statement on monetary policy assume a lower path for interest rates and a lower exchange rate than both earlier forecasts and the ones the board responded to at the february meeting. these are assumptions rather than forecasts or commitments to a course of action. it is worth noting that, despite concerns at various times about whether the exchange rate would adjust appropriately to our changing circumstances, it has been doing so over the period since we last met with the committee. against the us dollar it has fallen by around 17 per cent since our last hearing. the us dollar itself has been rising against all currencies, of course, so much of this movement is an american story rather than an australian one. against a basket of relevant currencies the australian dollar has fallen by less, but the decline is still about 11 per cent since august. further adjustment is probably going to | a return to the boom. many people say that we need more β confidence β in the economy among both households and businesses. we do, but it has to be the right sort of confidence. the kind of confidence based on nothing more than expectations of ever - increasing housing prices, with the associated willingness to continue increasing leverage, on the assumption that this is a sure way to wealth, would not be the right kind. unfortunately, we have been rather too prone to that misplaced optimism on occasion. you don β t have to be a believer in bubbles to think that a return to sizeable price increases and higher household gearing from still reasonably high current levels would be a risky approach. it would surely be a false basis for confidence. the intended effect of recent policy actions is certainly not to pump up speculative demand for assets. 6 as it happens, our judgement is that the risk of re - igniting a boom in borrowing and prices is not very high, and this was a key consideration in decisions to lower interest rates over the past eight months. hence, i do not think we should set monetary policy to foster a renewed gearing up by households. we can help, at the margin, the process of borrowers getting their balance sheets into better shape. to the extent that softer demand conditions have resulted from as in 2009, the challenge is β how to ensure that the ready availability and low cost of housing finance is translated into more dwellings, not just higher prices β. see stevens, g, β challenges for economic policy β, address to the anika foundation luncheon, sydney, 28 july 2009. bis central bankers β speeches households or some businesses restraining spending in an effort to get debt down, and this leads to lower inflation, our inflation targeting framework tells us to ease monetary policy. that is what we have been doing. the reduction in interest rates over the past eight months or so β 125 basis points on the cash rate and something less than that, but still quite a significant fall, in the structure of intermediaries β lending rates β will speed up, at the margin, the process of deleveraging for those who need or want to undertake it. in saying that, of course, we cannot neglect the interests of those who live off the return from their savings and who rightly expect us to preserve the real value of those savings. popular discussion of interest rates routinely ignores this element, focusing almost exclusively on the minority of the population β just over one - third β who | 0.5 |
fraziali ismail : building malaysia's resilience - lessons from covid19's economic impact and policy responses welcoming remarks by mr fraziali ismail, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the world bank report launch, kuala lumpur, 3 august 2023. * * * ladies and gentlemen, esteemed participants, and distinguished guests, a warm virtual welcome to all. thank you for inviting me to offer some remarks on today's event on " building malaysia's resilience : lessons from covid - 19's economic impact and policy responses ". first off, while joining you all virtually does hark back to the time period we're drawing lessons from, i assure you that it is not intentional. i would much rather be with you in person ; my apologies. this physical distance does remind me of the highs and lows we experienced during the pandemic. it was a time when baking became a global sport. hunting for that gardenia bread became our national treasure hunt and " you're on mute " became the new " hello ". but on a more sombre note, those were also highly trying times for us, when we were scrambling to forecast how the economy was performing, designing policy measures, and figuring out how to communicate. the mood was tinged with despair. we had to keep the economy afloat, while worrying about our family, friends and colleagues. i remember looking for quotes to lift morale and help my team stay positive. one stood out. it was by shams tabrizi, the great mentor of rumi. it reads : " it is pointless trying to know where the way leads. think only of your first step. the rest will come. " truth be told, i never had the chance to use it. the nation was facing a perfect storm of a health crisis, an economic crisis and a political crisis. we were so busy steering our ship through that storm, so busy taking those first steps that i forgot all about the quote until i was asked to speak for this event. and when we emerged on the other side, the rest, as shams tabrizi predicted, had come. our nation survived, battered but far from broken. today, we no longer talk about economic recovery, but the way forward to prepare for the next stage of development, the next crisis, for it will surely come. so swift, steady and sustained has our recovery been that | outlook for economic activity continues, however, to be surrounded by relatively high uncertainty. on the domestic side, uncertainties relate in particular to the evolution of private consumption in relation with consumer confidence. on the external side, persistently high oil prices and continued global imbalances pose downside risks to growth. with regard to those global imbalances, let me note that i fully trust that they can be progressively alleviated only by embarking actively on the homework that has to be done in all g - 7 / g - 3 economies, in particular by correcting the lack of savings in the us and implementing structural reforms in europe. let me add that the ecb is also of the view β and i have signed myself the g - 7 communiques since the meeting in boca raton, at the beginning of last year, that are stressing this point β that the currencies of a number of asian emerging countries are undervalued against major international currencies, in particular the euro and the dollar. this is the case of the chinese currency, but not only of the chinese currency. turning to price developments in the euro area, according to eurostat, annual hicp inflation was 2. 1 % in april, unchanged from the previous two months. over the coming months, annual hicp inflation rates are likely to remain around current levels, partly reflecting upward pressure on energy prices stemming from oil price increases. as regards the labour market, wage increases have remained contained over recent quarters and, in the context of moderate economic growth and weak labour markets, this trend should continue for the time being. overall, we continue to see no significant evidence of underlying domestic inflationary pressures building up in the euro area. this picture is broadly in line with forecasts recently released by international and private sector organisations. however, there continue to be upside risks to price stability over the medium term and these risks warrant continued vigilance. risks are associated mainly with oil price developments and potential second - round effects stemming from wage and price - setting behaviour. in this respect, responsibility on the part of social partners remains very important. our monetary analysis also calls for vigilance regarding upside risks to price stability over the medium to longer term. after moderating in the first half of 2004, monetary and credit growth remain strong, reflecting the stimulative effect on monetary dynamics of the historically very low level of interest rates in the euro area. as monetary dynamics over the past year have mainly been driven | 0 |
group of national experts that wrote the core financial competence framework for the adult population in the european union. a project presented by the european commission and supported by the international network on financial education. we are committed to incorporating the framework into our national financial literacy strategy. the pandemic was a reminder that the world is fundamentally unpredictable, and that financial literacy is an essential tool for managing personal finances to prepare for the unexpected. additionally, consumers are facing a surge in inflation and an increase in interest rates, which reduces purchasing power, but increases investment opportunities. to promote financial resilience, our financial education initiatives have been focused on the importance of budgeting and building up savings, and on the responsible use of credit to prevent over - indebtedness. our training courses cover wide audiences, but with special attention to the most vulnerable. sustainable finances have recently been integrated into our financial literacy agenda. it is clear that sustainability issues and individuals'sustainability preferences are particularly relevant to personal finances. in our activities, adults are challenged to channel savings to sustainable projects and are made aware of their important contribution in preventing greenwashing. realising that digitalisation has been reshaping the financial services, digital financial literacy is a priority in our agenda since 2016. digital payments have become the gateway to a broader digital finance system, enabling access to savings, credit and other financial products " a click away ". in 2018, we launched a comprehensive campaign targeting youngsters, who are techsavvy and feel comfortable with digital financial services, but tend to overlook security risks and lack financial literacy. with the experience gained from pooling efforts with other stakeholders for over ten years, we are confident that we can make a difference in people's lives. in 2011, portugal launched the first wave of the national strategy to promote the financial literacy. by adopting an inclusive and flexible framework, we received the support of a large group of stakeholders, including ministries, consumer and financial sector associations and ngos. this network is growing in number every year, allowing us to scale up the different initiatives and respond to the need for mass access to financial literacy initiatives. following oecd recommendations, we have been revising our national strategy every 5 years. these revisions took into account the results of national surveys, which were 2 / 3 bis - central bankers'speeches conducted in 2010, 2015 and 2020. portugal also participated in the first survey conducted by the ocde to measure financial literacy of entrepreneurs of micro, small and medium sized firms. in | 2011, the priority was focused on financial education in schools. since then, we work in close partnership with the portuguese ministry of education, which made financial education a compulsory subject in schools. i believe that this is the key approach. reaching a whole generation and developing responsible financial behaviour for future consumers of financial products is a long - term project. to provide support for financial education in schools, we published four financial education workbooks for the different grades. these workbooks are devoted to the implementation of core financial competencies for children and young people. we also developed and implemented several certified training courses available for teachers, among a set of different initiatives. micro, small and medium - sized enterprises have been in our financial literacy agenda since 2014. following the publication of the financial competences framework, the ongoing trainers programme is underway and carried out with specialised institutions within the ministry of economy. other important milestones deserve to be mentioned, such as the launch of a financial education programme for the unemployed in partnership with the portuguese institute of employment and vocational training. also, the set of e - learning courses to promote financial literacy at the workplace in conjunction with various bodies of the ministry of labour, solidarity and social security. these initiatives highlight the importance of partnerships with stakeholders that are close to different target groups. financial literacy initiatives have to be tailor - made to the needs and abilities of the different groups. we have to promote a more inclusive society, one that is more confident in managing its financial future in a changing financial system. by improving the financial well - being of citizens, we are promoting financial stability and the resilience of the economy. thank you for your attention. 3 / 3 bis - central bankers'speeches | 1 |
christian noyer : france β s prudential supervisory authority and financial markets authority β enhancing the protection of french consumers introduction by mr christian noyer, governor of the bank of france, president of the prudential supervisory authority ( autorite de controle prudentiel ) and chairman of the board of directors of the bank for international settlements, at the acp - amf academic symposium, paris, 11 may 2012. * * * dear mr president, ladies and gentlemen, i welcome you to this symposium organised today by the prudential supervisory authority and the financial markets authority. before saying a few words on the subject of this morning β s discussions, i would like to say just how much jean - pierre jouyet and myself are attached to fruitful collaboration between the two authorities that we preside. since the creation of the acp two years ago, the acp and the amf have united their efforts to durably enhance the protection of french consumers. a common division has been set up. apart from the public information platform, assurance banque epargne info service, which the general public is increasingly aware of, the two authorities have also conducted numerous consumer protection initiatives. for example, in 2010, the simultaneous publication of an acp recommendation and an amf guideline allowed the establishment of a framework for the marketing of complex products whatever their distribution channel. in order to limit the excesses sometimes encountered, these two texts underscored the need for contracts that are intelligible to non - professional consumers. in 2011, the number of jointly conducted control missions increased. twelve joint missions were conducted in entities distributing life insurance contracts and financial products ; the common actions also concerned operators offering leveraged transactions on the forex market and the processing of complaints throughout the financial sector. in 2012, joint missions will continue to focus on the different players involved in the marketing of insurance contracts, particularly among portfolio management companies, banks and distribution platforms. this joint work proves, if proof is needed, the shared determination of the two authorities to place consumer interests at the heart of the regulatory framework governing different financial products. indeed, by their very nature, certain subject areas automatically imply collaboration between the two bodies. this is the case for example of household savings. while the financial markets are a natural target for these savings, in the vast majority of cases, retail investors can only access these markets via the services offered by financial institutions and insurance entities. the crisis we have experienced these last four years | ajith nivard cabraal : macroeconomic background and outlook for 2007 presentation by mr ajith nivard cabraal, governor of the central bank of sri lanka, at the sri lanka development forum β 2007, colombo, 29 - 30 january 2007. * * * your excellency president mahinda rajapaksa, president of sri lanka, hon chairman, hon ministers, your excellencies, development partners and friends, in the next few minutes, i will endeavour to give you a quick update of sri lanka β s macroeconomic achievements in 2006 and also share with you, some thoughts on the outlook for 2007. as we now know, the sri lankan economy recorded a growth of 7. 8 per cent in the first three quarters of 2006 and according to current available data, it is very likely that the economic growth in 2006 would be well over 7 per cent. unemployment recorded its lowest level of 6. 3 % during the year. our international reserves increased by nearly 5 per cent. exports, imports and fdi grew significantly. many major infrastructure development projects commenced. a large number of village development projects were implemented. migrant worker remittances reached the highest ever level of over us dollar 2. 3 billion. these achievements by any standards, would have been considered significant. but, in the light of several major challenges faced by the country during 2006, these achievements could very well be even considered quite remarkable. the unprecedented high international oil prices, the unfavourable security situation due to heightened terrorist activity, the unforeseen investment needs in the post tsunami reconstruction, the ending of the debt moratorium that was granted in the wake of the tsunami and the intense export competition arising from the elimination of textile quotas, all left its mark on the economy in 2006. while each of these challenges were very serious, let me briefly deal with the special challenge arising from the uncertain security situation as a result of terrorist attacks launched by the ltte from early january 2006. in face of these attacks, even reluctantly, this threat had to be faced head - on and the terrible attacks had to be repulsed by the government. such efforts obviously required the appropriation of a significant amount of resources, a part of which could have been otherwise available for more productive activity. nevertheless, no responsible government could ignore persistent and delibarate attacks against the country β s integrity, defence, economic centers and public, and hence, as has been done in many countries across the world, the key | 0 |
government debt is good or bad, as i have already mentioned, is a sham question to a certain extent. another sham question is a choice between the financial stability and economic growth. both the central bank and the ministry of finance are being quite often criticised for focusing monetary and fiscal policies respectively on the problem of financial stability to the detriment of economic growth. in actual fact, economic growth is impossible without financial stability. while a stable budget is the basis of financial stability. it is possible to stake money, including government one, at the microlevel, at the level of small specific projects. to take risks at the macrolevel means to endanger economic growth and social stability. bis central bankers β speeches an important question is how to finance the deficit : through reserves or through debt? strictly speaking, both options lead to growth in net debt ( net of reserves ) and consequently to debt burden accumulation. that is why this choice is also a sham one to a large extent. nevertheless, since the commodity market risks are high, we believe that today the priority should be given to debt financing and keeping reserves for more complicated scenarios, when the access to debt financing is even more difficult. moreover, no doubt that the available reserves serve as an insurance from the market point of view and make the access to debt financing somewhat easier. in conclusion i would like to say a few words about how to reach the path of strong economic growth amid tough monetary and fiscal policies and prudent build - up of government debt. the matter is the structure of budget expenditure, rather than its volume, and the use of structural reform potential. the external conditions push the economy towards structural changes and balanced structural reforms may accelerate this process and make it less painful. the emphasis should be put on those industries, which turned out to be competitive in the current situation without government support. only they could become an efficient engine of development amid new reality. as it often happens, the best way to help businesses in the current conditions is not to interfere. the deficit resources of government support should be concentrated on assistance to the most vulnerable population groups, as well as on the development of infrastructure and human capital. bis central bankers β speeches | term rates in the economy depend on inflation expectations and expectations with regard to government finance sustainability. the β risk - free β is a key word describing the relationship between the financial system and the government debt. the latter may perform all these functions only if the state budget is balanced in the medium and long terms and the government may honour its obligations without resorting to defaults and the printing press. budget discipline impacts the central bank β s ability to function as an economic and financial stabiliser amid economic shocks. you may find a lot of examples in the russian and international history. the russian policy between the end of the 19th century and the start of the first world war serves as a model of how the balanced fiscal policy allowed the government to preserve national currency stability, refrain from increasing taxes, and stabilise debt in per cent of gdp at the levels acceptable to the market. at that time a sustainable economic growth persisted despite the lost war with japan and the revolutionary upheavals. ( vice versa, uncontrolled budget deficit growth and in effect the breakdown of government finance during the first world war led to an economic collapse and triggered the 1917 revolution. ) let β s turn to more contemporary examples. the development of the so - called emerging markets, i. e. the financial markets of developing countries, started following the state budgets β stabilisation and inflation reduction. market uncertainty about fiscal stability may cause shocks bis central bankers β speeches in the financial and fx markets. both the situation in brazil in recent months and the russian crisis of 1998 can serve as an example. moreover, market concerns over the consistency of the bank of russia β s policy and our adherence to announced goals, which we felt in 2014 and to a lesser extent in 2015, were also linked to the budget. all the theories of the ruble exchange rate pegged to a certain ruble price of oil originated from considerations of budget balance and concerns that the central bank would intentionally generate inflation to finance budget liabilities. that is the bank of russia was suspected of being ready to give up inflation targeting for the sake of budget replenishment. it took us many months to persuade the market of the opposite. does russia have a potential to build up government debt? yes, it does, in theory, since our country may boast one of the lowest levels of government debt. consequently, the development of the government debt market could be conducive to the development of the financial system as a whole. anyway i would | 1 |
that they will show that the canadian economy has expanded by close to 4 % since the fourth quarter of 1998. and employment has been growing strongly, taking the national unemployment rate down to an 18 - year low of just under 7 %. nova scotia β s economy has also done well this past year, both in terms of output and employment growth. indeed, when it comes to job creation through the year ( that is, december 1999 over december 1998 ), nova scotia has done better than the national average. a number of factors have supported the economic upswing in canada. on the external side, we have greatly benefited from an amazingly strong us market. a pickup in growth in europe and a recovery in some of the asian economies that were most hurt by the financial crisis have also helped. another important factor has been the turnaround in primary commodity prices, in response to firmer world economic activity. stronger domestic spending in canada, reflecting growing confidence, rising employment, and relatively low interest rates, has also been instrumental in boosting the rate of economic expansion. when i talked about our economic prospects in charlottetown in early november and again when our monetary policy report was released shortly after that, i indicated that the bank expected a positive picture for 2000. this meant continued healthy growth and an underlying rate of inflation ( as measured by the consumer price index, excluding food, energy, and the effects of changes in indirect taxes ) near the middle of our 1 % to 3 % target range. information received since then suggests that in the future there may be more upward momentum of demand in canada than we thought because of greater strength both in the world economy, especially in the united states, and in global commodity markets. so we may be looking at a somewhat faster pace of economic expansion for this year - in the upper half of the 2ΒΎ % to 3ΒΎ % range that we suggested in the autumn. i also pointed out last november that there were inflation risks in the outlook for canada that the bank was sensitive to, and should be ready to face, given that monetary policy must be forward - looking. i highlighted two risks in particular : a potential buildup of inflation pressures in the united states that could spill over to canada ; and the possibility of a much stronger momentum of demand in this country from both domestic and foreign sources. economic developments since november continue to point to these risks. and they underline the need for the bank to be vigilant and ready to act in a timely fashion to safeguard canada β | mr hartmann outlines the bundesbank β s preparation for the year 2000 address by mr wendelin hartmann, a member of the directorate of the deutsche bundesbank and chairman of the committee on payment and settlement systems, at a press conference in frankfurt / main on 18 june 1999. ladies and gentlemen, last weekend, a global year 2000 test of the major international payment and settlement systems took place. on the initiative of the new york clearing house ( nych ) nearly 500 internationally operating credit institutions from 20 countries participated in the test, for which they had 34 systems in america, europe, asia and australia at their disposal ( more detailed information is contained in the internet excerpts from nych which you have before you ). the year 2000 readiness of payment systems is of paramount importance to the financial sector. every day, these global financial routes handle payments amounting to more than us $ 1, 500 billion for foreign exchange dealings alone. disruptions to these systems impede the orderly flow of financial capital and may spread to all areas of the economy β both nationally and internationally β in the form of chain reactions. an orderly monetary policy and supply of money to the economy may thus be crucially impaired. for the central banks, it is therefore a major concern that payment systems are able to operate properly in the year 2000. for the organisation of this worldwide test, the bundesbank assumed a coordinating role for the german banking industry with the new york clearing house. it initially provided for an exchange of information with the credit institutions taking part in the test. nationally, the bundesbank, as the system operator, made both of its major large - value payment systems for the german and european market β electronic access frankfurt β ( eaf ) and β electronic counter β ( els ) available for the test. for an eu - wide settlement, we also incorporated the national target component into the test. the test took place under year 2000 conditions. the simulation was of the exchange of payments for the first two business days following the changeover to the year 2000, i. e. january 3 and 4, 2000. thirty - six credit institutions from all areas of the german banking industry, the private, public and cooperative sectors, used this opportunity to demonstrate their year 2000 readiness in a test under realistic conditions. the institutions : β’ submitted payments to the electronic counter, settled payments through electronic access in frankfurt, β’ executed payments via target to belgium, france, italy and the united kingdom and received payments from those | 0 |
##balances, most notably the large current account deficit and the housing boom, can be rectified by adjustments in prices, interest rates, and exchange rates rather than through more - wrenching changes in output, incomes, and employment. the more flexible an economy, the greater its ability to self - correct in response to inevitable, often unanticipated, disturbances. that process of correction limits the size and the consequences of cyclical imbalances. enhanced flexibility provides the advantage of allowing the economy to adjust automatically, reducing the reliance on the actions of monetary and other policymakers, which have often come too late or been misguided. in fact, the performance of the u. s. economy in recent years, despite shocks that in the past would have surely produced marked economic contraction, offers the clearest evidence that we have benefited from an enhanced resilience and flexibility. we weathered a decline on october 19, 1987 of a fifth of the market value of u. s. equities with little evidence of subsequent macroeconomic stress - an episode that provided an early hint that adjustment dynamics might be changing. the credit crunch of the early 1990s and the bursting of the stock market bubble in 2000 were absorbed with the shallowest recessions in the post - world war ii period. and the economic fallout from the tragic events of september 11, 2001, was limited by market forces, with severe economic weakness evident for only a few weeks. most recently, the flexibility of our market - driven economy has allowed us, thus far, to weather reasonably well the steep rise in spot and futures prices for crude oil and natural gas that we have experienced over the past two years. * * * this morning i have tried to outline my perceptions of the key developments that have influenced the conduct of monetary policy over the past eighteen years. i acknowledge that monetary policy itself has been an important contributor to the decline in inflation and inflation expectations over the past quarter - century. indeed, the federal reserve under paul volcker's leadership starting in 1979 did the very heavy lifting against inflation. the major contribution of the federal reserve to fashioning the events of the past decade or so, i believe, was to recognize that the u. s. and global economies were evolving in profound ways and to calibrate inflation - containing policies to gain most effectively from those changes. for reasons that may not be too obscure, i will pay close attention to, and hope to learn from, the deliberations of the next | the debt that supported higher asset prices. this is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums. * * * broad economic forces are continuously at work, shaping the environment in which the federal reserve makes monetary policy. in recent years, the u. s. economy has prospered notably from the despite the two - year bear market following the stock market collapse of 2000, equity prices have risen at an annual rate of 10 percent since 1995. capital gains do not add to gdp. the higher prices of plant and equipment and homes are reflected in an economy's cost structure, which directly or indirectly increases prices of goods and services, leaving real output largely unaffected. capital gains, of course, cannot supply any of the saving required to finance gross domestic investment. increase in productivity growth that began in the mid - 1990s and the enhanced competition engendered by globalization. innovation, spurred by competition, has nurtured the continual scrapping of old technologies to make way for the new. standards of living have risen because depreciation and other cash flows generated by industries employing older, increasingly obsolescent technologies have been reinvested to finance newly produced capital assets that embody cutting - edge technologies. but there is also no doubt that this transition to the new high - tech economy, of which expanding global trade is a part, is proving difficult for a segment of our workforce that interfaces day by day with our rapidly changing capital stock. this difficulty is most evident in the increased fear of job - skill obsolescence that has induced significant numbers of our population to resist the competitive pressures inherent in globalization from workers in the major newly emerging market economies. it is important that these understandable fears be addressed through education and training and not by restraining the competitive forces that are so essential to overall rising standards of living of the great majority of our population. a fear of the changes necessary for economic progress is all too evident in the current stymieing of international trade negotiations. fear of change is also reflected in a hesitancy to face up to the difficult choices that will be required to resolve our looming fiscal problems. the developing protectionism regarding trade and our reluctance to place fiscal policy on a more sustainable path are threatening what may well be our most valued policy asset : the increased flexibility of our economy, which has fostered our extraordinary resilience to shocks. if we can maintain an adequate degree of flexibility, some of america's economic im | 1 |
owned banks. β’ restructuring operations and elimination of excess or redundant manpower. we should also be cognizant that a liberalized system described above would also be more vulnerable including possible systemic breakdown in which many financial firms and businesses may go out of business. if the political leadership have cold feet and do not allow terminally sick and financially unviable firms to die their natural death then the financial sector would always remain saddled with unnecessary burden exacerbating the event risk of banking crisis at some unknown time in the future. β’ having discussed the pre - requisites of a market structure that will improve the efficiency of financial intermediation let us now turn to describe the essential elements of a desirable regulatory framework. banking regulation should ensure that : β’ adverse selection in bank entry is avoided by making certain that individuals more likely to misuse banks do not get bank charters, banks have adequate capital investment, cross ownership is proscribed and character stipulations for bank ownership are enforced. β’ the incentives of bank owners remain aligned with those of the depositors so that bank owners stand to make substantial losses in the event of insolvency. loans loss provisions and capital adequacy regulations play a key role in bringing about such as alignment. β’ excessive risk taking by bank managers is prevented by close scrutiny and supervision of their asset management. this includes measures limiting bank holdings of excessively risky assets, preventing lending to related parties, requiring diversification and making that banks have appropriate loan appraisal, documentation, follow up and classification procedures. along with the issues of harmonization of market structure and regulatory environment in the saarc region there is another issue that impinges upon the efficient functioning of financial sector i. e. autonomy and independence of the central banks among various countries. assuming that the countries in the region are able to implement the measures required to achieve harmony in the market structure and regulatory environment the capacity of the central banks to taking appropriate actions on right time without interference, approval or reversal by another layer of decision makers will be quite critical. thus the imperative of attaining central bank independence at an even keel in each country assumes an important dimension. after laying out the analytical framework and specifying the characteristics essential for harmonization of banking sectors in the region it may be useful for me to narrate the progress pakistan has been able to make in respect of each of the three dimensions discussed above. i do not wish to imply by presenting the experience of pakistan that this should be | ishrat husain : harmonization of the banking sector in saarc region keynote address by mr ishrat husain, governor of the state bank of pakistan, at the south asian federation of accountants conference held in new delhi, india on 28 august 2004. * * * harmonization of the banking sector should not be seen as an objective in itself for the member countries of saarc region but it should be considered as a tool for achieving a large objective. south asia has the largest number of poor people in the world. any objective must therefore aim to address this particular issue in a perceptible way. thus there must be a broad agreement and consensus that the objective should be greater production and exchange of goods and services among the regional countries so that the larger market achieved through intra - regional trading is able to generate economies of scale, lower cost of production, increase efficiency and lead to higher growth rate and reduce the incidence of poverty. unless all the stakeholders in the countries of the region strike a consensus, forge a strategy and action plan in a sequenced and structured way the likelihood of an enlarged south asian market becoming fully effective will remain low. β’ leaders of saarc region have, after a long hiatus and slow start, agreed to weave together the south asia free trade agreement ( safta ) in 2006. the practical implementation of safta is therefore a priority for all the member countries. careful planning and sequencing will be required along with strong political will to move in this direction. some of the preparatory steps for making safta take off in a meaningful way are : β’ trade facilitation through expeditious border crossings, quick custom clearance, efficient port facilities, improved transport links should precede or take place simultaneously with the expansion of volume of cross border trade. β’ domestic tax, tariff and subsidy policies that affect production and trade incentives should be harmonized to avoid recurrence of trade disputes and frequent use of anti dumping laws. as india provides a lot of subsidies to its producers in various forms and shapes the smaller countries are hesitant to allow mfn status to india. the recourse to a long negative list that restricts the volume of trade should be avoided at all costs. β’ macroeconomic policies such as fiscal and monetary policies should be harmonized to achieve a stable, non - discriminating macroeconomic environment for all the countries in the region. β’ supporting institutions to manage and facilitate integration, for example, setting standards | 1 |
sessions. but it is not enough that we discuss and become wise for ourselves. i urge everyone to turn these discussions into actions that would lead to public policy for sustainable development goals of our country, just as our conference theme reflects. let us use our wisdom to help not just ourselves but others as well. after this conference, i look forward to being with everyone at the alumni homecoming this evening. but i will not keep you any longer. i hope for everyone to have fruitful discussions and meaningful exchanges at this conference. once again, thank you very much and i wish you all a productive day ahead. 1 / 1 bis central bankers'speeches | path, i am confident we can look to sunny skies but that is not to say that it will always be sunny for i see patches of clouds nearby. i see potential financial disturbances from the yet unfolding subprime mortgage problem in the us, the now - growing consensus for a deeper - than - first - expected slowdown in the us, as well as the elevated and more volatile oil and commodity prices. these risks, although essentially out of our control, are real and could threaten our outlook. we therefore need to build on what we have so far achieved. we will continue to sharpen our tools for implementing sound monetary policy. we will also continue to reinforce sound structural reforms in the banking system to ensure its overall safety and efficiency as well as its adaptability and inclusiveness, as evidenced by our substantial strides in propagating sustainable microfinance in increasingly innovative forms. moreover, with the infrastructure and instruments of the domestic capital market now mostly in place, our challenge is to make the capital market a truly potent alternative source of funding and investments for domestic industry. we are already seeing growing evidence of this. and in support of the financial reform agenda, we will continue to cooperate with institutions concerned on the passage of key legislations such as the amendment of the bsp charter, the pera bill, and the cisa. i believe we all agree that the creation of a comprehensive and reliable credit information system is key to unlocking credit flows at more affordable rates that will benefit the micro, small and medium enterprises that dominate our economy and employ most of our people. one crucial challenge that we face, and for which i earnestly request your support, is to help ensure that we improve the economy β s absorptive capacity β either through improving access to credit, by providing better risk management products and tools that would allow for project financing to flourish and, ladies and gentlemen by actually extending credit! this is the way, i believe, that the problem of plenty, which you have time and again heard me say, would no longer be a problem of plenty, but be a pot of plenty for the many. indeed, our responsibility to the community extends beyond ensuring that the macroeconomy is stable, and that the banking community is sound. in this context, we believe that part of our role is to enhance financial literacy and education as well. hence, we have partners and collaborators beyond the circle of banks and financial institutions. our financial education program targets our key stakeholders, including overseas | 0.5 |
budgetary discipline, but what we need above all is progress on structural reforms in order to enhance growth potential, within a renewed european pact. that should be our ambition. | players involved, more complex the process to address customer grievances within the shortest span of time. as a result, either customer complaints take a long time to resolve or remain unresolved, both of which situations needs to addressed in right earnest. some criticism 36. we have been ahead of many countries world - wide, including even advanced countries, in the introduction of many efficiencies and safeguards in payment systems. two factor authentication is a good example. the recent upi, ussd and nuup are further examples. similar measures are being introduced by these countries now and we are being asked to share our experiences increasingly in international forums. 37. despite this, we are said to be over - protective in some aspects as a payments system regulator. we are asked as to why there is a regulatory arbitrage in favour of banks and why nonbank entities cannot be given an equal footing in terms of access as well as activities they are permitted to undertake. there is a feeling that opening up the system to private players will bring in the payments revolution faster, similar to the telecom revolution which happened with the opening up of the sector to private players and giving a level playing field to all entities. 38. let me first answer why there is primacy for banks in payment systems. as i mentioned right in the beginning, payments can be effected only in either of two ways β one you use cash to make payments and the other you transfer money in your bank account. there is no third method. thus for the non - cash payments, the origination and ending places are banks only. therefore, minus the banks, there is no non - cash payment instrument or system. critics do not seem to have understood this. 39. as regards the opening up of access to various systems and activities for non - bank entities, we have been opening up the space and gradually allowing entry to non - bank entities. at origination, in between originating bank and destination bank and at the receiving end, there is no restriction for a non - bank entity to be present. examples include the ppi issuers, bbps operating units, treds, wlas, payment aggregators, etc. 40. critics ask why a non - bank cannot be allowed to keep bank accounts. they quote the success of mpesa, a non - bank entity in kenya in ushering payment revolution in that country. our answer is simple. if you maintain a bank account, then you are a bank and you | 0 |
of saving, the funds essentially function like normal banks, even though they are not banks. when we say that, before the crisis, there existed an extensive shadow banking system that was not as strictly regulated as the β real β banks were, it is partly these funds to which we are referring. accordingly, money market funds do not like credit risk. so when the funds ( and their customers ) started to suspect that some european banks had large holes in their balance sheets, they pulled out of the market. this was not a matter of pricing, it was a matter of credibility. many us funds were also impacted by significant redemptions, partly because the customers needed the liquidity, but also because the customers became uncertain of the risks existing in the funds β investments. in sweden, the banks had no significant holdings of bad us mortgage securities, but they were still affected by the same difficulties as other european banks in borrowing dollars. initially, of course, the market did not know that the swedish banks had not purchased any β toxic assets β and had not lent significant amounts of money to any banks that had. but more important was the uncertainty that arose as a result of the swedish banks β extensive lending in the baltic countries. only two of the banks actually had significant business in these countries, but, as banks lend money to each other, it was not easy for the rest of the world to know where the risks actually were. consequently, all swedish banks encountered difficulties in borrowing on the market. β¦ and how it was solved however, the inability of the european banks to borrow dollars as before turned out to be not only a european problem but, in fact, also a us one. when the flow of capital from the private market in the united states suddenly decreased, the european banks found it difficult to repay what they had borrowed from their us counterparts. but the us banks were already facing difficulties with their liquidity β because they were also dependent upon short - term borrowing from the money market funds. they needed every dollar they could get back from their european counterparts. so the european dollar problem bounced back to the united states. in this situation, the us central bank ( the federal reserve ) decided to supply the european central bank ( the ecb ) and a number of other european central banks, including the riksbank, with dollar loans. while this had already been carried out on a smaller scale since 2007, it escalated steeply in conjunction with the lehman collapse. this lending was conducted via what are known | management. in order not to waste valuable time in an emergency, you need to have ways to settle them as efficiently as possible already in place. in my opinion, specifically ex ante arrangements for burden sharing between countries are needed. managing conflicts of interests conflicts of interests can become apparent in many ways, for example, if a cross - border bank becomes insolvent and incurs social costs that somehow need to be shared between the countries involved. the problem of burden sharing becomes particularly precarious when, for example, the bank is significant to the banking system in some country but not in some other countries, or if there are great discrepancies between the ratio of the bank β s size to the gdp of the different countries involved. the social costs that may call for some burden sharing can take many forms. for example, there may arise situations in which the taxpayers in one country may be faced with the prospect of essentially bailing out the depositors of a branch in another country through their national deposit guarantee scheme. incidentally, there is a recent example from my own country ( although, technically, it concerns a bail - out under the investor compensation scheme rather than the deposit guarantee scheme ). after a long and complicated investigation the swedish deposit guarantee board decided around two weeks ago to commence payments to a group of mostly italian investors that were the unfortunate clients of the hair - raisingly ill - managed securities company cta, which went bankrupt in 2004. fortunately, cta was not one of the bigger players β in fact i had never heard of it before it became an item for the deposit guarantee board β and the fund will be able to cover the payments to the approximately 1 200 clients, amounting to around β¬10 million in total. however, if a larger institution had gone bust, the fund alone would not necessarily have been able bail out the investors. all deposit guarantee schemes β as well as investor compensation schemes β are typically underfunded and are not able to cope with failures in large cross - border financial institutions. in such events, additional government funding will be needed. or, if emergency liquidity assistance was provided at some point during the course of the crisis ( on the erroneous assumption that the bank was basically solvent ), a loan loss may be incurred on the national central bank that acted as a lender of last resort. and, of course, when giving liquidity support to a bank with cross - border operations in many countries, you can never be entirely sure | 0.5 |
##ity had basically dried up, since they could be used as collateral in credit operations of the eurosystem. the ecb β s liquidity interventions were also accompanied by an intensification of its communication policy. a key objective of communication efforts was to reassure market participants and the public at large about the ecb β s full awareness of the severe deterioration of liquidity conditions in money markets and its preparedness to act in order to preserve orderly conditions in money markets. in addition, increased communication was requested by the rather technical nature of issues related to liquidity management and the relative lack of familiarity of the general public with them, also in order to prevent and occasionally correct misunderstandings about the scale, modalities and objectives of the eurosystem β s liquidity operations. as regards the objectives of such operations, it was important to continuously remind market participants and the financial press that, under the eurosystem β s institutional set - up ( further reinforced by some changes to the operational framework in 2004 ), decisions on liquidity operations are separated from considerations on monetary policy stance. in fact, in the euro area changes in liquidity conditions are directed to implement the stance of monetary policy chosen by the general council, as summarised by the ecb official rates ( which are explicitly communicated to the public through the regular press release on monetary policy decisions ), and under no circumstances can be interpreted as signalling changes in such stance. from the first day it opened its doors, the ecb has stuck to this principle β the so - called separation principle β for reasons of accountability, transparency and efficiency in the implementation of its monetary policy. the need to remind the public of the separation between monetary policy formulation and implementation became essential in the course of the first phase of the turmoil against the background of strong inflationary pressures and rising risks to price stability. in addition to operational responses on the euro market, the eurosystem further strengthened its cooperation with other central banks, first by means of enhanced information sharing and collective monitoring of market developments and later on through coordinated steps to provide liquidity to euro area banks in what was, to my knowledge, the first systematic and multilateral initiative of central bank co - operation in the money market field, a market which is central to the implementation of a central bank β s monetary policy. more specifically, in order to address the concerns of euro area banks on the availability of their funding denominated in us dollars, in december 2007 the ecb agreed with the federal | pursuing the second objective, the eurosystem aimed to contribute to reestablishing confidence among market participants and to safeguarding financial stability, while also supporting the appropriate functioning of the monetary policy transmission mechanism. contributing to the stability of the financial system is among the tasks assigned to the eurosystem by the treaty establishing the european union under article 105 ( 5 ). ensuring the smooth functioning of the money market is crucial for central banks since the short - term segments of the money market represent the first step along the mechanism of transmission of monetary policy impulses, and their impairment may complicate the signalling and implementation of the desired policy stance. what did the eurosystem do in practice? in practice the eurosystem engaged in more active liquidity management and adjusted its modalities of liquidity provision to the euro area banking sector. as an illustration of more active liquidity management, let me recall our intervention right at the beginning of the market turmoil. the problems that originated in the exposure of many financial institutions worldwide to the us sub - prime mortgage market started simmering in international financial markets in the spring of 2007. in money markets the impact of the turmoil was initially felt mainly in the longer - dated unsecured inter - bank market and in nongovernment repurchase agreement ( repo ) transactions. tensions eventually spilled over to the very short - term money markets ( i. e. below one - week ) in the summer, at first in the us dollar market, where banks β particularly, the european institutions β encountered difficulties in raising short - term liquidity, and on 9 august 2007 to the short - term euro money market. after it became clear that there was the risk of an imminent gridlock in the euro money market, the ecb released a communication stating its readiness to contribute to orderly conditions in the euro money market. the ecb then put its money where its mouth is by providing eur 95 billion on an overnight basis to the euro area banking sector through a fine - tuning operation conducted as a fixed rate tender with full allotment. this operation marked the start of a new phase in which the eurosystem would make some adjustments to its liquidity supply practices in two main directions : 1. under its so - called front - loading policy, it modified the time profile for the provision of euro liquidity via the weekly refinancing operations within the reserve maintenance period ; and 2. it made adjustments to the modalities of distribution across instruments | 1 |
increases in employment, following several years of strong growth as a result of pent - up demand during the crisis. investment in housing will continue to grow notably, boosted by job creation and the availability of credit under favourable conditions. also, business investment will remain robust, in line with the expected course of final demand, against a background of most notable headway in the ongoing restructuring of corporate balance sheets and of persisting easy financial conditions. turning to external demand, the cumulative gains in competitiveness that i referred to and the sound outlook for the international economy as a whole and, in particular, for the euro area, are expected to continue making for a dynamic spanish export performance. risks this predominantly favourable scenario is subject to various sources of risk. for example, developments on global financial markets. in february we saw how the high valuations attained by certain financial assets can give rise to bouts of price corrections and notable rises in volatility. any future intensification of these episodes, which to date have originated in us markets, might have adverse consequences for economic activity and for financial stability. furthermore, it is complicated to anticipate how brexit, and its consequences in terms of trade in goods and services or in movements of people and capital, will unfold. but, in any event, protracted uncertainty over the final agreement intensifies the risks of an adverse impact on activity. on the domestic front, the risks associated with the political situation in catalonia remain. the baseline scenario of our december projections included the negative effects of the increase in uncertainty relating to political tensions. specifically, on that occasion it was considered that the scope of the events already observed would be relatively limited and temporary, albeit not negligible. so far, the information available appears to confirm that recent economic developments are not far removed from the scenario anticipated, with effects that appear to have been confined to catalonia. specifically, since summer 2017, the performance of the catalonian economy appears to have been relatively worse than that of the rest of spain in terms of the figures, for example, on domestic spending and tourism. elsewhere, the indicators measuring the degree of economic and financial uncertainty suggest a reduction in this variable. the incidence of this source of risk will depend on the intensity and persistence of the tensions. an easing in these tensions might lead to higher growth than that considered in our december projections. conversely, a hypothetical rebound in tensions might lead to an increase in uncertainty resulting in a more pronounced impact on agents β spending decisions. | sentiment, although still weak, responding to the announcement of the comprehensive plan for financial revitalization, the so - called total plan, and to the emergence of expectations for permanent tax cut. in money markets, with the heightened awareness toward financial problems at a bank, concerns over credit risks of financial institutions strengthened once again, and upward pressure on interest rates suddenly mounted toward the end of june. however, with the ample provision of funds by the bank of japan and the announcement of the total plan, market anxieties settled down, and the upward pressure on interest rates gradually eased. with respect to monetary aggregates, growth in m2 + cds has been slowing, reflecting the sluggish private bank lending. these developments appear to strongly reflect the further decline in credit this report was written based on data and information available when the bank of japan monetary policy meeting was held on july 16, 1998. the bank β s view on recent economic and financial developments, determined by the policy board at the monetary policy meeting held on july 16, as the basis of monetary policy decisions. - 2demand of private firms with the worsening of overall economic activities, and the continued cautious attitudes of private banks in extending loans. meanwhile, some firms, especially small and medium - sized firms, have been facing difficult financing conditions in terms of both funds availability and fund - raising costs. this influence on the overall economy continues to warrant careful monitoring. | 0 |
to declare cetzam β s β tusunge β savings product officially launched. i thank you for your attention. bis central bankers β speeches | ##ship and sustainable investing is also based here. we are seeking to anchor centres of excellence, think tanks and research networks. mas is bringing together experts in our universities and financial institutions to undertake sustainability research tailored for asia β s needs. https : / / www. mas. gov. sg / news / speeches / 2020 / harnessing - the - power - of - finance - for - a - sustainable - future 10 / 13 14 / 10 / 2020 β harnessing the power of finance for a sustainable future β - keynote speech by mr ravi menon, managing director, mas, at the finan β¦ today, i am pleased to announce the launch of the singapore green finance centre β a collaboration between singapore management university ( smu ) and imperial college business school ( imperial ). the centre will conduct rigorous research tailored to the asian context, synergising smu β s strength in financial economics and imperial β s forte in climate finance. the centre will also groom a pipeline of talent in green finance across the career spectrum β from the undergraduate to the executive education levels. the centre has strong support from our financial industry, which will play a key role in steering the centre β s focus towards market - oriented outputs. i would like to thank the founding partners β bank of china limited, bnp paribas, fullerton fund management, goldman sachs, hsbc, schroders, standard chartered bank, sumitomo mitsui banking corporation, and ubs ag. mas will continue to promote a vibrant green finance research and talent development ecosystem. we will look to anchor more centres of excellence with [UNK] strengths and focus areas β to provide a diversified pool of research and talent in green finance. conclusion people across the world β and in singapore β are increasingly concerned about climate change and environmental degradation. and they want to do something about it. climate change is becoming a rallying cry to inspire people to step up to a higher cause, to take collective action for the common good of our planet. the looming climate crisis poses not just an existential challenge to be overcome but also an economic opportunity to be seized. the coming revolution in sustainability has the potential to remake the world, cleaner and greener, creating new value and new jobs. let us harness the power of finance to help create such a world, and a sustainable future. * * * [ 1 ] oxford smith school briefing paper, october 2018, carbon lock - in curves and southeast asia https : / / www. mas. gov | 0 |
: that markets operate efficiently when private - sector firms compete to provide the highest - quality products to consumers and businesses at the lowest possible cost. in general, the government should compete with the private sector only to address market failures. consideration of the case for a federal reserve cbdc this brings us back to my original question : what is the problem with our current payment system that only a cbdc would solve? could it be that physical currency will disappear? as i mentioned before, the key to having credible commercial bank money is the promise that banks will convert a dollar of digital bank money into a dollar of u. s. physical currency. but how can banks deliver on their promise if u. s. currency disappears? accordingly, many central banks are considering adoption of a cbdc as their economies become β cashless. β eliminating currency is a policy choice, however, not an economic outcome, and chair powell has made clear that u. s. currency is not going to be replaced by a cbdc. thus, a fear of imminently vanishing physical currency cannot be the reason for adopting a cbdc. 7 could it be that the payment system is too limited in reach, and that introducing a cbdc would make the payment system bigger, broader, and more efficient? it certainly doesn β t look that way to me. our existing interbank payment services have nationwide reach, meaning that an accountholder at one commercial bank can make a payment to an accountholder at any other u. s. bank. the same applies to international payments β accountholders at u. s. banks can transfer funds abroad to accountholders at foreign banks. so, a lack of connectedness and geographic breadth in the u. s. payment system is not a good reason to introduce a cbdc. could it be that existing payment services are too slow? a group of commercial banks has recently developed an instant payment service ( the real - time payment service, or rtp ), and the federal reserve is creating its own instant payment service, fednowsm. 8 these services will move funds between accountholders at u. s. commercial banks immediately after a payment is initiated. while cross - border payments are typically less efficient than domestic payments, efforts are underway to improve cross - border payments as well. 9 these innovations are all moving forward in the absence of a cbdc. consequently, facilitating speedier payments is not a compelling reason to create a cbdc. could it be that too few people can access the payment system | their activities inside the present eu. the role of the authorities is to support, not hamper these processes. therefore, my second conclusion is that frustration with the inability to politically consolidate the existing area should not become a reason for constraining its political expansion. in the end, business would find its way through, but europe would lose. | 0 |
to touch upon. currently, the proposal to end the preferential treatment of sovereign debt is being dealt with in the same way as physical exercise is. everybody agrees it β s a good thing in theory. but in practice, it β s very hard to get off the couch. hence, as of now, sovereign debt denominated in an advanced country β s own currency is still considered risk - free. daniele nouy recently grasped the nettle and pointed out : β sovereigns are not risk - free assets. that has been demonstrated, so now we have to react. β i wholeheartedly concur and have repeatedly asked to put this issue on the regulatory agenda. sovereign debt needs to be backed by capital, and exposure to a single sovereign must be capped, just as is the case for any private debtor. i welcome that the regulatory treatment of sovereign debt is now being discussed by the basel committee. but if these discussions fail to produce an agreement, we need to move forward with a european solution. in contrast to other jurisdictions, the eurosystem is for good reasons forbidden to act as lender of last resort for governments. the risk profile of euro - area sovereign debt is therefore different. 4. the tax deductibility of interest as benjamin franklin famously said, nothing is certain except death and taxes. but actually, this timeless quip does not apply to debt. interest expenses are tax - deductible, while equity disbursements are not. bis central bankers β speeches how sensitive are banks to this difference in tax treatment? a study 5 by imf economists suggests that they are as sensitive as any other firm. what does this imply for the leverage of banks? the imf economists estimate that abolishing the preferential tax treatment of debt would raise average unweighted bank equity by 2. 2 to 4. 2 percentage points. even though the authors caution that the effect is likely to be lower for the biggest banks, these numbers are sizable by any measure, especially considering that the proposed basel iii leverage ratio is 3 %. doing away with the preferential tax treatment of debt could therefore provide a major boon for financial stability. 5. conclusion ladies and gentlemen, debt is like oxygen : indispensable for economic life, but when you overdose on it, you first get high, and then you faint. air quality regulation has made great strides over the last decades, at least in the advanced countries. i hope we can replicate | to be determined by market forces. it is therefore all the more important that this market process functions as efficiently as possible. and this is where the regulators come in. it is our job to make sure that the regulatory treatment of debt does not give rise to incentives that endanger financial stability. and it is our job to make sure that, if things still go wrong, the financial sector can still deliver its important services to the real economy. as the financial crisis and the euro - area sovereign debt crisis have shown, there is ample room for improvement here. in particular, we need to ensure that all actors bear the responsibility for their respective decisions. to me, three issues are of special relevance in this regard : the question of bail - in vs. bail - out, the regulatory treatment of sovereign debt, and the tax preference of debt over equity. 2. bail - in vs. bail - out let me start with a question that has been debated heatedly since the crisis broke out : the issue of bail - in vs. bail - out. the financial sector is unique in that a malfunctioning of this sector impairs the functioning of all other sectors of the economy. and the crisis has served as a stark reminder that a malfunctioning cannot be ruled out. some form of protection is therefore called for β otherwise, innocent bystanders in the real economy will inevitably get hurt. depending on the kind of malfunctioning, the central bank might be able to provide the protection. if the issue is a temporary dry - up of liquidity, it can act as a lender of last resort and supply the necessary funding β on an interim basis. but if the issue is one of solvency, then the central bank has no role to play, as taxpayers β money might be ultimately at stake. rather, it is then for politicians to decide whether to let a bank fail or not. providing insurance in the form of a bail - out comes with obvious moral hazard problems. if banks know that they are too big to fail, they are tempted to make the most of this insurance and take on excessive risks, at the expense of society at large. as the bank of england β s chief economist andy haldane put it : β only in banking do control rights and incentive wrongs combine so uncomfortably. β instead of the public providing cost - free insurance for banks, the onus is on banks to insure themselves against failure. only then are risk and reward | 1 |
proceedings 75 ( 2 ). 412. see ibid., p. 412. see holzmann, r. and m. t. valderrama. 2021. raising r * : why, how and if not now, when? suerf policy note 253. 1 β 9. it is unclear, for example, whether r * is best approximated by the real returns on government bonds or rather by the real returns on private capital. see reis, r. 2022. which r - star, public bonds or private investment? measurement and policy implications. working paper. 1 β 48. see bergeaud, a., g. cette and r. lecat. 2019. the circular relationship between productivity growth and real interest rates. banque de france working paper 734. 1 β 39 ; jorda, o., s. r. singh and a. m. taylor. 2020. the long - run effects of monetary policy. nber working paper 26666. 1 β 72. equilibrium real interest rate with the right economic policies. available estimates indicate a major decline of r * across regions of the global north and particularly low values for europe. a low or negative r * is a key reason for deploying ump, be it negative policy rates, quantitative easing or funding for lending schemes. as i argued earlier in my lecture, the accommodative monetary policy stance that comes with ump can produce severe side effects. thus, as economic policymakers, we may have an interest in sustainably moving away from ump by raising r *. alternatively, and i think this might be the more sensible option, the endogeneity of r * makes it possible to actively use nonmonetary, structural policies to initiate a strong rise in r *. in my view, the most important levers for achieving this end are policies that boost productivity, that increase the labor force participation of the elderly to compensate for population aging, and that reduce the savings glut in the global north by transfers for productive investments toward the global south. for example, a broadly conceived and effective green agenda would offer new opportunities for all three channels. hence, altogether, we can perhaps read alexandre lamfalussy β s nostalgia for schumpeter as a very early expression of skepticism as regards too simplistic equilibrium thinking in macroeconomics. in any case, mr. lamfalussy β s musings may serve as a wake | as they have been19 β are not enough : effective and efficient capital markets require capitalists. in modern democracies, deep and liquid capital markets are best achieved through see european central bank. 2011. approaches to monetary policy revisited β lessons from the crisis. sixth ecb central banking conference, 18 - 19 november 2010. conference proceedings. 168 β 173. see e. g. cΕure, b. 2019. heterogeneity and the ecb β s monetary policy. speech at the banque de france symposium & 34th suerf colloquium on the occasion of the 20th anniversary of the euro on β the euro area : staying the course through uncertainties β, paris, 29 march 2019 ; and references therein. see bayoumi, t. and b. eichengreen. 1993. shocking aspects of european monetary integration, in : torres, f. and f. giavazzi ( eds. ). 1993. adjustment and growth in the european monetary union. cambridge : cambridge university press. 193 β 235 ; o β rourke, k. and a. taylor. 2013. cross of euros. journal of economic perspectives 27 ( 3 ). 167 β 192. see lamfalussy, a. 2001. reflections on the regulation of european security markets. suerf study 14. extended version of the annual suerf lecture given by professor lamfalussy at the bank of england on may 3, 2001. 11. see holzmann, r. and a. restoy ( eds. ). 2022. central banks and supervisory architecture in europe β lessons from crises in the 21st century. cheltenham, uk & northampton, usa : edward elgar. savings motivations that are common to all individuals over their life cycle β housing ownership and retirement financing β and the related market institutions. in fact, my own previous work argues that private pension funds can provide a particularly important impetus in this context if and when the right reforms are enacted and the right institutions are created. 20 let me now turn to the second revolving theme that caught my attention. i stumbled upon a fascinating passage in one of mr. lamfalussy β s articles published in 1985, just before he took over as general manager of the bank for international settlements. there he noted his β nostalgia for one of schumpeter's main themes, namely that economic analysis should concern itself with the process of change, with its succession of cumulative or compensating imbalances, | 1 |
dimitar bogov : activities and developments in eu payment systems address by mr dimitar bogov, governor of the national bank of the republic of macedonia, at the seventh international conference on payment and securities settlement systems, ohrid, 6 β 9july 20414. * * * ladies and gentlemen, esteemed colleagues, it is a great honor and privilege to open the seventh conference on payment and securities settlement systems. this conference has had an international character for several years now, and this year, the list of participants and guests is even broader. apart from the national bank of the republic of macedonia, we must give due credit to the central bank of the netherlands and the central bank of portugal for making this conference a success. without their support and active participation, the quality of the conference would not be at the same level. therefore, i would like to acknowledge the traditional cooperation of the national bank of the republic of macedonia with the central bank of the netherlands and the central bank of portugal, and at the same time to salute this year β s participation of the representatives of the central banks from central, eastern and southeastern europe, as well as representatives of the committee on payment and settlement systems at the bank for international settlements, euroclear and commerzbank. to us, the perennial active participation of the representatives from the domestic payment system is of great importance as well. esteemed colleagues from the financial sector! allow me to tackle several important aspects that will be included in our discussion in the days ahead of us. first, the conference will be opened by promoting the red book of the payment, clearing and settlement systems of the republic of macedonia, which was issued at the end of last year, in cooperation with the committee on payment and settlement systems at the bank for international settlements ( bis ). this publication is important for the republic of macedonia because it further improves the understanding, at both national and international level, of the functioning of the payment and securities settlement systems. at the same time, this project promoted the process of harmonization of the payment statistics of the national bank with the payment statistics of the european central bank, which is an ongoing process that includes other banks, and is expected to facilitate complete methodological unification and readiness to disseminate information in accordance with the requirements of the statistical system of the european central bank. allow me on this occasion to welcome mr. emanuel freire, who will promote the red book of the republic of macedonia and present the activities of the | of the statement of the nobel prize winner robert lucas that β the central problem of depression - prevention has been solved, for all practical purposes β and the statement of ben bernanke in his famous speech named as β the great moderation β, where he claims more than lucas that the modern macroeconomic policy has solved the business cycle problem or more precisely it has reduced the problem to a point that it is a mere shade rather than the most important economic question. daniel k. tarullo, member of the fed board of governors finds the reasons in replacing the basic regulatory framework established after the great depression 1929 β 1933, which mostly limited the commercial banks to traditional lending activities, with the regulatory framework that in the 1970s started to install deep changes in the organization and regulation of the financial markets, culminating with the adoption of the gramm - leach - bliley bill in 1999. he says that β with the innovations, the traditional commercial banking business model was put under strong pressure on both sides : on the liability side in the balance sheet of the banks in the form of more attractive savings instruments, such as the funds for investing on the money market, and on the assets side, with the growth of public companies and international competition β. until the end of the century the restriction cluster on the commercial banks from the great depression era was replaced with a regulatory setting in which they could operate on a national level, to involve in a much broader set of activities and to practically join with every kind of financial companies. tarullo says, that is how the highly complex financial holding companies were started... the independent investment banks grew in a group of big, complex and highly indebted companies... the financial engineering was quickly changing the character of the entire financial services sector. securitization and accompanying instruments united the capital markets and traditional lending activities, fueling the growth of the so - called shadow banking system. allan greenspan in his latest paper β the crisis β wrote about the reasons for it : a. β it was the global proliferation of securitized, toxic u. s. subprime mortgages that was the immediate trigger of the current crisis β. but, he says : β the roots of the crisis reach back, as best i can judge, to the aftermath of the cold war β. later he explains actually the large increase of the aggregate demand which came from, formerly the third world nations, especially china, which replicated the export - oriented model of the | 0.5 |
very weak. according to the survey data for the last two months, there are tentative signs of a stabilisation in economic activity at a low level. looking ahead, we expect the euro area economy to recover very gradually in the course of 2012. the very low short - term interest rates and all the measures taken to foster the proper functioning of the euro area financial sector are lending support to the euro area economy. moreover, stress in financial markets has diminished in response to our monetary policy measures, but also in response to the progress made towards a stronger euro area governance framework and intensified fiscal consolidation in several euro area countries. however, subdued global demand growth, the remaining tensions in euro area sovereign debt markets and their impact on credit conditions, as well as the process of balance sheet adjustment in the financial and non - financial sectors, continue to dampen the underlying growth momentum. this outlook is subject to downside risks. they notably relate to tensions in euro area debt markets and their potential spillover to the euro area real economy. downside risks also relate to possible adverse developments in the global economy, higher than assumed increases in commodity prices, protectionist pressures and the potential for a disorderly correction of global imbalances. bis central bankers β speeches euro area annual hicp inflation was 2. 7 % in january 2012, according to eurostat β s flash estimate, unchanged from december. the average inflation rate for 2011 was 2. 7 %, mainly driven by higher energy and other commodity prices. looking ahead, inflation is likely to stay above 2 % for several months to come, before declining to below 2 %. this pattern reflects the expectation that, in an environment of weak growth in the euro area and globally, underlying price pressures in the euro area should remain limited. risks to the medium - term outlook for price developments remain broadly balanced. on the upside, they relate to higher than assumed increases in indirect taxes and administered prices, as well as increases in commodity prices. the main downside risks relate to the impact of weaker than expected growth in the euro area and globally. the monetary analysis indicates that the underlying pace of monetary expansion remains subdued. the annual growth rate of m3 decreased to 1. 6 % in december 2011, after 2. 0 % in november, reflecting a further weakening of monetary dynamics towards the end of the year. the annual growth rates of loans to non - financial corporations and loans to households, adjusted for loan sales and securitisation, also decreased further in december, and | mario draghi : ecb press conference β introductory statement introductory statement by mr mario draghi, president of the european central bank, and mr vitor constancio, vice - president of the european central bank, frankfurt am main, 9 february 2012. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to our press conference. we will now report on the outcome of today β s meeting of the governing council, which was also attended by the commission vice - president, mr rehn. based on our regular economic and monetary analyses, we decided to keep the key ecb interest rates unchanged. the information that has become available since mid - january broadly confirms our previous assessment. inflation is likely to stay above 2 % for several months to come, before declining to below 2 %. available survey indicators confirm some tentative signs of a stabilisation in economic activity at a low level around the turn of the year, but the economic outlook remains subject to high uncertainty and downside risks. the underlying pace of monetary expansion remains subdued. looking ahead, it is essential for monetary policy to maintain price stability for the euro area as a whole. this ensures a firm anchoring of inflation expectations in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. such anchoring is a prerequisite for monetary policy to make its contribution to supporting economic growth and job creation in the euro area. a very thorough analysis of all incoming data and developments over the period ahead is warranted. through our non - standard monetary policy measures we will continue to support the functioning of the euro area financial sector, and thus the financing of the real economy. since the first three - year longer - term refinancing operation ( ltro ) was conducted in december 2011 we have approved specific national eligibility criteria and risk control measures for the temporary acceptance in a number of countries of additional credit claims as collateral in eurosystem credit operations, which should lead to an increase in available collateral. further details will be provided in a press release to be published today at 3. 30 p. m. at the start of the current reserve maintenance period on 18 january 2012 the reserve ratio was reduced, freeing up additional collateral. as stated on previous occasions, all our non - standard measures are temporary in nature. let me now explain our assessment in greater detail, starting with the economic analysis. real gdp growth in the fourth quarter of 2011 is likely to have been | 1 |
willem f duisenberg : the international role of the euro speech by dr willem f duisenberg, president of the european central bank, on the occasion of the 2000 spruce meadows round table, held in calgary, on 8 september 2000. * * * let me first thank the organisers of this conference for having invited me to share some thoughts with you on the international role of the euro. the euro was successfully launched 20 months ago as the single currency of 11 member states of the european union ( eu ) - known as the β euro area β. on 1 january 1999 these member states transferred their monetary sovereignty to a new supranational institution, the european central bank ( ecb ). since then, the eurosystem - composed of the ecb and the national central banks ( ncbs ) of the 11 countries that have adopted the euro - has been in charge of the euro area single monetary policy and related functions, such as foreign reserve management and operations and payment systems oversight. the euro has brought about fundamental changes to the economic and financial environment in the euro area and beyond. by lowering transaction costs and enhancing price transparency, the single currency represents a major contribution to fostering competition and efficiency in goods and financial markets across the euro area. as such, the introduction of the euro represents a quantum leap towards completing a fully integrated single market in the eu and lays a solid basis for the improvement in the living standards of european citizens. besides these welfare - enhancing effects on the β domestic β economy of the euro area, the new setting also has far - reaching consequences for the world economy and the international community. let me shed some light on the international ramifications of monetary union by highlighting three interrelated aspects. first, the use of the euro as an international currency in the global financial system ; second, the growing role played by the eurosystem in international policy cooperation ; and, third, relevant aspects of the exchange rate of the euro. before dealing with these points in turn, i should like to recall some key economic features of the euro area. key economic features of the euro area let me begin by putting the euro area into an international perspective. the euro area represents a large and relatively closed economy. given its population of almost 300 million people and its significant weight in the global economy, the euro area is broadly comparable with the united states. as regards its size and structure, the most striking fact is that the euro area economy has a share of world output of around | after its inception, we can state that the eurosystem and its monetary policy have delivered upon their responsibilities. the policy measures by the ecb governing council have resulted in an inflation rate which is in line with our quantitative definition of price stability. on the fiscal side, the picture has been less positive, though. the fiscal stimulus measures in response to the financial crisis, large - scale government support programmes for ailing domestic banking systems, the working of automatic stabilizers and eroding tax bases in the face of weakening growth have put government budgets in the euro area countries under intense pressure. however, let me emphasise that for some euro area countries government budgets had already suffered from lax fiscal policy before the crisis. governments which entered the crisis with significant fiscal imbalances exited the recession with the highest deficit and debt - to - gdp ratios recorded in times of peace. the aggregate fiscal balance of the euro area increased from a close - to - balanced budget in 2007 to a deficit of more than 6 % of gdp in 2010, with a debt ratio rising from about 66 % in 2007 to more than 85 % in 2010 β and still increasing. this already drastic aggravation of public finances in the aggregate masks much more extreme developments for some individual countries. the sovereign debt crisis has shown that sound public finances are all the more important in a monetary union where a large number of independent fiscal policy - makers share the benefits of a single currency, gaining access to a large pool of savings and being immunized against exchange - rate risk. originally, it was expected that financial market pressures as well as treaty obligations would provide strong disciplining devices for member states to maintain sound public finances and to engage in structural reforms. bis central bankers β speeches firstly, financial markets were expected to discriminate between sovereign borrowers, leading to differentiated long - term bond yields across issuers with differing degrees of fiscal soundness. 2 however, as we have seen during several years before the crisis, markets did not come up with differentiated pricing, but rather with a fairly complacent pricing of risk across the board. in the wake of the financial crisis, these β one might say, β falsely comforting β β steady states have abruptly turned around. on the one hand, the government bond yield increases that we saw over the last years certainly contained episodes of overshooting, not fully reflecting economic fundamentals. on the other hand, the re - pricing served as an important wake - up call that strongly pushed for | 0.5 |
system β s average interest burden had been rising since 2015, mainly due to the foreign exchange market interventions undertaken for monetary policy purposes ; this burden declined following the revision of the exemption threshold regime and the threshold increases. the average interest rate on all sight deposits is currently around β0. 2 % and is thus less than a third of what it would be in a system without exemptions. the exemption threshold of a bank is calculated as a fixed multiple of its minimum reserve requirement, which itself is a function of its short - term liabilities. thus, a bank with a higher stock of short - term, safe assets ( including repos ) relative to its short - term liabilities receives a relatively lower exemption threshold as a share of its short - term, safe assets. when first introduced, the banks β exemption thresholds were static, in the sense that they were calculated on the basis of a fixed reference period, viz., october 2014. with the november 2019 adjustment, banks β exemption thresholds became dynamic, in the sense that the reference period over which the exemption thresholds are calculated is updated each month as the sliding window over the preceding 36 months. starting in january 2015, a bank β s exemption threshold was determined as 20 times its minimum reserve requirement, based on the october 2014 reference period. with the november 2019 adjustment, its exemption threshold was raised to 25 times ( raised further to 30 on 1 april 2020 ) its minimum reserve requirement, using a moving average of the minimum reserve requirements over the preceding 36 months. page 9 / 13 the increases in the exemption thresholds also broadened the scope for additional liquidity redistribution, causing trading volume on the repo market to rise. indeed, repo market trading volume, shown by the vertical blue bars in chart 4, increased substantially in november 2019, as did the number of banks active on the repo market. let us now take a closer look at the impact of the exemption threshold adjustments on the repo market and, in particular, at the tools the snb has deployed to ensure that secured money market rates remain close to its policy rate. the role of snb monetary policy operations in the money market the increases in the aggregate exemption thresholds have changed the dynamics in the repo market, as they simultaneously caused the demand for liquidity to rise and the supply of liquidity to fall in the repo market. with more demand for liquidity and less supply, the cashproviding banks were able to achieve higher, i | speech embargo 5 november 2020, 4. 00 pm monetary policy implementation : how to steer interest rates in negative territory virtual money market event andrea m. maechler and thomas moserβ member of the governing board / alternate member of the governing board swiss national bank webcast, 5 november 2020 Β© swiss national bank, zurich, 2020 β the speakers would like to thank peter kuster and tanja zehnder for their valuable support and astute insights when drafting this speech. they also thank roman baumann and mico loretan for their comments as well as snb language services for the translations of the text. page 1 / 13 ladies and gentlemen good afternoon to all of you. on behalf of my colleague thomas moser and myself, i would like to welcome you warmly to the swiss national bank β s first - ever virtual money market event. i am delighted that we are all able to interact in this way, even though the circumstances which necessitate the virtual format are anything but pleasant. the coronavirus crisis has turned the lives of billions of people upside down. many have contracted or even died from the disease, and many others have lost their jobs as a result of it. given all of this, the fact that the snb has been forced to break with an almost twenty - year tradition and refrain from holding a physical money market event is little more than a side - note. but it is regrettable all the same. the coronavirus crisis generated significant turbulence in financial markets when it surfaced in february and march. the leading central banks eased their monetary policy stance, and many made use of the standing us dollar swap lines to enhance the provision of global us dollar liquidity. investor sentiment improved substantially beginning in late march on the back of large - scale fiscal and monetary support programmes launched in many countries, including switzerland. bolstered by these programmes and the eventual relaxation of public health policy restrictions, financial markets continued their recovery until late summer, and economic activity also picked up considerably. however, developments in recent days and weeks have made it clear that the coronavirus crisis is not over and that uncertainty remains high. in switzerland, the snb has repeatedly reaffirmed its expansionary monetary policy. in so doing, it has made an important contribution in terms of immediate crisis management. some of the instruments the snb has marshalled to manage the coronavirus crisis are well known. the negative interest rate on banks β sight deposits held at the snb and our willingness to | 1 |
price stability. as you know, the strategy selected by the governing council of the ecb comprises a quantitative definition of price stability, which should contribute to anchoring long - term inflation expectations, as well as the two so - called pillars. the quantification of the primary objective, combined with the transparency and the credibility of the eurosystem, provides the most important guidance to financial markets. our monetary policy should contribute to keeping inflation expectations safely below 2 %. this ensures a high degree of likelihood that future price developments will be consistent with the definition of price stability. the governing council bases its monetary policy discussions on the information revealed by the two pillars of its strategy. the first pillar is a prominent role for money, implying that monetary and credit developments are thoroughly analysed for their information content with regard to future price developments and risks to price stability. the prominent role for money is signalled by the announcement of a quantitative reference value for monetary growth in terms of m3. i like to emphasise again that the m3 reference value is not a monetary target. monetary policy will not react mechanistically to deviations of m3 growth from the reference value. the second pillar is a broadly based assessment of the outlook for price developments. this comprises analysis of many individual non - monetary indicators. we also look at macroeconomic forecasts prepared both externally and internally. i know that some analysts in the market would prefer if the eurosystem had a very simple strategy, where interest rates are changed quasi - automatically in response to a few ( or even a single ) observable variable ( s ). some would prefer monetary targeting, others favour inflation targeting. i acknowledge that our strategy is complex. however, we have to recognise that we live in a rather complex economic world and that there are additional uncertainties related to the changeover to the new regime of monetary union in the euro area. it would therefore be impossible for the eurosystem to conduct a successful policy by mechanistically following a simple rule whereby policy decisions are closely linked to a few indicator variables or to a central inflation projection at a particular point in time. two key features of the ecb β s communication with the public and the markets are our monthly bulletins and the monthly press conferences. the latter usually directly follow the first governing council meeting of each month. by these means we publicly conduct a detailed review of current monetary, financial and other economic developments in the euro area against the background of the strategy. this aims at illustrating | the application of the strategy in practice, guiding market expectations. although the strategy is complex, we generally try to end with an overall assessment which summarises the opinion of the council on the future situation. the press conference provides prompt information in an even - handed way, and it offers the opportunity for immediate two - way communication. as far as i am aware, no other central bank regularly communicates with the public in such a prompt and open manner immediately after its monetary policy meetings. we are convinced that this contributes to reducing uncertainty in the markets and thus gives important and clear guidance, also with regard to short - term policy moves. in this respect, one should recognise that the ecb is facing a completely new environment. we do not only have to decide on the single monetary policy for a new monetary area comprising 11 independent countries, but also to communicate with the public and markets of these 11 countries, which were used to quite different monetary policy strategies and communication policies in the past. this diversity of monetary history, communication and culture across the euro area obviously constitutes a great challenge for communicating in a comprehensible and transparent way both with the general public and the markets. obviously, journalists, financial markets and the public are still in the process of learning the new strategy of monetary policy in the euro area and, over time, the eurosystem will further improve its communication. let me finally address the third part of your question : ( β does more information necessarily mean better guidance? β ). i am convinced that it is misleading to assume that more information always means better policy and a clearer guidance to the market. what is important is that the information given to the public is clearly structured and understandable, avoids adding uncertainty and is provided in an even - handed way. the eurosystem β s monetary policy strategy has been designed with these aims in mind. moreover, as indicated, a high degree of credibility of monetary policy can make a substantial contribution to reducing uncertainty in the markets and is thus a key aim of our policy. what is clearly more important than the amount of information given is that the communication policy, as part of the strategy, is consistent with the structure of the internal decision - making process. i can assure you that this is indeed the case. during the monthly press conferences, i make an introductory statement summarising the governing council β s discussions and conclusions before answering questions from journalists. as the statement is agreed, in substance, with all the council members beforehand, it is | 1 |
peter praet : interview in bdp revista, staff magazine of bank of portugal interview with mr peter praet, member of the executive board of the european central bank, in bdp revista, staff magazine of bank of portugal, conducted by ms isabel arriaga e cunha on 18 june 2018 and published on 2 november 2018. * * * europe is celebrating the 20th anniversary of the european central bank ( ecb ), and in a few months the 20th anniversary of the euro. what do you think are the main achievements and successes of these 20 years? 20 years ago the responsibility for monetary policy was entrusted to a new european institution with the mandate of maintaining price stability. this was a major step forward in the process of building an ever - closer union among the peoples of europe. we are a european institution that has been capable of deciding and acting in good times as well as in very challenging times. this is a remarkable achievement from an institutional point of view. and we have fulfilled our mandate in very difficult times β despite the financial and economic crises during the last decade. the euro is a stable and safe currency. we see with 74 % in the eurobarometer the highest approval rating for the single currency since 2004. that is quite remarkable, even more so as there are strong political forces challenging european integration. so, you see the ecb as having lived up to its responsibility so far? the ecb has had three presidents over 20 years. there have sometimes been differences. this is quite normal within a decision - making body of today 25 members, but the governing council has always enjoyed a strong sense of collegiality. we are all fully committed to fulfilling our mandate and are always open to debate and each other β s ideas. this is why the ecb has always had the ability and the willingness to act, whenever it was needed and within its mandate. so, back to your question : what are the main successes of these 20 years? the euro was created, because the single currency is a necessary condition for the completion of the single market. this remains true, but you need more than the single currency for the single market to function properly : once you have a single currency with a single market with free mobility of labour, goods and services, you are urged to reach a higher degree of political integration. there is a need for more european integration. this integration can take time, it will not come overnight, but each politician should keep in mind | lives. for men, this seems to be less complicated as their participation in household tasks is far less than that of their female partners. in my opinion, however, decisions to sacrifice a professional career for family life are not the prerogative of women alone β men have to make these decisions as well. if family life does not impede men from pursuing a successful career, then it should not prevent women either. i believe that today, both men and women should bear the responsibility of earning the household income and share the family responsibilities. together, they should make choices and decisions on how they will organize their family life while pursuing professional careers. bis central bankers β speeches ladies and gentlemen, as already noted, female labor force participation is heavily determined by female education and cultural attitudes. other factors that influence women β s decision concerning whether to work or stay out of employment include flexible working arrangements, the tax system, the availability of childcare facilities, and access to public transportation. both the government and employers can address these issues and, hence, improve female participation. in the area of education, we need more public investment in education and training to reduce the qualitative mismatch between demand and supply in the labor market. the investments in human capital must be targeted towards our youth as well as the unemployed population. in addition, our education and training system should focus not only on the labor force in those sectors where our economy has a competitive advantage, but it should also focus on creating a skilled labor force that can attract knowledge - based industries and services companies, particularly in high value - creating activities. education is not only important for those entering or returning to the labor market, but it also determines the extent to which those already working can keep their jobs and advance their careers in a constantly changing and competitive environment. in this context, both government and employers can stimulate on - the - job training and lifelong education. employers should consider their workforce as an asset. investing in on - the - job training and lifelong education for their employees increases job satisfaction and productivity. given the productivity gains to be had, the government can stimulate on - the - job training and lifelong education through, for example, tax incentives. another important determinant of female labor force participation is the possibility of flexible working. flexible working can offer a wide range of options including part - time working, flexible hours, and working from home. flexible working has several benefits for employers. first, it helps retain staff and reduces absenteeism. second | 0 |
tom alweendo : the exchange rate speech by mr tom alweendo, governor of the bank of namibia, during a breakfast meeting of the namibia economic society, windhoek, 17 august 2004. * * * i have been asked to talk to you this morning about β the exchange rate β and against my better judgment i agreed to do so. specifically, the question everyone is asking is whether it is not high time that the monetary authorities do something to depreciate the exchange rate through monetary policy operations. at the center of the argument for action to depreciate the exchange rate is the negative effect a high exchange rate has on the export sectors of the real sectors. at the risk of stating the obvious, let β s all establish and agreement that an exchange rate is a price of one currency in terms of another currency. therefore, like other prices, exchange rates are determined by the interaction of supply and demand. this interaction will sometimes results into a depreciation or appreciation of a currency. intervening in this process is in itself an interference with the free market concept, where the market is supposed to be efficient, guided by an invisible hand. i am, however, happy that there are now a number of market players who understand that the market is not always perfect and that there is sometimes a justifiable need to intervene in order to correct the market. in order for us to appreciate the exchange rate today, let us look at the movement in the exchange rate over the last fourteen years. in 1990, the average nad / us $ exchange rate was nad2. 59 and the average inflation was about 15 %. by 2000 the exchange rate has depreciated by more than 100 % to nad6. 87. in 2002 the exchange rate reached a record low of nad10. 52. during 2003 the exchange rate started to appreciate and most people were not expecting an appreciation, but were expecting depreciation. because of this mismatch in expectation and what transpired, the effect of the appreciating exchange rate is made to sound much worse than it really is. those who argue that the monetary authority should do something to depreciate the currency, suggest two methods. firstly they say that the central bank should reduce interest rate and secondly the central bank could buy us $. with the first method, the local currency will become less attractive and there will be less funds flowing into the local economy and hopefully this will translate into a weaker exchange rate. this | prefer a weaker exchange rate because you will be competitive in terms of price. on the other hand, if you are mostly an importing country, you should prefer a stronger exchange rate, again on the account of price competitiveness. to my mind, this is a generalized answer, at best, and it leaves out a number of realities. for example a weaker currency is generally associated with expectation of higher inflation. we are also well aware of the danger of inflation and to therefore rely on a weaker exchange rate for price competitiveness may only be beneficial in a very short term. for long term prosperity a country will be better off to rely on its total factor productivity levels. lastly, ladies and gentlemen, i now want to answer the questions i was asked : β are there economic reasons to celebrate the strong nad? β my short answer to that question is maybe and maybe not. i thank you. | 1 |
these 3 - month rates come down further, and those declines be sustained. we are also looking for evidence that near - term inflation expectations are easing and that longer - term expectations are centred on our 2 % target. near - term expectations remain high and our surveys suggest that uncertainty about where inflation is headed remains unusually elevated. looking at indicators of labour markets and economic activity, it is clear that even though the economy has started to slow, it remains in excess demand. job vacancies have declined from their peak but remain high, and businesses continue to report 2 / 3 bis - central bankers'speeches widespread labour shortages. with the economy now fully reopened, households want to enjoy many of the close - contact services they have missed, but businesses can't keep up, and we have seen prices for services rise rapidly. higher policy interest rates are beginning to slow demand. higher mortgage rates have contributed to a sharp slowing in housing activity from unsustainable levels, and consumer and business spending on goods is moderating. this has led to declines in house prices and is exerting downward pressure on goods prices. moving forward, we expect the effects of higher interest rates to continue to work through the economy, moderating household spending and business investment. slowing global growth, particularly in the united states, will also weigh on canadian exports. we project growth in gross domestic product ( gdp ) will stall through the end of this year and the first half of 2023 before picking up in the second half. annual average gdp growth is therefore projected to decline from about 3aΒΌ % this year to just under 1 % next year and about 2 % in 2024. with growth below potential for several quarters, excess demand in the economy dissipates and the economy moves into excess supply in 2023. putting the global and canadian outlooks together, we expect inflation will hover around 7 % in the final quarter of this year, fall to around 3 % by the end of next year and return to the 2 % target by the end of 2024. the bank of canada's job is to ensure inflation is low, stable and predictable. we are still far from that goal. we view the risks around our forecast for inflation to be reasonably balanced, but with inflation so far above our target, we are particularly concerned about the upside risks. we are mindful that adjusting to higher interest rates is difficult for many canadians. many households have significant debt loads, and higher interest rates add to their burden. | this tightening phase will draw to a close. we are getting closer, but we are not there yet. 1 / 3 bis - central bankers'speeches we are carefully assessing the effects of higher interest rates on economic activity and inflation. and we are being clear with canadians and focusing on the job we have been assigned - to restore price stability for the benefit of all. let me expand on these considerations and highlight the key points in the governing council's deliberations. the governing council began by assessing international developments since the july mpr. inflation around the world is high and increasingly broad - based. with most central banks raising their policy rates to control inflation, global financial conditions have tightened rapidly. the global economy is slowing, and we revised down our projection for global growth. we also noted the emergence of financial stresses in some markets in recent months. a number of indicators suggest that global supply disruptions are easing. oil and other commodity prices have also come down since july. together with slower global growth, these developments suggest global inflation should come down over time. however, uncertainty is high, particularly related to russia's invasion of ukraine, and there is potential for more volatility in energy markets and for renewed supply chain disruptions. turning to canadian developments, the governing council devoted considerable attention to assessing inflation, inflation expectations and the balance between demand and supply in the economy. since june, inflation in canada has come down from 8. 1 % to 6. 9 %. though welcome, most of that decline reflects a drop in gasoline prices. inflation in canada is broadbased, reflecting large increases in both goods and services prices. about two - thirds of the components of the consumer price index ( cpi ) have risen by more than 5 % over the last year. and rising prices for essentials like groceries and rent are hitting lower income canadians particularly hard. because short - term movements in total cpi inflation are often dominated by swings in volatile international prices like oil prices, we are watching measures of core inflation closely for signs that price pressures in canada are easing. our preferred core measures have stopped rising in the last couple of months, but they have yet to show clear evidence that underlying inflation is coming down. looking ahead, there are some early encouraging signs. businesses have said they expect the rate of price increases for the goods and services they sell will come down. and more timely 3 - month rates of core inflation have declined, although they are still averaging about 4 %. we will need to see | 1 |
still. basel iii and the capital requirements directive, or crr, are even more detailed, heavier on formulas, and more complex. why is there this trend towards ever more complex rules? five reasons stand out in particular. bis central bankers β speeches first : regulation has needed to keep pace β and still needs to keep pace β with ever more complex banking business. second : we are increasingly dealing with what is known as risk regulation. here, historical data and statistical procedures are used to calculate the probability of dangerous events occurring β the rules and regulations then stipulate how banks must prepare for such scenarios. third : global harmonisation brought about by the basel standards. these standards were created mainly for large international banks, but are being applied to all institutions in germany and the european union. fourth : complexity is also caused by european regulation, which imposes an additional set of rules that need to be followed. furthermore, the relationship between european and national rules is often unclear. and last, but not least, complicated rules are also an outcome of compromises. compromises are a necessary element of regulation β especially where a large number of countries with a wide variety of banking landscapes are involved. moreover, the changes proposed by banks and saving banks often haven β t exactly made the rules any simpler. this has made compliance with the rules an increasingly costly, time - consuming and unwieldy undertaking. such a complicated set of rules is all but bound to lead to a considerable increase in the costs of compliance. if such rules had been imposed on inspector schimanski and his ilk, tatort would have been a much less exciting show. i personally wouldn β t be thrilled to spend 90 minutes watching the inspector poring over implementing regulations. that β s only something for masochists, and gotz george, the actor who played inspector schimanski, certainly wasn β t one of those. 3. disadvantages : high compliance costs as i mentioned at the outset, the suspect β s motive to cause harm to banks and their customers via complicated rules isn β t very plausible. and the supposed sequence of events isn β t exactly water tight either. but one thing we do have to admit is that the complexity of banking regulation has made compliance very expensive for institutions β in two respects. first, the regulatory requirements generate work for the institution β s executives and employees. this includes one - off costs, such as the costs of procuring new software. but it β s also about | andreas dombret : current developments in europe introductory remarks by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the german embassy, paris, 11 december 2013. * * * ladies and gentlemen let me kick off the discussion by offering some thoughts on the current state of play in europe, and the euro area in particular. many challenges have by now been overcome, yet some still remain ahead. let me mention a few of them. first, the markets are still concerned about the quality of banks β balance sheets and possible forbearance policies. the lack of transparency about true asset quality is certainly an issue. price - to - book ratios of less than one testify to this. second, it is true that we have seen significant improvements in market access and funding costs during recent months. however, signs of fragmentation between the so - called periphery and other countries of the euro area are still evident. that is, financing conditions for sovereigns, banks and corporates continue to diverge along national borders. third, in many parts of europe the necessary deleveraging process still has to continue. the corporate and private household sectors in some european economies are still riddled with debt from previous exuberance. likewise, public deficits and sovereign debt levels are uncomfortably high in many countries. finally, growth, when measured on an annual basis, in the euro area remains subdued. the european commission expects euro area real gdp to shrink by 0. 4 % in 2013. and in 2014, growth may well amount to a mere 1. 1 %. this adds to the challenges facing bank balance sheets and public finances. so, is it all gloom and doom? far from it, i would argue, as long as policy makers take the right steps. let us take a short look at what has been done so far and what remains to be done. let me begin with the issue of monetary policy, as you would probably expect from a central banker. only few would dispute that the measures taken by the eurosystem have greatly reduced tail risks in the financial markets. however, i cannot conceal the concern that these measures come with diminishing rates of return. in fact, we may soon reach a point where their risks outweigh their benefits. in the end, monetary policy cannot solve the crisis. everyone agrees on this. all monetary policy can do is to buy time. and in doing so the eurosystem has entered unchartered and dangerous territory | 0.5 |
to purchase assets of which the supply is limited or inflexible, such as real estate. 10 we are prepared to use our micro - and macro - prudential instruments to face the risks of bubbles and excessive leverage, but if the lower bound were effectively abolished, those risks would increase and may lead to macroeconomic instability along this dynamically inefficient path. third, we have to reflect on why we have reached the lower bound in the euro area in the first place. an important issue here is the possibility that the natural real rate may have fallen very low or even gone negative ; this could occur for various reasons such as low productivity or a slowdown in population growth, both of which are relevant for the euro area. a protracted period of deleveraging in the euro area, similar to the one which occurred in japan in the 1990s, could also have pushed the natural real rate down, even into negative territory, see m. draghi, 2015. β the ecb β s recent monetary policy measures : effectiveness and challenges β, camdessus lecture, international monetary fund, washington dc, 14 may. see g. claeys and z. darvas, 2015. β the financial stability risks of ultra - loose monetary policy β, bruegel policy contribution, issue 2015 / 03. bis central bankers β speeches and potentially for a long time. 11 this is related to the so - called β secular stagnation β hypothesis. 12 this scenario may also be consistent with a gloomier view of recent bond market developments than the one i have provided above. real forward interest rates indeed suggest that the expected short - term real interest rate about ten years ahead is around β 1 %, while expected euro area gdp growth for the period six to ten years ahead stands at 1. 4 % ( according to the consensus forecast ). if forward markets were correct, then the fall in longterm yields would not due to a generalised reduction in the market price of risk, and thus a flattening of term and risk premia induced by our extended asset purchase programme. it would be rather a reflection of a generalised fall in real interest rates, signifying bleaker prospects for euro area growth. for monetary policy to remain β neutral β in such an environment, a lastingly low or negative actual real rate would be needed. it is in response to this that some are proposing to remove the effective lower bound. but my question is, why not instead | august characterised by notably lower market liquidity. the eurosystem is taking this into account in the implementation of its expanded asset purchase programme by moderately frontloading its purchase activity in may and june, which will allow us to maintain our monthly average of β¬60 billion, while having to buy less in the holiday period. if need be, the frontloading may be complemented by some backloading in september when market liquidity is expected to improve again. the slightly for a discussion of the financial stability consequences of lower market liquidity, see a. bailey, 2015. β financial markets : identifying risks and appropriate responses β, speech given at hughes hall, cambridge university, 15 may. bis central bankers β speeches higher purchase volume that market analysts may observe in the coming weeks is therefore unrelated to the recent episode of market volatility. other options for dealing with the lower bound the fact that non - standard measures can help to overcome the lower bound constraint does not mean that there might not be other, even more effective ways to deal with it. in this context two types of policy have been put forward : those that take the existence of the effective lower bound as a given and seek to improve the traction of monetary policy in that environment ; and those which aim to remove the lower bound constraint altogether. as regards the first type, several options have been proposed in the literature, but most are unfortunately not very appealing to policy - makers. for instance, blanchard and ball, among others, suggest increasing the inflation objective, for example from 2 % to 4 %. 6 this option, however, would impose permanent costs on the economy in terms of the inefficient allocation of resources associated with a higher inflation rate. another important casualty would be the credibility of the ecb, given that economic agents would entertain the possibility of further changes in the objective in response to future shocks. all in all, raising the inflation target is β too blunt an instrument β for achieving the desired objective of stabilising the economy in a low interest rate environment. additional proposals are even more far - reaching. they involve the use of β active β fiscal policy to create inflation, or to increase policy interest rates to coordinate expectations on the desired equilibrium of inflation of below but close to 2 %. 7 but neither proposal is practical given our context in the euro area. our forward guidance is based on the notion that we do not intend to raise rates for an extended period of time. and explicit monetary - fiscal policy coordination is neither possible | 1 |
. one factor influencing our choice of which topics to cover in the first phase was our assessment of what issues the market was looking for clarity on sooner rather than later. we have attempted to provide greater clarity on issues such as information sharing and order handling in the document released today. alongside drafting the code, we have also been devoting considerable time and effort to thinking about how to ensure widespread adoption of the global code by market participants. clearly, that has been an issue with the various existing codes that have been in place in a number of markets over many years. it is evident that they were ignored on occasion, wilfully or otherwise. as i said earlier, we are working with the industry to produce a principles - based code of conduct rather than a set of prescriptive regulatory standards. it will not impose legal or regulatory obligations on market participants, nor will it supplant existing regulatory standards or expectations. but we do expect the principles in the code to be understood and adopted across the entire fx market. so we are setting out today our overall approach to adherence to the code and we intend to work closely with market participants in the coming year to facilitate the development of market - based mechanisms which demonstrably embed the global code within firms β culture and practices. these mechanisms need to be sensitive to existing law and regulation and to the diverse nature of fx markets globally. hence a β one size fits all β approach to adherence would not be appropriate. we need to strike the right balance between respecting the existing diversity across different markets, and establishing globally consistent and effective adherence mechanisms. the success of the global code in promoting integrity and restoring confidence in the wholesale fx market lies in the hands of its participants. that is why the global fxcs have issued today a joint statement of support making clear their intention for the global code to become an integral part of the wholesale fx market. furthermore the bis central banks are today signalling their commitment by announcing that they themselves will follow the code, and that they expect that their counterparties will do so too. bis central bankers β speeches | 22 / 08 / 2018 low inflation | speeches | rba speech low inflation guy debelle [ * ] deputy governor address at the economic society of australia ( qld ) business lunch brisbane β 22 august 2018 the inflation rate is currently just over 2 per cent ( graph 1 ). this is consistent with the inflation target for the reserve bank agreed between the governor and the treasurer. however, that follows a period where inflation has been a little below target for a number of quarters. while inflation has averaged 2Β½ per cent since the inflation target was introduced, over the past three years it has averaged 1. 8 per cent ( table 1 ). http : / / www. rba. gov. au / speeches / 2018 / sp - dg - 2018 - 08 - 22. html 1 / 23 22 / 08 / 2018 low inflation | speeches | rba graph 1 how broad based has the recent decline in inflation been? in 2016, only around one - quarter of the cpi basket had an inflation rate of above 2. 5 per cent. [ 1 ] in the june quarter this had risen but only to 40 per cent. to look at it another way, in recent quarters around 80 per cent of the basket had an inflation rate below its inflation - targeting average ( graph 2 ). http : / / www. rba. gov. au / speeches / 2018 / sp - dg - 2018 - 08 - 22. html 2 / 23 22 / 08 / 2018 low inflation | speeches | rba graph 2 there are a number of macroeconomic forces at work that have contributed to these outcomes, but today i am going to focus on some of the individual price developments that underpin the aggregate inflation outcome. [ 2 ] i will examine pricing dynamics at a more disaggregated level and how these dynamics have changed in recent years. an understanding of these changing dynamics and what might be behind them is useful in assessing the outlook for inflation. important drivers of recent lower outcomes include competition in the retail sector, historically low increases in rents, low wages growth and slower growth in some administered prices. http : / / www. rba. gov. au / speeches / 2018 / sp - dg - 2018 - 08 - 22. html 3 / 23 22 / 08 / 2018 low inflation | speeches | rba table 1 : inflation by component ( a ) effective weight average since 1993 average since 2015 1. 2 β0. 1 0. 1 2. 4 3. 2 2. | 0.5 |
also argued that β [ t ] his requires that the national supervisors and parliaments should receive the necessary information to understand the risks national depositors are exposed to from these branches and the possible impacts on the financing of their economies. this may require developing specific reporting instruments and processes for the local authorities to continue to be able to appropriately supervise local activities and thus contribute to supervisory decisions taken at the ssm level that may impact their jurisdiction. β, eurofi ( 2019 ), programme of the eurofi high level seminar in bucharest, 3 - 5 april. viii as evidenced by the high - level working group chair report on the strengthening of the banking union, including edis ( op. cit. ) : β broad agreement exists on the need for a harmonisation of necessary parts of bank insolvency law, including with regard to cross - border groups and the ranking of creditors, while the toolbox for resolution might need to be expanded. β ix this report is expected to feed into the review of the single resolution mechanism, european commission ( 2019 ), β report from the commission to the european parliament and the council on the application and review of directive 2014 / 59 / eu ( bank recovery and resolution directive ) and regulation 806 / 2014 ( single resolution mechanism regulation ) β, available at http : / / ec. europa. eu / transparency / regdoc / rep / 1 / 2019 / en / com - 2019 - 213 - f1 - en - main - part - 1. pdf, and european parliament ( 2019 ), briefing for the purposes of the public hearing with elke konig, chair of the single resolution board on 2 april 2019. the european parliament econ committee has also commissioned an external study on β lessons from the united states for banking resolution in the banking union β to be published in spring 2019. x state aid sa. 50640 ( 2018 / n ) β italy β liquidation scheme for small banks, available at http : / / ec. europa. eu / competition / state _ aid / cases / 274069 / 274069 _ 1989761 _ 107 _ 2. pdf. xi judgment in joined cases t - 98 / 16, italy v commission, t - 196 / 16, banca popolare di bari scpa v commission, and t - 198 / 16 fondo interbancario di tutela dei depositi v commission. xii the dgs directive also recognises that dgs funds may be used | assistance programme : the budget deficit significantly declined and public debt is now on a downward trend ; private sector deleveraging is ongoing ; and the banking sector is more robust, with a stronger liquidity position, higher solvency ratios and improved asset quality. the adjustment programme has widely been regarded as a success. in my view, this success was due to three factors : 1. first, programme ownership. portugal was committed to the implementation of the programme, which was accepted by the population. a constructive dialogue with social partners was possible and this was key to ensuring the success of the quarterly reviews. 2. secondly, the speed and intensity of the response from the tradable sector, in particular exports, was key to the rapid rebalancing of external accounts and mitigation of the impact of lower domestic demand on the non - tradable sector. 3. third, the maintenance of confidence in the banking sector, as evidenced by the behaviour of deposits. this was crucial to preventing the economy from collapsing with a credit crunch and avoiding the imposition of capital controls. it is important to remember that an adjustment programme is always a short - term programme whose effects are only sustainable if there are structural and institutional adjustments that prevent repetition of the conditions that led to the need for adjustment. as such, notwithstanding the undisputable progress, there is no room for complacency. 2 / 3 bis central bankers'speeches a lasting trajectory of growth and convergence towards our european partners depends on our capacity to generate and maintain high levels of employment and productivity. this is a necessary condition to ( i ) bring our workers β wage levels closer to european standards ; and ( ii ) finance the welfare state in a context of unfavourable demographic developments. the challenge is thus one of activating the β levers β of employment and productivity. i will briefly highlight the four most critical ones. 1. first, investment. it is vital to increase both the stock of capital and investment in intangibles, learning from past mistakes, particularly by scrutinising investment projects in a far more demanding way. of course, we cannot ignore the fact that the recovery in investment is constrained by the ( still ) high indebtedness level and low savings rate of the portuguese economy. this means that higher investment will have to be financed through an increase in equity, either from existing shareholders, or the entry of new domestic or foreign shareholders. 2. second, skills. in portugal, employees β | 0.5 |
of reserves down the road. for all these challenges, i look forward to your ideas, your expertise, your input. because monetary policy is too important, too crucial for our economy and our general well - being, to rely on trial and error. the ecb, the central banks, would prefer to avoid the honour of receiving an ig nobel prize. yes, in the history of the ig nobel prizes some were also awarded as criticism wrapped up in a blanket of satire. for instance, in 2009, the ig nobel for economics was awarded to the directors, executives, and auditors of four icelandic banks for demonstrating that tiny banks can rapidly mushroom into huge banks, and vice versa, and for demonstrating that similar things can happen to an entire national economy. so, to avoid that'honour ', we need data and research to fulfil our mandate, so that we can do the best possible job at what we must do best. because in monetary policy, we cannot live by the slogan of the ig nobel prizes, also the closing remark of the annual ceremony : " if you didn't win a prize β and especially if you did β better luck next year! " so, make us think! 3 / 3 bis - central bankers'speeches | β the global financial crisis ( gfc ), the european sovereign debt crisis and a pandemic that kept the economy in lockdown. and more recently, russia's unjustifiable war in ukraine that caused energy prices to spike and inflation to soar. shocks that have challenged central banks all over the world in their quest for price stability. shocks that have challenged us to find new instruments, to expand our toolkit to counter the deflationary dynamics and enable governments to engage in fiscal 1 / 3 bis - central bankers'speeches stimulus. a challenge that we met by deploying several unconventional monetary instruments, including forward guidance, asset purchases and longer term refinancing operations. did they work? yes, they certainly left their mark. forward guidance and asset purchases lowered medium to long - term interest rates, making credit more affordable and boosting the economy. tltros significantly reduced banks'funding cost, and stimulated banks to pass on these favorable funding costs to businesses and households. these measures are now an integral part of the central bank's toolbox ; they add policy space when rates are at the lower bound, even though they are not unbounded themselves. yet, as we have found out, they also come with a challenge : the combination of instruments and the sequencing we ourselves imposed have created a very high degree of persistence in our monetary policy. in other words : it reduced our ability to'turn the ship'when inflation flared up. why was that? the moment policy makers could effectively raise rates was delayed because we communicated that the we would first stop with net asset purchases before raising rates. and stopping asset purchases takes time. they were a novel, untested instrument. and as brainard argued : uncertainty regarding an instrument calls for smaller steps. so, to'turn the ship ', we started by gradually reducing the net asset purchases to zero under the pepp and app. after that, in july 2022, we were'free'to raise rates for the first time. what followed was a rise of policy rates at an unprecedented pace : between july 2022 to september 2023, policy rates increased by a total of 450 basis points from minus 0. 5 percent to 4 percent today. restrictive policies will likely remain needed for some time to come to get inflation back down to target. personally, and conditional on incoming data confirming the latest projections from september, i see the current level of our policy rates as a good'cruising altitude'where they | 1 |
muhammad bin ibrahim : scaling up excellence β creating opportunities while mitigating risks keynote address by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the regional conference on money services business β scaling up excellence β creating opportunities while mitigating risks β, kuala lumpur, 19 may 2014. * * * i β m glad to be here with you today to join mr mathew a. verghis in welcoming you to this regional conference on money services business. on behalf of bank negara malaysia, i would like to thank the world bank, the malaysian association of money services business, and the international association of money transfer networks who partnered with us in organising this event. this conference aims to bring together regulators and industry players to review developments in the money services business industry at a time when there are significant changes occurring in the financial industry. in many countries, money services business plays an important role in complementing banking institutions to provide financial services to the community, in particular, the unbanked and small business communities. given the forces of change that are reshaping the financial industry, it is timely to consider how these forces impacted the expectations, opportunities and challenges for money services businesses. the money services business industry contribute to an important purpose in our communities. they provide financial services to segments of society in both the developing and developed world that do not have access to basic banking facilities and services. increasingly, money services business provides and support tourism, business travel and cross - border trade activities in a more globalised world economy. according to a world bank report, it is estimated that nearly 1 out of 7 persons is a migrant, reflecting the large and diverse diaspora community in the world today. worker remittances to developing countries were in excess of usd400 billion last year and represent a key source of external resource flows. these flows support economic growth in developing countries, far exceeding official development assistance. more than usd 1 trillion was spent on global business travel expenditure in 2013 and more than 1 billion in international tourist arrivals are recorded each year. in 2013, business activities supported world trade volume of over usd 23 trillion. all of these developments have created new and greater demand for remittance, currency exchange and other financial services that can be offered by money services businesses. the industry itself has also become more diverse. advancements in technology have enabled new business models, offering new product and service, innovations and forming of new alliances. these enhancements have the potential to further lower cost and increase convenience | could have an impact on earnings and resilience in the medium term. one ssm project i could mention here explores the structural reasons for a disproportionately large risk appetite, which some institutions were shown to have in the past. this certainly does not mean that we are looking to intervene in an institution β s business activities ; instead, it is our aim to identify at an early stage and mitigate to the greatest extent possible any developments that could pose a serious threat to a bank β s livelihood. imbalances in the banking sector, then, are an important testing ground for european banking supervisors β yet everyday supervisory measures are equally as important, even if their success cannot always be put into numbers as easily. you can see this, for example, in the case of home country bias, a phenomenon which occurs when national supervisors unintentionally allow their national interests to influence their work. and it is precisely this trend that the ssm is designed to counter. it is not so much a case of supervisors breaking the rules, but more a question of how they interpret them, yet it is not always possible to identify a home country bias in each individual case. the new supervisory architecture is designed to counter this home country bias trend that national supervisors exhibit. supervisory teams consisting of staff members from several different countries and, of course, 3 / 6 bis central bankers'speeches the key role of the ecb have forged a more neutral approach and a more level supervisory playing field. i consider this a very welcome development. dear students, i hope that my remarks, which touched on only a small part of the work of banking supervisors in the new european era, have also managed to drum up some interest in our field of work. the tasks of national and european banking supervisors not only entail a high level of responsibility, but are also very varied and challenging. i do have my own particular reasons for saying this, however, not least as it is the specialists from the individual member states who keep the european supervisory mechanism up and running. germany and, in particular, the bundesbank contribute over 28 % of the total headcount of supervisors in the ssm. we therefore rate well qualified young professionals like yourselves very highly. 3. resolution β what we have learned so far let us now take a look at the topic of resolution in the narrower sense. we all have unpleasant memories of institutions which unfortunately only appeared to obey the laws of a market economy and our regulatory framework when | 0 |
foster a resilient and sound global islamic financial system. the ifsb is an important part of these endeavours and its work remains relevant as we face a time of increasing uncertainties. the strategies identified in the ifsb β s strategic performance plan for the year bis central bankers β speeches 2013 to 2015 provides the focus for the ifsb to achieve the key result areas charted in the roadmap. i am confident that the ifsb would effectively manage its journey ahead amidst the increasing challenges, with the collective support from its members. indeed, we look forward to the constructive outcome of the deliberations during this 10th ifsb summit. we also hope that you will also have the opportunity to experience malaysia during your time here. on that note, i thank you for your attention. bis central bankers β speeches | move away from globalization towards the rise of protectionist policies such as the protracted trade tensions between the us and china. while the philippines is not directly affected with the tariff impositions, the continued trade friction could take its toll on the country β s external sector. fourth, there is also the so - called rise of the fourth industrial revolution. while technological innovation in itself is not bad, and indeed often brings benefits, the velocity and depth of transformation could have potentially disruptive effects, especially in the short term. in fact, rapid technological innovation has already ushered in broad structural economic changes that policymakers are only just beginning to understand. certainly, this would have significant impact in the conduct of economic policy and the way we do business. on top of these global risks, we also have to deal with the infrastructure gap on the domestic front. nonetheless, despite these risks, we are cautiously optimistic that the philippine economy is poised to sustain its growth momentum amid lingering global headwinds. let me close by assuring everyone that the bsp will continue to adhere to sound policies and remain focused on its mandate. you can continue to count on us to remain steadfast in our primary objective of price and financial stability, factors that reinforce the vibrant investment environment. having said all these, i am looking forward to a productive, open, and stimulating discussion with you and will be receptive to your insights. thank you and mabuhay. 3 / 3 bis central bankers'speeches | 0 |
. s. capital proposal has been overwhelmingly negative, including from a broad range of stakeholders. i have previously spoken at length about my concerns with the proposal, and as public commenters have reviewed it, they have identified additional areas of concern. 3 in my view, the concerns are well - founded. the proposal acknowledged that the revisions, if implemented, would result in an estimated 20 percent aggregate increase in total risk - weighted assets across bank holding companies subject to the rule. individual impacts would vary not only by firm, but also by business line. for any particular business line or product, the aggregate impact of the proposed capital changes could result in a more significant increase, depending upon the firm's characteristics. consider the impact on business lines subject to the market risk capital rule. as noted in the proposal, the revisions to the market risk rule alone would increase risk - weighted assets from $ 430 billion to $ 760 billion for category i and ii firms, and from $ 130 billion to $ 220 billion for category iii and iv firms. 4 even this example ignores the additive capital increases from other aspects of the rule, such as the operational risk charge " overlay " that may separately result in a higher capital charge for the same business line, if that line is also generating fee income. the changes that may affect any particular financial product or service vary but could include impacts across all aspects of the proposal. for many of the derivatives and swaps activities in which banking entities engage, the aggregate impacts on different business lines could result from changes to the market risk rule, the calculation of credit valuation adjustments, and the treatment of securities financing transactions, among others. so far, what i have described are just the aggregate effects of capital increases that would appear within the four corners of the u. s. basel iii endgame proposal. we know that these changes do not exist in a vacuum. a particular firm can also be impacted by changes to the global systemically important bank ( g - sib ) surcharge and long - term debt requirements. the firm's business planning would also need to consider existing 3 / 7 bis - central bankers'speeches requirements, such as leverage and " total loss - absorbing capacity " requirements. by design, these elements are intended to be complementary, often seeking to capture different risks, operate as " backstop " capital standards, promote resiliency, and be available for recapitalization in resolution. despite the goal that the capital framework operates in a holistic fashion, | to rise at a solid pace. continued softness in consumer spending and weaker housing activity early in the second quarter also suggest less momentum in economic activity so far this year. payroll employment continued to rise at a solid pace in april and may, though slightly slower than in the first quarter, partly reflecting increased immigrant labor supply. despite some further rebalancing between supply and demand, the labor market remains tight. the unemployment rate edged up to 4. 0 percent in may, while the 1 / 7 bis - central bankers'speeches number of job openings relative to unemployed workers declined further to near its prepandemic level. labor force participation dropped back to 62. 5 percent in may, which suggests no further improvement in labor supply along this margin, as labor force participation among those aged 55 and older has been persistently low. at its current setting, our monetary policy stance appears to be restrictive, and i will continue to monitor the incoming data to assess whether monetary policy is sufficiently restrictive to bring inflation down to our target. as i've noted recently, my baseline outlook continues to be that inflation will decline further with the policy rate held steady. and should the incoming data indicate that inflation is moving sustainably toward our 2 percent goal, it will eventually become appropriate to gradually lower the target range for the federal funds rate to prevent monetary policy from becoming overly restrictive. however, we are still not yet at the point where it is appropriate to lower the policy rate, and i continue to see a number of upside risks to inflation. first, much of the progress on inflation last year was due to supply - side improvements, including easing of supply chain constraints ; increases in the number of available workers, due in part to immigration ; and lower energy prices. it is unlikely that further improvements along this margin will continue to lower inflation going forward as supply chains have largely normalized ; the labor force participation rate has leveled off in recent months below pre - pandemic levels ; and an open u. s. immigration policy over the past few years, which added millions of new immigrants in the u. s., may become more restrictive. geopolitical developments could also pose upside risks to inflation, including the risk that spillovers from regional conflicts could disrupt global supply chains, putting additional upward pressure on food, energy, and commodity prices. there is also the risk that the loosening in financial conditions since late last year, reflecting considerable gains in equity valuations, and additional fiscal stimulus could add momentum to demand, | 1 |
weaknesses in the regulation and supervision of banks around the world, in the eu such weaknesses were exacerbated by fragmentation. from the early stages of the crisis the banking sector fragmented along national lines, driven by diverging macroeconomic conditions in different countries and by governments β diverging responses in dealing with failing banks. differently from the us, common resolution frameworks backstopped by public money were absent. governments that could do so, because of their sound budgets, massively bailed out their failed banks. an opportunity for bank consolidation was lost, but their economies were spared a credit crisis after a financial crisis. in other countries where bailouts were not possible due to constrained finances or new regulatory restrictions introduced by the bank recovery and resolution directive ( brrd ), the crisis lasted much longer. european supervision and the european framework for managing bank failures, of which the brrd is an important part, have made such a cause of fragmentation, namely the different countries β responses to banking crises less likely today. but more needs to be done. 4 / 6 bis central bankers'speeches progress in completing the banking union β namely, first harmonising options and discretions, completing resolution, and laying the groundwork for the creation of an effective deposit insurance β is essential and i am confident that significant steps in this direction will soon be taken. but let β s keep in mind that fragmentation starts with the decision by banks not to operate in regions where the risk - return of lending is judged to be insufficient to remunerate their invested capital ultimately, what ensures a steady flow of bank lending to the economy, even in times of unforeseen stress or disruption, is a growth - friendly environment, which can only be assured by the appropriate government policies. 1 report to the council and the commission on the realisation by stages of economic and monetary union in the community ( werner report ), 1970 ; report on economic and monetary union in the european community ( delors report ), 1989 ; padoa - schioppa t. ( 1999 ), β emu and banking supervision β, international finance, vol. 2, no 2, pp. 295 β 308 2 ecb ( 2008 ), financial integration in europe, april. 3 see : about the single supervisory mechanism 4 european central bank ( 2016 ), β chapter 1 β topical issue : the ecb β s macroprudential policy framework β, macroprudential bulletin, issue 1. 5 the 10 % average requirement refers to | lgd β, deutsche bundesbank discussion paper series 2 : banking and financial studies, no 06, 2011. rannenberg, a. β asymmetric information in credit markets, bank leverage cycles and macroeconomic dynamics β, nationale bank van belgie / banque nationale de belgique, mimeo 2011. bis central bankers β speeches | 0.5 |
philip n jefferson : on the assessment of current monetary policy speech by mr philip n jefferson, member of the board of governors of the federal reserve system, at the " how to get back on track - a policy conference ", hoover institution, stanford, california, 12 may 2023. * * * accompanying charts of the speech good afternoon, everyone. thank you to the organizers for inviting me to speak. it is a pleasure to be here. i welcome hearing diverse views on how to best conduct monetary policy, and this conference is certainly providing an invigorating debate on that topic. before i begin, i want to address quickly some news from this morning. i am deeply honored by the trust president biden and vice president harris have shown me with the nomination to be the next vice chair of the board. i am humbled by this extraordinary opportunity and thankful to my colleagues, friends, and family for their support. turning back to the conference, as i join this debate, let me remind you that the views i will express today are my own and are not necessarily those of my colleagues in the federal reserve system. introduction the title of the conference " how to get back on track : a policy conference " is potent. its intent and ambiguity are striking. first, the title presupposes that u. s. monetary policy is currently on the wrong track. second, the webpage for this conference advances a puzzling definition of the phrase " on track. " how so? according to the hoover webpage, " a key goal of the conference is to examine how to get back on track and, thereby, how to reduce the inflation rate without slowing down economic growth " ( emphasis added ). 1 as this audience knows, there are macroeconomic models that permit disinflation with no slowdown in economic growth, but the assumptions underlying these models are very strong. 2 it's not clear, at least to me, why such a strict metric would be used to assess real - world monetary policymaking. third, the definition of " on track " in the title contrasts with more commonplace definitions such as " achieving or doing what is necessary or expected, " as offered by a standard reference such as the merriam - webster dictionary. 3 my view is that this commonplace definition provides a more practical lens through which to assess real - world policymaking. against this semantic backdrop, i will begin my remarks with my perspective on the current inflation and economic situation. then, i will | practices for the effectiveness of any capital adequacy framework. let me take leave of you with a final thought : do never forget the story about the barber that dates 4 / 5 bis central bankers'speeches back to the years before the 1970s. his business had collapsed not because of the variety of risks stemming from the rapid pace of technological progress ( schumpeter β s creative destruction ) but because of the risk associated with misplaced trust. the world has since changed cinematically and dramatically. in the decades before the 1960s, the life of tools, equipment and machines for production of goods and services lasted for 25 to 30 years. the cycle of obsolescence was so long that the risks of enterprises going bust because of technological progress were lower than they are today. lending institutions faced lesser risks in those days. with digital technology, the cycle of obsolescence has accelerated. just imagine the average lifespan of a phone app is a mere 30 days. we do not have enough time to master anything in today β s world before it is displaced. the risks of enterprises and along with them lending institutions going bust are indeed unprecedentedly heightened. it β s very difficult for any lender to appropriately assess risks arising out of digital advancement β and more so for any regulator. lending institutions indisputably need much stronger capital buffers than in the past in order to meet the challenges of the unknowns. with this final thought, may i wish you all the very best in your pursuit to know more about how best to implement the basel standards of regulation of banks. the regulatory and supervisory community in africa faces enormous challenges. i fervently hope that by the end of this seminar you will have learned from each other quite some ways and means of improving your approach to regulation and supervision of financial institutions. thank you. 5 / 5 bis central bankers'speeches | 0 |
that its action is effective. in response to the temptations voiced across the atlantic, let us be clear : simplification is not deregulation. vii i already had the opportunity to say this three weeks ago, on the subject of banking supervision. it β s not necessarily a question of reducing requirements, which are vital to mitigate the risk of a financial crisis β something the united states all too often forgets. but there is undoubtedly scope for reducing the complexity of our rules and their application. and the same can also apply to insurance. in prudential matters, the new β proportionality regime β set out under the revised solvency ii directive offers a first avenue for rationalisation. while preserving the robustness and level of requirements β notably capital requirements β the page 8 of 9 new regime proposes adapting the practical implementation of the directive to the size and complexity of each institution. there is one crucial area in europe where we are thankfully at the forefront, but which is representative of a certain build - up of overlapping regulations, namely that of climate change. these are essential if the financial sector is to be able to contend with the very real risks to which it is exposed. but if the regulations become too complex and difficult to understand, there is a risk they will be applied poorly or not at all. we therefore need to achieve the most unified regulations possible in europe, instead of a plethora of regulations including β to name but a few β the csrd regulation viii, the csddd ix and solvency ii, and france β s energy and climate act and its article 29 which is well - known to insurers. each of these regulations, often issued by different bodies, represented legitimate progress at the time. however, their accumulation now clearly lacks overall consistency. let β s stick to the objective but, at the very least, bring the definitions closer together and avoid duplicating requests for data. secondly, we need to come up with a single transition plan per institution, summarising prudential requirements under solvency ii and net - zero alignment requirements under the csrd and csddd. this is vital if we are to set credible targets for financial institutions. and one day, we will perhaps be able to go further in aligning european efragx and international issbxi standards. * as the year draws to a close, filled with economic and political uncertainties, i will conclude with a nice quote from the french writer and former insurance | and consolidating our european economic sovereignty. iii however, we need to get beyond the excessive opposition between solidity and competitiveness. security guidelines have served our financial system well through the recent crises, whether they be basel iii, solvency ii, or the macroprudential policies deployed by the hcsf in france, whose action is lauded by european and international authorities. this continuity imperative applies just as much to progress in supervision. together, these elements have effectively protected the euro area β through the pandemic and then the sharp rise in interest rates β from the risk of a financial crisis and contagion from the californian and swiss crises. to preserve this financial stability, the time has now come for regulatory stabilisation. this is why european supervisors and legislators are determined to ensure a level playing field between different jurisdictions and, consequently, a fair application of basel iii everywhere : nothing less β¦ and nothing more. the aim here is neither a basel iv nor overtransposition. clearly, this transposition of basel iii is necessary in the united states, where it currently applies to only 13 banks β leaving a multitude of sometimes large banks subject to rules that are too lax. at the ghosiv meeting in basel on 13 may, the competent us authorities reiterated their commitment to implementing all aspects of the agreement fully and consistently. however, there is still uncertainty over the timetable and the exact substance of the final text. if, unfortunately, delayspresentation and / or differences in content are too significant, then europe of the annual report of the au β¦ could β and should β postpone the entry into force of certain provisions, particularly those on market risks, as provided for in the " banking package " approved on 6 december last. this is clearly not our first best solution, but it is a safeguard. as regards the revision of the european solvency ii directive, we are very satisfied with the political agreement reached by the co - legislators in december, which maintains the neutrality of requirements on the french market while supporting longterm sustainable investment and improving how the principle of proportionality is taken into account. as regards supervision, we will be celebrating the 10th anniversary of europe β s single supervisory mechanism ( ssm ) here on 24 june. this will be an opportunity to recognise this great success - the euro area has more secure supervision than elsewhere - but also to stress the need to maintain balanced supervision. this must be strong in terms of its powers, proactive and intrusive, | 0.5 |
was not as rapid as in iceland or even ireland, but total deposits had reached 3Β½ times gdp by the end. as in ireland, exchange rate movements were not an issue insofar as the euro is the national currency. for cyprus, the classification β resident β is sometimes challenged, but taking it at face value we find that loans to residents in cyprus at 74 % of the total, exceeded residents β share of deposits at 62 %. the difference meant that residents borrowed more than β¬10 billion more than they deposited with the banks β about 60 per cent of gdp. thus, while the banking system in cyprus has been considerably exposed to other countries, notably greece ( both restructured government bonds and problem loans reportedly associated in particular with laiki bank ), it is neither a situation where foreign funds have been employed in net terms to fund the domestic fiscal authorities, nor to fund a domestic property bubble on the scale that occurred in ireland. instead, the scale of foreign funding enabled the main banks to become exposed to greek official debt and to make loans of doubtful quality to cypriot, greek and other borrowers, which resulted in losses that promised to demand recapitalisation on a scale unaffordable by the cypriot state. while the mechanism adopted for bailing - in the bank creditors ( and certainly some of the earlier proposed mechanisms ) in order to boost the capital position of the banks can be criticised β and certainly underlines how welcome is the european legislation on bank resolution, now in advanced stage of negotiation β there are also lessons for macroprudential regulation. * * * the fact that the most affected banks in cyprus have also been the main retail and payments banks for the national economy has resulted in broad economic disruption, including the introduction of exchange and payments controls, and haircuts on transactions balances of companies. here the β domestic financial shield β mechanism has been ineffective in protecting the foreign depositors, but was itself broken in the collapse. 3. concluding remarks by avoiding the melange of export banking with the domestic banking sector, some of the macrostability risks of having a large banking sector doing international business can be reduced. fiscal resources will not be stressed and the domestic economy will not be bis central bankers β speeches destabilised by an export banking sector if its funding and lending is largely focused on the rest of the world. without such separation, extremely prudent and active management is needed to avoid trouble in systems with large banking sectors. one can even imagine devi | consultation, in which irish institutions were among the most prominent in the number and comprehensiveness of their responses. the new arrangements involved a change in the timing of the reserve maintenance period and shortening the maturity of the main refinancing operations from two weeks to one week. the intention of these two revisions was to eliminate the effects of expectations of interest rate changes on bidding behaviour. the ecb also enhanced its communications with market participants and increased transparency by publishing a benchmark allotment for each main refinancing operation. the benchmark allotment is the amount that allows for neutral liquidity conditions and the market can now compare the actual allotment with this benchmark amount. the implementation of the recent changes went smoothly and counterparties quickly adapted their bidding behaviour to the increased allotment amounts in the weekly operations. a favourable outcome has been an overall stabilisation of the spread between the overnight rate and the minimum bid rate during the reserve maintenance period. another, almost inevitable, consequence of the changes has been the increased incidence of liquidity imbalances at the end of the reserve maintenance period, which has been reflected in increased volatility in the overnight rate on the last day of the period. the ecb has responded with more frequent fine - tuning operations and it recently consulted with market participants, via its money market contact group, on other possible approaches that might help to reduce volatility. the eurosystem institutional set - up, involving centralised decision - making on monetary policy issues and decentralised implementation of policy presents special challenges in the area of communication. such arrangements demand that the eurosystem keeps in touch with local market participants and opinion. i would like to outline a few examples of how this achieved. local market views are collected by the bank and provided to the ecb on a daily basis. together with the views of the rest of the euro - area market, these play a part in the ecb's management of the euro - area money market. we in the bank also conduct annual money market surveys and periodic bond market studies, which feed into wider euro - area market studies and these in turn are published by the ecb. another communication forum is the dublin markets contact group. this group of banks, representative of the local market, meets under the auspices of the bank's financial market department. we use this forum to provide feedback from similar groups established at eurosystem level while local issues that arise in the dublin market are fed | 0.5 |
this conference and i am looking forward to the contributions from the upcoming high - level panel discussion among g20 policymakers, to whom i am pleased to give the floor with no further hesitation. 3 / 3 bis central bankers'speeches | has thus become an important complement to market conduct and prudential regulation. raising the financial competencies of individuals has become a long - term policy priority for the financial industry. this is particularly crucial in hong kong where, as you know, we have a regulatory framework based on disclosure and complementary customer suitability assessments. in that context, it is especially important that consumers understand a product β s features and risks thoroughly when considering their investments. they have to decide whether or not an investment suits their objectives, and whether they have the ability to assume the associated risks. thus, a key component of any efforts to enhancing financial education and protection must be improving individuals β ability to ask the right questions and increase their awareness that ultimately they are responsible for their investment decisions. bis central bankers β speeches β conclusion β so, we β ve discussed how important consumer protection and education are. and we β ve covered the roles of each of the three groups in bringing about better protection and education. let me now try to bring these strands all together. something that became very clear in the wake of the financial crisis was that apparently low - probability risks at the margin of an industry can have profound impacts β and that a rules - based system alone is inadequate in guarding against them. after the crisis, there has been increasing recognition that each of us in fact operates in a financial eco - system β in some respects, a fragile system β in which the well - being of the whole rests on the health and actions of each part. through suasion and regulation, financial regulators like the hkma can do a lot to support consumers. but we will always be one step remote from the point of transaction. that β s why we look to banks and other financial institutions not just to follow our rules, but to show leadership by really engaging in this area. institutions can do a lot, individually and together, to self - and peer - regulate and, above all, ensure integrity throughout their organisations, particularly at the consumer - facing levels. in the end, though, in this financial eco - system as with any other, so much depends on its beating heart β the consumer. that β s why i believe one of the best things we in this room can do is to bend our efforts towards greater financial literacy. through initiatives to better inform and empower consumers, they can be the judge of their own best interests. that way, the benefits accrue not only to individual consumers, but to the sector and society more widely. | 0 |
the fed β s accommodative monetary policies. and credit availability to both households and small businesses has improved. in recent months, as i noted earlier, there has been some softness in the economic data. recent indicators of both household spending and business investment have slowed, and industrial output has declined. the commerce department β s initial estimate was that real gross domestic product was nearly flat in the first quarter of 2015. if confirmed by further estimates, my guess is that this apparent slowdown was largely the result of a variety of transitory factors that occurred at the same time, including the unusually cold and snowy winter and the labor disputes at ports on the west coast, both of which likely disrupted some economic activity. and some of this apparent weakness may just be statistical noise. i therefore expect the economic data to strengthen. all of that said, the headwinds facing our economy have not fully abated, and, as such, i expect that continued growth in employment and output will be moderate over the remainder of the year and beyond. despite the recovery i noted in home prices and a greater number of home sales, residential construction activity remains quite low. i mentioned the ongoing issues with mortgage credit, but more generally, many years of a weak job market and slow wage gains seem to have induced many people to double - up on housing, and many young adults continue to live with their parents. population growth is creating a need for more housing, whether to rent or to own, and i do expect that continuing job and wage gains will encourage more people to form new households. nevertheless, activity in the housing sector is likely to improve only gradually. the pace of business investment has also been only modest during this recovery, and some of the reasons might persist a while longer. businesses seem not to have had sufficient confidence in the strength and durability of the recovery to undertake substantial capital expenditures. moreover, some analysts have suggested that uncertainty, not only about the strength of the recovery but also about economic policy, could be a significant factor. and the fact that many businesses seem to be holding large amounts of cash may suggest that risk aversion is playing a role. weak investment in the energy sector is also likely to persist. this represents the negative side to the fall in oil prices, one being felt by the oil - producing regions of the country. new domestic oil drilling has plunged over the past few months, and we have also seen a slowdown in activity in sectors that supply oil production companies, | by income held only 8 percent of all financial assets held by households. a larger lesson from the financial crisis, of course, is how important it is to promote assetbuilding, including saving for a rainy day, as protection from the ups and downs of the economy. i surely hope that our nation will not face another crisis anytime soon as severe as the one we recently experienced. but for many lower - income families without assets, the definition of a financial crisis is a month or two without a paycheck, or the advent of a sudden illness or some other unexpected expense. families with assets to draw on are able to deal with these developments as bumps in the road. families without these assets can end up, very suddenly, off the road. according to the board β s recent survey of household economics and decisionmaking, an unexpected expense of just $ 400 would prompt the majority of households to borrow money, sell something, or simply not pay at all. the federal reserve β s mission is to promote a healthy economy and strong financial system, and that is why we have promoted and will continue to promote asset - building. one way we do this is through the community development programs at each of our 12 reserve banks, and through the federal reserve board β s division of consumer and community affairs in bis central bankers β speeches washington. as a research institution, and a convener of stakeholders involved in community development, i believe the fed can help you in carrying out your mission, to encourage families to take the small steps that over time can lead to the accumulation of considerable assets. thank you for the chance to be a small part of this conference, and for your commitment to a cause that i strongly support. bis central bankers β speeches | 0.5 |
european central bank : press conference - introductory statement introductory statement by mr jean - claude trichet, president of the european central bank, at the press conference following the meeting of the ecb governing council, madrid, 8 june 2006. * * * ladies and gentlemen, the vice - president and i are very pleased to welcome you to the press conference here in madrid. i would particularly like to thank governor caruana for his kind hospitality and express our special gratitude to the staff of the banco de espana for their excellent organisation. let me now report on the outcome of today β s meeting, which was also attended by the president of the eurogroup, prime minister juncker, and commissioner almunia. at today β s meeting, we decided to increase the key ecb interest rates by 25 basis points. this decision reflects the upside risks to price stability over the medium term that have been identified through both our economic and monetary analyses. the further withdrawal of monetary accommodation will thus contribute to ensuring that longer - term inflation expectations in the euro area remain solidly anchored at levels consistent with price stability. as stressed on previous occasions, such anchoring is a prerequisite for monetary policy to make an ongoing contribution towards supporting economic growth and job creation in the euro area. overall, also after today β s increase, the key ecb interest rates are still low by historical standards, liquidity is ample and our monetary policy remains accommodative. given the outlook for price developments and the dynamism of money and credit growth in the euro area, we will continue to monitor closely all developments to ensure price stability over the medium and longer term. allow me to explain our assessment in greater detail, starting with the economic analysis. all the main indicators of economic activity that have recently become available are positive. according to eurostat β s first estimate, on a quarter - on - quarter basis, real gdp grew by 0. 6 % in the euro area in the first quarter of 2006, compared with 0. 3 % in the previous quarter, with domestic demand making a significant contribution. the expected re - acceleration of real gdp growth in the first months of 2006 has thus materialised, confirming our view that economic growth is broadening and becoming more sustained. this assessment is further supported by information on activity in the second quarter β such as various confidence surveys and indicator - based estimates β which continues to be encouraging. looking further ahead, the conditions are in place for growth in the euro area to remain close | asset price misalignment, which may need to be addressed by policy. in addition, financial market indicators have the potential to reflect developments at critical stages of the transmission process. this is due to the fact that financial markets in general adjust faster than goods markets, and their prices are timelier and less prone to measurement error. today β s workshop will give us the chance to discuss these and many other issues. i am that sure my colleagues around the table would like to share their practical experiences so that we could have a better understanding of the financial market indicators suitable for emerging markets and how we as policy makers can best make use of them. let me now pass the chair to mr. eli remolona, head of economics for asia and pacific, bis. | 0 |
of the crisis. for example, one significant factor is the tax changes in germany : they had a significant impact on euro area inflation of around 0. 6 percentage points, but the effect will drop out of the calculation in the early part of next year. 1 / 3 bis - central bankers'speeches in all likelihood it will be a similar case with oil prices : after sharp rises over the last year, in recent weeks they have shown signs of easing. other factors, most notably the logjams in logistics and global supply chains are currently thought to be mostly temporary in nature, although they will continue to drive inflation for at least several more quarters. they might also have a longerterm impact on inflation, particularly if they lead to the shortening of production chains or the migration of production to closer locations that are less favourable in price terms. the rise in inflation is therefore not unexpected, but it has been more pronounced and more sustained than was anticipated at the beginning of the reversal. the key to future developments is what happens in two areas : the first is the expectations of firms and financial markets. the second, a related area, is the labour market, and the passthrough of higher prices into wage demands. these two factors could lead to inflation remaining above 2 %, its core target level, for a sustained period. my message is the following : if the developments and projections indicate that higher inflation could become more persistent, we have sufficient instruments at our disposal to adequately address the inflationary pressures. the first monetary policy decisions will be taken soon, in mid - december, when we decide whether to end the pandemic emergency purchase programme, and whether to potentially make changes to the app, i. e. our ordinary asset purchases, and also decide on the fate of the targeted longer - term refinancing operations ( tltro iii ). here it is vital that the measures are designed to grant sufficient flexibility if the situation does not unfold in line with the core scenario. we must therefore ensure sufficient manoeuvring room in the event of a further deterioration in the pandemic, and thus in the economic situation, and also in the event of inflationary pressures lasting longer than anticipated and inflation being more sustained than expected. to close, allow me to touch on the banking system. the slovenian banking system as a whole and the individual banks have survived the crisis to date without major upheaval. the key performance indicators have remained stable, and the changes in | central bankers'speeches to mention just a few parameters : common equity tier 1 ratio of significant institutions rose from close to 13 % in 2015 to almost 16 % today. aggregate liquidity coverage ratio is now further above the regulatory minimum. quality of banks'assets has also improved significantly with the share of nonperforming loans of si's somewhat above 2 %, well below 7 % observed in 2015. at the same time, i am well aware that other policy measures have also contributed to banks'resilience. european banking sector has also indirectly benefited from strong policy support, which has helped shield the real economy from adverse shocks and more directly, sequencing of our monetary policy measures has impacted banks balance sheets in a substantive way as well. against such backdrop, our attention has shifted towards medium - term challenges. and i would like to highlight three areas, which are of particular importance. the first one to mention β and not necessarily the priority one β is related to the architecture of the eu and euro area. the ssm was established on the premises of a broader institutional framework, which is the economic and monetary union complemented by a three - pillar banking union as well as capital markets union. while much has been achieved on the first two pillars, the third pillar and with it the whole banking union remain incomplete. at the same time, progress is needed on capital markets union. the past decade was a decade of intense discussions and while several attempts were made to implement it, unfortunately, we have not progress beyond discussions and attempts. the second challenge i would like to mention is related to fast - changing environment the banks are operating in. digitalization of society in the last decade has been astonishing. and more recently, ai technologies are rapidly evolving their applications and gaining users. it is not just banks that must adapt to a speedily digitalizing society, including financial sector supervision and supervisors need to evolve as well. we must ensure we are equipped with the right tools and skills for the future. the third topic which demands our increased attention is climate risk. what is astonishing is a rapid change in the tone of the debate in the past decade. if we were faced with a lot of skepticism in the early days, the debate has now almost completely changed β from analysis of the problem to discussion of the solutions. the hard work of the ecb, ssm and the ncas in this area is widely recognized and i can proudly say that banka slovenije is also participating to the best of | 0.5 |
, a build up of economic activity should lead to improved business sentiment, which, in turn, should lead to increased earnings and income. the rises in earnings and income should eventually encourage sustained growth in business fixed investment and personal consumption, respectively. when the strength of the self - sustained recovery, or the momentum of this cyclical force, is very weak, there is a risk that private - sector activity might begin to decline, particularly if unable to absorb the negative impact of such exogenous factors as external demand and fiscal policy. however, when there is a reasonable measure of strength in the self - sustained recovery, the inherent force can be expected to withstand the negative impact and put the economy back on the recovery path, despite being temporarily decelerated. in this case, the negative impact is contained and the private sector β s economic outlook and investment attitude remain firm. as the pressures created by those exogenous factors subsequently subside, economic recovery should gradually become apparent. i will now turn to my second point, that is, assessment of the strength of japan β s self - sustained recovery. the japanese economy began to recover in late 1993 from a recession that followed the collapse of the β bubble β economy. in early 1995, however, the recovery paused, and there were even concerns about the occurrence of a deflationary spiral. in view of these circumstances, drastic monetary and fiscal policy measures were adopted. while the halt was directly attributable to the negative effects of the rapid appreciation of the yen, it was also due to the fact that the strength of the self - sustained recovery in the private sector was yet too weak to overcome the downward pressures from outside the private sector. it is true that the economy had been on a recovery trend since late 1993. however, we at the bank judge that because firms β profitability as well as capacity utilization had remained at a low level, the shock of a sudden appreciation of the yen applied the brakes to the economic recovery. the important issue now is how much strength there is in the recent economic recovery in japan. balance - sheet adjustment and adjustment of industrial structure are still in process. this being the case, we at the bank do not believe that the self - sustained economic recovery has gained sufficient strength. this is precisely why we have maintained the official discount rate at a low level since september 1995. in the course of the gradual economic recovery over the past two years, however, the level of economic activity has doubtlessly been rising steadily, | by sector and by the size of firm, large manufacturers are faced with only limited balance - sheet adjustment pressures since they did not take on large debts during the β bubble β period. these large manufacturing firms saw an early recovery in profits following the collapse of the economic β bubble β, and in fact, have been investing significant amounts in plant and equipment since fiscal 1995. smaller firms, however, especially those in the nonmanufacturing sector, continue to suffer heavy balance - sheet adjustment pressures, having borrowed heavily from financial institutions during the β bubble β period to invest in real estate. the ratio of financial liabilities to assets at market value of smaller nonmanufacturing firms remains at a high level. as these firms have been most strongly affected by industrial restructuring, their profits as a whole have been slow to recover. as a result, their business fixed investment has shown little signs of improvement. yet, it cannot be said that low interest rates have proved ineffective to alleviate firms β balance - sheet problems. the only ways to alleviate the balance - sheet adjustment pressures is for firms to increase profits, and low interest rates have contributed broadly to improving firms β profits. with increased profits, firms can repay borrowings and thereby recover their net worth. also, a forecasted rise in a firm β s profits would facilitate the raising of capital by that firm. thus, increasing profits is most effective in improving the financial strength of a firm, and the repayment of debt is an important process in allowing a firm to prepare for future business activity. although in the current phase of economic recovery, low interest rates have not yet triggered any significant rise in business fixed investment in the smaller nonmanufacturing firms, these rates have steadily contributed to establishing the foundation of the recovery by helping to improve firms β financial strength. including such indirect effects, the bank believes that the low interest rates have in fact been firmly supporting the recovery of economic activity in the corporate sector. i would now like to go on to another often raised question about whether low interest rates are delaying the structural adjustment. it is true that there may be firms that are managing to survive despite a deteriorating business performance, owing to lower interest rates alleviating the burden of paying interest. my view, however, is that structural adjustment of the economy is achieved not just through natural selection of firms, where those with extremely poor business performance are weeded out. rather, i believe that it is achieved when the large number of firms with high growth potentials | 1 |
prasarn trairatvorakul : β challenges and opportunities β speech by dr prasarn trairatvorakul, governor of the bank of thailand, at the german business talks event, bangkok, 28 february 2012. * * * good evening, ambassador rolf schulze, distinguished guests, ladies and gentlemen, i would like to thank the german embassy for inviting me to give the key - note speech at the german business talks event. germany is by far the biggest trading partner of thailand within europe, accounting for over 20 per cent of total trade volume between europe and thailand. with the increasing presence of german multinational corporations in thailand, i hope that our businesses will become more integrated and continue to prosper together into the future. in this session, i would like to focus on two key issues. the first concerns the future challenges facing thailand. the second issue is about the bank of thailand β s ( bot ) role in meeting these challenges. let us begin with the challenges. on the external front, the global economy is beset by substantial risks and uncertainties. major advanced economies are still grappling with fragile recoveries. in the us, despite some recent positive news from the labor market, economic activity continues to be weighed down by substantial debt over - hang. this inhibits a full recovery in the housing sector and consumer spending, which together form the backbone of the us economy. in the euro - area, everyone here is obviously keenly aware of the unfolding sovereign debt crisis. against the backdrop of fear and uncertainty, banks have tightened their lending and consumers have become more cautious in their spending. this will act as a drag on the euroarea economy going forward. a key constraint for both the us and euro - area, as well as many other advanced economies, is the limited policy space available to authorities. in these countries, monetary policy and fiscal stimulus have been pushed to their limits. limited capacity to respond to new shocks thus represents a real risk for these economies, and for the global economy, that we must be weary of. in this setting, and given the deep - seated nature of the problems being faced, meaningful remedies rest just as much on political factors as on economic ones. how governments respond and how their electorates receive these responses will be an important source of uncertainty. in contrast, the rising economies in asia offer a more positive outlook. despite the slowdown in exports of many asian countries, reflecting the softer global economic backdrop, | to blossom into the future. thank you. bis central bankers β speeches | 1 |
countries. macao is the only city in china to maintain such special relationship with these countries. the central government attaches much importance to it. as early as 2003, the standing secretariat of the β forum for cooperation and development between china and portuguese speaking countries β was set up in macao. it carries the function of enhancing economic and trade relation between china and portuguese speaking countries ( including angola, brazil, cape verde, east timor, guinea bissau, mozambique and portugal ). premier wen jiabao was present in macao in november 2010 for its third ministerial conference and made an important speech. he raised a series of policy measures which would promote macao to be the platform for economic and trade cooperation between china and portuguese speaking countries. vice premier wang qishan met with delegates of macao financial sector in october last year. he had high regard of macao for its function as bridge and hub belt servicing liaison between china and portuguese speaking countries. he also hoped that macao would play a pivotal role in promoting trade settlement denominated in rmb with portuguese speaking countries. at the same time, macao and europe has rather long relationship. the linkage of macao and europe can be traced back to the 16th century. at that time, religious practices, culture, technology and manufactured products of europe were imported into macao from south asia, and then were transmitted to other regions of east asia. before the 19th century, macao played an important role in communication in economic and cultural aspects between civilians of the mainland and european countries. after the establishment of the sar, the chief executive visited a number of member states of the european union which has further strengthened linkage in a number of realms of the european union. in addition, the sar government has established the office to the european union, which would further reinforce relationship between macao and the european union. fourth, the financial supervision of macao has achieved international standard. in 2008, imf conducted an appraisal of financial supervision of macao. out of the 25 core principles for effective banking supervision, 21 were compliant, 4 were largely compliant. financial institutions in macao have fine risk management. the regulator carries out effective supervision in a consistent manner. this creates a solid ground work for the rmb to β reach out β. fifth, as aforementioned, macao was designated, as early as 2004, one of the testing grounds for offshore rmb business. banks of macao have accumulated ample experience related to rmb business operation | services office of the municipal government of shanghai in 2012, the β 1st financial cooperation meeting between shanghai and macao β took place in shanghai in 2013. during the meeting, consensus on various issues was reached and expected results were achieved, including the proper use of macao as a trade and commerce platform between mainland china and portuguese - speaking countries ( pscs ). as far as we recognise, the msar financial sector has entered into a stage where opportunities are abundant. in the current situation, i believe that the local financial sector should look at it from a broader perspective, think more innovatively, make full use of various policy initiatives, try actively and seize the opportunities. on the basis of maintaining a reasonably prudent balance between business development and risk management, the local financial sector could reach new highs in the future, while making greater contribution to appropriate economic diversification. bis central bankers β speeches finally, on behalf of the amcm, i wish the msar continuous prosperity and stability, macao β s financial sector steady development, everyone a prosperous year of the horse, good health and a happy family! thank you very much! bis central bankers β speeches | 0.5 |
attenuated by macroprudential action. 4 indeed, preventing the build - up of systemic risk through the use of both microprudential and macroprudential regulation and supervision is among the tasks assigned to central banks. how deeply the central bank should be involved in such matters remains an open question, however. there are naturally pros and cons, but in speculating on the issue, in my view one crucial fact must be borne in mind : financial instability can impair the transmission of monetary policy and prevent the central bank from achieving its price stability objective. this risk materialized in the euro area with the sovereign debt crisis. there are other fundamental arguments for central banks being fully involved in banking regulation and supervision. first of all their lender - of - last - resort function : only supervisory powers can enable the central bank to determine correctly and promptly whether a bank is illiquid or insolvent, as the northern rock case in the uk made dramatically clear in 2007. 5 at the same time, putting more power in the hands of central banks is likely to increase the political pressure on them. and this is a serious challenge for these venerable institutions. influencing asset prices and credit flows throughout the financial system makes them the perfect target for both lobbies and governments β and, of course, the ideal culprit if things go wrong. it was argued in the past that an institution in charge of both monetary policy and banking supervision may be tempted to be softer in setting the monetary stance in order to avert a banking crisis. the global financial crisis has dispelled this argument. on the other hand, the historical experience of countries like italy, where monetary policy and banking supervision were concentrated in a single institution β the central bank β shows that the independence attributed to the two functions by law and by social norms tends to be mutually reinforcing when the two are put under the same roof. the monetary - policy independence of a central bank β enshrined in statute, confirmed in practice and strengthened by hard - earned reputation β can powerfully support the independence of independence and macroeconomic performance : some comparative evidence, β journal of money, credit and banking, vol. 25, no. 2, may 1993, pp. 151 β 162. paolo angelini et al. β monetary and macroprudential policies, β banca d β italia working 5 papers, no. 801, march 2011. bis, central bank governance and financial stability, may 2011. bis | - term unemployment, is structural in nature, reflecting factors such as inadequate skills or mismatches between the types of skills that workers have and the skills that employers demand. if this view is correct, then high levels of long - term unemployment could persist for quite a while, even after the economy has more fully recovered. and it appears true that over the past two decades or so, structural factors have been responsible for some increase in long - term unemployment. for example, because an older worker who loses a job typically takes longer to find a new job than does a younger worker in the same situation, the aging of the baby boom generation has probably contributed to a gradual rise in long - term unemployment. factors such as globalization, technological change, and the loss of lowerskill manufacturing jobs have likely reduced the employability and earnings potential of some groups of workers. to the extent that higher rates of unemployment, especially long - term unemployment, result from structural factors, the scope for countercyclical policies to reduce unemployment would be impaired, and the benefits of a more complete economic recovery for many workers who are unemployed or discouraged would be more limited. see paul taylor, rich morin, rakesh kochhar, kim parker, wendy wang, daniel dockterman, rebecca hinze - pifer, and soledad espinoza ( 2010 ), β the impact of long - term unemployment : lost income, lost friends β and loss of self - respect " ( washington : pew research center, july 22 ). for example, see frances mckee - ryan, zhaoli song, connie r. wanberg, and angelo j. kinicki ( 2005 ), β psychological and physical well - being during unemployment : a meta - analytic study, β journal of applied psychology, vol. 90 ( january ), pp. 53 β 76 ; and sarah a. burgard, jennie e. brand, and james s. house ( 2007 ), β toward a better estimation of the effect of job loss on health, β journal of health and social behavior, vol. 48 ( 4 ), pp. 369 β 84. on life expectancy, see david j. roelfs, eran shor, karina w. dawson, and joseph e. schwartz ( 2011 ), β losing life and livelihood : a systematic review and meta - analysis of unemployment and all - cause mortality, β social science and medicine, vol. 72 ( march ), pp. 840 β 54. | 0 |
, for the rest of the financial sector the fsap reports indicates many problems, which simultaneously contain many themes including essential issues such as their supervision. although, due to their small dimensions, these problems do not present imminent risks for the time being, they still should be carefully examined and resolved. returning to the assessments made under fsap in other countries similar to albania ( i mainly refer here to south east european countries, seec ) and to many other financial reports referring to this region, we realize that these problems are similar and these countries suffer more or less similar symptoms. if one has a look back at the history, it realizes that it can not happen differently. the regional tradition is poor, of little inheritance in institutions, market rule and behaviour, and financial intermediation. however, today, about 15 years after the big collapse of the communist regime it seems that south east european countries ( seec ) have been engaged in an irreversible process of their stabilization and integration with the rest of europe. | albanian financial sector conducted from both the international monetary fund and world bank ( fsap ) concluded that : the financial sector consists mainly of a regulated and supervised banking system. the stress - test indicated that the level of different risk exposure to the banking system is rather low, an argument that supports this conclusion. the banking system has experienced remarkable developments over 2004. after the licensing of popular bank, with albanian capital, the number of banks increased from 15 to 16, and a preliminary license is granted to union bank, which is expected to raise the number of banks to 17 over 2005. the system assets have further increased by 14 percent while there was an increase of banking products and an expansion of their network. during this year there will be sold the public shares of both the italian albanian bank and united bank of albania, which will lead to an increase of effectiveness and banking competition, paving the way to the processes of selling, merging and acquisitions towards a new consolidation of the banking system. the lending activity increased by 38 percent where one can distinguish inter alia the significant growth of medium - term and long - term loans compared to short - term loans. the map of coverage of the country with the banking system has further expanded, including new areas ever covered before. at the end of 2004, the total number of branches reached 88, or 11 branches more that the end of the previous year, while the number of agencies recorded for the first time a full three - digit number, 100 and the number of the employed people increased by 26 percent. the high increase of the number of branches relative to agencies shows that banks are not interested only in providing the service of collecting deposits but also in providing other products like crediting to the economy. these developments, besides their positive contribution in enhancing the financial intermediation speak for a better perception of the investing potential from banks, in albania. an outstanding development is mainly related to the client service, which is accompanied through electronic terminals by the increasing number of electronic cards in circulation. banks offer already debit and credit cards in co - operation with international companies such as visa and mastercard. six banks provide the atm service and the number of atms reached 108 by the end of february 2005. the banking system results to have a profit level, which has been increasing to lek 5. 1 billion. return on equity ( roe ) was estimated at 21 percent while problem credits represent only 4. 2 percent, from 4. 6 percent in the previous year. on the other hand | 1 |
to the millennium problems. representatives of the financial sector meet in varying constellations for discussions and to make sure that adequate measures sveriges riksbank : finansmarknadsstatistik no. 6 ( sveriges riksbank : financial market statistics no. 6 ). have been taken to avoid problems. already in april 1998, β the joint year 2000 council β was established ; 3 its principal task is to ensure coordination between the various actors in the market and to provide a platform for an exchange of information and experience. everybody is working for a common goal β to ensure that the turn of the year passes by in a smooth fashion. up to now, the preparations for the millennium shift has, in all essentials, been working according to plans. however, it is of great importance that this issue continues to have top priority. my opinion is that the financial sector and all interested parties can look ahead to the new millennium with confidence. in conclusion, it is worth recalling that the introduction of the euro at the beginning of this year was able to take place without any serious hitches, even though many systems were being taken into use for the first time. basel committee on banking supervision, the committee on payment and settlement systems, the international organization of securities commissions and the international association of insurance supervisors. | ms hessius discusses the role of the central bank and market liquidity speech given by ms kerstin hessius, deputy governor of the sveriges riksbank, at a seminar of sveriges finansanalytiker forening on 14 september 1999. * * * the financial sector plays a central role in our society β s economy. it is this sector that enables us to make payments, to transform savings into investments or future consumption and to spread and minimise potential financial risks. it is therefore essential that the financial sector functions smoothly when we pass from one millennium into the next. many actors share the responsibility of a smooth transition. naturally, the swedish riksbank is one party involved, but everyone β from private savers and investors to public authorities and the media β must bear their part of the responsibility. agents in the financial sector addressed early the potential problems that may arise in connection with the transition to a new millennium. substantial resources have been devoted to measures designed to minimise the risk of any technical problems arising and to ensure that all systems can cope with the transition. the financial supervisory authority has closely monitored work on systems adaptation since 1997. the role of the riksbank in this connection is bound up with our regular tasks as central bank in the economy β to implement monetary policy, to promote a secure and efficient system of payments and to ensure that sufficient notes and coins are available in the economy. my intention today is to concentrate on the central role played by the riksbank in the management of liquidity in the financial system. the risks that are generally given prominence as being the greatest where the millennium period is concerned are the risks of technical malfunctions arising, primarily as a result of problems in adapting all computer systems to the year 2000. such malfunctions have the potential to disrupt the financial infrastructure. irrespective of how high a degree of probability is assigned to these risks, they have to be treated with the utmost seriousness. the very uncertainty about the possibility of problems arising is in itself enough to lead to disturbances ; for this reason, preparations have to do not only with technical adaptations but also to a great extent with instilling confidence that the systems will function in practice. one way to build confidence is to use various types of agreements to attempt to limit the burden on systems around the millennium period, hence reducing the risks. one example of a measure of this kind is that the european central bank, the ecb, has decided that | 1 |
across countries and its impact on activity β including global spill - overs β and inflation. 6 framing our monetary policy response : the ecb β s monetary policy strategy as i said before, it is the ecb β s responsibility to preserve price stability in the euro area. given the nature of the recent rise in inflation, the first question we should ask ourselves is how our monetary policy should respond to it. in july 2021, the ecb adopted a new monetary policy strategy, the cornerstone of which is a symmetric inflation target of 2 % in the medium term. the aim of the ecb is therefore not to stabilise current, observed inflation, but to stabilise inflation over the medium run. this medium - term orientation responds to two considerations. first, monetary policy affects inflation with variable lags. the transmission mechanism of monetary policy operates first by affecting banks β, firms β and households β financing conditions. this, in turn, affects credit, investment, and consumption decisions. the resulting changes in aggregate demand exert pressure on firms β production needs, thus lowering their demand for labour and other inputs, and hence on production costs, and will end up affecting prices. this process however takes time. empirical studies typically show that monetary policy decisions have their maximum effect on inflation after one - and β a - half to two years. therefore, attempting to stabilise observed inflation at all times is a futile, and probably counterproductive task, as it increases the volatility of macroeconomic aggregates. second, the optimal response of monetary policy depends on the nature of the shocks that cause inflation to rise. for instance, an energy shock is typically considered as a supply or β cost - push β shock, as it increases production costs for firms. in this case, the central bank faces a trade - off between inflation on the one hand, and economic activity and unemployment on the other : if it reacts too strongly to the increase in prices resulting from the cost - push shock, the output and employment losses caused by the supply disturbance will be further amplified, and unemployment will suffer. if, on the other hand, it responds too feebly, in order to minimise economic and employment losses, inflation may increase too much. the optimal policy in this case is to β lean against the wind β, tightening policy enough to allow for a certain transitory increase in inflation above target as well as a reduction in output below its potential level and an increase in unemployment. 7 the previous prescription is based | objectives. in particular, the more confident market participants are in the fed β s ability to exit when the time is right, the more effective its purchases will be in stimulating the economy. suppose the fed was indeed successful in reducing long - term interest rates further β what then? some claim that lower rates would have no effect on economic activity β that the fed would be β pushing on a string. β this is too dark a view. although the responsiveness of demand to reductions in interest rates is probably lower in a world in which balance sheet constraints are important, the responsiveness is not zero. i believe that it remains significant. even in today β s challenging circumstances, lower long - term rates would support the economy through a number of channels. lower long - term rates would support the value of assets, including houses and equities and household net worth. lower long - term rates would make housing more affordable and support consumption by enabling households to refinance their mortgages at lower rates. this would increase the amount of income left over for other spending. of course, this channel can be made more powerful to the extent that further progress can be made in efficient mortgage debt restructurings that allow households with negative equity in their homes to take advantage of the drop in mortgage rates. in addition, lower long - term rates would reduce the cost of capital for businesses, thereby fostering higher levels of capital spending for any given economic outlook. in considering the limits to balance sheet expansion, there are two constraints β one major and one more minor. the first constraint is the risk that the balance sheet expansion might cause inflation expectations to become unanchored, leading to higher risk premia. this risk is presumably greater in a period in which budget deficits are high, as they are today. if exit concerns were to rise as purchases increased, then a rise in inflation risk premia would offset at least some of the expected fall in interest rates. in contrast, the more credible the ultimate exit strategy, the less likely it is that inflation risk premia would go up and the more effective purchases would be in lowering long - term rates. also, the more credible the ultimate exit plan, the more confident investors would be about the fed β s willingness to do what is needed to accomplish its objectives. this is important because it would help stabilize longerrun inflation expectations at levels consistent with the dual mandate. the fomc should be able to assure investors that it has both the means and the will to exit when | 0 |
one of the two economies that recorded positive growth in 2020. data on the first half of 2021 showed that growth remained positive. the positive performance of vaccination in europe has been reflecting on our economy through the tourism and external demand channels. in this context, net exports also continue to contribute positively to growth. high - frequency data also signal a recovery in the labor market on the back of the reopening. while employment in the services sector was on a slower recovery track amid pandemic restrictions, the losses of the pandemic period have been fully compensated for with the recent surge in services employment. besides, on the back of strong exports, industrial employment has been following a more positive course compared to other subcategories in the recent period. all in all, we see that non - farm employment started to recover first with the help of the industrial sector, and reached pre - pandemic levels in early 2021 despite the limited contribution from the services sector. finally, we can say that the labor market has largely overcome the effects of the pandemic on the back of the services sector and tourism. distinguished guests, during the post - pandemic recovery, economic activity started to normalize at a global level. however, we see that a series of problems that may be largely attributed to the pandemic period have caused a rise particularly in producer prices in developed and developing countries, as is the case in turkey. therefore, central banks are closely monitoring the implications of high inflation for expectations and international markets in the current normalization period. one of the key drivers of the increase in inflation was rising commodity prices. we witnessed sharp increases in both energy and non - energy commodity prices due to the recovering global demand. parallel to the rise in commodity prices, supply constraints caused by the failure of production to match the rapidly increasing demand also play a role in the rise in prices. increasing international transportation costs and lengthened delivery times also drive producer prices up. we see that post - pandemic problems such as container shortages create a supply - demand mismatch, exerting upward pressure on prices. the fact that exchange rates and commodity prices, which used to explain producer inflation developments in turkey to a large extent, have fallen short of explaining producer inflation in the recent period points to additional supply - side factors. recent surveys of the european region reveal that supply constraints are among the leading factors that restrain manufacturing, and their impact has increased significantly. these developments show us that pandemic | - related conditions or their impacts have not disappeared yet. central banks continue to emphasize these factors in their recent evaluations of inflation. thus, the gap between producer and consumer inflation has recently increased well above the long - term average in many advanced and emerging economies. for instance, ppi is four times the rate of cpi in the euro area. in the price developments during the pandemic, we have seen that a limited group may have a significant contribution to inflation. for example, the durable goods group, which had decelerated on average in the us for the last 25 years, has been one of the items that had the largest contribution to the recent rise in inflation, due also to supply constraints. in the reopening and economic normalization period, energy and services prices registered significant increases across the world. global central banks think that energy and pandemic - driven high rates of price increases in some sectors will prove to be temporary with the normalization in demand composition, easing of supply constraints, and waning base effects. these factors will also have a downward effect on turkey β s inflation in the upcoming period. having touched on the current state of global inflation and how it has been affected by pandemic - driven conditions, i would now like to share with you our evaluations of inflation developments in turkey. in august, annual inflation rose by 0. 30 points to 19. 25 %. in this period, annual inflation of the b index, which is a core inflation indicator and obtained by excluding unprocessed food, energy, alcoholic beverages and tobacco from the cpi, decreased by 0. 05 points to 18. 46 %, and that of the c index, which excludes processed food from the b index, declined by 0. 46 points to 16. 76 %. in august, while annual inflation increased significantly in the food group, it posted a limited rise in services and receded across other main groups. meanwhile, producer inflation continued to increase due to commodity prices, disruptions in supply chains, and demand conditions. at this point, i would like to note a couple of points regarding pricing behavior. recently, price increases in certain products have far exceeded their historical averages. considering the products with the largest contributions to inflation, we see that the annual price increases in august may have been more than three to four times the average price increases in the last 10 years. while factors such as the pandemic - driven rise in commodity prices and supply constraints are some of | 1 |
lars nyberg : the riksbank's cooperation with sida speech by mr lars nyberg, deputy governor of the sveriges riksbank, at a seminar arranged by sida, stockholm, 13 december 2006. * * * let me begin by thanking you for this opportunity to briefly describe the riksbank β s work on aid issues. i would also like to say that it is particularly pleasing to see that the nobel peace prize has this year been awarded to efforts in the financial sector in bangladesh. otherwise, the financial sector is often sadly forgotten in aid contexts. foreign aid to developing countries often concentrates on combating poverty in all its forms, which is of course commendable. but it is easy to forget that a financial sector with functioning institutions is necessary to achieve long - term stable economic growth. a high inflation rate in one country may, for instance, quickly lead to greater poverty among large sections of the population than even the best type of poverty combating measures have time to counteract. a wellfunctioning central bank and responsible monetary policy can therefore make a significant contribution with regard to combating poverty. the riksbank has cooperated with sida for some years now in building up and reinforcing capacity within the central banks of sri lanka, vietnam and uganda. we do not call this foreign aid, but quite simply β staff exchange programmes β. as all of the central banks in the world do more or less the same things, albeit in rather different ways, it is always rewarding to see how others work. we therefore send experts in various fields out to the countries with which we have this cooperation, for instance, experts who design payment systems or make models for inflation forecasting. the other central banks send their staff to us for further discussion of these issues or to talk about other things, such as how we deregulated the financial system in sweden in the 1980s, or how important information and transparency are if one is to run a central bank with independent responsibility for monetary policy. recently we have received some young employees who have stayed with us for periods of a month to six weeks on β internships β, where they can, for instance, learn how to write a financial stability report from scratch. long - term thinking is a central concept of our programme. it takes time to understand one another β s reality and to create relationships that lead to cooperation based on mutual trust. we usually say it takes at least five years. central bank governors | francois villeroy de galhau : european and french economic outlook and post - brexit financial architecture speech by mr francois villeroy de galhau, governor of the bank of france, at the 2019 paris europlace international financial forum, tokyo, 28 november 2019. * * * ladies and gentlemen, it is a great pleasure to be with you again in tokyo, with my colleague and friend governor kuroda. the paris europlace international financial forum in tokyo is now a well - established tradition β¦ even if the topic of your sessions touches upon β new frontiers in finance β. in my remarks today, i will elaborate on the european and french economic outlook, before turning to the future european financial architecture after β and beyond β brexit. * * i. causes of and answers to the current european slowdown the causes of the european slowdown initially lay outside the euro area : of these geopolitical uncertainty is undoubtedly the most important ; it is mostly man - made, and must be fixed by man. we are witnessing a significant slowdown in global trade due to the escalation of trade disputes. the consequent loss of global growth could reach up to 0. 8 % next year according to the imf, mainly due to indirect effects, beyond tariffs : the fall in business confidence and investment, the decrease in productivity. similarly, the twists and turns of brexit have created market volatility and weighed on business investment. the effects of the slowdown are very acute in the euro area β s biggest economy, germany, which is very much exposed to global trade. structural trends are also at play. we observe a downward trend of productivity growth β which is considered by some as β secular β, jumping perhaps too hastily to a very long - term conclusion. furthermore, the ageing of the population means the labour supply is shrinking and potential growth is falling. thanks to japan β s g20 presidency, the challenges posed by demographics are now on the agenda. the ecb β s monetary policy has played an important role in supporting the recovery of the euro area : estimates put the cumulated impact on growth at around 2. 5 pp and on inflation at between 1 and 1. 5 pp for the period 2014 β 181. in addition, 11 million jobs have been created since 2013. in september, the ecb introduced a further package of measures. although it has received less attention, the most innovative part of this package is the strengthening of the state | 0 |
. | . this concern is unwarranted for a number of reasons. first, even if the elimination of the penny did result in a rounding up of prices to the nearest multiple of 5 cents, which is unlikely, that would be a one - time price increase and not a change in trend inflation. second, this one - time price increase of one or two cents would be so small, relative to the prices of the items that make up the basket of goods and services priced by the total consumer price index ( cpi ) that it would not register on that index since the cpi is rounded to the nearest 0. 1 per cent. third, it is very unlikely that prices would be rounded up, since such rounding would not carry through to the cash register after sales taxes are applied, and retailers would lose the perceived marketing benefit of posting a price that ends in 9 cents. in the absence of a penny, rounding would only need come into play in cash transactions and would apply to the total bill after tax, and not to each individual item purchased. if applied symmetrically, varya taylor. β trends in retail payments and insights from public survey results. β bank of canada review. ( spring 2006 ) : 25 - 36. rounding down of cash purchases ending in 1, 2, 6, and 7 cents would offset the rounding up of those ending in 3, 4 8, and 9 cents. in new zealand, for example, the choice of rounding up or down on cash transactions was left to retailers after the country eliminated its one - and two - cent coins in 1989. many larger retailers opted to round down ; a few small retailers opted to round up. ultimately, there was no noticeable effect on inflation in new zealand. indeed, that has been the international experience that we have seen. in both australia and new zealand, the elimination of small coins ( one - cent and two - cent coins ) has had no noticeable effect on inflation. inflation, however, does have an influence on the value of the penny. since the coin was first produced by the royal canadian mint in 1908, the penny has lost 95 per cent of its purchasing power. in other words, the penny then had the same purchasing power as 20 cents would today. indeed, in 1908, you could buy your daily newspaper for two cents, and a loaf of bread cost five cents. on that, i thank you for your invitation to appear here tonight, and welcome the opportunity to answer your questions related to the future of the penny | 1 |
in order to raise the long - term growth potential of europe. and the lucid monitoring of the national competitive indicators, including unit labour costs. mr president of the parliament, mr president of the union, mr president of the commission, mr president of the eurogroup, europe can count on the ecb and on the eurosystem to implement in this century the historic task which was assigned to us at the end of the last century. we will be faithful to the primary mandate given to us by the treaty. we know that our fellow citizens are asking us to deliver price stability. we know also that price stability is a prerequisite for financial stability, a very important objective at the current juncture. all the members of the governing council make their decisions taking into account the interests of the whole of the euro area, of 15 countries. we do not consider any particular country, but all 15 of them. sehr geehrte frau bundeskanzlerin, this year in aachen, upon receiving the charlemagne prize, you quoted konrad adenauer : β gerade in aachen wird man die mahnung verstehen, dass europa uns heute schicksalsgemeinschaft ist. dieses schicksal zu gestalten ist uns ubergeben β. β in aachen, above all, people will understand the call : that europe, for us today, is a community with a common destiny. it's up to us to shape that destiny. β β justement ici a aix on comprend l β appel qui fait de l β europe aujourd β hui notre destin commun. il nous appartient de donner forme a ce destin. β a β common destiny β : the words of the man with whom general de gaulle achieved reconciliation after so many conflicts. these words apply even more to the countries belonging to the euro area. in the ecb and in the eurosystem we are fully convinced that, with our fellow citizens, 320 million of them, we share a destiny in common β wir teilen dasselbe schicksal β nous partageons un destin en commun. i thank you for your attention. | in an environment of price stability. for fiscal policies the challenge and opportunity is to use the current economic expansion to intensify the necessary further consolidation of public finances. in a number of member states the budgetary situation is still too far from reaching the targets specified in the stability and growth pact, namely that budgets are to be in surplus or at least close to balance. moreover, the recent reduction in deficits has been greatly helped by the relatively low levels of interest rates and by improving economic conditions. according to most forecasts, fiscal trends over this year and the next even point to a procyclical stance rather than to prudent anticyclical policies. the overriding goal for fiscal policy should be to shelter governments β budgets from normal cyclical fluctuations, but also from unexpected shortfalls in revenues and interest rate increases. in addition, governments β budgetary policies also need to urgently address longer - term issues in the context of the imminent problem of ageing populations. many governments are as yet insufficiently prepared for this problem, inasmuch as they are still highly indebted and are not pursuing the structural reform of public transfer systems with sufficient vigour. the assessment that much has been achieved, but that, at the same time, much remains to be done, also holds true in the case of general economic policies. the structural reform of labour and product markets remains the key to achieving significant reductions in unemployment. there is by now broad consensus on the fact that the larger part of the still very high level of unemployment in the euro area is of a structural nature. only flexible labour markets will prevent bottlenecks from emerging and triggering upward pressures on prices at a relatively early stage of the current economic upswing. looking at the regulatory reform process across the euro area, a good deal of deregulation and liberalisation of previously sheltered sectors have taken place in recent years. there remains significant scope for further action along these lines. in regulated industries, a low level of competition is often accompanied by a high level of public ownership. privatisation and regulatory reform should thus be seen as mutually reinforcing measures. the favourable impact of such measures in terms of lower price increases has become clear in the case of the telecommunications and energy sectors. this should be encouragement enough to step up efforts in other sectors. notwithstanding significant demands on labour mobility in the short term, increased competition in previously sheltered sectors will usually result in longer - term employment gains. responsible wage policies are of crucial importance | 0.5 |
acknowledge that the resilience of the financial system in general, and of credit institutions in particular, plays a key role in softening cyclical downturns. evident in this crisis has been the notable weakness with which many banks have faced the downswing. to increase their resilience, banking regulation policy can perform a pivotal function by curbing the countercyclical behaviour of capital, so that it protects banks and prepares them for the crisis. and to discuss this, i am bound in this second part of my speech to refer to rojo ( the spanish for red, and β rot β in german ). again, this is not only a type of wine but the name of the former governor of the bank of spain entrusted with steering and successfully ensuring the spanish economy β s entry into the euro area. it was also rojo who, in the final stage of his mandate as governor of the bank of spain, designed and put into practice the prudential regulatory mechanism of dynamic provisioning. this has contributed to reinforcing the stability of the spanish banking system and today commands wide recognition ; but, when initially launched, it aroused understandable rejection by spanish banks and was met with indifference on the part of the international community of banking regulators and supervisors. let me give you the background to this prudential and countercyclical regulatory mechanism. the origins of spanish dynamic provisioning must be sought in credit developments in the late 1990s. having emerged from the 1993 recession, the worst for 40 years in spain, the economy, and much more intensely so bank lending, began to expand at an increasingly brisk pace. the bank of spain was led to introduce dynamic provisioning, which came into force in mid2000, by a combination of factors. these included most notably : the mix of strong credit growth, with the dangers this entailed for the stability of the financial system ; heightened competition, which acted to exacerbate these risks given that credit institutions applied increasingly lower risk premia to maintain their market share ; the deterioration in the level of loan loss provisions and their extremely high correlation with current default rates ; and, finally, the bank of spain β s past supervisory experience. in addition to the practical issues i have mentioned, behind dynamic provisioning there lied a conviction, resulting from many years of supervisory experience and, more recently, also from empirical evidence, that credit risk appears in bank balance sheets at the time lending is granted. risk is an ex ante concept, | must be stock - exchange listed when above a certain size. a more substantial alternative would be a law requiring savings banks to cease holding significant stakes in credit institutions, within a reasonable period, and to invest as they see fit, perhaps obtaining higher returns, in order to continue to pursue their welfare aims. yet while, as i have already said, much progress has been made in improving the resolution toolkit, the banco de espana needs to continue to be equipped with instruments to enable the performance of its supervisory tasks to be quick and simple rather than complicated and slow. for this purpose it would be desirable to transfer a significant part of the powers of the ministry of economic affairs and competitiveness in relation to sanctioning, licensing, etc., to the banco de espana, in line with what the imf has been suggesting for some time. also, the frob needs to be authorised to assume the powers of the shareholders in general meeting in relation to banks taken under official administration and legal requirements that delay asset and liability transfers need to be eliminated. as for the banco de espana, it should equip itself with supervisory instruments to ensure that problems can be promptly corrected and it should distance itself from a legalistic system that envisages official administration only as the very last resort, when all legal requirements have been violated. also, although the banco de espana β s professional and collegiate decision - making structure β one of its valuable traditions β must be maintained, it needs to be documented further and made more systematic, and the information that has begun to be supplied on the banco de espana β s website needs to be expanded. more important still, however, is the need for the banco de espana β s autonomy in the area of supervision to continue to be respected and for governments to continue to resist the temptation to interfere in its supervisory decisions, while continuing to design legal bis central bankers β speeches instruments and to defend the proper use of public resources. the banco de espana must continue to maintain a dialogue with governments, not only advising them but also listening to them ( since nobody has a monopoly on good ideas ), although supervisory decisions must continue to be based, as up until now, solely on a professional basis. i have been emphasising today what has been done during these years of crisis by spain ( that is to say, everyone, because until our country has regained the trust of the rest of the world, the attention of investors will continue to be focused on what everyone has done and is doing to correct | 0.5 |
euro area. i would like to put them in a us context, and recall the scepticism expressed about the euro by some us commentators. to be more precise, my remarks this morning will focus on the following questions : Β· is it possible to have a single currency without having a nation - state? Β· are the economies of europe sufficiently homogeneous to handle a single currency? Β· last but not least, how does the euro area monetary policy function? a single currency without a nation - state many us commentators thought that the euro would not fly, as the european union does not constitute a nation - state. they argue that it is difficult to conceive how sovereign states, such as the members of the european union, can give up their monetary independence. to back up their case, these commentators sometimes refer to the united states. the us dollar was introduced in 1792 as the currency of the young nation - state that was established in 1789. indeed, the currency was regarded as an expression of the unity of the young nation and its independence from the british crown. however, in economic and even cultural terms, this young nation was a very heterogeneous collection of former colonies and in many respects, apart from the common language, perhaps much more diverse than the current euro area. it is also interesting to note that although the us dollar was introduced almost at the same time as the united states was established, the us could hardly have been called a fully - fledged monetary union in those days, at least not according to our current definitions. besides some ill - fated and short - lived attempts in the late 18th and early 19th century, the united states did not have a central bank, responsible for issuing the currency, until 1913, when the federal reserve system was set up. moreover, effective banking laws were also lacking, at least until 1863, when the national banking act became law. indeed, throughout much of the 19th century, exchange rates between us states underwent de facto fluctuation, due to the excessive use of paper money, the quality of which differed from one state to another, and the absence of widely accepted currency in the form of gold and silver. at the same time, the process of political union in the united states remained incomplete, as the civil war in the 1860s manifestly demonstrated. one can even argue that the current constitutional and political set - up of the united states and division of responsibilities between the federal and state governments goes back to the 1930s, the aftermath of the great depression | . the point that i would like to make is that β like in europe β monetary and political integration were lengthy processes that went hand in hand, processes that were much more complicated than some of these commentators would have us believe. moreover, in order to understand why europe has successfully introduced a single currency without being a nation - state, it is important to grasp the history and essence of the european integration process. having been the initiator and to a large extent the theatre of two world wars, european countries realised they could only avoid the horrors of another armed conflict by coming closer together. the strategy was, and still is, to link the countries of europe by gradually integrating their markets and economic policies. by doing so, political integration will follow. in 1968 a customs union was established among the countries of the then european economic community, followed by the establishment of a european single market in 1993. in order to make a single market, i. e. ensure the free movement of goods, services, capital and labour, it was felt necessary to introduce a single currency. and as you know, this most recent step in the european integration process occurred in 1999. its introduction was a logical step in an integration process that started after the second world war and which will ultimately lead to ever closer ties between the countries of europe. the euro area : a fairly homogeneous economic entity us commentators were also sceptical about the homogeneity of the european economies. a single currency would only be beneficial if the potential members of the monetary union were fairly homogeneous. if not, countries would no longer be able to adequately respond to diverse economic developments, as they could not let their exchange rates fluctuate. these commentators also argued that the european countries had no other adjustment mechanisms, such as a high labour mobility or fiscal stabilisation, which might serve as a substitute for exchange rate flexibility. however, in my view, there are very good reasons for having a single currency in those member states of the european union which have sufficiently converged. this is supported by the experience gained in the three and a half years since the introduction of the euro. first, economic research and empirical evidence has shown that countries in europe are not as heterogeneous as the critics of the euro project often claim. indeed, compared with the differences between the economic structures and business cycles of us regions, the european countries score relatively well. the research has also shown that a given region in the us will recover more quickly from an economic shock | 1 |
jerome h powell : welcoming remarks β " conversation with the chairman : a teacher town hall meeting " welcoming remarks by mr jerome h powell, chairman of the board of governors of the federal reserve system, at conversation with the chairman : a teacher town hall meeting, washington dc, 6 february 2019. * * * thank you to all the educators who are here with us in washington or are joining us online. i look forward to responding to your questions. but first, i have a few thoughts about the vital work you do as economics educators and its connection to what the federal reserve is trying to accomplish. i promise to be brief, because it is a school night. i am here today, and the fed has organized this event, because of the importance of economics education. some of your students may go on to become professional economists, but all of them, i hope, will apply the valuable lessons and the skills they have gained from economics in other careers and in others aspects of their lives. studying economics can benefit students in multiple ways. the lessons of economics are valuable in a wide variety of vocations. moreover, the knowledge gained will empower students as consumers, managers of their own finances, and as informed citizens. economics has been consistently useful to me over my career in law, finance, and government service. it is, of course, central to my current role as a monetary policymaker and financial regulator. in government, economic analysis is one of the principal tools we use in making policy decisions. among other things, economics is an essential facet of the science of public policy. what policies actually work? which ones sound good but don β t work, or are actually counterproductive? economics gives us the tools to answer those questions and help us make the best the decisions on behalf of the public. of course, economics is not only the basis for judgments and decisions made by the fed and other government agencies. it also underpins the countless decisions by consumers, businesses, and investors that drive economic activity. the concepts you teach and apply in the classroom guide those decisions and even help explain human behavior outside of the workings of the economy. for example, to continue to grow and succeed, any business owner should understand the differences between fixed cost, variable cost, average cost, and marginal cost. businesses and investors need to understand present or discounted value, but so should any parent or grandparent starting a college fund. economics teaches us about the power of incentives, which are central to thinking | the fed an exceptionally broad and deep understanding of developments in financial markets and financial institutions. the benefits of the fed β s supervisory authority for its non - supervisory activities the extensive information and the expertise that the fed gains in the process of supervising banks are useful for carrying out many of the central bank β s non - supervisory activities. the benefits of supervisory information for monetary policy are perhaps the most debated. the research literature has focused on whether information drawn from bank examinations is helpful in assessing the economic outlook and thus in formulating monetary policy. the results have been mixed ( peek, rosengren, and tootell, 1999 ; feldman and others, 2003 ). some evidence suggests that supervisory information is likely to be most useful for monetary policymaking in times of financial stress. for example, the federal reserve β s experience suggests that such information was helpful in evaluating the availability of credit in the early 1990s, when some banks β lending was constrained by their limited capital ( bernanke and lown, 1991 ; greenspan, 1994 ). more generally, monetary policy is certainly aided by the anecdotal information on regional economic conditions that reserve bank business and community contacts, including numerous bankers, provide. many of these contacts are fostered by the extensive interaction between the reserve banks and the banks in their districts. the federal reserve β s oversight of the payments system is another critical central banking function. in contrast to the situation in some other countries, the federal reserve lacks explicit legal authority to oversee systemically important payments systems. instead, the federal reserve β s powers in this area derive to a considerable extent from its bank supervisory authority. notably, some key institutions providing clearing and settlement services hold bank charters that place them under federal reserve oversight. 3 in its capacity as a bank supervisor, the fed can obtain detailed information from these institutions about their operations and risk - management practices and can take action as needed to address risks and deficiencies. the fed is also either the direct or umbrella supervisor of several large commercial banks that are critical to the payments system through their clearing and settlement activities. 4 as i have mentioned, the fed also has an operational role in the payments system. in particular, fedwire - a system that the fed operates for transmitting large - value payments - is a critical component of the u. s. financial infrastructure. the operation of fedwire and related payments systems often involves large short - term credit exposures to system participants ( reflecting so - called daylight overdrafts ). the fed also extends | 0.5 |
transform the global economy the current pandemic provides a prime opportunity to build a more resilient future and make the changes towards what we want to see, namely a greener, more digital and more inclusive global economy. we welcome the plans to further integrate climate change - related issues into imf surveillance. at the ecb, in the area of banking supervision, we published a guide on climaterelated and environmental risks in november 2020 to explain how we expect banks to prudently manage and transparently disclose these risks under current prudential rules. we have asked banks to conduct self - assessments in the light of the guide and to draw up action plans on that basis. then, next year, we will conduct a full supervisory review of banks β practices. as part of our ongoing monetary policy strategy review, we will examine the risks posed by climate change and how they feed into the monetary policy framework. in a similar vein, the international community has to continue to work together to enhance cross - border payment systems to make them faster, cheaper and more inclusive, and to address the opportunities and challenges of the digitalisation of finance. at the ecb, discussions are ongoing on whether to issue a digital euro to make our currency fit for the digital age, as a complement to, not a replacement for, cash. 3 / 3 bis central bankers'speeches | credible euro adoption strategy helps stabilising the economies, as it provides an important anchor for policymakers. as already mentioned before, a credible strategy requires in particular responsible macroeconomic policies and advancements in structural reforms. one essential element of the countries β euro adoption strategies relates to the credibility of timetables. at the time of eu accession most countries had announced to join the euro area as soon as possible. we all know that this was based on assumptions at the time of the accession. the recent financial crisis has impacted the convergence progress and has moved the euro adoption further into the future. therefore, individual countries β timetables have to be carefully looked at and adjustments may be necessary. let me emphasise that an overly ambitious timetable for adopting the euro can be rather costly for the country concerned. this may encourage market participants to pursue strategies which may prove to be risky if the timetable turns out not to be achievable. we observed this in some cee countries, which for example allowed the emergence of unsustainable credit growth and a large share of loans denominated in euro. a look beyond the eu borders the financial crisis also took its toll outside eu borders. many non - eu emerging european economies, including eu candidate and potential candidate countries, recorded a strong fall in external and domestic demand, amid mounting concerns over financial stability and increased uncertainty about the availability of external financing. while policymakers in these countries currently focus rather on the entry into the eu and not on euro adoption, the need for sustainable convergence is still high on their agenda. overall, non - eu emerging european economies are in the early stages of catching - up in income levels with those of the eu. ensuring a smooth process of real and nominal convergence is therefore a key priority in the region. moreover, the risks of boom - bust cycles in credit or asset prices have been amply illustrated by the recent developments, whereby countries with sounder fundamentals were generally less affected by the crisis. rapid and determined international policy actions, including support from european institutions via macro - financial assistance ( mfa ) and instrument for pre - accession assistance ( ipa ) funds have contributed to bringing confidence back. moreover, i have to mention an issue of relevance for some economies in the region, namely the official, unilateral use of the euro. as you all know, unilateral euroisation is not in line with the provisions of the treaty. and as the recent intensive financial pressures experienced by the unilaterally euroised | 0 |
of the euro area economy. moreover, as experience has shown, stable prices minimise the inflation risk premium, thereby lowering long - term interest rates and helping to stimulate investment and growth. in order to maintain price stability, the ecb has designed a monetary policy strategy wherein risks to price stability are assessed on the basis of two pillars. the first pillar assigns a prominent role to monetary developments. the second pillar is a broadly based assessment of a wide range of other economic and financial indicators. this all - encompassing and systematic approach guarantees that the governing council of the ecb takes into consideration all relevant pieces of information when assessing the outlook for price stability in the medium term. all this shows clearly that the ecb needs to focus on the euro area when conducting its monetary policy. focusing on domestic objectives is, in fact, the mandate of all major central banks in the world, and rightly so. i strongly believe that the best contribution that the euro area can make to world economic growth is to ensure macroeconomic stability " at home " by pursuing policies which lead to sustainable non - inflationary growth in the euro area. given the size of the economy of the euro area, a stability - oriented policy will help to create a favourable environment conductive to non - inflationary growth at the global level. the mandate of the ecb is fully consistent with this principle. this is the only reasonable allocation of responsibilities among the large economies in the world. anything else risks blurring such responsibilities and diluting accountability, which would in turn distort incentives in a perverse way. this notwithstanding, the euro area is not, of course, economically speaking, an island and global developments do affect the euro area economy. hence, let me also stress that one of the requirements of a globalised world is a frequent exchange of information and views among policymakers. the ecb currently participates in the meetings of international organisations, such as the international monetary fund ( imf ), the organisation for economic co - operation and development ( oecd ) and the bank for international settlements ( bis ), and different fora, such as the g7. such exchanges are important, among other things, to better understand economic developments and to fully analyse the spillover effects in the economy arising from different policies. the ecb is not in a position to fine tune economic activity in the euro area, as it does not have the instruments to do so. any attempt to do so would prove counterproductive, leading to | and exports. of course, the last leg to all of this is the currency volatility experienced by regional currencies. in fact, we saw, for the first time in this past decade, intervention by some regional central banks that would have been quite unthinkable a year ago. looking ahead, significant downside risk to growth and upside risk to volatility remains. on the growth side, the october imf world economic outlook sees the world economy entering a major downturn. global growth is projected to slow substantially in 2008 and only a modest recovery would begin later in 2009. against this background, key concerns of asian central banks focus on the global economic slowdown, tightened global liquidity, and potential capital outflow. indeed, slower export growth to major advanced economies, and adverse changes in equity market wealth on real consumption, investment, and income will certainly affect export - dependent asian economies. as for financial market volatility going forward, some of the growth projections that came out of various sources, including the degree of volatility in asset and currency markets, would quite easily exceed even the most conservative stress - test scenario that most banks would have carried out six months ago. however, if the experience of asian crisis is anything to go by, one should remain alert to the possibility of a long period of correction and adjustment. moreover, given the global contagion, economies and markets with less structural resiliency, and lacking width and depth and thus liquidity, may eventually encounter dislocations in their real sectors. what does this combination of global slowdown and heightened market volatility mean for banks and financial regulators? ladies and gentlemen, in this scenario, credit risk management would be the priority for banks and regulators, to ensure that going forward, asset quality remains sound, and banks have adequate capital and provision to absorb this risk. indeed, the underlying cause of the present global financial crisis is the lapse in credit culture and credit risk management, which has allowed excessive leveraging and indebtedness. moreover, raising new private capital in this environment is a very tall order ; while the option of public capital injection very costly for shareholders and tax payers. therefore, it is imperative that banks need to be even more vigilant in managing not only their asset quality but also their internal capital, funding, expenditure including executive pay, and dividend policy. looking at banks in the asian region, such as thailand, despite rapid development of capital market | 0 |
, in contrast to the usual pattern, the household sector was a major stabilizing force. as a consequence, although household spending should continue to trend up, the potential for significant acceleration in activity in this sector is more limited. in fact, there are a number of pluses and minuses in the outlook for household spending. low mortgage interest rates and favorable weather have provided considerable support to homebuilding in recent months. moreover, attractive mortgage rates have bolstered both the sales of existing homes and the realized capital gains that those sales engender. they have also spurred refinancing of existing homes and the associated liquification of increases in house values. these gains have been important to the ongoing extraction of home equity for consumption and home modernization. the pace of such extractions likely dropped in response to the decline in refinancing activity that followed the backup in mortgage rates that began in early november. but mortgage rates remain at low levels and should continue to provide support to activity in this sector. consumer spending received a considerable lift from the sales of new motor vehicles, which were remarkably strong in october and november owing to major financing incentives. sales have receded some as incentives were scaled back, but they have remained surprisingly resilient. other consumer spending appears to have advanced at a moderate pace in recent months. the substantial declines in the prices of natural gas, fuel oil, and gasoline have clearly provided some support to real disposable income and spending. to have a more persistent effect on the ongoing growth of total personal consumption expenditures, energy prices would need to continue declining. futures prices do not suggest that such a decline is in the immediate offing, but the forecast record of these markets is less than sterling. although the quantitative magnitude and the precise timing of the wealth effect remain uncertain, the steep decline in stock prices since march 2000 has, no doubt, curbed the growth of household spending. although stock prices recently have retraced a portion of their earlier losses, the restraining effects from the net decline in equity values presumably have not, as yet, fully played out. future wealth effects will depend importantly on whether corporate earnings improve to the extent currently embedded in share prices. perhaps most central to the outlook for consumer spending will be developments in the labor market. the pace of layoffs quickened last fall, especially after september 11, and the unemployment rate rose sharply. over the past month or so, however, initial claims for unemployment insurance have decreased markedly, on balance | operate efficiently without endangering sound fiscal positions in the longer term. moreover, governments are encouraged to push ahead with reforms relating to the size and structure of public expenditure and revenue, which will also create room for tax cuts and absorb the fiscal costs of population ageing. in the field of structural reforms allow me to refer briefly to the adoption of the broad economic policy guidelines. if implemented in a determined manner, structural reforms will contribute to expanding the euro area's potential for non - inflationary growth and to reducing its high level of unemployment. we are now at your disposal for questions. | 0 |
bank supervision in particular and financial supervision in general is still in its early evolutionary stage. with the fast changes in financial markets and information technology, the methods of ensuring the safety of banks will also need to change. already, the rules relating to bank operations are changing in many parts of the world. this means that the ways banks are supervised also need to be changed. the responses to these rapid changes may be slow, but there is concerted and dynamic effort by the international supervisory authorities to ensure the safety of banks. thus, banking supervision is conducted in the interest of everyone because the cost of a banking crisis can be enormous. when banks fail, we all fail. and certainly, the cost of a banking crisis will be unbearable especially for our relatively small economies in the pacific region. i note that you have a full agenda ahead of you. at the same time, i have no doubt that the choice of topics is to provide discussions, which should add value to your work not only in your own countries but also for the pacific region. the case study that will provide the experience of palau regarding the failure of one of its biggest bank, will not only remind us of the reality and the crucial role of bank supervisors, but it should bring us together to learn from it and be better prepared for the possibility of such crisis occurring in our own respective countries. i also note with interest that you will be covering the basel revised core principles which, as i mentioned earlier, reflect the ever changing environment in which banks operate, that international standards continue to change as the environment of risks also changes. and as part of the global financial system, we all need, to some extent, to adapt to such changes. although some of these changes may not directly affect us due to our narrow market base, others can impact on our financial system indirectly. one of these changes would be the basel ii new capital adequacy framework that has already been advanced for some years for adoption. from experience, the new capital accord will have significant impact on our limited resources and our capacity to administer and properly implement. in this connection, i am pleased to acknowledge the presence of resource experts, ms elizabeth roberts, director of the financial stability institute ( fsi ) at the bank for international settlements, basel ; messrs graham johnson and chris gaskell from the australian prudential regulatory authority ( apra ) ; mr kim norris, director, international advisory group, osfi, canada ; and experts from the ifc. i am | based on a clear pact : national reforms and, not or, european coordination. this full coordination also rests on the setting up of a strong and legitimate european institution : a euro area finance minister backed by a european treasury system and subject to greater democratic accountability. this finance minister would be in charge of defining the collective strategy, supervising its decentralised implementation by member states and handling crisis management tools. going forward, he / she could also be in charge of a common budget. bis central bankers β speeches | 0 |
from around 30 percent to the current annual 2. 9 percent, after patiently building credibility and institutions. the transition was characterized by a flexible regime in the use of instruments, including foreign exchange market intervention first through the central bank and nowadays through operations with the government - owned exporting companies and the treasury, which allowed the economy to adjust to both domestic and external shocks. in argentina, the monetary policy transmission channels are only just being rebuilt, since credit to the private sector accounts for 10 percent of the domestic product, still far below the latin american average. moreover, consumer credit reacts weakly to interest rate fluctuations. this means that 90 percent of the economy operates in cash ; therefore, the hasty adoption of certain instruments would not only be useless but also hamper their future use. we cannot β take short cuts β ; rather, we must patiently rebuild the power of monetary policy tools. furthermore, in certain macroeconomic scenarios with still persistent features of fiscal dominance and external determinants, monetary policy should be conceived under a general equilibrium approach, where fiscal solvency, the monetary balance and external sustainability are mutually determined. in consequence, when devising the transitional monetary regime, the classical dilemma of rules versus discretion cannot be solved with an extreme option. far from β buying β credibility, a β rigid β monetary policy rule might become unsustainable if the people anticipate inconsistencies with the rest of the macroeconomic policies. on the opposite extreme, β unrestricted discretion β would also lead nowhere and could contribute to a frustrating process. our approach to financial and monetary policy rests upon this theoretical framework and is built on four pillars β ( i ) a gradual and consistent monetary policy that ensures money market equilibrium ; ( ii ) a countercyclical prudential reserve accumulation approach ; ( iii ) a system that is independent from public sector financial needs ; and ( iv ) a policy framework that boosts corporate and household credit. the current regime of control over the money supply and the demand for money combines the necessary doses of monetary prudence and flexibility. simple rules on the growth of money supply provide the adequate tool for the people to make monetary policymakers accountable. thus, the credibility lost in the crisis is gradually rebuilt without sacrificing the necessary discretion to address the contingencies inherent to an economy that is in transition towards its long - term equilibrium. to preserve the money market equilibrium, we apply a deep monetary absorption strategy coupled with reserve accumulation for prudential purposes. such a strategy | martin redrado : an economy in transition article by mr martin redrado, governor of the central bank of argentina, published in la nacion newspaper on 25 june 2007. * * * severe economic crises make countries significantly stray from the path of long - term growth. in post - crisis periods, the macroeconomic fundamentals usually overreact to then gradually readjust themselves and converge towards a lasting scenario. therefore, for some time there remains uncertainty as to the β real β equilibrium value of the main aggregates, with many of the nominal and real variables showing distortions while returning to their usual levels. factors such as the dimension of the crisis, the condition of fiscal, monetary and financial institutions, and the sustainability of the external equilibrium achieved determine the duration of this normalization phase. judging by the crises that shook the region over the past decades, not all countries are in the same stage of evolution. thus, there are economies approaching their long - term cruising speed ; in others, however, the convergence process is still incipient. therefore, simplistic comparisons among various countries β situations may lead to wrong recommendations. in argentina, despite a notable recovery, several features of the current macroeconomic performance enable us to infer that the economy is still heading towards a new long - term equilibrium. neither in argentine history nor in the international experience do we find precedents for the deep, large impact of the 2001 - 02 crisis. unlike the case of brazil, mexico or southeast asia, the abandonment of convertibility in argentina included an institutional breakdown, a huge devaluation, the destruction of the financial system and the default on the public debt, all at the same time. these transition stages take time and raise enormous challenges. our neighboring countries β experience teaches us that flexibility and gradualism in both policy design and implementation are the adequate way of treading them. during the money and banking conference organized by the bcra, vittorio corbo, governor of the central bank of chile, stressed the sequential process undergone by the chilean economy following the crisis of the early 1980s. four elements have been of utmost importance in this long process : consolidating fiscal solvency as a countercyclical tool, reestablishing external sustainability, restructuring liabilities, and rebuilding the financial system. once all these aspects were addressed, progress was made in the consolidation of a fullfledged inflation targeting regime that is nowadays highly credible. thus, in 15 years, chile managed to lead inflation | 1 |
financial markets is that hedge funds, private equity firms and the banks financing these institutions all strongly rely on techniques for credit risk transfer ( crt ) to manage their risks. while crt markets have obvious benefits in terms of allowing effective risk sharing in the financial system, excessive reliance on the functioning of such mechanisms can lead to complacency on risks. in addition, crt markets operate in a rather opaque manner which does not allow for monitoring of concentration and counterparty risks by other market participants or by public authorities. moreover, the growing spreading of more complex structured credit products raises the issue that investors in such instruments may not be able to properly assess the risks they assume. unanticipated changes in the macro - financial environment can cause model assumptions to fail and this may contribute to pricing dislocations and market liquidity problems if many investors decide to exit their positions simultaneously. all in all, i see scope for further cooperation between public and private sector entities to gather information on the crt market to improve the ability to assess potential systemic risks. the state of the fundamentals in the credit markets, crt and unregulated financial institutions can together be described as a potential β triangle of vulnerability β in that a shock at any corner of this triangle could have implications for the other two. for instance, a significant turn in the credit cycle could mean that credit protection - sellers, such as hedge funds, could become unable to make due payments to banks. similarly, if widespread problems were to emerge at hedge funds or private equity firms which are active in crt markets, this could even spark a downturn in the credit cycle, if it were to impair the β originate and distribute β business model adopted by many banks involving securitisation and hedging of lending exposures. let me conclude by saying that ultimately the triggers for any potential adjustment cannot be predicted with any degree of certainty. all that we know is that the present state of global finance β where we are observing a level of risk pricing which is historically low β is not necessarily sustainable in the long run. all parties concerned should therefore contribute to an orderly and smooth adjustment, when the time comes, and avoid an abrupt and sharp adjustment which would be adverse for the global economy. all parties concerned, public and private, have in this respect a very important shared responsibility. i thank you for your attention. | slower pace of quarter - on - quarter real gdp growth in the second half of this year than in the first. looking further ahead, the conditions remain in place for the euro area economy to grow at solid rates around potential, although some volatility in the quarterly growth rates is likely to emerge around the turn of the year, mainly reflecting the impact of an increase in indirect taxes in a large euro area country in january 2007. global economic activity has become more balanced across regions and remains robust, thereby providing ongoing support for euro area exports. investment is expected to remain dynamic, benefiting from an extended period of very favourable financing conditions, balance sheet restructuring, accumulated and ongoing strong earnings, and gains in business efficiency. consumption growth in the euro area should also strengthen further over time, in line with developments in real disposable income, as employment conditions continue to improve. risks to the outlook for economic growth are broadly balanced over the shorter term, taking into account, in particular, the recent slowing down in the us economy on the one hand and the recent fall in oil prices on the other. the oil price decline β if it were to prove lasting β has the potential to lead to somewhat stronger demand and output growth than embodied in our current baseline scenario for activity in the coming quarters. over the longer term, risks to growth continue to lie on the downside, relating mainly to the possibility of a renewed increase in oil prices, fears of a rise in protectionist pressures, especially after the suspension of the doha round of trade talks, and possible disorderly developments owing to global imbalances. as regards price developments, according to eurostat β s flash estimate annual hicp inflation was 1. 6 % in october, after having declined to 1. 7 % in september from 2. 3 % in august. the recent decline in inflation is the combined result of favourable base effects, given in particular the strong rise in oil prices a year ago, and the recent significant fall in oil prices. while the outlook for energy prices remains uncertain, on the basis of current energy prices and the higher quotations on futures markets, inflation rates are likely to increase again in the next few months and early 2007. as a consequence, we expect a high degree of short - term volatility in the annual hicp inflation rate. looking through this volatility, however, hicp inflation will remain elevated at a level above 2 % on average in 2006 and is likely to remain so in 2007. risks to | 0 |
asset - backed commercial paper by conduits created to acquire and hold securities. both demand and supply factors drove the increased use of short - term wholesale finance. on the supply side, the growth of savings from corporations and institutional investors in need of deposit - like products in which to place their cash balances created a plentiful source of funds. these products were viewed as β safe β since, after all, the funds were only exposed for a short period of time, and in the case of repo, they were secured by collateral. on the demand side, setting aside any possible instabilities in this funding source, it was more profitable to use shorter - term funds to finance longer - term assets. in fact, the growing reliance on short - term wholesale funding to finance longer - term assets increased liquidity and maturity mismatch risk in the financial system. this was particularly dangerous because many of the assets being financed were structured - credit products, some of which were opaque, difficult to value and illiquid. in periods of market stress, these features increase the run risk by funding providers. bis central bankers β speeches short - term funding of longer - term assets is inherently unstable, especially in the presence of information and coordination problems. it can be rational for a funding provider to supply funds on a short - term basis, reasoning that it can exit if there is any uncertainty over the firm β s continued ability to roll over its funding from other sources. but, if the use of short - term funding becomes sufficiently widespread, the firm β s roll - over risk increases. in this situation, there is a strong incentive for each lender to β run β early if there is any uncertainty that could undermine the borrower β s ability to continue to roll over its funding from other sources. this is the case even if the provider of funds believes that the borrower would remain solvent as long as it retained access to funding on normal terms. the cost of running when it turns out to be unnecessary is small relative to the cost of not running when it turns out to be prudent. of course, this insight is not a new one. prior to the establishment of a lender of last resort and retail deposit insurance for banks β which came with the quid pro quo of prudential regulation β bank runs were a regular and disruptive feature of our financial system. these innovations solved the coordination problem and stabilized this source of funding. what was new prior to the crisis was the | john c williams : opening remarks β β racism and the economy : focus on health β remarks ( via prerecorded video ) by mr john c williams, president and chief executive officer of the federal reserve bank of new york, at β racism and the economy : focus on health β, 9 september 2021. * * * as prepared for delivery good afternoon, and welcome everyone. i β m john williams, president and ceo of the federal reserve bank of new york. i β m here to kick off what is now the eighth installment of a landmark series on the topic of racism and the economy sponsored by the 12 federal reserve banks. these events examine structural racism β s toll on the economy and identify potential actions that can improve economic outcomes for all segments of society. there is no facet of our society immune to racism, health included. so, this afternoon, we will be looking at key issues around race and the economy through the lens of health β a focus never more urgent and critical. before we move on with the program, i β d like to share more broadly why this is so important for the federal reserve, what we β re learning, and what we β re doing. and with that, i must give the standard fed disclaimer that the views i express are my own and do not necessarily reflect those of the federal open market committee or anyone else in the federal reserve system. having poor health is a challenge on many levels. we β re keenly aware that health can be a huge driver of economic inequality. people who lack good health or healthcare often struggle to participate fully in the economy. on top of that, social determinants of health β economic stability, housing, and education β can be barriers to employment and affect the kinds of jobs people get. of course, we at the federal reserve are neither healthcare workers nor healthcare policymakers. but a major part of our core mission is to foster a strong economy and promote maximum employment. and to put it simply, we need healthy people to have a healthy economy and workforce. that β s why understanding the nexus of race, health, and the economy is central to achieving our goals. we are deeply committed to doing so, both in this series and beyond. the pandemic demonstrated just how acute many of the connections are between physical and economic health for individuals and communities. and it exposed just how dramatic racial disparities can be, especially in accessing healthcare and other critical resources. the convergence of a health crisis | 0.5 |
goods and services within the borders of the country. 3. preserving the value of the kwacha both externally and internally the reserve bank ensures that the exchange rate is stable at all times. thus it strives to ensure that : β’ 4. money that is in circulation in the country should be backed by an equivalent level of foreign reserves. banker and advisor to the government the reserve bank maintains government accounts and manages government domestic debt. 5. banker to other banks in malawi the reserve bank acts a banker to the commercial banks by keeping commercial banks deposits, which can be withdrawn by commercial banks when they run out of liquidity in their vaults. 6. acts as lender of last resort for financial institutions the rbm helps to alleviate liquidity pressure in the financial system. it does this by lending to banks through the discount window. b. delegated functions on behalf of the government of malawi, the reserve bank of malawi carries out the following delegated responsibilities : 1. establishment of money and capital market the rbm is the authority responsible for regulating and supervising the proper functioning of money and capital markets. it is responsible for the development of the capital market and for the provision of rules and regulations for fair and orderly market conditions. 2. supervision of financial institutions to promote financial sector development the bank carries out orderly management and supervision of banks and other financial institutions to protect their liquidity, equity base and ensure their overall viability and stability. 3. issuing of government paper and treasury bills the rbm is vested with the responsibility of issuing local registered stocks and treasury bills as a way of raising resources for government to augment its revenues. the bank also underwrites i. e. meets the difference in case of under subscriptions from the financial sector, the parastatals and the private sector. 4. administration of exchange control the administration of exchange control was delegated to the reserve bank by the ministry of finance on 2 june, 1965. β’ currently there are no restrictions on the current account. however, the capital account has not yet been liberalised. c. other functions 1. to promote development and economic growth in malawi the reserve bank of malawi implements several measures designed to influence the money supply and availability of credit, interest rates and exchange rates with the view to promoting growth, employment, stability in prices and a sustainable balance of payments position. 2. conducting research collecting and analysing economic data from the financial and other sectors for research and policy purposes. before i conclude, it is important | more access points and a broader range of financial products. we introduced the β branch - lite β concept to reach underserved areas ; the promotion of β basic deposit accounts β ( bdas ) to encourage account ownership among the unbanked ; as well as the issuance of guidelines on agricultural value chain financing to increase the flow of credit to the agricultural sector. all these complement our long - standing campaigns to promote financial literacy and consumer protection. recently, we have begun to harness the power and reach of the digital space to further push this agenda. the digital revolution underscores the importance of innovation and technology to ensure delivery of financial products and services to a wider segment of society. in this regard, digital payment channels have found their way into our payments and settlements infrastructure. under the national retail payments system ( nrps ), we aim to leverage on financial technology β or fintech β to bring about an inter - operable, safe, and efficient real - time digital payments system. just this april, we launched instapay to enable 24 / 7 low - value electronic transfers. these initiatives should facilitate the shift from being a cash - heavy to a cash - lite economy, a trend we observe happening across the globe. even as we provide an enabling environment for these technological innovations in the payments ecosystem, the bsp β walks the talk β by exploring ways to digitalize our own payments processes. you may have noticed that all medical reimbursements, regardless of amount, are now being directly credited to the payroll account. cashless payment options using qr codes are now available at our canteen and cooperative stores. soon, bsp employees may have the option to open their payroll account with other domestic banks. digitalization of travel allowances, as well as of our payment collections, are also underway. my fellow bspers, much has changed since the bsp was established 25 years ago. today, the momentum for progress and reform has not diminished. i could not be prouder to say that we have done this well and this much because of everyone β s invaluable contributions to the cause. for this, i, on behalf of the monetary board, also salute and honor the three governors who came before me β the late governor gabriel singson, the late governor rafael buenaventura, and former governor amando tetangco, jr. who joins us today to celebrate with us. thomas aquinas said, that β if the highest aim of a | 0 |
of oil, with fluctuations and considering the brent - wti average, is slightly below those at the cutoff date of the previous report. the copper price rise has coincided with a well - stocked market despite supply - side problems, in the context of a weak dollar. china's low interest rates and better performance lend support to higher prices in the short term. in any case, although its price is not expected to remain stable, it is projected to average more than june's estimates. in our baseline scenario, the pound of copper should trade at an average of $ 2. 75 in 20172018, and at $ 2. 70 in 2019. stronger economic growth in the developed world has also consolidated. the united states, like it did several quarters ago, shows a good performance of consumption and a dynamic labor market. europe has seen a strong recovery in its growth rates, all across the economies making up the group, beyond the differences that persist among them in variables such as the size of the gap and the unemployment rate. growth in japan surprised positively, and expectations have been revised upwards. meanwhile, inflation has tended to subside and the monetary authorities of the developed world have made no big changes to their monetary policy strategies. nevertheless, the market has been incorporating some moderation into its vision of the us monetary policy and some more intensity in that of the eurozone, which partly explains the global depreciation of the dollar. emerging currencies have benefited from the weak dollar, the better prices of commodities and increased risk appetite. comparing the statistical closures of this and the previous reports, the peso has appreciated by around 4. 5 %, which, in real terms, translates into a decrease of approximately 3. 5 % of the real exchange rate. thus, at the last cutoff date it was fluctuating around 90 in its 1986 = 100 measurement, lower than its averages of the last 15 or 20 years. moreover, in the days following the statistical closure, the peso has continued to appreciate in both nominal and real terms. as a working assumption, the baseline scenario of this report assumes a slight depreciation in real terms over the projection horizon ( figure 7 ). turning to the performance of the emerging economies, in the first half of the year china grew 6. 9 % annually, exceeding expectations. these figures raise the baseline scenario estimate, although some moderation in activity is assumed for the second half, in line with the latest data on manufacturing output, | central bank of chile october 2019 third statistics conference : β measuring the economy in the digital age β opening remarks by mario marcel, governor of the central bank of chile october 1 - 2, 2019 β santiago, chile good morning, it is a great pleasure to welcome you to the third statistics conference organized by the central bank of chile ( cbc ), on β measuring the economy in the digital age β that brings together distinguished experts on macro statistics from many agencies and countries around the globe. this conference follows the one on β statistics for financial and monetary analysis β in 2015 and on β measuring the economy in a globalized world β in 2017 and it is becoming a landmark event for the cbc, and i hope for all participants as well. the conference we are opening today will address the opportunities and challenges that digitalization imposes on us in interpreting and analyzing increasingly dynamic economic and financial phenomena. the digital economy digitization is progressively changing the way we understand our world, by creating new business models and processes, generating new smart products and services, with lower costs and more timely delivery, all of which is reshaping consumer behavior. major questions are emerging about the ability of our conventional toolkit to measure economic activity in the face of such changes. digital products, services and means of economic interaction are making the task of identifying economic phenomena more challenging, especially for economic and financial statistics. traditionally, economic transactions were governed by the interaction between producers and households. in the digital age, households have become firms, and, in turn, producers hire the households β services directly. seemingly, free products and services have also emerged. all this calls for a revision of a number of assumptions behind gdp as a measure of the population β s well - being. what exactly is the digital economy is an issue still under discussion. according to the organization for the economic co - operation and development ( oecd ), the focus is on digital transactions, that is, those that order or deliver products using digital means. according to this definition, one important feature of digitization is the massiveness of peer - to - peer services intermediated by platforms such as airbnb, uber, or ebay, which facilitate transactions of goods and services. the international monetary fund ( imf ), in turn, defines the digital economy as the use of digital information. working groups of international experts are being convened to elaborate on these definitions and to propose a general framework for measuring the digital economy. the structural changes associated with digitization result in | 0.5 |
of the spectrum are policymakers who suspect that most firms and households form their expectations using something closer to simple rules of thumb based on recent history. under this alternative worldview, a string of adverse supply shocks is dangerous because it has the potential to cause rising inflation to become embedded in expectations. should this shift in expectations occur, the joshua gallin ( 2004 ), " the long - run relationship between house price and rents, " finance and economics discussion series 2004 - 50 ( washington : board of governors of the federal reserve system, september ). jonathan mccarthy and richard peach ( 2004 ), " are home prices the next β bubble β? " federal reserve bank of new york, economic policy review, vol. 10 ( december ), pp. 1 - 17. donald l. kohn ( 2006 ), " monetary policy and asset prices, " speech given at the european central bank colloquium held in honor of otmar issing, march 16. central bank would face a persistent inflation problem, one whose correction would likely require a prolonged period of tight monetary policy. in this less comfortable world, restoring price stability can involve a painful process of slow growth and elevated unemployment. of course, these considerations are more than a theoretical curiosity and help to explain the intense focus of central banks on inflation expectations. the marked rise in energy prices over the past few years led until recently to a rate of overall consumer price inflation notably above core inflation. however, the available measures of expectations - whether from surveys or financial markets - have shown longer - term expectations increasing very little, if at all, throughout this period, providing some assurance about the inflation outlook. however, this is an ex post assessment. as a policymaker, i would have been more confident in my ex ante judgment about the risk of expectations moving higher if we had had a better understanding of the determinants of expectations regarding prices and of the links between these expectations and the subsequent performance of inflation. more generally, the uncertainty we face about the process of expectations formation makes interpretation of the underlying correlations in the data challenging. this is no surprise : the rational expectations revolution begun by robert lucas more than thirty years ago started from the premise that it is impossible to move from reduced - form evidence to the underlying economic structure without understanding the evolution of expectations. much of the macroeconomic literature over the past few years has focused on how alternative assumptions about expectations may explain the patterns of correlations in aggregate data. however, the empirical weaknesses of the | we believe that the best ideas, policies and, ultimately, service to the public are the result of diverse perspectives, and from a staff that reflects the rich diversity of our nation. inclusion makes us stronger by providing all employees the assurance that they will be working in an environment that welcomes and values their differences, and that recognizes and rewards people according to the contributions they make in advancing the mission of the organization. that is not to say that we have all of the solutions, or that we do not have considerable progress to make. but we have made efforts in a number of areas. these efforts are consistent with the congressional directive to establish the office of minority and women inclusion, and as articulated in the board of governors'strategic plan for diversity and inclusion. 2 first, we have made a commitment, and have made progress, to make our institution more diverse. that includes efforts to bring greater diversity to the board of directors of our federal reserve banks and branches as well as to senior leadership in the federal reserve system. we have also worked to improve our internal culture. these efforts include re - establishing and strengthening employee resource groups. we are working to come up with codes of conduct including efforts to make our meetings more inclusive and set rules around behavior in seminars. we are also providing diversity and inclusion as well as bystander training to both new and 1 / 2 bis central bankers'speeches existing employees. second, we have broadened our reach in recruiting to provide a more diverse range of applicants the opportunity to apply for positions at the federal reserve β through strengthening our connections to schools that serve diverse populations, hiring an outreach specialist for these communities, establishing a stronger presence at career fairs for diverse students, and hosting career events for students to promote jobs in economics and finance at the federal reserve. third, we are working with high schools and universities to inspire students'interest in economics and finance. we are also working to provide them with the tools they need to enter these fields. this has included partnerships with local high schools to teach economics, and with a local historically black university, howard university, to teach and mentor students in economics and statistical analysis. this last initiative has led to students developing an interest and pursuing careers in economics, including as research assistants at the federal reserve, and several are currently employed at the board as research assistants. of course, these conferences are also an important part of addressing diversity and inclusion in central banking, and the economics and finance professions. i look forward to welcoming all of you to | 0.5 |
hirohide yamaguchi : some remarks on the financial crisis over the past year speech by mr hirohide yamaguchi, deputy governor of the bank of japan, at the 4th annual euromoney japan capital markets congress, tokyo, 18 september 2009. * * * introduction i am honored to be invited to speak today at the fourth annual euromoney japan capital markets congress. the collapse of lehman brothers one year ago triggered unprecedented disruptions in the global financial markets. fortunately, financial conditions have improved recently to a great extent, but they have not yet fully recovered from the crisis. today, by looking back on the financial and economic developments in the past year, i will provide some of my impressions of those developments. i. economic and financial developments after the collapse of lehman brothers the global financial markets changed drastically after the collapse of lehman brothers in september 2008. market participants became increasingly cautious about taking counterparty risk, causing trading volume to decrease sharply and market liquidity to decline significantly. credit spreads widened and the prices of financial products, including securitized products, plunged. consequently, financial institutions experienced business difficulties or failed one after another in many countries, thereby aggravating financial system concern. credit provisions from financial institutions to firms and households declined markedly, leading to a global credit contraction. confidence, which is the most crucial element in the financial system and markets to function smoothly, was virtually lost. meanwhile, economic conditions deteriorated simultaneously and rapidly around the globe. final demand β namely, housing investment, private consumption, and business fixed investment β plunged, leading to large - scale adjustments in inventory and production. this deterioration in economic conditions, together with a spread of anxiety among firms and households, exacerbated the malfunctioning of the financial system, and in turn deteriorated economic conditions further, causing a downward spiral β the emergence of the so - called adverse feedback loop between financial and economic conditions. also in japan, the functioning of commercial paper and corporate bond markets was impaired, and strains in japan β s short - term money markets increased as reflected in a rapid expansion of the libor - ois spreads. nevertheless, the stress imposed on financial markets and the financial system in japan after the collapse of lehman brothers was low relative to that in the united states and europe because financial institutions in japan had little exposure to securitized products. however, the slowdown in economic growth was rapid in japan, compared with that in the united states and europe. against a backdrop of a global | in accordance with the guideline for money market operations decided at the monetary policy meeting held on april 30. the outstanding balance of current accounts is recently moving at around 25 - 27 trillion yen. under these circumstances, the overnight call rate continues to hover at very close to zero percent. longer - term interest rates remain steady at low levels. yields on long - term government bonds declined and were temporarily moving at the 0. 5 - 0. 6 percent level, as banks and institutional investors have further increased investment in government bonds since the start of the new fiscal year. yield spreads between private bonds ( bank bonds and corporate bonds ) and government bonds are contracting further due mainly to the increase in corporate bond investment by institutional investors. stock prices plunged temporarily toward the end of april reflecting uncertainty regarding the domestic economic outlook and concern over the worsening supply - demand situation in the stock market, but they have since recovered following the recovery in european and u. s. stock prices. the nikkei 225 stock average is recently moving at around 8, 000 yen. in the foreign exchange market, the yen appreciated reflecting the ongoing weakness of the u. s. dollar due mainly to concern about increasing fiscal deficits and current account deficits in the united states. the yen is currently traded in the range of 115 - 118 yen to the u. s. dollar. with regard to corporate finance, private banks remain cautious in extending loans to firms with high credit risks while they continue to be more active in extending loans to blue - chip companies. recently, their lending attitudes seem to be becoming slightly more accommodative in areas such as interest margin charges. meanwhile, the lending attitudes of financial institutions as perceived by firms, particularly small ones, remain severe. in the corporate bond and cp markets, the issuing environment for firms with high credit ratings continues to be accommodative, and the environment for firms with relatively low credit ratings seems to be improving slightly. credit demand in the private sector continues to follow a downtrend mainly because business fixed investment is at low levels and firms are continuously reducing their debts. amid these developments, private banks β lending continues to decline by about 2 - 3 percent on a yearon - year basis, but the rate of decline is contracting slightly. the amount outstanding of corporate bonds and cp issued is moving at around the previous year β s level. meanwhile, according to business surveys, financial positions of firms, particularly those of small firms, remain severe. the year - on - | 0.5 |
including steel and certain types of machinery. i would add, however, that, on balance, the plusses for energy consumers from the fall in oil prices almost surely outweigh the minuses. remember that we are still a net importer of oil. putting it all together, the economic projections of most members of the fomc call for growth in real gross domestic product of roughly 2 β 1 / 2 percent per year over the next couple of years, a little faster than the pace of the recovery thus far, with the unemployment rate continuing to move down to near 5 percent by the end of this year. and for inflation, as i noted earlier, my colleagues and i expect inflation to move up toward our objective of 2 percent as the economy strengthens further and as transitory influences wane. of course, the outlook for the economy, as always, is highly uncertain. i am describing the outlook that i see as most likely, but based on many years of making economic projections, i can assure you that any specific projection i write down will turn out to be wrong, perhaps markedly so. for many reasons, output and job growth over the next few years could prove to be stronger, and inflation higher, than i expect ; correspondingly, employment could grow more slowly, and inflation could remain undesirably low. bis central bankers β speeches implications for monetary policy given this economic outlook and the attendant uncertainty, how is monetary policy likely to evolve over the next few years? because of the substantial lags in the effects of monetary policy on the economy, we must make policy in a forward - looking manner. delaying action to tighten monetary policy until employment and inflation are already back to our objectives would risk overheating the economy. for this reason, if the economy continues to improve as i expect, i think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target and begin the process of normalizing monetary policy. to support taking this step, however, i will need to see continued improvement in labor market conditions, and i will need to be reasonably confident that inflation will move back to 2 percent over the medium term. after we begin raising the federal funds rate, i anticipate that the pace of normalization is likely to be gradual. the various headwinds that are still restraining the economy, as i said, will likely take some time to fully abate, and the pace of that improvement is highly uncertain. if | the fed β s accommodative monetary policies. and credit availability to both households and small businesses has improved. in recent months, as i noted earlier, there has been some softness in the economic data. recent indicators of both household spending and business investment have slowed, and industrial output has declined. the commerce department β s initial estimate was that real gross domestic product was nearly flat in the first quarter of 2015. if confirmed by further estimates, my guess is that this apparent slowdown was largely the result of a variety of transitory factors that occurred at the same time, including the unusually cold and snowy winter and the labor disputes at ports on the west coast, both of which likely disrupted some economic activity. and some of this apparent weakness may just be statistical noise. i therefore expect the economic data to strengthen. all of that said, the headwinds facing our economy have not fully abated, and, as such, i expect that continued growth in employment and output will be moderate over the remainder of the year and beyond. despite the recovery i noted in home prices and a greater number of home sales, residential construction activity remains quite low. i mentioned the ongoing issues with mortgage credit, but more generally, many years of a weak job market and slow wage gains seem to have induced many people to double - up on housing, and many young adults continue to live with their parents. population growth is creating a need for more housing, whether to rent or to own, and i do expect that continuing job and wage gains will encourage more people to form new households. nevertheless, activity in the housing sector is likely to improve only gradually. the pace of business investment has also been only modest during this recovery, and some of the reasons might persist a while longer. businesses seem not to have had sufficient confidence in the strength and durability of the recovery to undertake substantial capital expenditures. moreover, some analysts have suggested that uncertainty, not only about the strength of the recovery but also about economic policy, could be a significant factor. and the fact that many businesses seem to be holding large amounts of cash may suggest that risk aversion is playing a role. weak investment in the energy sector is also likely to persist. this represents the negative side to the fall in oil prices, one being felt by the oil - producing regions of the country. new domestic oil drilling has plunged over the past few months, and we have also seen a slowdown in activity in sectors that supply oil production companies, | 1 |
is also still unclear. there is no implied criticism here β re - designing the regulatory frameworks for, among others, banks, insurance companies and rating agencies, takes time, and a lasting, well - planned robust set of regulations that will stand for many years to come is surely preferable to a hastily - agreed but inadequate framework. the authorities nationally and internationally are pushing the agenda hard to come up with the right decisions as quickly as possible. the progress of the regulatory agenda has, however, created additional uncertainty in financial markets which is reflected in investor behaviour and in some market prices. for example, market intelligence suggests that it is one of the factors contributing to the continued elevated funding costs for many banks. in due course, the various regulatory initiatives will produce detailed rules. as that happens one can expect a variety of reactions. on one level, there is likely to be some shift of activity between markets and business models as participants evaluate where the new rules establish new incentives. beyond that, there might well be some general improvement in market functioning, reflecting the reduction in regulatory uncertainty and the more resilient financial system that the regulatory agenda is designed to deliver. at the moment, market intelligence suggests that market participants are focussed on the elevated uncertainty and have not yet anticipated the benefits of, for example, a safer banking system. conclusion financial markets have come a long way since the epicentre of the crisis in 2008, with many markets that were significantly impaired in the crisis now functioning well. that progress is encouraging in terms of financial stability and support for the real economy, but further healing is still required. looking ahead, there are some clear obstacles to that process. the sovereign debt crisis, currently focussed on the euro area, is one. and the general recovery in the macroeconomic outlook is another. there will also be a lot of uncertainty embedded in markets until final details are available on the majority of the regulatory agenda. that agenda must be allowed to take sufficient time to get the right answers, but as these become available we should expect to see further improvements in market functioning. meanwhile, the authorities will need to pay particular attention to the next rounds of financial innovation, especially given the prolonged low interest rate environment. bis central bankers β speeches | ##stream and bank calculations. ( a ) shows the difference between actual and estimated equilibrium spreads as a percentage. positive numbers represent overvaluation, negative numbers undervaluation. ( b ) equilibrium corporate bond spreads are defined as the total estimated credit component plus a five - year rolling average of the illiquidity premia. full details of the approach used for the decomposition of corporate bond spreads can be found in churm, r and panigirtzoglou, n ( 2005 ), β decomposing credit spreads β, bank of england working paper no. 253. the bank β s model - based estimates suggest that us high - yield and investment grade corporate debt currently reflect historically low risk premia, and so may be vulnerable to a correction ( chart 14 ). moreover although much of the recent issuance reflects refinancing of existing bonds or loans ( with companies seeking to lock in low interest rates and extend maturities ) and m & a activity, there have also been growing reports of us issuance to finance β dividend recapitalisations β ( where debt is issued to pay special dividends ). issuance of covenant - lite leveraged loans ( which include fewer of the usual protective covenants for the benefit of the lending party ) was $ 34bn in the first five months of 2011, compared with $ 8bn in the whole of 2010. and us contacts have reported renewed issuance of bonds with payment - in - kind ( pik ) toggles ( where issuers have the option of deferring cash interest payments, choosing instead to roll interest payments into additional debt securities ). although the incidence of these sorts of deals remains significantly below that associated with the pre - crisis exuberance, these examples might be indicative of the reach for yield / assets encouraging investors to chase returns via higher risk assets. despite the low - yield environment, market contacts have been telling us that some investors β expectations of returns were little changed by the crisis, reflecting a combination of investor inertia and the need to earn sufficient returns to cover their liabilities. but we also hear that investment horizons are often shorter and tolerance of volatility and desire for leverage is lower. something clearly has to give here β investors know β and must remember β that there is no such thing as a free lunch, and that additional return involves additional risk. the bis central bankers β speeches macro - prudential concern is that the reach for yield encourages financial innovation and growth in | 1 |
hard to say. the area is relatively new and there is therefore a lack of experience and research in the field. this means that we will have to test our way forward for several years. there are a lot of reports that explain why macroprudential policy is needed and the tools it may entail. but not a lot has been written about how it should actually be conducted in practice. this is of course because the policy area is new and we still have a lot to learn. i believe that the imf can contribute here too by increasing our knowledge about which tools are most appropriate in which situations and by issuing recommendations to countries on how they should actually conduct macroprudential policy and implement various tools. the imf β s articles of agreement should reflect a clearer surveillance mandate one way to strengthen the imf β s surveillance is to ensure that the imf β s articles of agreement cover what the fund actually does. according to the articles that set the frameworks for the imf β s work, the fund β s bilateral financial surveillance should ensure that β each member shall avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other members. β the articles were written in a different era and, as we have seen, the imf has been carrying out financial surveillance and analysis that is broader than stipulated in the articles for a number of years now. the modernisation and clarification of the imf β s articles is now needed to enable the fund to fully take on the task of supervising the global financial system, but this will require a long process. however, a first step towards a more formal mandate was taken in july 2012 when the imf β s executive board adopted the integrated surveillance decision ( isd ). this agreement stipulates, for example, that the fund β s bilateral surveillance should be conducted on the basis of a broader perspective than set out in the articles. the links between countries and how their economic policies can affect the global economy should now be included in the surveillance. the isd thus underlines the multilateral dimension of the fund β s bilateral surveillance. bis central bankers β speeches it is positive that there is now a board decision on how the imf should work. but the longterm goal should still be to change the articles of agreement so that they reflect what the imf actually does. this is also an issue that we are pursuing in our constituency. until financial | third, the integration of impact evaluations into wb projects and programs, which requires building capacity in client countries and allows for optimizing design and delivery. strengthened international cooperation is essential to assisting those in need and enhancing preparedness for future crises in order to prevent their most dramatic impacts. our constituency firmly supports multilateral institutions and international coordination efforts. as with its 2021 g20 presidency, italy enters the 2024 g7 presidency firmly committed to those efforts. 3 / 3 bis - central bankers'speeches | 0 |
it is premature to declare the phillips curve dead. inflation will return when tightening cyclical factors outweigh the structural disinflationary forces. and the us could be the first country to show signs of a turnaround in inflation. 3 / 7 bis central bankers'speeches its output and unemployment gaps are more or less closed. and the recently announced tax cuts could end up boosting aggregate demand beyond the productive capacity of the economy. the structural factors could well be having a β one - off β effect on prices, rather than a continuing dampening impact on inflation. the disinflationary effects of globalisation may not persist for much longer. the world has already globalised considerably over the last two decades. with populist pressures, it is unlikely the trend will continue at the same pace. technological change may still have some legs to run and its disinflationary effects may persist for a while longer. but will they be strong enough to offset the short - term inflationary pressures from tightening cyclical conditions? so what happens if inflation returns sooner or comes in higher than expected? central banks will obviously have to tighten monetary policy faster and by more. that in itself should not derail economic growth as long as the tightening is done judiciously and credibly. no central bank wants to cure inflation by creating a recession. but monetary policy tightening has always been a tricky business fraught with risk. more so now, with the economy attuned to a prolonged period of very low interest rates for such a long time. an increase in interest rates could put considerable strain on debt service ratios and lead to sharp cutbacks in household and corporate spending. for investors, inflation is the biggest bear to watch because monetary policy could tighten at a quicker pace than expected by the markets. markets are currently pricing in only about three fed rate hikes to end - 2019, so it may not take much to unsettle the markets. equities, whose valuations are premised on low discount rates, could sell off in a hurry. β mama bear β - protectionism let me now turn to β mama bear β protectionism. and let us not take a hibernating bear for a dead one. this is a bear that may not wake up for a very long time, maybe never. but if it does, it could be ferocious. protectionism was the biggest fear this time last year. there were populist backlashes against globalisation, represented | most vividly by the results of the brexit referendum in the uk and presidential elections in the us. the great relief of 2017 was that this risk did not materialise sufficiently to threaten the global economy or financial markets. but globalisation continues to face challenges. the wto ministerial meeting last month ended inconclusively. 4 / 7 bis central bankers'speeches the us pulled out of the trans - pacific partnership ( tpp ) early last year and has threatened to leave nafta. in europe, the risk of a hard brexit is not trivial. if negotiations break down, both the uk and eu will bear high disruption costs. protectionism can do much harm to the global economy because its reach extends beyond the flow of goods and services, to the flow of capital and technology. large countries have been toughening restrictions on foreign acquisitions and flow of technologies. the us committee on foreign investments objected to a record number of requests by overseas investors in 2017. the eu is planning to implement a screening framework for cross - border acquisitions. us tax reforms may potentially have adverse consequences for international trade and investment flows. the finance ministers of france, germany, italy, spain and the uk have written to the us, warning that some provisions of the us tax cuts and jobs act may contravene international trade agreements and tax treaties. for example, a 20 % excise tax could be imposed on payments an american company makes for buying goods or services from its foreign subsidiary. we will do well not to get complacent about the return of β mama bear β because the underlying causes for populist anger and support for protectionism are deeply rooted. income inequality in many advanced economies remains wide. according to research by mckinsey, two - thirds of households in the us and western europe have experienced stagnating or falling real income between 2005 and 2014. trade and immigration are the obvious scapegoats for voters frustrated by the stagnation in living standards. the risk remains that some countries may erect trade and investment barriers and others may do so in retaliation. a protectionist spiral will almost certainly derail the growth momentum, not just for 2018 but beyond. β baby bear β - financial instability and finally, the β baby bear β of financial instability. a financial crisis is a sure way of thwarting economic growth, as we saw nine years ago. what is the risk now? from one perspective, the wide - ranging post - crisis regulatory reforms have made the | 1 |
nestor a espenilla, jr : turning vision into partnership speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the awards ceremony and appreciation lunch, manila, 11 july 2017. * * * pdic president roberto tan, national statistician lisa bersales, members of the monetary board, sector heads, fellow bspers, former central bank governor jaime c. laya, guests, a pleasant good morning to all of you. magandang umaga especially to our stakeholders and awardees. every year for the last fourteen ( 14 ) years we at the bsp have held this annual ceremony traditionally right around this time : our anniversary month β¦ there is significance in this chosen timing. the message we wish to convey is that, not only do we value you : our stakeholders... more so, we recognize that the bsp would not have achieved all it has if it were not for your partnership. this is why we celebrate with you during our milestone month of july. the theme of our 24th anniversary here at the bsp is β together moving forward : a new season of excellence. β there is a journey implied, and a needed collaboration and cooperation expressed. this theme includes, not just the members of the bsp family progressing onward in unity, but this includes you too, our esteemed stakeholders, whom we honor today. i have been with the bsp β then, the central bank of the philippines β since 1981 β¦ and as a young central banker one of my tasks was to draft technical speeches β¦ so even thirty - six years after, i still have a passion for words. let me focus on this event β s keyword. stakeholder. it sounds quite ominous. its origin is consistent with this sense of foreboding. the word β stakeholder β first appeared in the oxford english dictionary in 1708. it referred to one holding a wager, a bet. thankfully, for us now, the word has evolved into a dynamic β even an exciting and active concept, where speculation has no role. as presently understood, stakeholders are partners and can be involved in the successes of an enterprise, from whose accomplishments they too can greatly benefit. the importance of collaboration and partnerships was stressed by governor amando m. tetangco, jr. in his two ( 2 ) terms at the bsp β s helm β¦ gov. say repeatedly said that in | . these indicators help the bsp craft and assess our policy settings. so as you can see, there are more exciting times ahead, more collaboration planned, and better avenues to make them more successful and productive. we look forward to continuing the journey with you. congratulations to all our stakeholders. mabuhay kayo. mabuhay ang bsp. 2 / 3 bis central bankers'speeches mabuhay ang ating bansang pilipinas! 3 / 3 bis central bankers'speeches | 1 |
potential, so it is critical for the federal reserve to bring inflation back down to our goal. we are firmly committed to doing so. 1 / 4 bis - central bankers'speeches shifts and realignment those who have been following my speeches lately will know that i've been quite devoted to a recurring theme : using the layers of an onion to describe inflation. 1 but with the new year, i thought i would switch gears. i didn't have to look too far, because the mechanism of shifting gears is exactly what's going on in the economy. it also explains the effects that monetary policy is having on the economy and how that's helping to bring inflation back down. during the pandemic and its aftermath, we saw an enormous swing in demand, away from services like travel and entertainment and toward goods and housing, as people adjusted to work from home and avoided contact - intensive activities. more recently, we are seeing a rotation in demand from goods back into services. but through all these shifts, overall demand has remained very strong and has far exceeded supply. this misalignment of supply and demand is true for the labor market as well. although several indicators of labor demand - such as job openings, quits, and hiring - have stepped down from their very high levels of the first few months of 2022, they show that demand still far exceeds available supply. and the unemployment rate of 3. 5 percent is historically low. the same dynamics play out in the federal reserve's second district, the region that the new york fed represents. our regional business surveys indicate that activity is slowing, with an especially sharp decline in the manufacturing sector. that said, many businesses continue to add staff, and consumer confidence is strong. overall, inflationary pressures in the region are moving downward, but are still quite high. gears are turning with inflation running persistently above its longer - run goal of 2 percent, the fomc has taken strong actions to align demand with supply in the economy and bring inflation down. you can think of monetary policy as a large gear that is connected to smaller gears representing different sectors of the economy. but not all gears move at the same pace. some turn more quickly, while others are slower, meaning they experience longer lags between policy actions and effects. these effects of monetary policy are showing up in prices at different speeds. for example, the prices of globally traded commodities have already declined and are now well below levels we saw earlier last year | . this reflects in part the effects of lower demand resulting from tighter monetary policy here and abroad. similarly, prices for many goods have started to plateau or even decline, reflecting weaker demand, lower import costs, and an easing of global supply disruptions that developed during the pandemic. for example, prices of used cars - a big driver of inflation during the first year of the pandemic - have been retreating toward more normal levels over the past few months. the combination of the general rotation of demand from goods to services and the effects of higher interest rates on demand for goods should contribute to further downward pressure on the prices of many goods this year. 2 / 4 bis - central bankers'speeches one gear that is moving at a far slower pace is the price of non - energy services. the ongoing imbalance between supply and demand in this sector continues to contribute to inflationary pressures. but there is some good news on this front as well. one of the biggest drivers of the rise in inflation for services has been shelter costs, which soared as demand for housing increased during the pandemic. recent data for newly - signed leases indicate that the tide is turning on rents, and we should see shelter cost inflation start to slow later this year. that said, inflation for other services besides shelter has remained high, and this gear is only starting to turn. inflation expectations represent another gear that is turning at an encouraging speed. longer - run inflation expectations remain remarkably stable at levels consistent with 2 percent inflation. 2 after rising moderately last year, households'three - year - ahead inflation expectations are now back to where they were in january 2021, and one - yearahead inflation expectations have started to reverse the rise seen over the past year and a half. 3 the fomc's policy actions with inflation still high and indications of continued supply - demand imbalances, it is clear that monetary policy still has more work to do to bring inflation down to our 2 percent goal on a sustained basis. at its meeting last month, the fomc raised the target range for the federal funds rate to 4 - 1 / 4 to 4 - 1 / 2 percent, the seventh consecutive increase. the fomc's december 2022 summary of economic projections showed that a large majority of participants saw the federal funds rate reaching a level between 5 and 5 - 1 / 2 percent by the end of this year. the fomc statement indicated that " the committee anticipates that ongoing increases | 1 |
robert holzmann governor oesterreichische nationalbank introduction vienna, november 26, 2020 globalization and pandemics β pol antras global economy lecture 2020 ladies and gentlemen, on behalf of the vienna institute for international economic studies ( wiiw ) and the oesterreichische nationalbank, i welcome to this year β s global economy lecture, which is the 25th of its kind. we have a very distinguished speaker today, professor pol antras from harvard university, who is joining us from cambridge, massachusetts. a very warm welcome to you, professor antras, we are very honored that you are taking your time today, on thanksgiving day, to present your views on β globalization and pandemics. β the global economy lecture series has existed since 1999, but this is the very first time that it takes place online. while we would certainly have preferred meeting you all in person at the oenb premises in the usual setting, with a reception and informal networking after the lecture, i have to admit that the new format also has its merits. pol antras would probably not have agreed to fly over to europe for a lecture on thanksgiving day. and, besides, a physical meeting would probably not have attracted as many participants as we can welcome today. over the twenty years of its existence, the global economy lecture has hosted a number of very distinguished speakers, and it has featured all the major trends in international economics, and in particular in international trade and global value chains : from the transition process in central and eastern europe or in asia to the effects of major trade agreements, the emergence of multinational enterprises, and the digital revolution of production processes. today β s lecture is going to cover another new phenomenon in global trade : the covid - 19 pandemic has led to a temporary collapse of world trade links. supply disruptions occurred mainly at the beginning of the crisis. demand increased markedly for a number of specific items, e. g. health products and it equipment. these goods are produced in highly organized global value chains, which were subject to severe disruptions due to restrictions in transport and labor mobility. industries with shorter safety stocks were hit hardest. more recently, the largest problems have resulted primarily from weak global demand for final goods. publisher : oesterreichische nationalbank communications division otto - wagner - platz 3, 1090 vienna the pandemic itself is a tail event, with enormous short - to medium - term implications for global growth and trade. but we would | ##os. the conversion of mortgages into mortgage - backed securities ( mbs ) and collateralized debt obligations ( cdos ) may seem complicated but in reality these are fairly straightforward transactions. to provide the committee a rough schematic, we start with those who take out amortizing housing loans from banks. for the bank, this is a long - term asset which ties up resources and is prone to market and credit risks. to mitigate these risks, the bank may pool the amortizations expected from the mortgage and create a security which can be sold to investors. the coupon payment of the new security is funded by the amortizations of the housing loan. this security is referred to as the mbs and the transaction is oftentimes is handled through a special purpose vehicle. to the bank, the effect is an improvement in the asset quality of its balance sheet because the traditional mortgage risks are mitigated. investors welcome this because it affords them another instrument that they can consider for their portfolio. the spv earns from being a conduit while the mortgagor is unaffected because he / she has already received the proceeds from the original loan. taking this a step further, collateralized debt obligations may also be created and likewise offered to investors. there are technical differences between cdos and mbs but for purposes of situating the current market conditions, it is perhaps sufficient to suggest that the two instruments are similar in that they pool underlying assets and sell an instrument that represents these underlying assets. the effective fed funds rate subsequently reversed course. housing prices also began to fall significantly and mortgage defaults began to rise. since the home was typically the collateral of the mortgage, falling housing prices also eroded the value of the collateral supporting the loan. in the past, a loan default would have simply meant foreclosing on the home. however, since the mortgage was already β converted β into a security ( mbs and cdos ) held by investors worldwide, the combination of rising mortgage defaults and falling collateral values translated into losses for the mbss and the cdos ( either through outright defaults, missed coupon payments and loss in market value of the security ). these factors sparked the widespread dilemma that we now find ourselves in. if memory serves us right, it was in february 2007 that the term β subprime mortgage β was publicly alluded to in a disclosure by an international financial institution. the subprime difficulties began to take explicit shape as | 0 |
steps to make monetary policy more accommodative? first, because the trend of inflation changed. it is not clear to us at this point if it is noise in the data β loud noise, to be sure, but noise β or a fundamental decline in inflation. however, it is clear to us that we have to continue to strive and raise the inflation rate toward the midpoint of the target range. second, the risks have intensified. should the risks be realized, we will want to act in a timely manner, in order to prevent to the extent possible a slowdown in economic activity. how will we do that? we have a range of tools, and they are all on the table. there are the standard tools, and we are refreshing the toolbox regarding tools that have not been tried here, or have not been used for a very long time. and one more comment on monetary tools β in recent weeks the issue of the foreign exchange market has been in the headlines. therefore, maybe this is the time to clarify β i did declare that in principle i would prefer that the exchange rate would be set by market equilibrium, and that was the also the bank β s approach before i took office. practically, there is a window of exchange rates that we view as consistent with price stability and economic activity, when we take into account all the factors and variables in the economy. the window is dynamic, and depends on parameters that change all the time, which naturally should not be disclosed. from this perspective, the bank of israel policy on this issue could be called β constructive ambiguity ", which is the appropriate policy for a small economy such as israel ; and therefore, if and when the bank of israel will assess that the exchange rate has materially deviated from the window that we defined, we may very well intervene in the market β and no one will receive a warning letter from us beforehand. thank you! 4 / 4 bis central bankers'speeches | . a large number of financial entities, including those not obligated by law, joined the system and began reporting to it and receiving data from it. we also set out the separation of two credit card companies, while ensuring that the parameters of the separation support the goals of the reform. i am also happy to update that the financial stability committee has already met several times and is making progress with the formulation of its tools and work procedures. we presented to the government an extensive and clear analysis on the need to carry out fiscal adjustments. in parallel, we presented a plan to improve the standard of living and productivity in the economy β with an emphasis on operative policy proposals. we are not blind to the housing issue, and its impact on the young generation. therefore, i asked the research department to begin formulating operative recommendations in the housing area, in order to help the new government identify the order of priorities and to act to remove obstacles that weigh on increasing the supply of homes. in a joint initiative with the imf, we are developing a new macroeconomic model, which takes into account two sectors that to date have not been included in the common models β the housing market and the financial system. recall that these two were among the main factors in the 2008 crisis. the model will serve us in macro assessments but will also contribute to the work of the financial stability committee. in another joint initiative with the imf, we are working on an international conference on cyber risk in the financial and banking system, with the understanding that looking forward, this is one of the main risks to financial stability. given the changes in the global economy, and with eyes to the future, i initiated a strategic process to define the bank β s goals for the coming years. the entire management has been enlisted in this process, which is being conducted by the director general of the bank, hezi kalo. it is not straightforward to carry out such a process in the midst of the ongoing work that is always very intensive, but it was clear to me that we must look beyond the immediate issues. therefore, we added a slogan to the process β β working today, thinking about tomorrow β. i asked the members of management to think outside the box, and to try to identify the important challenges that the bank of israel and the israeli economy will deal with in the coming years. to that end, we set up several teams, with the participation of tens of staff and managers, in all the relevant areas : the first | 1 |
test frameworks, but also the sustainability of their income sources vis - a - vis the green transition. let me emphasise that in this exercise we define resilience very broadly. we test the capabilities of banks to analyse, assess and respond to the consequences of climate - related and environmental stress in both a quantitative and qualitative fashion. what i call a narrow stress test β i. e. the typical number - crunching to assess the impact of physical and transition stress on capital and income β is only one part of the overall exercise. at this stage, the fact that banks provide proof of their climate stress testing capabilities is as important as the results of the test. the results from this stress test will complement the information from the thematic review, in which we will assess the evolution of the soundness, effectiveness and comprehensiveness of banks β c & e risk management practices, as well as their ability to steer their c & e risk strategies and risk profiles towards the targets they set forth in their action plans. i will now delve a little deeper into this exercise. thematic review on climate - related and environmental risks a year has passed since banks completed their self - assessments and drew up their action plans. so, where do banks stand in terms of their alignment with the ecb β s supervisory expectations on managing c & e risks? this is the question the ecb β s thematic review on c & e risks seeks to answer. the thematic review is being carried out jointly by the ecb and the national competent authorities and assesses 107 significant banks and 79 less significant banks. truly all of european banking supervision is pitching in β supervisors from the ecb and the national competent authorities are working together to ensure the consistency of the supervisory approach as well as the outcomes of the exercise. this broad scope and our close cooperation have been incredibly enriching, as they have enabled us to actively share our knowledge and experience and to learn from each other β s practices on a daily basis. while the ultimate objective is for all banks to be fully aligned with our supervisory expectations, the thematic review is intended to be a learning exercise β not just for supervisors across europe, but also for the banks. this is why we have made a point of sharing good practices we have observed β so that banks can draw inspiration and push forward. new supervisory tools are being developed as banks step up their modelling and management of c & e risks. there is now a common understanding that these risks are a fundamental part of | is vitally important. thank you. buena suerte. 1 / 1 bis - central bankers'speeches | 0.5 |
to 15 percent in december. correspondingly and as appropriate, commercial bank prime lending interest rates mirrored the bank rate adjustments ; in addition, the management of excess bank liquidity reinforced the policy stance. nevertheless, high inflation resulted in lower real interest rates, some of which, unfortunately, became negative in real terms. with respect to the bank β s outlook for inflation for this year and a reasonable period ahead, both domestic and global inflation is expected to abate, as a result of lower economic activity and subdued demand. commodity prices, including the cost of oil, are likely to be low, and world inflation is forecast to decrease from 6. 4 percent in 2008 to 3. 1 percent in 2009. in south africa, inflation is expected to decline to 5. 5 percent in 2009, and fall within the 3 - 6 percent target range. therefore, foreign prices will dampen domestic inflation. since the bank β s inflation objective is 3 - 6 percent and trading partner countries β inflation is forecast at 3 - 5 percent, the downward crawl of the pula should be marginal in 2009, and the real effective exchange rate should be stable. overall, economic performance is expected to slacken significantly, due to the depressed mining activity. it is also anticipated that despite the decline in government revenue, due to a fall in mining production, public spending will increase in support of economic growth. nevertheless, it is estimated that output will be below trend, particularly in the short term. this should put downward pressure on inflation. in this environment, it is unlikely that increased government spending will be inflationary, particularly in the absence of a public sector wage increase. however, it is worth mentioning that any large increase in administered prices, such as electricity tariffs and botswana housing corporation rentals, would be inflationary. be that as it may, the probability is that price increases will be subdued in 2009 compared to 2008. it is, therefore, anticipated that, by the end of the year, inflation will be closer to, if not within, the medium - term objective range of 3 - 6 percent. honoured guests : you may very well ask : what about the monetary policy stance in 2009 in the circumstances! well, we at the bank consider that monetary policy action this year will take into consideration the following scenarios : first, the increase in government spending is unlikely to be inflationary ; second, the exchange rate is expected to be stable ; and third, it is hoped the inflation trend will continue to be downward. these developments | of responsibility, and in a good number of financial and non - financial businesses, disregarded these cardinal guiding principles of good corporate governance and conveniently forgot that what is legal is not necessarily ethical. in the end, the financial and economic structure could not bear the weight of accumulated lapses ; so, it collapsed. while all this is now water under the bridge, it has been recognised in some quarters that the international accounting standards contributed more than their fair share to the financial crisis. it is pointed out that one new standard abandoned the traditional prudent principle of historical asset valuation and replaced it with a highly subjective and pro - cyclical β fair value β concept. as a result, brokers, analysts and investment bankers abused the standard. the upward movement of stock prices immediately inflated balance sheets which, in turn, further inflated the asset price and, when the economic downturn set in, the bubble eventually burst. it was known that the paper profits resulting from inflated asset book values could not be realised ; and yet banks and other non - bank institutions took inordinate debt issuance risks. in addition, the β fair - value β principle was not much understood by the market, and was not transparent. in the event, balance sheets were hardly a useful basis for decision - making by economic agents. the far reaching economic and social consequences of this accounting practice are now a matter of record. distinguished ladies and gentlemen, it has been said that war is too serious a business to be left to the generals only. likewise, it is now widely recognised that accounting is too important a profession to be left to accountants only. indeed the united states of america and the european union recently took measures to β soften β or dilute, as it were, the deleterious effects of β fair - value β accounting practice in financial institutions. another emerging change is the call for more disclosures in accounting standards with which those of us outside the profession are grappling, obviously with the helping hand of accountants. long gone are the days when accountants confined themselves to the boring ivory tower of β number crunching β or, as at times pejoratively referred to, β bean counting β. in fact, it has been said that accounting has now entered a golden age ; an age of the changing role of the accountant ; an age of wide - ranging roles that include professional business advice, planning, reporting, identification of value drivers and risk mitigation. in particular, it is increasingly desirable that the | 0.5 |
declined. see gordon, r. j., ( 2016 ), β the rise and fall of american growth : the u. s. standard of living since the civil war β, princeton u. p. and goodhart c., p. pardeshi and m. pradhan, ( 2015 ), β workers vs pensioners : the battle of our time β, prospect magazine, december. 3 adam, k and j. zhu, ( 2014 ), β price level changes and the redistribution of nominal wealth across the euro area β, journal of the european economic association, 14 : 871 β 906. 4 deutsche bank research, focus germany β difficult times for german savers, 4 october 2016. 5 bundesbank monthly report october 2015. 6 rostagno m., bindseil, u., kamps, a., lemke, w., sugo, t. and t. vlassopoulos, breaking through the zero line β the ecb β s negative interest rate policy, brookings institution, washington dc, 6 june 2016. 7 for a more detailed discussion of the challenges for euro area banks and the interlinkages with monetary policy see praet, p. ( 2016 ), β monetary policy and the euro area banking system β, speech at ecmi annual conference, brussels, 9 november 2016. 5 / 5 bis central bankers'speeches | that households with the lowest net wealth, whose debt payments are higher than their financial income, had an unchanged position. households with the highest net wealth, whose financial income is much higher than their debt, had the most marked fall in income. but while net financial income has fallen for the wealthiest households, the same is not true for wealth. wealthier households tend to have a greater amount of housing wealth and house prices have risen since the introduction of negative interest rates. extrapolating the hfcs forward using changes in equity, bond and house price data shows increases in the net wealth for every wealth quintile. 3 / 5 bis central bankers'speeches the ecb β s policy measures have been unambiguously positive for euro - area governments. germany alone saved approximately 28 billion euro in 2015 in lower than expected interest payments. such payments would ultimately have been financed from lower spending or higher taxes. broadly speaking, the lower income the household sector has received from income payments from government bonds, either directly or intermediated through the banking sector needs to be offset against lower tax liabilities now or in the future. indeed, research by deutsche bank4 shows that the impact of low and negative interest rates on the returns of german household financial assets has been limited so far. this was in part due to revaluation gains on the back of the ecb β s asset purchase programme as well as interest income from investment funds and insurance and pension products. it is still possible for savers to gain positive real returns by holding a diversified portfolio of assets. bank deposits may currently be giving a negative real return, but as research by the bundesbank also shows, negative real returns on bank deposits is the norm, not the exception in germany. 5 but savers are not the only sector potentially affected by negative rates. low and negative rates depress net interest margins for banks since lending rates fall, but there is a floor to deposit rates caused by the effective lower bound. to date, ecb staff estimates show the impact of our policy measures has been net positive for banks. 6 net interest margins have certainly been compressed, but that has been offset by a greater flow of lending as economic activity is higher, lower incidence of non - performing loans, again due to lower servicing costs and greater levels of activity, and revaluations of fixed income portfolios. over time, the revaluation effects will fade and the squeeze on net interest margins may intensify. future expected profitability may | 1 |
a debate which goes well beyond the portuguese situation. in general, the discussion has been rather simplistic. the arguments put forward typically suffer from time consistency problems and rest on a partial equilibrium analysis. therefore it is worth being clear and taking a complete and dynamic perspective. conceptually, the counter - cyclical use of budget policy, in particular by allowing the automatic stabilisers to work, finds broad consensus. it is also undeniable that budget consolidation always means austerity, insofar as it exerts a negative effect on economic activity in the short term. this negative effect will be stronger if the variables that generally dampen the recessive impact of budget consolidation β i refer to the interest rate, the exchange rate and external demand β are constrained in some way. this is the current situation : various countries are undertaking budget consolidation simultaneously ; interest rate levels in the main advanced economies are limited by the β zero bound β ; and the countries most affected by the sovereign debt crisis do not have an independent monetary policy. on the other hand, it is also generally accepted that above a certain threshold, which in the case of the advanced economies is estimated at around 90 % of gdp, public debt levels negatively affect economic growth in the short, medium and long term. this negative effect is explained by three factors : β’ firstly, by the greater uncertainty over macroeconomic developments resulting from unsustainable debt paths. uncertainty leads to postponement of investment projects and a bias towards investments with short - term returns, at the expense of projects bis central bankers β speeches which may potentially impact on economic growth, but whose returns tend to be long - term ; β’ secondly, by the increase in risk premia, which increases the economy β s financing costs and, in extreme cases, results in the interruption of financing ; β’ thirdly, by the fact that high debt levels constrain the counter - cyclical use of budget policy, which in the presence of hysteresis, may have lasting effects on the economy β s productive capacity, due to the depreciation of human capital and insufficient investment in physical capital. here i would like to take a moment to mention the following : it is odd that the intense public debate on the relationship between budgetary policy and economic growth, recently rekindled following publication of a box in the latest edition of the imf β s world economic outlook, has focused only on the size of the short - term budgetary multipliers, when | and a worsening of public debt unsustainability with the consequent further loss of credibility. it is true that in these countries, and this has also been the case in portugal, the high starting position of public debt, the significant stock - flow adjustments and the fact that the budget multipliers are currently higher than usual, are leading to a deterioration in the public debt ratio in the initial phase of the consolidation process. bis central bankers β speeches this counterintuitive and undesirable initial effect will only be reversed by the cumulative adjustment of the primary balance, the reduction of the interest rate ( which in turn depends on the credibility of the adjustment ) and last but not least the increase in the economy β s growth potential. the importance of economic growth for the trend of the public debt ratio may be illustrated with a simple calculation : starting with plausible values for portugal in 2015 and keeping other relevant variables constant, a one - percentage - point increase in gdp growth over the period 2016 β 2020 leads to a debt ratio which is around 15 percentage points lower than the baseline. 2. a growth strategy for the portuguese economy thus we need to refocus the public debate on the portuguese economy. the great challenge we face is to make portugal a more productive country that creates jobs. we all know that adjusting the public and private sector balance sheets is necessary to help the portuguese economy avoid prolonged relative impoverishment. it is necessary, but as we also know, it is insufficient. sustained growth involves rebalancing the allocation of resources towards the tradable sector. the infrastructure and support services are available investments in the non - tradable sector have been made ; these now must be put to work to create capacity in the tradable sector. on this issue, i would like to touch on three points that i will expand on thereafter. β’ first, the potential for growth through exports is very high and the strong export performance over the last two years looks quite promising. β’ second, the private sector will have to be the main driver of the economy β s structural transformation. β’ finally, it is up to the state to take a catalysing role in this structural transformation, namely by providing an institutional framework and macroeconomic conditions that foster high - quality investment and attract highly - skilled labour. i would now like to develop each of these three points very briefly. the potential for growth through exports i will start with growth potential based on exports. contrary to common opinion, the | 1 |
, although time - consuming, is vital to ensuring that our work will bring ongoing benefits not only for our organization, but for the country as a whole. the strategic planning process has actively sought the input of everyone across the central bank, cognizant of the fact that an effective consultation process establishes the solid foundation for the success of the plan over the coming years. we went through a bottom - up planning process, engaging in discussions with all staff of each division and unit to formulate departmental plans. the board then joined the management team to set expectations and provide guidance on the formulation of this important document. i would like to take this opportunity to congratulate the team involved in the consultations, discussions and drafting of the plan, who have ensured that we have a document that serves as a roadmap that will guide our endeavours over the next five years. on this note, i would like to also thank and convey my appreciation to board director, professor william ogara, and the second deputy governor, ms jenifer sullivan, for spearheading the process, ever since we embarked on the strategic review exercise over a year ago. as governor of the central bank, i look forward to the ongoing commitment and professionalism of all staff to continue upholding the credibility of our institution and to achieve the strategic objectives set out in the plan. i also look forward to building on the good collaboration that we have with all our stakeholders represented here today, in taking this plan forward. on this note, i am pleased to announce the official launch of the strategic plan 2019 β 2023 of the central bank of seychelles. thank you. | . many challenges were encountered as the project was rolled out in a shorter timeframe than we normally would, but appropriate steps were taken to ensure 1 / 2 bis - central bankers'speeches its secured implementation. this hybrid model of work is still being implemented, and may remain long term. other initiatives have also been undertaken as we move to modernise our systems and processes. notably, in the third quarter of 2022, we awarded a contract to a firm for cyber forensic services and incident response plan. in addition, at the end of last year, we completed migration to the hyperconverged infrastructure, for which we are currently seeing significant benefits, primarily high availability of the system, prompt deployment of critical security updates and a downward trend in electricity expenses. leading to this event, we have also availed cloud communication technology with appropriate features for such meetings. the ict subcommittee is one of the ccbg cross - cutting enablers whose focus is to support sadc central banks to enhance communication, interaction, and integration. while i have emphasised cyber security, there are other technology risks and opportunities that are evolving in central banking, for which this committee, in particular, has an important role. i believe this meeting will be an opportune time for you ict and business continuity leaders to reflect and address these critical matters, as you strategise on achieving our common goals for the future. another risk that seychelles being a small island state is a strong advocate of since it threatens our existence, is climate change. i want to take this opportunity, on behalf of the central bank of seychelles, to express solidarity with the countries in southern africa affected by the recent floods. on this note, i wish you all successful and fruitful deliberations and hope you make the most of this opportunity for networking and peer - to - peer learning. to our foreign guests, i want to wish you an enjoyable stay on our beautiful shores, as you experience our creole hospitality. thank you very much! merci beaucoup! muito obrigado! 2 / 2 bis - central bankers'speeches | 0.5 |
. naturally the hkma has accorded high priority in our ongoing supervision of banks to ensure that the underwriting standards are upheld all the time. i am pleased to report that the non - performing loan ( npl ) ratio, which is a key indicator to assess the credit quality of the mainland - related lending, has remained at a healthy level of around 0. 7 %, which is just slightly above the overall npl ratio of 0. 56 % for all bank loans. wealth management 11. given the rapid growth and accumulation of wealth in hong kong and the mainland, there is a strong demand for wealth management services. the asset - under - management of private banking in hong kong now amounts to roughly us $ 1 trillion. again, risk management is the key to the sustainable development of the private banking industry. there are two key aspects of risk management in the private wealth business. first, the banks must conduct proper kyc processes, especially on the source of funds and ongoing monitoring of suspicious fund flows for anti - money laundering / counter - terrorist financing purposes. second, the private banks must understand the risk appetite / tolerance level of their clients on the one hand and conduct proper product due diligence before marketing them to clients. if hong kong wishes to remain the preferred centre for private wealth management, we must strive to strike the right balance between the need to accord appropriate investor protection and allow the banks to provide user - friendly and efficient services to clients. to succeed in this endeavour, the regulators must work in close collaboration with the industry to continue adapting the rules and practices to cater for the evolving demands of the customers and the rapidly changing financial markets. there is no magic quick fix available, and i hope that the stakeholders would agree to adopt a truly risk - based approach. what it means is that the regulators should articulate the risks or problems that they seek to address while the industry should consider how proper risk management could be achieved without over - interpreting the regulations or imposing rigid processes that drive away customers. soft power 12. at the end of the day, any premier ifc must possess superior soft power if it wishes to sustain such position. soft power is the sum of a wide range of tangible market infrastructure and intangible strengths. while there must be a robust but market - friendly regulatory regime, we need to have a high degree of professionalism amongst the industry practitioners. fully cognizant of this principle, the hkma has in the last decade or so launched many soft power | until the mid - 1990s. our terms of trade were weakened, productivity developed more weakly in sweden than in other countries and during certain periods investors were concerned over a rapidly growing central government debt. however, developments during the latter part of the 1990s were rather different. the growth in productivity and gdp has been better and the inflation rate as low as the average among our main trading partners, while the central government debt has declined, which should have favoured a stronger krona. nevertheless, the krona has depreciated. a more detailed discussion of the stabilisation policy tools within the emu can be found in the report β stability and stabilisation policy in the emu β ( sou 2001 : 62 ), which can be downloaded from http : / / finans. regeringen. se / propositionermm / sou / index. htm. a small part of the most recent depreciation can be explained by real economy factors : the terms of trade have deteriorated slightly due to falling prices on telecom products ; exports have declined more heavily in sweden than in many other countries following on from the economic slowdown in the usa ; and a falling order intake for exports has created a declining demand for the krona. however, there are also other explanations that are not directly concerned with real economy factors, but have instead been steered by financial flows, i. e. that the krona has been affected by a net outflow of capital from sweden. the development of the krona and the stock market has shown a strong correlation since the beginning of 2000. this is probably connected with foreign investors selling swedish shares in line with falls on the stock market, which has affected sweden more than other countries, as a large part of the stock market value is owned by foreign investors. moreover, swedish investors have bought a large amount of foreign shares, which is probably connected with the new pension system and the freer investment regulations for the ap pension funds. it has been possible for the ap pension funds to increase their foreign exchange exposure, i. e. the percentage of foreign assets, from 10 to 15 per cent with effect from this year. the funds can increase their exposure by five percentage points a year to a maximum of 40 per cent in 2006. on top of this comes a factor that is difficult to explain on the basis of classical exchange rate theories. the krona is affected to a large extent by general unease on the global financial markets. during times of financial unrest the krona | 0 |
euro. the time remaining must therefore be used efficiently. those who have prepared and are ready will also be those who will also derive the greatest benefits. i do believe that we are heading in the right direction. | ##ling not more than 3 percent of that year β s incremental budget appropriations over the previous year. in addition to that, the treasury and the central bank have signed a seven - point protocol to cooperate in fighting inflation. the official aim of this accord is also to give the central bank more independence. so, an important development towards the full independence of the central bank has been initiated, as required in the maastricht treaty. however, we have been in the process of preparing a new central bank law in parallel with the same institutions in the eu. the work has already been done and we are ready to submit it to the government if and when the political environment is appropriate. on the other hand, in addition to the already installed electronic payments clearing system, the cb has signed a contract to develop and install a modern national securities settlement system. the new system will allow the bank to increase the efficiency with which government securities can be traded on the capital markets and ensure that the payments system will match the standards of those in the eu and other western nations. the new system will also be capable of being connected to the - 3target network. at the same time the system will strengthen turkey β s links with the european member countries and will enable it to trade in the same currency as other members, a requirement for participation in the emu. as far as the technical infrastructure is concerned, turkey is ready to integrate itself into the eu. i would like to remind you that turkey has been pursuing a series of liberalization policies since 1980 which are broadly in line with economic tendencies in the world. a wide range of policy measures were put into effect to achieve the restructuring of the economy. changes in exchange rate and trade policies were the main instruments in this process. this program has brought a radical change in turkey β s development strategy by increasing its dependence on market forces. in this context, the fixed exchange rate policy was replaced by the flexible one, restrictive control measures on imports were abolished and protection was reduced gradually. similarly, foreign exchange transactions were thoroughly liberalized, free trade zones were established, foreign investment was further encouraged along with the privatization of public enterprises. as a result of these newly adopted policies, there have been spectacular changes in the turkish economy, with exports and foreign investments having proved to be responsive to the structural adjustment process ; within this process, the turkish lira has become fully convertible and restrictions on capital movements have been effectively removed. even though the liberalization policies were adopted independent of | 1 |
more opportunities in lek crediting. in any case, the process of analysis, assessment, follow up and evidencing the credit quality should be pivotal to relevant structures in banks and should be carried out with maximum seriousness and commitment, conform to supervisory requirements. in this process, cooperation is needed with clients that are facing temporary difficulties. however, in the case of non - performing loans, it is necessary to undertake envisaged and timely actions to execute the guarantees and other forms of collateral, in order to recover maximum values. these actions are important while the bank of albania deems that the crediting activity of the banking sector will continue to face a challenging environment and targeted improvements for the credit quality will require more time to be realised. in conclusion, let me underline that, movement in the above - mentioned directions make a complex process which requires a two - way commitment and cooperation. it is with pleasure that i find that cooperation between us and the banking sector is seeing progress, both in field of supervision and monetary policy implementation. i believe this cooperation will grow among supervisors in the south eastern europe. on behalf of the bank of albania i would like to assure you that we will offer full cooperation in this regard. taking advantage of this opportunity, i would like to underscore that the bank of albania will always respect the public expectations and will fulfil, on time, its legal responsibilities in terms of maintaining the banking system and price stability. i thank you for your attention and wish you success! bis central bankers β speeches | ##ity situation, continues to increase financial intermediation in the economy. allow me now to elaborate on these issues. the primary objective of the bank of albania is to maintain consumer price stability, which in quantitative terms is expressed as the annual increase in prices in the 2 β 4 % range and targeting the midpoint of 3 %. the bank of albania has successfully achieved this objective. different surveys show that economic agents report stable expectations for a low inflation. this consistent profile of our monetary policy has proved particularly useful in the last few years. we have had greater flexibility to implement a prudent easing monetary policy that promotes investment and consumption at home. over a several - month period, the bank of albania has made a number of decisions for cutting the key interest rate in the economy, the one - week interest rate on repurchase agreements, to its record low of 4. 25 %. it is a pleasure bis central bankers β speeches to note that the degree of pass - through to the economy is satisfactory and in accordance with the time lags in the monetary transmission mechanism. during this easing cycle, the annual increase in the inflation rate has remained under control and lek β s exchange rate has been stable. as a result, foreign direct investment and other portfolio flows have been stable, financing the major part of economic agents β current demand for foreign currency. macroeconomic stability is not an exclusive task of the central bank β s activity, but it reflects broadly the sharing of the same principle and harmonization of actions with fiscal policy. financial system β s stability, and the banking sector β s stability in particular, is the second main pillar of our activity. i can state that, in the recent years, we have devoted most of our capacities to meeting this objective. the challenges have been numerous considering that banking activity reflects not only the stability of the institution itself, but also the overall economic conditions. however, in close cooperation with the banking industry, we have succeeded in taking some measures that have enhanced the banking system β s resilience. as a result, despite the slower credit growth rate and lower credit quality, the banking sector continues to generate profit and remains well capitalized and liquid. in march, capital adequacy ratio stood at 15. 9 %, while liquid assets accounted for almost one - third of total sector β s assets. the banking sector has expanded its activity driven mainly by the performance of public deposits, which continue to grow at buoyant rates. we are, however | 0.5 |
unbanked. investors and institutions have shown keen interest in setting up and conducting microfinance services in fiji. i am pleased to note that one such operator with an established presence on other pacific island countries did set up business here in 2010. donors have also indicated their intentions to assist the country to establish the necessary support structures and institutions to develop our microfinance sector. all these are interesting financial sector developments and i would like to acknowledge all our stakeholders for their efforts. challenges in microfinance let me touch briefly on some of the challenges that we face in pursuing the development of financial inclusion and microfinance. institutions conducting financial inclusion and microfinance activities in fiji can face a variety of obstacles in providing effective services to the unbanked. some of these challenges are macro in nature, such as prohibitive economic and investment policies and poor infrastructure. others are more micro and may revolve around the institutions themselves, their approaches towards microfinance and the way they conduct their business. typical challenges institutions may face in extending financial services into the rural and maritime areas in fiji are poor infrastructure, technology reach and transportation. basic things such as proper roads, shipping routes, power, and communication towers may be lacking. these are needed by institutions in order to extend innovative financial services like rural mobile banking, mobile phone money services and eftpos banking into the unbanked areas. tin requirements for all persons will need to be better coordinated so as to ensure the unbanked are conveniently able to open bank accounts. bis central bankers β speeches developing and extending appropriate and sustainable financial services for clients in this sector can go a long way towards building strong relationships, and instilling brand image in the communities, which could reap enormous returns in the long term. objective of the workshop ladies and gentlemen, the theme of the workshop this year is β extending financial services outreach to the next level β. while we may say that much has been achieved over the last fourteen months in the area of financial inclusion and microfinance in fiji, there is still room to do more. we have been clearly thrown a challenge by our theme. as key stakeholders, we want you to realistically review what has been achieved so far, by the national financial inclusion taskforce, the three working groups and by yourselves, that have contributed to this development. by the end of this workshop, we need to come up with recommendations of things that can be taken up in the next phase, by developing strategies and | our unbanked, low income and poor people, as well as the overall benefits to the communities and the economy of fiji. at this workshop, the chairpersons of the respective working groups will fully enlighten you on progress being made in their areas. however, let me share with you some of the exciting developments over the past fourteen months. the commercial banks have now fully established and integrated microfinance into their operations and are conducting microfinance and financial literacy services in villages and communities in the rural and remote areas, as well as in the urban and semi - urban areas. their momentum is being driven by highly capable senior staff, appointed especially for the job. bis central bankers β speeches in 2010 the banks also joined the rbf, micro finance institutions, government ministries, pfip and other stakeholders in three very successful expos held in ba, labasa and suva. it was extremely pleasing to see so many people moving through the various tents and also some of our micro finance entrepreneurs being given the opportunity to show off and sell some of their wares. we will continue the expos through 2011. while on the subject of financial literacy, we were all delighted with the recent launch by the ministry of education of their fined programme, which will see the integration of financial education into the school curriculum from class one to form seven by 2012. not to be outdone in all of this, the two major mobile phone network operators also successfully launched their mobile phone money services in fiji in the middle of last year. we are proud to say that these initiatives are the first of their kind in the pacific region. our example is now being used to launch similar services elsewhere. clearly the mobile money platform can be built on and taken to the next level insofar as banking is concerned. i look forward to these developments. at least one bank has introduced sms banking for its customers, while internet banking, an ever - expanding atm network and eftpos interchange developments, now allow many more banking options over a wider area of the country. there will definitely be some innovative options available as this technology spreads across fiji. the opening of nearly 17000 accounts by one bank for social welfare recipients has been another important inclusion milestone in 2010, enabling participants to access their funds electronically with much greater convenience. i also acknowledge the current efforts by our microfinance institutions to restructure and reposition themselves on stronger platforms which will enable them to effectively and efficiently reach out to their clients and the | 1 |
of very sensitive information, and the disclosure of this information may have severe consequences. although the ecb became aware of the subpoenas being imposed on swift in june 2002, this information could neither be transmitted to third parties nor be made public. moreover, the ecb has no authority to supervise swift with regard to compliance with data protection laws. the difficult questions arising in that regard must be addressed by the relevant data protection authorities, as data protection is a matter which falls outside the ecb β s competence. 3. conclusions let me now conclude my remarks with a brief summary of the main points i have made. first, the g10 central banks, including the ecb, perform the oversight of swift under the leadership of the nbb. as such, our responsibilities are precisely to ensure that swift has an appropriate framework in place to avoid systemic risks. in executing these responsibilities, the central banks β as overseers β rely not on a comprehensive legal framework, including powers to impose sanctions, but on β moral suasion β. second, compliance with the us subpoenas fell outside the context of financial stability and thus outside the remit of our oversight role. third, we did not give swift any blessing in relation to its compliance with these subpoenas. in fact, we could not have given any such authorisation even if we had wanted to, as this fell outside our competence. therefore, swift remained solely responsible for its decisions. the conclusion that swift β s compliance with the us subpoenas was and is beyond the remit of oversight by central banks remained unchallenged in the belgian data protection authority β s report of 27 september 2006. | gertrude tumpel - gugerell : financial integration and stability closing remarks by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at the ecb colloquium β european integration and stability β in honour of ms gertrude tumpel - gugerell, ecb, frankfurt am main, 19 may. * * * it is my great pleasure to close this colloquium after an afternoon of inspiring contribution and presentations, stimulating discussion and a lot of food for thought for the future. it was over 12 hundred years ago here in frankfurt, where charlemagne ( charles the great ) introduced a wide reform of the coin system. at the great synod in frankfurt in 794, he not only harmonized the coins with respect to weight, size and design, he also decided that the new coins would be commonly introduced and accepted, making the β carolingian denar β the common currency and means of payment on both sides of the rhine. an impressive example of early stage financial and monetary integration, which shows that such integration has been preoccupation throughout history. this afternoon β s discussion centred around financial integration and stability, the challenges of this relationship and the broader link to overall european integration. central banks β also the ecb β have always set out the great benefits of financial integration. for very good reasons β i think : an integrated financial market is the basis for a smooth and equal transmission of monetary policy, it increases the efficiency and overall welfare of the economy, and enhances the resilience of the financial system from risk diversification. we have promoted the integration of the euro area β s financial market with concrete action β particularly in the area of payments systems and market infrastructures, in which i had the pleasure to work on for the past 8 years. for example, we created an integrated real time large value payment system, target, which today is the first market infrastructure to be completely integrated and harmonized at the european level. [ this has been instrumental to the integration of money markets and wholesale banking activities in europe. ] we have also supported very much the creation of the single euro payments area ( sepa ) in the area of retail payments and have decided to setup a fully harmonized platform for securities settlements, t2s. but despite our commitment and our support for financial integration, we also had to learn β with the experience of the past 4 years in mind β that financial integration and financial stability do not always | 0.5 |
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