text1
stringlengths 1
3.21k
| text2
stringlengths 1
3.21k
| label
float32 0
1
|
|---|---|---|
finance companies. cyber resilience cyber risk remains one of the top risks which mas is tracking closely. the incidence, scale, and complexity of cyber - attacks continue to mount. recent attacks on major organisations globally such as colonial pipeline, microsoft and accellion, are strong reminders that the fallout from a cyber attack can be far - reaching. there are two cyber threats which the financial sector needs to pay keen attention to. the first is ransomware attacks where the modus operandi has become more threatening. in addition to corrupting a victim ’ s data using crypto - ransomware, attackers are now exfiltrating information from their victims. 6 / 9 bis central bankers'speeches mas has asked financial institutions to review the adequacy of their internal it controls, as well as incident response and business continuity plans to fend against the latest ransomware threats. second, cyber criminals are targeting major third - party it vendors to amplify the coverage of their attacks. the cyber attack on solarwinds is a powerful illustration of the increased sophistication and persistence of cyber criminals. they are now attacking supply chains to infiltrate the networks and systems of multiple entities. mas has exhorted financial institutions to exercise strong oversight of arrangements with third party service providers, to ensure system resilience and maintain data confidentiality. financial sector performance let me now provide an update on the financial sector. in 2020, the financial services sector 9 grew by 5. 1 % even as the overall economy contracted. in the first half of this year, we estimate the sector grew by about 6 %. growth has been broad - based across the financial services sector. the banking industry has been supported by strong fee income growth. the insurance industry expanded strongly on the back of robust demand for single - premium life insurance products. the payments industry grew significantly as adoption of e - payments gained traction with businesses and individuals moving towards online transactions. assets under management in singapore grew by 17 % year - on - year, to s $ 4. 7 trillion as at end - 2020, driven by strong inflows into traditional and alternative investment strategies 10 as well as valuation gains 11 across major asset markets. the fintech sector has also continued to do well. investments in fintech firms based in singapore reached a record s $ 1. 4 billion in 2020, an increase of more than 30 % from 2019. in the first quarter of this year, fintech companies here already raised more than s $ 650 | by individuals increased to over 20 percent in fiscal 2003, second only to nonresident investors. financial institutions have already started taking advantage of this opportunity. for example, the sales of mutual funds and insurance products through bank branches have increased dramatically over the past two years. the increase may be partly due to deregulation. it may also partially reflect the successful division of labor between banks and providers of these products such as asset management companies and insurance companies, which work effectively to satisfy a wide range of customer demand. furthermore, the government is taking up the challenge to satisfy the diversified investment needs of households by increasing the issuance amount of government bonds that specifically target individual investors. in the retail financial area, from now on various business strategies implemented by financial institutions will emerge following the efforts of the most advanced retailers. in this regard, i emphasize the importance of solidifying mutual trust between financial institutions and households rather than focusing on marketing techniques. if financial institutions can establish solid relationships with households as well as explain to them the risk profile of each product and the effects of diversification and if households can make wise decisions about portfolio management with full understanding of the information provided by financial institutions, this system will lead to a more efficient allocation of resources. from the perspective of consumer protection, financial products are already governed by various regulations. however, solid and well - maintained relationships between households and financial institutions could potentially protect consumers even more effectively than such regulations, and therefore help to promote the efficient allocation of resources. 2. financing next, i will turn to the issue of how to support households to raise funds. in the past, when households in japan needed temporary and short - term funds, they appeared to prefer to withdraw money from time deposits or sell financial assets such as stocks rather than borrow money. this may be partly because the consumer loan market in japan is dysfunctional : for example, there is a substantial divergence between interest rates on consumer loans by banks and those offered by consumer finance companies. such a large gap may indicate the existence of unsatisfied financing demand of households. although there may still be difficulties in risk management of consumer loans as distinct from corporate loans, the law of large numbers is as effective a way as any other to manage credit risks of consumer loans. i do not think there is any problem with the method of risk management. financial institutions are utilizing their extensive branch network to improve their marketing strategies for consumer loans, or strengthening business alliances across different types of institutions in light of the current situation | 0 |
satisfactory proxy for rental costs affecting business, some adjustment for the marginal / average discrepancy may be needed at times when that discrepancy is significant - as it certainly is when one is at or near turning points in the rental cycle. please be assured that i am not criticising the construction of the cpi, which is, so far as i am able to judge, absolutely appropriate in terms of arriving at an overall cost - of - living index, but i do suggest that some qualifications may be needed if it is to be used in other analysis, such as that of business decisions which we are discussing here. let me turn now to interest rates. real rates have been high, at least as measured on the backward - looking basis in slide 4 ( ie nominal rates less recorded inflation over the preceding twelve months ). this is the arithmetic result of nominal rates which are very much dictated by us rates and recent deflation of prices in hong kong. us rates are being held up in part by the extremely buoyant us economy, and you will see from slide 6 that the hong kong economy is out of phase with the us, on the downside, to a greater extent than at any time since our exchange rate link was established. the only comparable divergence was in the 1980s, and that was on the upside, when we experienced - in complete contrast to today uncomfortably rapid inflation and negative real interest rates. but tight monetary policy is being balanced by a more relaxed fiscal stance ( slide 7 ), as defined by the size of the budget balance relative to gdp. this is a reversal of the more common position in hong kong of relatively loose monetary and tight fiscal policy. the chart confirms that historically, as one might expect, there has generally been an offsetting balance of these two policy components. i think, nevertheless, that there is a tendency to exaggerate the tightness of monetary policy at the present time. this happens because of too simplistic an approach to measuring real interest rates and assessing their influence. i can best illustrate this by reference to the illustration in slide 8. as at april last year, 12 - month hibor was 8. 0 %. looking back over the preceding 12 months ( ie april 1997 to april 1998 ), inflation had been 4. 7 %, so at that time ( april 1998 ) the commonplace measure of the real interest rate would have yielded 3. 3 %. a more sophisticated method would have been to take the forecast for inflation over | the three - month libor remaining stable throughout the forecasting horizon. in other words, the forecast shows the development of inflation on the condition that monetary policy is left unchanged. however, monetary policy will certainly need to be adjusted during the forecasting period. the economic environment changes continuously as new disruptions occur, and the national bank responds to these changes in order to meet its objective of maintaining price stability. therefore, it is important to bear in mind that the forecast is made for a three - year period but is valid for only six months at most, i. e. until the publication of the next forecast. the relatively long forecasting period reflects the time lag with which monetary policy measures impact on the price level. we publish our forecast in order to inform the public of our assessment of the inflation outlook, at the time of the forecast, on the basis of an unchanged monetary policy. the publication is a means of making our monetary policy decisions more transparent and easier to understand. i will now make a few remarks about the development of the swiss economy in the year now ending and the coming year. the recessionary trends witnessed across the globe will not leave switzerland unscathed. both this year and next, growth will be considerably slower than we predicted only a short time ago. we expect the economy to go into virtual stagnation in the second half of 2001. overall, the economy will presumably grow by about 1. 5 % in 2001. in line with the development in the major economic blocs, notably exports and capital spending have shrunk drastically, putting a major break on economic growth. although consumer confidence has been dented, consumption has so far turned out to be a cornerstone of growth. the decline in construction investment is also clearly more moderate than the fall in capital spending. we expect the economy to follow a path of muted growth and to perform below its potential until the middle of next year. only the second half of 2002 should see the economy expanding in line with the development abroad. we project average growth of approximately 1. 0 % for 2002. unemployment is likely to climb in the months ahead. we consider the current interest rate level and the existing monetary conditions to be adequate to enable the economy to return to sustainable, non - inflationary growth. our forecasts, however, are fraught with uncertainties. in the aftermath of the terror attacks in the united states, these uncertainties are now particularly substantial. investment and consumption depend on whether market participants have confidence in the | 0 |
bodil nyboe andersen : recent economic developments in denmark speech by mrs bodil nyboe andersen, governor of the national bank of denmark, at the annual meeting of the association of danish mortgage banks, copenhagen, 29 april 2004. * * the danish economy has shown very positive trends in the last decades even though economic growth has been modest recently. various governments have implemented a number of structural reforms since the beginning of the 1980s. as a result, the danish economy is today extremely robust with strong economic fundamentals. the fixed - exchange - rate policy, which was introduced in 1982, has been a cornerstone of this development. however, a sustainable and credible fixed - exchange - rate policy requires that the rest of the economic policy and the structural conditions are in order. in denmark this called for a number of economic reforms that began in the 1980s. the cost - of - living adjustment was abolished and the central - government finances improved. the deductibility of interest payments was restricted and interest taxation reduced. all of these factors contributed to breaking expectations of a devaluation - inflation spiral. however, breaking these expectations took its toll and, as many people in the financial sector may still recall, the years around 1990 were lean years for denmark. on the other hand, these measures resolved some of the structural problems that had burdened the danish economy for many years. since the beginning of the 1990s denmark has seen stable growth with declining inflation, lower interest rates and the accumulation of solid surpluses on both public finances and the balance of payments, as well as gradual expansion of pension savings. in recent years denmark has seen strong growth in real wages, and at the same time danish companies have successfully carried out rationalisation measures. even though unemployment has been increasing for a period of time, unemployment has been low on a european scale in the last 5 - 10 years. this indicates that the structural reforms already implemented in the labour market have contributed to enhancing the flexibility of the danish economy. in international assessments and comparisons it is noted that denmark has successfully applied a long - term and medium - term orientation to its economic policy without resorting to short - term fiscal - policy measures. most recently, the imf delegation that visited denmark in march this year described this as follows in their conclusions : “ at the same time, denmark has been well - served by focusing on medium term fiscal targets, and relying on large automatic stabilizers to support demand during downturns. discretionary counter - cyclical policy | negative interest rates have just been a continuation of low interest rates. slide 6 : denmark is an ecb copycat today, nearly three years after the massive inflow of currency, it is clear for most people that denmark is not swiss national bank copycats – we are ecb copycats. if the danish central bank again should be in a situation where highly targeted communication becomes necessary we will consider various options and use whatever it takes to get the message out. side 3 af 4 slide 7 : target groups for the communication nowadays our communication is not only targeting people in the financial markets. we have started a journey on which we aim to communicate much broader and wish to reach all danes in an effort to pave the way for their understanding of why there is a central bank and what we are doing. we are not publishing traditional quarterly review anymore. the publication has been cut into slices and is now released on an ongoing basis. we are now working with five different target groups : the professionals, the public servants, the academic community, the journalist and the politician. publications are edited and targeted to audience groups. next step is the public and we expect to use the 200 anniversary of the danish central bank next year to reach out to the danes. we have so far received positive response to the new strategy. are we going to see a central - bank governor using twitter or facebook to announce personal and professional matters? i'm not able to answer that question. what i know is, that danmarks nationalbank will use all appropriate communication channels but from my point of view too much information could devaluate the message. communication is a powerful tool but it should be used in a clever way and with caution. thank you for your attention! side 4 af 4 danmarks nationalbank central bank communications conference lars rohde, chairman of the board of governors, 15 november 2017 never explain – never apologize governor montagu norman bank of england ( 1920 - 1944 ) sharp increase in foreign exchange reserves in 2015 snb abandon the floor of the swiss franc can he make it? heads or tails? denmark is an ecb copycat note : key policy rates. target groups for the communication danmarks nationalbank thank you | 0.5 |
euro, ii including through regular exchanges with consumer associations, merchants and financial players, and the testing of dedicated prototypes. iii to put it in a nutshell, the e - euro will be a digital banknote, or ‘ cash + ’. naturally, it will feature the same characteristics as existing cash. notably, it will ensure privacy, iv with the offline functionality ensuring the highest level of confidentiality ; it will be the safest of assets ; thanks to its likely legal tender status v, it will be accepted everywhere across the euro area ; and its basic functionalities will be free of charge for individuals. vi but ‘ cash + ’, bringing significant advantages compared with banknotes : it will allow each and every one to use central bank money in e - commerce, in remote peer - to - peer payments, as well as for conditional payments. i think it ’ s our duty to build this capacity for our fellow citizens, but it will be their freedom to use it. the digital euro will offer european citizens an additional option in the way they make purchases and transactions, and they will determine the pace of its development, and its ‘ market share ’. a digital euro will not replace physical cash or other forms of money, and this brings me to this alleged ‘ competition ’ issue. money is and will remain a public - private partnership for a long time now, money has been a public - private partnership. we need the skills of both sides : the agility, innovations, customer relations of commercial banks ; and the trust and stability guaranteed by central banks. yes, digital commercial bank money already exists, and is usually regarded as safe as central bank money ; it will remain very significant in payment amounts, and you may possibly develop tokenised deposits. but the trust commercial bank money inspires is not only due to each bank ’ s private signature ; it ’ s anchored by its full equivalence and permanent convertibility, 1 : 1, to the public money issued by the page 5 of 6 central bank. loosing this public anchor – in a world of digital payments without cbdc – would sooner or later mean undermining this private trust ; think of the 19th century in the united states, before the fed, where there were regularly confidence crises. to make it crystal - clear, a digital euro will not lead to disintermediation. it will be distributed through banks : we central banks have absolutely no intention to open private accounts. in response to some other worries, there will | make 1 / 2 bis - central bankers'speeches reforms a reality. the symposium will discuss both immediate issues, such as strengthening external resilience, as well as long - term structural issues such as our labour market and the role of finance in our economy. ladies and gentlemen, sasana symposium is more than just keynotes and in - depth, technical discussions. the symposium is also about demonstrating how reforms and policy are more than just abstract concepts and ideas, about how reforms can make a positive impact in the lives of malaysians. for example, itekad, a social finance programme which we launched at the height of the pandemic has been making inroads. we're happy to share today that over six thousand small and micro businesses have benefitted from itekad, with them seeing almost a 90 % increase in monthly sales and creating job opportunities in their communities. i would like to invite you to drop by the itekad marketplace – just outside our museum and art gallery – to meet microentrepreneurs that have gained from the itekad programme. itekad is a human example of how the public and private sector can come together to make a meaningful, lasting impact in the lives and livelihoods of malaysians. ladies and gentlemen, to conclude, sasana symposium was originally conceived as a platform for discussing key issues and research of our flagship publications – the annual report, the economic and monetary review and the financial stability review. our experience last year proved that this was an impactful occasion for us to engage the public in meaningful dialogue, and exchange perspectives on our work and thinking to promote monetary and financial stability for sustainable economic growth in malaysia. my hope is that you will leave sasana symposium with a better appreciation of what we do, and your part in helping us secure a better future for all malaysians. thank you. 2 / 2 bis - central bankers'speeches | 0 |
is disorderly. that is why innovators are often referred to as “ disruptors. ” so, what makes climate - related innovations more disruptive or less predictable than other innovations? like the innovations of the automobile and the cell phone, i ’ d expect those stemming from the development of cleaner fuels and more efficient machines to be welfare - increasing on net. so where does that leave us? i don ’ t see a need for special treatment for climaterelated risks in our financial stability monitoring and policies. as policymakers, we must balance the broad set of risks we face, and we have a responsibility to prioritize using evidence and analysis. based on what i ’ ve seen so far, i believe that placing an outsized focus on climate - related risks is not needed, and the federal reserve should focus on more near - term and material risks in keeping with our mandate. - 10 i ’ d be happy to take a few questions. - 11 - references acharya, viral v., timothy johnson, suresh sundaresan, and tuomas tomunen. 2022. “ is physical climate risk priced? evidence from regional variation in exposure to heat stress. ” working paper 30445. national bureau of economic research. https : / / www. nber. org / system / files / working _ papers / w30445 / w30445. pdf. bernanke, ben s. 1983. “ non - monetary effects of the financial crisis in the propagation of the great depression. ” the american economic review 73 ( 3 ) : 257 – 76. bernanke, ben s., mark gertler, and simon gilchrist. 1999. “ the financial accelerator in a quantitative business cycle framework. ” handbook of macroeconomics 1 : 1341 – 93. https : / / www. sciencedirect. com / science / article / pii / s157400489910034x. bickel, kristian, sarah n. hamerling, and donald p. morgan. 2021. “ how bad are weather disasters for banks? ” staff report 990. federal reserve bank of new york. https : / / www. newyorkfed. org / research / staff _ reports / sr990. html. diamond, douglas w., and philip h. dybvig. 1983. “ bank runs, deposit insurance, and liquidity. ” journal | prices can fluctuate wildly at any time for no or little reason, then over time investors could require higher haircuts and regulators could see a need for even more hqla. how can we protect and strengthen the structure of these markets? in tomorrow ’ s session, several panels will discuss market structure, including potential risks to clearing and settlement infrastructure, and ask how current structures might be adapted to provide greater liquidity and better guard against liquidity risk. i would point to four important trends that have been driving the changing structure of these markets : first, advances in computerized trading and high - speed communications and the entry of new players using these technologies ; second, the intensified prudential regulation and supervision of the systemically important banks that are the largest dealers ; third, the banks ’ own re - evaluation of risk in the wake of the financial crisis ; and fourth, the increasing importance of mutual funds and other asset managers. while markets will always continue to evolve, there is no reason to think these trends will suddenly reverse. in all likelihood, they are here to stay. although post - crisis regulatory changes have likely increased the costs of market making, markets were already undergoing dramatic changes well before the crisis. high - frequency and algorithmic trading firms already accounted for a large and growing share of transactions in the interdealer market, altering the speed and nature of market making. as traditional dealers have lost market share, they have sought to remain competitive by internalizing a greater share of their customer trades, finding matches between their own customers and keeping those trades off the public interdealer markets. but internalization does not eliminate the need for a public market, which is where price discovery mainly occurs. dealers need to place the orders that they cannot internalize onto that market, and at times of market stress such as on october 15, they will likely need to put most of their orders onto the public market. the current structure of the trading platforms in both the cash and futures markets is based on a central limit order book, which provides for continuous trading but also provides strong incentives to be the fastest. there may be adaptations of this market structure that could give greater emphasis to liquidity provision rather than a never - ending competition for more speed. some of the panelists we ’ ll hear from tomorrow argue that it may be possible to do so, for example by considering frequent batch auctions as an alternative to the central limit order book, or by placing minimum time limits on orders. ideas | 0.5 |
a large proportion of their population access to the most basic necessities, let alone education, health and financial services. an integrated and balanced development strategy makes several demands of the financial system. this, in turn requires a careful balancing between rapid expansion in capacity and the kinds of products and services offered on the one hand and safety and prudence on the other. this balancing act, at one level common to emes, but at another, differentiated by the vastly different conditions within the emes themselves may not be amenable to a reasonable set of common standards, except at a lowest common denominator level, which is then unlikely to serve the purpose of achieving a safe and secure global financial system. the financial safety nets issue is also one on which a distinct eme perspective may emerge. the difference in concerns between advanced and emerging economies is heightened in the current environment in which increasing liquidity in some advanced economies is driving possibly short term capital flows into emerging economies. in such a situation, self - insurance needs to be given due consideration. when economic fundamentals are sound, would reserves not constitute the most effective way of dealing with reversals in short - term capital flows? if self - insurance were done away with, reliance on external insurance mechanisms might conceivably have two negative implications. one, procedure and due diligence might take time, thereby diluting the effectiveness of the safety net. two, global investors may suspect that something is fundamentally wrong, aggravating the pressure of exit. i have used the issues of financial regulation and safety nets to illustrate my point about the balancing act that emes need to perform between addressing domestic priorities and aligning with a meaningful set of global standards or mechanisms. however, this can be taken as a more general issue for emes as they engage in global forums on a whole range of issues on which the benefits of integration have to be viewed in conjunction with the pursuit of domestic policy objectives. essentially, from the emerging market perspective, the value of the g20 process lies in how effectively it is able to accommodate this need for balance. as i have tried to argue through this presentation, both on short - term and long - term issues, the differences and divergences between countries in the group are wide and, perhaps, inevitable. this puts the group at an immediate disadvantage when it comes to addressing issues, because, given the differences, even agreeing on a common objective, let alone a common approach may be a difficult, if not impossible | , despite being affected by bad weather conditions such as typhoons. confidence indicators related to private consumption also have been picking up ( chart 5 ). based on this situation, private consumption is expected to increase moderately on the back of the continued steady improvement in the employment and income situation. b. the current situation of prices and their outlook next, i would like to touch on price developments. the year - on - year rate of change in the cpi for all items less fresh food has been slightly negative due to the effects of the decline in energy prices ( chart 6 ). meanwhile, that for all items less fresh food and energy has remained positive for exactly three years since october 2013. this is the first time since the late 1990s, when japan's economy fell into deflation, that the inflation rate has been positive for such a long period. however, it has slowed recently. this is mainly attributable to the fact that prices, such as for durable goods, have declined due to the effects of the past appreciation of the yen, and that firms'price - setting stance has become slightly cautious, reflecting weakness in private consumption in the first half of 2016. the year - on - year rate of change in the cpi for all items less fresh food is likely to be slightly negative or about 0 percent for the time being, and increase toward 2 percent in the second half of the projection period - - that is, through fiscal 2018. the following four points can be highlighted as the background to this outlook. the first point is with regard to developments in energy prices, such as crude oil prices. the downward pressure of the past decline in energy prices on the cpi is expected to dissipate going forward and the negative contribution of energy items is estimated to reach around 0 percentage point in early 2017 ( chart 7 ). therefore, the cpi for all items less fresh food - for which the year - on - year rate of change is currently minus 0. 5 percent - - is expected to reduce its rate of decline rapidly and turn positive. the second point is that, as i have explained earlier, private consumption has bottomed out recently on the back of improvement in the employment and income situation, and is expected to increase moderately. with such developments, firms'price - setting stance is expected to revert to raising prices. the third point is that labor market conditions are expected to further tighten, exerting upward pressure on wages accordingly. in this context, how the labor - management wage negotiations | 0 |
mr. meyer discusses financial globalization and efficient banking regulation remarks by mr. laurence h. meyer, a member of the board of governors of the us federal reserve system, before the annual washington conference of the institute of international bankers in washington, dc on 2 / 3 / 98. the highly publicized recent events in the world ’ s financial system have served to make certain things abundantly clear. in particular, we now have further evidence that there is a large and growing disparity between the risk management practices of what might be called the “ best practice ” financial institutions and those of their competitors around the globe. this disparity, moreover, runs much more deeply than the weaknesses exposed during the asian financial crisis. in that event, bankers were seen to make the kinds of basic mistakes that have been oft repeated at other times and in other places. for example, loans were made to government - supported enterprises, either at the behest of the government itself or under the assumption that official support would be provided if the loans turned bad. at times, these loans were made to highly leveraged companies whose underlying financial ratios did not justify the origination of the loans on the terms under which they were made. to add insult to injury, the offending banks sometimes borrowed in dollars and lent in their home currencies, without hedging, believing that their government could and would continue to stabilize exchange rates. while these practices are troublesome, i am much more concerned with what i believe is both an exciting and disturbing aspect of the evolution of financial markets. spurred by improvements in computer technology and advances in financial theory - - most notably in option - theoretic models - - new financial products, as well as the markets supporting traditional banking products, are becoming ever more sophisticated and ever more global in nature. while financial innovation and globalization can only be applauded for their salutary impact on market efficiency, they present some difficult problems for market practitioners and, where the practitioners are regulated entities, their supervisors. today, i should like to concentrate on three themes, or principles, related to the evolution of financial markets : first, there exists a significant and dynamic connection running between market innovation and market regulation. financial innovation often occurs in response to regulation, especially when such regulation does not make economic sense. conversely, the evolution of regulation often is spurred by advances in the market. second, the globalization of financial markets means that mistakes in risk management made by one or more significant players in world markets | something nobler for our country. and our country will not, can not and should not be changed by either the imf, the world bank or the european union, but by us – you and me, and mr. vice - president and the ministers – today in their official capacity, and tomorrow as ordinary citizens. the aim of today ’ s launch and cooperation of the un and the nbs is getting the information through to companies operating in serbia about the global compact initiative, the largest global voluntary association dedicated to promoting socially responsible operations. the main reason for our participation in this project is not to support the launching of this initiative, but to learn something new and do something concrete together with the people who care about the future of our country and our planet. cooperation of the public sector, non - government organizations, and companies is not only possible but also indispensable, and i am convinced that much more can be done to the benefit of all the participants. our research has shown that in serbia today there is awareness of socially responsible operations, but more on conceptual level than in terms of concrete projects. what is lacking is the ignition spark, and i sincerely hope that today ’ s meeting will provide just that! there is a proverbial saying in our country that “ anything that can be bought for money is cheap. ” so, in that spirit, it is not only the privatization receipts that matter in the context of foreign direct investments, but also the companies ’ attitude to social responsibility issues which contributes to changing our country for the better. there are many companies in serbia that have not yet had any experience with projects promoting socially responsible behavior, but what matters is their good will to join in. many companies and institutions, including the nbs, are already engaged in many activities that can be defined as socially responsible : waste recycling on the site, free of charge training of the nbs ex - employees, financial support to handicapped children, etc. however, as members of the global compact we shall have the opportunity to share our experiences, to formulate our common platform and to become a part of a bigger family. and finally, let me be explicit : this is a voluntary gathering of people and companies – you have the opportunity but no obligation to join this initiative. you have no obligation but you have an opportunity to give, and give only as much as you think you ought to. you are not pressured in any way ; there is no obligation on your part other than strictly moral, which | 0 |
emmanuel tumusiime - mutebile : the progress made on the introduction of islamic banking in uganda speech by prof emmanuel tumusiime - mutebile, governor of the bank of uganda, on the occasion of eid - el - fitri celebrations at bank of uganda western gardens, kampala, 17 september 2010. * * * your eminence the mufti of uganda, the rt. hon. ali kirunda kivejinja, third deputy prime minister / minister of internal affairs, hon ministers, honorable members of parliament, his worship the mayor of kampala, chief executives of commercial banks, bank of uganda senior management, distinguished guests, ladies and gentlemen, asalaam aleikum, eid mubarak, eid mubarak, eid mubarak! it gives me great pleasure to welcome you to this auspicious occasion when we mark the end of the holy month of ramadan and to celebrate eid - el - fitri. let me take this opportunity to congratulate our muslim brothers and sisters for having been steadfast in committing themselves to fulfilling one of the five pillars of islam by fasting during the holy month of ramadan ; i pray that allah accepts it. i urge all the muslims who observed the fasting to maintain this noble act of worship. the virtues of fasting should be upheld throughout your daily life both at work and elsewhere. at the bank of uganda, we believe that god plays a role in everything we do in executing the bank ’ s mandate “ to fostering price stability and a sound financial system ”. that is why we adopted the culture of starting all our meetings with a prayer led by staff from different religions and denominations to seek god ’ s guidance. we uphold the freedom of worship and no staff is constrained because of religious affiliation or creed and endeavor to accord equal opportunities to all. in this regard the bank hosts the christian community to the christmas thanksgiving we host the muslims to the eid celebrations. let me once again assure you that the bank is committed to hold this eid - el - fitri celebrations every year. allow me to appraise you on the progress made on the introduction of islamic banking in uganda which a number of local and foreign banks have expressed interest. ladies and gentlemen, islamic banking is a system of banking or banking activity which is consistent with the principles of islamic law ( shari ’ ah ). an islamic financial institution ( ifi ) is therefore | hegemony of the dominant reserve currencies. there is a need for greater understanding on both sides. in the meantime, so far as the reserve bank of india is concerned, we will continue to play by the extant rules of the game. 9. central banks have to interact closely with financial markets for transmission of monetary policy impulses. in this context, ensuring a sound and efficient payment and settlement system is 2 / 3 bis central bankers'speeches a pre - requisite. taking cognisance of exponential growth of digitisation and online commerce in india, policy efforts have been directed in recent years to put in place a state of the art national payments infrastructure and technology platform. this has changed the retail payments scenario of the country. regulation and development of our payment system envisages the objectives of safety, security, convenience, accessibility, and leveraging technological solutions to enable faster processing. in order to ensure an orderly development of fintechs and streamline their influence into the financial system, we are now working on guidelines to introduce a ‘ regulatory sandbox / innovation hub ’ within a well - defined space and duration to experiment with fintech solutions. 10. in this high flux and uncertain environment, emes could perhaps be better off by stepping up cooperation on all fronts, while recognising multi - polarity. one area of cooperation could be to put in place an institutional mechanism which balances the concerns of both oil exporting and importing countries to ensure stability in energy prices. emes also need to explore alternatives to reduce dependence on conventional energy sources, and give greater focus on renewables and energy efficiency. the international solar alliance, with its headquarters in new delhi, is a vivid example. it seeks to provide a dedicated platform for cooperation among financial and solar resource rich countries so that the global community benefits from the use of solar energy. 11. in closing, let me say a few words about india. real gdp growth is expected to clock 7. 2 per cent during 2019 – 20, the fastest among large economies of the world, growing by an average rate of around 7. 5 per cent in recent years. inflation has remained below target, averaging 3. 6 per cent for the period under the inflation targeting framework so far ( since october 2016 up to february 2019 ) ; the current account deficit is expected to be around 2. 5 per cent of gdp in 2018 – 19 ; and the gross fiscal deficit has adhered to budgetary targets. 12. looking ahead | 0 |
raise the limits for the issuance of short - term government securities, the t - bills. bundesbank president jens weidmann however goes one step further. he already sees a problem if greek banks extend t - bills, i. e. perform a “ rollover ”. is he right or is he too strict? the ecb ’ s governing council has not yet reached a conclusive opinion on that matter. for me, this is a dynamic process : the more a country – and a banking system – loses market access and the less likely it looks to regain it soon, the greater the risk of indirect monetary financing, and the stricter we have to be. our response has been to observe the current situation very closely and promptly in order to prevent any circumvention of the ban on monetary financing. the supervisory arm also has a role to play here. that means that the course is set and that no more t - bills should be issued, but it can even amount to a requirement for athens to reduce the volume? we have to see how the situation develops. but i also uphold the applicable legislation. the government in athens is complaining that the ecb was less severe with the previous government in 2012. no, the rules are the same. at that time there was a programme, a cooperative government and the prospect of a successful review of the programme and its implementation. currently, we are far from agreement. promises alone are not enough. that applies especially when they are undermined in public. how frustrated are you by the government in athens? the fragile recovery in greece seems to be stalled and government finances are deteriorating. the figures have clearly got worse. that ’ s no surprise. it also shows how dangerous the crisis is if it leads to parties from the far ends of the political spectrum bearing responsibility which have no experience of government or of how europe works. this then requires a period of adaptation in a phase when there is no time. in your view, would it make sense to introduce capital controls in order to stop the enormous outflows of capital? capital controls are alien to a monetary union and they should only be invoked in an emergency. or is it too late because a lot money has already “ fled ”? we certainly have to keep an eye on the situation. how likely is it that greece deliberately or “ accidentally ” leaves the euro area? if you have a chance to shape things, you don ’ t assume that the result will be an accident. | yves mersch : interview in borsen - zeitung interview with mr yves mersch, member of the executive board of the european central bank, in borsen - zeitung, conducted by mr mark schrors and published on 8 april 2015. * * * mr mersch, the start of the ecb ’ s public sector purchase programme has made a deep impression on the financial markets : the stock markets are up, the euro is sharply down and the returns on euro government bonds have clearly fallen again. how surprised are you by the strength of the impact of quantitative easing ( qe )? it ’ s true, long - term interest rates have fallen further, in some cases to all - time lows. all in all, the financing conditions for the economy have improved. there are also signs that we will soon be moving into positive territory again in terms of lending. it would perhaps be somewhat bold to claim that the better mood in the economy is solely due to qe. but it is clear that qe is having a signalling effect and this channel is working very successfully. but aren ’ t such reports about the successful effect of qe on the real economy somewhat premature? previously, even the ecb used to say that monetary policy measures take 12 – 18 months to have an effect. yes, but monetary policy also works via the signalling channel and in this case it works very effectively and quickly. now we have to wait and see how the other channels work. however, the decision on qe certainly came at the right time. because the economy of the euro area was at a turning point, not least because of cheaper oil? at the beginning of the year we had weakly positive signs. with qe, this development has strengthened. but isn ’ t there also a danger of “ overdosing ”? the governing council will carefully monitor the situation every month. we have now adopted a plan that we intend to follow up on : we are making purchases to the tune of €60 billion every month until september 2016. this forms the basis for our march projections, which envisage a slow return to an inflation rate that is close to our understanding of stable prices : accordingly, we shall be at 1. 8 % in 2017. however, if we see that we are going beyond that figure, it would of course be appropriate to consider whether we need to adjust our plan. in other words, if the new projections in june foresee an overshooting of the | 1 |
to improve financial literacy, across the board. among other things, financial education would help both individuals and firms establish sounder financial situations and reduce financial risks such as unnecessary exposure to exchange rate volatility. the bank of albania has been on the vanguard of financial education in albania and will continue to spearhead such efforts. albania needs also to develop further payment systems and improve access to finance for various segments of the society, such as small and medium - sized enterprises or the rural sector. the bank of albania has responsibly exercised its duties in the area of payment system development. in this regard, we : established, in 2015, the national payments system committee, to coordinate the work of all relevant public and private sector agencies ; compiled the draft law “ on payments services ”, which approximates the respective eu directive and paves the way for developing new payment products ; and, improved the technological infrastructure for payments, reducing therefore their costs. however, our work may not be considered as completely finished. lastly, albania should pay attention to the development of new financial market segments, such as capital markets and pension and investment funds. in this context, alignment of the legal and regulatory framework is of primary importance with a view to preventing the potential emergence of systemic risks or the possibility of regulatory arbitrage. * * * dear ladies and gentlemen, our agenda for the work that lies ahead of us is as complex as ambitious. its successful realisation will enable our economy to grow at a fast and steady pace, and will mark a step forward in our journey towards eu integration. on behalf of the bank of albania, let me affirm our readiness to rise to the challenge. i am also confident that today ’ s conference will provide a significant contribution to finding optimal solutions. hoping that you will find the conference and your stay in tirana both valuable and enjoyable, i wish the conference a great success! thank you for your attention! 4 / 4 bis central bankers'speeches | exceed their short - term costs. third, financial integration provides an additional channel of exposures to foreign shocks, whether in the form of global financial crisis or volatility in the regulatory framework. overall, financial integration has been and remains a positive factor for development. in the case of albania, it brings in financial capital and managerial know - how, with a series of positive effects on the albanian economy, spearheading the economic and political integration of the country. yet, integration requires fostering cooperation and exchanging information with our international partners and counterpart institutions. lastly, the monetary and financial stability of the country should not be seen as an exclusive responsibility of the central bank, notwithstanding its primary role in it. it requires the contribution and cooperation of all state authorities. dear ladies and gentlemen, the albanian economy has solid premises for continuing and even accelerating the pace of growth. strengthened financial stability, coupled with prudent monetary policies, offers additional guarantees for its sustainability. however, let me point out that many challenges lie ahead of us. from a broader perspective, the financial industry, both in our region and globally, is under pressure from four powerful currents : rapid development of information technology, which has created opportunities for financial innovation and has challenged classical banking models. new payment and credit instruments, new financial market actors, and new business models, such as digital and electronic banking and payments, boost the penetration of financial services. conversely, they challenge not only classical actors of the financial sector but also its regulators. globalisation, which has expanded the scope of market actors and regulators. this phenomenon significantly exposes emerging economies to volatility in the regulatory framework or in the risk appetite in advanced economies. re - regulation, currently underway in the financial system in europe and globally. this process is aimed at enhancing security in the banking sector, lowering the probability of systemic crisis, and enhancing the capacities of authorities for managing them. however, it imposes additional costs on the banking sector and places it under less favourable conditions vis - a - vis other market participants. very low interest rates that characterise many segments of the global financial market. 3 / 4 bis central bankers'speeches these rates reflect the accommodative monetary policy stance adopted by major central banks, the decline in global productivity and unfavourable demographic developments in advanced economies. these have a toll on the balance sheets of broader segments of the financial market such as banking sector, pension funds and insurance companies. from a nearer - term perspective, albania needs | 1 |
put you back about r6, 60. against a basket of currencies, the rand has depreciated by roughly 6 per cent since the end of last year. the relatively moderate amplitude of the exchange rate movements of the rand – against a basket of currencies, at least – should be welcomed. prices in the financial and real - estate markets have reached new record highs. the financial and realestate markets remained buoyant, but with the changed outlook for mortgage interest cost, the rate of increase in real estate prices, which at times exceeded 35 per cent on a year - on - year basis, tapered off over the course of 2005. its most recent reading is still a quite strong 16 per cent. so embassy property must have turned out to be well - performing investments indeed. the price stability objective in south africa continues to be strongly supported by government ’ s management of its financial affairs with the national government budget for fiscal 2005 / 06 again formulated within a framework of fiscal discipline but with more emphasis on infrastructure development and a budget deficit for 2005 / 06 now projected to amount to only 1, 0 per cent of gdp, compared to the 3, 1 per cent of gdp projected in february. the government debt consolidation process has allowed the cost of borrowing to decline markedly. even though debt issuance has increased since 2003 / 04, sound debt management has been such that new issuance is spread across the maturity spectrum of the yield curve. the latter normalised somewhat in recent months owing, among other things, to the fact that the national treasury increased supply at the longer end of the curve. with the cost of borrowing falling as dramatically as it has, the bond market has become a more appealing corporate finance tool and, as such, corporate bond and commercial paper listings have become more popular. the corporate bond market has increased considerably in size – expanding from just under r40 billion in 2002 to over r130 billion today – an increase of over 200 per cent! the improvement in south africa ’ s long - term foreign currency debt rating from bb ( high risk, speculative grade credit ) in 1994 to bbb + in 2005 ( investment grade rating ), made south africa ’ s debt much more attractive to the international investing community. the most recent upgrades by fitch and standard and poor ’ s contributed towards tighter spreads on south african debt. the yield spreads on south african foreign - currency denominated bonds continue to remain substantially lower than those of emerging markets in general ( the emerging | over the medium term. combining financial assistance with strict conditions has brought the negative economic trends in the programme countries to a halt. the economic downturn in some of the most strongly affected countries may even have bottomed out in the near future. what is crucial now is to ensure that the programme countries do not stray from the path of essential fiscal, financial and structural adjustment. the second step undertaken was the strengthening of the framework for steering economic policy at the european level. it is aimed at preventing dangerous imbalances in both public budgets and current accounts more effectively in future. the governing council of the ecb has urged time and again that economic governance in the euro area be improved, calling for the stability and growth pact to be strengthened, for procedures to be put in place to counter macroeconomic imbalances and for the ceilings on public debt and deficits set out in the stability and growth pact to be transposed into national legislation in all member states. we welcome that the regulatory framework has been reformed accordingly. however, the regulatory framework alone cannot ensure that economic policies are sound. paper doesn ’ t blush, as clearly evidenced by the failure of the original stability and growth pact. the new governance framework can only be successful if it is implemented consistently, according to both the letter and the spirit of what has been agreed. its success thus depends on the action taken by the european commission and the council of ministers. all this is confirmed by taking a brief look at the current “ european semester ”, the new process for the coordination of economic policy in the european union. i fear that the unsound economic policies in some member states are once again not being opposed decisively enough. the rules of the new european governance framework can only be effective if they are strictly applied. in particular, deadlines for the correction of excessive budget deficits should, for instance, only be extended, by way of exception, in the event of exceedingly adverse circumstances. extensions should not become the rule. the third set of measures is to be found in the first steps undertaken towards a banking union. the measures are aimed, in particular, at disrupting negative feedback loops between banks and public sector debtors, and at halting the increasing fragmentation of european financial markets. all banks in the euro area, as well as the credit institutions in member states that have arranged for close cooperation with the ecb, will be subject to european supervision, the “ single supervisory mechanism ”. although the ecb will be responsible for the | 0 |
to better inflation nowcasting : websites of retailers and retail chains, websites disclosing or comparing product prices, as well as government websites with information on administered prices. this enables us to cover directly from the web around 90 % of the cpi basket. we calculate the cpi in line with the methodology of the statistical office. the whole process of inflation nowcasting based on web scraping is automated, i. e. both data scraping and processing are automated, which enables us to monitor inflation on a weekly or even daily basis. unlike most comparable international practice, our methodology is based not only on prices for online shopping, but on all relevant information on prices. namely, most other inflation nowcasting methods, described in the relevant papers, mainly give a partial inflation estimate ( nowcasting only individual cpi components, primarily food ), while our model provides for a comprehensive inflation nowcast in real time. i am proud to always point out that we were among the first in the world to introduce the instant payment system, as the most perfect payment method that currently exists. recently, we recorded a record number of transactions performed in one day – as many as 360, 741 transactions. the system provides for the execution of transactions via standard channels, but also for a fast and easy payment of bills by scanning the nbs ips qr code, transfer of funds to the payee registered for the service by selecting his / her mobile phone number from the contact list, payment at physical points of sale by scanning / generating the ips qr code, as well as at online points of sale by deep link technology. we have also made available on the nbs ips system website the generator and validator of nbs ips qr codes. instant payments at points of sale have significant advantages for merchants compared to card payments because of lower costs compared to paying with cards of international card systems, as well as because the merchant has the funds available on its account in a few seconds. and that is the goal when we talk about the development of technology and fintech – creating additional value with the most modern service at lower costs. seneca says : " if a man knows not to which port he sails, no wind is favourable ". translated onto the financial sector – there can be no success without recognising market needs and without a clear goal we wish to achieve. at the same time, like any innovation, new concepts of financial services provision also carry risks related to cyber security, data | monetary policy, where there have been a number of significant developments since we last met, including the discontinuation of the yield target, the cessation of the bond purchase program and a change in the outlook for interest rates. the yield target for the april 2024 bond was discontinued in early november. up until that point the target had played an important role in anchoring the yield curve and keeping funding and borrowing costs low in australia. in early october, the yield on the target bond was sitting at close to zero per cent. but then, a flow of stronger - than - expected data, both here and abroad, resulted in a shift in the distribution of possible future outcomes for the cash rate. in particular, these data implied that there was a reasonable probability of an increase in the cash rate before 2024. this assessment was reached by both the rba and financial market participants and it was reflected in market prices. in these circumstances, the board judged that there were more costs than benefits in seeking to continue to anchor the yield on the april 2024 bond at 10 basis points. the removal of the target was associated with volatility in the bond market. the rba is conducting a review of the whole experience with the yield target and the results will be published later this year. in terms of the bond purchase program, the final purchases were made yesterday. all up, across the various programs, the rba has purchased $ 350 billion of bonds issued by the australian government and by the states and territories. these purchases have lowered funding costs, supported asset prices and led to a lower exchange rate than otherwise. as a result, more people have jobs and inflation is closer to target. the stock of bonds purchased will also continue to support accommodative financial conditions in australia. the decision to end the bond purchase program followed a review of the three considerations we have used from the outset : ( i ) the actions of other central banks ; ( ii ) the functioning of our bond market ; and ( iii ) the actual and expected progress towards our goals. all three considerations pointed to the same conclusion – to end the program. of these three considerations, the most important was that faster - than - expected progress has been made towards our goals of full employment and inflation consistent with the target. the final development has been the change in expectations about the future path of interest rates. since the onset of the pandemic, the board has said that it will not increase the cash rate until | 0 |
telecommunications, media, transport, and electronic commerce and internet business firms who are managing touchpoints with a large - scale customer base. conversely, there are also financial institutions that actively adopt services of fintech providers. as for fintech as a service — the theme of this year ’ s fin / sum — there are cases where financial institutions utilize the advanced electronic know - your - customer ( e - kyc ) and fraud detection services of fintech providers in their applications. there is also a recent trend toward unbundling financial services that financial institutions used to provide as tightly coupled, thereby enabling componentized financial services to be combined with services of non - financial firms. this is referred to as “ banking as a service ” ( baas ), also known as embedded finance. it allows, for example, consumer firms issuing discount coupons 1 / 3 bis central bankers'speeches or providing loyalty points on their applications to enhance the usability of the coupons or points by plugging in cashless payment services provided as baas to their applications. there are also non - financial firms that seek to improve customer convenience and customer marketing by providing banking services under their own brands together with their businesses through baas. integrating information and financial systems in this way, a broad range of enterprises and entrepreneurs is creating new businesses through neue kombination ( new combinations ). the term neue kombination was originally introduced by schumpeter in his book the theory of economic development, and it was later interpreted as describing innovation. according to schumpeter, innovation is not necessarily about invention but is more about creating or changing combinations. needless to say, it is digitalization in various fields that is currently accelerating the creation of neue kombination. neue kombination 2. 0, brought about by digitalization, is reinforced by linking what were traditionally two separate systems : ( 1 ) the information systems assisting people ’ s livelihoods and business activities and ( 2 ) the systems supporting financial services. for example, most economic activities involve payments as financial activities. while commercial data such as billing and payments have been leveraged to improve the business efficiency of a supply chain, they have not been shared with financial services. this means that neue kombination, or innovation, could occur if the matching of commercial and payment data is enabled by linking commercial systems and payment services. for example, large volumes of invoice receipts could be automatically matched with payment records, thereby improving business efficiency, and potentially enabling real | we have seen a marginal shift from sovereign debt towards corporate debt11. in the search for yield, this is understandable. i would emphasise that the prudent person principle under solvency ii expect firms to consider the security, quality, liquidity and profitability of their portfolio when assessing their investment exposures. while the shifts we are seeing may increase the yield on investments, it is important that boards and executive management are ensuring that these changes are not at an undue cost to security, quality or liquidity. e ) individual accountability and the fitness and probity ( f & p ) regime the central bank continues to see significant shortcomings in compliance with f & p obligations and a lack of awareness in the industry regarding the scope of the f & p regime. this is concerning given firms are the first line of defence under the f & p regime, which is why derville rowland and i wrote to all firms12 early in april 2019 to highlight obligations and areas where compliance was found to be lacking. as you are aware the future ambition of the central bank is to introduce an individual accountability framework which will provide more powers to make senior management in regulated undertakings accountable for their actions. this would also see enhancements to the current f & p regime, with further obligations on firms. regulated firms can expect to see a continued supervisory focus on f & p. i expect that the boards and senior management of all firms to be fully aware of their f & p responsibilities and to ensure that all individuals within firms comply with f & p standards. f ) recovery planning internationally and in ireland, insurance is behind banking in recovery planning, both in terms of the regulatory framework and firms ’ preparedness. this needs to change. effective recovery planning, should include “ triggers ” for implementation, escalation processes, recovery options, and the identification of financial or operational impediments to recovery. i expect you to be formally considering recovery planning as part of strategy setting and capital planning, including consideration of the some of the issues i have discussed already – outsourcing, reinsurance, it resilience and so forth. i also expect firms to address impediments to resolution as they are identified. the central bank ’ s and eiopa ’ s focus on resolution planning will continue to increase. the 2020 review of solvency ii for example, which the central bank is taking an active role in, is wide ranging in scope covering many fundamental areas of the regime, including insurance | 0 |
higher lending rates seen in countries with prolonged npl problems weigh negatively on credit demand. higher lending costs drive firms to utilise internal sources of financing, resulting, on average, in the avoidance of large investment projects. a reduction in npls has the reverse effect, improving the willingness, incentives and ability of economic agents to invest in new projects. the practical implications of npls for growth opportunities are evident when looking at european data on bank lending to non - financial corporations and households. the contraction of bank lending is particularly pronounced in countries suffering from high levels of npls. at the same time, member states with high npl ratios have also experienced below average gdp growth, consistent with the below - average propensity to invest that npls generate. the opposite picture is found for the member states that exhibit a lower level of npls. therefore, the effective management of npls is of the utmost importance for a country ’ s growth opportunities. banks − benefiting from improved asset quality, profitability and liquidity − will be in a better position to reduce the cost of credit risk and lending spreads. this amounts to a pivotal development for the competitiveness of the non - financial corporate sector in an international environment of ultra - low interest rates. it also facilitates the reduction in the debt servicing costs of households that mitigate the impact of reduced household gross disposable income. the above is to the benefit of the real economy as the unlocking of funding and the improved business climate impacts positively on the setting - up of new businesses, investment, employment and growth. in sum, we would move to a virtuous circle where improved asset quality positively affects gdp growth, in turn leading to a further reduction of npls and so on. in conclusion, greece is poised to return to economic and financial normality and to shift to a new, outward - looking and sustainable growth model, based on tradable goods and services. the economic adjustment and structural improvements over the past years have opened up significant investment opportunities. to reap the benefit of these opportunities though, there are certain preconditions : first, the completion of the second review with no further delay ; second, the consistent and determined implementation of the programme in conjunction ; third, a more realistic approach by all parties to the fiscal mix and government debt burden. such developments, together with the cleaning - up of banks ’ balance sheets will set in motion a virtuous circle, paving the way to the full return of the | as the governor, am charged with managing the bank and i am also the accountable authority under the public governance, performance and accountability act 2013. as you know, there is great deal of public 1 / 3 bis - central bankers'speeches visibility of, and commentary about, our monetary policy decisions, but there is much less oversight of how i discharge my responsibilities to manage the rba. from a number of perspectives, current oversight arrangements fall short of contemporary standards. the proposed changes would address this and help the governor manage the bank and its many functions. the recommended changes could also strengthen the monetary policy process, by having a board whose sole focus is monetary policy. i very much welcome the conclusion that this board should include people with diverse perspectives and knowledge and who have experience in decision - making under uncertainty. it is also pleasing to see that the panel recommended that the treasury secretary remain on the board. the establishment of these two boards will require changes to the reserve bank act, which is a matter for the australian government and parliament. you would have already heard that the treasurer intends to proceed with these changes. we will work constructively with the government and parliament with the aim of ensuring that any changes to legislation are effective in achieving their objectives. the review also recommends that the statement on the conduct of monetary policy be updated. this is important because this statement sets out the common understanding between the government and the rba on monetary policy. the review sets out a number of issues that could be covered in this statement – the suggestions make sense and have our support. the board will work constructively with the treasurer to finalise a new statement. the review includes a number of recommendations for how the board works, including the frequency of meetings and the approach to communication. it recommends that the board receive and consider a richer set of briefing materials, including on economic modelling, research and monetary policy strategy. it also recommends closer interactions between board members and the bank's staff in the expectation that this will support a stronger culture of challenge and debate within the rba. the board will consider these issues over coming meetings. it will develop a holistic response, given that many of the recommendations in this area are interrelated and will have flow - on effects for how we do our work and how parts of the bank are structured. we will publish a detailed response later this year after the necessary work has been completed. the review also includes a number of recommendations to strengthen the rba's management, culture and operations. | 0 |
vulnerabilities in liability driven investment ( ldi ) funds amplified the impact of an abrupt change in fiscal stance into a selfreinforcing spiral in government bond prices. long maturity nominal gilt yields rose by 130 basis points in a matter of days – three times the size of any comparable historical move – and we were required to intervene to safeguard financial stability. a temporary and targeted backstop purchase facility for gilts proved effective in ending the firesale dynamic, providing the ldi funds with a window to increase their resilience while minimising risks to public funds, market incentives and the stance of monetary policy – which, unlike in 2020, was now in a tightening phase. in my remarks today, i want to discuss four main lessons that i take from those events : 1. the changing nature of systemic liquidity risk : though focus naturally alights on the idiosyncrasies of the autumn fiscal announcements and the uk ldi sector, the real import lies in the features the events had in common with the dash for cash and other similar developments : another reminder, if more were needed, that we face a new era of liquidity risk, originating outside the banking system, that can amplify shocks, destabilise core markets and undermine monetary and financial stability. 2. public backstops vs private self insurance : as a central bank it fell to us to provide a public backstop to prevent systemic liquidity risk from undermining monetary and financial stability. at the same time, the events revealed material weaknesses in pension fund and ldi risk management. given the costs involved, we must ensure public backstops do not end up substituting for a failure to achieve the appropriate level of private insurance against liquidity risk here and elsewhere in the non - bank sector. 3. ensuring we have central bank tools that are effective : to backstop these new forms of systemic liquidity risk effectively, central banks need the right tools – to detect risks in a timely way ; and to respond. in the ldi case, early warning required the use of qualitative as well as quantitative market intelligence. effective response required the use of a buy / sell facility. lending directly to non - banks would not have worked in this case. but it has many desirable properties for other scenarios, and is a high priority for future work. 4. calibrating central bank tools to minimise risk : backstop facilities must be carefully designed if they are to be effective in | the key question now is where are we going from here. well, the relatively good news is that the external economic storms seem to be beginning to abate. the us in particular, which experienced negative growth in the middle of last year, saw a surprisingly strong recovery on the back of a reversal of falling stocks, over the winter ; and while this may not have continued on the same scale through the spring, consumer spending has remained encouragingly resilient. the uncertainty looking forward relates primarily to the prospects for a recovery of investment spending as we move into the second half of the year. most economic analysts - including ourselves in the bank - are reasonably optimistic, pointing in particular to the continuing underlying strength of us productivity growth despite the economic slowdown and evidence that demand for computer hardware has picked up. the consensus economic forecast is for overall growth in the us - perhaps after something of a lull in the second quarter - to pick up steadily to around trend - to 3 % or perhaps somewhat more - through the second half of the year into next. but it has to be said that many us businesses themselves seem less convinced about future earnings prospects ; and financial markets, too, remain uncertain, notably about equity valuations - partly as a result of the recent spate of corporate governance and accounting failures. the outcome in the us, of course, is fundamentally important to the prospects elsewhere. but on the reasonably optimistic consensus view for the us, the outlook is for recovery to around trend growth in the eurozone and for modest positive growth even in japan. and there are encouraging signs of stronger growth elsewhere in asia - though parts of south america have problems of their own. if global economic recovery seems likely to provide a more hospitable international environment for our own economy, so, too, do recent developments in foreign exchange markets. last year i pointed out that sterling ’ s exchange rate was at a 15 year low against the dollar, but close to its peak against the euro. in overall terms sterling ’ s effective exchange rate index against currencies generally had been relatively stable - at around 105 plus or minus 5 % - for most of the past 2 - 3 years. that pattern of exchange rates made life particularly difficult for the euro - exposed sectors or our economy, and, given that the eurozone represents over 50 % of our external trade, contributed significantly to the imbalance within our economy. happily, from our point of view, and indeed in the context of the global external imbalance, | 0.5 |
the starting point if it is to draw on the energies of the entire organisation. articulating it with great clarity throughout the organisation allows the collective alignment to the goals. this also avoids being diverted by distractions when we are confronted with destabilising times. it is also imperative when we are ambitious with bringing about change and transformation. knowing clearly the outcomes and the benefits it brings increases the potential of bringing diverse groups within a country and across countries to building the consensus on achieving a common goal. another aspect that needs to be mentioned is being paranoid about the worst that could happen. this is sometimes referred to as productive paranoia. central bankers need to excel as risk managers – knowing what could go wrong and prepare for the worst that is yet to come. in part it involves building the buffers to prepare for the unexpected events before they happen. when i am asked the question about how we are going to manage ‘ the lift off ’ – the normalisation of interest rate by the federal reserve in the united states – my response is that it is not what we will do now but what we have done before it happens that will see us through this period. it is not only the buffers that have been built but also the capability that has been developed that will better allow us to intermediate and thus absorb the shock. this will enable us to withstand the volatile financial flows that are already occurring in anticipation of this eventuality. sometimes there are also black swan events. these are defined as those developments that have a low probability of happening and that is difficult to predict and anticipate. being paranoid and building the resilience against such shocks will contain its damaging effects. therefore continuous rigour needs to be applied all the time, during the good times and the challenging times. vigilance, detecting developments that could signal danger, early recognition of risks are all important. also knowing how your risk profile changes over time will avoid one being taken by surprise. central banking is therefore not for the faint of heart. it not only demands the high levels of energy – not just the physical energy, but that of the emotional, spiritual and the mind. when tested to the limit, it is from these sources of energy from which the strength is derived. investing in these sources of energy will avoid its depletion. energy should not be taken for granted. then there is the courage that is needed. it is derived from your convictions and values that you hold, reinforced by your sense of purpose and what motiv | the entire spectrum of businesses. the responsibility and accountability is therefore immense. our business is about bringing value and benefits to our citizens. in an environment of greater transparency and enhanced communication there is also greater awareness of the prevailing circumstances. this has produced higher expectations for the delivery of results. energy is derived from this very sense of meaning of what responsibility brings. it is the drive to making the difference to the economic well being of our citizens. fiercely knowing this responsibility and accountability is the very source of the intense energy necessary to preform the function of central banking. knowing the high costs that destabilising developments can have on the people and businesses and its potential damage to the nation is a major prompt of the perseverance to press on, to survive and to succeed. often we need to just confront the realities and produce a solution when it seems hopeless. courage is also needed to stay the course. knowing the stakes are high, knowing that you are being counted upon spurs the unwavering determination. from my experience as a lifelong career central banker, such extreme conditions that test us to the limit have become increasingly frequent. while there have been many great successes that have been achieved, there have also been those moments that have been most trying bis central bankers ’ speeches and devastating. during such times, developments set you back to a much worse situation than your original position. those times have arisen from external shocks that are beyond our control, from ambitious agendas that have been met with violent resistance and domestic stress brought on by actions that are in conflict with the bank ’ s mandate or from political tensions. the ability to endure, to persevere, to be resilient in the face of such extreme odds is about having a great sense of purpose of what needs to be achieved and the motivation of why it needs to be achieved. the sheer responsibility and the awareness of the accountability that comes with it is the very driver of such perseverance. it is also the fear of failure and knowing the far - reaching and damaging consequences. this is reinforced with the values and the discipline to stay the course to do what is right and to do what is in the interest of the people. the discipline is also important so that the central bank is consistent in its behaviour in managing the challenging conditions or in its aspirations to push the frontiers and create great value for the country. during such times, having great clarity in the vision and on the objective of what is to be achieved becomes paramount. this has to be | 1 |
requirements of the regulatory framework. we would kindly ask you and your shareholders for dedication in this process, not only to find the necessary human and financial resources, but also the most appropriate forms for a quick, transparent, and consistent handling of non - performing loans. we need to bear in mind that lending carries along risks that are difficult to identify at the time of disbursement. these risks are determined not only by the quality of bank lending procedures, but also by significant external factors, including the performance of the economy. this uncertainty permeates the current phase our banking sector is going through. therefore, it is indispensable that bank management structures and their shareholders commit the necessary financial resources to cope with the possible additional costs in the future. for shareholders, this implies not only retention of profits in the bank, but also adding new capital in case of need. remember that it also represents a more general trend in the banking industry globally, with a number of new forthcoming standards that provide for improving the quality of bank capital and increase of its size. our banks should gradually begin to adapt to these new standards. for senior managers, strengthening the control systems of the bank activity remains a primary objective, especially for those activities that generate the main revenues and expenses arising from the activity. risk management structures should be really empowered and have a stronger voice in decision - making. banks should continue to further improve the efficiency of their operations, including the establishment of a better control over the costs of the activity. setting priority activities for your institution will allow you to identify new investment needs as well as those activities that use bank resources inefficiently ; they should, in turn, be restructured. this process will positively affect the financial performance of the institution, and will allow the implementation of other active policies in areas that benefit the activity of the bank. we all know that banking is an activity based on trust. for this reason, the bank ’ s services to customers should be “ first class ” across the entire bank network. this means that customers should be served correctly, timely and transparently. banking services should be provided in accordance with the clients ’ financial literacy, in any case highlighting, the benefits and the risks that customers may incur as they use your bank products. in the context of its role as the supervisory and regulatory authority of banking operations, the bank of albania will continue to carefully monitor and address the challenges facing this bis central bankers ’ speeches activity. our regulatory framework and supervisory and operational | ardian fullani : competition versus risk - taking in the banking sector in see countries speech by mr ardian fullani, governor of the bank of albania, at the conference on “ competition versus risk - taking in the banking sector in see countries ”, organized by the central bank of the republic of kosovo, prishtina, 5 october 2012. * * * honourable governors, dear participants, regular regional meetings are a good opportunity to discuss economic and financial developments in our countries. they help identify the similarities and differences among us, and the economic and financial policies we need for solving the problems we encounter. the geographic position and economic relations with the same trade partners are factors that have led to similar economic and financial developments across our countries. they have determined the nature and size of contamination from the global economic crisis, in general, and the euro area crisis, in particular. the impact of the crisis on our countries has often been the main topic of discussion in such meetings. macro - financial difficulties and uncertainties in the euro area render the actual european crisis the main focus of this meeting as well. actual operations and commitments of the european central bank consist in a wide range of instruments that european authorities may use to support financial markets and institutions. investors, however, are still waiting on additional decisions which will be more harmonised and stronger politically. the economic situation, especially in greece and spain, remains difficult, whereas portugal and italy have undertaken additional fiscal consolidation programmes. unemployment in the eu and the euro area has reached historic levels, especially amongst the youth. economic growth is weak and is mainly concentrated in central countries of the euro area. our countries have been affected by this situation for objective reasons. trade relations, movement of capital and workers, and the financial system are channels that pass these problems on to our economies. the form, size and extent of this impact have evolved over the past four years. at present, the situation is reflected in the decrease of domestic demand, decline of economic growth, reduction of available income, loss of confidence and deterioration of optimism ; this is, in turn, reflected in higher savings. consequently, these developments have placed the focus of economic policies towards economic activity and revitalisation of optimism in order to boost investments and consumption. on the other hand, maintaining financial stability becomes a necessity, creating thus a binomial of priorities that condition each other and require a simultaneous solution. the albanian economy is increasingly facing the challenge of economic growth. although the albanian economy enjoys consolidated macroeconomic stability | 0.5 |
economy. with its 290 million consumers, the euro area is an economy similar in size to the us. gdp is lower than the one of the us, it contributes for a larger part to world exports. gdp of the euro area represents about 22 % of world gdp, this is somewhat less than the us whose gdp reaches 29 %, but considerably higher than japan ’ s gdp that stands at 13 %. on the other hand the euro area is the largest commercial partner, with some 20 % of total exports, against 16 % for the us and 8 % for japan. the emergence of a european international currency is one of the results that was expected from the introduction of the euro and it is an obvious advantage for european companies. however, the eurosystem has adopted a neutral stance concerning the international status of the euro. its importance as an international currency will be determined by the markets. to assess the international character of the euro after somewhat more than nine months, i will briefly go into the few functions usually attributed to an international currency. we can distinguish the official use of the currency and its use for private transactions. in the first instance, the euro can be used by public authorities as a reserve currency or as a pegging currency. although no recent data are available on the relative share of the euro in the official reserves, one may suppose the euro to be the second reserve currency after the dollar, if one transposes the international weight of the currencies the euro has replaced. on the other hand the euro is used and will in all probability be even more used in the future as a pegging currency by some eu countries that have not joined the emu, by countries of central and eastern europe that are candidates for eu membership and by some other emerging countries. i would also like to mention countries such as argentina, brazil, canada and south africa which have issued international bonds denominated in euro in order to diversify their foreign debt to the benefit of the european single currency. the international use of the euro by private operators can primarily occur within the framework of transactions or for investment and financing operations. at the beginning of the 90s one estimated that about 50 % of the exports of goods and services was invoiced in dollars, one third in one of the currencies that participate in the euro and only 5 % in yen. although the part of the euro area in world exports is greater than that of the us, the euro will only assert itself progressively as a payment currency | of discipline can have on the climate of confidence. it seems that people in europe more and more have a “ ricardian perception ” of fiscal deficits. they are more aware of the enormous challenges and costs our ageing society entails. people in the different european countries are really worried about the long - term sustainability of public finances. high fiscal deficits will only worsen their anxiety and so incite them to increase their precautionary savings. in this context, the rules of the stability and growth pact are appropriate. it is not correct to describe it as a fiscal straitjacket. starting from a budget in balance or in surplus at the peak of the cycle, a country can let the automatic stabilisers fully operate when the activity is slowing down. the main problem with the pact is, i think, that better incentives are needed to respect fiscal discipline during good economic times. so i hope that the forthcoming recovery will be the right moment for the european governments now facing budgetary difficulties, to put their finances again on the right track, so that in that field it will be possible to reconcile short time flexibility with long term sustainability. in that case fiscal policy may again become an element of the required lasting macroeconomic stability. it is by paying more attention to the quality of public finances and by rendering the structure of taxes and that of expenses more growth oriented that governments can contribute to stimulating europe ’ s growth potential. i refer to expenditures such as education and improvement of human capital, public investment in infrastructure and research and development. r & d could become a comparative advantage of europe. at the moment europe invests 1. 9 p. c. of gdp in r & d and is thus lagging behind the us figures and the lisbon target ( 3 p. c. ). over the past years, european policymakers have become more aware of this growth problem europe is facing. so, in march 2000, during the lisbon summit, an ambitious strategy was adopted aiming to increase the rate of sustainable economic growth and even to enable europe to become the most competitive and dynamic knowledge - based economy in the world in 2010. in order to achieve such a strategic goal the lisbon agenda has brought together the different strands of reform policies on product, labour and capital markets aiming at promoting a more efficient allocation of resources and at higher growth potential. moreover, in order to facilitate monitoring of progress with reforms, quantitative targets have been fixed to measure progress in particular on the labour market in achieving for instance higher | 0.5 |
central bank to some credit risk, 3 but the short tenor and restriction to high - quality companies makes the risk slight. the federal reserve ’ s term asset - backed securities loan facility ( talf ) represented a rather more radical departure. under the talf, the federal reserve made medium - term loans to investors against highly - rated securities backed by consumer and business debt, with the aim of increasing the availability of consumer and business credit. even though there is a haircut on the securities, the credit risk to the central bank is potentially higher under this programme ; that risk was effectively underwritten through the provision of credit protection by the us treasury. many of these extraordinary actions were designed to be self - liquidating as conditions normalise : central bank or government support becomes more expensive than market finance, or else is specifically time - limited. a central bank should not offer special support to particular private institutions or markets indefinitely, unless it is seeking to offset an identifiable market failure. otherwise, it just ends up distorting the market structure. moreover, to the extent that there is a market failure or distortion present, in the first instance it is surely the job of government, rather than the central bank, to address that market failure. in addition, anything that involves the central bank favouring particular businesses or sectors of the economy or exposing the consolidated public sector balance sheet to credit risk takes it into territory that is inherently political and risks inviting political intervention or limitations to its independence. while there should be little need for extraordinary liquidity and credit support once normal times return, there are potential lessons from the crisis for the execution of conventional monetary policy. before the crisis, and with policy rates averaging somewhere in the 4 – 5 per cent range, central bankers generally believed they had plenty of room for manoeuvre to offset all but the most severe adverse demand shocks. but the sharp increases in a range of credit spreads from the onset of the crisis in august 2007, and especially after the collapse of lehman brothers in the autumn of 2008, meant that policy rates had to fall sharply merely to though in any case, the bank of england ’ s asset purchases are indemnified against loss by hm treasury. maintain the pre - existing levels of key borrowing rates, 4 let alone lowering them in order to stimulate aggregate demand to counteract the substantial contraction over 2008 q4 and 2009 q1. as a result, many monetary policymakers soon found themselves with policy rates at, or near, the zero interest rate lower bound | high volatility has had the opposite effect ; that is consistent with the cross - country evidence of ramey and ramey ( 1995 ), who find that higher volatility tends to be associated with lower growth. the idea that periods of economic stability encourage exuberance in credit markets, thus sowing the seeds of their own destruction, is a key part of minsky ’ s theory of recurring financial crises ( see e. g. minsky, 1982 ). the results here provide some empirical evidence for such a dynamic process. moreover, to the extent that better policy accounted for the great moderation, it provides a second, indirect, channel whereby policy may have contributed to creating the conditions conducive to a subsequent financial bust. but it would clearly be a mistake to conclude that policy should aim to induce fluctuations in the macroeconomy in order to prevent financial market participants becoming too confident about the outlook! the right moral is surely that policy makers need to be most vocal about the risks to the outlook when things appear to be going well, and to take appropriate restraining action if needed. 3. the instruments of monetary policy dealing with the fallout from the banking crisis has pushed central banks in the affected jurisdictions into uncharted waters. the top panel of table 1 summarizes the wide variety of measures adopted by some of the major central banks, while chart 5 illustrates the associated expansion in the balance sheets of the federal reserve, the european central bank and the bank of england. the most immediate response was to offer liquidity support to the banking sector, especially as the crisis intensified in the wake of the collapse of lehman brothers and the rescue of american international group. measures adopted included widening access to discount window facilities, expanding the range of eligible collateral and counterparties, extending loan tenors and introducing foreign currency swap lines. as the lending in these operations is normally over - collateralised, there is essentially negligible credit risk to the central bank. in addition to these classical, if somewhat expanded, central banking support operations, a number of central banks – most especially the federal reserve, but also the european central bank and the bank of england – undertook less conventional actions aimed at improving the operation of particular, temporarily dysfunctional, markets. for instance, the federal reserve and the bank of england both bought high - quality commercial paper, reducing the risk that a borrower could not raise new funds to repay maturing paper and thus also encouraging private investors to lend. this exposes the | 1 |
mark carney : bank of canada ’ s economic overview and monetary policy stance opening statement by mr mark carney, governor of the bank of canada, at the house of commons standing committee on finance, ottawa, 27 october 2009. * * * good morning, mr. chairman and committee members. paul and i are pleased to appear before this committee today to discuss the bank of canada's views on the economy and our monetary policy stance. while conditions in the canadian economy have improved since we met with you in february and april, many of the basic challenges remain. before paul and i take your questions, i would like to give you some of the highlights from our latest monetary policy report, released last week. • recent indicators point to the start of a global recovery. economic and financial developments have been somewhat more favourable than the bank had expected in july, although significant fragilities remain. • in canada, as expected, a recovery in economic activity is also under way, following three consecutive quarters of sharp contraction. this resumption of growth is supported by monetary and fiscal stimulus, increased household wealth, improving financial conditions, higher commodity prices, and stronger business and consumer confidence. • however, heightened volatility and persistent strength in the canadian dollar are working to slow growth and subdue inflation pressures. the current strength in the dollar is expected, over time, to more than fully offset the favourable developments since july. • given all these factors, the bank now projects that, relative to our july monetary policy report, the composition of aggregate demand will shift further towards final domestic demand and away from net exports. • we now expect growth to average slightly lower over the balance of the projection period. the bank projects that the canadian economy will contract by 2. 4 per cent this year and then grow by 3. 0 per cent in 2010 and 3. 3 per cent in 2011. this projected recovery will be somewhat more modest than the average of previous cycles. • total cpi inflation declined to a trough of - 0. 9 per cent in the third quarter, reflecting large year - on - year drops in energy prices. • total cpi inflation should rise to 1. 0 per cent this quarter, while the core rate of inflation is projected to reach its trough of 1. 4 per cent during the same period. • owing to the substantial excess supply that has emerged in the economy, the bank expects both core and total inflation to return to the 2 per cent target in the third quarter of 2011, one quarter | later than we projected in july. • the main upside risks to inflation relate to the possibility of a stronger - thananticipated recovery in the global economy and more robust canadian domestic demand. • on the downside, the global recovery could be even more protracted than projected. in addition, a stronger - than - assumed canadian dollar, driven by global portfolio movements out of u. s. - dollar assets, could act as a significant further drag on growth and put additional downward pressure on inflation. • on tuesday, 20 october, the bank reaffirmed its conditional commitment to maintain its target for the overnight rate at the effective lower bound of 1 / 4 per cent until the end of june 2010 in order to achieve the inflation target. • the bank retains considerable flexibility in the conduct of monetary policy at low interest rates, consistent with the framework that we outlined in the april mpr. • our focus in the conduct of monetary policy is on achieving the 2 per cent inflation target. the exchange rate should be seen in this context. it is an important relative price, which the bank monitors closely. • what ultimately matters is the exchange rate's impact in conjunction with all other domestic and foreign factors on aggregate demand and inflation in canada. to put it simply, the bank looks at everything through the prism of achieving our inflation target. with that, mr. chairman and committee members, paul and i would now be pleased to answer your questions. | 1 |
perfectly appropriate for institutions to consider alternative funding strategies to meet customer demand. on the one hand, choosing to meet loan growth through wholesale funding rather than attempting to attract new money market accounts, for example, may avoid a costly rate hike on existing deposits. on the other hand, institutions should consider the costs of choosing wholesale funds in lieu of building the institution's retail funding base. significantly, the accumulated effect of these decisions on an institution's risk and liquidity profile may not be noticed until difficult times place pressure on the institution's ongoing funding. management should keep in mind that the value of the federal subsidy provided by lower - cost insured deposits is rarely appreciated until periods of crisis, when a stable funding base cannot be maintained at any price. management should ensure that complex funding products are well understood, especially those with embedded options that cause cash flows to change dramatically depending on market conditions. the funding products should also be consistent with the portfolio objectives of the bank and the sophistication of the bank's risk - management system. in addition, management should seek to identify liquidity pressures and other risks through stress tests so that appropriate contingency funding and hedging programs can be formulated. it is important in this market to place the liquidity and core deposit erosion at both small and large banks, as well as the resultant increased reliance on managed liabilities, in a proper historical context. an unpleasant fact is that the wider range of choices for near - deposit substitutes, and broader understanding by consumers of what those choices are, may have decreased, perhaps permanently, the share of core deposits funding assets. this change may be as significant in the current banking landscape as the tax on state bank notes was in the nineteenth century. to be sure, the imposition of the tax was sudden, while the erosion of the share of funding from core deposits has been, and presumably will continue to be, gradual. but just as state banks responded to the tax by innovating deposit banking to flourish once again, community banks will, i am sure, adjust to the changing realities of the deposit market. moreover, it is also important to recognize that the reduction in portfolio liquidity is more a product of good business - - high loan demand - - than of the relatively slow growth in core deposits. some liquidity pressures will be alleviated as demand for loans declines. though core deposits may be more difficult to attract, they have in fact continued to grow, just not as rapidly as the loan | ardian fullani : imagine the future – for a better economic cooperation. economic chamber ’ s and bank ’ s responsibilities speech by mr ardian fullani, governor of the bank of albania, at the 10th vienna economic forum, vienna, 7 may 2014. * * * dear ladies and gentlemen, dear colleagues and participants of the vienna economic forum, i am honoured and delighted to return and speak to such a constructive and important economic forum, discussing with you the economic development topics, which affect the present and the future of our economies. the topic of this forum is very important for the economies of the south east europe. it creates the proper environment, which enables the examination of the problems faced by our economies during the crises. we can certainly draw few lessons from what we have learned during the recent years, following the global economic and financial crises. these discussions and the harmonization of economic policies will help us to project a strong coordinated economic structure for the long term future of our economies. it is particularly important to converge here in vienna and discus the cooperation issue because one of the obvious outcomes ( lessons ) of the developments during the recent years is that the economic developments in particular for small open economies of the south east european region, are not local or regional anymore. just like the flu, it is rather unexceptional and highly transmittable from one economy to the other, from one sector of the economy to the other. most importantly, european economies and their financial systems, among which the austrian financial system enjoys a significant share of the market, define the globalization for the region and are, to a large extent, important determinants for the success or failure of these economies. given the large share of the european financial groups, they have and will play an important role in the transmission of global shocks in the region. what is more important, they have a significant role in the transmission of legislative and regulative shocks carried over by european monetary and supervisory authorities. the size is such that even a simple change in the future business plans of a single european financial institution can transform into real shocks for the economies of the region. it became evident during the crisis and afterwards that an increase in risk and uncertainty, led to increased incentives for banks to withdraw from the emerging europe economies. though this was mostly prevented due to increased cooperation through institutions such as the vienna initiative, the concerns from our perspective have not completely dissipated. in this respect the business plan of eu based groups can play a potentially important role in the | 0 |
emmanuel tumusiime - mutebile : the progress made on the introduction of islamic banking in uganda speech by prof emmanuel tumusiime - mutebile, governor of the bank of uganda, on the occasion of eid - el - fitri celebrations at bank of uganda western gardens, kampala, 17 september 2010. * * * your eminence the mufti of uganda, the rt. hon. ali kirunda kivejinja, third deputy prime minister / minister of internal affairs, hon ministers, honorable members of parliament, his worship the mayor of kampala, chief executives of commercial banks, bank of uganda senior management, distinguished guests, ladies and gentlemen, asalaam aleikum, eid mubarak, eid mubarak, eid mubarak! it gives me great pleasure to welcome you to this auspicious occasion when we mark the end of the holy month of ramadan and to celebrate eid - el - fitri. let me take this opportunity to congratulate our muslim brothers and sisters for having been steadfast in committing themselves to fulfilling one of the five pillars of islam by fasting during the holy month of ramadan ; i pray that allah accepts it. i urge all the muslims who observed the fasting to maintain this noble act of worship. the virtues of fasting should be upheld throughout your daily life both at work and elsewhere. at the bank of uganda, we believe that god plays a role in everything we do in executing the bank ’ s mandate “ to fostering price stability and a sound financial system ”. that is why we adopted the culture of starting all our meetings with a prayer led by staff from different religions and denominations to seek god ’ s guidance. we uphold the freedom of worship and no staff is constrained because of religious affiliation or creed and endeavor to accord equal opportunities to all. in this regard the bank hosts the christian community to the christmas thanksgiving we host the muslims to the eid celebrations. let me once again assure you that the bank is committed to hold this eid - el - fitri celebrations every year. allow me to appraise you on the progress made on the introduction of islamic banking in uganda which a number of local and foreign banks have expressed interest. ladies and gentlemen, islamic banking is a system of banking or banking activity which is consistent with the principles of islamic law ( shari ’ ah ). an islamic financial institution ( ifi ) is therefore | one whose statute, rules and procedures expressly state its commitment to the principles of islamic shari ’ ah and to the banning of the receipt and payment of interest in any of its operations. as you are aware, the current regulatory regime does not permit financial institutions to engage in islamic banking. to close this gap, bank of uganda has proposed amendments to the financial institutions act, 2004 to permit the licensing of and transacting by financial institutions in islamic banking in uganda. the proposed amendments to the law were submitted to the finance minister for consideration by cabinet and subsequently parliament for enactment. this amendment will bring uganda in line with other eac member countries that have licensed islamic banking and finance. it will increase the depth, breadth and range of finance products bank customers can use to access banking services. let me conclude by wishing you once again happy celebrations. it is now my pleasure to invite hon ali kirunda kivejinja to address the congregation. god bless you all. asalaam aleikum, eid mubarak, eid mubarak, eid mubarak | 1 |
direct electronic communication on all issues related to statistics and undertaking financial education activities. in 2016, we started with a regular publication of press releases on statistics, as well as a project, which is in the final phase, for establishing a statistical internet portal for external data users. in doing so, in the basis of all these new statistical requirements, lies the need for providing granular, rather than aggregate data. the crisis has not called into question the traditional aggregate economic statistics, but has shown that it is not enough. for example, in order to understand why the huge liquidity that the ecb brought into the banking system did not lead to stronger credit growth, granular data were needed, which will enable to better understand what drives the aggregates, and thus enabling the monetary policy to be more effective. all the statistical points indicated so far in one way or another are links within the g - 20 statistical initiative, which, although not a formal framework for us, is a guideline we adhere to. in addition, this initiative is in synergy with other important international statistical standards, as well as european statistical requirements, which we, as a central bank, strive to follow. one such initiative is sdds plus, as the third and highest pillar of the imf ’ s statistical standards. i can proudly say that we, as a state, have shown a willingness to join this initiative, which is currently involving only 14 countries, actively working together with the sso and the mof to prepare all the requested data, thus preparing for accession to this highest standard are in the final stage. an additional aspect that brings new challenges to statisticians is the digitization process, which is also gaining momentum in the financial industry. digitization and innovation of financial services imposes new challenges for their statistical monitoring and measurement. at the same time, in the statistical world, the number of initiatives for active use of the so - called “ big data ” is rising, a new paradigm that changes profiles and statistics makers, statistical processes, as well as the overall economic and financial analysis. ladies and gentlemen, finally, we, like other statistics makers in rm, in recent years have made great step forward in improving the existing statistical surveys and introducing new one for the purpose of filling in the identified staistical gaps in global terms. however, statistics is not an aim by itself. by providing rich, high - quality, timely and internationally harmonized set of statistics, we contribute to higher 2 / 3 bis | dimitar bogov : when pressures on prices are relieved, we will stimulate economic growth interview with mr dimitar bogov, governor of the national bank of the republic of macedonia, in “ kapital ” weekly magazine, published on 8 november 2012. * * * bank affairs are always possible in the countries in the region banking affairs have erupted, in connection with criminal activities of some banks in conjunction with politicians. what is the situation in macedonia? is everything under control in the banking sector? nbrm controls the banks in terms of their compliance with the regulations, the quality of corporate governance, and assesses the risks that banks undertake in their operations. banking supervision is a strong prevention against criminal operation. but that does not mean that as anywhere in the world, banking affairs could not take place also in the banking sector in macedonia. spasijka jovanova the national bank of the republic of macedonia lowered the forecasts for the economic growth this year to 1 percent and raised the concerns of inflation. the condition when no growth is registered, i. e. there is a downturn, and there is higher inflation, is called stagflation, which is the worst stage of an economic crisis. is the macedonian economy in such a stage? i would not agree that the macedonian economy is entering stagflation. however, there were unusual movements in the world economy. on the one hand, european economies are in recession, the us economy has been struggling to return to the path of growth, and more recently, fast - growing economies such as brazil, india, china, turkey have also slowed down. in such circumstances, it would be logical for the prices on the commodity exchanges worldwide to fall. but it is not happening. prices of oil and basic agricultural products are not falling, but maintain the previously achieved high level or even continue to rise. in part, this is due to the overly relaxed monetary policy of the fed, the ecb and the bank of england, as well as the debt crisis in the euro area, which “ urge ” investors to invest in real goods on the commodity exchanges. the rest is a consequence of the so - called supply shocks, i. e. political tensions in the arab world and the middle east, as well as the drought in the countries that are the largest producers of grain. in such conditions, despite the slowdown of economic growth, macedonia is facing a higher imported inflation. in conditions of such an emphasized economic crisis | 0.5 |
quarter, uk gdp will still be around 12 % below its level at the end of 2019, a huge shortfall. the impact has been synchronised across economies – the similarities of this shock far exceed the differences in terms of economic impact. that said, within economies – the uk included – the impact of covid has been highly uneven across sectors. those that conduct activity involving large amounts of close human contact have obviously been most seriously affected. i would add that this has led to other notably uneven and unequal effects, because these sectors tend to have higher proportions of low paid workers, female workers, and there is a concentration by ethnicity as well. this is an issue the resolution foundation has done some commendable work on ( cominetti et al, 2021 ). a common question that we ask about economic shocks is whether it is a demand or supply shock. as monetary policymakers we ask this question with good reason – the identification of shock type matters for all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice the impact on spare capacity and inflation. so, what is the answer for covid? the answer appears to us to be both : demand and supply. this is not surprising – shutting large parts of the economy down to protect against infection affects both demand and supply. but this is highly relevant to the task of getting over covid, and for monetary policy. let me try to illustrate the nature of the covid shock through the lens of aggregate demand and supply. the first point to make is that illustrating the shock through a calculation of the output gap alone isn ’ t very helpful, precisely because it is the net of two shocks. in chart 1 i have therefore shown the historical path of aggregate demand ( gdp ) and supply ( potential output ) over the last twenty years, consistent with past mpc forecasts. i would caution against over - interpreting the detail of this chart, as there are several ways to represent aggregate supply and demand, and thus the output gap. but, detail notwithstanding, it is clear that while a gap has opened up between demand and supply during the covid pandemic, the overwhelming feature is the coincident hit to both demand and supply. that stands in marked contrast to the more pronounced impact on demand following the global financial crisis, and persistent period of spare capacity thereafter. as well as the covid shock, the behaviour of supply and demand also reflects | adnan zaylani mohamad zahid : leaders setting the direction for change opening remarks by mr adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the sustainability leadership programme for financial institutions, 14 july 2021. * * * introduction good afternoon and a very warm welcome to all. thank you to ibfim and the university of cambridge institute for sustainability leadership ( cisl ) for this invitation to deliver the opening remarks. at the recent joint committee on climate change ( jc3 ) conference held last month, in his address, sir david attenborough somewhat laid down the gauntlet, in particular for us in the financial industry. “ all of us, no matter who we are, have the responsibility to care for the planet. the future of all humanity now depends on us and on none more than you in the world of finance. you have the fate of the whole world in your hands. ” with this in mind, it is quite apt that we are here, senior leaders in the industry, participating in this sustainability leadership programme over the next two days. over the past 18 months, many have felt the economic and social impact caused by the global health crisis. at the same time, the world has not been spared from natural catastrophes due to climate change. the latest being the mudslide in atami, japan. in malaysia, more than 25, 000 people were displaced from their homes due to severe flooding in several states between november 2020 and january 2021. these, among many other incidents, are growing evidence that climate change results in more frequent extreme weather events bringing destructive consequences along with them. while causing great upheaval, the pandemic and climate crisis provide an impetus for us to reset and reprioritise resources to re - steer our economies and financial systems to be more sustainable and inclusive. islamic finance ( if ) has large potential in this space. the concept of vicegerency on earth in the quran, which asserts mankind ’ s responsibility to take on ownership over preservation of wealth and resources on earth, as well as the universal values of maqasid shariah resonates well with the principles of sustainability. as such, it is not surprising that islamic financial institutions have stepped up to meet this challenge, evidenced through the value - based intermediation ( vbi ) initiative and practices by islamic banks and takaful operators. consequently, as sustainability becomes a global | 0 |
program with clear time - frames for the implementation. it is obvious that the imf and the world bank should have a leading role with regard to monitoring the implementation of the core principles. the main argument for this structure is that the international financial institutions already send missions to almost all countries in the world. however, it is generally acknowledged that the basle committee possesses great expertise in bank regulation. i therefore plead for a model in which the basle committee, the imf and the world bank each and together assist countries in realising financial stability in their respective fields of competence. in this model, the imf and the world bank are primarily responsible for creating a sound environment for banking, which is highly dependent on viable government policies. as part of the assessment of government policies, these institutions will of course also pay attention to the quality of bank supervision. 20. the basle committee is primarily responsible for the amendment and interpretation of the principles and will review compliance with the principles at the international conference of banking supervisors in october 1998 and bi - annually thereafter. the basle committee can furthermore make a major contribution towards the implementation of the principles by offering technical assistance and courses to supervisors in emerging countries. in this respect, banking and traffic again look alike. it is all a matter of knowing your responsibility ; if you do not make a timely agreement about who drives home, you both end up drinking too much. | but before that a short word on the way the principles have been developed because it shows an important development in the cooperation between the members of the basle committee and other countries. the principles were first drafted by a joint working group consisting of a number of basle committee members and representatives from 15 other countries. subsequently a very lively exchange of views took place in a meeting in basle in march of this year in which representatives of approximately 40 countries, including the chairmen of all regional groups, participated. to my satisfaction the consultation period following that meeting produced a large number of reactions, nearly all of them favourable. these reactions will be incorporated in the core principles. to endorse the final text of the principles, a similar meeting to the one in march will take place on september 10th in basle. two weeks later, in conjunction with the annual meeting in hong kong, the imf and the basle committee will co - sponsor a conference to introduce the principles to as wide as possible an audience of ministries of finance and central banks. 3. as i said, the main rational behind the core principles has been the increased awareness among policy - makers that banking crises can aggravate recessions. another reason for the formulation of core principles is the increased globalisation of economic activity. with the strong growth of trade and financial flows between national economies, banking problems in one country have much more potential to spread to other parts of the world. a specific form of globalisation concerns the increasing international activities of large banks. policy makers generally welcome cross - border banking, because of the beneficial effects on the efficiency, liquidity and depth of financial markets. however, the internationalisation of banking also increases the risk of contagion of banking problems. in order to reduce this risk, the core principles pay special attention to the supervision of cross - border banking. on this subject, the most important message from the core principles is that home country supervisors should practise consolidated supervision over their internationally - active banks. in order to enable home country supervisors to fulfil this task most effectively, host country supervisors must share information with them about the local operations of foreign banks. finally, the core principles state that banking supervisors must require the local operations of foreign banks to meet the same high standards as are required of domestic institutions. advantages 4. you may wonder whether the core principles will really be able to reduce the severity and frequency of banking problems around the world. let me try to answer this question by reviewing the main | 1 |
corporate - finance example is also consistent with what we have observed in markets in recent months. issuance of both investment - grade and high - yield bonds has been robust. indeed, domestic nonfinancial corporate bond issuance is on pace to set a record in 2012, and the speculative - grade segment may also register a new high for the year. at the same time, a large fraction of issuance has been devoted to refinancing – either to retiring existing debt or to payouts to equity holders via dividends and share buybacks. these uses of proceeds have accounted for about two - thirds of all issuance by speculative - grade firms so far this year. such patterns are what one would expect in a world of segmented markets and negative term premiums. 12 this caveat about the diminishing effectiveness of lsaps can be thought of as a specific version of goodhart ’ s law. 13 it may be that under normal circumstances, changes in 10 - year rates have significant explanatory power for economic activity, perhaps because they are a proxy for the expected future path of short rates or other aspects of financial conditions. but it doesn ’ t follow that when one sets out to influence the 10 - year rate directly, via asset purchases – without changing the future path of short rates – the usual historical relationships will continue to apply. while we should acknowledge these doubts, it is important to keep them in perspective. in addition to lowering interest rates, lsaps also boost equity prices and other asset values. taken together, these effects of lsaps seem likely to be meaningful, even if the benefits of an impetus to rates are less than in the baseline scenario sketched earlier. and to be sure, there is a wide confidence interval around any estimate we might make of the benefits. moreover, it is worth repeating a point made earlier : whatever direct hydraulic effects lsaps create by pushing down term premiums and discount rates, their overall impact may be reinforced via a signaling effect, whereby they enhance the credibility of our forward guidance about the future path of the federal funds rate. indeed, this signaling benefit strikes me as an important part of the argument in favor of lsaps in the current environment. let me turn now to the cost side of the equation. several potential costs of lsaps have been discussed. one is the exit problem – that a large balance sheet may make it harder for the fomc to raise rates when the time comes. | banks and also enacts borrower - based measures to mitigate the risks associated with boom - bust financial cycles. we view our mortgage measures that put ceilings on loan - to - income ( lti ) and loan - to - value ( ltv ) ratios as essential in limiting systemic financial risk, while acting to protect consumers from the risks associated with overborrowing. it is critically important to appreciate that our framework sets limits on the size of mortgages : the lti and ltv ratios are not targets but ceilings. in buying a home, a household should take into account the protections offered by putting down a higher deposit in terms of limiting repayment burden and risks associated with excessive debt levels. equally, lenders are required to assess the loan - bearing capacity of each mortgage customer and restrict the size of the mortgage if indicated by the analysis of the borrower ’ s credit risk. while the november 2016 revisions to the mortgage rules do raise the maximum loan size for first - time buyers seeking to buy homes above €220, 000 in value, it is important to take into account several considerations. first, borrowers also have to satisfy the lti requirement, which remains unchanged at a cap on loans of 3. 5 times income. for many households, this will limit the capacity to increase the mortgage size. second, to the extent that the revisions lead to an increase in aggregate mortgage credit volumes, this should be interpreted in the context of the subdued level of lending in the aftermath of the crisis. third, our framework is designed to avoid spiral dynamics between house prices and credit volumes. since the mortgage measures were initially flagged in late 2014, there has been a sharp moderation in expectations for annual gains in house prices, since it is widely understood that persistently - high rates of increase in house prices are not likely in a system in which measures place ceilings on lti and ltv ratios. in particular, the lti rule limits the capacity of house prices to grow too quickly relative to income levels, while the 80 percent ltv ceiling on loans taken out by second and subsequent buyers attenuates the feedback loop by which rising house prices increase the capacity of existing home owners to increase leverage. furthermore, our macroprudential regulations can be tightened if there is emerging evidence of elevated risks in the mortgage market, especially in relation to the rate of credit growth. finally, it is important to appreciate that many factors influence the dynamics of house prices. while rising incomes typically | 0 |
##miceri ( 2024 ), “ the drivers of post - pandemic inflation, ” nber working paper series 32859 ( cambridge, mass. : national bureau of economic research, august ), https : / / www. nber. org / papers / w32859. for the economic effects on the size of fiscal stimuli, see oscar jorda and fernanda nechio ( 2023 ), “ inflation and wage growth since the pandemic, ” european economic review, vol. 156, 104474. see christiane baumeister, gert peersman, and ine van robays ( 2010 ), “ the economic consequences of oil shocks : differences across countries and time, ” in renee fry, callum jones, and christopher kent, eds., inflation in an era of relative price shocks ( sydney : reserve bank of australia ), pp. 91 – 128, https : / / www. rba. gov. au / publications / confs / 2009 / pdf / conf - vol - 2009. pdf ; and andrea de michelis, thiago ferreira, and matteo iacoviello ( 2020 ), “ oil prices and consumption across countries and u. s. states, ” international journal of central banking, vol. 16 ( march ), pp. 3 – 43. for the effects of labor market tightness on price and wage inflation, see olivier j. blanchard and ben s. bernanke ( 2022 ), “ what caused the u. s. pandemic - era inflation? ” nber working paper series 31417 ( cambridge, mass. : national bureau of economic research, june ), https : / / www. nber. org / papers / w31417 ; olivier j. blanchard and ben s. bernanke ( 2024 ), “ an analysis of pandemic - era inflation in 11 economies, ” nber working paper series 32532 ( cambridge, mass. : national bureau of economic research, may ), https : / / www. nber. org / papers / w32532. - 8researchers at the board of governors also find that differences in the pace of disinflation across countries have been largely driven by different trajectories of services price inflation. 13 as shown on slide 5, they find that the dispersion of inflation across countries peaked in 2023 and has been declining since then for headline and core goods, | capacity to implement common and consistent measures in order to restart operations after a cyber - attack ; page 3 sur 3 ( iii ) test dedicated crisis communication tools. 3 ) monitoring the degree of cyber security and the progress of cyber resilience programmes. irrespective of the nature of our organisation ( a central bank, a commercial bank, an insurance company, a fmi ), we have to not only deal with a large number of cyber security issues, but also to coordinate a large number of stakeholders ( boards, senior executives, chief information officers, chief risk officers, chief information security officers, etc., ). therefore it is of utmost importance, but at the same time difficult to obtain an overview of cyber security. all levels of management ( technical, operational and executive ) need to have appropriate information to monitor cyber resilience and cyber risks. above all, monitoring cyber security at the executive level ( “ tone at the top ” ) may prove to be challenging. of course, there is a broad range of different metrics and it is necessary to select a limited number of them. for instance, if i had to mention three of them, i would choose : ( i ) overseeing the development of awareness and training within the organisation ; ( ii ) monitoring patch management in order to make sure that identified flaws are corrected in due time ; ( iii ) and, last but not least, capturing the effectiveness of the identification and authentication processes. in a nutshell, key indicators help to improve the governance of the it security system. * * to conclude, i believe that it is necessary to better structure the international governance of cyber security in the financial sector : it is clear that the different regulatory and supervisory authorities are aware of “ cyber risks ”. this is becoming apparent through the numerous initiatives at various levels ( domestic, european, and international ). while this is welcome, it is both delicate but necessary to strengthen international cooperation in order to ensure that there are neither loopholes nor overlaps and that there is convergence towards proposals and solutions that can easily be shared with others. | 0 |
us of the potential for systemic risk if interlinkages develop between the crypto system that exists today and the traditional financial system. crypto - asset - related activity, requires effective oversight that includes safeguards to ensure that crypto companies are subject to similar regulatory safeguards as other financial services providers. i would note with some humility that striking the right balance between creating an environment that supports innovation and managing related risks to businesses, households, and the stability of the financial system is no easy task. we do not want to stifle innovation, but when regulation is lax or behind the curve, it can facilitate risk taking and a race to the bottom that puts consumers, businesses, and the economy in danger and discredits new products and services with consumers and investors. i believe everyone has a stake in getting the regulatory balance right. we are working closely with the occ and the fdic to assess the risks and opportunities posed by a range of crypto - asset - related activities, and to clarify which activities are legally permissible and can be conducted by banks in a manner that is consistent with safety and soundness, consumer protection, and overall stability of the financial system. before leaving the topic of crypto - assets, i would like to touch on stablecoins. stablecoins, which like other instruments that purport to be available on demand at par value, can be subject to destabilizing runs and require strong federal prudential oversight to mitigate their potential for economic harm. that is especially the case for stablecoins that aim to function as private money. legislative action on crypto - assets in general, and stablecoins in particular, would help promote responsible innovation and protect the financial system. 3 / 4 bis - central bankers'speeches climate - related financial risks we are also working to understand financial risks related to climate change. at the federal reserve, our mandate in this area is important, but narrow, and we are focused on our supervisory responsibilities and our role in promoting a safe and stable financial system. to that end, the federal reserve recently announced a pilot climate scenario analysis exercise designed to enhance the ability of supervisors and firms to measure and manage climate - related financial risks. scenario analysis - in which the resilience of financial institutions is assessed under different hypothetical climate scenarios - is an emerging tool to assess climate - related financial risks. the pilot climate scenario analysis exercise, which is distinct and separate from bank stress tests, will be explora | when oil is scarce ). social welfare is likely increased by informed speculation in oil markets because speculative activities make oil relatively more available at the times when it is most needed. 8 this discussion suggests three indicators to help us detect the influence of speculative activity on current oil prices. first, if speculative activity is an important source of the rise in oil prices, we would expect today ’ s oil price to react strongly to news bearing on future conditions of oil supply and demand. second, we should see speculative traders holding claims to large amounts of oil for future delivery, in the hope of enjoying a profit by re - selling the oil should prices rise. finally, corresponding to the speculative positions held by traders, we would expect to see significant increases in the physical inventories of oil being held for future use. the first indicator, rapid swings of oil prices in response to news about the prospective supplies and usage of oil, does appear to be present and to suggest a speculative element in pricing. it is thus somewhat puzzling that the other two indicators of speculative activity do not appear to be present : our best - available measure of speculative traders ’ holdings of contracts for future delivery of crude oil and petroleum products has decreased from earlier in the year and is not unusually high by historical standards. 9 and official data imply that physical inventories of crude oil and petroleum products, at least within the industrial countries for which we have good data, have not risen to any significant for example, we know of historical examples of speculators “ cornering ” a market, leading to wild price fluctuations unjustified by fundamentals. in addition to helping ensure that oil is used at the socially most valuable time, speculation also reduces risks for producers and consumers of oil. for example, an oil producer who sells oil for future delivery receives a guaranteed price today and does not have to bear the risk that the price will drop sharply before the oil delivery date. the measure used here is net long futures positions of noncommercial traders ( that is, traders who do not have a direct hedging need ). these data, available from the commodity futures trading commission, do not perfectly measure speculative activity, as they do not cover all trading in oil futures, nor do they necessarily cleanly distinguish speculators from other traders. degree and at times have even been below seasonal norms. 10 perhaps the official data overlook important accumulations of crude oil stocks - in china and other emerging - market economies, for example - but that remains ( if | 0.5 |
in the patterns of trade, production and growth in the coming years. the adjustments to these changes will be neither easy nor smooth. as unemployment in some advanced economies mount, the risk of trade and financial protectionism rises. rapid changes in the real economy will generate greater uncertainty, and potentially greater volatility in financial markets. over the next few years, asia is likely to grow more slowly compared to pre - crisis days, when external demand from advanced economies weakens. to sustain growth, asian economies with big domestic markets will need to continue with structural reforms to boost domestic demand. smaller asian economies will have to re - orientate their economies to respond to new opportunities in these markets. the cross - border production and supply - chain networks, which have been so efficient in raising asia ’ s exports to the rest of the world, remains valuable but will have to be increasingly re - orientated towards raising domestic and intraasian consumption of final goods and services. measures to encourage new investments in the corporate sector and in public infrastructure, as well as in education and healthcare, will be necessary for most asian emerging economies in order to realize their growth potential. the basic outline of changes is well understood, but crafting the details of these changes, and calibrating the pace of implementation, will need thoughtful work. the build up of domestic demand would probably be a gradual process, as experiences of japan and germany suggest that reducing a nation ’ s export dependence involves major structural changes that evolve over an extended period of time. nevertheless, i am optimistic that asia will be able to respond to these challenges, to achieve its longer term growth potential and contribute towards more sustainable global growth. financial regulations and development let me now turn to the third set of challenges : financial regulations and development. financial authorities are now working intensely in various fora, such as the financial stability board and basel committee, on regulatory reforms and cross - border cooperation. the major themes relate to new capital and liquidity frameworks and linking these to systemic risks ; dealing with the moral hazard problem of individual institutions becoming “ too big ”, or “ too connected ” to fail ; cross - border coordination and resolution regimes ; redefining accounting rules and building counter - cyclical buffers to address pro - cyclicality ; adherence to global standards and others. in many areas, measures have already been agreed and implemented. many of these changes will be relevant to asia, and we need to abide by global standards. however, following the asian crisis, significant | developments that may help to address some of these challenges. the united nations has convened a high - level advisory board on effective multilateralism which will explore reforms to the global financial architecture to help channel more public and private capital to developing countries. this is timely work. if we are to finance the sustainable infrastructure that the world needs, especially through blended finance, we will need to reform how development finance is implemented and consider adjustments to the mandates and incentive structures of multilateral development banks. the network of central banks and supervisors for greening the financial system is launching an initiative to raise awareness on blended finance including potential regulatory and practical barriers. we can look forward to more details at cop 27 but suffice to say the ngfs will focus on practical guidance from past case studies and demonstrative projects to explore what is possible. the gfanz asia - pacific network will launch an initiative to develop guidance for financial institutions on how they can facilitate the managed phase - out of coal power generation in the asia pacific. mas and the asian development bank will participate in this initiative. there are about 5, 500 operational coal plants in asia, responsible for over 4. 5 gigatonnes of carbon emissions per year. asia's coal plants are far younger than the coal fleets in the us and europe, with the majority having decades left to operate. the gfanz initiative will help to address the challenges involved in responsibly decommissioning these plants, including the fiduciary and reputation risks 3 / 4 bis - central bankers'speeches that financial institutions may face from the initial spike in financed emissions as a result of investing in such early phase - out projects. singapore has been doing its part to complement these global and regional efforts to promote transition and blended finance. infrastructure asia, launched by mas and enterprise singapore, provides technical assistance to enhance project bankability, thereby helping to attract financing. it provides expertise in project scoping, shares best practices in project development, and facilitates infrastructure financing deals in the region. infrastructure asia is facilitating a number of sustainable infrastructure projects, including in waste management and waste - to - energy. clifford capital, whose borrowings are guaranteed by the singapore government, provides debt financing to crowd in equity participation for infrastructure projects. bayfront infrastructure management, established by clifford capital, mobilises institutional capital for project and infrastructure finance through the issuance of infrastructure asset - backed securities. to - date, it has catalysed a total of us $ 330m for | 0.5 |
and the united states really that different? in april, inflation in the euro area is expected to have increased to a new record high of 7. 5 %, causing significant concern among firms and households. a large part of the rise in inflation reflects the exceptional surge in energy prices ( slide 2 ). over the past 12 months, energy accounted, on average, for around half of total headline inflation. 1 / 8 bis central bankers'speeches because the euro area is a net importer of energy, this surge in inflation is often referred to as “ imported inflation ” – in other words, inflation over which monetary policy has no, or very little, control. in this context, comparisons are often made with the united states, where energy is making a smaller contribution to headline inflation, suggesting that price pressures are predominately a result of domestic forces. and indeed, there is currently a large gap between the euro area and the united states when looking at measures of inflation that exclude energy and food ( slide 3, left - hand side ). for at least three reasons, however, such comparisons should be treated with caution. first, even if we exclude the impact of energy and food, inflation in the euro area is currently at levels never seen before in the history of the single currency. the prices of goods and services other than energy and food are currently increasing at an annual rate of 3. 5 %, more than twice as much as the pre - pandemic historical average. so, most people in the euro area are seeing a marked increase in their cost of living across the board. it gives them little comfort that inflation in other countries may be even higher. second, differences between the euro area and the united states have already existed previously. over the ten years preceding the pandemic, inflation excluding food and energy was, on average, about 50 % higher in the united states than in the euro area. so, inflation in the united states started from a visibly higher level. the rising gulf in this measure seems to suggest that these differences have been growing sharply over the past two years. however, year - on - year differences have largely been driven by a few months of extreme outliers, mainly in the spring of 2021. since then, the differences in month - on - month changes in inflation excluding energy and food have broadly returned to their pre - pandemic pattern ( slide 3, right - hand side ). the third, and perhaps most important, issue is that exclusion | / 6, norges bank. sfs 1988 : 1385, sveriges riksbank act in its wording as of 1 july 2011, stockholm : riksdagen. svensson, lars e. o. ( 2004 ), “ commentary ” [ on laurence h. meyer, “ practical problems and obstacles to inflation targeting ” ], federal reserve bank of st. louis review 84 ( july / august 2004 ), 161 – 164. svensson, lars e. o. ( 2011 ), “ practical monetary policy, examples from sweden and the united states ”, brookings papers on economic activity, fall 2011, 289 – 332. svensson, lars e. o. ( 2012 ), “ the possible unemployment cost of average inflation below a credible target ”, working paper, www. larseosvensson. net. swedish government ( 1997 ), riksbankens stallning ( the position of the riksbank ), government bill 1997 / 98 : 40. swedish government ( 2012 ), 2012 spring fiscal policy bill, government bill 2011 / 12 : 100. sveriges riksbank ( 2004 ), “ changes in calculation methods for the inflation rate, ” inflation report 2004 / 2, 45 – 48. bis central bankers ’ speeches sveriges riksbank ( 2010 ), “ minutes of the monetary policy meeting, no. 3 ”, 30 june 2010. sveriges riksbank ( 2012a ), financial stability report 2012 : 1, 1 june 2012. sveriges riksbank ( 2012b ), “ minutes of the monetary policy meeting, no. 2 ”, 17 april 2012. sveriges riksbank ( 2012b ), “ monetary policy update april 2012 ”, 18 april 2012. bis central bankers ’ speeches | 0 |
are ongoing within central banks and international bodies such as the financial stability board and the network for greening the financial system ( ngfs ), which brings together over a hundred central banks and financial supervisors. ladies and gentlemen, 2 / 4 bis - central bankers'speeches at bank al - maghrib, we have been involved in these national and global efforts to combat climate change and its impacts for several years. in 2016, on the sidelines of cop22 held in marrakech, the bank rallied regulators and stakeholders in the national financial sector around a roadmap on sustainable finance. in the same vein, bank al maghrib is working alongside the ministry of finance and other financial regulators to draw up a strategy for financing the fight against climate change. this should make it possible to assess the green financing gap and identify measures and mechanisms to enable the national financial sector, as well as foreign financial institutions, to amplify their contribution to green and climate finance. it will be supported by the adoption of a green finance taxonomies, necessary to channel financial flows and prevent " green washing ". regarding banking regulation, bank al - maghrib issued in 2021 a directive on the management of financial risks related to climate change and the environment. to assist banks in its deployment, bank al - maghrib, with the support of the world bank, has carried out an assessment of the banking sector's exposure to physical and transitional climate risks, as well as an analysis of climate shock scenarios. bank al - maghrib is currently working on new regulatory guidelines to provide banks with guidance on the data to be collected as well as the indicators and metrics to be put in place to measure climate - related risks emanating from major borrowers and to assess the green and sustainable portion of their portfolios. they also aim to transpose international sustainability transparency standards to enhance market discipline within the banking sector. in terms of managing its foreign exchange reserves, bank al - maghrib incorporates the principle of sustainability into its investment guidelines, by promoting sustainable and responsible investments. as of 2016, at cop22 hosted in marrakech, the bank invested $ 100 million in green bonds issued by the world bank. more recently, in 2023, it made a similar investment of 200 million dollars. its investments in green, social and sustainable bonds currently account for 7 percent of foreign exchange reserves, with a long - term target of 10 percent. bank al - maghrib strengthened its commitment to the | , since 2007 both the ministry of finance and bank almaghrib have considered financial inclusion as a major instrument to develop a comprehensive strategy of the financial sector by 2020 which aims to deepen the national banking market, develop capital markets and position our country as a regional financial hub. through our commitment to the maya declaration in 2013, we announced our pledge to promote access to and use of quality financial services based on sound and solid foundations. that same pledge was reaffirmed in 2016 as part of the roadmap of aligning the moroccan financial sector to sustainable development goals at the cop 22 held last year in marrakech. this commitment reflects our willingness and determination to continue our financial inclusion efforts, which have enabled morocco to become a regional benchmark, given the significant progress it has achieved in this regard. such efforts have been reported by the world bank and the imf during their last financial sector assessment mission ( fsap ) conducted in 2015. ladies and gentlemen, aware of the importance of data for designing relevant policies, bank almaghrib has taken specific measures to develop, in line with international standards, a set of indicators which address two fundamental dimensions of financial inclusion : access to and use of financial services. as for the “ quality ” dimension, it is monitored for the time being through the banking services price index, which we developed in 2011 and which accurately reflects the cost and trend of banking services. moreover, considering the weight of very small, small and medium enterprises ( vsmes ) in our industrial fabric and their role in employment and wealth creation, we mobilized various public and private actors to establish an observatory for vsmes. founded in 2016, this observatory aims at ( 1 ) centralizing national and regional data and information on vsmes, and ( 2 ) generating demographic, economic and financial information on economic sectors in order to allow stakeholders to respond more effectively to the issue of financing this specific category of companies. we have also established two credit bureaus, the first in 2007 and the second in 2016, in order to provide credit institutions and similar bodies with a common platform for the exchange of data. the objective of this platform is to help these institutions better assess the risks incurred on their counterparties, through solvency reports specifying the commitments of their customers and their payment behaviors. it also allows bank al - maghrib to measure the use of loans by the population and to evaluate the impact of actions taken on the supply and demand side. and in 2013 we launched, jointly | 0.5 |
bank raises the policy rate and thus suppresses both inflation and demand, thereby reducing the risk of the economy overheating. but if inflation rises as a result of a negative supply shock, the problem is more complex. if most people assume that the effect on inflation is transitory, the problem does not need to be so great. the central bank can then simply wait until inflation falls back again. however, one risk that is always present is that price impulses spread to other prices and start to affect economic agents ’ expectations. these may then expect inflation to remain high, or even rise further. the signs of such second - round effects have now begun to increase in many economies. this creates a tricky balancing act for monetary policy : at the same time as one wants to maintain confidence in the inflation target and prevent inflation from becoming entrenched at a high level, one wants to avoid pursuing a policy so tight that the economy enters a recession. as we saw, this was what happened after the first world war, although the motive then was to return to the previous price level rather than bring down inflation. to be a little drastic, one can say that the task facing the central banks is to avoid ‘ the great inflation 2. 0 ’, and to do so at the lowest possible cost in terms of lower production and higher unemployment. the conditions are better than before i intend to stick my neck out a bit here and say that the conditions for coping with this balancing act are quite good for sweden and at least considerably better than they were when inflation began to rise in the mid - 1970s. there are several reasons for this. none of these are news, but it is still worth reminding ourselves of them. firstly, since 1993, we have had an inflation target in the swedish economy. during the most recent period of lastingly high inflation, the idea was that inflation would be kept down by means of the fixed exchange rate. the fixed exchange rate was expected to have a disciplinary effect on price - setting and wage - formation, as excessive inflation in relation to the rest of the world would lead to difficulties for the export industry and increased unemployment. however, as i have pointed out, this did not work very well. expressed in economist terms, there was no credible nominal anchor in the economy, that is, a clear, quantified benchmark for price - setting and wage - formation. today, we have one in the form of the inflation target. during the period of inflation targeting, long | , the country's fx reserves hit their record high of eur 21. 2 bn. last year, the national bank bought eur 1 bn net in the interbank fx market. since the start of this year, we have bought additional eur 435 mn net. confidence in the financial system has also been preserved, as confirmed by the continued rise in total deposits in banks, which in late 2022 exceeded the 2019 figure by over 40 %. the npl share in total loans was reduced to a record low of 3 % at end - 2022. during the three crisis years – from 2020 to 2022, serbia was recording real economic growth of around 9 %. this year, real growth is expected to equal between 2 % and 3 % and gdp per capita to reach around eur 10, 000 for the first time. the unemployment rate is at its lowest, and private sector formal employment at its highest – close to 10 % above the pre - pandemic level. this means that 150, 000 more people are employed now than before the pandemic. in december, total average wage was higher by 36 %, while private sector wage exceeded the precrisis figure by as much as 46 %. we have also ensured conditions to attract a record high level of fdis, worth eur 4. 4 bn last year, i. e. 7. 1 % of gdp. stability and resilience of the domestic banking sector ladies and gentlemen, i began my address with the macroeconomic environment in which banks in serbia operate as trends in the financial industry always depend on real sector developments, and vice versa. good regulations and efficient supervision of financial institutions are also important. while some countries have a complicated supervision system and a huge problem of coordination among different supervisors, the banking sector supervisory function in serbia is exercised by a single institution – the national bank of serbia. the advantages of such organisation of the supervision system and the quality of supervision are reflected in a stable financial system. it is confirmed now as well – during the current developments in the international financial market – that the national bank of serbia is rightly cautious in easing its regulations. we do nothing " on request ". we do not fulfil anyone's wishes as we are guided by financial system security and the protection of interests of depositors and bank clients. this is our statutory objective and it is only in such way that we can best contribute to overall stability. that the nbs's approach is adequate | 0 |
of countries. the commission should have greater responsibility by making proposals, which can only be modified with unanimity in the council, rather than mere recommendations under the stability and growth pact. in the event of non - compliance, sanctions need to be applied much earlier and to be broader in scope. they should not only address excessive debt ratios, but also apply when countries are not making sufficient progress towards medium - term budgetary objectives. a wider spectrum of financial sanctions needs to be considered, along with non - financial and procedural sanctions, such as more stringent reporting requirements or even a limitation or suspension of voting rights. the second area may appear more novel, both at the level of the european union and at the level of the euro area, but the ecb has in fact been stressing it in the eurogroup since at least 2005 : the surveillance of policies to maintain europe ’ s internal and external competitiveness – policies to raise productivity, to enhance people ’ s skills and to improve firms ’ competitiveness. these policies go well beyond the tradable sector. they must also encompass the non - tradable sector, including the public sector, since it too is decisive for the competitiveness of an economy as a whole. conscious management of wages and costs in order to maintain a healthy position for the economy within a competitive environment – this should be the core focus of such broader macroeconomic surveillance. the reason why competitiveness should be the main focus is not that countries should pursue export - oriented policies or boost international market share. the reason is that within a monetary union, the relative competitiveness of economies captures very well the sustainability of price and cost developments. i am pleased that last thursday ’ s european council confirmed the need for an effective surveillance framework in this area. experience has shown that persistent divergence in this regard is detrimental both for member states and for monetary union as a whole. as with fiscal surveillance, this framework needs to allow for targeted and differentiated surveillance and follow - up measures. for countries that experience significant losses of competitiveness, surveillance should become increasingly deep and detailed. more ad hoc reporting and dedicated country missions, policy recommendations, compliance requirements, public peer pressure and gradual financial steps to encourage compliance could all be part of that process. for this to work, we need a transparent and effective trigger mechanism to determine the intensity of vulnerabilities and surveillance. this should be based on close monitoring and reporting by both the commission and the ecb. experts are currently developing ways to best | . remember that lockdowns are a non - economic shock that affects productive and unproductive firms indiscriminately. policies that protect viable businesses until activity can return to normal will help our productive capacity, not harm it. the right policy mix is essential. fiscal policy has to remain at the centre of the stabilisation effort – the draft budgetary plans suggest that fiscal support next year will be significant and broadly similar to this year, and the next generation eu package should become operational without delay. supervisory authorities are working to ensure that banks can continue to support the recovery by readying them for a potential deterioration in asset quality. 10 and structural policies have to be stepped up so that policy support can accompany the wide - ranging changes that the pandemic will bring, such as an accelerating spread of digitalisation and a renewed focus on climate issues. 11 the outlook for monetary policy so what is the role of monetary policy in this response? it is clear that downside risks to the economy have increased. the impact of the pandemic is now likely to continue to weigh on economic activity well into 2021. moreover, demand weakness and economic slack are weighing on inflation, which is expected to remain in negative territory for longer than previously thought. this is partially due to temporary factors, but the fall in measures of underlying inflation also appears to be connected to the weakening of activity. and developments in the exchange rate may have a negative impact on the path of inflation. continued policy support is therefore necessary to achieve our inflation aim. but we should also consider how best to provide that support. the unusual nature of the recession and the unsteadiness of the recovery make assessing the inflation path harder than in normal times. shifts in consumption baskets caused by supply - side restrictions are creating significant noise in the inflation data. 12 and the stop - start nature of the recovery means the short - term path of inflation is surrounded by considerable uncertainty. in these conditions, it is vital that monetary policy underpins inflation dynamics by supporting demand and preventing second - round effects, where the negative pandemic shock to inflation feeds into wage and price - setting and becomes persistent. to that end, the best contribution monetary policy can make is to ensure favourable financing conditions for the whole economy. 4 / 6 bis central bankers'speeches two considerations are important here. first, while fiscal policy is active in supporting the economy, monetary policy has to minimise any “ crowding - out ” effects that might create negative spillovers for | 0.5 |
at least compared with other risks, such as inflation and exchange rate risks. the reason is twofold. first, inflation risk may take time to materialise and to be factored in, even when the central bank monetises the debt. second, financial markets may find it easier to manage and hedge against inflation and currency risk than against sovereign risk. the separation between monetary and fiscal policies may create non - linearities and even multiple equilibria in the pricing of credit risk, which in turn may fuel self - fulfilling expectations and precipitate crises. given the role that government bonds play in advanced economies ’ financial markets, such instability may impair the transmission of monetary policy. this may justify targeted action by a central bank to push markets towards a more stable equilibrium. in general, the lack of fiscal dominance and the exposure to sovereign risk should promote overall better fiscal policies. this is certainly the case for most of the euro area countries. fiscal consolidation started already in 2010, when the euro area general government deficitto - gdp ratio and the debt - to - gdp ratio reached around 6 % and 85 % respectively. this compares with a deficit of 11. 2 % and a debt of 92 % in the us, a deficit of 9. 5 % and a debt of 220. 3 % in japan, a deficit of 10. 4 % in the uk and a debt of 80 %. further improvements in the fiscal situation of all the euro area members is expected for the current year, with the bis central bankers ’ speeches euro area average coming down to slightly above 4 %. the euro area debt - to - gdp ratio is expected to stabilise in 2013 and come down thereafter. in the euro area three countries are facing severe problems regarding market access. overall these three countries account for about 6 % of the euro area gdp. i will not elaborate on these three cases, and the fact that they have emerged in the midst of the worst economic and financial crisis since world war ii. the solution to these three cases entails a specific role to be played by the fiscal authority of the respective countries, the fiscal authorities of the other countries supporting the adjustment programme in those countries and the ecb. some commentators have said that in a crisis stronger coordination between monetary and fiscal policy is desirable, even if it comes at the expense of reducing the independence of monetary policy. the opposite is actually true. especially in a crisis the responsibilities for monetary policy and for fiscal policy have to remain quite separate. | stricter quarantine restrictions in ukraine and globally remains the main risk to macrofinancial stability 1 / 2 bis central bankers'speeches indeed, vaccination campaigns are already proving to be effective in some countries. however, they are being rolled out rather slowly, as a result of which the risk of tighter quarantine measures this year remains significant. in particular, some regions of ukraine have seen a significant rise in morbidity in recent months. therefore, the pandemic still poses the threat of a decline in business activity and a cooling of consumer and investment demand. this, in turn, could rein in inflation. conversely, the rapid recovery of business activity, rebounding commodity markets, the lagged effect of large - scale expansionary measures, and potential pent - up demand are generating risks of higher inflation globally. under such conditions, among other things, inflationary pressures from ukraine ’ s main trading partners could increase further. there are other significant risks. they include : volatile global capital markets a more dramatic deterioration in the terms of trade an escalation of the military conflict in eastern ukraine or on the country ’ s borders. given the above balance of risks and the significant rise in underlying inflationary pressures seen in recent months, the nbu board decided to raise the key policy rate, to 6, 5 %. what will the nbu ’ s monetary policy stance be in future? looking ahead, the nbu stands ready to raise its key policy rate more resolutely in order to curb underlying inflationary pressures, stabilize expectations, and bring inflation back to its target. the nbu remains committed to its duty to meet the inflation target. therefore, nbu monetary policy will continue to be aimed at preventing a spike in inflation. thank you for your attention! 2 / 2 bis central bankers'speeches | 0 |
and jori kandra ( 2023 ), " class of 2023 : young workers have experienced strong wage growth since 2020, " economic policy institute, working economics blog, may 4. 2 see anna crockett and xiaohan zhang ( 2023 ), " young adults are disconnected from work and school due to long - term labor force trends, " federal reserve bank of dallas, communities blog, april 6. 2 / 2 bis - central bankers'speeches | a result, the dispersion of bank lending rates among the four largest euro area member states – and this you can see on the right - hand side ( slide 3b ) – is currently at its lowest level since the introduction of the euro. and with the launch of banking union, the link between banks and sovereigns has started to loosen too. 4 / 15 bis central bankers'speeches one thought - provoking way of illustrating just how far dispersion has fallen across the euro area is to do a simple exercise : when we compute a standard forward - looking taylor rule based on next year ’ s inflation and output gap projections from the european commission, it would suggest an interest rate for germany and italy that is, by and large, the same. 2 such an exercise is, of course, overly simplistic – there are good reasons why we do not set policy according to taylor rules. in particular, policy rules are overly mechanistic and lack a deeper analysis of the underlying forces of growth and inflation, such as whether inflationary shocks are due to supply or demand shocks, which is a key aspect of our monetary policy strategy. nevertheless, this simple exercise puts into perspective the view of some observers that the ecb ’ s policy is too loose for some member states and too tight for others. but it also serves a different purpose. it shows that, while the broadening of the recovery is certainly welcome, a persistent convergence of growth rates is not unconditionally a good thing. for example, although simple policy rules would prescribe a broadly similar monetary policy stance for germany and italy, few would disagree that these two economies should ideally be on different growth trajectories, so living standards in italy could catch up with those in germany. this, however, is not what we are seeing today. although the left - hand chart of slide 4shows that the euro area did not converge to growth rates much lower than those we had seen prior to the crisis – a process that some academics have coined “ superhysteresis ” – it also shows that the distribution of growth rates is pointier with flatter right - hand tails when compared with its pre5 / 15 bis central bankers'speeches crisis pattern. this implies that, compared to the pre - crisis period, fewer countries are growing at rates faster than the average. in other words, we are seeing little evidence of lower - income countries catching up with higher - income countries. as you can see on the right | 0 |
from their own banking crises. 7 the parliamentary supervisory council of the bank of finland met ben bernanke during the last week of his term of office in washington last january. we asked him what lessons we might take from the research on the depression of the 1930s in the current crisis, and if there had been any new developments in the field. he emphasised that the essential lessons learned from the 1930s depression were the securing of banks ’ liquidity during the crisis and aggressive reductions in interest rates, so as to avert a deepening of the crisis and a slide into deflation. but one thing about the current crisis had surprised bernanke : the complexity of international financial institutions and their multi - level connections within the global financial system. the demand for international cooperation was thus even more important now than it had been during the great depression. the influence of these lessons of the 1930s can be clearly seen in the monetary policy of recent years. the escalation of the financial crisis in september 2008 as the lehman brothers investment bank fell, and the severe disruption to the financial markets that followed, compelled central banks to act swiftly. the dry - up of liquidity in the banking system and onset of a general banking crisis had to be prevented. the securing of the banks ’ liquidity was carried out in broad international cooperation. for instance, european banks at that point needed large amounts of short - term dollar credit, which the ecb was able to arrange with the help of the us central bank. international cooperation was achieved with unprecedented speed and scope. as economic growth stalled in 2009 after the money - market crisis, inflation also came to a halt and turned negative for a while in all of the key currency areas. monetary policy was eased around the world, to support activity and prevent a destructive spiral of deflation. policy rates were pushed to record lows, to 1 per cent in the euro area, and already then close to zero in many countries. bernanke, b : nonmonetary effects of the financial crisis in the propagation of the great depression. american economic review, vol. 73, no. 3 ( 1983 ). bis central bankers ’ speeches since that time, interest rates have remained exceptionally low everywhere and the spiral of deflation has been avoided. in the current circumstances, the securing of price stability and the supporting of economic growth have not been in conflict ; rather, monetary policy has been able to pursue both of these goals. * * * in assessing the success of monetary policy | for its part, is widely expected to have a major impact on labour markets and productivity, and possibly also on income distribution and economic growth. the concept of ai as a field of science originated in the 1950s, but it was only with the significant increase in computer capacity and availability of high - quality data that a new 1 / 4 bis - central bankers'speeches leap in ai development became possible. the concept of ai has, of course, evolved over time, and it has often been associated with machine learning. a significant step more recently, as we know, has been the proliferation of generative ai and large language models powering solutions such as chatgpt and copilot. the international monetary fund, the imf, notes that the impacts of ai may vary by country depending on factors such as the country's readiness to utilize ai. advanced economies are best positioned to leverage ai, but they are also the most exposed to aidriven structural changes in the labour market, including the disappearance of some jobs and the creation of others. while the least developed economies are less exposed to these changes in the labour market, they are also less prepared to leverage ai, risking the creation of a new technological divide. the race for ai supremacy is already on. mario draghi's recently published report on the future of european competitiveness argues that the world stands on the brink of a new digital revolution driven by the proliferation of ai. the report expects ai to be a key factor in europe's future productivity growth. the report also emphasizes the importance of increasing ai investments in europe, including data centres and supercomputers, in order to avoid falling behind the united states and china. importantly, it also recommends education and retraining programmes to help the workforce adapt to changes brought about by ai. let's turn now to the impact of ai on finance, the topic of the second session. ai systems have been present in the financial sector for over a decade. as in many other sectors, the use of ai is already improving productivity. ai - powered systems can process large volumes of data in real time, allowing faster decisionmaking. tasks like loan approvals, which once took days, can now be completed in minutes. so, what else can we expect? additional automation in tasks such as customer service, fraud detection and regulatory compliance can further help drive down costs and minimize risks of human error. beyond operational gains, ai is also bringing new tools to risk management and improving both service quality | 0.5 |
as to overseas, may well occur. and third, measures intended for specific sectors, such as housing, give rise to the issue of conflict with other governmental measures. in fact, the inability to employ these macroprudential tools in a timely fashion entails the risk of accelerating financial cycles. “ hard ” measures, which involve the adjustment of regulatory ratios in a countercyclical manner, are relatively new. given this, the ultimate challenge, including responses to the various others i have just mentioned, is how to carry out these measures in an accountable manner. one point i want to stress in relation to this is that, in dealing with financial imbalances, what is important and effective is supervisory guidance by central banks and financial authorities namely, their “ soft ” approach, by which they issue advance warnings while providing guidance and advice to financial institutions based on assessments of financial system stability. supervisory guidance for financial institutions is primarily regarded as a microprudential measure. by carrying them out from a macroprudential perspective in an industry - wide and collective manner, however, the soft approach is capable of producing effects as a form of macroprudential policy. moreover, compared with hard approaches like the ccb, this approach allows for more forward - looking and flexible responses. based on such understanding, the bank ’ s disclosure of the challenges and risks involved in ensuring financial stability, through the publication of the financial system report, and its responses to these issues, through on - site examinations and off - site monitoring, are considered part of macroprudential policy. second, let me shift my focus to international financial regulations as a form of “ structural ” macroprudential policy. reform of international financial regulation is entering its final stages. basel iii and responses to the issue of “ too big to fail, ” such as tlac ( total loss - absorbing capacity ), are measures designed to substantially strengthen the resilience of the global financial system. furthermore, it is important to acknowledge the fact that financial authorities and the financial industry worldwide have developed a common understanding on international regulation, overcoming differences in their views. this indicates a major step forward, in that we have created a foundation for international cooperation to tackle many issues and crises that could arise in the future. bis central bankers ’ speeches having said this, i would like to mention several points with regard to the finalization and gradual implementation of the basel iii regulatory reforms. the first point is the importance of a comprehensive calibration | joint efforts in carrying out macroprudential policy, fulfilling their respective functions. furthermore, in june 2014, the two entities together established a task force with the aim of holding regular joint meetings, and they have been fostering further coordination. the bank is determined to continue with its efforts to contribute to ensuring the stability of the financial system, making use of these arrangements. thank you. bis central bankers ’ speeches | 1 |
kristina persson : why is inflation so low? the example of the retail sector speech by ms kristina persson, deputy governor of sveriges riksbank, at the nordic retail college, norrtalje, 24 may 2005. * * * introduction strong forces are affecting the developments in the world economy today. globalisation and stiffer international competition are having an impact on individual countries'economies in many different ways. in sweden, this has contributed, among other things, to a very low inflation rate in recent years. the subdued developments in the prices of imported goods partly reflect the integration of countries such as china and india into the world economy. likewise, the surprisingly robust productivity growth can probably to some extent be attributed to the increased international competition. also contributing to the low inflation is the increasing establishment of low - price chains in the swedish non - durables sector in recent years. this increases competition and helps squeeze swedish food prices. i intend to begin by briefly discussing global structural change in general and thereafter to concentrate primarily on the changes that we are seeing in the swedish non - durables sector at the moment. finally, i also intend to touch upon the current economic situation. globalisation raises the demands on flexibility globalisation means ” the growing mutual dependence between countries around the world through the increasing volumes and amounts of cross - border transactions in goods, services and capital flows ”. 1 this process has intensified in recent years, partly reflected in a sharp pick - up in world trade, an even faster increase in direct investment and a very steep rise in global equity and currency trade. globalisation has given rise to rapid structural change, resulting in jobs being shed in certain sectors or being relocated to countries with lower production costs. sweden has, for a long time, experienced fast structural change, which contributed to the strong economic performance in the 1990s. less than 100 years ago, around half of sweden ’ s employed worked in agriculture and forestry ; today, that figure is only 2 per cent. over the same period, the proportion of the employed in the services sector has risen from roughly 20 per cent to 75 per cent, at the same time as the proportion in manufacturing increased at first from about 30 per cent to just over 40 per cent and then fell to 20 per cent. among other things, we saw during the 1960s and 1970s that large parts of swedish manufacturing, in the shape of the textile and shipbuilding industries, were outsourced from sweden. one consequence of structural change is that when old sectors | lars nyberg : are hedge funds dangerous? speech by mr lars nyberg, deputy governor of the sveriges riksbank, at a meeting at nordea and the cfa society of sweden, stockholm, 24 november 2006. * * * i shall begin by thanking you for the invitation to come here to nordea and the cfa society of sweden to develop some thoughts on the usefulness and risks with hedge funds. after several years of strong growth, hedge funds are a hot topic among market agents and authorities. although hedge funds ’ percentage of the total capital managed is small, around five per cent, they account for a large part of the liquidity on certain markets. many people express concern as to what effects hedge funds might have on financial stability and after the much - publicised collapse of the us hedge fund amaranth in the autumn, the debate on regulation has gained new impetus. as you may perhaps know, amaranth primarily traded various gas and energy derivatives. after summer 2005, amaranth held gigantic positions in the gas market – they believed in a price increase. between august and october 2005 the price of natural gas rose by 50 per cent, partly as a result of the severe hurricanes. the fund earned substantial amounts of money and the fund managers were also expecting this autumn to see high energy prices during the winter. they bought futures for november and march and sold ( sold short ) contracts for october and april. however, this year did not develop as expected. during the period from august to mid - september the price of natural gas fell by 40 per cent and in a couple of weeks amaranth lost usd 6 billion, which corresponded to two thirds of its capital. despite the size of the amount, the market effects were largely non - existent and there was never any concern in terms of financial stability. the private sector also managed to settle its positions without any intervention from the responsible authorities. does this mean that the concern over hedge funds is exaggerated? or is increased regulation necessary? before i discuss these questions, however, i would like to take a brief look back at the development of hedge funds in recent years. a look back hedge funds are a relatively new phenomenon in the swedish market. however, the first hedge fund was established in the united states 60 years ago. at the end of the 1940s, us journalist alfred winslow jones bought shares he considered to be under - valued and sold short shares he considered over - valued. his idea was that the price of under - valued | 0.5 |
the sound parts from the problematic ones. if the current restructuring strategies lack the potential for improving the sick part, then perhaps it is the due time to pass to a new strategy that treats both parts of the business as separate from each other. this would enable an optimal solution in each specific case versus a unified refinancing strategy that was implemented so far. clearing the lending activity would bring about shifting of the new credit from inefficient refinancing to new development possibilities and economic growth, where the savings - investment balance is in equilibrium. this issue relates not only to the performance of the banking system and the financial stability of the country, but also to the ability of the economy to grow in the future. as i have also mentioned in other events, both the macro and micro factors that encouraged rapid economic growth in the recent years, are no longer present in the global and national economy. the new equilibriums we are living with show that the rapid consumption - driven growth models and credit - based growth models will no longer be present in out economy. this is true owing to supply and demand factors, since the rapid consumption - and creditdriven growth has aggravated the savings – investments balance sheets of agents in the economy. consequently, there should be found a new long - term economic growth model, capable of absorbing the financial resources, particularly the foreign ones, and generating an economic growth. the first step in this regard is the identification of the competitive advantages that the albanian economy generates and the acceleration of structural reforms in the albanian economy in the light of these priorities. it is a pleasure that our timely discussion topics and activities are in line with the agenda of this activity. thus the imf provides a valuable contribution to our economy through discussion of these topics. furthermore, through this activity, the imf enhances the transparency throughout the albanian economy regarding the economic development vulnerabilities from the imf viewpoint, thus participating in the country ’ s economic debate. i would like to emphasize the latter, because i find it particularly important with regard to the difference between scientific contribution and that of political economy. the imf comes to albania as a participant in this debate with four scientific papers, whose results are based on available and reliable statistics, identified economic models and conclusions based on wellgrounded assumptions and analyses. each of these elements is clearly explained in the working papers that will be discussed today. these elements altogether make the work replicable ( controllable ), open for discussion, and | much impact to the end user. this includes through the geopolitical risk program under the council of financial regulators, and in the case of apra, through cps 230. rba ( 2024 ), ‘ merchant card payment costs and surcharging – issues paper ’, october. this could include having only interchange caps instead of both caps and benchmarks, removing ad valorem interchange caps and benchmarks ( so that they are solely cents - based ), or limiting the number of interchange categories. this includes the impact of other service costs being bundled into the surcharge that is passed onto consumers. financial stability board ( 2024 ), ‘ annual progress report on meeting the targets for cross - border payments : 2024 report on key performance indicators ’, 21 october. the financial stability board has, for the purposes of its targets, defined remittances as low value, high volume payments primarily sent to recipients in emerging market and developing economies. retail payments are all other payments under us $ 100, 000. this task has been helped by recent updates to the guidance from the australian competition and consumer commission on how international money providers can improve the transparency of these services. this included guidance around how international money providers should display information to consumers, requiring standardised illustration of costs and other service features, such as the time it will take for the recipient to receive the funds. see accc ( 2024 ), ‘ best practice guidance for foreign cash and international money transfer services ’, october. for instance, the rba is working to ensure that the australian industry adopts the globally harmonised iso 20022 messaging requirements for cross - border payments. work is underway to plan the npp ’ s adoption of globally harmonised iso 20022 messaging, and we expect industry to have adopted the globally harmonised iso 20022 messaging requirements for high - value and fast payments by the end of 2027. see bis innovation hub ( 2024 ), ‘ project mandala : streamlining cross - border transaction compliance ’. for the paper, see here : rba and treasury ( 2024 ), ‘ central bank digital currency and the future of digital money in australia ’, september. see also jones b ( 2024 ), ‘ financial innovation and the future of cbdc in australia ’, speech at the intersekt conference, melbourne, 18 september. rba ( 2024 ), ‘ rba and dfcrc joint consultation paper project acacia – exploring the role of digital money | 0 |
jorgovanka tabakovi : only sustainable growth and development lead to a sustainable future address by dr jorgovanka tabakovi, governor of the national bank of serbia, at the first western balkans sustainable investing forum, national bank of serbia, belgrade, 17 november 2022. * * * accompanying presentation of the speech welcome to the national bank of serbia and the first western balkans sustainable investing forum, i hope the first of many. first of all, i would like to greet my colleague and friend igor mirovi, the president of the provincial government. at his initiative, the development and guarantee fund of vojvodina and the guarantee fund of the republic of srpska founded the business association " green navigator of the western balkans ". all forms of cooperation, especially those aimed at strengthening renewable energy sources and agriculture, are an important element of sustainable growth. i also welcome mr. alessandro bragonzi, head of regional representation for western balkans at the european investment bank ( eib ). the eib is the eu's climate bank, but through its activities it also supports the green transition in the western balkans. the cooperation between the nbs and the eib is particularly dynamic in the area of disbursement of apex loans, with the nbs acting as serbia's agent. apex loan funds are intended for entrepreneurs, small and medium - sized enterprises, companies of medium market capitalisation, priority projects and local self - government, for projects in infrastructure, protection and improvement of the environment, energy efficiency, health and education. around 9, 600 new jobs are to be opened throughout serbia within the projects that have been financed so far from the apex loans, and i am especially happy about those that support the employment of young people in serbia as well as the development of education, because there is no substitute for knowledge. ladies and gentlemen, it is evident that not all growth is equally good. only sustainable growth and development lead to a sustainable future. and if growth is not sustainable, investments cannot be sustainable either. the reverse is also true. that's why when we talk about sustainable growth, we can't help but include the following questions : green economy, digital economy, and issues of various types of equality. i will continue about : awareness of the importance of " green " transformation necessity of taking a gradual approach in that process 1 / 4 bis - central bankers'speeches nbs activities in the area of sustainable investing i will start by stating that | the work of the vienna initiative climate change working group, which is co - chaired by the european investment bank, the european commission, the european bank for reconstruction and development and the world bank group. the goal of the working group is to discuss availability and quality of data, regulation and supervision, development and improvement of knowledge and capacity in the area of climate risks, as well as the transition process faced by many sectors. it is a good platform that enables the exchange of experience and plans, especially since the representatives of the european and global regulators are present in the working group, which gives an insight into the current and planned measures for managing and monitoring the risks related to climate change. ladies and gentlemen, there is no doubt that ecology must be one of the priorities of policy makers, and in serbia it is, because it is interwoven with many policies. also, all actors – from individuals to institutions and decision makers – must act responsibly. however, this does not mean that we should close factories that are not eco - friendly, but that every activity should be carefully measured, and that our task is to find sustainable solutions that will be the best for our citizens. this is evident in the example of the current global 3 / 4 bis - central bankers'speeches energy crisis, where it takes time to build alternative energy sources, and where energy security is a priority. this means that it is important to find the right measure and the right sequence of activities, and we all have to participate. today's event is a proper collective action. thank you for your attention and i wish you a successful first western balkans sustainable investing forum 4 / 4 bis - central bankers'speeches | 1 |
kevin greenidge : continuing the legacy of success remarks by dr kevin greenidge, governor of the central bank of barbados, at the alleyne school speech day, bridgetown, 6 april 2023. * * * good day everyone! it's an honour to stand before you on this momentous occasion. as i look out at all the smiling faces, i am filled with a sense of pride and admiration for all of you. you have worked tirelessly to be winners today and you should be proud of your accomplishments. today, i want to talk to you about " continuing the legacy of success. " as alumni of this great institution, we have a responsibility to uphold the high standards of excellence that have been set for us. we are the product of the hard work and dedication of those who came before us, and it's now our turn to carry on their legacy. over the years, our school has been the breeding ground of exceptional individuals who have gone on to achieve great things in various fields, including in academics, athletics, arts, and in community service, just to name a few. these icons include : dr. the honourable corey forde, head of isolation centre and infection control specialist, present today dr. velma scantlebury, gcm, first black female transplant surgeon kathy harper - hall, programme director at sport for life barbados inc. sport for life philip antoine, national mixologist and reverend harcourt blackett this legacy is not just a mere accolade, but it is a responsibility that you carry with you wherever you go. but what does it mean to continue the legacy of success? success is not simply about achieving your goals, but also about leaving a positive impact on the world around you. it's about making a difference in the lives of others and contributing to society in a meaningful way. the legacy of success that we have inherited is not just a list of achievements, but also a set of values and principles that we should strive to uphold. valuing hard work one of the most important values that this school has instilled in us is the importance of hard work. nothing in life comes easy, and it's through hard work and dedication that we can achieve our goals. as former us president theodore roosevelt said, " nothing 1 / 3 bis - central bankers'speeches worth having comes easy. " success is not handed to us on a silver platter. it requires dedication, perseverance, and a willingness to put in the | . that path entails obvious contradictions ; for this reason, the deutsche bundesbank recommends we shun such an approach. conclusion ladies and gentlemen, we find ourselves in a situation in which difficult and, perhaps, uncomfortable decisions are unavoidable. this situation is aggravated by uncertainty in the markets and among the general public. this uncertainty has to be eliminated if we want to break free of the present crisis. yet this uncertainty cannot be eliminated by repeatedly topping up the rescue fund. instead, what we need are decisions which address the root causes of the crisis. besides a swift and ambitious fiscal consolidation, i would highlight three main points. we need clarity regarding greece ’ s future. greece must fulfil the conditions of the aid programme ; if it does not, there is no basis for granting further support. a greek default – which most certainly no - one wishes to see – cannot therefore be categorically ruled out. we need clarity regarding the banking sector ’ s resilience. it has to be strengthened where it is too low in order to prevent contagion effects. this explicitly includes recapitalisations. this is justified even though the banks are not to blame for the high level of sovereign debt in several european peripheral countries. and we need clarity regarding the future of the monetary union. i have outlined two different paths in my address. which of the two paths is chosen is in the hands of our politicians. it is now up to them to decide quickly. we therefore expect clear and landmark decisions by the european council this coming sunday. bis central bankers ’ speeches | 0 |
the forecast horizon. however, a prolonged, high - intensity war threatens to further destroy cities, infrastructure, and production facilities, and the extent of the destruction is difficult to estimate in advance. compared to the previous forecast, the risk of insufficient international financing this year has eased considerably, but the risks to regular financing remain. the following risks also remain significant : 2 / 4 bis - central bankers'speeches the emergence of additional budget needs to maintain defense capabilities or cover substantial quasi - fiscal deficits, in the energy sector in particular heavy damage to infrastructure, especially energy and port infrastructure, which will limit economic activity and put supply - side pressures on prices the continuation of the partial blockade of freight transportation at border crossings with some eu countries, which will depress exports and make imports more expensive the deepening of adverse trends in migration, and the aggravation of the situation in the middle east, which, in particular, increases the risks of possible disruptions to energy supplies and a rise in energy prices for the global economy. at the same time, a number of positive scenarios may still materialize, including further expansion of export opportunities, the transfer of funds from immobilized russian assets to ukraine, the acceleration of european integration processes, and the implementation of a large - scale recovery program. taking into account the balance of risks, as well as favorable macrofinancial trends, in particular better inflation dynamics, the nbu board decided to cut the key policy rate by 1 pp, to 13. 5 %. the previous steps to ease interest rate policy and changes in the operational design of monetary policy gradually decreased nominal yields on hryvnia deposits and domestic government debt securities. at the same time, on the back of the overall improvement in inflation expectations, these instruments remained attractive and in demand. a moderate cut in the key policy rate should not diminish interest in hryvnia assets, as they will continue to protect savings from being eroded away by inflation. the nbu is also cutting the interest rates on overnight certificates of deposit and threemonth certificates of deposit, to 13. 5 % and 16. 5 % respectively. what is more, the nbu is decreasing the interest rate on refinancing loans more pronouncedly – by 2 pp, to 17. 5 %. in the context of the interest rate policy easing cycle, the need to maintain a significant difference between the interest rate on refinancing loans and the key policy rate is diminishing. with | ##sinflation in ukraine and require a review of utility tariffs. taking into account the above and the consequences of the war, the nbu expects inflation will drop to 20. 7 % in 2023, and 9. 4 % in 2024. inflation will return to the 5 % target in 2025. what will be the overall state of the ukrainian economy? economic activity has been reviving in ukraine since april 2022, particularly due to the liberation of northern oblasts and a decrease in the number of regions affected by active hostilities. in the meantime, hostilities in the east and south of the country, destruction of infrastructure in various regions, the blockade of sea ports, and weak demand in the majority of sectors are restraining the economic recovery. losses in the agricultural sector also make a large impact. the economy will thus shrink by a third in 2022 because of the war. when the active phase of the war is over, it is expected that consumer demand will rise, technological and logistical processes will be set up, and investment activity will recover, among other things, thanks to ukraine's european integration prospects. this will enable the ukrainian economy to return to growth. at the same time, the large losses of production and human potential caused by the war and security risks will be a drag on economic growth. the nbu expects the ukrainian economy will grow at the rate of around 5 % – 6 % per year in 2023 – 2024. what does the materialization of the nbu's baseline scenario depend on? ukraine's continued cooperation with its international partners will remain one of the key factors in supporting the economy during the full - scale war and contributing to its recovery after the active phase of hostilities ends. ukraine will continue to work closely with international financial organizations in 2023, including through the launch of a new imf program to support macroeconomic stability in the country. ukraine's cooperation with the imf and continued european integration will help the country implement other structural reforms. a prudent economic policy is also a necessary prerequisite for delivering macroeconomic stability and ensuring the nbu's baseline scenario materializes. under the current conditions, it envisages : narrowing the budget deficit through prioritizing expenditures and raising revenues gradually reducing imbalances in the energy sector replacing the monetary financing of the budget with market borrowing decreasing demand for imports by imposing additional taxes discontinuing the practice of monetizing the state budget deficit. 2 / 4 bis - central bankers | 0.5 |
changes and structural breaks on asset prices. from a policy perspective, enhancing our knowledge about the role of risk aversion and amplification mechanisms in explaining the build - up and unravelling of crises provides important insight on how to conduct monetary and financial stability policy. fiscal policy and the euro area sovereign debt crisis the last theme of the conference that i would like to mention is the effect of fiscal policies and the evolution of the sovereign debt crisis in the euro area. by using a suitable nonlinear model, born et al ( 2014 ) show that the effects of fiscal consolidations on the cost of servicing sovereign debt depend crucially on the degree of fiscal stress. 6 while expenditure - based fiscal consolidations carried out in normal fiscal circumstances have favourable effects on the cost of servicing debt, in situations of fiscal stress, sovereign spreads tend to rise. these findings suggest that fiscal policies in the euro area should be oriented towards a growth - friendly composition. as pointed out by the ecb president in his 2014 jackson hole speech, selective tax cuts should be matched by corresponding selective spending reductions, targeting taxes with high fiscal multipliers and unproductive expenditures. additional benefits could be reaped by implementing strong co - ordination among fiscal policies of the different euro area countries, with an active role for complementary actions at the eu level with public investment. another important concern for the ecb has been the possibility that self - fulfilling beliefs might lead to unsustainable sovereign debt dynamics and therefore precipitate a crisis. 7 as bacchetta et al ( 2014 ) show, a belief - driven crisis cannot be prevented by conventional monetary policy, unless the monetary authority is ready to generate very high inflation levels for a prolonged period. non - conventional policies – based on issuing monetary liabilities in the form of fiat money – could be used, but their effectiveness would be limited. either the central bank has a large amount of assets relative to the sovereign debt, or the zero lower bound has to bind for an unrealistically long time. hence, it seems legitimate to conclude that the effectiveness of policy actions in preventing self - fulfilling sovereign debt crises is subject to important qualifications. this is in line with the ecb announcement of the outright monetary transaction ( omt ) programme in august 2012, aimed at eliminating self - fulfilling beliefs of a euro area break - up. the omt programme announcement has been successful so far mainly because of its careful design. the programme is strictly conditional on adjustment programmes and structural reforms | the ecb has carried out several measures to address these problems and the financial situation in the euro area has improved dramatically. however, the economic situation remains difficult, with negative implications for investment. the prospect of a prolonged period of low inflation might have adverse effects, including a possible de - anchoring of inflation expectations. this is why, after setting our policy rates to their effective lower bound, the ecb has decided to engage in a mix of further unconventional monetary policy measures. we are convinced that these measures, working through several channels, will provide further monetary easing and underpin the anchoring of inflation expectations. see e. g. aruoba and schorfheide ( 2014 ), christiano et al ( 2014 ). bis central bankers ’ speeches from a policy point of view it is important to incorporate the zlb explicitly in models that inform the policy process. this results in nonlinearities that have far - reaching implications, including for the size of the fiscal multiplier and for the role of goods and labour markets to exit the zlb. housing another important theme treated in the conference is housing and its relationship with global macroeconomic conditions. the model used2 by justiniano et al ( 2014 ) explains the u. s. house price boom that preceded the great financial crisis as the consequence of looser lending conditions in the mortgage market. looser lending conditions were the direct consequence of a variety of factors, in particular of the process of securitisation and the diffusion of market - based financial intermediation. the lax macro - prudential regulatory framework was a pervasive factor in producing looser lending conditions. an important lesson to be drawn from this analysis is the significance of an active macro - prudential policy capable of containing the unwanted effects of the kind of credit standard loosening that seems to have been responsible for the inception of the housing boom. monetary union the future of the european monetary union is another particularly relevant theme. it is possible to relate the current problems faced by many euro area countries to the existence of relevant heterogeneity in financial frictions across single member countries. 3 in the model used by simon gilchrist et al ( 2014 ), these differences allow firms from strong countries to undercut prices and gain market share from firms in vulnerable countries. this generates real exchange rate misalignments and current account deficits in peripheral countries, which may be viewed as a cause of the current sovereign debt crisis in europe. under these circumstances | 1 |
, as an autonomous apex institution, with the mandate of playing a proactive role of a " think - tank " of the banking system. the nibm is recognized by the university of pune as an approved centre for post - graduate research, and also by the department of scientific and industrial research, ministry of science and technology, government of india. joint indiainternational monetary fund ( imf ) training programme ( itp ) has been established recently at the nibm campus in pune. the reserve bank has sponsored and funded this collaboration. this is the seventh such facility of the imf institute in the world. a former governor of the reserve bank and at present the prime minister, professor manmohan singh, inaugurated the upgradation of the 50 year old bankers ’ training college into a centre for advanced financial learning, when he visited the reserve bank recently. the centre is in the process of taking a final shape with the help of a high powered advisory group. the reserve bank also promotes research by providing financial assistance under a scheme – the reserve bank ’ s endowment scheme – to various institutions for undertaking research and training in areas of interest to the reserve bank. the financial support is generally provided through corpus funds. at present, there are 21 corpus funds and the beneficiaries include several universities. the reserve bank funds several seminars / lectures by experts, including leading academics, most notable of them being a series of three memorial lectures and support to national level academic workshops / conferences. as a continuation of this process, and as a part of its capacity building and knowledge management initiatives, the reserve bank has recently signed a memorandum of understanding with the london school of economics and political science ( lse ), as one of the sponsors, for creating a lse india observatory and ig patel chair. currently, an eminent economist, lord nick stern, holds the chair. the lse india observatory co - ordinates india related research, policy development and teaching at the lse and is expected to emerge as a hub for academic collaboration with academic institutions in india, government agencies and corporate bodies. we, in the reserve bank, believe that this event reinforces our joint commitment to greater collaboration between our two countries, economies, financial sectors, central banks, and academia. i would like to conclude by expressing my gratitude to the university, in particular, vice chancellor professor fagoonie for his kind invitation to me, and honorary professor bheenick for making the conferment ceremony a very | among them, which may lead to delays in sanction, double financing, etc. the building up, and sharing, of credit information will help in enhancing synergies among the various institutions and also ensure avoidance of multiple financing and consequent over - indebtedness. in this context, let me add that as per credit information companies ( regulation ) act, 2005, nbfcs, as credit institutions, are required to be members of at least one credit information company ( cic ) ( currently there are four cics ). what is important is that credit data regarding all the borrowers should be furnished to the concerned cic accurately and timely and full use should be made of the database of cics while extending credit, to guard against adverse selection and over indebtedness. diversification it was observed that mfis found a few geographies more profitable than others and against conventional wisdom which advocates diversification, ran in droves to the same geographies with southern region showing significant concentration of shgs and mfis. excessive proliferation of entities in a few regions, led to immense, and, sometimes, unhealthy competition leading to perverse practices. it is now comforting to see that, learning from the recent episode, the mfis are reorganising themselves and are spreading into, hitherto, untapped regions. diversification helps not only mfis in withstanding any region specific shocks but also help customers at large, by spreading the microfinance across the country. improvising the business model – reducing costs microfinance is a labour intensive sector involving significant delivery costs. while the entities could build these costs into their services and charge the customer, which many in fact did, the more efficient way of protecting or increasing one ’ s margins is reducing the operational costs by enhancing efficiency and leveraging technology. mfis should not pass on their operational inefficiencies to clients in the form of prices that are far higher than they need to be. considering the profile of the borrowers who are poor, to whom even a small increase in rates could make a lot of difference, mfis should strive to build more cost effective and efficient delivery models to serve their clientele better. credit rating of mfis the rating of mfis assumes critical importance as mfis are sourcing financing from banks and other institutions. there are several mfis in the country and their rating helps the lend | 0.5 |
, confirm that the demand for fixed capital goods remains strong. the stable course of sustainable components such as investment and exports had a positive effect also in employment. while employment participation rates increase further, the trend of decline in the number of unemployed also continues. thus, as of may, the total number of people employed reached a historical high with 30. 8 million people. in addition, the relatively stationary course of the unemployment rate with 10. 9 % indicates that the employment gap is still high and the employment capacity will increase further in the upcoming period. 2 / 5 bis - central bankers'speeches employment developments in the turkish economy are very promising. due to investment expenditures and exports as well as the rapidly increasing industrial production since the second quarter of 2020, the number of people employed rose by 2. 7 million ( 1. 3 million being in the services sector and more than 900, 000 in the industrial sector ) as of the first quarter of 2022. in addition, employment has increased by approximately 846, 000 people since the beginning of the year. this increase in employment is significantly larger than that of peer countries. considering the population and the sources of employment growth in these countries, our employment performance becomes even more remarkable. employment in the manufacturing industry in particular, exhibits a notably strong performance. in the pandemic period, many countries have not managed to compensate for the losses in labor force participation. on the other hand, both the labor force participation and employment indicators in our country have exceeded their pre - pandemic levels, showing how brisk and robust the labor markets were in the normalization process. distinguished members of the chamber of industry, the turkish economy is going through a process of structural transformation centered on increasing investments, employment, production and exports, the focus of which is you. adjusted for cyclical effects, the turkish economy had a current account surplus for three consecutive quarters for the first time since this analysis began in 2004. in other words, this new balance indicates that when global energy and commodity prices start to normalize, our economy will reach its current account surplus capacity, shortterm financing needs will be minimized, and growth will be driven by exports. this points to the beginning of a new era for our country. put differently, growing and simultaneously generating a current account surplus will help the turkish economy see permanent growth and price stability on a sustainable path. despite being overshadowed by energy price hikes, we, as the central bank, are determined to seize this historical opportunity that we | the last five consecutive quarters. machinery - equipment investments have 1 / 5 bis - central bankers'speeches also made an uninterrupted positive contribution to growth in the post - pandemic period. on the production side, the services and industrial sectors continued to contribute to growth. we see that machinery - equipment investments continue in a sound and sustainable framework. investments that support productive capacity, particularly machineryequipment investments that drive industrial output, point to a stable and strong growth. in this context, it is important that the investment need required for the continuation of the supply - side contribution to sustainable growth and price stability is met with accessible, long - term and low - cost turkish lira financing. machinery - equipment investments and net exports are the pillars supporting the economic performance of turkiye centered on increasing investments, employment, production and exports, and their share in national income has been rising consistently. their total share in national income reached the highest historical level at 18 % as of the first quarter of 2022. the stable increase of machinery - equipment investments will enhance the supply capacity of our economy, thereby contributing to permanent price stability. the latest data indicate that industrial production remained on a favorable track in the second quarter of the year with the help of sustainable components. industrial production has grown on an annual basis without interruption since the third quarter of 2020 and recorded an upsurge of 9. 1 % in may 2022. while this increase in production spreads across the manufacturing industry, industrial production in exporting sectors remains even stronger. industrial turnover indices also indicate that external demand has a positive impact on industrial production. strong economic growth is also apparent in capacity utilization rates. while capacity utilization rates increased in all sectors, in some sub - sectors they even exceeded historical averages. this points to a need for additional capacity, and supports the investment demand. on the other hand, hovering above past averages, the manufacturing industry capacity utilization rates indicate that the strong trend in investments will continue by encouraging companies to opt for capacity expansion. in this context, capacity increases are more pronounced in sectors that are composed of companies with high investment appetite. survey data also show that as of july, investment expenditures of companies will rise further in the coming periods. this trend grew stronger with a spillover into all sectors, chiefly to those sectors producing investment goods as well as exporting ones. given the january - may average, increases in the import quantity of investment goods accompanied by the rise in industrial production, with capital goods in the lead | 1 |
companies, shareholder capital or equity is used to finance the acquisition of assets. the same is true for banks. equity finances the provision of loans to households and companies, and those loans are the banks ’ assets. in that sense, capital supports lending by banks and does not substitute for it. higher capital requirements ensure that enough of the finance raised by banks is in a form that can absorb losses without the banks failing. higher levels of capital enable banks to attract other non - capital funding, in turn making it easier for them to lend to households and businesses. at present it is the better capitalised banks that are expanding lending. how well are the banks doing in building resilience? there is good news here, as the banks have strengthened their capital positions since the darkest days of the crisis. but there is further to go. these capital positions are most often measured by the ratio of capital to riskweighted assets. risk is difficult to measure, but i think that we must continue to do this, albeit accepting the uncertainty in the process by using a healthy dose of scepticism, and aiming to keep the bis central bankers ’ speeches method of measurement as simple as we reasonably can. but it is helpful to back up the riskbased measure with a leverage ratio that simply measures capital as a proportion of assets. in the lead - up to the crisis, banks around the world chronically underestimated the risks to which they were exposed. the consequences were dramatic and highly damaging, and we are still living with them today. the crisis has been fundamentally a product of banks that grew rapidly and failed to back that growth with sufficient capital to bear the losses. the fpc has recommended that banks should ensure that they take the necessary steps to put our system in a place where it can support the economy without compromising its stability. the bank of england has taken steps to extend the funding for lending scheme, and within that has acted to provide a clear incentive to stimulate lending by banks to small firms. but banks that are short of capital cannot increase lending. that is why in march the fpc made a series of recommendations to ensure that uk banks are well capitalised, and that banks meet that requirement in a way that does not hinder lending to the economy. you may be assured that we are determined that the newly formed pra follows through on those recommendations. bis central bankers ’ speeches | ##nometric analysis of official statistics. there are other and often crucially important pieces of information that come to us in more qualitative form. these include information from businesses about what they see happening in the economy. perhaps the most famous example of this in recent years is the productivity acceleration in the us in the mid - 1990s. the extensively revised official us data now show that productivity began accelerating in 1995. however, that was not visible until the vintages released in 1998. but as alan blinder and ricardo reiss have reminded us at this conference, chairman greenspan did not wait until 1998 to conclude that the underlying rate of productivity growth might be increasing. the key reason was that he talked with and listened to people who work in business. already in may 1996, when the fed ’ s model was forecasting increasing inflationary pressures going forward, alan said “ it is very difficult to take the existing structure of the nairus, capacity limits, and the usual potential analysis that we do and square it in any measurable way with what we sense from anecdotal reports ”. 1 in the uk, there does not seem to have been a productivity miracle. but we have had many examples of the importance of qualitative data in making judgements. for instance, there have been significant flows of migration that have expanded the potential labour force. by their nature, such flows are not accurately reflected in official data. but the bank of england ’ s business contacts were able to tell us that the ability to recruit new migrant workers was a growing and significant response to a tight labour market. the third lesson that alan has taught us is that it is the consistency over time of a policy framework that sustains a market economy, as the achievements of the united states over the last 200 years show very clearly. alan, of course, has stressed this in the context of price stability. but it applies transcript of fomc meeting 21 / 05 / 1996. equally well to the system of taxes, property rights and public goods provision on which prosperity in a market economy relies. alan famously defined price stability in the following terms : “ price stability is best thought of as an environment in which inflation is so low and stable over time that it does not materially enter into the decisions of households and firms. ” 2 i would suggest that implicit in this is a prescription that alan might write for all economic policies, not just monetary policy : namely, that economic policy stability is best thought of as an environment in | 0.5 |
yves mersch : challenges of retail payments innovation speech by mr yves mersch, member of the executive board of the european central bank, at the belgian financial forum, organised by the national bank of belgium, brussels, 26 october 2015. * * * introduction i am sure that almost all of you in this room today have a smartphone in your pocket. with the smartphone, you feel as if you have the world at your fingertips : you can call or message anyone across the globe, access up - to - the - minute information and news on the internet, and stay entertained by downloading music, films or books. you can do all this at any time of day, wherever you are. this is the smartphone ’ s great innovation : making communication, information and entertainment available 24 / 7, on the spot, around the globe. i am also sure that all of you have a wallet in your pocket, containing banknotes, coins and some credit or debit cards. you use these to pay for things, but there are limitations. what if there were none? what if you could pay anyone, anytime, wherever you are? be it with cash, by card, online or with your smartphone? and what if all these payments were instant? in a nutshell, this is what i will talk about today : how we can make this happen. we already have the euro, making it possible for you to pay with the same banknotes and coins throughout the euro area. now we want to make cashless payments as easy, fast, and far reaching as smartphone services. users – be they consumers, retailers or businesses – do not see why payments cannot be instant and boundless like e - mails, text messages or whatsapp. what are the challenges of innovation in cashless payments? how do public authorities contribute to the process? who is involved in the market, and how can a level playing field be ensured? how should innovative payment services be designed? these are some of the questions i will address. to give you a broad roadmap, in the first part of my speech i will talk about the key institutions involved in bringing innovation to the payments arena. the eurosystem, which comprises the european central bank and the national central banks of the euro area, plays a key role, as does the european commission and the european retail payments board. the second part of my speech will address the supply side of the market, i. e. the retail payments service providers. here | monetary conditions – due to the depreciation of the swiss franc against the euro – that has occurred since our last monetary policy assessment in mid - june. | 0 |
jean - claude trichet : testimony before the committee on economic and monetary affairs of the european parliament introductory statement by mr jean - claude trichet, president of the european central bank, before the committee on economic and monetary affairs of the european parliament, brussels, 1 december 2003. * * * it is my pleasure to appear before your committee for the first time in my capacity as president of the ecb. i would like to tell you that i was very impressed by our last encounter here and i thank your committee and parliament for the confidence expressed by giving your approval to my appointment. i look forward to continuing our regular dialogue in the same fruitful and constructive spirit that was dear to my predecessor wim duisenberg, to whose achievements i wish to again pay tribute on this occasion. i shall begin my first report to you with our assessment of economic and monetary developments, before turning to another issue of topical importance, namely the draft eu constitution. i should like to conclude my statement by briefly addressing the international role of the euro. 1. economic and monetary developments at the time of mr duisenberg ’ s last testimony in september, we noted that economic activity had been very weak in the first half of 2003. at the same time, early signs of a recovery were emerging. since then, data have confirmed our main scenario, which is one of a gradual improvement in economic activity starting in the second half of this year. eurostat has provisionally estimated that quarterly real gdp growth was 0. 4 % in the third quarter of the year. there are, increasingly, reasons to expect the gradual economic recovery in the euro area to broaden and strengthen in the course of 2004. recent data show that the recovery of the world economy is clearly making progress. the expansion of global trade and economic activity should support euro area exports. on the domestic side, recent survey data continue to point towards a further improvement in confidence. the conditions for investment are also improving as a result of firms ’ continued adjustment efforts to enhance productivity and profitability. financing conditions are generally favourable, not least due to the low level of interest rates. finally, terms - of - trade effects stemming from the past appreciation of the euro should also positively affect real disposable income and thus facilitate a pick - up in consumption growth. developments in financial markets are broadly consistent with the overall picture of a gradual resumption of economic growth. as compared with a few months ago, downside risks to the main scenario of a gradual recovery | by mr draghi and a handful of ecb executive board members ; it came about with the agreement of the large majority of the governing council, on which all national central banks governors in the euro area have a seat. i would never have imagined that the euro area could break up, as almost happened in 2012. nor did i think it possible that the ecb would have to print more than an additional €1. 5 trillion ( i. e. €1, 500, 000, 000, 000 ), and pump it into the economy in order to respect its mandate. the ecb has acted resolutely but the story is not over yet. in order to emerge from the crisis, it is crucial that the other authorities also do their homework. it is not up to monetary policymakers to resolve structural problems. bis central bankers ’ speeches | 0.5 |
good governance archipelago, we benefit from an exchange of ideas, sharing of competencies, and strengthening of linkages. for most, the bsp ’ s functions are esoteric : controlling inflation, effective banking supervision, and ensuring a safe and efficient payments and settlements system. as proof of their successful accomplishment, there are numbers and graphs. there are also awards and international recognition. but these do not drive the island ’ s narration. while we are proud of the figures and commendations, the real story lies in opportunities created and actual filipino lives improved. when the bsp adopted the inflation targeting framework in 2002, it became more effective in upholding a low and stable inflation environment. for the last six years, it has met the inflation target. inflation expectations are well - anchored. economic growth is supported. uncertainty is reduced. on a micro - level, informed decisions on consumption, investment, saving, and production can be made. traders may hedge against risks related to the fluctuating cost of raw materials and finished goods. income equality is promoted as the purchasing power of the poor is protected. because of the country ’ s strong economic fundamentals, there is positive differentiation by global investors. investments are sustained. bis central bankers ’ speeches our solid fundamentals create buffers against uncertainties, preserving macroeconomic gains. credit rating agencies 1 and international financial institutions 2 have recognized the country ’ s inflation performance. growth projections are favorable. last december, moody ’ s raised its rating a notch above minimum investment grade. it cited the government ’ s efforts to sustain relatively low and stable inflation. in 2013, the bsp was named best macroeconomic regulator in the asia pacific region by the asian banker. to thrive in a fluid and interconnected world, the bsp adopts a foreign exchange rate policy, which is essentially market - determined. official action only limits excessive price movements. to achieve financial stability, we pursued progressive and prudent banking reforms. we aligned the regulatory framework to international standards, while maintaining sensitivity to domestic conditions. among others, we adopted basel 3 capital reforms. we set higher risk management and governance standards for our supervised financial institutions. we institutionalized more effective examination and off - site monitoring processes. the industry ’ s risk exposures are better monitored through stress tests of banks ’ balance sheets and stress test limits for real estate exposures. in 2014, the asian banker granted us the “ best conduct of business regulator award. ” and we are happy to report that from 2012 to 2014 | bank of japan presents its quarterly economic outlook for summer 1997 bank of japan, quarterly bulletin, august 1997 ( advance summary ). 1. japan ’ s economy continues on a moderate recovery trend. production and income are showing underlying firmness despite the continued reaction to the temporary surge in demand ahead of the consumption tax hike. among final demand items, public - sector investment has been on a decreasing trend, and housing investment has been somewhat lackluster, particularly as a result of the reaction to the rise in demand ahead of the consumption tax hike. on the other hand, net exports have recently increased significantly and business fixed investment has been rising steadily. despite the continued decline in demand which followed the rise ahead of the consumption tax hike, particularly in consumer durables, the recovery trend in personal consumption does not seem to have been hindered. in these circumstances, industrial production has been firm and the growth in employees ’ income has been rising steadily, albeit moderately. price indices were pushed up in april 1997 by the consumption tax hike, but excluding this factor, prices have been stable. both quarter - to - quarter and year - to - year changes in domestic wholesale prices ( adjusted for seasonal electricity rates ) have been near zero, and the year - to - year declines in corporate service prices have narrowed. the year - to - year rises in consumer prices ( nationwide, excluding perishables ) are widening somewhat, albeit by a small margin. changes in commercial land prices have varied by type, and residential land prices have virtually stopped declining. 2. in the financial markets, the overnight call rate ( uncollateralized ) stayed slightly below the official discount rate of 0. 5 per cent. the long - term government bond yield rebounded to near 2. 7 per cent in late may, as market uncertainties about the economic outlook and the japanese financial system gradually subsided after the second half of april. however, it declined to around 2. 2 - 2. 3 per cent. stock prices rose to ¥20, 000 - 21, 000 in may and june 1997, and have recently been fluctuating without showing clear direction. in the foreign exchange market, the yen reached ¥127 to the u. s. dollar in early may, but later appreciated and has recently moved at around ¥113 - 116 to the u. s. dollar. with respect to the fund - raising activities by firms, growth in bank lending continues to be lackluster but fund - raising through the capital market has | 0 |
assessment of the future levels of inflation and unemployment. i find it helpful to summarize the relevant information in what i term a mandate dashboard. the dashboard provides real - time readings on current and expected inflation and unemployment. here ’ s what the dashboard looked like in the fomc meeting earlier this month. i ’ ll explain the dashboard starting with the inflation side. the first cell from the left is current inflation. the second cell is what inflation is projected to be in one year ’ s time. finally, the third cell contains a forecast for inflation in two years ’ time. the unemployment side is similar. the first cell from the left represents current unemployment. the second cell represents a forecast for unemployment in one year ’ s time, and the third cell is a forecast for unemployment in two years ’ time. of course, i have to be a little more precise in what i mean by inflation and unemployment. by “ inflation ”, i mean the change in the personal consumption expenditure price index over the preceding four quarters, excluding changes in the prices of food and energy. 1 hence, my measure of inflation in the dashboard is what is commonly called “ core inflation ”. i ’ m using core inflation because i view it as a good measure of overall inflationary pressures over the next two to three years. by “ unemployment ”, i mean the unemployment rate averaged over the three months in the current quarter. 2 the forecasts for future inflation and unemployment are the midpoints of the central tendencies of the projections of fomc participants that they released in november. it is important to note that the dashboard includes information from other current variables besides inflation and unemployment. the forecasts for inflation and unemployment could potentially be based on a wide range of information – anticipated changes in fiscal policy, changes in european financial markets and so on. so, basing policy on the mandate dashboard does allow policy to react to changes in these other economic variables. the fourth quarter of 2011 has not ended. hence, what i ’ m calling “ current inflation ” is actually the fomc ’ s projection of inflation from fourth quarter 2010 to fourth quarter 2011. with three quarters of data already in, this projection is likely to be an accurate one. the fourth quarter of 2011 has not ended. hence, what i ’ m calling “ current unemployment ” is actually the fomc ’ s projection of the average unemployment rate in this quarter. bis central bankers ’ speeches however, using this kind of dashboard does require monetary policy to | a very long - term perspective, and where the presence of non - linearities and irreversible tipping points are likely, conditioning the methodologies to be used. and there is limited research, and accompanying data, that explore how climate risks feed into the financial risks faced by banks. in this context, many supervisory and / or prudential authorities are opting to use stress tests and scenario analysis. the bank of spain is indeed preparing such stress tests for the spanish banking sector and the results are expected to be published in autumn. a pigouvian tax is assessed against private individuals or businesses that engage in activities with adverse side - effects for society that are not internalised by these private agents, as a result of not being an integral part of the costs and prices they face. in any case, recognition should be given to the fact that the efficacy of pigouvian taxes may have a limit. this is because, at some point, the supply of polluting energy inputs may be so elastic that it absorbs all the taxes levied on them, without affecting demand. at that point, quantitative restrictions could become the best option. as a result, we should accept that efforts to translate climate - related risks into quantifiable financial risks are in their early stages. and we will have to step up our efforts to address these problems and limitations. it ’ s also crucial that these efforts are coordinated at the global level, given the global dimension of the risks and the potential spillovers that can arise through interconnections between the real and financial sectors. in this regard, at the basel committee on banking supervision ( bcbs ), we are conducting a “ gap analysis ” to identify areas in the current basel framework where climate - related financial risks may not be adequately addressed or are not captured. this gap analysis will be comprehensive in nature, and will cover regulatory, supervisory and disclosure elements. building on the analysis, we plan to explore practical solutions to address any identified gaps. in addition to a set of principles or guidelines on effective supervisory practices for assessing climate - related financial risks, the committee will explore whether any policy measures under the regulatory framework should be taken, and how the basel committee could support international efforts related to the development of globally consistently sustainability reporting requirements. importantly, any changes proposed by the basel committee to its regulatory framework would be in pursuit of its mandate to strengthen the regulation, supervision and practices of banks worldwide with the purpose of enhancing financial stability. as to monetary policy, | 0 |
areas across the country that had recently experienced a bank branch closure. we found that small businesses, older people, and people with limited access to transportation are most https : / / www. stlouisfed. org / publications / bridges / fall - 2018 / parents - wealth - helps - explain - racial - disparitiesin - student - loan - debt. see federal reserve bank of richmond and federal reserve bank of atlanta ( 2017 ), small business credit survey : report on rural employer firms ( richmond, va. : frb richmond ), https : / / www. richmondfed. org / / media / richmondfedorg / community _ development / resource _ centers / small _ business / pdf / credit _ survey / sbcs _ report _ rural _ employer _ firms _ 2016. pdf. see randal k. quarles ( 2018 ), “ trends in urban and rural community banks, ” speech delivered at “ community banking in the 21st century, ” sixth annual community banking research and policy conference, st. louis, mo., october 4, https : / / www. federalreserve. gov / newsevents / speech / quarles20181004a. htm. according to 2017 federal deposit insurance corporation summary of deposits data ( available at https : / / www5. fdic. gov / sod ), nonmetro persistent poverty counties had, on average, 0. 36 bank branches per 1, 000 people, compared with 0. 53 for other nonmetro counties. - 9affected. 18 we also learned that the loss of the branch often meant more than the loss of access to financial services ; it also meant the loss of financial advice, local civic leadership, and an institution that brought needed customers to nearby businesses. regulation and supervision need to be carefully tailored to suit the size and business model of different types of institutions. at the fed, we have renewed our efforts to avoid unnecessary regulatory burden on community banks, which provide essential credit in their local communities. another means to address the issue of branch closures is the community reinvestment act, or cra, which encourages banks to help meet the credit needs of the communities they are chartered to serve. the cra has been an important tool for strengthening local communities. the trend toward fewer branches and increased use of technology to deliver financial services presents a particular challenge to our current approach to cra evaluations. specifically, the current regulations use a bank ’ s | , local government, and community organizations offered their perspectives on the relative importance of the fed ’ s dual mandate goals. as i and my fed colleagues who have participated in these events will attest, they have provided us with valuable perspectives on the economy that we would not otherwise be able to glean from aggregate economic statistics. in coming regularly scheduled meetings, the fomc will undertake its assessment of our monetary policy strategy, tools, and communication practices. this assessment will be informed by what we ’ ve heard at this conference, by our listening sessions in the federal reserve districts, and by the work of system staff. when the committee tackles important issues, we take the time for wide - ranging and candid discussions, and so i expect our deliberations will continue over several meetings for the remainder of this year. we will share our findings with the public when we have completed our review, likely during the first half of next year. thank you and let ’ s move directly to our first session. 1 the views expressed are my own and not necessarily those of other federal reserve board members or federal open market committee participants. i would like to thank ellen meade for assistance in preparing these remarks. return to text 2 in january 2009, when longer - run projections were added to the summary of economic projections, the midpoint of the central tendency for the longer - run normal unemployment rate was 4. 9 percent. in march 2019, the median of the longer - run normal unemployment rate was 4. 3 percent. return to text 2 / 2 bis central bankers'speeches | 0.5 |
economy. into this changed landscape ron kalifa published his independent fintech strategic review earlier this year. 4 the bank welcomes this report, which provides a timely opportunity for us to reflect on our role and how ron ’ s recommendations fit with our work to support safe innovation. so how do we see our role in the fintech landscape? at its most basic, i would say that private - sector innovation relies on public - sector foundations. alongside other uk authorities and international bodies, the bank is proud to provide the infrastructure on which private sector innovation can flourish – whether that is ‘ hard infrastructure ’, when the bank, or public sector, provides core parts of the system directly, as with our real - time gross settlements ( rtgs ) service ; or ‘ soft infrastructure ’, meaning the regulation, laws, rules, and standards set by the public sector on which private companies rely. the bank stands ready to provide the right type of infrastructure depending on the situation. sometimes the bank will need to be in the lead, sometimes it will work as part of a coalition of public organisations. https : / / www. bankofengland. co. uk / - / media / boe / files / speech / 2019 / embracing - fintech - speech - by - dave - ramsden. pdf https : / / www. bankofengland. co. uk / - / media / boe / files / report / 2019 / response - to - the - future - of - financereport. pdf? la = en & hash = 34d2fa7879cbf3a1296a0be8dcfa5976e6e26cf0 https : / / www. bankofengland. co. uk / speech / 2020 / dave - ramsden - speech - public - lecture - for - university - of - nottingham https : / / www. gov. uk / government / publications / the - kalifa - review - of - uk - fintech all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice sometimes we ’ ll work in collaboration with the private sector, and sometimes our role will be to act more as a ‘ critical friend ’. and sometimes, as with rtgs, that will mean timely upgrades to critical technology, while at other times it can mean working right at the cutting edge, as with our work on central bank digital cu | which will take the total sum bought to £325 billion. to give you some context, that represents about a fifth of the annual output of the united kingdom and around a third of the total stock of uk government debt in issue. why did we decide to inject further monetary stimulus into the economy? and how likely is it to be effective? we started quantitative easing in march 2009 in the aftermath of the collapse of lehman brothers, as the uk economy was undergoing its deepest post - war contraction. bank rate was almost as low as it could go and further stimulus was necessary to put a floor under demand and get the economy growing again. all told we bought £200 billion of gilts during that initial phase of quantitative easing. quantitative easing essentially involves trading one liability of the state – gilts – for another – monetary claims on the bank of england. we aim to buy mainly from non - bank private financial institutions, such as pension funds and insurance companies, not from the bis central bankers ’ speeches banks, as is sometimes erroneously claimed 1. when we buy a gilt, we simply credit the bank account of the seller with an appropriate sum. if the seller were indifferent between holding the gilt and holding the associated bank deposit, that is where things would stop. but because deposits tend to yield less than gilts and assets such as corporate bonds and equities, the seller is likely to want to buy some other asset instead. the consequence is upward pressure on the prices of a whole range of assets, including corporate bonds and equities. that increases the availability, and reduces the cost, of finance to corporates. it also boosts the value of people ’ s wealth, which should encourage more spending. as i noted a moment ago, we aim to acquire the gilts from institutions other than banks. but as a by - product of the purchase, banks will find that they have both more customer deposits and an increase in their claims on us ( what are known as bank reserves ). that may encourage them to increase their lending, though in the particular circumstances prevailing during and after the financial crisis, we expected this effect to be quite weak. that is in line with the observed weakness in bank lending over the past three years. our analysis of the first phase of quantitative easing suggests bond yields were around one percentage point lower than they would otherwise have been. and uk equity prices rose 50 % during the programme, though only a small part of that is likely to be down to quantitative easing | 0 |
to synchronize regulations for the otc and the exchange traded markets. 22. adam smith famously said “ people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. ” 3 i am sure this does not apply to the meetings of the forex association and i am confident that in this event, your deliberations will help to make the forex markets a place where people can trade with confidence, volatility notwithstanding. 23. i wish your deliberations over the next two days all success. theory of moral sentiments. bis central bankers ’ speeches | v k sharma : the international financial crisis and india – the impact, response and outlook address by shri v k sharma, executive director of the reserve bank of india, at the conference on “ doing business with india ”, jointly sponsored by the confederation of indian industry and the indian high commission, johannesburg, 23 july 2009. * * * his excellency the high commissioner of india mr. bhatia, mr. navdeep suri, consul general of india, mr. hari bhartia, vice - president of cii, dr. guma, dy. governor, south african reserve bank, mr. rudolf gouws, chief economist, rand merchant bank, distinguished invitees and delegates, first of all i would wish to thank his excellency the high commissioner of india for giving me the opportunity and privilege to address this distinguished and august audience. second, i must congratulate and compliment the high commissioner of india and his very passionate team as well as the cii for having taken the bold initiative in conceptualizing and organizing this conference with a very imaginative theme of “ building partnerships when the chips are down. ” the current global financial crisis was caused primarily and fundamentally by extended structural global macro economic imbalances. these global imbalances were reflected in current account surpluses of china, asia and emes and current account deficits of the usa, in particular. these large and persistent imbalances represented “ unearned ” prosperity for deficit reserve currency countries and “ unshared ” prosperity for surplus countries. such a global economic order was inherently unsustainable and unstable from the word go. in other words, the only sustainable and durable global economic growth model would be where growth and prosperity are both “ earned ” and “ shared ”. in fact, the whole thing can be likened to cosmic balance / equilibrium / harmony where stars, suns, planets, all orbit within the inviolable discipline of their elliptical orbits which do not permit deviant behaviour beyond the shortest and the longest distance from the suns and stars of the orbiting planets! any deviant behaviour / conduct, inconsistent with the cosmic harmonious balance and equilibrium, will invite and inflict extremely retributive backlash ; the more severe and prolonged the disequilibrium and imbalance, the more wrenching and excruciating will be the resulting pain as is currently being experienced. in refreshing contrast, india ran modest current account surpluses to modest current account deficits | 0.5 |
demand for banking services and consequently, to offer wider menu choices. gearing up for competition 4. one inevitable outcome of the changing banking structure will be that the industry would have more players but simply bringing in more players would not make the banking industry more competitive. it is not as if there is lot of concentration in our banking industry. in fact, india scores over many of its peers as well as several advanced countries when it comes to concentration within the industry. concentration measured by top three banks in total banking assets is just under 30 %. this compares well with other countries. for germany and japan, it exceeds 75 %, while that for china, brazil, uk and france it exceeds 50 % and for the united states it is just over 35 %. herfindahl index, a measure of concentration ratio, shows that concentration is low and the index normalized to a range of zero to unity reads 0. 040 for march 2013, down from 0. 065 in march 2000. apart from concentration, on several other parameters the sector appears fairly competitive. interest rates, both on deposit and lending side are essentially deregulated. branch licensing has now been freed subject to certain well - founded interventions to ensure that under - banked rural areas are not neglected. foreign banks can seek licenses on tap. we plan to move in similar direction for private sector banks with passage of time after seeing the outcomes of the current initiative. 5. however, even with these developments, the banking industry cannot be considered truly competitive. the reason for that is the major players have not really started competing with each other. it is only when the dominant players in any business segment start to compete against each other that the consumer truly benefits in terms of prices and quality of service. this sadly is not the case in our banking sector. in my opinion, the bigger and stronger players would not be averse to competition as the new banks are not likely to threaten their position at least in the medium term. the stronger players would rather use this opportunity to further consolidate their position by innovating and improving their internal systems and processes. as i said before, if the customer experience in terms of quality of service and charges has to improve in this country, it can only happen through competition amongst the bigger banks. therefore, i would request the doyens of the industry present here, who represent the top public, private and foreign sector banks in the country, to begin a healthy competition amongst them. 6. it is not | agencies, have continuous dealings with each other, which tends to reinforce the exercise of their oligopolistic power over markets. further, operations of international banks / conglomerates specialising in cross - border flows, combining traditional banking and risky investment banking operations, have close business and operational links with rating agencies, accounting firms, etc. the concentration of global financial power in a few entities with close mutual connections has considerable potential to undermine competitive forces. in assessing the competitive efficiency of global financial markets, it may be useful to make a distinction between the role of multinational banks which have subsidiaries or branches in different countries but predominantly operate in domestic markets, and that of international banks which specialise in cross - border financial activities, especially flows on capital accounts, both short - term and long - term. experience has shown that multinational structures that relied less on wholesale funding and forex swap markets have been less vulnerable to crises. international banks are able to operate across different financial markets and countries with significant divergence in fiscal regimes as well as regulatory regimes. they have often been found to deal in financial flows of suspect legality in one country, though not always in both countries involved. international banks have the opportunity and incentive to conduct operations involving tax avoidance. because of these operations, international banks enjoy significant influence over the political economy in several countries. in the prevailing environment of global financial markets, some large global financial conglomerates are larger and, perhaps, more powerful than some of the central banks. it is clear from the experience of the euro area that, in effect, the sovereign becomes the source of extraordinary intervention as the ultimate risk bearer in times of crisis. the problem arises when the sovereign ’ s capacity for such intervention is constrained by globalisation : this may be beneficial in many respects, but it could undermine the capacity of the sovereign to tackle the financial sector problems that arise. the conduct of fiscal policy itself is dominated by consideration of the view of global financial markets on the sovereign ’ s solvency and its capacity to support the financial sector under distress. extraordinary intervention by the sovereign and related fiscal measures are thus subject to the credit rating agencies ’ appraisal of their solvency ( sen, 2012 ). these considerations may have a bearing on the conduct of both financial sector regulation and macro policies at the national level. in brief, my submission is that the prospects for credible and acceptable global governance arrangements to ensure a workable global economic policy and environment within which global finance could contribute to growth and stability, do not appear very bright | 0.5 |
of origin ” principle in the services sector, as is already the case in the common market for goods. this principle states that a firm should no longer be hampered by regulation in the import country if it has already complied with the national regulations in its home country. such a move would make services markets more open to competition. and reducing barriers to entry to more than two - thirds of the overall eu economy could provide a real boost to productivity. labour markets and productivity ladies and gentlemen, barriers to market entry can exert a powerful drag on productivity. but productivity is not only held back by product market regulations. for productivity to flourish, we need resources to flow – to the most innovative and efficient firms. this is why creating a working european venture capital market is very important. here, another factor comes into play : on average, bigger firms tend to be more productive and are better placed to compete in export markets. unfortunately, the growth of small, innovative companies is hindered in some european countries by a plethora of regulations that kick in at a certain size threshold. in france, for instance, many regulations become binding when a firm reaches a size of 50 employees. this causes some firms which would otherwise expand to stay below that level. research9 suggests that this distortion leads to a loss of 4 – 5 % of french gdp. other size - contingent regulations exist in other countries such as portugal or italy, where the threshold is 15 employees. what these regulations all have in common is that they deter firms from expanding. therefore, they are a drag on growth. these examples show that capital is not the only indispensable input for firms. labour is equally crucial. studies10 indicate that, compared to the us, innovative european firms have considerably more difficulties in attracting the staff they need. this lowers allocative efficiency and, ultimately, productivity. the reason for this seems to be that overly strict employment protection exerts a “ lock - in ” effect : workers do not move easily from firm to firm. this not only hampers productivity, but is of particular concern in a monetary union. after all, the theory of optimum currency areas suggests that, in the absence of the exchange rate as markus poschke, 2010. “ the regulation of entry and aggregate productivity, ” economic journal, royal economic society, vol 120 ( 549 ), pages 1175 – 1200, december. garicano, luis, claire lelarge and john van reenen ( 2013 ) | furthermore, we consider it a good thing that the thresholds are to be raised for trading book institutions. it is much to my regret, however, that a general approach – such as the small banking box – was rejected. i ’ ll come back to this shortly. without wishing to anticipate the final result of the legislative process, i would like to paint a picture of how we, as german banking supervisors, need to tackle the issue of proportionality in the eu. with that in mind, let ’ s turn our attention to three key questions : who, how, and what? let ’ s begin with “ who ”, as in who should be subject to eased requirements. as i have already mentioned, we are focusing on small institutions. in other words, the target group comprises institutions with a manageable level of total assets. the problem is that the definition of “ manageable ” varies from country to country in the eu. in order to account for this heterogeneity, we will probably set an absolute threshold value for total assets combined with a relative threshold value that takes national gdp into account. this quantitative threshold value will be accompanied by additional criteria in order to prevent institutions with riskier business models from benefiting from simplified rules. thus, banks to which reduced requirements apply are not permitted to use internal models ; they ought to have a small trading book and carry out derivatives transactions to a limited extent only ; and they may not participate to any meaningful extent on the capital market or in cross - border activities. but as experience has taught us that it is all but impossible to draw up an exhaustive list of criteria covering all eventualities, the final decision must rest with the supervisors. and, of course, banks should ultimately also have the opportunity to reject their classification as such an institution. now let ’ s turn to “ how ”. there are basically two potential ways of improving proportionality here. first, we could take a small - scale approach and introduce simplifications and exceptions for individual rules. second, we could create a whole new framework that is specifically tailored to small banks and low - risk institutions. the second solution would be further - reaching and clearercut. but at present, the majorities in europe appear to favour the small - scale solution. and then we still have to consider “ what ”. it is important the emphasis lies on reducing the administrative workload and minimising the red tape. the measures we are currently reviewing include exceptions to disclosure | 0.5 |
has taken several important policy decisions over the years in the areas of affordable and low income housing. it has played an important role in ensuring that the affordability component merges well with the overall sectoral strategy. two factors that have clearly emerged as key drivers in the indian housing market are : ( 1 ) a wider group of stakeholders and a multiplicity of institutions, and ( 2 ) enhanced confidence in the housing finance industry of all stakeholders. 5. the national housing and habitat policy 2007 lays emphasis on development of affordable housing and elimination of acute housing shortage among the poor. accelerated supply of serviced land, expansion of housing finance market and facilitating the private sector participation in the sectoral growth are also emphasized in the policy. with the establishment of individual home loan financing through commercial banks & housing finance tenth five year plan document of the planning commission bis central bankers ’ speeches companies, access to home loan finance has expanded considerably. however, access to finance for the very poor and those working in informal sector, to fulfil their affordable housing needs, still needs to go a long way. 6. recognising the importance of housing and real estate sectors, the union budget for 2014 – 15 included several announcements such as – • ₹ 8000 crores allocated to the rural housing fund run by nhb. • ₹ 7, 060 crores allocated for development of 100 new smart cities in the country. • relaxation of fdi norms in the real estate sector. • ₹ 4, 000 crores allocated for low - cost housing and ₹ 50, 000 crores for urban housing. • slum development to be treated as corporate social responsibility ( csr ) activity. • real estate investment trusts ( reits ) introduced. sebi has since issued guidelines in this regard. • increase in deduction limit on interest paid on home loans. 7. state governments have also played an important role in promoting affordable housing for the lower segments of the population. many of the state governments have initiated programmes aimed at eradication of slums and provision of formal housing to the lower income segments. these programmes, which are at various stages of execution, have given to the people, hopes for a better life and hopes for a brighter tomorrow. other policymakers such as the reserve bank of india and the national housing bank are also playing their part in promoting growth through housing. it is heartening to note that the housing finance sector, which was in its infancy just two decades back, is now a thriving and vibrant part of | we don't want this transition to be more difficult than it has to be. but we remain focused on our mandate. higher interest rates in the short term will bring inflation down in the long term. and getting through this difficult phase will get us back to price stability with sustained growth. as we move forward, we will be watching carefully to assess the impact of higher rates on spending and how this is feeding through to price pressures. we will also be watching to see how global supply disruptions resolve and to what extent this translates into lower inflation in canada. finally, we'll be watching inflation expectations closely to assess how households and businesses are responding to slowing growth and spending. with that summary, senior deputy governor rogers and i are now pleased to take your questions. 3 / 3 bis - central bankers'speeches | 0 |
øystein olsen : management of the government pension fund global introductory statement by mr øystein olsen, governor of norges bank ( central bank of norway ), at the hearing before the standing committee on finance and economic affairs of the storting ( norwegian parliament ), oslo, 30 october 2020. * * * please note that the text below may differ from the actual statement. the government pension fund global ( gpfg ) and the fiscal rule have long been important pillars of economic policy in norway, as the past year has clearly illustrated. it has been necessary to draw on the gpfg to finance the extra costs related to managing the covid - 19 pandemic. at the same time, wide swings in international equity prices have led to substantial volatility in the return on the gpfg. norges bank manages the gpfg with the objective of achieving the highest possible return over time within the mandate defined by the ministry of finance. the gpfg is to be managed within an adequate control and risk management framework and in a responsible and efficient manner with a high degree of transparency. the gpfg has a diversified portfolio of investments all over the world. this allows us to reap the gains from an upturn wherever it may occur and shields us from negative events in individual markets. however, we cannot protect ourselves from broad - based global downturns, as shown by the developments in the gpfg through 2019 and 2020. the return on the gpfg in 2019 was the second highest percentage return since 1998 and the highest measured in nok. but global equity markets fell abruptly in the first quarter of the year. the value of the gpfg's equity investments sank by over 20 percent, measured in international currency. central banks and authorities all over the world have responded forcefully to dampen the crisis. equity markets picked up. the gpfg posted a positive overall return in the first three quarters of 2020. equity market volatility is not new. the gpfg has a long - term investment horizon. history has shown that we are able to ride out temporary falls in value. measured over the whole period from 1998 to the third quarter of 2020, the annual net real return was 4 percent. as long - term interest rates are low, we cannot expect the return to be as high in the years ahead. the return on the gpfg is measured against the return on a benchmark index of global equities and | on our investments. the gpfg has today a clear financial objective. a change that blurs the distinction between company and state could raise doubts about the role of the gpfg. a new central bank act entered into force on 1 january 2020. the act has brought changes in the bank's governance structure and organisation. a monetary policy and financial stability committee was established at the beginning of the year. this has given the executive board greater capacity to work on the management of the gpfg. over the past year, the executive board has completed a reorganisation of the administrative support functions at the bank with the aim of pooling expertise, promoting cost - effective solutions and underpinning the identity of the bank as a single institution. another important change is the executive board's appointment of a new ceo for the bank's management of the gpfg. nicolai tangen took up the position of ceo on 1 september, and i would now like to give the floor to nicolai. 2 / 2 bis central bankers'speeches | 1 |
economic development. closer home, regional integration efforts particularly the east african community ( eac ) have borne fruits with banks extending their reach across the region. the imminent operationalization of the african continental free trade area ( acfta ) is expected to create an africa - wide market with resultant benefits from economies of scale. financial markets have increasingly become global. in particular, the u. s. financial markets have become a global bellwether with an outsize influence including in emerging and developing countries. given the dominance of the u. s. dollar as a global reserve currency, we in the eac are not immune to the dynamics in the u. s. financial markets. global movements in the dollar exchange rate and interest rates are increasingly impacting our markets. on the one hand, as we expand our presence in the international eurobond markets, we are becoming increasingly vulnerable to movements in global bond yield curves. on the other hand, with a growing influence of foreign investors in our markets, we have to be alive to their short - term horizons and their potential flight to safety in turbulent times. nevertheless, there are other urgent concerns that must be recognized and attended to. the cost of globalization in terms of the industries that are wiped out and livelihoods that are altered, must be addressed. we have also seen the rise of nationalism in the last few years, particularly 1 / 4 bis central bankers'speeches in britain, europe and the united states, threatening to reverse the gains made by globalization. there has been an increasing retreat to protectionism as large segments of the populace particularly in the west feel excluded from the global economy. the covid - 19 pandemic has presented the two sides of the coin in this issue. on one side, the vaccine nationalism particularly by western countries has shown the ugly face of the retreat from globalization. on the other side, the pandemic has emphasized the need for global cooperation and coordination as no one is safe until we are all safe. we are certainly treading dangerous ground. second, is the proliferation of innovations and new technologies. from mobile banking to cloud computing, artificial intelligence to blockchain technology, internet of things, and robotics, all heralding significant opportunities to re - engineer the operations of governments and business and transform lives and livelihoods. even before the covid - 19 pandemic, digitalization had transformed the african financial sector landscape. in kenya, we had seen access to financial services triple from 26 percent of adults in 2006 to | patrick njoroge : bend but do not break keynote address by dr patrick njoroge, governor of the central bank of kenya, at the fourth annual bankers conference, organized by the uganda bankers ’ association, 27 july 2021. * * * as prepared for delivery good morning! i am honoured to join you at your fourth annual bankers conference. at the outset, let me express my gratitude to my brother governor mutebile, for inviting me to speak at this important conference. i also applaud uganda bankers ’ association ( uba ) for organizing the conference with the timely theme, how the financial sector can thrive in the era of the fourth industrial revolution. we are meeting virtually, but i recall uganda ’ s warm hospitality, beauty, and vibrancy. i am optimistic that we shall soon be able to meet physically, in the but also elsewhere. we convene at a critical juncture, firstly, having struggled globally with the ravages of the coronavirus ( covid - 19 ) pandemic for one - and - a - half years. secondly, we are at the cusp of the fourth industrial revolution, whose transformative powers are already evident in the financial sector, and will transform the way we live, work, and relate to one another. in the words of professor klaus schwab, who popularized this label : “ it is characterized by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. ” 1 both these elements portend stormy times, for our way of life, society, families, and the institutions that we represent. but how should we react? we can attempt to stand firm, unyielding against these perils, and fully aware that they may destroy us. or we can accommodate some of the pressures with the grace of a palm tree, and build back better — bend, but don ’ t break. allow me to set the stage by highlighting three disruptive trends in the current global context. first, the entrenchment of globalization. this product of the third industrial revolution has redefined the terrain for governments, businesses and citizens, shortening distances and brought together disparate people in common markets. global supply chains have overhauled the traditional manufacturing and production processes with resultant efficiency gains. markets have increasingly opened up allowing businesses to expand their global footprints. the absence of a navigable route to the sea for uganda and other landlocked countries need no longer be a handicap to | 1 |
to the future. tonight i would like to outline a few core principles that should guide this pivot forward. first, engagement : to maintain the legitimacy of our work, to increase understanding of it, and to enhance its effectiveness, we must improve our outreach and transparency — including to our membership, other global authorities, the public, and key stakeholders. second, rigor : as we devote more attention to evaluation of new and evolving risks in the financial sector, we must ensure that our assessment of vulnerabilities is based on cuttingedge thinking and a disciplined methodology. and third, analysis : regulation has evolved rapidly in the last decade, and — if we are doing our jobs right — will continue to evolve with rapid developments in the financial sector. an important part of our work must be continual, critical analysis of the effects of regulaton with an eye to making useful improvements where possible. engagement : outreach and transparency let me begin with the principle of engagement, and let me lay the groundwork for this discussion by reviewing the way the fsb was established and its mandate, to see how we can continue to fulfill that mandate going forward. as we all know, the fsb was born out of the crucible of the 2007 – 09 global financial crisis — a crisis that demonstrated in the starkest possible way the importance of global financial stability to the well - being of families and businesses around the world. in the months following the peak of the crisis, the world was struggling with financial 1 / 4 bis central bankers'speeches market turmoil, and the resultant macroeconomic effects were felt by people everywhere around the world. it was clear that the response to this crisis needed to be global, and the g7 and g10, without any emerging market representation, were not the right bodies to organize a global response. as such, the heads of state and government of the g20 called for the financial stability forum ( fsf ), a relatively small and unmuscular group, to expand its membership and to strengthen its institutional framework. the result was the financial stability board, which was designed as a mechanism for national authorities, global standards - setting bodies, and international authorities to identify and address vulnerabilities in the global financial system and to develop stronger regulatory and supervisory policies to create a more resilient global financial system. this new group is more representative of the interconnected global economy and financial system and can more effectively mobilize to promote global financial stability than anything that existed before. whereas | public comment on proposed principles providing a high - level framework for the safe and sound management of exposures to climate - related financial risks for large banking organizations, ” press release, december 2, https : / / www. federalreserve. gov / newsevents / pressreleases / other20221202b. htm. crowe, christopher, and ellen e. meade ( 2008 ). “ central bank independence and transparency : evolution and effectiveness, ” european journal of political economy, vol. 24 ( december ), pp. 763 – 77. debelle, guy, and stanley fischer ( 1994 ). “ how independent should a central bank be? ” in goals, guidelines, and constraints facing monetary policymakers, proceedings of a conference held in north falmouth, massachusetts, in june 1994. boston : federal reserve bank of boston, pp. 195−221, www. bostonfed. org / economic / conf / conf38 / conf38f. pdf. rogoff, kenneth ( 1985 ). “ the optimal degree of commitment to an intermediate monetary target, ” quarterly journal of economics, vol. 100 ( november ), pp. 1169−89. tucker, paul ( 2018 ). unelected power : the quest for legitimacy in central banking and the regulatory state. princeton, n. j. : princeton university press. | 0.5 |
in anticipation of new regulatory requirements. among companies in the uk, us and europe, there has been a significant increase in their liquid asset holdings, of around $ 0. 5 trillion since 2008, mostly for precautionary purposes. and among institutional investors, there has been a further portfolio switch into bonds since the crisis. since 2009, the size of us bond funds has more than doubled, rising from $ 1. 5 trillion to $ 3. 5 trillion. as after the great depression and the asian financial crisis, this precautionary behaviour has not been confined to the government bond market. it has affected spending behaviour among households and companies too. and, as previously, the consequences for the wider economy have not been benign. in 2008, households and companies were running a combined financial deficit ( income less spending ) of 2. 4 % of gdp in the us and 1. 5 % of gdp in the uk, while in the euro - area they were running a small surplus of 2. 4 % of gdp ( chart 10 ). in other words, the private sector in aggregate was neither saving nor dissaving to any great degree. see imf financial soundness indicators. bis central bankers ’ speeches by 2010, the private sector had switched to a large financial surplus of 7. 2 % of gdp in the us, 8. 2 % of gdp in the uk and 5. 8 % of gdp in the euro - area. the private sector was now saving and in significant scale. this precautionary behaviour, as after the great depression, has proved persistent. it has only recently started to normalise. this is a 21st century paradox of thrift and precaution. the psychological scars of the great recession, as after the great depression, have proved lasting and durable. they help explain the sluggishness of the recovery, and the adhesiveness of interest rates, since the crisis. and, if the past is any guide, these scars may heal only slowly. recession risk psychological scarring affects how people perceive and respond to risk in the past. as important for monetary policy, however, is the economic and financial risk people expect to face in future. another lower left tail event could further frazzle the nerves and set back recovery and risk appetite. just how likely is that? looking at the long - run pattern of growth, across countries and time, gives some guide to the probability of a future tail event, such as a recession. as chart 8 illustrates | time. and this could trigger mass exodus either by holders of rated assets or, in cases where banks themselves are rated, by depositors or other counterparties. of course the rating agencies provide valuable services and information. and their increasingly public significance raises calls for them to be regulated. in my view, attempts to do so could actually create additional moral hazard, particularly in today ’ s compensation orientated society. if rating agencies were regulated who would you blame if mistakes are made : the rating agency, the regulator, or both? 9. implications of networks finally we need to consider the financial stability oversight implications of the networks which increasingly hold the financial system together. these are the plumbing or the nervous system of the financial world. this is the world of payments, clearing and settlement systems. such networks can and do both generate significant economic benefits, but they also create vulnerabilities. the economic benefits of scope and scale from such networks come as a result of the development of standardised messaging, it protocols and other areas of interoperability. however, the universal reliance on these networks makes the financial system increasingly vulnerable to any failure, whether financial or physical. if the market all settles in one system and is faced by single points of failure how could we work around these? secondly, if there is a failure, what about data retrieval? if an entity containing a series of uncompleted transactions fails, how can that data be retrieved or recreated so that you can get markets up and running again? fortunately significant effort is being put into developing innovative solutions : something which may give confidence to the many who are unfamiliar with this area. 10. implications of the new environment for financial stability oversight it will be clear from the litany of issues i have just mentioned - new players, new products, new risk transfer techniques and interconnections - that the changes in today ’ s financial world are indeed quite profound in relation to financial stability oversight. but are they net benign or net negative? the world here is sometimes portrayed as being in two designated camps. this may be a bit of a parody, but i am sure the two protagonists would forgive my little sketch. the bullish view is led by governor greenspan. this holds that, in the new financial world, banks now possess the enhanced ability to disperse risk - to offload risk to others, be they investors, insurance companies or whatever. the banks have thereby been able to weather a variety of shocks, which in an earlier age might well have | 0.5 |
11. 05. 2023 the financial system : current situation and challenges ie university – banco de espana – federal reserve bank of saint louis conference : current challenges in economics & finance madrid pablo hernandez de cos governor thank you very much to the organisers for inviting me to this conference. today, i will be addressing you in my capacity as chair of the advisory technical committee of the european systemic risk board ( esrb ), 1 a role which brings a deep eu - oriented perspective, complementary to my regular responsibilities as governor of the banco de espana and member of the governing council of the european central bank. the macrofinancial risk landscape and the banking sector the macrofinancial risk landscape has changed in recent months and continues to evolve. in a relatively short period of time we have moved from low inflation and low interest rates to persistent high inflation and rising interest rates. this shift poses new and enhanced risks to financial stability. to heighten awareness of these risks the esrb adopted a warning2 on vulnerabilities in the eu financial system in september 2022. this is the first general warning ( i. e. addressed to all eu member states ) that has been issued by the esrb since its establishment in 2010. over the last seven months some economic developments have surprised to the upside, while some vulnerabilities timely identified in the warning have come to the fore. on the positive side, the eu economy proved to be more resilient than expected in the face of the large negative terms - of - trade shock from russia ’ s war in ukraine and growth forecasts for 2023 were revised upwards. however, developments last autumn in the uk gilt market and, more recently, in the us and swiss banking sectors remind us of the need to remain vigilant in regard to vulnerabilities in a challenging and rapidly changing macro - financial environment. in this context, let me explain the esrb ’ s view on the key risks affecting the european union ’ s financial sector. the aforementioned esrb warning set out four key risks to eu financial stability : 3 • the challenging macroeconomic outlook coupled with elevated geopolitical tensions underscores the importance of a prudent management of credit, market and funding risks in the banking business. • an environment of still subdued growth prospects and elevated inflation may put firms'and households ’ balance sheets under stress. • vulnerabilities in the non - bank financial sector could trigger asset price corrections and amplify vol | niklaus blattner : system stability and security of the systems summary of a speech by prof dr niklaus blattner, vice - chairman the governing board of the swiss national bank, at the luzerner tage fur informationssicherung ( lutis, conference on information security ), lucerne, 25 may 2004. the references for the speech can be found on the swiss national bank ’ s website. * * * the stability of the banking system and the security of the financial market infrastructure - including the stock exchanges and especially payment and securities settlement systems - have become an important concern of central banks all over the world in recent years. this has notably happened against the background of the numerous financial crises witnessed during the past decades. moreover, events such as 9 / 11 have heightened awareness for the security of the financial markets and other infrastructures. in switzerland, the growing importance of system stability has also been reflected in the new national bank act, which entered into force on 1 may 2004. within the framework of its principal mandate of pursuing a monetary policy in the interests of the country as a whole while at the same time ensuring price stability, the swiss national bank ( snb ) is legally obliged to make a contribution to system stability and to facilitate and secure the operation of cashless payment systems. in implementing its mandate, the snb takes preventive measures as well as measures aimed at overcoming crises. for instance, in a crisis the national bank plays an important role in providing liquidity. with the new act, the snb specifically bears the responsibility of overseeing the systemically important payment and securities settlement systems. the operators of such systems will in future have to meet certain minimum requirements, which will also include requirements with regard to information security. secure and reliable information and communications structures are an essential precondition for the smooth functioning of the financial system. in the context of its mandate, the snb limits itself to systems - relevant aspects in these areas. systems - irrelevant problems concerning individual banks or payment systems, by contrast, are explicitly not a part of its mandate. this is based on the conviction that the problems in the financial system must be solved by the market itself whenever possible. | 0 |
of thailand has used the managed floating approach for some time now. our principle is to let the exchange rate reflect the fundamentals of the economy relative to our trading partners and competitors. in the short run, international price competitiveness depends on 2 things : 1. the appreciation of the thai baht vis - a - vis a basket of currencies of our trading partners and competitors ; and 2. the increase in production cost of a thai company relative to that of our trading partners and competitors. for example, given the same appreciation path of two competing currencies vis - a - vis the us dollar, if production cost of a thai company rises beyond that of its foreign competitors, then it loses price competitiveness. generally, production cost rises with inflation. and so, keeping inflation low helps to lower relative cost increase for thai exporters and boosts their price competitiveness. the exchange rate that the bank of thailand manages is that which represents price competitiveness ; it is called the real effective exchange rate. let me give you a specific example : it is well known that even though the baht has gained against the us dollar, it has been appreciating in line with regional currencies. from the beginning of 2007 to early march 2008, the real effective exchange rate of china has appreciated by roughly 8 per cent while india has gained by 5. 4 per cent. during the same period, the thai baht real effective exchange rate has appreciated by only 1. 8 per cent. so taking into account higher inflation in china and india, an average thailand - based exporter has not lost price competitiveness against those based in these two countries. viewed in this light, the export boom should not come as a big surprise. ladies and gentlemen, to gain the most from exchange rate flexibility, the bank of thailand has always sought to limit the volatility of the thai baht - us dollar exchange rate. we do this because businesses use us dollar as invoice currency. to this end, the baht has been the least volatile currency in the region over the past year. going forward, we will continue to take care of the shortterm volatility when we deem it to be too disruptive to export or import price - setting. over the next 12 months, as the global financial environment becomes even more volatile, it is likely that a few regional currencies will become more flexible. those of you who follow the foreign exchange market regularly should know that markets | ##ntial supervision in the background, the pressure of competition will help ensure that our financial institutions can perform well in the globally competitiveness environment. to this end, better accounting standard, for example, the adoption of ias 39, is expected to strengthen financial sector ’ s resiliency to adverse shocks and will bring forward better investment climate. going hand in hand with modern infrastructure has to be skilled human resource. studies on labor market condition and my dialogues with entrepreneurs, thai and foreign, have confirmed that labor quality shortage is the key problem here as well as everywhere else in the world. to be sure, formal schooling is an important source of skill and quality development, but experience in the workplace contributes no less. in thailand, there is an acute problem of skill mismatch ; that is, skills produced through formal schooling are found to be different from those which firms find useful. ladies and gentlemen, japan ’ s direct investment here has contributed to skill improvement for thai businesses and workforce, mostly through learning by doing, training and other knowledge transfers. but beyond that, to reduce mismatch in demand and production of skills, japanese firms can play a direct and beneficial role. the solution is to break down the barrier between work and school early on. firms can get involved in training vocational students while potential workers can get a glimpse of what ’ s really needed out there in the real world. if done well, i think it gives incentive for firms to invest in training these students because it gives them the opportunity to identify and select the best workers before they enter the workforce. to the students, there are potential gains as an incentive as well. with the opportunity to be trained by the best and getting to know its corporate culture first - hand, student trainees are more likely to compete for limited hires by improving their performance. this sort of apprenticeship program has long been practiced in germany, and has been shown to reduce skill mismatch in the workplace as well as improve firms ’ profitability. practiced here, it could also reinforce mutual understanding between thai workers and the ways japanese firms do business. that said, human capital development takes vast and continuous effort over a long period of time. in the near term, i think your experience from adjusting to the yen ’ s sharp appreciation should be particularly helpful to your local partners. japanese companies are capable of lending a helping hand to your local suppliers as they try to upgrade their productive efficiency. that would help smooth their adjustment process during these rough and tumble times. ladies and | 1 |
amando m tetangco, jr : trust reforms – positioning the business for growth speech by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the first general membership meeting of the trust officers association of the philippines ( toap ) for the year 2007, manila, 30 march 2007. * * * distinguished directors and members of the trust officers association of the philippines ; fellow bankers, special guests, friends. good evening. the invitation of toap president ma. lourdes de vera declared that you are adopting the hawaiian theme tonight. i was also advised that if i chose to come in my usual business attire, i will be given a lei. naturally, i became curious. i remembered this wise woman who said : when a man brings his wife flowers for no reason, … there ’ s a reason. tonight, you chose to bring the full bloom of flowers to this ballroom. clearly, this is a celebration! well …, if the practitioners in our trust and fund management industry are celebrating, then we at the bangko sentral are here to congratulate you. toap has been … and continues to be … a dependable partner of the bangko sentral in promoting the development of our financial system … and in upgrading the quality and variety of financial services to the public. this is the reason why i readily accepted your invitation for me to join you in your first general membership meeting this year. in particular, i appreciate the fact that our trust practitioners specifically requested that i discuss banking reforms as they relate to the trust industry. but first, i shall give you an overview, so that you can appreciate the context of our reform agenda. economic prospects and financial stability we are all witnessing a markedly more positive sentiment on our economy as manifested in higher investment flows from abroad into both direct equity and portfolio securities. not surprisingly, domestic investor activity has likewise perked up. these developments have re - energized our domestic financial markets. to a major extent, the phenomenon is being driven by global liquidity conditions, relatively benign global capital markets and generally stable world economic conditions. these factors have made international investors more willing to look at a broader array of investment opportunities, outside of the traditional favorites. but it is also true that smart money does not get into markets if the fundamentals are not right. so, what are the positive things that investors are seeing in the philippines today? well, | updates on the monetary, external and banking sectors and our outlook for these sectors, but it also allows for an exchange of ideas, where feedback is welcome, and critical questions can be asked, providing us with additional input when we consider our reform initiatives and policy decisions. i have read that to find equilibrium between continuity and change one must : first have a deep understanding of the operating context ; second take a holistic approach, and third, for success and sustainability of policies, work with all facets of the environment. i will present my message following this outline. first, the operating context the philippines is recognized among one of the fastest growing and most resilient economies in 1 / 5 bis central bankers'speeches the region and the world, enjoying a sweet spot of high growth and manageable inflation complemented by a strong and resilient financial system. gdp growth averaged 6. 4 percent in the first semester of 2017. as of the second quarter of 2017, the philippines posted 74 consecutive quarters of uninterrupted growth ( i. e., q1 1999 to q2 2017 ) or a span of 18. 5 years, with growth accelerating in recent years. the government has set a growth target of 6. 5 to 7. 5 percent for this year, and 7. 0 to 8. 0 percent for 2018 up to 2022. we believe these targets are attainable, given strong macroeconomic fundamentals, rising government spending on critical infrastructure and human capital development, increasing private sector investments, and strong domestic consumption on the back of rising incomes of the country ’ s young and educated workforce. this strong economic performance did not happen overnight. rather, it is the result of meaningful reforms pursued since the 1997 asian financial crisis. the list of reforms is long and wide ranging. among its highlights is the adoption in 2002 of the inflation targeting framework. since 2009, we have consistently achieved our inflation target, except only in 2015 – 2016 when inflation went below 2 % due to unusually low oil prices. this track record has reinforced the credibility of the bsp ’ s inflation targeting framework. with its sound macroeconomic fundamentals, the philippines ’ economic outlook in the years ahead continues to be promising. inflation for the first 8 months of this year averaged 3. 1 percent, well within the target range of 2. 0 to 4. 0 percent for this year. we have often been asked why we have not yet raised policy rates given that inflation is trending higher this year and also given | 0.5 |
some fiscal strains, it is hoped that there will be no directional change. the annual rate of growth in broad money ( m3 ) was 22. 3 per cent in 1994 - 95, but dropped subsequently, pulling down the annual average growth rate between 1994 - 95 and 199697 to 17. 3 per cent and in the current year it should be around 15. 5 per cent. there is a similar pattern in regard to inflation, which averaged 7. 4 per cent between 1994 - 95 and 1996 - 97 and the wholesale price index this year is estimated to be around 6 per cent, less than last year ’ s 6. 9 per cent. finally, non - food credit growth has averaged 21 per cent per annum in the last three years and this year it is expected to be around 20 per cent including investments in psu and corporate bonds, debentures and cp. as you may be aware, the latest cso estimate places gdp growth of 1996 - 97 at 7. 5 per cent and net capital inflow from abroad for the last two years has been placed at 1. 86 and 1. 15 per cent of gdp at market prices. external sector on the external front, in sdr terms, exports have grown at 13. 6 per cent and 16. 7 per cent during 1994 - 95 and 1995 - 96 while imports have grown at 18. 0 and 23. 7 per cent. last year, ( 1996 - 97 ) there has been a deceleration to 9. 6 and 10. 6 per cent, respectively. this year, during april - december, growth of exports was 9. 1 per cent and that of imports 13. 5 per cent, both in sdr terms. the foreign direct investment flows continue to rise and are us $ 2. 5 billion during april - december 1997 - 98 as against $ 2. 7 billion during the whole of 1996 - 97. more important, the policy framework and the procedures ensure that most of the value of fdi flows to infrastructure and productive sectors. fii investments during the current year so far are less compared to $ 1. 9 billion for the entire 1996 - 97 period ; but, it is expected that it would be at least $ 1 billion during this year. the flows on account of external aid last year, commercial borrowings and non - resident deposits are positive on a net basis, and broadly as per expectations at the beginning of the year. the invisibles have also been on track and as a result, the | mr. reddy reports on recent developments and concerns in the emerging market countries and the current scenario in the indian economy key note address by the deputy governor of the reserve bank of india, dr. y. v. reddy, at the cii seminar on ‘ emerging scenario in foreign currency management ’ in mumbai on 20 / 2 / 98. emerging concerns and state of indian economy on this occasion, i propose to address the limited issue of identifying the emerging concerns on the state of economies of emerging markets with particular reference to recent developments and place before you a factual account of the current scenario in the indian economy. the recent crisis the recent crisis has many unique features which are worth relating as a backdrop to the current concerns. first, it was unexpected, by almost all concerned i. e., governments, multilateral institutions, rating agencies and market participants. second, it is unusual since its origin is not of low economic growth or low savings or high government deficit or financial repression but in a way failure of the market mechanisms or private sector. third, it is pervasive since it is a crisis of currencies, corporates stocks and banking. fourth, it is the most contagious so far, with an impact, initially on neighbours, then other developing countries and soon the developed world also. fifth, it is still, by and large inexplicable though the immediate cause appeared to be sudden confidence erosion and global scale herding by market participants. sixth, the response of the official policy makers and the international financial community seems to have been often delayed and pretty much behind events - following or reacting to events rather than shaping them. seventh, it is not only pervasive and widespread but also deep - say the extent of depreciation of some currencies. eighth, while there are some similarities between the directly affected countries, there are significant dissimilarities. ninth, similarly while there are some internal causes ( i. e. domestic situation or excessive short - term borrowing and lending to non productive sectors ) there are also some external causes ( i. e., global factors such as developments in japan and china, including in particular excessive lending from major financial centres ). there are three important aspects of the crisis which we need to note. firstly, it appears to be a case of unrealistically high expectations and disappointment on the part of participants. secondly, there is still some lack of consensus on the appropriate response, and also as to the role of relevant | 1 |
economic history. before the crises in the 1930s and particularly before world war one, there was a period characterised by openness, increased cross - border trade and growing international capital flows. major technical advances in the 19th century were introduced successively as the production of goods and services gradually become more modern. these developments peaked in the 1920, a period of high economic growth in many countries. stock - market investors as well as consumers looked forward to rising future income. these expectations were broken, however, when the gains from the new technology, instead of leading to rapidly rising corporate profits, accrued mainly to the national economy in the form of a lower price rise and substantial real wage increases. with the global depression in the 1930s, the move towards further integration was checked. a number of decisions to raise tariffs and prohibit international capital movements exacerbated the economic situation. this made the negative consequences for the global economy even more serious and the international economy landed in a deep depression. developments in this period demonstrated that protectionism and closed doors are not conducive to higher living standards. after world war two, some minor steps were therefore taken once more towards increased international cooperation. the deregulation of trade began in earnest in the 1950s and financial deregulation started in the 1970s. important breakthroughs in technology followed in their wake. all this heralds another favourable period of rising living standards in the countries that manage to reap the benefits. turning now to sweden, there are a number of parallels with developments here in the 19th century. from a poor agrarian society to a wealthy industrial nation in the early 19th century sweden was still a poor country. strategic social institutions were in a shaky state. the form of government was unstable, the payment system was rather chaotic and there was a general shortage of credit facilities. people who wanted to try something new found themselves restricted. many saw no alternative to emigrating and trying their luck in america. it seems that more than a million people left sweden for the new country in the west before the process of industrialisation began in earnest here. less than a hundred years later, at the end of the 19th century, the swedish economy had undergone a dramatic transformation. inflation was low and the payment system functioned properly. the country vibrated with energy in every sphere. an impressive number of new products were developed on the basis of swedish inventions and many of them became world leaders. swedish financial experts were involved early on in exploiting the innovations. more and more people found work, living standards | rose and sweden achieved one of the highest growth rates in the world. when it comes to the causes of sweden ’ s rapid economic transformation, there are some differences of opinion. the industrialisation taking place elsewhere was probably a major factor. another was the possibility of importing capital for large investments. domestic reforms in key areas may also have helped create the conditions for growth. price stability was presumably of some significance. low, stable inflation reduces uncertainty about the future for those who have to plan for the long term. confidence in the commitment to price stability was gradually built up after parliament in 1830 decided to base the currency on the value of silver. another important factor was probably the development of the credit system in the 19th century. banks were established and financial know - how grew after interest controls had been abolished. this made it possible to finance industrial investment and exploit all the new inventions. an increasingly stable form of government no doubt also contributed to the transformation. the constitution was reformed by degrees and served to guarantee stability. business enterprise benefited from the abolition of trade guilds, the freedom to trade and the introduction of joint stock companies. another import measure was, of course, the introduction of compulsory education, which led in time to increased human capital. this is not intended to be a complete account of all the factors behind sweden ’ s transformation from a poor country into a rapidly growing industrial nation. my point is that, if a number of institutional changes had not been made, the outcome would have been less favourable. these changes provided a stable framework for the process of industrialisation and ensured that our country could benefit from the ongoing globalisation. realignment of sweden ’ s economic policy it may be asked whether the good growth at present can also be attributed to a realignment of swedish economic policy. there are no doubt those who consider the political decision - makers could have gone further in this direction, just as there are others who think they have gone too far. i shall not enter that discussion but simply note that a number of important decisions have been made in the past ten to fifteen years. they include the deregulation of credit and foreign exchange markets, the reform of the tax system, changes to components of the transfers system and the enhancement of competition. all this has helped the swedish economy to function better. moreover, price stability is now monetary policy ’ s statutory objective and the riksbank, now also formally independent, has been made accountable for this. other steps, in the form of a far - reaching | 1 |
choongsoo kim : asia ’ s role in reviving global growth and financial stability dinner speech by mr choongsoo kim, governor of the bank of korea, at the international conference organized by the asian development bank, the institute of international finance, the kb financial group and the institute for global economics, seoul, 17 may 2012. * * * good evening, ladies and gentlemen. it is a privilege and a pleasure for me to speak here this evening. i am extremely grateful to chairman sakong for inviting me. as we have just enjoyed some splendid food, to boost our health and energy, i hope that my address now may serve as substantial food for thought for everyone in this room. i may risk ruining your appetites for dessert and coffee, but being a central bank governor, as you know, it is my job to take away the punch bowl when the party gets going. i would like to first briefly review recent economic and financial developments in the global economy, before addressing the challenges and opportunities faced by asia in repositioning itself in the new global financial scene. i. where do we stand? after four years of financial turbulence and economic uncertainty, the global economy is still in trouble, despite some signs of recovery from the fallout of the global financial crisis. the global economic outlook is improving only slowly, and the pace of recovery is uneven across regions. the us economy appears to have turned the corner, with improved risk appetite and real activities, while asia is leading world economic growth, albeit at a level below its potential so far. the euro area, on the other hand, has yet to escape the specter of its twin crises and stagnant growth. given its sheer economic size and dominant share in global banking, the euro area has been the major source of risk to global growth and financial stability over the past two years or so. the recent large - scale liquidity operation by the ecb, the so - called ltro, has helped to calm the financial markets and stabilize sovereign debt dynamics, at least temporarily. the ltro ’ s purpose, as i understand it, is to buy precious time for the conduct of necessary fiscal reforms and bank restructuring. unfortunately, the positive effects of the ltro seem to have been waning recently. the sovereign spreads of the highly - indebted countries are on the rise again, while the abundant liquidity is being hoarded by banks amid little signs of any increase in lending. i hope that the time bought by | the ecb through the ltro is used wisely, to put an end to the fiscal crises and the resultant financial instability. a natural question at this juncture would be how to consolidate the financial gains achieved so far, and what to do to pull the world economy out of its current troubles. i think revisiting the dynamics of the global financial crisis, and the ensuing fiscal crises in advanced market economies – or ames in short – could offer us clues to help answer these questions. ii. reversing the direction of real - financial and cross - border linkages let me be more specific. some eighty years of macroeconomic research and policy lessons guided us to the deployment of extraordinary monetary and fiscal stimulus measures in response to the global bis central bankers ’ speeches financial crisis, and these policies did pay off by enabling us to avoid another great depression. success was short - lived, however, as the world economy instead fell into the great recession. adverse feedbacks through real - financial linkages triggered fiscal crises in ames, particularly in the euro area, which pose threats to global financial stability even today. despite their own sound fundamentals, meanwhile, emerging market economies – or emes in short – have become the hostages of cross - border linkages, both real and financial, as they have faced weak and highly uncertain external demand, sharp reversals in capital flows, and heightened foreign exchange market pressures. as you may have noticed here, and as i should highlight now, there have thus been two types of linkages at the heart of the postcrisis economic and financial developments – real - financial linkages, and cross - border linkages. and the implication is thus that a global solution is necessary if we hope to return to a sustainable path of growth and financial stability. we live now in an interconnected world. and in an interconnected world, stagnant growth and fiscal crisis occurring in one region is no longer an isolated problem of that region alone. rather, it is a global problem, that has far - reaching implications for other regions and, ultimately, the world economy as a whole. i believe that our search for a global solution to the problems we now face should begin with a focus on reversing the directions of these two types of linkages – so that in place of negative spillovers we instead see positive feedbacks. and in fact, powerful real - financial and cross - border linkages are a basis for positive feedbacks just as much as they are a | 1 |
randal k quarles : don't chase the needles - an optimistic assessment of the economic outlook and monetary policy remarks by mr randal k quarles, vice chairman for supervision of the board of governors of the federal reserve system, at the economic club of new york luncheon, new york city, 18 october 2018. * * * thank you for having me. 1 i very much appreciate the opportunity to speak to this distinguished group and look forward to my discussion with greg ip. now almost exactly a year into my appointment as vice chairman for supervision, i have, as might be expected, spoken publicly most often about banking and the financial system more generally. however, supervision and regulation are not all that i do at the federal reserve, and i welcome this opportunity to speak to another part of my day job, as a member of the federal open market committee ( fomc ). today i would like to offer my take on the economic outlook, which is optimistic, and explain how i view my optimism as consistent with the continued gradual pace of policy tightening that many committee participants have projected. in particular, i will explain how my views on potential growth help shape my outlook, both for the economy and for the appropriate path of monetary policy. relatedly, i will discuss the uncertainties that arise when a central element of the outlook - in this case, the potential capacity of the economy - - is unknown and largely unobservable. such uncertainty can complicate policymaking in even what appears to be a very healthy economy, providing a further argument for gradualism. where we are now in previous remarks on the economic outlook, delivered at a national association for business economics conference in february, i characterized the u. s. economy as being in a " good spot " and asked if the economy had reached a positive turning point following an extended period of post - crisis slow growth. i argued that while it might be too soon to call a turning point, there was a definite possibility of an upside surprise. 2 so now that we are fairly deep into 2018, where do we stand overall? my view has not changed all that much from february. while many other forecasters had to revise up their forecasts over the course of the year, my own outlook is basically unchanged, because the economy is evolving essentially as i expected at the outset of the year. the economy remains in a good spot. gross domestic product increased a robust 3 1 / 4 percent in the first half of | accomplish. in light of what has happened over the past two years, it is imperative that governments convince markets that they can and will put large financial firms into a resolution process rather than bail out creditors and shareholders. yet no one can guarantee that future resolutions of systemically important firms will proceed smoothly or predictably. resolution mechanisms must be understood not as silver bullets, but as critical pieces of a broader agenda directed at systemic risk and the too - big - to - fail problem. | 0.5 |
example, reports on y2k surveys of supervisors and regulators being undertaken by the basle committee on banking supervision and by the international organization of securities commissions are planned to be made available on the joint year 2000 council web site. public papers produced by the joint year 2000 council will also be available on the web site. a listing of international conferences and seminars related to y2k will be posted on the web site, together with links to other y2k web sites and documents. at this stage, each member of the joint year 2000 council is in the process of finalizing the country page for its respective country. last week, i wrote to every contact provided by the web pages of the joint year 2000 council can be reached at the web site of the bank for international settlements ( www. bis. org ). these pages will also be registered under the name jy2kcouncil. org in the near future. the four sponsoring organizations ( almost 600 contacts in over 170 countries ), asking for assistance in coordinating the development of their country page. this also provided a further opportunity to raise the awareness of the year 2000 problem at the most senior levels of financial market authorities and supervisors in countries around the world. through the effort to develop this web site and other similar efforts by the joint year 2000 council, i believe we can succeed at keeping the awareness of the issue at a very high level within the global financial supervisory community. efforts to improve preparedness of course, awareness of the year 2000 problem is only the first step in addressing it. global efforts to prepare for year 2000 vary widely, and many countries believe that more coordinated national action will be necessary to tackle the problem as effectively as possible. at our second meeting of the joint year 2000 council, a strong consensus emerged that a national government body in each country could play a helpful role in coordinating preparations for y2k. while the council did not have a strong view on what particular form or what specific authority such a body would require in each specific country, the council members felt strongly that involvement in some fashion by the national government could be beneficial. accordingly, the joint year 2000 council plans to issue a statement in the near future providing general support for the concept of a national - level coordinating body for the y2k problem. in the united states, of course, the white house has established the president ’ s council on year 2000 conversion, headed by john koskinen. this effort, as well as those of this committee under | the leadership of chairman leach, and of the other congressional committees that have addressed the y2k problem, has shown that national government bodies have a very important and useful role to play in encouraging progress in addressing the y2k problem. turning now to the question of how financial supervisors can implement effective y2k programs, the joint year 2000 council intends to promote the sharing of strategies and approaches. for example, the basle committee on banking supervision has prepared a paper containing “ supervisory guidance on independent assessment of bank year 2000 preparations ”. this document is aimed at moving supervisors worldwide from a level of general awareness to a specific, concrete program of action for overseeing y2k preparations, both on an individual bank basis and on a system - wide basis. the joint year 2000 council intends to adapt this paper for use by financial market regulators and supervisors more broadly and to issue it as rapidly as possible with the endorsement of all four sponsoring organizations. the goal will be to provide guidance in developing specific year 2000 action plans for all types of financial market authorities. supervisors in countries that have gotten a head start on the issue can thereby provide the benefit of their experience to those who are starting later. those supervisors getting a late start have a need for tools of this type. the joint year 2000 council will also be working with the members of our external consultative committee, particularly the global 2000 coordinating group, to build on this effort and develop a y2k self - assessment tool that could be used broadly by the financial industry in countries around the world. we also intend to develop additional papers on a variety of y2k topics that might be of interest to the global financial supervisory community. at this point, i am sure that members of the committee have questions regarding the state of y2k preparations in various parts of the world. i think that it is fair to say that most believe a spectrum exists, with the united states at one end of the spectrum, and emerging market and undeveloped countries at the other end. there are likely exceptions of course ; some developed countries are probably less far along than they should be. some emerging market countries, on the other hand, appear to be quite advanced in their preparations. overall, however, there is still not nearly enough concrete, comparable information on the preparations of individual institutions to be able to make any confident statements about the state of global preparations in any detail. over the time remaining until january 2000, we hope to use the joint year 2000 council as a means of gathering a better | 1 |
high levels and this will put the focus back onto productivity growth and economic reform as the drivers of increasing living standards. the second issue is the importance of ensuring that the economy remains flexible, and can respond to unexpected developments. my colleagues at the reserve bank and i have spoken at length on previous occasions about the key elements here. having a flexible exchange rate has been one of the great stabilising forces in the australian economy over the past 30 years. labour market flexibility is also important. so too is retaining the flexibility of both monetary and fiscal policy to respond quickly to unexpected developments. to this list, i would add the importance of having a highly trained and educated workforce. not only does education help lift productivity, but it also makes the economy more flexible and this helps lower risk. the third element that affects the nature of the risks is the way that investment is financed. historically, much of the external funding for business investment has come from banks. while bank financing is likely to remain important for many firms, a greater share of investment is likely to be financed from other sources than has been the case in the recent past. this may not be welcome news for the banks, but having investment financed from a variety of different sources helps reduce aggregate risk. over the years ahead, foreign direct investment and capital market raisings by firms in the resources sector are both likely to play a more important role than they have over the past decade. this means that some of the risks – and, of course, some of the expected returns – from the rapid increase in australia ’ s capital stock will be shared with foreign investors. the fourth element of risk management is the response of domestic consumption to the improved outlook. the textbook says that if future income prospects improve, the level of national consumption – either private or public – should increase now. but the textbook also says that the lower our appetite for risk, or the greater the uncertainty about the future, the smaller should be any immediate adjustment in consumption. it also says that the more uncomfortable we are about the possibility of a future decline in consumption if things do not work out well, the smaller should be adjustment now. if we look back at our own economic history, the early 1980s provides a good example of what can happen if the adjustment is too quick. in the first couple of years of that decade, there was much optimism about the future of the resources sector, largely reflecting the rise in oil prices as a result of opec ii. this optimism was translated quickly into higher | explored in the past to investigate factors that determine prices and the degree of price dispersion, much in the tradition of our long - standing efforts under the umbrella of the eurosystem inflation persistence network. 15 the data, which consist of 3. 5 million observations on the price and quantity of individual products sold, have confirmed that competition at producer and retail level is a key factor affecting micro price - setting. insights gained from the use of online and scanner data have also encouraged the ecb to make micro - price research a strategic research priority between 2018 and 2020. the first step is to pick up where the inflation persistence network left off, by resuming the collection of micro data underlying the consumer price index and the producer price index and complementing them, where possible, with scanner and online price data. 16 collaboration within the eurosystem will once again be vital for the success of this ambitious project. the ecb, with the help of the national central banks, also draws on big data to help improve business cycle analysis. google search data, for example, have been suggested as a potentially valuable source of data for policymakers. back in 2012, hal varian and co - author showed that google searches can help predict economic activity. 17 building on this idea, escb staff have explored the possibility of nowcasting unemployment using volumes reported by google trends for a large number of search queries broadly related to unemployment. they find that many of the search terms indeed correlate with unemployment and may reduce forecasting errors by up to 80 % by comparison with naive benchmark models. 18 job search and related google search quotes have also been found to be strong predictors of variations in subjective wellbeing. 19 similar initiatives are underway for more leading indicators. related to this, electronic payment data from credit cards and cash withdrawals from atms have been shown to help forecast private consumption as well as gdp growth, provided that they are made available in a timely manner. 20 these data are also less prone to revision than traditional national accounts data. our internal findings so far suggest that, in some euro area countries, the correlation between payment data and private consumption is encouragingly strong, making their systematic use in forecasting an option for policymakers. technological progress in exploiting textual information can provide similar benefits. research shows that information extracted from business newspapers can be used to nowcast quarterly gdp growth and outperforms traditional forecasting methods at turning points. 21 4 / 9 bis central bankers'speeches | 0 |
a change in the survey framework. sources : ministry of internal affairs and communications ; bank of japan. chart 9 outlook for economic activity and prices ( july 2018 outlook report ) the medians of the policy board members'forecasts, y / y % chg. real gdp cpi ( all items less fresh food ) fiscal 2018 + 1. 5 + 1. 1 forecasts made in april 2018 + 1. 6 + 1. 3 fiscal 2019 + 0. 8 + 1. 5 forecasts made in april 2018 + 0. 8 + 1. 8 fiscal 2020 + 0. 8 + 1. 6 forecasts made in april 2018 + 0. 8 + 1. 8 note : figures for the cpi ( all items less fresh food ) exclude the direct effects of the consumption tax hike. source : bank of japan. chart 10 yield curve control 1. 4 % recent 1. 2 bottom of 10 - year jgb yields ( july 27, 2016 ) 1. 0 0. 8 target level of the long - term interest rate : 0. 6 around zero percent short - term policy interest rate : minus 0. 1 percent 0. 4 0. 2 0. 0 - 0. 2 - 0. 4 - 0. 6 residual maturity, year source : bloomberg. chart 11 strengthening the framework for continuous powerful monetary easing taking more time than expected to achieve the price stability target of 2 percent. maintaining the output gap as long as possible within positive territory is appropriate. persistently continuing with powerful monetary easing forward guidance for policy rates " the bank intends to maintain the current extremely low levels of short - and long - term interest rates for an extended period of time, taking into account uncertainties regarding economic activity and prices including the effects of the consumption tax hike scheduled to take place in october 2019. " ⇒ strengthening the commitment to achieving the price stability target enhancing the sustainability of " quantitative and qualitative monetary easing ( qqe ) with yield curve control " long - term interest rate : the bank maintains the target level of around zero percent. while doing so, the yields may move upward and downward to some extent mainly depending on developments in economic activity and prices. purchases of etfs : the bank maintains the annual pace of increase in the amount outstanding of about 6 trillion yen. while doing so, the bank may increase or decrease the amount of purchases depending on market conditions. etc. achieving the price stability target of 2 percent at the earliest possible time while securing stability in economic and financial conditions. 11■ | s conduct of monetary policy next, i would like to explain the bank's conduct of monetary policy including the measures decided at the mpm held two days ago. the bank has been pursuing powerful monetary easing under the policy framework of " qqe with yield curve control, " aiming to achieve the price stability target of 2 percent ( chart 10 ). in order to achieve the price stability target at the earliest possible time, the bank set the target level of 10 - year japanese government bond ( jgb ) yields at around zero percent, and has purchased large amount of jgbs so that the yield curve would be formed in line with the target. by conducting this operation, short - and long - term interest rates have been stable at low levels and lending rates as well as issuance rates for corporate bonds - - to which certain spreads are added in both cases - - also have remained at extremely low levels. the amount outstanding of bank lending has been increasing firmly. thus, the current highly accommodative financial conditions, brought about by yield curve control, have largely contributed to an improvement in the output gap, stimulating firms'and households'spending activities. in addition, the bank has purchased exchange - traded funds ( etfs ) and japan real estate investment trusts ( j - reits ) with a view to exerting positive effects on economic activity and prices through lowering risk premia in the stock market. as i explained, following the discussion at the latest mpm, the bank released its economic projections, which show that it will take more time than expected to achieve the price stability target of 2 percent. however, the momentum toward 2 percent inflation has been maintained. accordingly, as for the conduct of monetary policy, the bank judged it appropriate to persistently continue with the current powerful monetary easing, thereby maintaining the output gap as long as possible within positive territory, in order to make the momentum sustainable. during the discussion, we thought it necessary to address two challenges. the first is to firmly maintain confidence among the public regarding the bank's current policy stance that aims at achieving the price stability target of 2 percent. the second is to strengthen the sustainability of the current powerful monetary easing so that the effects of monetary easing will not be reduced while taking care of such factors as the negative effects on financial markets, in a situation where monetary easing needs to be continued. in order to address these two challenges, the bank decided to newly implement measures to strengthen the framework of powerful monetary easing. | 1 |
level with regard to each bank ’ s capital needs. this effect is critical now that qualifying banks choosing an advanced approach to credit or operational risk will be allowed to apply some of their own assessments of risk in the calculations of their minimum capital requirements. we might view the entire three - pillar structure of basel ii as a series of built - in reality checks for management ’ s decision - making. in this regard, the three pillars of basel ii are intended to make sure that management assesses and controls its risks carefully and that it takes the steps necessary to allocate the appropriate capital. as you know, in the first pillar, the minimum capital requirements focus management ’ s attention on identifying, assessing and quantifying risk within a specified framework. this puts the onus of analysis and decision - making on the right set of shoulders : bank managers are in the best position to evaluate their risks and are ultimately responsible for responding to them. when banks consider their risks more comprehensively and work to evaluate rigorously the magnitude of losses that they may face, they are improving the quality of the information at their disposal. that, in turn, should improve their ability to arrive at sound decisions regarding the amount of capital that they may need to weather potential losses in the future. considerable attention has been paid to some of the formulas and techniques that we have adopted in pillar 1 to help quantify the potential for losses related to credit and operational risk exposures. we must remember that these formulas are not revolutionary. in fact - in one of many examples of how basel ii seeks to reflect reality - the new framework draws on the tremendous advances that many firms have already achieved in quantifying their exposures to credit and operational risk. this reflects as well one of the committee ’ s goals to build the new framework on sound risk management practices in use today and to provide sufficient flexibility for it to evolve with advances in the future. at the same time, the committee knows that mathematical formulas and financial models are only as good as the assumptions they make. at best, therefore, they serve as supplements to our insight : they do not replace our need for expertise and judgement. even einstein warned of the dangers of confusing mathematical certainty with reality. he said once that, “ as far as the laws of mathematics refer to reality, they are not certain ; and as far as they are certain, they do not refer to reality. ” reasonable supervisors and bankers know that we cannot rely purely on the apparent mathematical certainty of models and formulas | of the european union but is still sizable, which is more bewildering in the case of the currency union. a departure from perfect capital mobility has important economic implications, as it might be leading to lower aggregate investment, a higher home bias in investment decisions and a lack of portfolio diversification. the capital markets union project has received a stronger push over the last few months. most of the work in terms of harmonising investment products across the eu has already been agreed. progress on savings products has also been achieved. in particular, the development of the market for the pan - european pension product is particularly relevant considering the situation of public finances in many eu countries and the challenges posed by population ageing. but, looking ahead, greater headway is needed over the coming years. in particular, allow me to highlight three dimensions. first, the legal framework : insolvency regimes vary widely across jurisdictions for financial and non - financial corporations, as a result of cultural traditions and legal frameworks. this is a major obstacle for cross - country investments and, i would add, a very difficult one indeed to overcome. second, the strengthening of european regulators. as european markets become more integrated and technologically complex, this is becoming a more essential element that policy - makers need to address. it will be even more important since, depending on the final outcome of negotiations, brexit might increase the risk of fragmentation, as some companies and transactions may be reallocated to various possible destinations, while others may remain in the uk. 8 / 11 third, more needs to be done in terms of making capital taxation more consistent. the debate has stalled in this regard. for example, the various regimes for withholding taxes, with more than 90 types of forms in different languages, are often cited as a huge obstacle for investment by market participants. moreover, the favorable tax treatment of debt compared to that of equity has significant economic implications. a well - functioning capital markets union will have major ramifications as it will attract institutional investors, improving the allocation of resources and strengthening the international role of the euro. crucially, it will help reshape capital markets in europe after brexit. i believe that this project is essential for the single market, for the economic and monetary union and a resilient euro, and, ultimately, for the eu ’ s global competitiveness. i am certain that these and other matters will be raised and discussed during the following panel of this conference. the case | 0.5 |
prices. these are more relevant than the spot price for retail pricing. bank of england persistent, however. and reducing it requires the economy to grow below its trend rate for a period of time. because they ’ ve depressed real incomes, that slowing in demand will to some degree follow from the very same rises in import costs that have pushed up headline inflation. equally, if government support mitigates that effect, there is more at the margin for monetary policy to do. the mpc is likely to respond relatively promptly to news about fiscal policy. whether official interest rates have to rise by quite as much as currently priced in financial markets remains to be seen. i ’ ve received helpful comments from colleagues at the bank of england. i ’ d like to thank fabrizio cadamagnani, kieran dent, joseph oyegoke and doug rendle for their help in preparing the speech. the views expressed are my own and do not necessarily reflect those of the bank of england or other members of the monetary policy committee or the financial policy committee. | non - bank money might be the next big thing. or they might be a flash in the pan. i don ’ t have a bet here – i am a central banker not a venture capitalist. my job, as a central banker and regulator – in all of this – is to ensure that financial innovations, including new forms of digital money, do not impair the bank of england ’ s ability to maintain monetary and financial stability. this shouldn ’ t be confused with preserving the status quo. financial stability is n ’ t about protecting incumbent banks or other existing firms from competition. instead financial stability seeks to ensure that people and businesses can rely on essential financial services – like the ability to make a payment or the ability to get a loan – in bad times as well as good. a regulatory framework earlier this week, the bank of england published a discussion paper that examines the implications of stablecoins for its financial and monetary stability mandate. in it we present an illustrative scenario to examine the implications of the emergence of stablecoins and other new forms of digital money. the discussion paper models what would happen if a large number of households and businesses moved their deposits from banks and into a stablecoin or central bank digital currency ( cbdc ). contrary to some press headlines, even such a dramatic shift does not inherently constitute a financial stability risk as long as it happens in an orderly manner. in fact findings show that the implications of this in the long term for the ability of households and businesses to get a loan are relatively modest – although there is considerable uncertainty around this result. as such, while other risks may arise during a transitionary phase, the most significant risk arises from the potential for stablecoins in particular to undermine confidence in money and payments, and hence in the wider financial system. as we discussed a few minutes ago, the risk of a loss of confidence in the credibility and stability of private money is not theoretical. loss of confidence in private money can be a major threat to financial stability. but it is equally true that private money can be made acceptable as a widespread means of payment – indeed, as i covered earlier, the vast majority of money held for transactions in the united kingdom is already private. so, with the right regulation, a stablecoin could potentially be made safe for wide - scale use. our existing regulatory framework seeks to ensure that the public is able to trust the reliability and stability of the money it uses every day. banks are subject to extensive rules and | 0.5 |
. the low interest rate environment poses additional challenges for the effectiveness of monetary policy. the normalization of exceptionally accommodative monetary policy will be an unprecedented and challenging process with a longer - term perspective. this calls for enhanced vigilance among policy makers especially concerning the containment of potential spillover effects. multilateral cooperation continues to be crucial, especially when facing the risk of a possible inward shift in policies and threat of protectionism. trade integration has contributed to the improved living standards across the globe, while lifting hundreds of millions out of poverty. geopolitical and national political risks add to the uncertainty of the global economic outlook. in this context we strongly believe that adherence to a rules - based international trading order is vital in order to continue reaping the benefits of globalization. adding to that, climate change also requires worldwide, multilateral action, and so does handling its macro - economic consequences. in order to secure intergenerational equity it is imperative that the long - term 1 / 2 bis central bankers'speeches economic consequences of climate changes are prioritized over any short - term gains from disregarding environmental considerations. the fund has a role to play in new macro - critical areas ; also it should maintain its tailored advice on appropriate country - specific policies and remain the key institution in the global financial safety net. we welcome the fund ’ s work in new areas such as the digital economy, the fintech industry, and in facilitating policies that promote inclusive growth, i. e. ensure equal opportunities for all. the benefits, brought on by the fintech industry and increased digitalization, are welcome and encouraged. however, we have to take into account the changes they might bring to the regulatory framework and established market structures. in this respect the fund could have a role to play in monitoring the risks that the evolution of the fintech industry might entail. the recently observed changes brought by the fintech industry and increased digitalization might also help address the risks regarding correspondent banking relationships ( cbrs ), which have recently come under pressure. we welcome the fund ’ s analytic work and advice on policies aimed towards dealing with the adverse impact of withdrawal from cbrs. the fund plays a central role in fostering global economic growth and financial stability by providing country specific policy advice and guidance to policymakers in moving towards not only strong domestic policies, but also promoting globally optimal solutions. we support the fund ‘ s engagement in policy diagnosis and recommendations while promoting the implementation of the right mix of structural | reforms, fiscal, macroprudential and monetary policies. we strongly support the fund ’ s role as the key institution in the global financial safety net ( gfsn ). we welcome the fund ’ s continuous work on reforming its lending facilities and instruments to address potential gaps in the gfsn. we welcome the discussions on the new tools and the introduction of the policy coordination instrument, which could encourage countries to commit to and signal strong national policies. at the same time we believe that further work is needed in order to ensure an adequate and strong gfsn with the fund at its center. we stand ready to engage in an open and constructive discussion on the 15th general review of quotas. the outcome of the review should be broadly acceptable and beneficial for all members. the results should not serve the interests of the largest member countries at the expense of small and medium open economies, as it would threaten the credibility and legitimacy of the fund. to conclude, we face changes in the global economy and live in the environment which requires us to think and operate in the frame of an appropriate policy mix of structural reforms, fiscal, macroprudential, as well as monetary policies. the fund has a crucial role in advising countries and ensuring a smooth transition through cyclical as well as systemic changes. the fund ’ s contribution in multilateral cooperation remains significant and especially relevant when facing possible threats of protectionism. the fund should stay alert to long - term tendencies in the global economy. we stand ready to cooperate. 2 / 2 bis central bankers'speeches | 1 |
have increased. it is now more than ever important and necessary that europe responds cohesively and decisively to the challenges it is facing. i believe we should remember the words of a great european, carlo azeglio ciampi, spoken in this room more than ten years ago : “ if we act alone we will be at the mercy of events bigger than us, events that threaten peace and european security. ” i am confident that the foundations on which the eu project is built are strong enough to achieve the objectives that have been entrusted to us by the people of europe. i am now looking forward to the debate. thank you for your attention. 4 / 4 bis central bankers'speeches | mario draghi : introductory statement to the plenary debate of the european parliament on the european central bank's annual report 2015 introductory statement by mr mario draghi, president of the european central bank, to the plenary debate of the european parliament on the european central bank's annual report 2015, strasbourg, 21 november 2016. * * * i am happy to be back at the european parliament to discuss with you the ecb annual report for 2015. this debate is an important pillar of our accountability. we take your comments and suggestions very seriously. at your request, last year we began publishing the ecb ’ s feedback on your resolution on the ecb annual report. on 4 october 2016 the governing council also approved principles increasing transparency in developing ecb regulations on european statistics. these principles take into account the transparency practices of the european parliament, the council of the european union and the european commission. in my remarks today, i will retrace the economic developments since our last plenary exchange in february. in particular, i will discuss the role of the ecb ’ s monetary policy in supporting the ongoing recovery. i will also review the policy agenda aimed at addressing current vulnerabilities in the euro area. economic developments and the role of the ecb ’ s monetary policy in supporting the recovery the euro area recovery continues to proceed at a moderate, but steady, pace. it has shown remarkable resilience to adverse developments and uncertainties emanating from the global environment. in fact, euro area unemployment has been steadily declining. more than four million jobs have been created since 2013, when the situation was at its worst. domestic demand has also strengthened and real gdp growth has recorded positive figures for 14 consecutive quarters. since the beginning of the year headline inflation has gradually picked up, moving from the negative rate of – 0. 2 in february to 0. 5 in october. our monetary policy measures since june 2014 have been a key factor behind these positive developments. asset purchases, targeted longer - term refinancing operations ( tltros ) and low policy rates have strongly supported the recovery. let me explain more in detail. first, the pass - through of our monetary stimulus to bank lending conditions has been remarkable. interest rates have fallen markedly across a broad spectrum of asset classes and credit markets since june 2014. as a result, euro area firms and households have experienced more favourable borrowing conditions. for example, bank lending rates for companies declined by more than 100 basis points between june 2014 | 1 |
mr. meister reports on the year 2000 problem from the perspective of german banking supervisors luncheon speech by mr. edgar meister, a member of the directorate of the deutsche bundesbank, at the year 2000 meeting of european central banks and financial regulators organised by the joint year 2000 council and the deutsche bundesbank in frankfurt / main on 30 / 10 / 98. i i am pleased to contribute to this conference on the year 2000 and how the millennium date change poses a very significant risk for financial institutions and markets. the media have now been reporting regularly, and sometimes with flashy headlines, on the many problems which the y2k problem or “ millennium bug ” can pose to the economy and public administration. one has visions of planes crashing, assembly lines coming to a standstill, pensioners being asked to register for school, babies receiving old age pensions, contracts becoming null and void, or deliveries being interrupted. we are all well aware that the year 2000 problem impacts on the whole economy and the public administration. therefore, joint action must be taken now if we are to avoid potentially serious problems down the road. acting in my role as a central banker and as chairman of the banking supervision committee of the european central bank, my primary concern is on the role financial institutions play in this context. that is why i want to take this opportunity to give you a short overview on the implications of the problem on the financial sector and a brief summary of the measures taken by german banking supervisors to promote and intensify the necessary year 2000 preparations. ii in the banking and insurance sectors, the impact of systems being insufficiently year 2000 compliant can be particularly drastic. some vivid examples are the possibility of interest and redemption payments on loans being calculated inaccurately, statements of accounts and insurance periods being updated incorrectly, cheques and credit cards being rejected by atms ( automated teller machines ), and futures contracts being cancelled. however, the more pressing risks are to be found in the danger that payment systems might collapse, liquidity bottlenecks might occur, and the number of credit defaults might increase, owing to year 2000 problems on the part of banks ’ customers. for this reason, banking supervisors have alerted the banking industry to the possibility of significant changes in customers ’ behaviour occurring at the end of 1999 as far as their demand for cash goes. a lack of public confidence in the ability of the financial sector to solve the year 2000 problem could trigger increased withdrawals of deposits and demand for cash. the | liberalization strategy is to ensure strengthening of the domestic system, and allow gradual opening of the banking sector. this will mean new entries into the system, as well as more intensified competition between existing players. the phasing of this process will be consistent with continued economic and financial stability. the banking system must be prepared for greater competition. improved risk management framework will be the critical success factor for banks'ability to meet future challenges. these include the adoption of ias 39, currently underway, and the new basel capital accord at the end of next year. we realize that these reforms pose a major challenge to the banking system in thailand as in the global market. however, the process of policy consultation and dialogue with the banking sector has assured us that banks are able to cope, although some more so than others. nevertheless, ias 39 will improve the transparency and provision buffer against impaired assets, while basel ii has already raised the standard of risk management that will be absolutely crucial going forward. in summary, we are moving in the right direction and are in a good position to build on this reform and to consolidate our progress. how well - founded is our confidence? as you know, we are currently undergoing the financial sector assessment programme or fsap with the imf and the world bank, which assesses the supervisory process and financial sector soundness. preliminary findings on our compliance to the bis core principles of banking supervision are favorable, with the results mostly fully compliant and largely compliant. all in all, thailand's supervisory system compares well to international best practices. the only exception, as we all know, has to do with the inadequacy of the current legal infrastructure that provides for the central bank's autonomy and explicit supervisory power in key areas. i must thank the tremendous effort and cooperation made by the banking sector throughout the whole fsap process thus far. the next phase of the process will involve the stress test analysis of the banking system, which again, will require your cooperation. the value of this exercise is not only to confirm our strength, but also to help guide us to areas of improvement that can safeguard us against future challenges. you can expect more improvements in our supervisory system in the months and years ahead, especially after the new financial institutions businesses act is enacted. ladies and gentlemen, the economy and the banking system have come a long way to reach this point, where we are able to remain resilient against many difficult challenges. such ability, to a large extent, | 0 |
jose manuel gonzalez - paramo : non - standard monetary policy : five questions about the exit speech by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, on the occasion of the seminar at the european economics and financial centre, london, 6 november 2009. * * * introduction 1 i would like to thank the european economics and financial centre ( eefc ) for organising this conference and giving me the opportunity to speak in front of such a distinguished audience. this is the second time i have had the honour of participating in the eefc series of seminars ; the first time being back in september 2006. it is always a pleasure to be invited to address an audience again because it allows you to resume the dialogue already started. back in 2006 my speech focused on the many challenges that uncertainty poses for the design of monetary policy. today, i would like to focus on some questions related to the exit from the ecb ’ s non - conventional monetary policy. there is no need for me to recall the start of the crisis in early august 2007, when tensions originating in the us sub - prime mortgage market spread to international money and credit markets, nor its intensification in mid - september 2008, following the filing for bankruptcy protection by lehman brothers. while the full cost of the crisis has yet to be assessed, the output contraction and job destruction observed so far ( as well as the less readily measurable social costs ) have been on a scale unseen for more than half a century. in order to contain the impact of the crisis on the real economy and preserve price stability, central banks have engaged in an aggressive cutting of policy interest rates and have introduced a number of non - standard monetary policy measures. at the same time, governments have adopted large fiscal stimulus measures, while also making vast public funds available to provide support to their banking and financial industries. recent data suggest that the massive response to the crisis by public authorities is bearing fruit. the threat of a continuing free fall in activity in our economies has now receded and there are signs that the global slowdown may be bottoming out. however, the crisis has certainly not come to an end : uncertainty remains high and the economic data remain volatile. based on the information currently available, we expect the recovery to be gradual and, at least in the short term, to continue to rely on a number of temporary factors, such as past discretionary stimulus. even though the crisis is not yet over, during the last year we | leverage of the sector had reached unprecedented heights. however, as analysed in box 7, the recent re - leveraging in the euro area corporate sector has not been broad - based, but rather it has been concentrated among unlisted firms – including not only small and medium - sized enterprises, but also firms which have been de - listed through private equity deals. data is obviously lacking on unlisted firms, but comparing trends in the debt - to - asset ratio for listed non - financial corporations and the debt - to - gdp ratio for the non - financial corporate sector suggests that a sharp rise has taken place in the debt - toasset ratio of unlisted firms in the period since 2004 ( see chart on the left of slide 8 ). increasing corporate sector leverage in the euro area has also begun to raise questions about the likelihood of an adverse turn in the credit cycle and its possible consequences for the financial system. although closely related to business cycles, credit cycles are also driven by the criteria applied by banks and other investors when extending credit. by this yardstick, a long period of inertia in bank lending standards since mid - 2004 and the persistent tightness of credit spreads suggest that euro area firms have not been facing financing constraints ( as shown in the chart on the right of slide 8 ). on the contrary, as banks placed greater emphasis on the so - called “ originate and distribute ” business model, new opportunities have emerged for other financial institutions to acquire exposures to credit. this development has further improved firms ’ access to bank credit. euro area household sector turning to the euro area household sector, the pace of net borrowing by the household sector has slowed since spring 2006, but has remained at high levels ( see the chart on the left of slide 9 ). there have also been signs of moderation of house price inflation in a number of euro area housing markets. the risk of potentially disruptive property price declines in the future appears limited in the euro area as a whole, although differences continue to exist among individual member states. however, concerns remain about the sustainability of unprecedented levels of mortgage - related leverage in those parts of the euro area where, ceteris paribus, housing valuations appear stretched, where the debt build - up has been pronounced, and where the majority of debt is financed at variable interest rates. while measures of leverage compared to income can provide a rough indication of the ability to service debt, it is also important to evaluate the sustainability vis | 0.5 |
lucas papademos : opening address at the fifth ecb central banking conference speech by mr lucas papademos, vice president of the european central bank, at the fifth ecb central banking conference “ the euro at ten : lessons and challenges ”, frankfurt am main, 13 november 2008. * i. * * introduction on behalf of the executive board, i would like to welcome you to the fifth ecb central banking conference, taking place in the tenth year of the ecb ’ s establishment. we are delighted that this year ’ s conference has attracted many distinguished participants from academia, central banks, governments, international institutions and the financial sector. your contributions will ensure that this conference will provide insightful and thoughtprovoking analysis and generate debate on many policy issues of relevance to central banking. as we will be celebrating the 10th anniversary of the introduction of the single european currency in a few weeks ’ time, the theme of this conference is, of course, focused on “ the euro at ten : lessons and challenges ”. the introduction of the euro was a historic milestone in the process of european monetary, economic and political integration, with wide - ranging implications for the european and global economies. accordingly, this conference will concentrate on several issues of relevance to the performance of the euro area economy and financial system and on the challenges for the conduct of monetary policy and the performance of other central banking tasks in an increasingly integrated global economy. ii. the euro : economic performance and policy challenges the first session will examine the macroeconomic performance of economic and monetary union, its achievements and challenges, over the past ten years. there are several key questions to be addressed. first, has the euro and the single monetary policy established a zone of monetary stability as envisaged, with all the direct and indirect benefits this entails for the 320 million citizens of the euro area? the evidence unambiguously provides a positive answer. the euro has been a resounding success : it has established itself as a stable and credible currency, which has become the second most important currency in the world after the us dollar. a deeper analysis, however, should reveal the contribution of monetary policy, and of other factors, to this achievement and the challenges that lie ahead and must be effectively addressed in order to ensure the preservation of price stability in the years to come. a second key question is whether – or to what extent – the euro has contributed to boosting the trend growth of the euro area economy by strengthening competition, enhancing market efficiency | gertrude tumpel - gugerell : ten years of european monetary union – what is the role of national central banks today? speech by ms gertrude tumpel - gugerell, member of the executive board of the european central bank, at the austrian national bank ’ s high level evening panel discussion : “ ten years of european monetary union : what is the role of national central banks today? ”, brussels, 6 may 2008. * * * ladies and gentlemen, i would like to thank very much the oesterreichische nationalbank for inviting me and i am very pleased to be here today in brussels to speak about “ 10 years of european monetary union : what is the role of national central banks today ”. in less than one month ’ s time, the eurosystem will celebrate its 10 - year anniversary, as it was on 1 june 1998 that the european central bank ( ecb ) was founded and with it the eurosystem. as many of you know, i have had the opportunity to work and contribute to the eurosystem activities from both sides : from the perspective of a ncb, as a former board member of the oesterreichische nationalbank, and from that of the ecb, in my current position. therefore, it is a particular pleasure to speak today about the achievement of emu and the role of the ncbs in the success of european monetary policy over the last 10 years. 1. the main achievements of emu the introduction of the euro has undoubtedly been one of the most important steps towards european integration. we cannot stop if the whole world around us is in motion jean monnet wrote in his memoirs. however this is not to say that the path has been easy and without criticism and scepticism on the part of some. it has been almost 40 years since the first european consultations and discussions on a monetary union took place. the first attempt, under the chairmanship of the luxemburg prime minister werner, to establish a monetary union failed as the discrepancies in the national policies appeared still too large. it was over 15 years later that the delors group started working on a report that culminated in the maastricht treaty in 1992 that provided a three - stage plan for the establishment of a european monetary union. however, related to the difficulties faced by the european monetary system in the beginning of the 1990s the enthusiasm for a common currency at that time was still limited. today the euro belongs to | 0.5 |
were in the pre - crisis period. dealers cite a number of reasons for this change, including reductions in their own risk appetite and the effects of post - crisis regulations. at the same time, the federal reserve and foreign owners ( about half of which are foreign central banks ) have increased their ownership to over two - thirds of outstanding treasuries ( up from 61 percent in 2004 ). banks have also increased their holdings of treasuries to meet hqla requirements. these holdings are less likely to turn over in secondary market trading, as the owners largely follow buy and hold strategies. 5 another change is the increased presence of asset managers, which now hold a bigger share of treasuries as well. mutual fund investors, who are accustomed to daily liquidity, now beneficially own a greater share of treasuries. perhaps the most fundamental change in these markets is the move to electronic trading, which began in earnest about 15 years ago. it is hard to overstate the transformation in these markets. only two decades ago, the dealers who participated in primary treasury auctions had to send representatives, in person, to the offices of the federal reserve bank of new york to submit their bids on auction days. they dropped their paper bids into a box. the secondary market was a bit more advanced. there were electronic systems for posting interdealer quotes in the cash market, and the globex platform had been introduced for futures. still, most interdealer trades were conducted over the phone and futures trading was primarily conducted in the open pit. today these markets are almost fully electronic. interdealer trading in the cash treasury market is conducted over electronic trading platforms. 6 thanks to advances in telecommunications and computing, the speed of trading has increased at least a millionfold. 7 advances in computing and faster access to trading platforms have also allowed new types of firms and trading strategies to enter the market. algorithmic and high - frequency trading firms deploy a wide and diverse range of strategies. in particular, the technologies and strategies that people associate with high frequency trading are also regularly employed by broker - dealers, hedge funds, and even individual investors. compared with the speed of trading 20 years ago, anyone can trade at high frequencies today, and so, to me, this transformation is more about technology than any one particular type of firm. given all these changes, we need to have a more nuanced discussion as to the state of the markets. are there important market failures | is by attempting to internalize their customer trades – essentially trying to create their own markets by finding matches between their customers who are seeking to buy and sell. internalization allows these firms to capture more of the bid - ask spread, but it may also reduce liquidity in the public market. at the same time it does not eliminate the need for a public market, where price discovery mainly occurs, as dealers must place the orders that they cannot internalize into that market. while the changes i ’ ve just discussed are unlikely to go away, i believe that markets will adapt to them over time. in the meantime, we have a responsibility to make sure that market and regulatory incentives appropriately encourage an evolution that will sustain market liquidity and functioning. in thinking about market incentives, one observer has noted that trading rules and structures have grown to matter crucially as trading speeds have increased – in her words, “ at very fast speeds, only the [ market ] microstructure matters. ” 8 trading algorithms are, after all, simply a set of rules, and they will necessarily interact with and optimize against the rules of the trading platforms they operate on. if trading is at nanoseconds, there won ’ t be a lot of “ fundamental ” news to trade on or much time to formulate views about the long - run value of an asset ; instead, trading at these speeds can become a game played against order books and the market rules. we can complain about certain trading practices in this new environment, but if the market is structured to incentivize those practices, then why should we be surprised if they occur? the trading platforms in both the interdealer cash and futures markets are based on a central limit order book, in which quotes are executed based on price and the order they are posted. a central limit order book provides for continuous trading, but it also provides incentives to be the fastest. a trader that is faster than the others in the market will be able to post and remove orders in reaction to changes in the order book before others can do so, earning profits by hitting out - of - date quotes and avoiding losses by making sure that the trader ’ s own quotes are up to date. technology and greater competition have led to lower costs in many areas of our economy. at the same time, slower traders may be put at a disadvantage in this environment, which could cause them to withdraw from markets or seek other venues, thus fracturing liquidity. and | 1 |
financial market environment. however, we need to take appropriate measures to address any emerging risks and mitigate any potential impact to the financial system stability. 6. uses : the survey data and findings can be used by various stakeholders ’ to further enhance financial inclusion and promote the sector ’ s development. i urge you all to design ways to enhance dissemination to minimize administrative burden and ease access to allow majority of kenyans to use the information. 7. despite the progress made in the financial inclusion front in the last 10 years, i believe that large gaps still remain in formal financial inclusion across regions, income groups, age, education and gender in the country. • in order to enhance financial inclusion to reach a wider population across the country, supportive policy strategies and innovations coupled with a strong and proportionate supervisory and risk management frameworks are necessary. • moreover, the need for financial education and literacy programmes to the population by both the public and private sector is vital, which should be underpinned by sound market conduct practices including financial services consumer protection measures. 8. at this point, let me invite you to listen and learn from today ’ s presentations of the survey findings and urge you to make use of the information and build - upon the same to expand the financial inclusion landscape. with these few remarks, i welcome you to this breakfast launch event of the key findings of the 2016 finaccess household survey and wish you fruitful deliberations. the survey report is, therefore, officially launched. thank you! bis central bankers ’ speeches | is not under the direct control of monetary policy, and it is not our objective. we target a 2 per cent inflation rate. that means that it is the outlook for overall inflationary pressure and related risks that matters most when we consider the appropriate stance for monetary policy. so even if only a few sectors were expanding enough to absorb the excess capacity in the aggregate economy, we would need to take the appropriate monetary policy action to meet our inflation target. so let us look at how the economy has been performing recently. signs that growth is broadening when we assess the extent to which the sources of growth are broadening, we look at the economy from a number of perspectives. these include the progress made in adjusting to lower oil prices, the range of industries that are growing and the evolution of the labour market. as i discuss each in turn, i will point to some signs that growth is broadening across regions and sectors, although not to the same extent. adjustment to lower oil prices let us start with the adjustment to lower oil prices. in 2015 and 2016, the starkest effects of the drop in oil prices on gdp were in business investment. firms in the oil and gas sector cut capital spending in half, shutting down oil rigs and cancelling investment plans. investment in the rest of the economy was also subdued, in part as a result of the weakness in non - commodity exports, especially last year. the economy kept growing, thanks to household spending, and activity was concentrated in regions where the energy sector was not as important. today, as we move past the adjustment to lower oil prices, we are seeing the economy pick up. a couple of weeks ago we got the national accounts data from statistics canada for the first quarter of this year. it was pretty impressive, with growth at 3. 7 per cent. and the figures show business investment growing again. this is in large part because capital expenditures in the oil and gas sector have bounced back. that is good news. that said, investment growth in this sector is likely to moderate if oil prices stay around where they are today. more generally, ongoing uncertainty about the policies of the us administration is weighing on investment plans. and, given how business investment has declined in the past two years, we flagged it as one of the downside risks to the outlook in our april monetary policy report. growth in the first quarter was also fuelled by the usual suspects — consumer spending and residential investment. however, growth in the housing sector is | 0 |
looking at the german government ’ s recent economic policy decisions, not all of them adequately address the needs resulting from these challenges nor do they set the kind of example which a large euro - area country like germany should be setting for the other member states. however, i do not want to talk about germany in too much detail today. rather, i would like to share my views on the future of european monetary union. from an economist ’ s point of view, the question whether a country should abandon its currency and join a monetary union is typically analysed in the framework of what is known as the theory of optimum currency areas. bis central bankers ’ speeches without a doubt, the euro area lacks some of the characteristics of an optimal currency area. labour mobility, for instance, is much lower than in the us ; plus the business cycles are not synchronised, nor is there any central fiscal stabiliser. at the end of the day, the decision to create european monetary union was a political one, not an economic one. nonetheless, in the first 15½ years since the euro was launched, people have enjoyed a stable currency. the average euro - area inflation rate has been 2. 0 %, which is very close to the ecb governing council ’ s definition of price stability ( “ below, but close to, 2 % ” ). however, the crisis exposed shortcomings on a national level and the fragilities of the institutional framework of the monetary union. but i am positive that if we learn from the sovereign debt crisis, the european economy will be stronger than before the crisis and we will be able to maintain our monetary union as a stability union – and it is indeed worth being maintained. in the next 30 or 40 minutes, i would like to discuss how we can achieve this end. i will start by looking into what still needs to be done at the national level. from there, i will go on to address the weaknesses in emu ’ s institutional foundation. moreover, i will touch upon current monetary policy issues. but before i talk about what needs to be done, let us take a step back and consider what went wrong in the first place. the origins of the crisis for many euro - area member states, the introduction of the euro ushered in a new era of abundant capital owing to the elimination of exchange rate risks. however, the favourable financing conditions in the euro - area countries which had previously higher interest rates mainly stimulated investment in real estate and | recently said in athens, there is still work to be done. continued structural reforms are needed to accelerate growth, create more jobs, and boost both productivity and wages – not just in greece but in other euro area countries, too. by the way, we in germany should not be content to merely ride the wave of the successful labour market and social reforms implemented in the 2000s. the institutional foundations of monetary union require further reform if the euro area is to be made permanently crisis - proof. because there ’ s one thing we can probably all agree on : none of us want a repeat of the last ten years of crisis. the extensive rescue packages put together in recent years have triggered debates in the countries providing assistance on the mutualisation of liability and intergovernmental transfers. in the countries receiving assistance, the conditions attached to the programmes were seen as very severe in some cases and as outside interference in national decision - making. 3 a strong europe : more important than ever the crisis in the euro area and the way in which it was resolved have also stirred up animosity and resentment and given a boost to anti - european movements. decidedly euro - critical and populist parties have enjoyed electoral success in many member states. but this development cannot be put down to rescue measures alone, as populist movements are flourishing outside the euro area, too. 2 / 10 bis central bankers'speeches looking at the economic setting, this discontent may come as a surprise, what with the global economy experiencing a robust upswing. in the united states, the united kingdom, germany and elsewhere, unemployment has fallen to its lowest level in decades. but it would seem that economic effects aren't the only significant factors at play here. digital change and globalisation, for example, are transforming the way we live and work. populist movements play on the fact that people perceive these profound changes as a threat. and i can understand that many people feel uneasy and cheated, and why they fear that they have lost control. " take back control " – that was the motto of brexit supporters. walter eucken once remarked, " people ’ s opinions, their mental attitudes, are often more important as regards the direction of economic policy than economic facts themselves. " 3 3. 1 globalisation and technological progress from an economic perspective, it is clear that technological progress and free trade boost general prosperity in the long term. however, looking at the bigger picture obscures the fact that employment prospects and relative wages are | 0.5 |
analyses estimate that svb's interest rate risk sensitivity was around 35 % before the crisis, well above the 15 % alert threshold set out in the international rules and supposed to trigger supervisory action. - monitoring compliance with regulations calls for strict, intrusive and reactive supervision, which, according to the fed, was not the case. let me reassure you on one point : the european situation is radically different. the basel committee's rules are applied in europe in their entirety and to all banks. by the way, i would like to add that europe is in the process of finalising the transposition into european law of the latest reinforcements of the basel iii agreements, ahead of the other major jurisdictions. as regards supervision, the euro area has a single supervisor, the european central bank, which has intrusive supervisory powers and regularly mobilises sophisticated tools such as stress tests and on - site inspections. 1. 2. … but it must be deployed and applied in a consistent manner go to slide 4 ] while the case of svb illustrates the consequences of poor implementation rather than an ineffective regulatory and supervisory framework, this does not mean that it would not be appropriate to amend this framework in the light of experience. hence the " but " after my " no " to the question i asked about the relevance of regulation and supervision. there are indeed several issues that deserve to be addressed, and will undoubtedly be the subject of intense discussions among supervisors in the months to come. i would simply like to mention three of them here. the first issue concerns the supervision of interest rate risk : should the current framework for supervising interest rate risk evolve towards a more systematic and mechanical application of rules? at the acpr we believe not. the heterogeneous nature of interest rate risk requires fine - tuned supervision. this is what the current " enhanced supervision " approach is about : it imposes standardised risk measurement tools, while recognising the specificities of the financing models of the different jurisdictions, such as the granting of long - term fixed - rate loans, or regulated savings, in france. the second issue concerns the treatment of unrealised losses on debt securities carried at amortised cost - i am referring to the unrealised losses that materialised when svb had to sell part of its government bonds portfolio : should these unrealised losses be recognised in the current prudential framework, beyond their simple disclosure in the financial statements? more precisely, should these unrealised losses | and account for 12 percent of gdp, anticipating a considerable potential for growth in years to come. consumer loans and credit card financing show annual growth rates of around 35 percent, which places them among the most dynamic lines. funding to businesses is still increasing in all productive sectors. loans to trade, industry and services sectors grew above average, with a higher share in overall funding. policies implemented by the central bank to favor lending, combined with a favorable macroeconomic framework, have taken household and corporate financing to around 40 percent of total assets in 2008, almost 4 percentage points higher in y. o. y. terms. this took place against a backdrop of a historically low nonperforming loan portfolio ( 2. 8 percent of loans to the private sector ). nonperforming loans fell more than half a percentage point during the past 12 months due to corporate sector financing. the counterpart of the increase in funding to the private sector has been the trend of the system exposure to the public sector, which dropped by 3. 3 percentage points of assets in 2008. it has already accumulated a 27. 5 percentage point drop since late 2004, and is now 14 percent below total assets. these figures – which represent a third of total loans to the private sector – are in line with those for other countries in the region. setting a general ceiling of 35 percent of assets and a maximum limit based on financial institutions ’ capital and for different jurisdiction, and unbiasing minimum capital requirements, among other actions, allowed us to reverse the crowding - out of loans to businesses and households. furthermore, if we take both deposits and loans into account, the government has now become a net creditor of the banking system. one of the main structural reforms of recent years has been the establishment of a regulatory framework preventing currency mismatches ( with peso - denominated assets and liabilities and a lender of last resort that lends in pesos as well ) and maintaining prudence when introducing financial innovations. only 12 percent of deposits are currently denominated in foreign currency, and funding is limited to those who can prove repayment capability in the same currency. our system is not funded with foreign resources ( these only amount to 4 percent of liabilities ) : peso - denominated deposits are the main source of funds for local banks in times when the international financial conditions prevent them from getting resources through the capital markets. after growing at a 22 percent annual rate in the past four years, private sector placement | 0 |
25 per cent in 2013 to 50 per cent in 2017. the average debt - to - turnover ratio among indebted firms fell from 48 per cent to 31 per cent over the same period. this survey evidence tallies with aggregate statistics, which show a large fall in outstanding bank credit to smes between 2010 and 2018. the substantial paying down of legacy debts incurred before the crisis have occurred in tandem with rapid growth in the issuance of new loans. our statistics report that new bank lending to smes outside of the financial and property - related sectors rose from €1. 9 billion in 2013 to €3. 7 billion in 2017. the agriculture and wholesale and retail sectors to have received the largest share of this new lending, at just over 45 per cent between them. regionally, sme lending is broadly balanced : the proportion of new lending to sme borrowers based in dublin is about in line with the capital ’ s population share. the increases in new bank lending volumes have occurred simultaneously with steady declines in the share of sme credit applications being rejected and a decline in the share of smes reporting more difficult financing conditions. an interesting feature of this new credit landscape is that loan application rates have not increased during the economic recovery, and are currently lower in ireland than in many european countries. as many as half of smes currently report that they are not applying for credit because they hold sufficient internal funding. one interpretation is that this simply reflects limited funding needs due to the nature of the activities undertaken by these firms. a possible alternative interpretation is the scarring effects of the crisis has increased risk aversion in the business community, limiting the appetite to undertake riskier or more ambitious investment programmes. there are a number of government initiatives to facilitate greater access to the finance, and have 2 / 4 bis central bankers'speeches formed an important part of the post - crisis response in ireland. the strategic banking corporation of ireland administers a range of schemes channelling funds through the traditional banking sector and through non - bank finance providers. by the end of 2017, sbci had facilitated over €900m in loans to smes. the ireland strategic investment fund ( isif ) also participates in the sme finance market, including by taking direct equity positions in companies and facilitating greater access to credit. at the end of 2017, isif had €663m in commitments to sme - orientated projects. in the first half of 2018, isif invested a further €110 | shaktikanta das : opportunities and challenges of fintech keynote address by mr shaktikanta das, governor of the reserve bank of india, at fintech conclave 2019, organized by niti aayog, new delhi, 25 march 2019. * * * i am extremely happy to participate in niti aayog ’ s fintech conclave 2019 and share my thoughts on the technological revolution that is shaping the future of finance. i am particularly thankful to shri amitabh kant, ceo of niti aayog for having invited me to such an august gathering. as i understand, this conclave is woven around the theme of indian fintech ecosystem as well as steps required to help achieve the potential that the sector offers towards growth, employment and inclusion. given the wide canvas that fintech encompasses, i have organised my thoughts on some of the core issues in this area. 2. in general, fintech stands for financial technology and describes technologically enabled financial innovations. from ‘ start - ups ’ to ‘ big - techs ’ to established financial institutions, all the key players are harnessing this technological edge along the financial services ’ value chain to provide agile, efficient and differentiated experiences to the end - user. this movement has the potential to fundamentally transform the financial - landscape where consumers will get to choose from a larger set of options at competitive prices and financial institutions could improve efficiency through lower operational costs. as a country that is determined to achieve universal financial inclusion at affordable costs, this is a defining moment for us, and we should seize the opportunity. fintech experience in india 3. india has been at the forefront of this revolution. a recent global survey ranks india second in terms of fintech adoption, with an adoption rate of 52 per cent 1. it is reported that there are as many as 1218 fintech firms operating in india which have created a large number of jobs. they are also generating a healthy appetite for investment. 4. the reserve bank has over the years encouraged greater use of electronic payments so as to achieve a “ less - cash ” society. the objective has been to provide a payment system that combines the attributes of safety, security, enhanced convenience and accessibility, leveraging technological solutions that enable faster processing. affordability, interoperability, and customer awareness and protection have also been other focus areas. banks have been the traditional gateway to payment services. however, with the fast pace of technological changes, this domain is no longer the monopoly of banks | 0 |
to small businesses. 4 see board of governors of the federal reserve system, federal deposit insurance corporation, office of the comptroller of the currency, and office of thrift supervision ( 2008 ), “ interagency statement on meeting the needs of creditworthy borrowers ”, joint press release, november 12 ; board of governors of the federal reserve system, federal deposit insurance corporation, national credit union administration, office of the comptroller of the currency, office of thrift supervision, and conference of state bank supervisors ( 2010 ), “ regulators issue statement on lending to creditworthy small businesses ”, joint press release, february 5 ; board of governors of the federal reserve system, division of banking supervision and regulation ( 2009 ), “ prudent commercial real estate loan workouts ”, supervision and regulation letter sr 09 - 7 ( october 30 ) ; and office of the comptroller of the currency, federal deposit insurance corporation, federal reserve board, federal financial institutions examination council and office of thrift supervision ( 2009 ), “ policy statement on prudent commercial real estate loan workouts ”, joint policy statement, october 30. see william j. dennis ( 2010 ), “ small business credit in a deep recession ”, national federation of small business research foundation ( washington : nfib, february ). see board of governors of the federal reserve system, “ senior loan officer opinion survey on bank lending practices ”. fiscal policy in addition to the near - term challenge of fostering improved economic performance and stronger labor markets, we as a nation face the difficult but essential task of achieving longer - term sustainability of the nation ’ s fiscal position. the federal budget deficit is on track this year to be nearly as wide as the $ 1. 4 trillion gap recorded in fiscal year 2009. to an important extent, these extremely large deficits are the result of the effects of the weak economy on revenues and outlays, along with the necessary actions that were taken to counter the recession and restore financial stability. but an important part of the deficit appears to be structural ; that is, it is expected to remain even after economic and financial conditions have returned to normal. in particular, the administration and the congressional budget office ( cbo ) project that the deficit will recede somewhat over the next two years as the temporary stimulus measures wind down and as economic recovery leads to higher revenues. thereafter, however, the annual deficit is expected to remain high through 2020, in the neighborhood of 4 to 5 | by the commercial banks. this board has been functional for almost three years now. the feedback from the industry and sbp experience with the shariah board has been excellent. in fact the shariah board has played a key role in ensuring an issueless promotion of islamic banking in the country. all three elements are interactive, and together form the comprehensive shariah compliance supervision mechanism. each element has been performing its role very effectively. we have been able to make sure that the whole is far greater than the sum of the parts. as such we are very confident that our shariah compliance supervision is second to none and the mechanism we have put in place has worked very well and will continue to do so. this can serve as a model for any other central bank that may want to institute shariah compliant supervision in its jurisdiction. to facilitate the growth of islamic banking across borders, i would like to emphasize the need for increasing international cooperation between supervisors in different areas including corporate governance. we need more dialogue between supervisors across regions for mutual learning and evolution of international best practices. our shariah board has five members. the chairman is a shariah scholar of outstanding repute, dr. mahmood ghazi. we have one more shariah scholar as a member. it is dr. imran usmani, son of the most respectable maulana taqi usmani. we have a lawyer member on our board, very well versed in laws pertaining to islamic financial transactions. we have the country ’ s most eminent chartered accountant as the fourth member of the board. this gentleman also leads the committee of institute of chartered accountants of pakistan that is adapting the aaofi accounting standards in the country. the fifth member of the board is sbp ’ s director of islamic banking department, who represents the interests of both the islamic commercial banks and the state bank of pakistan on the board. annexure - growth of islamic banking in pakistan description dec. - 03 dec. - 04 dec. - 05 jun - 06 oct - 06 total assets ( rs. in bn ) % age of banking industry 0. 5 % 1. 4 % 2. 1 % 2. 3 % 2. 6 % 0. 4 % 1. 2 % 1. 9 % 2. 1 % 2. 5 % % age of banking industry 0. 5 % 1. 3 % 1. 8 % 2. 0 % 2. 1 % full fledge islamic banks conventional banks with islamic banking | 0 |
deliver. it is widely accepted that there are three fundamental norms of macroeconomic performance, which i summarize as full employment, growth, and price stability, and these norms are a useful point of departure to thinking about the objectives for monetary policy. full employment can be interpreted as achieving the maximum sustainable level of employment and production. it basically means avoiding waste, in the sense of failing to use all the available productive resources. by sustainable, i mean the highest level of output that can be sustained without imposing unacceptable costs, a consideration i will return to shortly. by growth, i am referring to the desire to achieve both a high average level and rate of growth in living standards, on average, over time. we usually measure living standards in terms of real income per capita. we can be at full employment and yet be poor. we want to be at full employment and be rich. and we want our living standards to be improving over time. i ’ ll refer to the average rate of growth in output in the long run as the economy ’ s trend rate of growth. price stability refers to the stability of the overall price level, measured, for example, by the price index for overall output ( the chain - weighted price index of gdp ) or for consumer goods and services ( the consumer price index ). we often satisfy ourselves with the norm of low and stable - 2inflation. at any rate, price stability is really more an intermediate goal than an ultimate objective. the reason we care about price stability is that we believe that it contributes to a high and rising level of living standards. indeed, it is viewed as so important in this regard that we identify it as a separate and free - standing norm. and we will soon see we have particular reason to do so from the perspective of monetary policy. implications of economic theory i am going to assert some conclusions based on economic theory that help to understand the potential for monetary policy to achieve these objectives and the consistency among them. these conclusions are widely though not universally shared, but they do guide my views of what monetary policy can and should do. first, monetary policy cannot influence real variables - - such as output and employment - - in the long run ( except via the contribution of price stability to living standards ). this is often referred to as the principle of the neutrality of money. this proposition removes “ growth ” as an objective for monetary policy and also means that monetary policy cannot materially affect the level of output or employment corresponding to “ | - border banking and international bond claims reported by the private sector to the bank for international settlements for the end of the first quarter of 2005, 41. 8 percent were in dollars and 39. 8 percent were in euros. adjusting for exchange rate changes, the dollar's share was 4 percentage points less than three years earlier, and the euro's share was more than 5 percentage points greater. 6 monetary authorities have been somewhat more inclined to hold dollar obligations. at the end of the first quarter of 2005, of the $ 3. 8 trillion equivalents held as foreign exchange reserves, more than three - fifths were held in dollars and approximately one - quarter in euros. since early 2002, the dollar's share has been little changed after adjusting for movements in exchange rates. allocation of capital lowers living standards everywhere. see martin feldstein and charles horioka ( 1980 ), " domestic savings and international capital flows, " economic journal, vol. 90, pp. 314 29. see footnote 1. bank for international settlements, cross - border locational statistics, bond database, and federal reserve board staff calculations. 3 / 5 what could be the potential consequences should the dollar's status as the world's reserve currency significantly diminish, especially if foreign investors reduce their rate of accumulation of claims on u. s. residents? most analysts would contend that u. s. interest rates were lowered by the world's accumulation of dollars. accordingly, in the event of a significant diminishing of the dollar's reserve currency status, u. s. interest rates would presumably rise. although i doubt that the u. s. dollar will lose its status as the world's reserve currency any time soon, there are, in my judgment, lessons to be learned from the experience of sterling as it faded as the world's dominant currency. sterling's status was at its height more than a century ago. great britain had net external assets amounting to some 150 percent of its annual gdp, most of which were lost in world wars i and ii. many wartime controls were maintained in the years immediately after world war ii. arguably these exacerbated the periodic sterling crises that hobbled britain in those years as much of the remnants of its empire endeavored to reduce their heavy reliance on holding sterling assets as central bank reserves and private stores of value. the experience of britain's then extensively regulated economy provides testimony to the costs of structural rigidity in times of | 0.5 |
. although the bank of japan does not have a plan to issue its own digital currency at this juncture, the bank fully acknowledges the importance of deeply understanding innovative technologies not only for maintaining financial stability but also for seeking the possibility of applying them to central bank infrastructure in the future. central banks should always be attentive to on - going innovation, and continue making efforts to provide the best infrastructure to society in accordance with the development of technologies. i believe that this conference was very informative and fruitful for all participants. i sincerely hope that discussions on these issues will continue in various international forums, in order for innovations to contribute to the development of financial services and economic activities. at the end of my remarks, i wish each of you a safe journey home. thank you for your attention. | issuing " central bank money " with finality, namely, banknotes and central bank deposits. the modern currency system, which consists of a central bank and private banks, is characterized as " a two - tiered system. " in this two - tiered system, the central bank specializes in supplying banknotes and central bank deposits, while private banks perform the function of credit creation and provide deposit currencies as broader money. through such activities, private banks provide payment services to the general public and allocate financial resources to the economy as loans and credits. from the perspective of information processing, the emergence of central banks allowed people to get rid of the burden of evaluating the credibility of many payment instruments. the creation of central banks has substantially reduced the costs of information processing in payments and settlements. at the same time, private banks have contributed to efficient allocation of financial resources through their function of information processing. the modern two - tiered structure reflects the wisdom of human beings in history to achieve both efficiency and stability in the currency system. in this regard, the issuance of central bank digital currencies for general use could be analogous to allowing households and firms to directly have accounts in the central bank. this may have a large impact on the aforementioned two - tiered currency system and private banks'financial intermediation. under the current system, the central bank allows direct access to its accounts only to a limited number of entities such as private banks. from the viewpoint of the usage of information, the central bank leaves the private sector the opportunities to utilize detailed data such as " who buys what " attached to daily transactions. at the same time, the central bank can obtain the information necessary to maintain the stability of payment and settlement systems through operating its wholesale settlement systems. the issuance of central bank digital currencies could also affect such a role - sharing structure for utilizing information. to sum up, it innovation raises many fundamental questions and challenges related to the currency system, the design of central bank infrastructure and the utilization of information attached to economic activities. i sincerely hope our understanding of these issues will be further deepened in the future. initiatives taken by the bank of japan to tackle these new challenges, the bank of japan has recently been taking various initiatives in the fields of innovation and fintech. in 2016 the bank established its " fintech center. " the bank has also been conducting a joint research project called " project stella " with the european central bank to study the potential of distributed ledger technology | 1 |
nout wellink : basel committee initiatives in response to the financial crisis remarks by dr nout wellink, president of the netherlands bank and chairman of the basel committee on banking supervision, before the committee on economic and monetary affairs of the european parliament ( econ ), brussels, 30 march 2009. * * * thank you, madame chairwoman and members of the econ committee, for this opportunity to share with you the basel committee ’ s strategy and initiatives to respond to the present financial crisis as it relates to the regulation, supervision and risk management of the banking sector. the work of the basel committee is consistent with and supports the initiatives of the financial stability forum and the leaders of the g20. in formulating responses to the financial crisis, it is necessary to address both the near term challenges related to the weakening economic and financial situation and the long term regulatory structure issues. the two are linked and we need to manage carefully the transition from current measures to a more sustainable long term framework. with regard to the near term situation, it is clear that the banking sector has been at the heart of the adverse feedback loop between the financial and real side. we have moved from what i would call the mark - to - market and illiquidity phase of the crisis related to legacy assets to the fundamental credit cycle part of the crisis. this is associated with large write downs from corporate and retail lending books, and i believe this phase will continue to play out over the medium term. it is critical that supervisors have a comprehensive strategy to deal with both phases of the crisis and their associated impact on banks. that is essential if we are to restore stability to our financial systems and economies. when it comes to the long term, we need to establish a clear target for the future regulatory system which substantially reduces both the probability and severity of a crisis like the one we currently are working though. by providing clarity about the future regulatory framework, we will help re - establish near term confidence, reduce the risk of competitive distortions and limit the degrees of uncertainty for the public and private sector. also, by emphasising that these reforms will be phased in over an appropriate horizon, we reduce the risk that our own actions contribute to procyclicality in the system. in this regard our plans are closely aligned with the views expressed in the de larosiere group ’ s report. this group ’ s report has been strongly appreciated by the basel committee. let me now say a few words about the steps the | for achieving the best possible performance of the company. this means maximizing profits, increasing growth and market share, expanding business lines, and doing all that it takes to maximize the company ’ s share value. on the other hand, the board of directors has to oversee the operations of management, ensuring that they operate well within the bounds of acceptable risks in order to ensure business continuity. the board of directors, thus, needs to act as a check - and - balance against the management with a view to ensuring the safety and soundness of the enterprise. meanwhile, shareholders also expect the board to perform its role as a watchdog or guarantor that the corporation would not incur losses or go into bankruptcy. they also expect the board to check management against excessive risk taking. therefore, it goes without saying that if the roles of chief of management and the chairman of the board are performed simultaneously by the same individual, then other board members cannot fully perform their duties of providing the check - and - balance required by good governance. worse yet, shrewd ceo will tempt other board members with stock options so that they would go along with his policy direction. this would especially be the case when the ceo aims for high growth or business expansion, which usually implies a quick rise in the company ’ s equities. though, these policies are often prone to higher risks, board members may become less inquisitive and more optimistic in their judgment as a result of the personal interests in potential profits from stock options. at the end of the day, their own personal interests would overtake their sense of conservatism and responsibilities. one can think of an even worse scenario when the ceo would like to cover up any wrongdoings or poor performances. since this ceo is also chairman of the board, he can easily influence the agenda of the meeting. thus, board members may never be aware of the company ’ s problems. if and when they have been informed of the problems, it may already be too late, as evidenced in the case of enron. it is for the above reasons that the authorities here in asia, are pushing for the separation of chairman and ceo positions so that they cannot be occupied by the same person in order to properly balance the powers and functions of the two roles. it is also fortunate for us that the practice of issuing stock options to directors of financial institutions is not yet widespread among banks in asia. ladies and gentlemen, what i have highlighted is only one face | 0 |
and hands - on regulator / supervisor gives the confidence that markets will operate as per sound principles and would be free from unfair and unethical practices. this trust forms the basis of functioning of the entire financial system and any dent in this trust can have a significant destabilizing influence. as governor reddy expressed and i quote, “ banking is a trust - based relationship and the banking licence from the regulator provides an assurance of trust to the public at large. to the banks, the banking licence provides the privilege of accepting uncollateralised deposits from the public. however, the acts of stealth banking, negative option marketing, misleading advertisements, information gathering from customers for cross selling of products and services, and tie - up arrangements are inconsistent with the concept of a trust - based relationship. the lack of transparency, coupled with the difficulty of consumers in identifying key information from the large volume of material and communication in fine print, leads to an information asymmetry, which renders the banker - customer relationship one of unequals. ” bis central bankers ’ speeches 3. retention of customers : all banks offer similar products ( i ) accept deposits ( ii ) provide credit ( iii ) provide payments and remittance services ( iv ) foreign exchange facilities ( v ) provide financial instruments. in the process, banks extend services to their customers. sadly, the friendly neighbourhood banker is disappearing as is the feet on street, ear to the ground salesman, the distance between banks and customers is increasing. this is not a good thing. branch manager who was a friend, may not be aware of the number of customers of the branch, frontline staff may be ignorant of features of the varied products on offer. technology emerged as the backbone of banking operations, revolutionizing service delivery through new platforms and channels. these developments created greater challenges for the customer in terms of service quality, non - human interface, unsolicited marketing of products, ever - increasing fine - prints etc. all of these disagreeable compounded due to lack of awareness of the average customer. hence, knowing their customers and understanding their own product offerings must be the starting point of the banks ’ customer protection framework. as all banks broadly have the same products, it is only better customer service which sets one bank apart from another. the cost of customer acquisition is 8 – 10 times greater than of retention of current customer. broadly, customer expectations while dealing with banks are a ) professionalism, quick and efficient service b ) transparent, fair and | for credit default swaps ( cds ), right from their introduction in december 2011. a reserve bank working group on enhancing liquidity in the government securities and interest rate derivatives markets recommended standardization of irs contracts in order to improve their tradability and facilitate centralised clearing and settlement. to begin with, the inter - bank rupee overnight index swap ( ois ) bis central bankers ’ speeches contracts have been standardised. the inter - bank otc forex derivative contracts are largely standardised. infrastructure for the central clearing and guaranteed settlement of us dollar - indian rupee ( inr ) inter - bank forex forward transactions has been in place since december 2009, which currently caters to around 30 per cent of the transactions. the reserve bank is working towards making the guaranteed settlement of the us dollar - inr mandatory. the fra and irs trades in the inr are currently being centrally cleared in a non - guaranteed mode. the proposal to bring irs and fra transactions in the inr within the ambit of guaranteed settlement is engaging our attention. 5th issue : safeguarding financial stability what have we learnt? some of the most forceful lessons of the crisis are in the area of financial stability. we learnt that financial stability is important, much more so than we thought, because the costs of financial instability can be very heavy. we learnt that financial stability is an international public good – a disruption in the financial system anywhere can cause disruption in the financial systems everywhere. we learnt that price stability and macroeconomic stability do not guarantee financial stability ; financial stability has to be guarded as an explicit variable. we learnt that signs of financial instability are difficult to detect in real time and that pressure can build up in the system for much longer than we think possible before an eventual implosion takes place. what has been the global response? the post crisis reforms effort has accordingly focussed on three questions : ( i ) how do we define financial instability? ( ii ) what are the policy instruments for safeguarding financial stability? ( iii ) what should be the institutional arguments for safeguarding financial stability? there are no definitive answers to any of these questions ; they are still being debated. nevertheless, let me give you a flavour of the general approach to answers. there seems to be general agreement that financial stability is difficult to define in concrete and quantifiable terms to suit all contexts. the consensus is that financial stability is a condition in which the financial system can withstand shocks thereby reducing the probability of disruption or breakdown of | 0.5 |
crushed. | piero cipollone : tips ( target instant payment settlement ) - the new eurosystem market infrastructure service – banca d ’ italia as service provider and manager of the business relationships with the financial community welcoming remarks by mr piero cipollone, deputy governor of the bank of italy, at tips webinar, bank of italy, 12 july 2021. * * * it is a great pleasure to welcome you here today to this seminar on target instant payment settlement ( tips ), the eurosystem market infrastructure for the settlement of instant payments in central bank money. the seminar will illustrate the architecture and functioning of the platform developed by the bank of italy on behalf of the eurosystem, and its contribution to retail payments market innovation in europe. tips was launched in 2018 and allows transactions to be settled in central bank money across europe within seconds. in launching tips, the eurosystem acknowledged that the capacity to transfer funds in a matter of seconds is a powerful one, and has great potential with respect to traditional credit transfers. the implementation of the system was carried out by the 4cbs – the central banks of france, germany, italy and spain, which are the providers of the eurosystem market infrastructures. the bank of italy, in particular, was responsible for developing the service and it was also entrusted with the task of operating the platform. from the 4cbs ’ perspective, tips represents a break with the past as well as increasing awareness of the fact that digitalization is blurring the lines between wholesale and retail. before tips, eurosystem projects such as target2 and target2 - securities ( t2s ) were designed to promote integration and harmonization of market infrastructures within the euro area, meeting the needs of financial market operators, depositories and large custodian banks. with tips, the eurosystem has provided the european financial community with an infrastructure designed to support the provision of innovative, customer - friendly retail payment solutions for the benefit of european citizens. in fact, tips was developed with the aim of fostering the integration of retail payment services and of eliminating barriers due to a lack of interoperability between different settlement platforms based on the sepa instant credit transfer ( sct inst ) scheme – i. e. the standard tips ( target instant payment settlement ) – the new eurosystem market infrastructure service : banca d ’ italia as service provider and manager of the business relationships with the financial community welcoming remarks by piero cipollone | 0 |
that the escb will pursue in stage three of monetary union. before explaining our decision on the strategy, let me emphasise certain important characteristics of the environment in which the single monetary policy will operate as of next january. of most concern to the escb are some uncertainties which will inevitably arise as a result of the move to stage three. these relate, in particular, to the way in which the transition to stage three of monetary union will affect economic behaviour and institutional and financial structures in the euro area. they also relate to statistical issues. against this background, the governing council has chosen a distinct monetary policy strategy, one that reflects the special circumstances it faces at present. this strategy will ensure continuity with the successful strategies pursued by participating national central banks in recent years, while taking into account - to the extent needed - the unique situation created by the transition to monetary union. with this context in mind, the governing council today agreed on the main elements of the stability - oriented monetary policy strategy of the escb. these elements concern : • • • the quantitative definition of the primary objective of the single monetary policy, price stability ; a prominent role for money with a reference value for the growth of a monetary aggregate ; and a broadly - based assessment of the outlook for future price developments. first, let me stress that, as mandated by the treaty establishing the european community, the maintenance of price stability will be the primary objective of the escb. therefore, the escb ’ s monetary policy strategy will focus strictly on this objective. in the interest of transparency and in order to give clear guidance with regard to expectations regarding future price developments, the governing council of the ecb has agreed to announce a quantitative definition of price stability. in this context, the governing council of the ecb has adopted the following definition : “ price stability shall be defined as a year - on - year increase in the harmonised index of consumer prices ( hicp ) for the euro area of below 2 % ”. let me emphasise the fact that price stability is an objective which is to be maintained over the medium term. the current rate of hicp inflation in the euro area is in line with this objective. three features of this definition should be highlighted : • • • first, the hicp is the most appropriate price measure for the escb ’ s definition of price stability. it is the only price index that will be sufficiently harmonised across the euro area at the start of stage three. second, by defining price | jean - claude trichet : interview with suddeutsche zeitung interview with mr jean - claude trichet, president of the european central bank, and suddeutsche zeitung, conducted by ms helga einecke and mr martin hesse, published on 29 april 2009. * * * mr. president, when will the end of the crisis finally be in sight? it is an on - going phenomenon. that is why we have to remain constantly alert. in the summer of 2007 we experienced unusual events in the money market and were the first central bank to respond. since mid - september 2008 we have been in a very serious crisis. the new, globalised financial world that has been created over the last 10 to 15 years is for the first time being put to the test. it is proving to be much more fragile and less resilient than it should be. can this world ever be brought back to health? yes, certainly. it calls for bold decisions today as well as credible exit strategies to improve confidence of our fellow citizens and of the corporate sector on our capacity to go back to medium – long term sustainable path. this is true for fiscal policies as well as for monetary policies. and we have to implement effectively, efficiently and as rapidly as possible the decisions the decisions taken in the g - 20 meetings. who must accept responsibility for this crisis? i don ’ t see any value in looking for scapegoats. for instance, some may make banks or rating agencies the whipping boys. but to me the entire financial system has proved unsatisfactory. it must be reformed from the bottom up. all parts and parcels of global finance together have not delivered the stability that citizens rightly demand. thus, significant improvements must be introduced everywhere. we owe this to the citizens and to the whole world. have central banks not been able to prevent this crisis? in the past we have made no compromises on our objective of price stability. from 2003 to 2004 we were publicly urged by the heads of the governments of three large countries to cut rates. we said no. in december 2005 ten out of 12 governments in the euro area called on us not to raise rates. we still did it and we have delivered what our democracies and our fellow citizens had asked us to deliver, namely stable prices. how great is the political pressure? we are not subject to political interference or short - term thinking. the eu treaty is crystal clear on this point and guarantees fully our independence | 0.5 |
full responsibility for government debt management, thereby relieving the cbn of such role. thirdly, there is a need to meet the west african monetary zone ( wamz ) convergence criterion, limiting central bank financing of government to 10 per cent of estimated current revenue. fourthly, the enactment of the fiscal responsibility act should be rigorously pursued. your excellency, distinguished ladies and gentlemen, there is no doubt in my mind that the issue of fiscal policy management is very critical to the successful implementation of our economic programmes. in this connection, i hope the seminar will find time to ponder on the following issues : ( i ) the need to establish a stabilization fund which will address the problem of revenue / expenditure volatility ; ( ii ) formulate viable fiscal rules which are consistent with our fiscal federalism, and ( iii ) propose the way forward in addressing the problems of inter - generational equity argument arising from debt overhang. i am convinced that the array of eminent professionals gathered here today will come up with concrete proposals that will enhance our fiscal policy in the medium to long - term. i thank you for your attention. | has been more frequent than in “ normal times ” because of the unpredictability of the liquidity demand. 2. the amount of refinancing provided via longer - term refinancing operations ( ltros ) has been increased significantly with a view to smooth conditions in the term money market. the amount of refinancing provided via the one - week main refinancing operations ( mros ) was reduced correspondingly, so that the total amount of outstanding refinancing has remained unchanged. as a result, the average level of eonia has remained close to the minimum bid rate even if its volatility has at times been higher than normal and our assessment is that our operations have had a positive impact – in particular in diminishing volatility – on term money market conditions. the eurosystem did not have to change its collateral framework at the time of the financial turbulences because, since its inception, it accepted relatively broad ranges of collateral and it granted a large number of counterparties access to rather large refinancing operations. we consider that the operational framework of the eurosystem has in itself provided notable stability during the turmoil. it is important to recall that, as the turmoil went on, central banks strengthened their cooperation, first through enhanced information exchange and collective monitoring of market developments and later on by coordinated steps to provide liquidity. since december 2007, the ecb has, in cooperation with the us federal reserve and together with the swiss national bank, been conducting several term auction facilities – so - called taf - operations – in which it provides usd liquidity, on behalf of the us fed, to euro area banks. these liquidity - providing operations do not have a direct effect on euro liquidity conditions, but are conducted to address the availability of us dollar funding for euro area banks and aimed at improving global funding conditions. i would sum up by noting again the challenging environment within which economic policymakers are currently operating. the global economy is undergoing a range of interdependent shocks across various facets of the global system. in part, they are associated with a change in our operating environment in which resources constraints are more pertinent ; technological progress is accelerating ; and interactions are more complex. understanding the shocks and their interrelations in this system is vital and ongoing part of our economic analysis and decision - making. thank you for your attention. | 0 |
interest rate swaps in total derivatives of the banking system has risen sharply from 15 % in march 2002 to 53 % in march 2006. the risks arising on account of obs activities of banks are controlled through a combination of both banks ’ internal risk management and control policies and risk mitigation mechanism imposed by the regulators. the board approved internal control policies covering various aspects of management of risks arising both on and off balance sheet exposures constitute the first line of defence to the bank. holding of minimum defined regulatory capital for all obs exposures, collection of periodic supervisory data and incorporating transparency and disclosure requirements in bank balance sheet are some of the major regulatory initiatives undertaken to control and monitor obs exposures of the banking system. the rapid proliferation of derivatives exposures inevitably poses a challenge on account of the downside risks associated with them, if not managed properly. there are issues relating to use of structured products, valuation, counterparty related issues, risk management and reporting issues and last but not the least, training and skill development. while derivatives facilitate risk hedging and risk transfer to institutions more willing to bear the risks, the tendency of participants to use derivatives to assume excessive leverage, and lack of prudential accounting guidelines are matters of concern. one of the features of in the indian derivative market relates to concentration risk in respect of both the market makers ( banks ) and the corporates. the combined share of top 15 banks has steadily grown from around 74 % in march 2002 to 82 % of total obs exposures of the banking system in march 2006, of which 62 % is accounted for by foreign banks. concentration of knowledge is another risk which results in the concentration of derivative activity among few players. rbi has been stressing on the need to carry out due diligence regarding customer appropriateness and suitability of products before offering derivative products to their customers. there is need to use risk mitigation techniques such as collaterals and netting to reduce systemic risks and evolve appropriate accounting guidelines. " credit risk modeling : the federal reserve bank of philadelphia's perspective " anthony m. santomero, president, federal reserve bank of philadelphia rbi has also issued two separate draft guidelines, one for valuation / accounting of investment portfolio in general and the second relating to derivatives. the proposed guidelines attempt to put in place fair value accounting norms for derivatives broadly in line with ias 39, the international accounting standard for valuation and accounting for financial instruments. for investments, the proposed framework envisages a symmetrical | this framework as a part of the overall risk perceptions of the bank and the capital planning strategy of the bank. issues in data infirmity still remain to some extent. in many cases, the alco ’ s role remains confined to deciding on interest rates of the bank. this is partly due to lack of decision support system available to the alco. availability of impact and scenario analysis of changes in yield structures would be a significant enabling factor. the reserve bank has recently issued draft guidelines to banks with the objective of graduating from the current maturity ladder approach prevalent in most banks to a duration gap approach. the later approach makes it possible for banks to calculate the modified duration of assets and liabilities, the duration gap and duration of equity. the concept of duration of equity gives banks, subject to certain limitations, a single number indicating the impact of a one per cent change of interest rate on its capital, captures the interest rate risk and thereby helps move a step forward towards assessment of risk based capital / economic capital. credit risk : another important issue is that bank resources and supervisory resources have concentrated on credit risk modeling of commercial and industrial portfolios, with relatively fewer resources devoted to risk quantification in the retail credit area 1. the possible reasons could be ( i ) from a systemic perspective, it makes economic sense to devote more resources to evaluating the risk factors of larger loans ( ii ) there is a long history of ratings agency evaluations for publicly traded firms which, along with the extensive data available for publicly traded firms, provided an extremely useful benchmark for the development of quantification methods for commercial portfolios. however, despite this commercial side emphasis, retail credit is a substantial part of the risk borne by the banking industry, and can not be ignored. recognizing this, over the last decade or so, the industry and academia have devoted significant resources to developing more sophisticated creditscoring models for measuring this risk. like their counterparts on the commercial side, these models also rely heavily on quantitative analysis. derivatives : there has been a spurt of derivatives exposures in the off balance sheet exposures. the composition of derivatives portfolio of the banking system has also undergone a significant transformation. forward foreign exchange contracts which accounted for around 80 % of total derivatives in march 2002 declined steadily and stood at almost 43 % in march 2006 while the share of interest rate contracts went up from 19 % to 54 % during the same period. foreign currency options have recorded noticeable increase during the last year. the share of single currency | 1 |
the opening to international trade have driven the development of large countries : first japan, south korea and the asian tigers ; more recently, china and india. they have raised hundreds of millions of people, a significant share of mankind, from conditions of absolute poverty. for the process to continue, it is important that the opening to market mechanisms and international trade spread from the production and exchange of goods to those of services. financial services offer an extraordinary potential for growth, with benefits for emerging countries that can hardly be overrated. the tumultuous growth of these countries requires a modern financial system that can channel their enormous savings and promote an efficient allocation of capital while raising the consumption of households and allowing them to make better provision for the future in the absence of effective social security cover. the creation of an appropriate institutional framework is a necessary condition for the development of modern financial systems. one of the lessons of the successes of globalization ( and also of the failures, which have not been lacking, especially in sub - saharan africa ) is the role of good institutions : ensuring legal certainty, efficient justice and honest and effective administration is essential for the development of the economy in general. it is especially important for the financial sector, which cannot prosper without the support of fixed and accepted rules, appropriate standards of corporate behaviour, and sufficiently transparent and efficient markets. ensuring the existence of these conditions is not an easy task. it is not only a question of good laws but also, and perhaps above all, of their being applied fully. in many emerging countries it requires a sea change in the culture of administration and in that of economic agents as well. the role played by the governments of these countries is therefore important, but so is that of the international financial institutions, in persuading, assisting and guiding through their example. | if ireland is to become one of the leading r & d performers in the european union. increasing the amount of innovation carried out in this country means not only encouraging indigenous firms to increase their r & d activity but also continuing to attract technology - intensive multinational firms, increasing the amount of r & d activity carried out by these multinationals in ireland and ensuring the diffusion of the technology embedded in foreign multinationals through the rest of the economy. in conclusion, ireland ’ s past productivity performance has been quite good and the productivity potential of the irish economy remains favourable. what i have been pointing out today are areas where we need to do better in light of the recent slowdown in productivity. for a mature economy like ireland, innovation in relation to both products and processes is a key determinant of long - run productivity growth and, therefore, living standards. much has been done in recent years to increase the amount of r & d carried out in this country and improve the innovative capacity of the economy and there is clearly scope for further improvements in this regard. this will be essential if ireland is to enhance its productivity potential and maintain a competitive edge in the changed global economic environment. 4 / 4 | 0 |
karnit flug : challenges in the field of pension savings remarks by dr karnit flug, governor of the bank of israel, at the pensions, insurance and financial literacy research center, ben - gurion university, beer - sheva, 20 november 2014. * * * good morning, the festive opening of this institute is a very important event, and its work plan seems promising. there is tremendous importance to raising awareness and research on the matter, and action in this direction is to be welcomed. it is also important to improve the public ’ s ability to make an informed decision in this field as this is one of the most important financial decisions a household makes. i therefore see tremendous importance in working on financial literacy. i would like to briefly touch upon a number of facts and trends that point to the challenges in the field of pension savings, and then to present a series of questions that i believe are proper to deal with in an institute such as this. projected demographic trends as we know, life expectancy is increasing, and if we look at the past 40 years, the life expectancy of those reaching age 65 increased from 80 years to 86 years for women, and from 79 years to 84 years for men. this fact, together with the fact that the retirement age increased by only two years, means that men are expected to live an average of 17 years after retirement and women are expected to live 24 years after retirement. this leads to the question of whether, during the working period, the public is saving enough to ensure a proper income at retirement age. another way of looking at the demographic change is to look at what is happening to the ratio between the working - age population and the retirement - age population. the trend in israel is similar to the trend in other countries in the world, although with some lag. as of today, there are 5 working - age people for each person over age 65 in israel, while the ratio in 2050 is expected to narrow to 3 : 1. this change obviously has serious implications for the labor market, the dependency ratio, and various aspects of policy. an international comparison of retirement arrangements shows that in israel, the retirement age for women is relatively low, and even after it is raised to 64, as is supposed to happen in 2017, it will be significantly lower than in most european countries, some of which are also in a gradual process of raising it. the retirement age for men in israel was raised to 67, and | found it increasingly difficult to assess which risks financial institutions where subject to, and institutions had more difficulty with valuing their products. transparency was gone, which not only contributed to the lack of trust between financial institutions, but also between client and institution. you will therefore understand that we, as supervisors, had to act quickly and act decisively. as chairman of the basel committee, let me mention some of the measures that the committee proposes. and i would also like to use this opportunity to convince you that these measures are really necessary. despite being a significant improvement over the previous accord, basel ii has shown to still contain some significant weaknesses and shortcomings. of many of these we were aware, but we were not able to adequately address them. however, now, under the pressure from the crisis, many of these issues are open for debate again. let me talk about some of these measures in more detail. first, we are going to improve the level and quality of capital. we have seen during the crisis that the current levels are not adequate and that in the end it is only the capital of the highest quality that counts in adverse conditions. an extension of this measure is that we will make capital requirements less cyclical, by means of additional capital buffers that are built up during economic upswings. this might imply that less profit can be used to pay out dividends or bonuses, as it is instead used for increasing the firm ’ s capital buffers. second, we want to make sure that we really cover all risks and allocate adequate capital to each. a key aspect of this is to prevent regulatory arbitrage opportunities, particularly with securitizations and between banking activities and trading activities. third, we will work on an international accord on liquidity buffers and supervision, instead of the current fragmented, national rules. furthermore, the basel committee proposes to supplement these risk - based measures with a non risk - based measure that acts as a backstop in order to prevent an excessive build - up of leverage during favourable economic periods. the design of the leverage ratio as a simple, transparent, and supplementary measure of capital that is based on gross exposures, will therefore serve as a safeguard against attempts to game the risk - based requirements and address model risk and measurement error. by the end of 2010 we hope to have fully calibrated these measures such that they can be phased in as economic conditions improve, with the aim of implementing them by end - 2012. i | 0 |
will be high now but lower in the next period. thus, we want to be careful and not pay too much attention to the specific month activity took place but instead average growth over a couple of quarters to get a clearer picture of the underlying strength of the economy. to see this point more clearly, recall that at the start of this year, personal consumption expenditures increased dramatically in the first quarter but subsequently grew less rapidly in q2 of 2023. a similar dynamic may be playing out now. on the other hand, if the third quarter data represents the beginning of persistently stronger demand, then we can expect that strength to show up in the fourth - quarter data, including by putting upward pressure on prices, which could have ramifications for upcoming decisions on monetary policy. in thinking about these two possibilities, let me tell you how i view two key components of gdp growth this year. consumer spending, which represents nearly 70 percent of gdp, has been quite strong thus far in 2023. while household spending has been volatile, smoothing it out over the past several quarters indicates underlying momentum. yesterday's september retail sales data indicated continued strong spending. the solid spending in the face of tightened monetary policy suggests consumption is likely supported by households'strong balance sheets as well as confidence in future 2 / 5 bis - central bankers'speeches labor income. i will be watching the spending data carefully, including those that hint at a slowdown. though hard to measure, it seems that households are drawing down their liquid assets. some other data supporting a slowing include more use of credit cards this year and a return of delinquency rates for consumer loans, which plunged over the course of the pandemic, to essentially their pre - pandemic levels. 2 also, as i mentioned earlier, financial conditions have tightened considerably since july. of course, i have been waiting a while for tightening financial conditions to cause a significant slowing of spending, and i have been consistently surprised at the resilience of consumer spending. so i will be patient in waiting for the data to document how spending evolves. another component of gdp that i'll be watching is investment in non - residential structures. manufacturing investment boosted real gdp growth in the first half of the year, partly driven by a surge in the construction of semiconductor and electric battery factories that began before new government subsidies were enacted and driven higher by that legislation. recent data suggests this spending is leveling off at a new, higher level : construction spending growth | you look today at the results obtained in terms of the yield curve and inflation expectations, you can appreciate the strategy followed by the ecb in the rate - cutting phase. one point on which i don ’ t agree with franco bruni ’ s analysis concerns his judgement on changing the objective of monetary policy after the failure of lehman brothers on 15 september 2008. bruni writes : “ … the objective became only that of saving the credit system from the collapse. this last change of objective is of great conceptual and political importance, it has a significance that could prove to be, so to speak, historic. and yet it has never been officially declared, particularly by the ecb ”. the proof that he provides for the above remarks is the decision to reduce interest rates from 2 % to 1. 5 % in march this year, a step which, in his opinion, was not justified by the trend of the economy, but by the problems facing europe ’ s banking system. there is a misunderstanding here that needs to be quickly clarified, also in view of the ensuing discussion on macro - prudential supervision and on the powers of the central banks in question. from the outset of the crisis in august 2007, the ecb has pursued a policy of separation between, on the one hand, the interest rate decisions, based solely on the priority objective of price stability and, on the other hand, the decisions concerning the instruments used to pump liquidity into the system in order to tackle the difficulties being encountered by the market. the most obvious example of the separation is precisely the one which occurred on 9 august 2007, when amid market tensions, it was decided both to maintain the rates unchanged and to intervene on a substantial scale to satisfy the banks ’ demand for liquidity, with a €90 billion operation. and the same separation has been continued in all the months since then. that the decision to reduce interest rates in march to 1. 5 % was justified is, i believe, evident from the growth and inflation estimates published at that time. i remember the ecb staff projections were pointing to euro area gdp growth for 2009 and 2010 being equal to - 2. 7 % and 0. 0 % and inflation of 0. 5 % and 1. 1 % respectively. also taking into account the relevant horizon for monetary policy, between one and two years ahead, an interest rate of 2 % “ three questions on monetary policy easing ”, university of ancona, 6 march 2009 ( available at www. ecb. | 0 |
asia ’ s own growth and stability, but also for the continued resilience of asian financial systems, as well as the future of international banking. against this background, i want to leave you with a few thoughts on the way forward. my overriding message is simple : given the complexity of the proposed reforms, the recent experience of implementation and coordination gaps, and the implications that the new global standards can have for asia ’ s growth prospects and the stability of the financial system, it is important that asia plays a stronger role in shaping global policies. this is to ensure that the adopted international standards are consistent with asia ’ s long - term interest in sustaining economic growth and stability, while helping to promote higher standards for banking supervision and regulation globally. to this end, i think emerging markets asia, as a group, must aim for a coordinated response on at least three fronts. first, is the coordinated approach with respect to implementing the new global regulatory standards. this means emerging market asia needs to aim for a degree of flexibility whereby national or regional variation or discretion is warranted in pursuing the shared global standards. the aim of flexibility is to adapt the new standards for local settings, taking account of the vast diversity that exists in levels of development and structures of the region ’ s financial systems. the dimensions which such adaptive flexibility may apply include timing of implementation, as well as technical calibration of policy measures. second, to ensure an effective adoption of the global standards, asia needs to establish a regional approach or standards on the key regulatory and supervisory issues. for example, on the issue of cross - border supervision, we need more effective home - host relationships with more authority for host supervisors with regard to information sharing especially during a crisis, and national discretion on capital and liquidity requirements of local operations of sifis. also, we should strengthen regional coordination on crisis management, for example, in dealing with home regulator on the resolution of sifis, supplemented by a process of supervisory surveillance of sifis ’ operating in the region that extends to highly interconnected markets such as otc derivatives and interbank transactions. third, is the need to strengthen the regional financial system through greater regional financial integration and development of a robust region - wide financial infrastructure. at this time, efforts to strengthen financial systems through reform and institutional building are being carried out visibly at the national level. in thailand, the bank of thailand has embarked on its second financial sector master plan aimed at promoting greater efficiency through competition, expanding access | too low, the fed and other central banks have less room to cut rates to support the economy during downturns. so, in this review, we are examining strategies that might better allow us to symmetrically and sustainably achieve 2 percent inflation. doing so would help prevent inflation expectations among consumers, businesses, and investors from slipping too low, as they appear to have done in several advanced economies. more - firmly anchored expectations, in a virtuous circle, would help keep actual inflation around our target, thus preserving our ability to change interest rates as appropriate to meet our mandate. we are also looking at whether our existing monetary policy tools will be adequate when the next downturn comes. finally, we are asking whether our communications practices can be improved to better support the effectiveness of our policy. after today, we have one fed listens session remaining, later this month in chicago. at the july meeting of the federal open market committee, my colleagues and i began discussing what we have learned so far from the fed listens events. we continued that discussion at our september meeting and have a lot left to do. we plan to publicly report our conclusions during the first half of next year. one clear takeaway of the sessions so far is the importance of sustaining this historically strong 1 / 2 bis central bankers'speeches job market. people from low - and moderate - income communities tell us that this long recovery, now in its 11th year, is benefiting them and their neighbors to a degree that has not been felt for many years. employers are partnering with community colleges and nonprofit organizations to offer training. and people who have struggled to stay in the workforce in the past are getting new opportunities. once again, i ’ m happy to be here. now it is your turn to speak. we ’ re listening. 2 / 2 bis central bankers'speeches | 0 |
monetary policy is not supposed to be able to affect real variables – like real interest rates – on a sustained basis. presumably, changes in risk appetite, subdued growth and expectations that growth will continue to be subdued have also played a role in lowering real rates. interest rates and growth this brings into focus the really critical question : what are the prospects for sustained growth in the future? relatedly, what expectations about rates of return in the future are reasonable? the real economy needs to generate decent returns on the real capital stock that are then matched ( risk - adjusted ) by the yield on financial assets. the financial assets are, in the end, just paper claims on that flow of real returns – directly in the case of private sector obligations and indirectly for government obligations, which rely on being able to tax growing private incomes. if the real economy can ’ t perform to provide real returns to capital, there is nothing to back higher yields on financial assets. in that world, nominal and real yields on bonds would remain extremely low, the income being generated by those working with the capital stock would struggle to fund the benefits required by retirees through dividends and returns on bonds and bank deposits. governments may not receive all the revenue they need to service their obligations. on the other hand, the stronger the prospects for long - term growth and good returns on the real capital stock, the smaller those problems will be and the more we can expect that, sooner or later, the yield on financial assets will be higher, in line with those real outcomes. which outcome will it be? the more pessimistic are moving closer to the position of “ secular stagnation ” : that situation where the desire to save is so overwhelming and the apparent opportunities for profitable investment so weak, that real interest rates cannot equilibrate saving and investment for the system at positive rates of interest and full employment. the result is that the ex ante excess saving leads to a sustained below - full - employment equilibrium. the concept arose originally in the 1930s, but has recently been articulated by lawrence summers as a description of the current environment. 2 i still find this a bit too pessimistic, because i struggle to accept that today, to an extent virtually unprecedented in modern history, ingenuity, technological development, entrepreneurial drive and opportunity for improvement are so weak – so unprecedentedly see summers l ( 2016 ) ‘ the age of secular stagnation : what is it and what to do about it ’, foreign | of variable - rate loans ( excluding split loans ) as at may 2022. sources : rba ; securitisation system another issue that we have been thinking about is whether borrowers that took advantage of very low interest rates on fixed - rate products in recent years are particularly susceptible to higher interest payments when fixed - rate terms expire. the extremely low interest rates on these products through 2020 and 2021 led many people to take them up, resulting in the share of housing credit on fixed mortgage rates increasing from 20 per cent at the start of 2020 to a peak of nearly 40 per cent in early 2022. the majority of currently outstanding fixed - rate loans are due to roll off within the next two years, with the greatest concentration of loans due to expire in the second half of 2023 ( graph 10 ). so these borrowers are shielded for the time being from interest rate rises. graph 10 projected expiration of fixed - rate loans * outstanding loans as at may 2022, by expiry month % % average lending rate scenario variable rate * * balance - weighted fixed rate % % share of total fixed - rate loans * * * m j s d m j s d m j s d * * * assumes fixed - rate loans are not repaid early or refinanced. assumes future variable rates increase by 300 basis points to mid - 2023 ; timing of rate increases broadly informed by market expectations. * * * another 13 per cent of fixed - rate loans will expire beyond 2024. sources : rba ; securitisation system what is the potential impact though when they do roll off? using information from the securitisation database, and again using some assumptions about the path of interest rate increases, we can get an idea of the magnitude of the impact on borrowers'interest payments as their fixed rates roll off. assuming all fixed - rate loans roll onto variable mortgage rates and new variable rates are broadly informed by current market pricing, estimates suggest that around half of fixed - rate loans ( by number ) would face an increase in repayments of at least 40 per cent ( graph 11 ). borrowers with fixed - rate loans that are due to expire by the end of 2023 would experience a median increase of around $ 650 ( or 45 per cent ) in their monthly repayments. this is slightly more than the rise in payments that variable - rate borrowers would experience over this time. these scenarios suggest large increases in debt - servicing | 0.5 |
economy is by increasing the supply of renewable energy. i see four key factors to drive europe ’ s energy transition forward. first, innovation - friendly and investment - friendly policy frameworks. governments are in the driver ’ s seat to set incentives for the uptake of renewable energies and discourage the use of fossil fuels. it is also crucial to remove administrative obstacles to allow a quicker transition. adequate carbon pricing can be a strong instrument. agreeing on this at the g7 ( group of seven ) level would be a good starting point. reaching an agreement at the g20 ( gruppe der zwanzig ) level would be a major step, although this is a long way to go. a second factor for accelerating the transition are climate - neutral technologies. businesses and research institutions are pioneering the development of carbon - neutral technologies that help reduce energy demand and improve the scale and efficiency of renewable energy supply. innovations like carbon capture and storage technologies are also key. a third factor is sufficient capital from banks and capital markets to finance and scale up innovations. overall, investors in europe and worldwide seem to be fairly cautious. for instance, european venture funding fell by 44 percent on the year in the third quarter. securing a broad range of financing instruments is vital against the backdrop of substantial investment needs. the european commission estimates that additional investment of around 520 billion euro per year will be needed until 2030 to green europe ’ s economies. [ 8 ] most of this would go towards energy systems and climate change mitigation. fourth, strong partnerships inside and outside europe. more than half of the eu ( european union ) ’ s energy needs comes from imports, mostly petroleum oils and natural gas. [ 10 ] last year, 22 percent of the eu ( european union ) ’ s final energy consumption was generated from renewables. [ 11 ] this share needs to increase in order to decarbonise carbon - intensive and energy - intensive industries – this is at the heart of the green transition. hydrogen will play a vital role in the green energy transition. however, hydrogen has to be produced, using fossil fuels or renewables. this means that hydrogen is only as green as the energies used to produce it. overall, europe will not be able to produce enough green hydrogen. [ 12 ] germany ’ s federal ministry for economic affairs and climate action estimates that the country will only be able to meet one - sixth of its hydrogen needs by 2030. against this background, fostering close partnerships will be vital. for | green energy and green finance for a sustainable europe speech at the 8. green finance forum, euro finance week 15. 11. 2022 | frankfurt am main | sabine mauderer 1 introduction 2 fast - tracking europe's energy transition 3 key role for the financial sector in financing the transition 4 the role of central banks 5 conclusion 1 introduction ladies and gentlemen, we are experiencing war in europe. and we are seeing inflation of 10. 7 percent in the euro area. [ 1 ] this begs the question : is this the time for green? do we have the means for transformation, for a green europe? my answer to this question is clear : yes, it is high time for a sustainable europe! why? there are two main reasons : first : climate change is speeding up at unprecedented rates. last summer, with its record - breaking heat waves, was a case in point. extreme weather events are causing damage that runs into the billions. according to eurostat ( european statistical office ), over the past decade, climate - related economic losses in the eu ( european union ) amounted to 145 billion euro. the second reason for a sustainable europe is the geopolitical shift. this has sent energy prices soaring – a major driver of the global inflation surge. energy price inflation came to 41. 9 percent in october. [ 3 ] so, europe is paying the price for its dependence on fossil fuels. 2 fast - tracking europe's energy transition pragmatic solutions are now needed to get us through the next two winters. in the short term, as governments are rushing to secure energy supplies, renewables alone cannot fill the energy gap. so we have to make a temporary return to gas and even coal. however, doubling down on fossil fuels from new suppliers will achieve neither climate targets nor energy security. in the longer run, the only way to address the climate crisis and to safeguard europe ’ s energy security is by accelerating the energy transition. there is no way round this : europe ’ s future can only be green! the question is : how do we get there? put simply, by following a two - pronged approach. first, reducing the demand for fossil fuels. the eu ( european union ) has committed to reducing its natural gas demand by 15 percent this winter. [ 4 ] germany needs to save even more natural gas – at least 20 percent. for winter 2023 - 24, some experts put that figure as high as 30 perce. the second approach to greening the | 1 |
of policy makers to formulate and implement an appropriate mix of policies. imbalances and asia adjusting imbalances, however, is easier said than done. the united states now imports 50 % more than it exports. if imports are to grow by 5 % per year, exports must grow by 7. 5 % just to keep the dollar amount of current account deficits at present levels. viewing from a slightly different angle, even if the income elasticity of u. s. imports to u. s. demand growth were to suddenly drop to zero while exports continued to grow at 5 %, it would take nearly 5 years before the deficit halved. how then could we realize this significant adjustment? what should asian economies, which are running surpluses, do in the context of global imbalances? first of all, economies should, in principle, accept adjustment through market forces. rigidity can lead to a build - up of stress in the system. many words have already been spent on this subject, and i will not repeat them. i would just note that, in our recent meetings with central bank colleagues from asia, they were fully aware of the need for flexibility and the challenges facing them in pursuing that goal. in addition to enhancing flexibility, today i would like to explore another option : the possibility of asian economies enhancing absorption in their economies. for japan, demography would aid the adjustment process. academic literature tells us that the rate of savings tends to decline in an aging society. in our case, as baby - boomers begin to retire in the next few years, they would start drawing down their savings. this should gradually influence the overall rate of savings and hence the level of external surplus. in this context, one important element would be rebuilding confidence in the social security systems that are now under pressure from the rapid aging of the population. in many non - japan asian economies, the government does not provide a sufficient social safety net. this is one area where a quick action is needed. in a financial context, one challenge is to explore a better use of capital. emerging asia collectively earns about 150 billion dollars a year in surpluses. these dollars are often invested in the united states. meanwhile, as developing economies, emerging asia has an almost insatiable appetite for capital. there are still numerous investment opportunities out there in the region. today, these ventures are often financed by overseas investors, often from the united states. at a risk of oversimplification, i would | earlier, the financial system in japan has been regaining stability, and the blanket guarantee of deposits will be fully lifted on april 1, 2005. financial institutions will be expected to amplify their efforts to develop innovative services tailored to customer needs, thus supporting economic activity. the bank ’ s basic stance regarding financial system policy must shift its focus in response to this changing environment : from crisis management to supporting private - sector initiatives toward providing more efficient and advanced financial services via fair competition, while maintaining overall system stability. in order to contribute to enhancing the functioning and robustness of the financial system, the bank will actively encourage financial institutions ’ efforts to improve their business activities, and devise various ways to enhance its own business. conclusion although japan ’ s economy is at a pause, it is expected to continue recovering with the further expansion of overseas economies and progress in adjustment in it - related goods. to ensure that this recovery will become sustainable, the bank considers it essential that a wide range of economic entities continue to make efforts to revitalize the economy. the bank is determined to firmly support japan ’ s economy from the financial side by maintaining monetary easing with the commitment based on the cpi, in the current situation where the cpi continues to fall slightly on a year - on - year basis. it has become increasingly important for the bank to pursue more advanced services in a wide range of areas as well as ensure well - disciplined management to properly carry out the duties entrusted to it as the nation ’ s central bank. in light of this, the bank has for the first time formulated a medium - term strategic framework ( mtsf ) for fiscal 2005 - 2009, which sets out the bank ’ s management policy for the next five years. the bank is committed to continuing its efforts, through the steady implementation of this mtsf, to retain public confidence and fulfill its mission of contributing to the sound development of the economy. | 0.5 |
31. 07. 2017 the european economy and monetary policy inauguration of la granda courses luis m. linde governor mr chairman of the la granda courses, mr rector of the university of oviedo, mr mayor of gozon, mr secretary of the la granda courses, authorities, dear colleagues : let me begin by thanking professor velarde for his invitation to me to participate in the inauguration of the thirty - ninth edition of the now - classic la granda courses. but first i should like to congratulate professor velarde on the menendez pelayo international prize he has recently received and which is just one in a long list of accolades. juan velarde is much more than an eminent academic. he is a true humanist whose work, anchored in different areas of the economy, has always included historical and social concerns where his deep - seated and – i would say – benign liberalism prevails. professor, my warmest congratulations on your menendez pelayo prize. the european economic recovery moving on to the subject of my address today, i should like to share with you some thoughts on the euro area economy and monetary policy. i shall begin by reviewing the key features of the current expansionary phase in the european economies and the fundamental role that monetary policy has played in providing for its take - off. i shall then refer to the main challenges over the course of these difficult years for the european economy and to the need to complete the institutional architecture of the monetary union. after several years ’ moderate growth, the euro area has arrived at a favourable cyclical juncture. on the latest available figures, annual output growth is currently running at almost 2 %. this rate exceeds the european commission ’ s estimates of potential growth, which stand at around 1 %. the soundness of the economic recovery is beginning to be reflected in the more dynamic behaviour of private investment. that breaks with a long period over which companies ’ plans to increase capital were checked by uncertainty over future growth and the need to reduce their high levels of debt. moreover, the recovery is extensive to the entire euro area, since all countries, including greece, have attained positive growth rates. the improvement in economic activity has also enabled unemployment levels to be reduced to rates close to 9 %, down from the levels of 13 % observed at the worst points of the crisis. significantly, this improvement in activity has come about against a difficult political background, marked by the start of the brexit process and the | rise in certain trends that are against free trade and the free circulation of people, freedoms that are the bedrock of the european project, and this without forgetting the permanent threat of terrorism. returning to the positive economic developments, we should not forget two central matters. firstly, these developments are largely the consequence of the extraordinary stimulus received from monetary policy. secondly, monetary union still has a long way to go to achieve sounder governance that will reduce the union ’ s vulnerability to shocks, provide for better coordination of its economic policies and promote the reforms needed to encourage and to be able to sustain long - term growth. 3 / 7 the role of monetary policy i shall first address the role that monetary policy has played and is continuing to play in the recovery. the confluence of the financial and sovereign crises in a european monetary union whose institutional architecture was incomplete meant that the ecb had to assume a pivotal role in the economic policy response. initial measures took the form of a gradual reduction in interest rates and the granting of practically unlimited amounts of liquidity to banking systems, at increasingly longer maturities, with greater flexibility in the attendant collateral policies. in 2012, amid a second recession in the euro area and financial turmoil, the possibility of purchasing the public debt of countries subject to financial pressures was introduced. while this possibility was not actually activated, it contributed to staving off the threat of the single currency breaking up. yet by mid - 2014, and despite the fact that the most acute episodes of the crisis had been overcome, the euro area was immersed in a scenario of low growth and deflation risks in which various external and internal factors were at play. on the external front, the weakness of global growth and the collapse of commodities prices accentuated the downside pressures of producer prices. in the euro area economies, the high unemployment levels and the need to reduce significant debt ratios curbed the expansion of demand, while the fragility of banking systems hampered the transmission of monetary policy measures to the real economy. these factors obliged the ecb to take a different tack and turn to so - called nonconventional measures. firstly, the interest rates on ordinary monetary policy operations were successively cut, placing the deposit facility rate at a negative level of - 0. 4 %, which currently remains in place. secondly, the ecb introduced a new long - term financing facility for the banking system, which was linked to the granting of loans to households and firms. thirdly, in 2015, the ecb took the | 1 |
, consistently demands : first : intense training and preparation ; second : sensitivity to the environment and possible changes to climate ; third : possession of well - maintained equipment ; fourth : a team of highly trusted and reliable individuals ; fifth : leadership of competent guides ; and finally : tenacity and courage to keep going amidst challenges. training and preparation in mountain climbing, each team member has to be skilled, fit, and prepared physically and mentally. this takes years of conditioning if one is to take on the tasks involved. as the banking industry ’ s premier training arm, baiphil plays an important role in providing required skill sets and competencies for modern banking. bsp commends baiphil for continually being proactive in responding to the training gaps and emerging requirements of the banking industry in line with on - going developments in the regulatory and operating environment. with its expertise, synergy and collaborative partnership with the bsp, baiphil is in the best position to design a comprehensive training program to foster and strengthen expertise, excellence and integrity among banking professionals. 1 / 4 bis central bankers'speeches environmental sensitivity the conditions for climbing higher look good! the philippine economy remains in a position of strength. it continues to expand, despite challenges in the external environment. this expansion is increasingly broad - based with notable rebound in agriculture and exports sectors. the sustained strength of the economy in the first quarter of 2017 was underpinned by manageable inflation, more than adequate gross international reserves and a steady stream of inflows from overseas filipino remittances, revenue from the business process outsourcing sector and tourism income, all contributing to higher consumption spending. moreover, the philippine banking system continues to be a stable anchor for the economy with key performance indicators showing double - digit growth in resources, expansion in lending, adequate capitalization, improved asset quality, and profitable operations. these gains driven by our common vision will fuel us to pursue greater heights. well - maintained equipment and gear as central monetary authority, the bsp has a well - articulated policy framework and an enhanced policy tool kit. like good and ready mountain climbers, our gear is ready and we have improved surveillance methods. assessing the mountain, we are thoughtful about weather shifts. for instance, the increasingly clear signal for policy normalization in advanced western economies points to a rise in global interest rates, just a question of timing and pace. mindful of these, bsp continually strengthens its framework for financial risk surveillance, sharpening assessment of | nestor a espenilla, jr : bsp and baiphil moving mountains - new heights in banking excellence speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the induction ceremony and general membership meeting of the bankers institute of the philippines ( baiphil ), makati city, 14 july 2017. * * * distinguished monetary board colleagues, juan de zuniga and tony abacan, baiphil president irene arroyo, immediate past president, liza ortiz, other baiphil past presidents, baiphil directors, officers and members, bap president nestor v. tan, bank ceos, my pdic colleagues, esteemed guests, friends, fellow bspers past and present, ladies and gentlemen, good afternoon! it is an honor and pleasure to carry on the tradition of inducting the new board members and officers of baiphil. as new bsp governor … [ i assumed the post eleven ( 11 ) days ago ] … it is auspicious that i now address the new leadership of baiphil … on behalf of my colleagues in bsp and the monetary board, let me extend our congratulations. as new leaders, it is natural for us to aspire greater achievements for the teams we lead. this is why i find your theme : “ scaling new heights in banking excellence ” very engaging. the theme is both timely and relevant as we come into our fresh roles and as the financial system evolves. the theme mentions heights. to add imagery to this message, let me take mt. everest as a starting point. everest, known as the roof of the world stands twenty - nine thousand and thirty - five ( 29, 035 ) feet above sea level. this is the ultimate goal of hard - core mountain climbers, the highest of heights. on 29 may 1953, a new zealander, sir edmund hillary and a sherpa, tenzing norgay, successfully climbed mt. everest in the face of great risk. as documented, they were the very first mountain climbers to reach the summit. now, sixty - four ( 64 ) years later, the peak of everest is decidedly less lonely and more than 3, 500 climbers have already reached the top or “ summitted ”. a myriad of things have changed since then. but from the time it was first done to the present day, scaling everest or any mountain | 1 |
Subsets and Splits
No community queries yet
The top public SQL queries from the community will appear here once available.