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industry β s investment management activities as new clients with lower amounts of investible funds can now be tapped. financial inclusion was a major consideration in crafting this policy amendment. we want to make investing more accessible, while providing retail investors with a greater degree of protection. we are confident that these investors will benefit from the expertise of trust entities and that trust entities would continue to exercise prudence in the way they offer their services. economic update to provide a big picture on what lies ahead, let me proceed with an update on the economy and the banking system. 1 / 4 bis central bankers'speeches the economic, social and health effects of covid - 19 are unprecedented. they disrupted economic activity globally. the philippines was not spared : its economy contracted by 9. 5 percent in 2020, its first fall since the 1998 asian financial crisis. but one can argue that the contraction could have been worse had the philippine economy not entered the crisis in a strong position. the uninterrupted economic growth for over two decades prior to the covid - 19 pandemic, the timely structural reforms, the generally manageable inflation, and the hefty gross international reserves β all these have helped cushion the adverse effects of the health cum economic crisis on the domestic economy. our key economic indicators remain encouraging. inflation inflation is manageable and inflation expectation remains anchored. while inflation rates have risen in recent months, they were driven mainly by faster price increases of key food items and higher domestic oil prices. but the upticks in inflation are consistent with bsp β s assessment that inflation will remain elevated in the coming months before decelerating in the fourth quarter of the year. inflation is projected to return within the government β s target range of 3. 0 percent Β± 1. 0 percentage point over the policy horizon. monetary policy will continue to support the various interventions of the national government to alleviate the impact of supply - side factors on consumer prices. balance of payments ( bop ) the country β s external position has caught up well despite the weak global demand in 2020 amid the synchronized recession of our major trade and investment partners. for full - year 2020, the overall balance of payments ( bop ) position was at an all - time high of us $ 16. 02 billion. for 2021, we project the balance of payments to be us $ 6. 2 billion or 1. 6 percent of gdp. gross international reserves ( gir ) meanwhile, the country β s gross international reserves ( gir ) level remains | susan schmidt bies : the continuous challenges of risk management remarks by ms susan schmidt bies, member of the board of governors of the us federal reserve system, at the financial services institute, washington, dc, 2 february 2006. * * * the continuous challenges of risk management i thank you for the invitation to speak today. my remarks will focus on the continuous challenges banking organizations face as they manage risk. today, banking organizations have a much wider array of risk - management tools and practices available to them, thanks in large part to innovations in financial products and services, improved technology, and many other developments in the industry. but financial innovation also presents new and different aspects of risk that institutions need to address. i will first describe some of the broader risk management issues facing banks. then, i will describe some guidance supervisors have recently issued to illustrate the importance of these concepts. i know that a number of attorneys who work on banking and financial matters are in the audience, so i will cover not only risks relating directly to lending and trading activities but also those relating to legal and compliance issues. dimensions of risk - management challenges certainly, risk management is not a new challenge. financial institutions have always faced the task of managing their risk exposures while remaining profitable and competitive. but financial innovation, even when it involves well - established products and exposures that are only slightly altered, continues to present new risk - management challenges. yet challenges are also opportunities : good risk management is an art that combines the ability to use financial innovation to improve profitability with an understanding of how risk profiles change as a result of that innovation. the federal reserve, in its role as both a bank supervisor and the nation β s central bank, has an obvious interest in maintaining the stability of the banking industry and the financial system as a whole. we, along with our counterparts at the other u. s. bank and thrift regulatory agencies, are responsible for ensuring that banking institutions operate in a safe and sound manner. but with the advent of very large banking organizations that engage in a wide variety of business activities - - some of them quite complex - - the federal reserve has become even more interested in ensuring that banking organizations understand the risks of these activities as well as their potential impact. as organizations grow larger, one of their major challenges can be described as making sure that the β right hand β knows what the β left hand β is doing. in other words, risks must be recognized and managed across the entire organization. in some cases, | 0 |
what they are paid for when corrosion of character is so pervasive? i come from a profession that has little to do with the practical aspects of human resource management. i am an economist, not a human resource professional. i have my own style of resolving human resource problems that is not necessarily the ideal one. it was 1998. i had just been appointed governor of the bank. the bank β s operations were partially computerized. there 1 / 3 bis central bankers'speeches were a few senior employees who, despite having had the benefit of many sessions of training, were still averse to the use of computer. i had seized the opportunity of a meeting with staff to drive home a key point. i vividly recall having said that people hate change. the world hates change. yet it is the only thing that has brought progress. the sophisticated quality of their cars they were driving, the electrical appliances that have greatly enhanced the quality of their lives, the advanced medical facilities that have reduced suffering were some examples of the products of β change β that successful organisations have adapted to. i had gone on to quote harold wilson, former british prime minister of the uk, β he who rejects change is the architect of decay. the only human institution which rejects progress is the cemetery. β my eyeballs rolled, on and on, on those who were aversive to the use of computer at the bank, while i stressed that we had to reinvent ourselves continually. it is not the strongest or the most intelligent that survives ; it is the one that is most adaptable to change. it was compelling for us to tool and re - tool, equip and reequip ourselves and keep on moving ahead if we had to keep earning a salary at the bank. the bad news was that re - engineering in any enterprise requires hard decisions. the hard decision was that those who are against change would have to head towards the exit door. guess what? samuel johnson said it beautifully : β when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully. β the same day the senior guys unpacked themselves to learn the difference between business ignorance and business tragedy. not long after, the same guys became the champion for change. they are still employed somewhere in the private sector, even after the age of 65. they turned out to be winners. winners are often losers who have evaluated themselves. ceos, heads of departments / divisions and human resource | can all sleep in peace knowing that the bank is on the job. on a recent occasion, i expressed my satisfaction at the profitability of our banks and the buoyant economic environment generally. i also expressed my concern about the excessive growth of credit which we were witnessing. i had at the back of my mind the truism that bad loans are made in good times. i was determined to ensure that we do not rediscover this through bitter experience. i am happy to report that the situation is firmly under control. so much so that we are actually envisaging repo operations, for the first time in more than a year, to inject liquidity in the system. the determination of the central bank to press ahead, in spite of criticism, has paid off. if we are happy with the profitability of our banks, we remain concerned about their efficiency and the affordability of their services. for instance, the average return on assets ( roa ) of banks in mauritius last year was 1. 8 per cent, 2 as compared to an roa of 1. 3 per cent in our neighbourhood giant, south africa. while strong earnings are important and the higher roa could point to greater operational efficiency, it could also reflect higher costs being levied on the customer. no doubt more competition leads to better price discovery. we have 19 banks operating in mauritius. although, there is a high degree of market concentration, we do not believe that there is any active collusion among them. to stimulate greater competition and enable customers to make informed choices, we are working with banks to devise a common template for displaying applicable fees, charges and commissions in a comparable manner on their respective web sites. a better - informed customer is the best guarantee of greater efficiency in financial intermediation and the sustainable profitability of our banks. it is a fact of life that some banking transactions will go sour, lead to recrimination, and result in costly and protracted lawsuits. if we are keen to reduce transaction costs, and the cost of doing business generally in mauritius, we must address these issues in a more efficient and timely manner. the provision relating to the ombudsperson for banks in the banking act of 2004 still remains to be implemented. you may reasonably ask why. and we owe an explanation on this score. it is my firm conviction that our jurisdiction is too small to have a multiplicity of source : annual report 2007 : bank supervision department, reserve bank of | 0.5 |
beginning of an historic shift in our approach toward money and payments? the payment universe, both locally and globally, has evolved very rapidly over the past five years. the last wave of technological change in payments was 20 years ago when central banks introduced real - time gross settlement systems ( in our case, target followed by target2 ). the new wave is more focused on retail payments and driven by technology. before passing any judgement, we have to start from the principle that innovation is good because it makes payments cheaper and faster. that β s an area where we β re learning a great deal from our african and latin american colleagues. there β s a lot of leapfrogging toward innovative solutions. in the end, the new landscape will be a mix of public and private solutions. so the key question for the years to come is how to combine core public infrastructures like the ecb β s fast payment platform, tips, with private systems, and what impulse central banks can give to make this happen in an integrated way. this is a particular challenge in europe where the retail payment world remains fragmented along national lines. the eurosystem is working on it. we β d better act fast here, because we don β t want this new world of payments to be dominated solely by us and chinese actors. europe has a particular interest in developing its own approach and standards so it can be safe and efficient at home and attractive as an international reference. how do stablecoins, private and public, fit into this discussion? stablecoins have the potential to leverage technological change to bring new and cheaper services to customers β provided that the long list of risks i highlighted is addressed properly. you β re asking me whether a public stablecoin will also fit into this landscape. that β s an area where we β re treading very carefully because the prospects differ across jurisdictions. central bank digital currencies ( cbdcs ) raise a number of serious questions to which we don β t yet have answers. although they might look like an attractive proposition for individuals wishing to reap the benefits of technology while holding a safe store of value, they may have shortcomings of their own : there are many ways to implement cbdcs, which we need to study carefully. if they make bank funding more fragile and more vulnerable to liquidity shocks and bank runs, then they might be bad for financial stability and financial intermediation. central banks shouldn β t have their heads in the sand and avoid that | risk models has not made people with grey hair, or none, wholly obsolete. | 0 |
β in full β which can only be discerned using a magnifying glass. as time goes by, as technology advances, electronic means of payment become more and more sophisticated : from manually swiped credit cards through magnetized cards, webbased payments, mobile payments, proximity cards, and electronic wallets, which include a variety of payment means and smart cards. smart cards will enable customers to carry out any type of transaction currently conducted using debit cards β immediate debits, deferred debits, credit transactions and cash withdrawals, and provide them with new advantages. the use of such cards, which is expected to begin in israel in the next few years, will require entering a code into a terminal located at the business, thus reducing the use of stolen or loss cards. israeli innovation and creativity have not bypassed the field of payment means, which is evident from the large number of mobile payment and mobile wallet applications β some of which are becoming more popular both in israel and abroad. some of the electronic payment means yet to be widely used in israel are already being developed or used in various countries, such as smart cards, proximity cards, payments using biometric identification, electronic wallets and digital checks. we are at the height of a technological revolution in means of payment, which is expected to make them more user friendly, more convenient, more widely available and safer to use. it is, of course, highly significant that this process be appropriately regulated, ensuring that its advantages are fully realized and possible risks are minimized. bis central bankers β speeches | karnit flug : money and technology β means of payment in israel main points of a speech by dr karnit flug, governor of the bank of israel, at the money and technology conference ( taking place as part of israel β s national science day ), tel - aviv university, tel - aviv, 26 march 2014. * * * in this conference, which deals with innovation and technology, i will not speak about monetary policy, fiscal policy or about the macro situation, nor will shall i speak about any challenges to the macro economic policy, but rather about part of the economy which is rarely discussed β its β plumbing β. we always take it for granted, and only speak about it when something goes wrong β when it either leaks or is clogged. this piping, which we call β payment and settlement systems β, comprises a number of levels, which include the payment systems, the means of payment β which the public uses on a daily basis β and the communications infrastructure between the system β s various components. when making a payment in one way or another, we all assume that the infrastructure ( or piping ) ensures that transactions are performed efficiently and swiftly. the payment and settlement system is a key element of the financial infrastructure, making sure that each and every payment or credit we make or receive arrives at its destination quickly, efficiently and securely. the bank of israel, through its accounting, payment and settlement systems department, serves as its oversight entity and is responsible for its regulation, for operating some parts of it ( zahav [ the real time gross settlement system ] and paper - based ( checks ) clearing house ), as well as for its security and efficiency. i will focus today on those parts of the system, their development in the last few years, as well as on expected developments. the means of payment include both traditional ones β paper based β such as cash, checks and vouchers, and the more advanced β electronic β ones, which include electronic debits and credits, payment cards, web - based payments and mobile payments. each group has its advantages and disadvantages : paper - based means are characterized by ease of use, by availability to all parts of the population, by their immediacy and the finality of a transaction, as well as by being anonymous. under certain conditions, anonymity may become a disadvantage, if used to commit offenses ( such as money laundering, tax evasion, etc. ) other disadvantages of | 1 |
finance, rural sector finance is even wider. thousands of micro and small enterprises, thousands of families have no access to financial services and products whatsoever, and most of those who do, cannot borrow under the existing borrowing costs and required collaterals. some has already noticed : " one micro - financing loan could change the future of a family, few could change the future of a local community and thousands of such credits could make an enormous contribution to the development of the overall economy ". this fund will make its contribution to this purpose, since it offers long - term source of financing and because it is aimed at target groups the access of which to the financial injection is most difficult. let us encourage them by noticing that they have wide opportunities to help them accomplish their mission. and, profit and development for the region. | bank ad skopje. dear guests, the fact that the leaders of this fund offered to present their financial services in the republic of macedonia, the central bank certainly encouraged and supported this initiative, shows that these important partners consider the republic of macedonia a friendly environment for launching various mutually beneficial business initiatives and projects. yet, we do not forget though, that some of these institutions had no doubts whatsoever about the republic of macedonia even in the most difficult periods for us after gaining the independence, since when nobody else was coming, they were here. we certainly appreciate that. regardless of all above, we still have many reasons that urge us to notice and convince others why is it good to invest in the republic of macedonia and to develop partnership with our economic agents and, of course, to inform on the activities that all of us in our country perform, directed towards increasing the attractiveness of the republic of macedonia as investment destination. hence, we definitely need such financial offers. the economic growth could be accelerated by more investments, competitive offer of financial instruments and products, which are likely to eventually bring about lower costs for borrowing capital. the potential investors should be aware that the macedonian financial sector is booming, but that the room for investments is yet to be opened. the gross national savings is low, not more than 12 - 17 % of gdp, over the recent several years. the gross domestic savings have been even lower over the last five years, swinging around 2. 5 % of gdp, on average. since 1995, the gross investments have virtually never exceeded 20 % of gdp. the foreign investments, except in the years of large privatizations by foreign companies, are also low, barely 2 % of gdp, on average, in the last 4 years. the total bank assets, even though registering a fast growth over the last years, making up roughly 50 % of gdp, still shows low level of financial intermediation in the country. the above figures were target of a deep impact of the external shocks the country suffered, besides, of course, the inexcusable delay of many essential reforms of the vital sectors of the country. but, eventually, the potential investors and creditors have to believe that : - the political and security shocks in the region and inside the country are behind us, - the economy accelerates its growth, which over the recent years is not below 4 % real gdp growth, - we preserve high macro - economic stability that implies exceptionally disciplined monetary and fiscal policies, which in turn result in low | 1 |
time illustrate how flexible inflation targeting operates in practice. the forecasts evolved to ensure that medium - term price stability would be maintained. therefore, despite inflation being weaker than expected and the revision to the 90 - day interest rate outlook, the credibility of the monetary policy framework has been maintained. medium - term inflation expectations have fallen over the past six months, but are currently near the 2 percent target midpoint ( figure 4 ). external forecasters also expect inflation to return to target over the medium term. bis central bankers β speeches crucially, the bank is β and perceived to be β committed to its inflation target, which helps anchor inflation expectations. when formulating monetary policy, the pta directs the bank to have a forward - looking focus, irrespective of past inflation outcomes. the projection, at any time, seeks to ensure that price stability can be achieved while avoiding unnecessary instability in output, interest rates and the exchange rate. the bank will continue to adjust monetary policy as conditions evolve to ensure that price stability is achieved over the medium term. conclusion when it comes to communication, central banks use a diverse range of practices, and best practices differ from country to country. for new zealand, we find it beneficial to publish a projection for the 90 - day interest rate. it supports transparency, and its evolution over time contributes to market participants β understanding of how the bank responds to unexpected economic events. the projections are conditional in nature, reflecting the many challenges faced in forecasting the new zealand economy. it is important financial market participants understand that these forecasts are not a commitment to a certain path of policy. indeed, financial market participants generally have a very good understanding of the conditional nature of our forecasts. the experience since the beginning of 2014 highlights the conditional nature of our interest rate forecasts. unforeseen economic events led to weaker - than - expected inflationary pressure in the economy. as a result, we significantly revised down the outlook for short - term interest rates. the bank will continue to adjust monetary policy as conditions evolve to ensure that price stability is achieved over the medium term. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | when? β. for example, often there is a long period of time after a customer - relationship has been established. in very difficult circumstances, a customer may find that they do not have the coverage they http : / / www. legislation. govt. nz / act / public / 2010 / 0111 / latest / dlm2478122. html ref # 8609867 v1. 2 page 3 of 7 believed would be available to them. and, on the other side of the ledger, insurers rely on accurate information from customers about their own circumstances. finally, the reserve bank is not tasked with guaranteeing insurers against failure. as we have seen with the collapse of cbl and the bailout of ami, the failure of an insurer is a significant event. even if a single - firm - failure does not threaten the financial system as a whole, such events challenge public confidence. insurance challenges continuously evolve further complicating the task of promoting a sound and trusted insurance sector is that expectations and circumstances continuously change. customer expectations of β good outcomes β from insurance are evolving, and there is a heightened awareness across the financial sector as a whole of the importance of good business conduct. risks also evolve. for example, climate change is leading to more frequent insurance events, and this is driving new ways of thinking about risk. just as advances in technology are providing more data and insight into insurance risk pricing. the reserve bank believes that the insurance sector must ensure that high quality risk management capability is in place, to support appropriate insurance outcomes. we support insurers using the best information to understand their customers and the risks faced by the insurer. we also respect that insurers are free to make their own commercial decisions. getting your risk management and pricing right is an important foundation to a sound insurance sector. however, we are conscious of the wider implications on the economy and asset prices as insurance providers make their individual business decisions. orderly and well - articulated changes in insurance and pricing strategies are needed, so that all participants in the financial sector β and wider economy - can adapt their behaviour without creating unintended outcomes. the reserve bank will be monitoring the development of insurance risk - based pricing, to ensure we understand the potential wider economic consequences and any impact on new zealand β s financial stability. we will comment on what we are observing to date in our upcoming financial stability report on 27th november. the reserve bank β s policy and supervision challenges also | 0.5 |
about is inflation. in other words, all of these are working to relax the speed of the importation process. the president is already on this. that is why i am quite confident that we will be back to normal inflation next year. no tradeoffs between price and financial stability 1 / 2 bis - central bankers'speeches the other reason that this is the case is that we [ at the central bank ] essentially prevented knock - on effects from supply shocks because we were aggressive. we increased the policy rate from 200 basis points ( bps ) to 625 bps in just nine months. we were able to do that because we knew that bank balance sheets could take it [ the impact of the rate hikes ]. with high policy rates - while they [ the banks ] could have [ incur ] losses on their holdings of government securities - but with the higher interest rates, they earn more money. on the whole, because the banks have very strong balance sheets, financial stability was never a constraint in our use of the policy rate to quell inflation. on the narrowing interest rate differential and the weakening exchange rate the other reason we did that [ raise the policy rate ] is, as the us [ united states ] increased its policy rate, its policy rate became very close to ours. if you asked people a hypothetical question, " if the interest rate on the peso instrument is the same as the interest rate on a dollar instrument, which instrument would you choose? " even filipinos would choose the dollar because of all the advantages of the king dollar. that is the other reason. the differential between our policy rate and the us policy rate, if it narrowed too much, could cause a very large fall in the peso. however, this [ depreciation ] is also partly reflecting fundamentals since the current account deficit increased, and the deprecation of the peso last year was clearly not good for trade numbers. as foreign exchange pressures wane, the central bank can dedicate full resources and focus on fighting inflation it [ the depreciation ] was due to the differential and the fact that people look at the exchange rate and say, " all the corporations that borrow abroad wanted to buy their dollar needs for debt servicing. " so, the moment we give [ delivered ] the 425 bps [ in cumulative ] policy rate increase, the peso appreciated. after a long series of policy rate adjustments, year - to - date [ from 1 january to 4 april 2023 ] | , the peso actually appreciated by 2. 0 percent. in other words, the exchange rate is no longer adding to the inflation problem. that is the situation. the policy rate [ adjustment ] addressed two issues : first, it prevented the knock - on effects of supply shocks from spreading too much. second, it made the peso stronger, which also significantly reduced inflationary expectations. and, as i said, we did it without any risk that financial stability is reduced. 2 / 2 bis - central bankers'speeches | 1 |
be provided by behavioural economics. individuals do not act as rational agents : they recall information selectively, make little use of statistical analysis, have unstable preferences, have cognitive and emotional limitations, are vulnerable to social pressures. these circumstances have testable implications on decision - making and choice, and should be taken into account when programs are aimed at changing people β s behaviour. over - reliance on information alone must be prevented. it is necessary to balance the possible approaches, provide clear and accessible information, provide also cognitive instruments to correctly process information and make the appropriate decisions, encourage familiarity with financial issues. knowledge, behaviour and attitudes are the three pillars of any sound programme. we have to avoid that financial education increases confidence without increasing skills : the risk is overconfidence that contributes to sub - optimal decisions. good communication is also essential for successful programmes. the language must be consistent with the target group and the goals of the programme. especially when programmes are addressed to the most vulnerable and least educated groups of the population, the language must be clear and easily understandable. panel iii was dedicated to one of the areas where the need for financial education programmes is most compelling : pension schemes. in the face of demographic trends people need to understand the risk of poverty in retiring age and to take the proper, counterbalancing actions. in this field, there seems to be a link between general knowledge of financial matters, familiarity with the public pension system and participation in supplementary pension schemes. for this reason we are confident that education can promote virtuous behaviours. speakers have pointed out some strategies to promote pension literacy : β provide clear and understandable information on pension schemes ; β deliver financial education at school in order to increase youth awareness that rainy days can come. financial education may benefit individual citizens and the system as a whole ; it promotes a more competitive market of financial products and services ; it empowers customers vis - a - vis the financial industry. as i have already mentioned, bank of italy has launched some initiatives, but this is just the beginning. i am glad to announce that italian supervisory authorities have decided to combine their efforts, enhance their mutual cooperation mechanisms and coordinate future financial education programmes. today a memorandum of understanding on mutual cooperation in the field of financial education has been signed. in the framework of this agreement, and in line with the experience of other countries, the supervisory authorities are developing a common web portal as a clearinghouse of the existing information materials. i wish to close this symposium by | a bit unfamiliar to many. 14. over time, it has become apparent that these innovations, in particular the technologies and business innovation underpinning them, are here to stay and will naturally develop in a healthy financial system like hong kong β s. they have the potential to improve efficiencies, reduce intermediary cost and promote innovation. 15. digital innovations encompass a wide spectrum of products and services beyond the commonly - known crypto - currencies. defi, given its composability feature, can inspire innovation in finance. take tokenised green bonds as an example. we concept - tested the idea with the bis innovation hub last year and are adopting it for an actual issuance later this year. when both bond and cash are tokenised and brought on - chain, all bond lifecycle events like asset servicing, trading and redemption can happen more efficiently in a distributed manner. it could even make possible real - time tracking of the green impact. 16. in addition to traditional financial assets, the blockchain technology also allows fractionalisation of asset ownership in art, real estate or other assets, creating new forms of financial intermediation. with radical open - mindedness, we can use technological innovations to make financial markets more complete and bring benefits for the real world. 17. now, wearing my hat as a regulator, a β radically open mind β does not mean that financial stability falls by the wayside. the use of digital innovations needs to be complemented by a clear approach to money laundering and financial risks. we continuously work with banks to achieve this. we also ensure that consumers and investors understand the risks associated with investments in these still - largely unregulated products. 18. to do this we need to put in the right guardrails. the basic principle is β same activity, same risks, same regulation β, such that digital assets performing similar functions to traditional products should be subject to similar regulations. this is exactly what we and other regulators in hong kong are doing. 19. the hkma is putting in place a risk - based and proportionate regulatory regime for payment - related stablecoins. the sfc is introducing a framework to regulate digital asset trading platforms. we have issued guidance to banks on what they need to watch out for if they wish to offer crypto - or defi - related services, whether for account opening or custodial services. 20. these guardrails will provide a solid foundation with a clear set | 0 |
harvesh seegolam : address - g20 / oecd task force on financial consumer protection address by mr harvesh seegolam, governor of the bank of mauritius, on the occasion of the g20 / oecd task force on financial consumer protection, port louis, 26 april 2023. * * * ms. nisha arora, chair of the g20 / oecd task force on financial consumer protection mr. chris green, chair of finconet members of the oecd the finconet governing council i wish you all a very good morning or good afternoon, depending in which geography you currently are if you are attending this event virtually. at the outset, i would like to thank the g20 / oecd together with finconet for organising this event at such a critical juncture where the advent of technology is revolutionising the delivery of financial services, thereby creating additional challenges for financial consumer protection. unfortunately, due to professional commitments, i could not make it in paris. however, as you can see, technology has made wonders not only in the financial services sector but also to enable us to connect from all corners of the globe. financial consumer protection has been high on my agenda since my appointment as governor in march 2020. i am pleased to share with the audience that from the 22nd to the 24th of november this year, the bank of mauritius will host the annual general meetings of finconet. you are all cordially invited to attend and further details will be provided by finconet as we draw closer to the meeting. i am pleased to share my views on such an important topic as consumer education and consumer protection, particularly in a global financial environment that technology is radically transforming. it would not be proper to underscore the importance of financial education and consumer education if we fail to comprehend the hazards of not educating and protecting consumers of financial products. indeed, failing on these two fronts would inevitably result in citizens making poor financial decisions, thereby affecting their quality of life and, by ripple, undermining the efficiency of our banking and financial systems. it is with these imperatives in mind that i have initiated a number of projects. in january last year, the bank of mauritius rolled out a nation - wide strategy with specific focus on financial literacy in a digital era. the strategy, which benefitted from the oecd infe's endorsement, aims at fostering an appropriate level of financial education to enable customers | to make informed decisions about the suitability of financial products to their specific situations. concurrently, the bank is actively building a robust financial consumer protection framework to shield consumers from abuse and make them become judicious users of financial products and services. 1 / 4 bis - central bankers'speeches we have made significant progress since the launch of our financial literacy strategy. in just two years, the bank has physically reached out to more than one quarter of the target audience of students aged 15 to 18. our online and social media platforms have catalysed dissemination to the public at large. our bank of mauritius museum facebook platform, which is a key element of our financial education outreach strategy, has actively been followed. while these do comfort us, we are not resting on our laurels. as i speak, the bank of mauritius, which is the national coordinator for the oecd's global money week again this year, is spearheading initiatives in the country with the participation of the mauritius bankers association and ngos. i here wish to thank the oecd and the g20 indian presidency for the focus they are placing on financial education and financial inclusion, and for having kindly invited the republic of mauritius to be part of some of the working groups. the bank of mauritius is honoured to be contributing to the discussions on the global partnership for financial inclusion and on financial sector issues. the learnings from these interactions will undoubtedly support the bank in its endeavours. ladies and gentlemen, while financial inclusion is a priority around the world, we need to be conscious that addressing gender gaps in the financial system also forms part of solving the equation. significant gender gaps still prevail in several geographies. while the figures are stark in developing economies, advanced economies are also not spared. in our common quest for inclusiveness, gender equality stands as a vital component of financial education and consumer protection. on this front, we cannot fail to underline how the oecd's relentless work on gender equality and the recommendation of the council on gender equality in education, employment and entrepreneurship go a long way in the financial empowerment of women and girls. as regulators, let us work together to ensure that our consumer education and consumer protection strategies contain specific components to address the additional financial literacy needs that women may have. ladies and gentlemen, the global financial system is surfing on the crest of technology. as online services and adoption of technology become increasingly the norm in the financial services industry, the possibility of wrongdoers abusing the | 1 |
by companies and can result in a net benefit for them. sudden hikes on both fronts may instead be dangerous, and smis may be the most affected. that's a further reason for consolidation. but these are market forces. we as regulators must ask ourselves whether regulation itself is such as to induce consolidation, without any explicit prudential reasons to do that. an excessive number of m & as may result in a reduction of market competition, in lack of diversity in insurance coverage, and may eventually feed the never dormant β too big to fail β issue. esrb, macroprudential policy issues arising from low interest rates and structural changes in the eu financial system. november 2016. is proportionality a solution? proportionality in the application of solvency ii could be a way out of these doldrums. it will be interesting to hear from you on this point. i think that proportionality is a good principle, and its application to the second and third pillar of solvency ii β that is governance and reporting β is certainly worth being discussed. for instance, in ivass we have been working a lot on the national implementation of the governance requirements set by solvency ii, and we have spent quite some time in thinking on how best to ensure their proportionate application, taking into account the needs of smis. following previous fruitful experiences, we see merits in an early involvement of the industry in this process. we shall be launching a public consultation soon. applying the proportionality principle to the first pillar β the capital requirement β is instead a more thorny affair. the forthcoming scr review led by eiopa and by the european commission might be an occasion to examine this issue. insurance companies could take advantage of the public consultation that eiopa is running. for sure, in the meantime we could make a better use of the existing prudential framework. for instance, the own risk and solvency assessment ( orsa ), on top of being used internally, can serve the purpose of improving the intensity and quality of the dialogue with supervisors. * * * to conclude, i very much hope that this conference could be of inspiration to the reflections and works that both regulators and insurers will conduct on this delicate issue. i wish everybody an interesting and fruitful discussion. thank you for your attention. designed and printed by the printing and publishing division of the bank of italy | become much more stringent than before. if just one small firm fails, then there may be a loss of confidence in the system. so it is certainly wise for supervisors to be worried ; it is not only a matter of market efficiency. let me concentrate on capital requirements. the main goal of solvency ii is that of linking each company β s capital requirement to the actual risks that it faces. such risks are self - measured by the company through methods controlled or even validated by the national supervisory authority. ordering these tools by increasing complexity, we have the so - called " standard formula ", then the " undertaking - specific parameters " ( usps ), and finally the " internal models ". inevitably, when you go from basic β solvency i β to sophisticated β solvency ii β you have to accept an increase in the level of complexity. so, no surprise, not only are internal models very complex, but also usps and even the standard formula. the latter is the method chosen by most smis to calculate their capital requirements. though it is the simplest of the three methods, it is much more complex than the one in use under solvency i. many smis lament that solvency ii was conceived and developed having the big market players in mind. is this true? i don't know, but in any case trying to answer such a question would be sterile. a more subtle and useful question is whether the increased complexity of regulation just reflects that of the business, or whether it adds a further, and unnecessary, layer of sophistication to the picture, especially for smis. fmi, β global financial stability report β, april 2016. are small insurers too small? we may argue that the modern world is " no country for midgets " to paraphrase the title of a famous movie. the two big challenges that the world insurance industry is facing nowadays β digitalization and persistently low interest rates β seem to be even bigger for smis, so that many foresee a consolidation of the insurance services supply, with more and more m & as taking place that will significantly increase the average size of companies. let's consider technological innovation first. on the one hand, digitalization is a unique opportunity for smis. internet of things and big data are revolutionary trends that have the power to induce a deep transformation also in the insurance sector. technological innovation connects people, integrates and manages data, automates processes, stimulate | 1 |
honest! i don β t get it. but i β d like to understand. that may take a while. in a nutshell... you β re working in an area in which not everything is governed by rules down to the last detail. so you can be creative. you work in an area in which your counterparty is highly innovative. i β ve been doing that now for almost 25 years but i learn new things every day. every day brings new challenges and every morning you are asked questions that you don β t yet know the answer to. and when you leave the office in the evening, you do know some of the answers that you didn β t know that morning. and you find that appealing? yes, that is truly delightful. you β re dealing with people for much of the time β if you don β t like confrontation, you β re in the wrong place. you have to show that you β re assertive, that you can say no, that you will keep on asking precise questions about certain things and will not be satisfied with vague answers. so you do need to have a certain kind of personality to feel comfortable in that role. you β ve experienced some turbulent times, including the financial crisis in 2008. as head of supervision at the bafin you had a crucial role in the crisis negotiations on the german side. your job probably wasn β t so much fun for you then. what affect did that experience have on you? in times of crisis the learning curve is especially steep and it does have an impact, i can tell you. you learn an incredible amount about political connections and political constraints. you β re raising your eyebrows as you say that. everyone has their own personal experience. you β re right, though, at that moment, in that particular case, it wasn β t much fun. but it does make you stronger and you come out of it with your own set of β lessons learned ". so what were the most important lessons that you learned from the crisis? oh, i learned many lessons from it. i β m not sure if it β s possible to name the most important one. we supervisors β and i think also the market participants, politicians and legislators β definitely learnt that markets are far more interconnected than we had thought. at the time we all clearly saw that a single domino could set off a whole chain reaction. exactly. we saw that banks must take liquidity far more seriously. supervision has its own 3 / 7 | bis central bankers'speeches distinct business cycle. after the crisis, supervisors are given many powers and large numbers of staff. but then it tapers off, and it becomes increasingly difficult to push things through. would you say that your experiences during the financial crisis have made you a tad tougher and more strict? oh yes, definitely. ms lautenschlager, this is our interview box, we always use it in our interviews. i β ll pass it over to you. for each guest we have on the programme, we put something appropriate into this box. would you like to open it? ah! boxing gloves? yes, small boxing gloves that you can hang on your car mirror. lovely, thank you. they β re a fitting gift for you, aren β t they? yes. could you sometimes use such boxing gloves when dealing with bank managers? but don β t boxing gloves actually soften the blows? they probably wouldn β t be suitable... but i wouldn β t only think of them in connection with bank managers. but simply.. so you would prefer to be bare - fisted? no, i prefer transparency, in the first instance, and precise instructions. and i think if you β re working in a kind of authority, i. e. with the competence to take administrative measures β sorry, but i am a lawyer, after all β you must give precise instructions. you should not be vague, but that doesn β t have to be forbidding. the underlying tone does not have to be nasty ; the message must simply be very clear : that is not good enough. you have to remedy the issue. i will give you a certain period of time in which to do so, otherwise.... and i think that every supervisor needs to have that capacity if they want to succeed. staying with the boxing metaphor for the moment, could we say that you had to fight your way up from modest beginnings. no, i would not say that. your father was a pastry chef? yes, my father is a pastry chef. my mother was a waitress. so, in that sense, i suppose it β s fair to speak of modest beginnings. what kind of upbringing did you have? i was brought up in the firm belief that i could do anything if i put my mind to it. my parents set great store by me having the good education that they never had themselves. there β s something else for you in the box, could you take | 1 |
amando m tetangco, jr : the importance of microentrepreneurship keynote address by mr amando m tetangco, jr, governor of the central bank of the philippines ( bangko sentral ng pilipinas ), at the microentrepreneur of the year ( moty ) awarding ceremony, manila, 19 november 2008. * * * magandang hapon sa inyong lahat! ladies and gentlemen, we are gathered once again to celebrate, honor, and give recognition to our outstanding microentrepreneurs. their collective success in overcoming the difficulties inherent in microentrepreneurship serves as a powerful inspiration for all of us. their stories remind us that with vision, courage, passionate commitment, a persevering spirit, we can pursue and reach seemingly impossible goals even in the midst of a global economic slowdown and financial turmoil. and so, friends, let us show our appreciation for all our awardees by giving them a long round of applause. palakpakan po natin ang ating mga awardees! let us also thank the officers and staff of citi philippines headed by country officer sanjiv vohra for initiating and sustaining the citi microentrepreneur of the year awards which is now on its 6th year. with citi, this annual recognition of outstanding microentrepreneurs has been institutionalized. a round of applause please for citi. of course, we also salute the members of the working groups from the microfinance council of the philippines headed by rollie victoria, from the bangko sentral, from citi, and from other partner institutions. palakpakan din po natin sila. they had the privilege of seeing our successful microentrepreneurs up close and personal, but i am sure they had a difficult time narrowing down the list. i can say this with certainty because we who compose the national selection committee devoted long deliberations on each of the finalists. given the remarkable accomplishments of our finalists, it was a tough choice indeed. and so, this year, the members of the national selection committee decided to give three special awards on top of our eight major winners. friends, let us also reward the hardworking members of the national selection committee with a round of applause. ladies and gentlemen. the stories of our winners become even more significant when viewed against the backdrop of an increasingly difficult operating environment. | action framework which provides a time bound setting to deal with problem banks. β’ adopted measures to improve access of smes to financing through lower reserve requirements and relaxed - but still prudent - regulations on bank branching, risk weights, single borrower β s limit, connected lending and documentation. indeed, the continuing partnership between the bsp and the banking sector has produced very positive results in 2006. economic and monetary policy outlook moving forward, let me share with you our views on the likely economic prospects for 2007. with resilient personal consumption, strong exports performance and robust services and industry output, gdp growth is expected to rise to 5. 7 - 6. 5 percent for 2007. if our fiscal position continues to improve, we can look forward to stronger, more sustained long - term growth. inflation is seen to continue to slow down in 2007, with the government target of 4 - 5 percent likely to be achieved, in the absence of new shocks. nevertheless, there are certain risks to inflation that need to be carefully monitored and assessed, including oil prices, possible impact of el nino on agricultural output, wage adjustments, and possible liquidity expansion. the bsp will continue to keep a vigilant eye on these risks so that it could move pre - emptively against threats to price stability. on the external front, dollar inflows from ofw remittances and foreign investments are expected to remain strong. this should continue to boost our external payments position and enable us to further build up our international reserves. these conditions, in turn, underpin our expectations of a strong peso in 2007. in fact, we are now our reviewing foreign exchange regulations, with further liberalization as our goal. going forward, we will continue to support various legislative initiatives to foster the development of our financial markets, including the creation of a centralized credit information bureau system to improve the quality of financial information available to investors, enhance private sector access to credit, and minimize exposure to risks of financial intermediaries. we are hopeful that the bill will be approved by the bicameral committee and signed into law by the president as soon as possible. the bsp will also continue to support additional legislative initiatives to hasten the development of the philippine capital market, including the amendments to the bsp charter, corporate recovery act, revised company investment act, and the personal equity retirement act. in the banking sector, we expect further expansion of bank resources, improvement in banks asset quality through npl disposal, | 0.5 |
, resource utilization rising, cost pressures increasing, and short - term interest rates still relatively low, the federal open market committee ( fomc ) over the course of 2005 continued the process of removing monetary policy accommodation, raising the federal funds rate 2 percentage points in eight increments of 25 basis points each. at its meeting on january 31 of this year, the fomc raised the federal funds rate another 1 / 4 percentage point, bringing its level to 4 - 1 / 2 percent. at that [UNK] monetary policymakers also discussed the economic outlook for the next two years. the central tendency of the forecasts of members of the board of governors and the presidents of federal reserve banks is for real gdp to increase about 3 - 1 / 2 percent in 2006 and 3 percent to 3 - 1 / 2 percent in 2007. the civilian unemployment rate is expected to finish both 2006 and 2007 at a level between 4 - 3 / 4 percent and 5 percent. inflation, as measured by the price index for personal consumption expenditures excluding food and energy, is predicted to be about 2 percent this year and 1 - 3 / 4 percent to 2 percent next year. while considerable uncertainty surrounds any economic forecast extending nearly two years, i am comfortable with these projections. in the announcement following the january 31 meeting, the federal reserve pointed to risks that could add to inflation pressures. among those risks is the possibility that, to an extent greater than we now anticipate, higher energy prices may pass through into the prices of non - energy goods and services or have a persistent effect on inflation expectations. another factor bearing on the inflation outlook is that the economy now appears to be operating at a relatively high level of resource utilization. gauging the economy's sustainable potential is difficult, and the federal reserve will keep a close eye on all the relevant evidence and be flexible in making those judgments. nevertheless, the risk exists that, with aggregate demand exhibiting considerable momentum, output could overshoot its sustainable path, leading ultimately - - in the absence of countervailing monetary policy action - - to further upward pressure on inflation. in these circumstances, the fomc judged that some further firming of monetary policy may be necessary, an assessment with which i concur. not all of the risks to the economy concern inflation. for example, a number of indicators point to a slowing in the housing market. some cooling of the housing market is to be expected and would not be inconsistent with continued solid growth of overall economic activity. | all the money we spend daily is deposit money created by a bank. there is little likelihood that many customers will withdraw large amounts simultaneously. banks can therefore create far more deposits than they can pay out at the same time. 6 but a bank cannot extend loans and create deposits without limitations. first, it must assess the customer β s debt - servicing capacity, ie credit risk. second, the bank must assess the degree of liquidity risk associated with lending long and creating deposits that customers can withdraw at any time. third, it must comply with statutory rules. banks β willingness to assume some degree of liquidity risk is a public good. in its absence, we would have less access to long - term loans and money in the form of bank deposits. on the other hand, too much liquidity risk entails a risk of instability and crises like the one we experienced in 2008. banking regulation implicitly provides a trade - off between these considerations. the other main activity of banks is payment services, which are services we use virtually every day. today, most people in norway receive money as a bank deposit directly into their account. as long as there are payment solutions that give us cheap and simple access to money, the account is an efficient and safe wallet. chart : banks provide payment services but how is it that bank deposits can become money that we can use as payment? an important pre - condition is that there is an infrastructure to enable deposits to be efficiently transferred 2 / 7 bis central bankers'speeches between customers and banks. as the bankers β bank, norges bank creates the money banks use to pay each other, so - called central bank reserves, which are the banks β deposits at the central bank. transfers of customer deposits between banks can take place without frictions because a corresponding amount of central bank reserves are transferred between banks β own accounts at norges bank, where banks have a common and trusted means of payment and settlement system. this helps ensure that there is no difference between the money created by dnb and money created by nordea. the money is interchangeable. for us, it is all norwegian kroner. as such, banks play a key role in delivering services we want from the financial system, albeit subject to a framework designed by the norwegian authorities. the banking sector is more strictly regulated than most sectors of the economy. with the right to create money comes obligations. competition from new participants chart : competition from new participants many of the services banks offer can be provided by others | 0 |
project, though innovative, could not represent a point of arrival. 18 the need to make the system more cohesive calls for projects from 2000 to 2008 a fifth of the growth in lending concerned customers acquired in new districts ; moreover, loans to firms with over 20 employees rose from 46 to 61 per cent of the total ( a proportion that has since stabilized ). see the speeches β il credito cooperativo : le sfide di un modello β and β il credito cooperativo del domani : sviluppo, efficienza e solidarieta β by the then deputy director of the bank of italy, anna maria tarantola, to, respectively, the annual meeting of the italian federation of mutual banks ( november 2009 ) and the xiv national congress of mutual banks ( december 2011 ). ignazio visco, β borghi, distretti e banche locali β. presentation of the volume civilta dei borghi : culla di cooperazione β, rome, 20 november 2012. bis central bankers β speeches of broad conception that take account of the experiences of the mutual and cooperative banking systems in europe, which are characterized by a high degree of integration. the bank of italy is open to a discussion of the different options, including as regards regulation. conclusion the italian economy is at a difficult passage in which cyclical weaknesses are overlaid on unresolved structural problems. the country β s growth potential is diminishing ; the loss of jobs, particularly among younger persons, and the reduction in households β purchasing power are breeding discouragement and depleting human capital. there is no room to support growth through deficit spending. the large burden of the public debt and the tensions in the financial markets do not allow it. some measures, discussed in the governor β s concluding remarks to the bank of italy β s annual meeting, can assist a struggling productive economy and bolster the prospect of cyclical upswing. but above all we must resume, with the contribution of all the country β s best talents and resources, the reform programme begun in the last two years. we can no longer postpone modernizing our productive structure, our education and research system, the functioning of public administration. the obstacles to competition and innovation must be extirpated in all sectors. the rationalization of public expenditure, its reallocation towards more productive uses, must permit a sharp reduction in the tax burden on our economy. the banking system must play | . i have no quick or easy solutions to offer. but what we should do, in my view, is to more systematically encourage more research on these important matters. central banks are not innocent bystanders in this process. we have to be mindful about the 4 / 6 bis central bankers'speeches impact of our own decisions on the future of financial structures. digital currencies, for example, could undermine commercial banks β monopoly on creating inside money. 15 negative interest rates, meanwhile, can have adverse consequences for banks β profitability over time despite being extremely effective in complementing other non - conventional monetary policy instruments and helping central banks overcome the zero lower bound constraint. so far, the general equilibrium effects of negative rates have clearly dominated. more generally, it is hard to believe that central banks keeping very large balance sheets for a considerable amount of time will not have an impact on financial intermediation. looking forward, low productivity and ageing societies may mean that our economies have gravitated towards a low growth, low interest rate environment that may weigh more permanently on banks β profits and, hence, financial stability. monetary policy, in turn, may have to resort more often to non - standard measures to meet its price stability mandate. in these circumstances, we need to be mindful of risks to financial stability. a too protracted period of asset purchases, for example, may cause financial imbalances to build up with potentially adverse consequences for price stability. conclusion let me close. preserving financial stability has become a much more complex and intertwined endeavour than it was 10 or 20 years ago. these interconnections can profoundly change the balance of regulatory trade - offs across major financial market participants. what is more, the financial system is evolving quickly. intra - temporal trade - offs are made worse by appreciable intertemporal trade - offs, where policymakers need to keep a watchful eye on the allocative repercussions of their regulatory decisions. in this environment, there are no quick fixes or easy solutions. but there are two principles on which we should continue to build. the first is cooperation among regulators, both within and across borders. only by joining forces will we be able to break up remaining silos and identify common solutions to the challenging trade - offs we face. the second is cooperation across policymakers. conferences like this one bring together policymakers from different fora β monetary policy, fiscal policy and financial stability. they force us to | 0 |
to be complemented with the further development and use of models for macro - stress testing and of financial stability indicators. these analytical tools can help monitor, and assess the implications for systemic stability, of risk exposures across institutions and markets, for instance, the common credit exposures of interconnected financial institutions to other firms, sectors or regions ; or the market risk exposures through holdings of securities or common positioning of interconnected institutions in relevant markets ( i. e. potentially leading to so - called β crowded trades β ). macro - prudential analysis and supervision focus, by definition, on the monitoring and assessment of systemic risk in the whole financial sector. this risk, which can emerge both during the upswing and the downswing of an economic and financial cycle, reflects the effects of macroeconomic forces and the collective behaviour of institutions and other market participants. central banks, whose primary objective is the preservation of price stability β a necessary though not sufficient condition for the stability of the financial system β and which maintain close links with the money and financial markets in order to perform their monetary policy tasks, are well suited to be the authorities mainly responsible for macro - prudential supervision. in the eu, the ecb and the european system of central banks stand ready to carry out the analytical and statistical work necessary so that the new eu body responsible for macro - prudential supervision can perform its functions effectively. at the same time, the involvement and cooperation of supervisory authorities is also essential. in addition to the proposed participation of the chairpersons of cebs, ceiops and cesr, as well as one representative of the european commission, the heads of national supervisors could be invited to join the national central bank governors as required by the subjects being discussed. appropriate links should also be established between the escb and the proposed european system of financial supervision. these links should contribute, inter alia, to effective information - sharing as well as to providing an additional channel through which the β output β of the deliberations of the new eu macro - prudential supervisory body will be communicated to the micro - prudential supervisors and help trigger appropriate policy measures. this could include changes to capital requirements and liquidity buffers in order to respond to identified emerging systemic risk. and this observation brings me to my last two points. the de larosiere group emphasised that once a macro - prudential risk warning has been issued β it must be clear to everyone who should act and according to which | ##fois. 13 pays aujourd β hui et 25 pays demain ou apres - demain ont decide d β unir leur destin. ces 25 democraties ont democratiquement approuve les dispositions qui les unissent. ces dispositions ne sont pas inscrites sur un chiffon de papier. elles sont inscrites dans un traite international qui engage tous ceux qui l β ont ratifie au terme d β un processus exemplaire. mes collegues du directoire, du conseil des gouverneurs et moi - meme, nous mesurons pleinement la confiance et l β honneur qui nous ont ete faits de definir et mettre en oeuvre la politique monetaire de l β euro, en toute independance, pour assurer la stabilite des prix conformement au traite. c β est ce double sentiment de confiance et de responsabilite qui nous anime. | 0.5 |
malcolm edey : inertia and coordination problems in payment networks remarks by mr malcolm edey, assistant governor ( financial system ) of the reserve bank of australia, at a panel session on β public policy and innovation β at the federal reserve bank of kansas city payments conference, kansas city, 30 march 2012 ( to be delivered 31 march 2012 ). * * * the question i have been asked to address is whether inertia ( or coordination failure ) is an obstacle to payments system innovation. and if so, what do we do about it? to begin with, it helps to distinguish between two types of innovation : proprietary and systemic. an example of the first type might be a new piece of card technology, or a new customer platform for an individual bank. an example of the second might be the adoption of a new interbank messaging standard or a system - wide shift to faster payment times. the difference lies in whether the benefit can in some sense be captured by the innovator, or whether the benefits are more dispersed and dependent on coordinated action. payments service providers are good at proprietary innovation, as you would expect β they have an incentive to be good at it. it β s in the second area that problems of inertia and coordination failure can come into play. i can think of two general reasons why this is the case. the first is the problem of capturing benefits so as to give a return to the innovator. to give a concrete historical example, think of the question of faster cheque clearing. for a given cost, faster clearing is obviously an improvement, but it can only be achieved collectively. yet doing so confers no competitive advantage to any individual participant in the chequeclearing system, so there is little incentive to agree on costly action to make it happen. to make the example more up - to - date, the same problem exists with incentives to deliver faster ( or real - time ) electronic transfers at the retail level. faster payments can only happen if the system as a whole is set up for it, and then only if a critical mass of the individual participants are set up to provide timely access. but putting this in place will obviously involve some cost, with little or no proprietary benefit to the investor, particularly where it may cannibalise other potentially profitable product lines. this problem would exist even if all the payments industry participants faced identical incentives. without an effective coordinating mechanism, industry will tend to under - invest in this kind of innovation. | as 450 basis points. while the secondary market spread remained this wide, there was likely to be little new primary issuance. investors could satisfy their demand much more cheaply in the secondary market. it is well understood that as a consequence of the demise of sivs, the investor base for asset - backed securities is substantially narrower than prior to the crisis. this is particularly the case in offshore markets. as some of these investors relied on various forms of excessive leverage to be profitable, they are not likely to return. but there are still natural investors, both domestic and offshore, that ought to be attracted to the high quality of the australian rmbs. recent developments rmbs issuance this year has been around $ 18 billion, higher than the $ 14 billion issued last year but well below the $ 50 billion plus annual issuance prior to the crisis ( graph 4 ). however, this comparison exaggerates the situation. the underlying pace of housing credit growth has also slowed from around 15 per cent per annum to around 7 per cent. so given this slowing in system credit growth, comparisons of gross issuance with the pre - crisis period are not very informative. an alternative benchmark is the amount of issuance required for securitisation to hold its own as a share of total housing lending. a rough calculation suggests that annual gross issuance of around $ 25 to $ 30 billion would be required to see securitisation maintain its current share of housing credit. graph 4 all of the issuance this year, with the exception of one tranche in early 2010, has been in the domestic market. the issuance has been mostly by the smaller lenders, regional banks, credit unions and originators, who have limited access to alternative funding sources. these issues have involved some degree of support from the aofm. in total, only $ 3. 2 billion of the rmbs issued have not had aofm support. in thinking about the aofm support for the rmbs market, i believe the aofm program has a number of advantages relative to alternative means of support : it can be easily tailored to help specific types of institutions ; it can be phased out easily ; the likelihood that the government loses money on its investment is very small ; and there is no ongoing contingent liability to the government from providing the support. if instead a government guarantee of rmbs were provided, it would be difficult to phase out, creating a commitment that could generate a large contingent liability for the government. at | 0.5 |
, the spate of product innovation with complex risk phenomena, the contagion effects that a crisis can spread given the linkages and interdependence of financial institutions, and the growing bis central bankers β speeches trend of businesses without borders, all call for a new approach to ensuring the financial health of our economies. and that, ladies and gentlemen, is what risk - focused supervision is all about. role of the supervisor in risk focused supervision the role of the supervisor in modern financial system supervision is to ensure that the risk management systems in place and the capital held, are appropriate for the variety of identifiable risks to which supervised financial institutions expose themselves on a day - to - day basis. the supervisor must have the authority and expertise to review and intervene in risk management processes, where necessary. this involves monitoring and evaluation of the risk profiles of supervised institutions in relation to their business strategies and risks. regulators and supervisors must fully understand any new financial innovations, instruments and market practices in order to have the expertise to develop models, assumptions and views of financial institutions, and certify the risk management of those supervised institutions. of course, the effectiveness of any risk - based approach owes a lot to the supervisor β s ability for early identification and monitoring of new and emerging risks. supervisors can devote a lot of time and effort toward trying to prevent or mitigate a risk incident but, as we have been taught, a good supervisor should target patterns of behaviour that give rise to excessive risktaking in the first place. when it comes to supervising for risk, behaviours matter. things like : β’ corporate governance β’ risk appetite ; β’ risk management ; β’ alignment of incentives to risk taking ; and β’ organisational culture ; are all important. institutions that have, and effectively implement these things, are likely to be well - run and would portray a good grasp of their risk environment. institutions that merely have them and do not effectively take action in ensuring that these are implemented, are inviting trouble. ladies and gentlemen, getting to grips with matters of risk management requires a more proactive approach from supervisors. β’ it takes a deep understanding of an institution β s operations and appetite for risk for its significant activities ; β’ it takes frequent interaction with regulated institutions at both board and management levels ; β’ it takes a capacity to assess the effectiveness of risk management and control functions, ( including how the institution is governed and the prevailing risk culture ) ; and, β’ it takes a capacity and willingness to act when inadequacies are | identified. none of these are easy to implement. risk - based approaches are resource - intensive. they require a hands - on, active approach to prudential supervision. they require experienced supervisors with deep industry knowledge. even after all that, there is no guarantee that supervisors will always make the right calls on risk. bis central bankers β speeches however in spite of such isolated moments where we as supervisors may not have made the right call, by targeting specific risk outcomes, risk - focused approaches to prudential supervision are better placed to enable us to make a material difference to the prudential health of the institutions we supervise, for any given level of resources. concluding remarks let me take this opportunity to thank the apec financial regulators training initiative and the knowledge sharing programme of the republic of korea for organising this workshop. i wish you a productive and exciting week and encourage you all to draw on the wealth of knowledge of the facilitators, as well as the rich experience of your fellow participants. do take some time to explore our wonderful islands, if this is at all possible. your fijian colleagues will only be too pleased to assist. we are known to be pretty friendly! on this final note, it gives me great pleasure to declare this workshop on risk - based supervision open. vinaka vakalevu. bis central bankers β speeches | 1 |
william j mcdonough : bank supervision and credit standards under basel ii β perspectives for smes remarks by mr william j mcdonough, president and chief executive officer of the federal reserve bank of new york and chairman of the basel committee on banking supervision, at the gurzenich koln, cologne, germany, 25 april 2002. * * * introduction graf von hohenthal, herr dr. breuer, members of the panel, β meine damen und herren β¦ β it is an honor to join your discussion on the efforts of the basel committee on banking supervision to ensure that the international rules on capital adequacy serve the needs of twenty - first century banking effectively. what makes this a special privilege for me is the opportunity to meet so many entrepreneurs, owners of small and medium - sized businesses, and others who make up the real engines of the economy. your interest in the work of the basel committee reminds us all that we must look beyond the banking sector to ensure that the foundation we lay provides for the stability and growth of the entire economy. i have long emphasized that the role of supervisors is not to hinder growth or profit, but rather to promote the responsible pursuit of opportunity and innovation. as we improve the rules for bank capital, we must certainly keep this mandate in mind and consider the effects that changes to those rules may have on the economy. like you, i recognize the need for small and medium - sized enterprises to retain access to credit at reasonable and fair prices. access to credit matters not just because credit can enable small businesses to grow, but more because small businesses enable the whole economy to grow. this is true not just for the β mittelstand β in germany, but also of entrepreneurial ventures around the world. in the united states, for example, small businesses traditionally create the majority of new jobs, invent a large proportion of all new technologies, and are responsible for nearly 40 % of our gross national product. preview i know that you are deeply interested in the steps that the basel committee is taking to ensure that small businesses continue to enjoy fair and open access to credit, and i am pleased to share with you the good progress that the committee has achieved since the release of the second consultative paper in january 2001. i β ll begin with an overview of the importance of regulatory capital to the stability of the banking systems β and that of the economy β and how the committee β s current efforts will reinforce that stability. second, i β | confident enough of its success to make a substantial investment. the angel might be a single wealthy individual, an investment fund or, in some cases, even a bank. in exchange for the investment, the investor receives an ownership interest in the income and assets of that firm. the basel committee recognizes that both venture capital and equity investments often are catalysts for innovation and growth in the economy. at the same time, we recognize that such investments can represent high - risk activities for banks. consequently, the new rules are being designed to recognize the underlying risk while not discouraging or penalizing banks that wish to remain involved in venture capital and equity investing. our goal is to create a capital approach to equity exposures that builds upon sound internal bank practice and remains flexible enough to apply in any country. our challenge is to develop a treatment that makes sense today and that will be responsive to the evolution of banks β practices in equity funding. an equally important consideration is implementation, given significant differences in the nature of banks β equity holdings across countries and in the ways in which capital markets have evolved over time in each country. the committee wants to avoid disrupting equity holdings that have developed under existing capital regulations - - - whether these are long - term holdings, such as in germany, or those associated with small business investment corporations in the united states. to this end, only new equity investments would be captured under the internal ratings - based approach for the first ten years after the date that the new accord is implemented. this is an area where the committee has tried to navigate differences between national practices. we see the best way forward as offering two approaches to calculating regulatory capital for banks β equity exposures, one based on measures of market risk and a second based on the treatment of corporate loans. in either case, we intend for both methods to result in comparable capital requirements, which we will seek to confirm through our next impact study. responsibility would lie with the national supervisor to determine the approach most suitable for its banks. we expect that the new capital treatment will provide much better support for the healthy growth of equity financing and venture capital markets than the current accord. summary of changes and need for standards these important changes β modifying the capital charges, permitting greater recognition of collateral and trade receivables, and increasing the flexibility of the treatment of equity β should go a long way toward ensuring that banks that lend to small and medium - sized businesses are not disadvantaged under the internal ratings - based approach of the new accord. i | 1 |
wu xiaoling : stepping up the study of the housing financing system and promoting the healthy development of housing finance in china speech by ms wu xiaoling, deputy governor of the people β s bank of china, at the international seminar on the housing financing system, beijing, 25 april 2006. * * * ladies and gentleman, good morning. i am happy to join you in such a warm spring season to discuss housing financing issues and provide explore policy options for development of housing financing system in china. here, on behalf of the people β s bank of china, i would like to express my warmest welcome and sincere appreciation to your presence at this important gathering. the seminar was part of the cooperation program between the pbc and the world bank to conduct a joint research on strategic issues concerning china β s housing finance. i hope through this seminar, we could learn from the successful experiences of other countries to design the framework and development targets of china β s housing financing system from a strategic point of view. here, i would like to stress three points. i. great attention should be paid to issues of real estate and real estate financing. maintaining price stability and promoting economic growth are the main policy targets of almost every central bank in the world. after 1980 β s, large fluctuations in the real estate market have drawn high attention of governments and central banks around the world. first, the real estate industry plays an important role in an economy and interacts with the commodity, service and factor markets as a pillar industry ; therefore it can significantly pull the growth of the gdp. the real estate industry has direct and indirect relations with some 57 industries according to estimation, and in 2001, contribution of the real estate industry to the gdp growth is around 1. 9 to 2. 5 percentage points. in 2005, investment in real estate development reached rmb1575. 9 billion yuan in china, accounting for 17. 78 percent of the total fixed assets investment and 8. 6 percent of the gdp. in the chinese economic transition, continued urbanization process and housing monetization will promote the development of real estate industry, so the real estate industry will be one of the important pillar industries for a long period of time in future. second, housing is related to people β s lives. a suitable house provides the basic living protection and a comfortable living environment that improves living quality, so housing policy and real estate industry development policy are important components of a moderately wealthy society and relevant to the realization of social development targets. according to | cpc central committee and state council, take effective measures to further support the pilot programs of financial reform and opening - up in shanghai. first, to facilitate the rmb internationalization, we will support shanghai in innovating and carrying out pilot programs in cross - border rmb business and products following the market - driven principle. we will give full play to the rmb in pricing and settlement of commodities. besides, shanghai can tap its advantages as an international financial center to provide financing support for the belt and road initiative. second, in the context of promoting rmb capital account convertibility, we will support shanghai in the pilot reforms of foreign exchange management, increasing the functions of free trade accounts in the shanghai pilot free trade zone, and promoting convenience in capital account management and convertibility of capital account. third, we will support shanghai β s efforts to further improve the financial market and financial services. as an international financial center, shanghai has 1 / 2 bis central bankers'speeches been playing an important role in various financial markets, including the stock, bond, money and foreign exchange markets. we will make more efforts in infrastructure development to expand the scope and depth of market, make trading more convenient and efficient, improve the legal framework, market environment, custody and settlement of transactions, in an effort to increase the appeal of the financial markets in shanghai and promote its status as an international financial center and a hub of financial markets. moreover, shanghai has huge potential in development of financial services, given its advantage as a talent pool, its appeals to foreignfunded institutions in payment and settlement businesses including third - party payment, bank card services and rating businesses, and vast space for business development. fourth, going forward, the financial sector opening will follow the principle of national treatment to gradually lift caps on foreign ownership and limits on business licenses. given shanghai β s unique competitive advantages, many foreign banks, securities companies, insurance companies, and investment banks have chosen shanghai as a focal point in their plans for global business development. therefore, shanghai will be the highlight of both china and the world in the development of financial institutions. the fifth is that shanghai also has considerable potential and advantages in leading the development of financial technologies. financial institutions and relevant companies in shanghai are forerunners in the country in r & d and innovation of financial technologies and we expect they will continue to do so in the future. shanghai β s development as an international financial center calls for concerted efforts of all parties. the pbc will continue to support | 0.5 |
inflation. at the same time, global headwinds have undisputedly accelerated, and uncertainty has increased, mainly related to the rising threat of protectionism. in this environment, the governing council last week extended its forward guidance on rates and now expects them to remain at their present levels at least through the first half of 2020, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. we have also announced the technical parameters governing tltro iii. 13 / 14 bis central bankers'speeches the governing council is determined to act in case of adverse contingencies and stands ready to adjust all of its instruments, as appropriate, to ensure that inflation continues to move towards the governing council β s inflation aim in a sustained manner. thank you. 1 of course, such models cannot differentiate between different policy instruments. but the effects of policy tightening or easing should, in principle, have similar effects on asset prices across the central bank β s toolkit. 2 see cΕure, b. ( 2018 ), β the persistence and signalling power of central bank asset purchase programmes β, speech at the 2018 us monetary policy forum, new york city, 23 february. 3 for example, swap dealers use positions in bunds to hedge interest rate risk on swaps. 4 the phasing in of banks β liquidity coverage ratio and net stable funding ratio is also likely to have contributed to this secular effect. 5 ecb staff have further refined and expanded the methodology used to calculate the bond free float for the aggregate of the four largest euro area countries that together account for around 80 % of euro area sovereign debt and gdp. there are a number of methodological differences and enhancements compared with the bond free float shown in cΕure ( 2018 ), op. cit. the new measure is based on security - level information from the quarterly securities holdings statistics. these data are only available from the last quarter of 2009 but allow for a more granular analysis that also takes into account holdings by other less price - sensitive investors, such as insurance companies and pension funds. total outstanding debt relates to general government debt and not to the central government. estimates for the euro area bond free float proxy are naturally higher than for germany as foreign exchange reserves are predominately held in german bunds. for more detail, see eser, f., lemke, w., ny | purchases did not trigger an unwarranted tightening in financial conditions. but this would be far too simple, of course. financial asset prices, as you know, reflect the effects of a large number of forces at any given point in time, pulling yields in different, and often opposing, directions. to make some sense of changes in asset prices, ecb staff use an array of analytical tools, including exploiting crossasset price restrictions to identify the possible sources of economic shocks. an unexpected tightening in monetary policy, for example, is assumed to lead to higher yields, lower stock prices and an appreciation of the exchange rate, just like textbook economics would teach. you can see the outcome of such an exercise for the ten - year euro area overnight index swap ( ois ) on my second slide. clearly, according to this model, a number of factors, including global and euro area monetary policies, have contributed to the downward pressure on yields since the start of the year. in other words, there are no signs that the effects of our asset purchases started to evaporate the moment we stopped expanding our balance sheet. 1 2 / 14 bis central bankers'speeches indeed, i would argue that the effects of asset purchases are highly persistent, and that they have affected recent pricing dynamics in two important ways : through a yield level channel and through a yield sensitivity channel. the persistence of stock effects the first channel relates to the growing evidence that central banks, through their stocks of acquired assets and by reinvesting maturing principals, can persistently lower the yield level around which investors evaluate changes to the economic outlook. i have laid out the mechanics behind the persistent impact of asset purchases in previous speeches. 2 in short, as the central bank reduces the bond free float β the share of outstanding government bonds held by private price - sensitive investors β it also reduces the compensation, or term premia, that investors, as a whole, demand for holding long - term bonds. a crude yet simple way to see this is to look at the correlation between a measure of the bond free float and the spread between ten - year german bund yields and corresponding ois rates. you can see this on my next slide. 3 / 14 bis central bankers'speeches the intuition is that, both being risk - free assets, changes in the economic outlook or monetary policy expectations would shift bund and ois yields to a similar degree. 3 a sudden spike in risk aversion, such as during the sovereign debt | 1 |
bring added benefits for the population and inspire other individuals and firms to tap into the opportunities that exist to further develop the country's digital financial services landscape. to conclude, i extend warm congratulations to the board members, management and staff of nebula fintech limited for embarking on this venture and wish the team all the very best in their endeavour to contribute towards efforts to bring more innovative payment services to seychelles. thank you 2 / 2 bis - central bankers'speeches | opening remarks by ms caroline abel governor of the central bank of seychelles visa - digital payments workshop august 16, 2018 venue : eden bleu hotel mr. majeed hujair - senior director of the visa school of public policy, invited guests, workshop participants, ladies and gentlemen, good morning. i am delighted and honoured to welcome you to this β digital payments β workshop, to be conducted by our fellow colleague from the visa school of public policy. visa has been a long - standing and active participant in the seychelles β economy, providing services to our commercial banks, merchants and consumers. it is of utmost importance that we continue to build and maintain this collaboration, especially through public - private dialogues. it is crucial for regulators to work with the private sector to provide an enabling environment, and to enhance financial inclusion, through private sector expertise. i believe we can all agree that the financial services sector is the lifeblood of any economy. access to, but more importantly, the use of financial services, helps to increase economic opportunities and reduce vulnerabilities. digital payment platforms are essential in enabling individuals, families and communities, to contribute towards economic development. over the past few years, the local financial system has experienced some considerable changes, with the introduction of new products and services, bringing about many new opportunities, as well as unique challenges. these changes have contributed significantly to shaping the local financial environment, in terms of policy actions and has highlighted the need to build capacity to effectively respond to the challenges. coordination and collaboration between all players in the financial sector, has proven to be crucial to the formulation of policy actions. digital financial services are playing an increasingly central role in financial inclusion efforts in seychelles. the central bank recognises digital payments as a priority, as the shift towards digital payments can bring about exciting opportunities and contribute immensely towards digitising the economy. the urge to modernise and introduce innovative digital financial services, as well as the willingness to build a financially inclusive society, is shared by many other stakeholders. various initiatives have been introduced in seychelles, showcasing our interest in digital financial services, for the betterment of the financial sector, and the country as a whole. some of the key developments and initiatives include : the introduction of a near real - time payment platform - the seychelles electronic funds transfer system ( seft ) the adoption of the international bank account number ( iban ) the introduction of internet banking platforms by our banks the introduction of emv compliant debit cards the introduction of mobile money services by | 0.5 |
a country as an industrial base or its competitiveness. however, owing to the complexity of the motives driving fdi at the enterprise level and the problems of defining and recording foreign direct investment, great caution ought to be exercised when interpreting the statistical data. i would like to thank dr ulrich grosch for his assistance in preparing this talk. deutsche bundesbank, international capital links, special statistical publication 10, may 2004. the corresponding regular analyses appear in the monthly report ; see deutsche bundesbank, the development of german enterprises β international capital links between end - 1998 and end - 2001, monthly report, june 2003, pp 51 ff. the database was presented in alexander lipponer, a β new β micro database for german fdi, in heinz hermann, robert lipsey ( ed ), foreign direct investment in the real and financial sector of industrial countries, berlin 2003. claudia m buch, alexander lipponer, fdi versus cross - border financial services : the globalisation of german banks, deutsche bundesbank, discussion paper, series 1 : studies of the economic research centre, no 05 / 2004 and claudia m buch, alexander lipponer, clustering or competition? the foreign investment behaviour of german banks, deutsche bundesbank, discussion paper, series 1 : studies of the economic research centre, no 06 / 2004. in my view, an assessment of the locational quality and competitiveness of a country requires very differentiated approaches. 5 fdi can certainly play a role. however, it is only one indicator among many. above all, one must keep in mind what the statistical term β foreign direct investment β actually means. the international definition of fdi represents the mutual comprehensive intra - group financial relations provided there is a β lasting interest β. this means that borrowing and reinvested profits are to be included in the statistics. there are good reasons for this. for example, long - term loans which a parent company grants to its subsidiary abroad can be a substitute for equity capital. furthermore, it would not be right to treat retained earnings as anything but new equity capital as part of a socalled β distribute - recapture β policy. however, i do see problems with the interpretation of foreign direct investment when taking a look at short - term loans and trade credits. true, these credits count as fdi. but they do not tell us much about the locational quality of a country. in particular cases, short - term intra - group loans can have | year, but most of the forward - looking indicators β including job vacancies β suggest reasonable employment growth over the months ahead. in terms of wages, we are expecting a continuation of the current pace of increase. wage increases of 2 point something have become common across much of the country and we do not see this changing in the near term. the recent inflation data were in line with our expectations, with cpi inflation running at 1. 8 per cent. within the overall cpi there are contrasting trends. the prices of many food items are rising more quickly than they have for some time, largely because of the drought. in contrast, housing - related costs remain subdued, with rents increasing at the slowest rate on record and electricity prices falling in most places. looking forward, we are expecting inflation to pick up to 2 per cent over the next couple of years. i would now like to turn to monetary policy. since the previous hearing, the reserve bank board has cut the cash rate by a further ΒΌ of a per cent, bringing the total reduction last year to ΒΎ percentage point. since last october, including at our meeting earlier this week, the board has maintained the cash rate unchanged at 0. 75 per cent. i understand that some people in our community have concerns about interest rates being at very low levels and that low interest rates makes it more difficult for people relying on interest income. i would like to assure these people that we did not take those decisions lightly. rather, we have been responding to two major developments. first, the low interest rates globally. and second, a period of balance sheet adjustment by australian households. as we have discussed at previous hearings, world interest rates have moved lower over the past decade. this is mainly because of structural factors related to ageing of the population, productivity growth, slower population growth and high rates of saving in asia. since we live in an interconnected world, we cannot ignore this shift in world interest rates. on the domestic front, as i discussed earlier, households have been responding to the period of low wages growth and a fall in housing prices. this has resulted in a period of low consumption growth and below - average economic growth. if interest rates had not been reduced last year this adjustment in household finances would have been more difficult and the overall economy would have suffered. the lower interest rates have made it easier for people to manage their debts and, on the other side of the balance sheet, they have boosted asset values. in doing so, they | 0 |
far more effective in adjusting economic imbalances. this will significantly reduce the risks of a future crisis and enhance crisis management capability. iii. the reform should be guided by a grand vision and begin with specific deliverables. it should be a gradual process that yields win - win results for all the reestablishment of a new and widely accepted reserve currency with a stable valuation benchmark may take a long time. the creation of an international currency unit, based on the keynesian proposal, is a bold initiative that requires extraordinary political vision and courage. in the short run, the international community, particularly the imf, should at least recognize and face up to the risks resulting from the existing system, conduct regular monitoring and assessment and issue timely early warnings. special consideration should be given to giving the sdr a greater role. the sdr has the features and potential to act as a super - sovereign reserve currency. moreover, an increase in sdr allocation would help the fund address its resources problem and the difficulties in the voice and representation reform. therefore, efforts should be made to push forward a sdr allocation. this will require political cooperation among member countries. specifically, the fourth amendment to the articles of agreement and relevant resolution on sdr allocation proposed in 1997 should be approved as soon as possible so that members joined the fund after 1981 could also share the benefits of the sdr. on the basis of this, considerations could be given to further increase sdr allocation. the scope of using the sdr should be broadened, so as to enable it to fully satisfy the member countries β demand for a reserve currency. set up a settlement system between the sdr and other currencies. therefore, the sdr, which is now only used between governments and international institutions, could become a widely accepted means of payment in international trade and financial transactions. actively promote the use of the sdr in international trade, commodities pricing, investment and corporate book - keeping. this will help enhance the role of the sdr, and will effectively reduce the fluctuation of prices of assets denominated in national currencies and related risks. create financial assets denominated in the sdr to increase its appeal. the introduction of sdr - denominated securities, which is being studied by the imf, will be a good start. further improve the valuation and allocation of the sdr. the basket of currencies forming the basis for sdr valuation should be expanded to include cu | ##rrencies of all major economies, and the gdp may also be included as a weight. the allocation of the sdr can be shifted from a purely calculation - based system to a system backed by real assets, such as a reserve pool, to further boost market confidence in its value. iv. entrusting part of the member countries β reserve to the centralized management of the imf will not only enhance the international community β s ability to address the crisis and maintain the stability of the international monetary and financial system, but also significantly strengthen the role of the sdr. 1. compared with separate management of reserves by individual countries, the centralized management of part of the global reserve by a trustworthy international institution with a reasonable return to encourage participation will be more effective in deterring speculation and stabilizing financial markets. the participating countries can also save some reserve for domestic development and economic growth. with its universal membership, its unique mandate of maintaining monetary and financial stability, and as an international β supervisor β on the macroeconomic policies of its member countries, the imf, equipped with its expertise, is endowed with a natural advantage to act as the manager of its member countries β reserves. 2. the centralized management of its member countries β reserves by the fund will be an effective measure to promote a greater role of the sdr as a reserve currency. to achieve this, the imf can set up an open - ended sdr - denominated fund based on the market practice, allowing subscription and redemption in the existing reserve currencies by various investors as desired. this arrangement will not only promote the development of sdr - denominated assets, but will also partially allow management of the liquidity in the form of the existing reserve currencies. it can even lay a foundation for increasing sdr allocation to gradually replace existing reserve currencies with the sdr. | 1 |
. 4 we are undoubtedly experiencing a solid, broad - based and resilient economic recovery that is 2 / 3 bis central bankers'speeches contributing to a narrowing of the output and unemployment gaps. but there still appears to be a disconnect between growth and inflation. as slack in the economy continues to be absorbed, reflationary forces will gradually build up and the traditional phillips curve connection between inflation and the business cycle should eventually reassert itself. that being said, current estimates of the slope of the phillips curve appear to be flatter than in previous times, which could be interpreted as an indication that the relationship between economic slack and inflation has weakened. this could be due to either a mismeasurement of slack ( because of structural changes in the labour market ) or the relationship between slack and inflation not being stable over time. at the same time, this effect could also result from discrete parallel shifts in the phillips curve. such parallel shifts may occur because of temporary changes in wage and inflation mark - ups, or β more concerning from a central bank β s perspective β the incipient dislodging of inflation expectations. in an extreme scenario, the entrenchment of disinflationary developments could sustain a downward drift in the phillips curve and unmoor inflation expectations. empirically disentangling these factors is extremely difficult, so such considerations need to be borne in mind when discussing the relationship between economic slack and inflation developments, particularly in an environment of uncertainty over the anchoring of inflation expectations. it is our primary task, as a central bank, to ensure that the reconnection of the real and the nominal sides of the economy β what i referred to before as the phillips curve regularity eventually reasserting itself β occurs at a steady state rate of inflation that is consistent with our medium - term aim : a level below, but close to, 2 %. we have not yet accomplished our mission, and so we must remain patient and persistent. patience is required for inflationary pressures to show through convincingly in the data. the euro area β s economic environment is improving, and the negative tail risks to inflation expectations, which were clearly visible at the start of our asset purchase programme, have virtually disappeared. but measured inflation rates are exceedingly volatile and metrics of underlying price pressures remain weak. the entire distribution of inflation expectations still needs to shift a fair distance to the right. we must also be persistent in using our policy instruments to ensure a durable | . i understand that some observers in this country have concerns about the medium - term implications of this policy. so let me be clear : we always have a medium - term orientation. we are steadfastly committed to our mandate to maintain price stability. and the measures we have announced fully support this commitment. first of all, our actions are for the sole purpose of ensuring the proper transmission of monetary policy. they do not aim to finance governments, and nor would they if they were activated. our operations would only take place in the secondary market, which ensures that money would pass to investors holding sovereign bonds, not to governments. bis central bankers β speeches moreover, we have been explicit that our measures can be only successful if they are accompanied by reforms from governments that address deep - rooted issues. the governing council has made a strong commitment to such reforms a pre - requisite to be considered for our operations. this ensures that governments will continue to take essential measures. euro area citizens can be certain that we remain alert to any risk to price stability. we have always delivered price stability in the past β indeed, the average rate of inflation in germany since the launch of the euro has been the lowest since the 1950s. and we will continue to deliver price stability in the future. the credibility of our commitment is clear. indicators of inflation expectations show that citizens and financial markets expect inflation to remain low in line with our mandate. we take very seriously the trust that citizens put in us to meet their expectations. we will not let them down. building a bridge to the long term i have discussed the actions that the ecb has taken to ensure price stability and the positive early impact they are having. of course the current improvement in sentiment does not mean that everything is solved. the ecb β s actions can only build a bridge to the future. the project must be completed through decisive actions by governments β both individually and collectively β to address the underlying causes of our current challenges. this requires further efforts by governments to restore fiscal sustainability across the euro area. it requires deep structural reforms to achieve long - term competitiveness and growth. governments must remain firmly committed to their current reform efforts, and not seek to relax them as economic conditions start to improve. to secure long - term stability also requires a second level of actions. for citizens and investors to fully regain confidence in the euro area, they need to be convinced that its design flaws have been permanently fixed. a concerted effort from governments to complete our economic and | 0.5 |
to contend with a strong appreciation of the swiss franc. this brings me to the institution that is inextricably linked with the success of the euro : the ecb. 2. the ecb β s monetary policy ensures a stable currency in the euro area the ecb has acted resolutely during this crisis to safeguard price stability in the euro area in line with its mandate and with full independence. on 9 august 2007, for example, the ecb was the first central bank worldwide to react decisively to the turbulence emerging in the financial markets. however, the financial market situation deteriorated so dramatically in the course of 2008 that the transmission of monetary policy was significantly disrupted. central banks across the world were repeatedly faced with a situation in which liquidity in short and longer - term money markets threatened to dry up. in this context, the conventional monetary policy of the eurosystem also reached the limits of what it could achieve. against the backdrop of this extraordinary situation, the ecb took a number of β non - standard β monetary policy measures. these mainly include refinancing operations with full allotment against collateral, longer - term refinancing operations with an extended maturity and the expansion of the list of assets eligible to be used as collateral. all these non - standard measures are temporary in nature and can in principle be withdrawn at any time if we see upside risks to price stability. in germany the ecb β s two three - year longer - term refinancing operations in particular have made headlines. bis central bankers β speeches the aim of these operations was to guarantee the refinancing of the banking system over the longer term in order to support the flow of credit from banks to the real economy. the demand from banks was high, with around 500 institutions participating in the first operation in december 2011. for standard longer - term refinancing operations, this figure is closer to 100. the second operation, in february 2012, had around 800 participants, including a large number of small credit institutions, more than half of which were german. these banks frequently grant loans to small and medium - sized businesses, which form the backbone of growth and employment in the euro area. in these two operations the eurosystem allotted around a trillion euro, although the net provision of liquidity was only about half that figure. these are large sums. i would ask, however, that you bear the following points in mind : first, the interest rate in these two operations | were also a consequence of dynamic export growth and not just resulting from import compression due to the recessionary period. 6 / 16 bis central bankers'speeches slide 6 the impressive correction of current account deficits in some euro area countries has been mirrored in a significant adjustment of intra - euro area trade and current account imbalances ( see slide 7 ). as a result, some euro area countries with large external surpluses now record current account surpluses mostly vis - a - vis countries outside the euro area. 7 / 16 bis central bankers'speeches slide 7 fiscal deficits have been reduced. fiscal effort, measured as the change in the structural primary balance, has been significant in many countries ( see slide 8, chart on the left ). as a result, and also thanks to the reduction in interest payments, fiscal deficits are now in almost all countries below 3 % of gdp ( see slide 8, chart on the right ). 8 / 16 bis central bankers'speeches slide 8 beyond fiscal deficits, the level of public and private debt has also posed concerns in some countries. in the run - up to the crisis, it was not so much public debt but rather the private sector indebtedness that increased substantially ( see slide 9 ). this should be underlined because, as jorda, schularik and taylor ( 2016 ) said : β β¦ private credit booms, not public borrowing or the level of public debt, tend to be the main precursors of financial instability in industrial countries. β 2 it was only after the crisis that public debt increased, on account of the necessary interventions. more recently, both public and private sector debt levels stabilised, thanks to consolidation efforts and private sector deleveraging, even if remaining rather diverse across countries. focusing on the programme and post programme countries, private debt levels in percent of gdp are currently lower than 10 years ago in spain, portugal and greece, but still higher in cyprus and ireland. public debt however is higher than at the start of the crisis, across the euro area. increasing the growth potential of euro area economies would help to achieve a downward shift in the debt - to - gdp ratios. 9 / 16 bis central bankers'speeches slide 9 synchronisation of economic cycles and symmetric shocks an important aspect stemming from the theory of optimal currency areas, relates to the risk of asymmetric shocks to countries in a monetary union, placing them in different phases of the economic cycle, which would make a single monetary | 0.5 |
favour of a retail payments system that provides users with a wide choice of options from a wide range of providers. each payments method has its strengths and weaknesses, and so users should be able to choose the most suitable payments method for each particular type of transaction. in some cases the pricing of the transaction enables them to do so in a manner which contributes to an efficient low - cost retail payments system, while in some other cases it does not. the best way of improving efficiency is usually to increase competition rather than to regulate, but i think i have shown that some parts of the retail payments system are constructed in such a way that competition increases costs and reduces efficiency. in those areas, regulation is required, and the reserve bank through the payments system board will continue with its task of improving efficiency, competition and safety of the retail payments system. | track of the latest proposals and understand what they could mean for their own institutions. for those institutions looking to prepare for adoption of basel ii, making the manifold 5 / 6 upgrades in risk - measurement and - management systems - - not the least of which is developing credible databases - - is even more difficult, especially since complete and final supervisory expectations have yet to be released. but we certainly hope that institutions do not lose momentum based on the revised timeline for basel ii ; indeed, that timeline reflects our assessment of the work that still lies ahead. while institutions might be challenged to move forward in certain areas until the basel ii npr and its associated supervisory guidance is issued, we still believe that they can make strides in other areas. for one, the agencies all along have emphasized the importance of institution - specific implementation plans, which include gap analyses, clearly defined milestones, and remediation plans. in other words, we think that institutions could now continue development of the corporate governance surrounding each institution's efforts in basel ii implementation and focus on their individual implementation processes. in addition, supervisors have begun to discuss individual qis4 results with each participant ; these discussions include specific feedback about the institution's results and some general peer comparisons. additionally, we do recognize that the recent update to u. s. implementation plans could generate some challenges for u. s. institutions as they try to implement basel ii worldwide, as well as for foreign banks operating in the united states. overall, we think these challenges are manageable and we can facilitate solutions to them during the implementation process. while not downplaying potential challenges, the u. s. agencies, in deciding to adjust implementation plans, thought it was important to ensure that implementation in the united states be conducted in a prudential manner and without generating competitive inequalities in our banking markets. as before the september 30 announcement, we continue to work with institutions and foreign supervisors to minimize the difficulties in cross - border implementation. our support includes extensive discussion with other countries in the basel accord implementation group, as well as more informal, bilateral discussions with institutions and foreign supervisors. our view is that these cross - border issues do not necessarily represent fundamentally new problems ; while requiring some work, these challenges are manageable. it is also useful to point out that all basel member countries have their own rollout timelines and national discretion issues, not just the united states - - which is entirely appropriate. in order to assist institutions in resolving their cross - border challenges | 0 |
support their technology, human capital, and market development. we will enrol eligible applicants in deal fridays, a programme jointly organised by mas and enterprise singapore, where they will gain access to the investor community. 7 / 8 bis central bankers'speeches conclusion the future of money, finance, and the internet will have far - reaching effects on economies and societies. it is important that public authorities and the financial and technology communities work together to shape that future, so that money, finance, and the internet can be forces for good, helping to expand economic opportunity, enhance social inclusion, foster stability, and protect our planet. ultimately, money, finance and the internet must serve the people who use them. mas is committed to partnering you on this exciting journey. have a great fintech festival! 8 / 8 bis central bankers'speeches | 2019 french energy - climate law makes it mandatory to disclose not only on climate - and biodiversity - related risks, but also on how financial institutions and corporations align their strategies with international climate and biodiversity goals. page 11 sur 12 of course, the implementation of double materiality raises significant theoretical, legal and operational challenges. xxviii but we should be thinking about this seriously rather than ignoring the topic, if we truly understand that preserving ecological stability is a prerequisite to price and financial stability. 4. conclusion let me conclude with two brief messages. the task ahead looks like an uphill battle : academic economic departments, policy makers, central bankers and supervisors remain far behind the curve when it comes to acknowledging that our socioeconomic systems need to operate a radical transformation. we know that those who dare to question the status quo face strong pushback or even reputational risks for their careers. they may be considered β activists β or β dreamers β. however, we have no choice but to restore nature as much as possible, as quickly as possible and finance can play a role in this task. the magnitude of the change require makes it difficult but also promising. no generation on earth for the past 12, 000 years had such a responsibility to keep the world alive. moreover, paradigm changes sometimes occur faster than expected, and there are great rewards for those who dared to explore new frontiers. it goes without saying that exploring these new frontiers of climate and nature in macroeconomics and finance should be done as seriously as possible, as we will be held to an even higher standard than our peers. it is my hope and belief that this conference will be a step forward toward this end. page 12 sur 12 * i thank romain svartzman for his assistance in preparing these remarks i dasgupta, p. ( 2021 ). the economics of biodiversity : the dasgupta review. steffen, w., grinevald, j., crutzen, p., and mcneill, j. ( 2011 ). β the anthropocene : conceptual and historical perspectives. β philosophical transactions of the royal society a : mathematical, physical and engineering sciences 369 ( 1938 ) : 842 β 67. https : / / doi. org / 10. 1098 / rsta. 2010. 0327. iii ceballos, g., ehrlich, p. r., & raven, p. h. ( 2020 ). β vertebrates on the | 0 |
, which were adapted after hearing their input. other federal reserve partnerships with indian country include initiatives on access to credit ; native community development financial institutions ; financial education programs tailored to early childhood, secondary, and higher education ; workforce development ; housing ; social services ; and elder programs. and as part of our ongoing effort to deepen our understanding of tribal economies, last year, the federal reserve board announced that we had joined the central bank network for indigenous inclusion, along with the reserve bank of new zealand, the bank of canada, and the reserve bank of australia. this is part of our commitment to learning best practices and expanding our international partnerships with central banks that are similarly invested in supporting indigenous people and communities. - 3the federal reserve works for all of us, and our research and analysis must reflect the specific needs and circumstances of all of our communities. i am grateful for our partnership with the national center for american indian enterprise development, and i want to thank you, as well as all our colleagues, advisors, and stakeholders who help us work toward a stable and inclusive economy for all. thank you. | higher inflation and interest rates in the u. s. and in many other countries around the world. but we should not assume that β more β is always better. more regulation and more supervision are see michelle w. bowman, β the path forward for bank capital reform β ( remarks at protect main street, sponsored by the center for capital markets at the u. s. chamber of commerce, washington, d. c., january 17, 2024 ), https : / / www. federalreserve. gov / newsevents / speech / files / bowman20240117a. pdf. - 13 only effective if the changes are targeted to address an existing problem and are appropriately focused and efficient. 14 when they are targeted and efficient, they may result in a net positive both in bank safety and soundness, and in financial stability. the function of bank regulators is not to create a bank regulatory framework that eliminates risk. banking is inherently about managing, not eliminating, risk. closing my remarks today are not meant to be an exhaustive list of all the financial stability threats facing the u. s. banking system, but i would be remiss in concluding without briefly mentioning a few other key financial stability risks, all of which i expect are familiar to you. first, monetary policy and the fight against inflation. this is a key risk identified in the financial stability report, and in surveys of bankers. when effectively implemented, monetary policy promotes price stability and maximum employment. in the long run, achieving both of these objectives promotes the stability of the broader financial system. it is of utmost importance that we maintain credibility in pursuing our fight against inflation by proceeding carefully and deliberately to achieve our 2 percent goal. but we cannot ignore the fact that monetary policy can present risks to the banking system and the broader financial system. changes in interest rates can make it more difficult for banks to manage interest rate risk, particularly in the face of rapid rate increases like those from 2022 and 2023. we know that many banks have seen a significant increase in unrealized losses on their balance sheets, a trend that has led to pressure on liquidity, funding, and capital for some institutions. see bowman, β the path forward for bank capital reform. β - 14 while monetary policy mandates may support long - term financial stability, monetary policy is an independent function that may heighten short - term stresses in the banking system. our supervisory activities should reflect an awareness of these effects on bank management decision | 0.5 |
more into line with the underlying risk, thus giving a disciplining signal to the sovereign. but sovereign bonds pose a threat to financial stability not only because of preferential riskweighting. the most important rule in risk management is diversification. yet when it comes to sovereign bonds, banks all too often neglect this principle. in many cases, european banks hold bonds from one sovereign only β their home country. large and undiversified exposure is what makes a sovereign systemically relevant. hence, the large exposure regime which caps the investment in one single debtor has to be applied to sovereigns as well. only then will the failure of a part not equal the failure of the system as a whole. thank you. bis central bankers β speeches | andreas dombret : holistic approaches to solve the β euro crisis β speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the global economic symposium, kiel, 1 october 2013. * * * ladies and gentlemen, thank you for the invitation to this year β s global economic symposium ; it is a pleasure to be here. the β euro crisis β has certainly been, and it still is, a defining moment in the history of european monetary union β though i would add that we are dealing with a sovereign debt crisis rather than a crisis of the euro. let me kick off the discussion by offering some thoughts on how to solve the crisis. what we need is a holistic approach. since the european monetary union is a highly interdependent system, any solution must not only remedy the problem at hand but also improve the working of the system as a whole. unfortunately, many of the proposed solutions fall short of this requirement. instead, they are prone to what is known as the β cobra effect β. the cobra anecdote is set in colonial india. trying to stop a plague of cobras, the british government offered a bounty for every dead snake. the plan seemed to be working at first. high numbers of dead cobras were presented to the colonial administration. unfortunately, this did not get the plague under control. most of the dead cobras were not wild ones β they had been bred by enterprising locals in order to claim the bounty. when the governor finally caught wind of the practice, he scrapped the reward, causing the cobra breeders to set the now worthless snakes free. as a result, the plague was worse than ever. every policy not only addresses a problem, but changes the nature of the game as well. this has to be taken into account when evaluating the overall merit of any measure. and when we look beyond instant effects, many policies lose their lustre. eurobonds are a case in point. granted, eurobonds would offer temporary relief to heavily indebted member states of the euro area. but the introduction of eurobonds would distort the already lopsided balance between liability and control even further. while spending decisions would essentially remain a national prerogative, liability would become european. incentives to incur further debt would thus be strengthened, not weakened. this would strain rather than smooth the working of the system. only if common liability were matched by common control would incentives be | 1 |
, respectively 1. as at end june 2015, total sukuk or islamic bond outstanding stood at usd313 billion with malaysia making up 55 % or usd172 billion of total market share 2. source : ifsb 3q2014. source : bloomberg, zawya. bis central bankers β speeches the increased participation of non - muslim jurisdictions also reflects the positive acceptance of islamic finance among the global community. sukuk has drawn strong interests as an attractive source of funding and a new asset class. uk, hong kong, luxembourg and south africa issued sovereign sukuk last year. with this leadership taken by the british government, uk became the first non - muslim country to issue sovereign sukuk of gbp200 million that attracted strong demand of more than 10 times. hong kong issued the second sovereign sukuk in 2015 following its successful inaugural issuance. the sovereign issuances are hoped to pave the way for corporate sukuk issuances particularly from these jurisdictions. another landmark transaction is the syndicated islamic financing facilities of gbp467 million for the battersea power station phase 3 project in london. the involvement of our malaysian players in some of these global transactions has encouraged cross - border business transactions and enhanced collaboration with players in other jurisdictions. despite the above, sukuk recorded a lower amount of new issuances of usd40 billion during the first half of 2015 due to a slowdown in the current global financial markets and still - low oil prices. malaysia remained the key jurisdiction for sukuk origination with issuances of usd19. 8 billion or 50 % of total market share. malaysia has evolved into a multicurrency sukuk issuance marketplace with issuances in us dollar, chinese renminbi, singapore dollar and japanese yen. our banks, islamic fund management companies and professional service providers, some of whom are with us today, have global capabilities and expertise in advising and managing cross - border financing and investments. the diverse range of institutional investors creates a strong demand for sukuk that efficiently channel funds and liquidity in the market. tesco, a uk - based company, opted for sukuk issuance rather than bond under its conventional and islamic mtn program due to the cost effectiveness of issuing the former. we welcome sukuk issuances by other foreign entities, leveraging on malaysia β s expertise and framework. new development in malaysia malaysia has promulgated the new islamic financial services act or | vulnerable, however, to setbacks in the recovery of the real economy. the upturn is still far from being self - sustaining. the coming year will show how far fading public - sector stimuli can be replaced by endogenous private sector activity β in germany β s case, this is typically generated by the interplay between net exports, capital expenditure and household consumption. it is still open to doubt, however, whether such a stylised or typical upswing will actually materialise this time round. hence, it would be premature to regard the financial crisis, and the economic crisis directly linked to it, as having already run their course. clearly, a protracted period of stagnation in the major economies would pose a substantial risk to financial stability. the detrimental, self - reinforcing feedback loop between an unprecedented and globally synchronous reduction in the level of real economic activity and an essentially dysfunctional financial system, which has been unravelling since the summer of this year, might then tighten again. it follows from this that exiting the broad - based stabilisation policies should be predicated on and calibrated to a sustained improvement in the underlying market conditions as well as in financial sector resilience. at the same time, it is important to bear in mind the implications which the highly unorthodox measures taken to support and stimulate the economy inevitably entail. they inherently carry considerable risks over the medium and long term. a prime example of such risks is ballooning government debt in many industrial countries. in addition to already acknowledged, explicit public debt, the bank rescue packages obviously impose an additional, implicit potential burden on the public sector. transparent and credible strategies are therefore crucial for unwinding and managing the fiscal β and, of course, monetary β policy support measures. should the policy - making process lose its credibility, this would be reflected in rising risk premiums and interest rates. higher interest rates, in turn, would tend to depress capital expenditure and, therefore, potential growth. in addition, they would further hamper the already onerous task of consolidating public finances, which is vital to ensure sustainable debt containment. it is therefore crucial to keep market participants β expectations of a stability - focused monetary policy as well as a sound fiscal policy firmly anchored. ii ongoing challenges the government and other public support measures have bought the financial system time to cope with losses and to prepare for potential financial strains lurking on the horizon. moreover, public - sector | 0 |
. does this impede as sometimes, mainly during election campaigns argued, a country β s ability to adjust to asymmetric shocks? the case of germany helps to answer this question. in the past years germany has made it from the bottom of the euro area growth table to a good positioning in the emu growth chart. why is this? the growth gap during much of that time was notably. average growth in the years 2001 to 2005 added up to only 0. 6 % p. a., which is clearly below germanys potential growth rate of 1 Β½ % p. a.. this slow growth and the unsatisfactory placement in the european growth chart was partly the result of other economies catching up economically and of the stimuli generated by interest rate convergence in some member states during the run - up to emu. domestic problems caused the main part of the subdued growth, however. among other things the very quick catching - up of wages in the eastern part of germany and structural weaknesses in the labour market led to a weak domestic demand and economic performance. it was only gradually that the german economy emerged from this difficult situation. firstly, the adjustment was supported by the fact that price dynamics in germany have been more moderate than in most other emu countries. on average the german hicp was 1 % - point lower than the average hicp of the other member states of the monetary union. this led to a cumulated price advantage of 8. 5 % since 1999. measured in terms of unit labour costs, german industry gained an advantage of 15 % since 1999. at this point one sidestep : it β s sometimes argued that higher inflation rates support growth because lower real interest rates foster investment activities. this is wrong for two reasons : firstly, if calculating real interest rates, one has to consider inflation expectations which are not considerably lower in germany than in other countries of the monetary union. secondly, and this is a much stronger argument, the case of germany shows that modest price dynamics support competitiveness within a monetary union and therefore foster sustainable growth. oecd, economic survey, euro area, 2007, p. 31. secondly, beyond or parallel to the stability performance deep and sometimes painful restructuring effort of the industry was necessary during the process of catching up. this include modest wage developments and strong cost saving and restructuring efforts in the last ten years. thirdly, the legislator launched overdue structural reforms. among other things the system of unemployment benefits as well as the pension scheme was reformed | stage compared to the current situation in other latin american countries. hasty diagnosis and simplistic comparisons among the various countries β situations may lead to inappropriate policy recommendations. under these circumstances, a sustainable and long - lasting reduction of inflation depends on the comprehensive, joint and coordinated action of the monetary policy, the fiscal policy, the wage policy, and the competition policy during the transition phase. the path is a sequential one while we build the traditional monetary tools as effective policy instruments. within this framework, today β s monetary and financial strategy is based on three main pillars : first, a robust and consistent monetary policy that ensures the equilibrium between supply and demand in the monetary market. this system is the most appropriate for an economy that still makes intensive use of relatively liquid means of payment and has a relatively low bank penetration. for the first time after the crisis, money supply is growing below the growth of nominal gdp, reflecting the prudential bias of our approach. the control of the growth in m2 is based upon a deep sterilization policy, which its key element is the issuance of bills and notes of the central bank and the development of a repo market. and these securities are by no means straight public debt ( the central bank is not using them to finance itself ). they reflect postponed liquidity ( they will be monetized when circumstances require so as it happened in the second half of 2007 ). second, a managed floating exchange rate regime that enables us to weather situations of financial stress β that is, a regime that provides predictability. we do not want to prevent variables from converging to their long - term values, but we would rather avoid excessive volatility as a source of unnecessary disturbances in economic decisions. on the other hand, we do not want to provide any sort of insurance that favors speculative flows. third, countercyclical policies to prepare the economy against shocks. these include the accumulation of foreign reserves and a sound financial system that buffers turmoil, instead of spreading it. i cannot find a more telling proof of the reasons why we have pursued antyciclical policies β such as foreign reserve accumulation β during these years : the recent external shock we faced can be compared to the β tequila effect β in terms of the magnitude of the outflows, but had a mild impact on domestic variables. the monetary and financial system truly protected it against financial contagion. another example of our risk management approach is the recovery of banking liquidity and solvency | 0 |
of the triangular trading links between fujian, hong kong and taiwan. in its role as an international financial centre, hong kong is also the host to a number of banks from taiwan. the taiwanese presence here consists of 4 licensed banks, 2 restricted licensed banks and 3 representative offices. there are also a significant number of other taiwanese banks which have expressed the intention to establish representative offices here. we are processing these applications in an orderly fashion on a β first - come first - served β basis. it has long been our policy not to allow in too many banks from the same region or country too quickly. as in the case of the japanese regional banks and the korean banks we therefore operate a queuing system. i know that this can sometimes be frustrating to those who are at the back of the queue. but i would like to made it clear that these is no reluctance on our part to admit banks from taiwan, as the existing presence here clearly demonstrates. i am sure that dr. jeffrey koo will also testify to this. 6. hong kong is currently going through tougher times as a financial centre. some foreign banks have cut back their lending here and a few banks have actually left. this has reflected problems back home rather than discontent with hong kong. however, it is true that hong kong must reduce the cost of doing business in order to remain competitive, and that is why the current fall in property prices and rents, while painful, is also necessary. i am confident that hong kong will emerge from the current crisis with a better - balanced economy and with even stronger fundamentals. above all, it can continue to rely on its main strategic advantage as a financial centre - namely, its proximity to the mainland of china. this places it in an ideal position to intermediate the trade and investment flows between places like fujian and taiwan. 7. in conclusion, i would like to repeat my welcome to you and to express my hope that your discussions today will lay the foundation for even greater cooperation between fujian, hong kong and taiwan in the future. | long term infrastructural projects because of the higher capital charge required to hold these assets on their books. more specifically, many european banks, which were very active in infrastructural financing in asia in the past decade, have reduced their exposures in this area and will continue to do so in the future. so many infrastructural projects in asia are now finding it increasingly difficult to secure the necessary finance. at the same time, many bankers and fund managers have said that there is still ample supply of funds looking for investment opportunities, but lending or investments in asia β s infrastructure has been greatly hampered by the shortage of β bankable β projects. so on the one hand asia has a huge funding need for infrastructural projects but on the other bankers and investors sitting on huge amounts of savings complain that they cannot find sufficient β bankable β projects. clearly there is a big gap here. there are many reasons why such gap exists, involving factors relating to legal, governance and political risks for investing in asia β s infrastructure. whatever the reasons, we must endeavour to find a workable solution to narrow the gap or else it will significantly impair asia β s growth potential as well as constraining the development of asia β s financial markets. 7. in conclusion, i would say that today β s conference is very timely as it will discuss the key challenges facing asia β s finance in the future. asia is now at a crossroad and we must work together to choose the right path. i have no doubt that this conference will contribute useful insights and advice on this very important subject. thank you. bis central bankers β speeches | 0.5 |
cent of investment in the country during this period was financed by the domestic savings. on the price stability front, india's performance has been fairly good. since independence, the inflation rate, in terms of the wholesale price index ( wpi ), on an average basis, was above 15 per cent in only five out of fifty years. in thirty - six out of fifty years, inflation was in single digit and on most occasions high inflation was due to shocks β food or oil. the tolerance level to inflation has been low, relative to many developing countries, especially on account of the democratic pressures in the country. the inflation rate accelerated steadily from an annual average of 1. 7 per cent during the 1950s to 6. 4 percent during the 1960s and further to 9. 0 per cent in the 1970s before easing marginally to 8. 0 per cent in the 1980s. however, the inflation rate declined from an average of 11. 0 per cent during 199095 to 5. 3 per cent during the second half of the 1990s ( 1995 - 2000 ) and further to 4. 9 per cent during 2003 - 07. more recently during 2006 - 07, wpi based inflation rate increased from 4. 1 per cent at the end of march 2006 to an intra - year peak of 6. 7 per cent at end - january 2007 and remained firm in the range of 6. 1 - 6. 6 per cent in the succeeding weeks before moderating to 5. 9 per cent by the end of the financial year ( i. e., as on march 31, 2007 ). since then, the inflation has further moderated and as on june 16, 2007, the wpi inflation rate was 4. 0 per cent. in recent period, there has been considerable improvement in the fiscal position. the average gross fiscal deficit of the central government as per cent to gdp during the decade of 1980s was 6. 8 per cent as against 3. 8 per cent in the 1970s. the government of india is pursuing the path of rule - based fiscal consolidation from the year 2004 - 05 under the fiscal responsibility and budget management act, 2003 whereunder time - specific targets have been mandated. the underlying purpose of the targets is to reduce the ratio of gross fiscal deficit ( gfd ) to gross domestic product ( gdp ) to three per cent by 2008 - 09. furthermore, the revenue deficit ( rd ) to gdp ratio has been targeted to touch 0. 0 per cent by 2008 - 09 so that borrowed resources | gent sejko : the importance of studying technological and demographic developments disrupting labour, finance and markets welcome remarks by mr gent sejko, governor of the bank of albania, at the 13th see economic research workshop, tirana, 5 december 2019. * * * dear ambassador maitre, dear guests and speakers from academia, central banks and research institutions, dear participants, it is a great pleasure for me to open the proceedings of the 13th see economic research workshop, in which we present and open for discussion research projects undertaken by the bank of albania in the current year, and have the opportunity to get feedback from colleagues from academia, central banks and research institutions worldwide. this is a very important event for the bank of albania, since all the projects that will be discussed during the two days of the workshop are designed to help the analysis, decision making and implementation in the areas of monetary policy and financial stability as well as other central bank aspects. based on this careful formal analysis, our policies have been successful in preserving monetary, macroeconomic and financial stability. despite hardships, our economy has registered positive growth rates, and our banking system β s performance has been stable. the banking sector is well capitalized and profitable, non - performing loans have decreased and banks continue to support economic activity with credit, while managing potential shocks originated from the external sector of the economy. the agenda is rich and covers the most important areas of research related to traditional central bank activity. in these two days, discussions will focus on monetary policy, financial stability, economic modelling and forecasting, risk assessment and management, which are all traditional instruments in the central bank toolkit and need to be improved constantly. it is very important to note that, in addition to these traditional topics, the workshop will discuss research in new and important areas such as : digitalization of financial services, structural reforms, healthcare and its implication for central bank objectives and national welfare. technological developments disrupting traditional labour, financial products and markets, and demographic developments may impose some of the most important challenges to our societies and institutions. therefore, it is important to study and adequately understand these phenomena. in addition, we are glad and eager to discuss research findings from a number of authors who come from academia, central banks and other research institutions. the ideas and methodologies that are embedded in their research will introduce our researchers and economists to new ideas, will help them extend their research agenda, and will reveal potential opportunities of cooperation in the future. i believe that | 0 |
been huge and there is widespread agreement that we cannot allow this to happen again. nevertheless, we should also recognize that a number of global banks have managed to navigate these rough and unchartered waters without capsizing, indeed, if you allow me to extend the metaphor, some have even been able to help to calm the waters. it is important to learn the lessons from all of our experiences, both good and bad, to help us better shape the future regulation and supervision of the financial system. and it is with this in mind that i want to comment on our experience with global banks headquartered in spain. as i will stress throughout my intervention, the global nature of systemically important banks should not be seen as a negative attribute. globalization allows countries and cultures to learn from each others β experiences, enriching us in a very broad sense. of course we want a safer world, but a key foundation of safety is a world that is able to grow. and growth goes hand - in - hand with openness and globalization. in fact, globalization has been the engine of growth in the years before the crisis. and global banks have played a key role in this process and, therefore, in delivering growth to our societies. some banks have become global because they have accompanied domestic non - financial companies in their international expansion process. bis central bankers β speeches our largest global banks became international around fifteen years ago. they went first to latin america, following their large domestic customers ( utilities, oil companies, telecom firms, construction and technology firms and so on ) into those new markets. once in the new markets, the banks were able to familiarize themselves with the needs of other local customers and started to provide banking services to local households and firms. the beneficiaries of this process were not only spanish companies, but also firms and households of the host countries. this natural expansion process has created benefits in terms of risk and income diversification for the banks involved, thus reducing their probability of failure and contributing to a safer financial system worldwide. moreover, global banks help to better allocate resources across the planet by contributing to fund investment processes in countries where savings are insufficient and, in the opposite situation, providing more opportunities for depositors and savers to channel their funds to better opportunities. this natural expansion process should continue for banks in emerging countries whose non - financial companies are expanding abroad into other emerging countries or into more mature countries. we should not bring this process into a halt, reducing welfare across | , isidro, the floor is yours. 3 / 3 | 0.5 |
contrast, the third channel stresses that the bank β s purchases of jgbs with a commitment to continue until achievement of the 2 percent target could contribute to raising inflation expectations directly. an increase in inflation expectations would produce upward pressure on nominal long - term interest rates, but this would be contained partially by the downward pressure on the term premium. therefore, it is judged that real long - term interest rates would decline. in addition to jgb purchases, the bank purchases various types of risk assets. thus, transmission channels other than those i have described are also present. direct purchases of risk assets could thus be expected to directly influence risk asset markets. e. chances to revitalize the japanese economy since the adoption of the 2 percent price stability target ( based on the headline cpi ) in january 2013, nearly two years have passed. the adoption of the 2 percent numerical target bis central bankers β speeches reflects the following factors. ( 1 ) the need to keep a sufficient buffer with regard to inflation to avoid the economy from falling into deflation again and also consider the upward bias problems inherent in cpi statistics. ( 2 ) the need to leave sufficient room for the conduct of flexible monetary policy by achieving a certain level of inflation to avoid the zero lower bound in recessionary phases. and ( 3 ) the need to set a target of around 2 percent, which is becoming a global standard in terms of a price stability target, to avoid the re - emergence of excessive appreciation of the yen. in addition, the 2 percent target is essential to realize a normal economic condition whereby positive rates of nominal gdp growth can be seen on a sustainable basis and thereby help to increase firms β and households β medium - to long - term economic growth expectations ( chart 6 ). it is important to realize that a continual decline in nominal gdp over the past 15 years is a highly unusual economic condition, rarely seen in other economies. given that the rate of cpi inflation often exceeds the rate of annual change in the gdp deflator in japan, there is a wide gap between the levels of these two indices. thus, achieving about 1 percent cpi inflation appears inadequate to ensure trend movements of the nominal gdp growth rate in positive territory, and this is also one of the reasons why i judge that the bank should aim at achieving 2 percent cpi inflation ( chart 7 ). having said this, it appears that some among the public and the market feel uncertainty about the importance of achieving the 2 percent target, as well as the bank β s policy | minus " insufficient employment " ), % points - 60 all industries insufficient employment manufacturing construction retailing accommodations, eating & drinking services 1. 8 s. a., ratio s. a., % 1. 6 1. 4 - 40 1. 2 - 20 1. 0 0. 8 0. 6 0. 4 cy 2005 active job openings - to - applicants ratio for full - time employees ( left scale ) active job openings - to - applicants ratio ( left scale ) unemployment rate ( right scale ) excessive employment 0. 2 source : bank of japan. 0. 0 cy 2005 sources : ministry of health, labour and welfare ; ministry of internal affairs and communications. chart 5 cpi 2. 0 y / y % chg. all items less fresh food ( core cpi ) 1. 5 all items less fresh food and energy 1. 0 0. 5 0. 0 - 0. 5 - 1. 0 cy 2013 / apr. oct. 14 / apr. oct. 15 / apr. oct. 16 / apr. oct. 17 / apr. oct. 18 / apr. oct. 19 / apr. oct. 20 / apr. oct. source : ministry of internal affairs and communications. note : figures exclude the effects of the consumption tax hike in april 2014. chart 6 output gap 3. 0 % excess demand ( upward pressure on prices ) 2. 0 1. 0 0. 0 - 1. 0 - 2. 0 - 3. 0 excess supply ( downward pressure on prices ) - 4. 0 - 5. 0 - 6. 0 cy 2013 / q1 q3 14 / q1 q3 15 / q1 source : bank of japan. note : based on staff estimates. q3 16 / q1 q3 17 / q1 q3 18 / q1 q3 19 / q1 q3 20 / q1 chart 7 inflation expectations y / y, ann. avg., % 2. 5 households ( over the next five years ) 2. 0 firms ( five years ahead ) 1. 5 1. 0 0. 5 0. 0 cy 2005 source : bank of japan. notes : 1. figures for households are from the opinion survey on the general public's views and behavior, estimated using the modified carlson - parkin method. 2. figures for firms are those for the average of enterprises'inflation outlook for all industries and enterprises in the tankan. chart 8 outlook for economic activity and prices as of october 2020 forecasts | 0.5 |
david dodge : the bank of canada and monetary policy : future directions remarks by mr david dodge, governor of the bank of canada, to the toronto board of trade, toronto, ontario, 20 february 2001. * * * it's a pleasure to be here today, in my home town of toronto, for my first public speech as governor of the bank of canada. and i am particularly pleased to be speaking to the board of trade. one of my great delights as a boy was when my father would bring me to the dining room of the old board of trade for lunch in june, if i had done well in school that year! that was my first contact with the toronto business and financial community β a valuable contact that i have sought to maintain over the years. and it is a contact that i hope to strengthen while i am at the bank of canada. the bank is well respected both inside and outside canada for the quality of its professionals and the work that it does. i am honoured to join it and to lead it over the next seven years. my task will be to ensure that we build on the bank's record to date and that we strengthen and deepen the progress made so far in fulfilling our responsibilities to canadians. there are three main issues i want to address publicly as i begin my term : the bank's contribution to good economic performance ; the bank's contribution to promoting financial stability, both nationally and internationally ; and the importance of open and frank dialogue with business, labour, and the general public. today, i would like to focus my comments on the first and the third of those issues. i hope to address financial stability as part of my next public speech. and i will conclude with a few remarks on the current economic situation. the bank's contribution to good economic performance as the country's central bank, the bank of canada has a commitment to contribute to the economic well - being of canadians. fundamentally, this means that we must conduct monetary policy so as to promote sustained economic growth, create conditions conducive to rising investment, employment, and incomes, and encourage a more stable macroeconomic environment. how can the bank of canada foster such an outcome?... low, stable, and predictable inflation the best contribution that the bank can make to good economic performance is to preserve confidence in the future value of money. in practical terms, this means that canadians should not have to worry about the effects of inflation when they make everyday decisions as | . in fact, these trends are all the more noteworthy in that they are happening against a backdrop of persistent and strong headwinds in the global economy. the progress in the economic front is the outcome of prudent and disciplined monetary and fiscal policymaking. and these conditions are sustainable because of strong and wellgrounded policy frameworks in place. these include : 1. the government is committed to sound fiscal policy. the government is appropriately focused on strengthening the quality of fiscal adjustments. it has increased spending for critical social priorities and economic infrastructures while keeping a watchful eye on the medium - term objective of fiscal consolidation. 2. the government continues to pursue a reform agenda that is aimed at raising the economy β s flexibility and unlocking the country β s growth potential. 3. a forward - looking monetary policy framework that has helped strengthen our commitment to non - inflationary economic growth. we have met our inflation target for the past consecutive four years ( 2009 β 2012 ), even as the economy β s engines have powered ahead ; 4. an enhanced policy toolkit that is geared to respond to the challenges brought about by strong capital inflows ; 5. finally, supervisory and regulatory practices that are benchmarked against international best practices. this is reflected in well - capitalized and better - governed banks that are able to efficiently perform financial intermediation and risk management. there are therefore fundamental reasons to believe that continued macroeconomic discipline and reforms can push the growth trajectory further to a path that will allow the economy to not only survive the global headwinds but to adapt and to thrive in a more challenging operating environment. as we are aware of the headway that has been made, we are equally mindful of the challenges and the risks to the favorable economic outlook. i can assure you that there are a lot of β responsible adults β in the room. these are policymakers who are attentive to the overt as well as the underappreciated risks to the philippine growth story. what are the challenges? what are the latent pressure points in the economy? let me cite three major ones, from the bsp β s standpoint : 1. managing capital flow surges β an issue repeatedly mentioned this morning 2. ensuring financial stability 3. going the distance with structural reforms in this challenging period of very strong capital flows and expectations of continuing strong capital flows, or as one economist has called it the whipsaw of huge capital movements, the question is β do | 0 |
continue to evolve and present new challenges. for singapore's capital markets to capitalize on fresh opportunities, we must all, as regulators, as market participants and as an industry body, do our utmost to keep up with changes. i hope we can work in close partnership to break new grounds for the industry here. i believe there are 3 fundamental factors that will enable our capital markets to stay ahead. firstly, a high standard of industry practice, enabled by high industry standards, and a strong, responsive supervisory framework. secondly, a strong pool of market participants with deep expertise. thirdly, a good network among the players and regulators to promote collaboration and the introduction of new products ; as well as to promote singapore as the choice location for capital raising and trading. all these are to be done without of course undermining competition or investors'interests. i believe siba can play key roles in each of these areas. allow me to elaborate. 1 / 3 high standards to maintain confidence a fundamental building block of a good capital market is trust and integrity. investors must have confidence that the market is clean, transparent, and provides fair dealing for all participants. they demand a high standard of corporate governance, timely disclosures, and compliance with regulations. hence, mas, as well as other relevant agencies like the accounting and corporate regulatory authority and the singapore exchange, have actively worked on various initiatives to enhance disclosure, strengthen market discipline and improve corporate governance of listed companies. these efforts included the code of corporate governance, revisions to the sgx listing rules, as well as the introduction of the new civil penalty regime under the securities and futures act that provides an alternative enforcement mechanism. in september 2005, mas released the guidelines on corporate governance to provide guidance on the best practices for financial institutions on corporate governance. for banks, and direct life insurance companies above a certain size, requirements that mas considers essential for sound corporate governance are now embedded in directives for compliance. in response to the growing interest in islamic finance, we also amended our regulations to facilitate the growth of specific segments of the market. these changes will enable financial institutions to use singapore as a base to reach out to clients and investors beyond the region, especially in the middle east. clear regulatory treatment and tax rules can help to catalyse the development of markets. the rapid development of real estate investment trust, or reits, is a good example. since the launch of the first reit in july 2002, this segment has developed rapidly. today, the | total market capitalization of reits is close to s $ 12 billion, making singapore the second largest reit market in asia, after japan. singapore is now a preferred location for property owners to structure their reits. to further strengthen our regulatory framework for reits, so that this market segment can maintain its high reputation and grow in a sustained way, we have recently embarked on a consultation exercise to review the property fund guidelines governing reits. we expect to announce the results of our review soon, which will provide greater clarity on how we will be strengthening the reits regime to promote better governance of reits and further facilitate the growth of the industry. as market players, siba members understand commercial realities and market practices well. siba therefore plays a very important role in complementing mas to ensure that high standards and best practices are upheld in the market. i am therefore very glad that siba has taken this role seriously. in aug 2004, siba released the due diligence guidelines, which set out the basic principles on due diligence to be performed by issuer managers for initial public offerings. the guidelines raise the professional standards of issue managers, and help maintain investors'confidence in the quality of the issue. mas endorses these guidelines as a valuable guide to issue managers and underwriters on the level of due diligence expected of them as professional advisers and in meeting their obligations under the securities and futures act and sgx listing manual. mas appreciates that siba is now currently working to release a code of best practices on debt issuance. this code will serve as guidance on debt issuance. i believe this will enable issue managers to discharge their mandates better, and to address potential concerns of investors. such a code will be beneficial to issuers and issue managers, as well as to investors. developing deep expertise the second key factor in developing our market is expertise. investment banking is a knowledge - intensive, innovation - driven industry. a deep pool of highly trained and committed professionals is critical to enable the industry to thrive. the nurturing of these professionals should start from academic education, where knowledge and theories of investment banking could be imparted. this provides the foundation, to allow professionals to deepen knowledge and skills through on - the - job training and professional upgrading courses that focus on commercial issues and execution skills. with the experience and expertise among its members, siba is well - positioned to spearhead efforts to develop the pool of investment banking professionals in singapore | 1 |
sharply. the banking sector, however, has been resilient given the low direct exposure to the toxic assets, the low reliance on global liquidity as a source of funding, and the strong capital base. the fact that the thai banking sector remains safe and sound is no accident. it is largely the result of continuing improvement in risk management capacity of the banking sector following the asian financial crisis, under a stronger regulatory framework and risk - based supervision. compared to some countries at this time, the banking sector in thailand is functioning normally, with the financial markets remaining relatively stable despite greater volatility and uncertainty in the global economy. at the bank of thailand, we are optimistic that policy efforts at the global level will be successful in stabilizing the financial markets and in providing a comprehensive solution to the current crisis. nevertheless, our view is that the adjustment that follows, and hence the process of global recovery, will probably take time. more importantly, in the thai context, given the global nature of the crisis, and the fact that our economy has been affected mainly through contagion, it will be difficult for an economy like thailand to achieve a sustained recovery on our own, if the global economy does not recover. therefore, in the context of policy, the focus of policy response in thailand should be on helping the economy and the private sector to adjust to the impact of the crisis, while ensuring that the key economic institutions and systems 6 most importantly the banking sector 6 continue to function normally, so that the economy will be in a position to move forward quickly once the crisis storm passes. it is in this context that the bank of thailand has been shaping our response to the current economic downturn. the response so far includes an aggressive easing of monetary policy, ensuring adequate liquidity to the financial markets and the banking sector, helping banks to better manage the increased risk in lending by introducing a government - sponsored credit guarantee scheme for smes, and encouraging banks to act early in assisting customers with debt rescheduling or debt restructuring so as to ward off the pressure on asset quality and on the non - performing loans. these are the direction and the measures we have taken in our response to the crisis, and more will be done if needed to ensure a smooth adjustment in the economy and the financial sector. judging from what we are seeing in terms of the recent broad global developments, i am confident that the combined effects of the fiscal stimulus by the government and the financial measures that the bank of thailand has | engaged in the review of such regulation and supervision. reflecting the globalization of finance, there is a growing tendency for the broad framework of financial regulation and supervision to be determined in international discussions. the bank, together with the financial services agency ( fsa ), has been taking part in discussions on financial regulatory and supervisory reform at various international forums such as the basel committee on banking supervision and the financial stability board, and i myself have been attending many of those forums. given that a robust global financial system is in the common interest of all countries, i believe it is critical for each country to contribute to the construction of internationally consistent rules and to establish a regulatory and supervisory framework that properly reflects differences between countries, such as in their financial structure. the bank will continue to make contributions in these areas. when comparing systems to ensure financial system stability immediately before the recent crisis from a central bank β s point of view, countries can be divided into two groups. in one, which includes the united states, italy, the netherlands, and many asian countries, regulation and supervision was carried out by the central bank, either alone or in cooperation with other authorities. in the other group, which includes the united kingdom and australia, the central bank was not involved in regulation and supervision. japan could be regarded as falling in between these two groups : the bank of japan does not have regulatory authority over financial institutions, but, as mentioned earlier, based on provisions in the bank of japan act, it conducts on - site examinations of financial institutions and provides various kinds of advice and guidance when the need arises. financial regulatory and supervisory systems around the world have been decided upon reflecting differences in countries β financial structure, stage of economic development, and historical background, and thus there is no uniform set - up that is correct for all countries. be that as it may, the recent crisis has shown clearly that it is indispensable for central banks to be involved in one form or another in ensuring the stability of the financial system and that central banks should play a significant role in the area of macroprudential supervision. here in japan, we have a system where the fsa, which is in charge of financial administration dealing with regulation and supervision, and the bank of japan, which is the central bank, cooperate with each other and each fulfills its respective functions to ensure the stability of the financial system. while it seems fair to say that japan β s financial system has remained relatively stable compared with those of the united states and europe | 0 |
achievements. notwithstanding this the recent dismal growth performance and the vulnerabilities referred to earlier mask layers of bis central bankers β speeches deep - rooted structural problems that manifest themselves in high levels of unemployment and massive inequalities. these in turn are caused by weak competitiveness, a poor skills profile and an educational system that, in parts, is dysfunctional, low domestic savings, low investment, uncompetitive product and labour markets and spatial distortions. south africa β s response should be focused on three strands. firstly, as a country, we require clear actions to stabilise the labour relations environment. secondly, the country has to take steps to address some of the areas of short term vulnerability. thirdly, a clear programme of reform is required to boost medium to longer term growth. much more important than the precise elements of a strategy is for government to be decisive, act coherently and exhibit strong and focused leadership from the top. there is clear recognition that south africa faces significant challenges ; what is required is decisive leadership from all role players that consistently demonstrates a coordinated plan of action to address them. this will go a long way to restoring confidence, credibility and trust. the bank will continue to focus on its expanded mandate and stands ready to play its part in such a coordinated national effort. thank you. bis central bankers β speeches | ##balances led to low interest rates and excessive leverage, contributing to high consumption expenditure and asset price bubbles. this view suggests that the financial cycle is at the core of understanding the macroeconomy, and that because the financial cycle has a lower frequency than the business cycle, a focus on inflation and the business cycle results in too short a time horizon for monetary policy. monetary policy should explicitly take financial stability issues into consideration, either as a secondary objective or as an objective with an equal footing. this implies that the policy interest rates should be part of the macroprudential tool - kit and is likely to result in tighter monetary policy in a low inflation environment when asset prices are seen to be rising. it also creates the possibility of conflict between monetary and macroprudential policy. bis central bankers β speeches the alternative view, and one that appears to be evolving into the current β wisdom β or β best practice β, is that the crisis did not represent a failure of monetary policy, but rather a failure of regulation, both at the micro and macroprudential levels. furthermore, the interest rate is a blunt instrument to deal with financial crises, and the collateral damage of excessively high interest rates could be quite high. according to this view, monetary policy and macroprudential policies have different objectives and therefore require different tools and different committees. under such circumstances, there are possibly fewer implications for monetary policy, but clearly coordination will be required, and the potential for conflict between the two still exists. but this is true of conflicts between monetary policy and other policies such as fiscal policy. this approach does not necessarily imply that macroprudential policy should be conducted by the central bank. however, having monetary policy and macroprudential policy under one roof, ( and indeed microprudential policy ), facilitates coordination, but implies more responsibilities for the central bank. the approach that we have adopted in south africa is in line with this second approach. in terms of the twin peaks regulatory architecture, the responsibility for financial stability and macroprudential policy has been given explicitly to the bank. at present, this function is undertaken by the bank β s financial stability committee ( fsc ) which includes all members of the monetary policy committee. it is envisaged that once legislation has been enacted, the current fsc will be replaced by a financial stability oversight committee ( fsoc ) which will have both coordination and policy formulation responsibility with regards to financial stability and the implementation of macropr | 1 |
housing investment as a percentage of gdp. however, even here prices and wages comprise a problem for the industry. the preliminary results show that construction workers received wage increases in excess of 5 per cent last year, while productivity only amounted to 1. 4 per cent and unemployment among construction workers was almost 10 per cent. unemployment in the construction industry varies geographically, however, with a rate of under 3 per cent in stockholm and over 19 per cent in, for instance, the gavleborg and norrbotten regions. relative productivity in the construction sector appears to be declining. the gap between the percentage employed and the percentage of gdp is increasing. this means that every person employed in the construction industry is providing a declining contribution to gdp, in relative terms. during most of the 1990s this difference increased, but it has recovered somewhat in recent years. this can perhaps be partly explained by the fact that there is still a large manual element that it is neither desirable nor possible to eliminate. at the same time, it is probable that the entire industry has a lower degree of rationalisation than other industries. this is also visible in the development of prices for both construction services and building materials, which is far above other industrial products, despite a relatively weak demand ( oh 3 development of prices for building materials ). there is something unhealthy in an industry where wages and prices rise despite a relatively weak demand and lingering unemployment in the industry as a whole. let me conclude by saying that a recover in the swedish economy is under way and that the swedish economy has a good foundation on which to build, with a surplus in both our public finances and in sweden β s international trade. inflation is hopefully on the way down. at the same time, wage formation and pricing behaviour in general comprise an element of uncertainty as economic activity begins to pick up. personally, i consider that this indicates a possibility that further interest rate hikes will be necessary in future. however, the next monetary policy step depends, as always, on what happens and the analyses we make. there is always uncertainty and we have now tightened up monetary policy by 0. 5 percentage points. outcome and forecasts of und1x made at different points in time 4. 0 3. 5 4. 0 ir 02 : 1 ir 01 : 4 ir 01 : 3 ir 01 : 2 ir 01 : 1 ir 00 : 4 ir 00 : 3 ir 00 : 2 ir 00 : 1 utfall 3. 5 3. 0 3. 0 2 | produce a large number of payments than a small number of payments due to the benefits provided by economies of scale. however, it takes some time before a new system can reap these benefits. the costs for building, manning and maintaining such a technical system are rather high and it is only when the system is in place that costs begin to fall. then the cost of processing an additional payment is almost zero. the average cost of making a payment thus falls as the number of payments increases. the price per transaction that the producer can charge without running at a loss is therefore low. already established payment services that handle large volumes of payments therefore have a cost advantage. the larger the volume the established service has, the greater is its advantage. the situation for a new service is exactly the opposite. at least initially, a new service will have a small number of payments to distribute the fixed costs between. in order not to price itself out of the market, the new service will have to run at a loss until it has achieved a sufficiently high volume. a new service thus has a significant cost disadvantage compared with an established service. second, a new system has to compete against the so - called network effects. the classic example of a network effect is telephony. being the first person to have a telephone offers no advantages. if two people have telephones they can at least call each other, which has a value. for every new telephone owner that is linked to the telephone network the benefit of having a telephone to those who are already connected increases as the number of people that can be reached has now increased. this reasoning about telephony can easily be applied to payment services where everyone wants to be able to send payments to and receive payment from everyone else, for example a service for payments between private individuals ( p2p ). the reasoning becomes more complicated when we talk about payments from consumers to companies ( p2b ). payment service markets with two distinct sets of customers for payment services and payment flows in only one direction are usually called two - sided markets. the market for point - of - sale payments ( pos ) is one such two - sided market. the payments on this market go from the private customer to the company and not the other way. the card market is only attractive to merchants if there are a sufficiently large number of consumers with cards. similarly, it is only attractive for consumers to have cards if it is possible to use bis central bankers β speeches them in a sufficiently large number | 0.5 |
v leeladhar : emerging realities in banking and finance - role of new generation managers address by mr v leeladhar, deputy governor of the reserve bank of india, to the students of post graduate programme in banking and finance, national institute for bank management, pune, 3 april 2005. * * * it is indeed a pleasure to be here in your midst today. to be amongst bright young students is not only energizing but also a learning experience - as we look at issues afresh and start by asking basic questions, which at some level are the most difficult. the reserve bank has shared a very special relationship with the nibm - it catalyzed its creation in 1969, provided the venue for its first campus and has been intimately associated with its functioning. while the institute has been a part of the capacity building exercise for the banking sector for over three decades, the pgpbf programme in banking is an endeavour of the nibm to β catch them young β and create the bankers of tomorrow - a set of new generation managers for a new generation of banks. building up an organizational architecture that generates intellectual capital has been a huge challenge for banks and financial institutions. it is even more so today, when we are undergoing a period of the most rapid acceleration of what is alluded to as β creative destruction β in the history of the financial sector. in the process of creative destruction, new constructs emerge. it is here that β new generation β managers may have a role more demanding than that of the managers of yesteryears. a role which calls for more than just β probity and prudence β which characterized the banker of yesteryears and increasingly focuses on managing β competing imperatives β. what do we mean by a new generation? how is the new generation different from the old? what has changed and is changing? and does it matter? in the context of time measurement, a generation refers commonly to a period of about 23 to 30 years, in which most humans become adults and have children. in another sense, the term generation refers to a common identity arising from common experience. thus the identity of β new generation β managers would arise from the common experience of a changing world around us, a product of the wider historical context. for a better insight into this we take a long view of the indian banking. while historians can slice the past into countless slices, in terms of transformational change, there have been only a few inflexion points in post - | in return - on - equity strategy for years ahead and strategic plans may be required to execute this kind of approach. the trend from physical to virtual distribution perhaps the most visible and overt change in banking in the eyes of the public has been the trend for banks to move away from branch banking to electronic, anywhere - anytime distribution of financial services. if this has triggered the β death of distance β, the real time gross settlements ( rtgs ) system is threatening to consign time lags in settlement of financial transactions to history. in reality, delivery systems like atms, on - line banking and β phone banking are a continuum of options from which the consumer selects. consumers select the delivery system that is right for them. in other words, distribution differentiates a bank when it sets up a delivery system that attracts certain customers. distribution is the new way to segment consumer markets and the transition of distribution systems is in fact emerging as an essential part of bank repositioning strategy. the trend from fragmentation to consolidation the forces of change today are favouring larger entities which bring mergers and acquisitions squarely into the strategic decision making of the banking sector. we are slowly moving from a regime of β a large number of small banks β to β a small number of large banks β. every bank will of course, depending on its strategy, have to migrate to its best position in this new structure. picking a market position and transitioning to it is one of the most significant strategic decisions a bank must make. all types of entities can be highly profitable if they transition to the right market position and right cost structure to execute the strategy. the trend from data to information to knowledge perhaps the most talked about, yet least understood, transition ahead is in the area of information technology and information application. distribution and processing technology transitions are keys to the shift to virtual banking which is prompted by the desire to have low cost operations. but technology - driven information transformation is at the center of the even more important management, marketing, and risk transitions that banks must make. information is only valuable if it can be put to work and used for decision tools such as programmed trading, target marketing, predictive credit modeling and scoring, amongst others. most new financial services are in fact based on technology creating ways to do them. the transition from an old world of data processing and information management to a new world in which knowledge is being put to work on competitive advantage will be a major strategic preoccupation in the years ahead. | 1 |
ben s bernanke : brief remarks speech by mr ben s bernanke, chairman of the board of governors of the federal reserve system, at the united states - mexico chamber of commerce annual gala, washington dc, 12 may 2011. * * * good evening. i am very pleased to join the united states - mexico chamber of commerce at this gala dinner as its members look back on another year of working to build the mutually beneficial trade and investment relationship between our two countries. the ties between mexico and the united states, both economic and cultural, are close and enduring β in no small part, i am sure, because of the nearly 40 years of effort by the chamber. thus, i am especially honored to join agustin carstens, the distinguished governor of the bank of mexico, in receiving your good neighbor award. thank you very much. muchisimas gracias. i have benefited from many years of contact and shared experiences with agustin and his colleagues at the central bank of mexico. some years ago, i had the opportunity to visit the bank of mexico. as an economist, i found the visit very stimulating. but i must confess that i enjoyed the trip as much for the cultural excursions as for the economics. i remember in particular the beauty of diego rivera β s monumental mural in the national palace in mexico city. as with so many things, i credit my wife, anna, who has a graduate degree in latin american literature, for my greater - than - average appreciation for the arts of mexico and the other latin american nations. perhaps agustin might also credit his spouse, the writer catherine mansell carstens, for an appreciation of culture that encompasses both of our nations. i met agustin not long after i came to washington to serve on the federal reserve board. he was then a highly regarded deputy managing director of the international monetary fund. in late 2006, not long after i became chairman, he became finance minister of mexico, and last year he succeeded guillermo ortiz as governor of the bank of mexico. we have had many opportunities to meet and share views about the u. s., mexican, and global economies. my appreciation for his wisdom and insight as an economist and policymaker has grown with each encounter. our productive and, i hope, mutually beneficial relationship reflects the close relationship of the united states and mexico. our countries are tightly linked through trade. the united states is by far mexico β s largest trading partner, accounting for about two - thirds of total mexican merchandise trade. | feasible and prudent, as an alternative to foreclosure. in some cases, temporary adjustments to payments may not be sufficient, and more - permanent reductions in interest rates or an extension of the loan term may be required to help a borrower. in some situations, lenders and servicers may want to consider using principal writedowns as a way to reduce re - default risk or to facilitate a refinancing. the federal reserve's outreach efforts inform its policymaking. we recently hosted focus groups to evaluate regulatory proposals on credit disclosures and held a series of informative hearings on the home ownership and equity protection act ( hoepa ) regulations. the board then issued a regulatory proposal under hoepa that called for stricter regulations to prohibit unfair and deceptive practices in the mortgage market. by targeting protections to borrowers who face the most risk of experiencing unfair or deceptive practices, the proposal seeks to protect consumers and preserve consumer choice in mortgage products. we have also sought to provide lenders with clear standards that, without being overly prescriptive, preserve access to responsible credit for qualified borrowers. the proposal covers the entire subprime market, not just lenders supervised by the federal banking agencies, and focuses attention on the areas of greatest risk β while preserving consumers'access to responsible credit. the proposal addresses the extension of credit without consideration of a borrower's liz laderman ( march 2008 ), " the efficacy of mortgage loan workouts, " unpublished, federal reserve bank of san francisco. ability to repay, verification of income and assets relied upon to make a loan, prepayment penalties, and escrow accounts for taxes and insurance. the comment period ended on april 8, and we are currently reviewing the more than 4, 000 comment letters received. legislative initiatives that would allow the federal housing administration to increase its scale to reach a wider range of borrowers and develop appropriate underwriting and pricing methodologies to deal with any increased risk and another that would strengthen the oversight of fannie mae and freddie mac are important compliments to our regulatory efforts to strengthen the housing markets. another major outreach effort involves gathering information on the best practices for addressing community development issues and then disseminating that information through publications, meetings, and forums. since january 2007, community affairs offices across the federal reserve system have sponsored or cosponsored more than 75 events related to foreclosures, reaching more than 5, 800 lenders, counselors, | 0.5 |
peter praet : interview in handelsblatt interview with mr peter praet, member of the executive board of the european central bank, in handelsblatt, conducted by mr rolf benders, ms dorit heΓ and mr jens munchrath on 8 july 2013, published on 12 july 2013. * * * mr praet, despite all the help provided by the ecb, half the continent is deep in recession, the governments of europe are scarcely in a position to push reforms through and even the german economy is showing weaknesses. what else can the ecb do to save the euro? there are limits to monetary policy. but it is true that the recession in europe has not yet been overcome. we expect a slight improvement in the second half of the year. but we still see downside risks. to put the recovery on a solid footing the countries must significantly increase their efforts as regards structural reforms. what risks do you mean? in china certain risks are emerging, because growth is too credit - driven. that β s having consequences now. on the other hand, economic conditions have been improving in the united states. so it β s unclear whether foreign demand for european goods will rise or fall. the uncertainties in the economic analysis were β with the results of the monetary analysis β the main elements of our discussion at the last meeting of the governing council of the ecb. were you in favour of a rate cut? what happens is that i, as chief economist, present the macroeconomic and monetary data at the beginning of a governing council meeting and make proposals for decisions. then the discussion starts β it β s not all black and white β and at the end, after all arguments have been exchanged, a consensus is formed. what were the arguments for a key rate cut? in our discussions the first task is always to arrive at a common assessment of the situation. we were in agreement as far as the outlook for price stability was concerned, including the development of the economy and the fact that lending to companies has deteriorated β and that there are signs of a further deterioration. in addition we have noticed that, without monetary policy action from our side, long - term interest rates have risen. afterwards we discuss what decisions we should take in response to the situation. here, there was a discussion about rate cuts. but at the end we agreed on the decisions that you know. instead of cutting rates you have now committed to keeping rates low β for an extended period | national accounts indeed have a hard time taking into account improvements in product quality and product entry or exit. as a result, they tend to overestimate inflation and underestimate output. for instance, there is currently an issue with it hardware, as output of these products is inadequately recognised, even in the us. but the growing share of digital computing technologies in economic activity raises new specific challenges, both on a conceptual and practical level [ slide 4 ]. let me take the example of travel services. on a conceptual level, digitalization is blurring the frontier between the market and informal economy, and leading to the development of β c to c β services ; for example, many of us now directly buy our holidays on - line. this disintermediation of services has been accompanied by a significant improvement in their quantity and quality. yet, travel services are now in large part β home production β, and the measured market value added of travel agency services is declining. on a practical level, with the rise of digitalization, new kinds of services can be imported, notably through e - trade, and the location of activities is less easy to determine. moreover, the fact that 1 / 3 bis central bankers'speeches these services are not standardized and evolve quickly makes it more difficult to estimate the deflator for service output in national accounting. the concern over output mismeasurement is therefore serious. yet mismeasurement alone cannot explain all of the slowdown, as it did not suddenly appear in the mid - 2000s. 2. is it also a demand phenomenon? i am very much inclined to say it is. negative demand shocks are particularly pernicious when interest rates are already low, as there is limited room to spur demand by cutting interest rates. in central banking jargon, we say that short - term interest rates cannot be reduced to the β natural rate β, which is the level where demand equates to potential output and inflation is stabilized. faced with these constraints, major central banks have implemented an array of non - conventional measures, including forward guidance and qe, in order to help stimulate demand by lowering long - term interest rates further. so why is demand proving so slow to pick up in spite of these highly stimulatory measures? [ slide 5 ] wage - setting mechanisms are likely to play a role. insufficient attention has been given to this, due to differences between countries and the fact that it is a micro - level issue. | 0 |
policy stance, especially if sustained over a prolonged period of time, can effectively be countered by targeted micro - and macroprudential measures. conversely, situations that require a tighter monetary policy stance, but for which a more nuanced effect on the real economy is desired, may call for a simultaneous relaxation of prudential measures that perk up economic activity via easier lending conditions, provided the health and stability of the financial system remain within safe margins. 8 lastly, although generally operating over a longer - term horizon, structural reform should also be a strategic part of policy coordination in emerging market economies. by providing incentives to improve the overall functioning of domestic input and product markets, increasing their competitiveness and strengthening the institutions within which they operate, policies that overhaul structural aspects of the economy foster efficiency gains that increase its productive potential. thus, a successful implementation of structural reform can ultimately result in strengthened buffers in other areas of policy as, for instance, an expanding productive capacity may offset the potentially adverse impact of restrictive fiscal and monetary policies on economic activity ; increased competition and efficiency resulting from structural reform alleviate inflationary pressures ; and possibly higher fiscal revenues in a context of faster economic growth, both see garcia - cicco, javier, markus kirchner, julio carrillo, diego rodriguez, fernando perez, rocio gondo, carlos montoro and roberto chang ( 2017 ) : β financial and real shocks and the effectiveness of monetary and macroprudential policies in latin american countries β, bis working paper no. 668, october. actual and potential, reduce the level of public debt relative to the economy β s gdp. naturally, the implementation of structural adjustment policies faces a number of challenges and some resistance is likely to arise, mostly as a result of the redistributive effects, both across time and across sectors, inherently imbedded in them. thus, it will frequently be important to place actions in this realm within the context of a broader - ranging plan that contemplates countering, and coordinated, measures in other fronts. for instance, fiscal and monetary easing may reduce the short - term output costs associated to the economy β s process of adjustment in the aftermath of structural reform, while the enhancement of the social safety net and the enactment of other targeted programs may alleviate the costs of transition. let me turn now to mexico β s experience regarding the role of policy efforts in the above - mentioned areas in overcoming the macroeconomic challenges faced in recent years. inflationary pressures in | the system and institutions more resilient. however, their use is hardly a guarantee of precluding future financial crises. in designing macroprudential tools, rules are preferable to discretion, as they can be more easily formulated to generate the right incentives for making the financial system more stable. it is key to remain on the alert for possible unintended consequences in the form of distortions and inefficient resource allocation, and long - term risks of factors that may inhibit the development of the system. until now, the prudential policies implemented in mexico have worked well, but we need to continue strengthening financial regulation and the macroeconomic framework so that incentives lead to a deeper, more efficient, and stable financial system. see bank for international settlements ( 2013 ), triennial central bank survey of foreign exchange and derivatives market activity in 2013, april. bis central bankers β speeches | 0.5 |
making a survey of access to cash services in different parts of the country. the continued dialogue with the banks will show whether the riksbank needs to take any further measures. starting from 2015, we will carry out extensive information campaigns aimed at both market participants and the general public. the effects of more electronic payments the challenges regarding electronic payments are essentially very different. the challenges i have mentioned include shortfalls in capacity on the telecommunications network, accessibility and user problems for some vulnerable groups and possible fragmentation of some segments of the market. but there are other challenges, too. common to these is that the riksbank does not have any formal tools to manage the problems. often the primary responsibility for these areas lies with another authority and often there are many different parties involved who need to cooperate to resolve the problems. for instance, the county administrative boards and the swedish post and telecom authority have the task of ensuring bis central bankers β speeches that everyone has access to basic payment services. finansinspektionen ( the swedish financial supervisory authority ) has responsibility for financial supervision. the swedish competition authority is responsible for ensuring there is suitable competition on the payments market, and so on. the banks, other providers of payment services and the retail trade are on different sides of the market, but their participation is often a decisive factor for bringing about a change. the riksbank is inviting to a new retail payments council i believe that the riksbank is well - positioned to take part in managing the challenges arising from a changing payments market. but as i mentioned earlier, successful management depends on the various market participants talking to one another and working together. at present, there is no suitable forum for these discussions. the riksbank, which is a centrallylocated and independent participant, can contribute by creating a forum where stakeholders can discuss and try to resolve problems on the market. this is why the riksbank sent out an invitation to take part in a new retail payments council last week. the idea is to bring together public authorities and market participants from both the supply and demand sides of the market. the council will not make decisions, but will act as a discussion forum that will identify and analyse problems and shortcomings on the market and propose possible ways of counteracting and resolving them. the council can thus become a joint resource for all of the parties involved. examples of questions that may be discussed include how to improve the situation for vulnerable groups, how to remove obstacles to competition or to improve | the amount and signed it and showed your id. this was not as simple and easy as the chip and pin code in today β s card terminals. thirdly, payment services must be accessible to households and accepted by companies and public authorities. accessibility means it is easy to get hold of cash when you need it, that it is not too expensive or complicated to acquire a card or online banking services or that the mobile network has good cover if i want to use mobile payment or banking services. the same reasoning also applies, of course, to the recipient of a payment. willingness to accept various types of payment may be undermined by factors such as technical problems, high costs and difficulty in depositing daily takings. accessibility is also closely linked to uniform payments standards. the methods of payment should be predictable and this is the case if by hijacking a card, we mean skimming and similar activities where the card data is secretly scanned and then used for fraudulent purposes. bis central bankers β speeches we all agree on how payments will be made. the more of us that are in agreement the better, as we can then make use of the network effects and economies of scale that are inherent in the mediation of payments. for instance, this type of unanimity means we can be fairly certain that it is possible to pay by card or in cash at the nearest shop. the reason for a positive attitude towards innovation and development is that they enable us to have safe, efficient and accessible payment services. i believe we can all agree that it is easier to use banknotes and coins today than it was a couple of hundred years ago, and that it is easier, quicker and safer to use chips and pin codes than paper slips for card payments. cards are in turn preferable to cheques. what about the swedish payments market? does it give us payment services that are uniform, safe, efficient and accessible? the transformation of the swedish retail payments market as the market changes rapidly through technological advances and through the establishment of new operators, it is important that the riksbank follows and analyses the swedish retail payments market. the results i am about to describe come from a telephone interview survey about households β payment behaviour that the riksbank regularly carries out. high accessibility and high level of confidence if we look at the most common payment services we use when we pay at points of sale, 96 % of the respondents said that they had access to cash, and almost 99 % said they had access to a bank or | 1 |
ΓΈystein olsen : the conduct of monetary policy introductory statement by mr ΓΈystein 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, 19 may 2020. * * * accompanying slides of the speech. please note that the text below may differ from the actual presentation. when i appeared at the hearing before this committee this time last year, the norwegian economy was growing at a solid pace and the policy rate was on the rise. the policy rate was raised three times in 2019, from 0. 75 percent to 1. 50 percent. there was no longer any need for low interest rates to support economic activity. after several years of solid economic growth and falling unemployment, capacity utilisation was assessed to be somewhat above a normal level in 2019. inflation was close to the 2 percent target. gdp growth slowed through autumn, and towards the end of 2019 the norwegian economy was assessed to be close to the peak of the business cycle. there were prospects that the policy rate would remain close to 1. 50 percent ahead, inflation would continue to be close to the inflation target and unemployment would remain low. we envisaged that growth would slow in the years ahead, partly as a result of weaker prospects for petroleum investment. none of us at that time could have foreseen that a virus would change the picture completely and lead the norwegian and the global economy into a deep decline. chart : a historically deep decline the economic outlook has changed dramatically in a short period of time. activity in the norwegian economy has fallen abruptly owing to the coronavirus pandemic. the virus outbreak and the extensive measures taken to contain it have led to production halts and lower activity across a range of businesses. unemployment has risen to very high levels. mainland gdp is projected to fall by around 5 percent in 2020. we have not seen a contraction like this since the war years. chart : an abrupt and deep decline in the global economy the countries around us have also been severely affected. measures taken to contain the spread of the virus, combined with changes in behaviour and uncertainty about developments ahead, have resulted in substantial declines in output across economies. in early march, we expected moderate economic growth among trading partners. now a deep decline appears likely this year followed by a gradual rebound. the subsequent path of developments is, however, highly uncertain. the authorities in many countries have implemented powerful fiscal policy measures | bonds. this contributes to keeping us long - term interest rates at a low level, which in turn have a considerable impact on developments in long - term interest rates in other parts of the world. in addition to these conditions, new accounting and solvency rules are being introduced in many countries. the new rules provide pension funds in particular with incentives to lengthen asset maturities, improving the balance between asset and debt maturities. increased demand for long - term bonds push up bond prices and push down yields. normally, an investor will, on an expectations basis, be compensated in the form of a positive term premium for holding long - term bonds instead of rolling over short - term bonds. various conditions though the literature is vast, see for example ahrend, r., p. catte and r. price ( 2006 ) β factors behind low long - term interest rates β, working papers 490, oecd, www. oecd. org, imf ( 2005 ) β global imbalances : a saving and investment perspective β, world economic outlook september 2005, www. imf. org, imf ( 2006 ) β awash with cash : why are corporate savings so high? β, world economic outlook april 2006, www. imf. org, and rajan, r. g. ( 2006 ) β is there a global shortage of fixed assets? β, remarks 1. december, www. imf. org relating to saving and investment patterns in the world economy and new accounting and solvency rules may have led to a marked fall in term premia in recent years. in some markets, they can even be negative. the level of long - term interest rates is frequently used as an indicator of the normal interest rate level. if low long - term interest rates are caused by extraordinary conditions and not expectations of low growth and low inflation, long - term market interest rates may underestimate the normal interest rate level. when preparing an interest rate forecast, we must have a view of what the normal interest rate level is. in order to produce a forecast that reflects a reasonable trade - off in monetary policy, we have also drawn up a set of guidelines, which are presented in the inflation report. the criteria cannot provide an absolutely precise guide as to how the interest rate should be set, but points to factors we should have considered and assessed. the central trade - off is between inflation prospects and the prospects for capacity utilisation in the economy, expressed in | 0.5 |
should move from the fourfold maximum to the twofold on the legislative level. as for illegal lenders, this problem needs a legislative solution, among other things. the accountability of illegal lenders is currently not very serious, so to say. moreover, ironically enough, the illegal lender can recover the debt in court. we believe it to be important to deprive agreements with illegal lenders of relief at law. non - governmental pension funds. we have established a system of pension savings guarantees. now it includes 38 of 91 eligible funds inspected by the bank of russia. many funds had to improve the quality of their assets to enter the system. furthermore, actuarial industry has been launched in compliance with the law ; today we have a bit more than 100 actuaries. they are active and it is an important segment of the financial market established last year. we have almost stamped out unscrupulous depositories which provided bogus excerpts on available securities. we implemented our function of a megaregulator which allowed us to make cross - checks and reveal such situations immediately. we took measures under the project β clean register β. bis central bankers β speeches we have developed and are implementing the road map on electronic communication in the financial market. electronic communication decreases companies β costs and ultimately the price of services for consumers, provides adequate financial inclusion to avoid having dependence on actual branches. new digital technologies quickly transform the financial sector. we have established a special technology and innovation task force at the bank of russia which is to study technological trends in the field of finance, and to timely reveal the areas requiring regulatory and supervisory changes. we seek to avoid hampering the development of new, more efficient and userfriendly technological solutions, but prevent accumulation of risks capable of mitigating consumer right protection. last year we established a centre for cyber - attack monitoring and response in the financial sector ( fincert ), which provides, among other things, methodological assistance in ensuring the highest possible cyber - protection to market participants. we always cooperate with the market in financial technologies and innovations. thereby, in 2015, we held the first forum on innovative financial technologies ; it was in demand with businesses and we are going to hold it again in autumn. we have established an institution of bond programmes. the development of debt instruments is extremely important for our financial market, because it is the best instrument for large companies, while banks should be more focused on lending to small and medium - sized businesses. in | responsive plans. this is a first step for thailand. given the borderless cyber world, collaboration on cyber security among asean countries needs to be enhanced. asean banks have to step up efforts and join hands in setting up processes and tools for sharing cybersecurity incidents, exchange of information and knowledge, conducting cyber attack exercises, and developing cyber security experts. secondly, there has to be sufficient immunity against the boom and bust of financial cycle. we have seen many financial crises over the years. the global financial crisis, whose total magnitude of economic costs are still being tallied is the latest example. as the financial cycle is one of the main drivers of financial instability, taking action to counteract pro - cyclical behaviours and reduce potential systemic risk build - up is necessary. the basel iii framework of pro - cyclical capital buffer and systemically important financial institutions ( sifis ) capital surcharge are among the first initiatives by a global standard setter. having good buffers in place will provide the financial system with an immunity against the large swing of financial cycle and financial volatility, as going forward, the potential of policy normalization in advanced economies and yield snapback could trigger capital reversal and foreign exchange liquidity squeeze in many emerging countries. changes in regulations and a greater emphasis on financial stability by policy makers, however, is only half of the solution. equally important are the roles of commercial bankers who contribute directly to the stability of the financial system. banks need to remain vigilant and look through the cycle while assessing credit risk and building up buffers. buffers such as provisions and capital have to be built - up during good times to absorb any losses during rough times. in short, decisions need to be based more on long - term views rather than short term views. basing decisions on long - term views is an important factor for commercial banks β practices. during periods of low growth and low yield, banks should refrain from unsound search - for - yield behaviours or facilitating aggressive search - for - yield behaviours that could build - up systemic risk and cause financial instability. thirdly, behaviour and culture within financial institutions must gear towards good governance, soundness, and sustainability to pre - empt unwarranted risks. during the last asian and global financial crisis, excessive risk - taking behaviour was one key driver. short - sighted views on risk were embedded in the practice of management and employees. this was defined and reflected in the structure on rewards, | 0 |
: 1. the structural changes that the economy has undergone in the last fifteen years. 2. the macroeconomic policy pursued by the government and the bank of israel before, during, and after the war. 3. the background conditions that affect all of us, i. e., developments in the global economy, and the security situation having said that, the economy is currently facing two important challenges : reducing the government debt, and tackling the problem of poverty. i have spoken in the past, and will speak again in the future, about the solutions to these problems. today, however, as it is my intention to deal with the problems currently facing the banking system, i will end this part of my address by saying that israel β s economic situation is very good, but we must try to ensure that this continues and not rest on our laurels. to you, the bankers, i would like to quote the english saying, β bad loans are made in good times ; β from a macroeconomic standpoint, we are now in good times. the targets facing the new supervisor of banks in the second part of my address i would like to talk about the banking system. the banking system plays a very important role in every economy, and of course, in israel β s economy too. what is important, of course, is that the banking system be stable, competitive, and fair, and that it serve all its customers - households and the business sector - well. first, i would like to thank the outgoing supervisor of banks, yoav lehman, for his 28 years of service to the bank of israel and to israel β s economy, and i would also like to congratulate the new supervisor, rony hizkiyahu, and wish him success in confronting the important challenges facing him within the bank of israel and vis - a - vis the banking system. within the bank of israel the supervisor faces the vital and difficult task of managing a large, complex department. the task is far from a simple one, particularly as it involves a transition to a new system of supervision, i. e., basel ii. the implementation of basel ii constitutes a major objective for the new supervisor and the banks. although we gave high priority to the implementation of the basel ii guidelines by the banking supervision and the banks, insufficient progress has been made so far. i must stress that basel ii is not just a new rule book, but it entails a whole new approach - with the supervision | speak about the need to improve the level of customer service. there are too many justified complaints, and the banks must invest resources to avoid such situations. i would like to clarify the position of the bank of israel on the matter of consumer protection. i am in favor of our involvement in this area, but i would like to place the responsibility where it belongs, and that is with the banks. to clarify my position : the situation should be that a dissatisfied customer first turns to the bank with his complaint, and only then, if he feels the complaint has not been dealt with properly, does he approach the banking supervision department. in a competitive banking system the banks must deal with most complaints against them, with the central bank acting only as the customer β s last resort and not his first port of call. in this context i would like to share with you a conversation i had. i was asked how i am settling down in israel, and if i understand what goes on here. i answered that the hardest thing to understand was my pay slip, but the truth of the matter is that there is something even harder to understand, and that is my bank statement. the last topic i would like to talk about is the cooperation between the various supervisors of the financial system. the supervisors currently cooperate with each other, and it is our intention to institutionalize this cooperation in an mou ( memorandum of understanding ). i view this step as a first stage in closer cooperation between the supervisors and the financial system. finally, the new supervisor faces enough challenges to stop him from being bored. his approach will be one of less detailed regulation, and more regulation according to principles. his success in this depends not only on him, but on responsible and competitive conduct by the banks. thank you. | 1 |
addition, the heavy weighting of the construction sector in the economy is a concern. this risk was highlighted last year in our financial stability report, which looked at the implications of a sudden correction in the construction sector. β’ as i already pointed out, the economy has lost competitiveness in recent years. given the already high price level in ireland and the rising cost base, every effort should be made to avoid a further erosion of competitiveness. an important element in this is to ensure that our productivity performance improves so as to avoid further losses. on the external side, the volatility in energy markets and the possibility of sharp changes in exchange rates arising from global imbalances continue to be the main risks facing the economy. ireland β s dependence on oil remains higher than most developed countries, thereby raising our exposure to movements in oil prices. similarly, with 60 per cent of irish exports going to countries outside of the euro area, the economy is more vulnerable to sharp movements in exchange rates than other euro area members. monetary policy and the euro area economy turning to the international background for the irish economy, developments have been broadly favourable. the global economy continued its robust expansion in 2005, withstanding most of the dampening influence of higher oil prices, and is projected to grow at a broadly similar pace in 2006. closer to home, the euro area recovery has gained momentum, with growth becoming more broadly based and sustained in the first - half of this year. while external trade continues to provide significant impetus to euro area growth, there are now also signs of an improvement in domestic demand. business confidence has strengthened significantly and we have seen a welcome recovery in investment. however, progress remains slow in relation to consumer spending, though there are some signs of improvement. forecasts and projections point to an improved euro area growth outlook for this year and next compared with the past two years, with economic growth of around 2 per cent projected for both 2006 and 2007. turning to euro area price developments, the headline rate of inflation has been above two per cent since the start of the year and is expected to remain above that level into 2007. risks to outlook for price developments remain on the upside and relate to the potential for further increases in oil prices, stronger pass - through into consumer prices than expected or further increases in administered prices or indirect taxes. in addition, risks to the medium to longer - term outlook are also being signalled by strong growth in the money supply. in the light of the various risks to the outlook | john hurley : economic developments in ireland and other issues opening statement by mr john hurley, governor of the central bank and financial services authority of ireland, at the presentation of the annual report 2005, dublin, 12 july 2006. * * * you are all very welcome to this press briefing to mark the publication of the central bank β s annual report for 2005. the annual report describes in detail our activities in 2005, which proved to be another busy year for the central bank, both in terms of our domestic and our euro area responsibilities. i should also mention at the outset that the financial regulator will publish its own annual report later this month, which will detail its activities over the past year, while the central bank will publish our annual financial stability report in the autumn. economic developments let me start by briefly reviewing the main developments in the irish economy over the past year or so. the economy performed well in 2005 with gnp growth of 5. 4 per cent. this was a notable increase on 2004, when the figure was 4 per cent. gdp grew by 4. 7 per cent last year. i understand that the cso will release new national accounts figures tomorrow, which may include revisions to figures for 2005. the strength of the economy was evidenced by another robust performance in the labour market, with an additional 87, 200 persons at work and with the unemployment rate averaging 4. 3 per cent. this labour market performance, coupled with relatively stable economic growth rates over the last few years of about 4Β½ to 5 per cent, indicates that the economy is operating at capacity. the budgetary position has been very sound with general government surpluses each year since 2002, in which year a small deficit was recorded. growth last year was driven by domestic demand, principally by consumption and investment expenditure. the construction sector continued to grow at a very strong rate, with average employment growth of more than 14 per cent. this sector now accounts for approximately 13 per cent of total employment, an exceptionally high ratio by international and historical standards. the strong performance in this sector has been driven primarily by residential house building, with 2005 again characterised by a record number of new house completions. in addition, the home improvements sector also grew strongly. there was also quite marked growth in personal consumption expenditure last year, with a volume increase of 5. 6 per cent, which was the fastest rate of growth since 2000. this was a reflection of the strong employment gains experienced in the economy, rising disposable incomes and relatively favourable financing | 1 |
only in our region, but in the world. nevertheless, we do not allow ourselves to become complacent, as the post - crisis era in which we currently find ourselves, has its own set of challenges that we need to deal with. the title of our 40th anniversary exhibition, β a modern central bank with a focus on financial empowerment β, speaks to the new challenges that we are tackling. while our objective to promote domestic price stability, our vision to become a model central bank and our mission to contribute towards the economic growth and development of seychelles, all remain unchanged, we are keenly aware that we need to constantly evolve to meet public expectati ons and to keep abreast with innovation in the financial sector. it is of utmost importance that as a central bank, we modernize the way we deliver our mandate and ensure that we provide the public with the capacity to understand the newer products and services that are at their disposal, to enable them to make informed decisions. ladies and gentlemen, innovation and the introduction of newer products alone can only take us so far. what has enabled the success of the central bank of seychelles is the hard work, conviction and dedication of its staff. today, we have 200 men and women who work tirelessly around the clock to ensure the stability of our financial sector. i would like to take this opportunity to thank each and every one of these 200 individuals, as well as the former governors and staff members for their contribution to the development and growth of the central bank of seychelles. the display in today β s exhibition is a testament to the achievements of all those who have had the privilege to walk the halls of the central bank building. it also showcases the evolution of the central bank over the past 40 years and indicates of the path that we aim to follow in the coming decades. on this note, i would like to officially declare this exhibition open and invite you all to peruse through the contents and interact with our member s of staff who are on hand to respond to any queries that you may have. thank you. | remarks by ms caroline abel governor of the central bank of seychelles at the opening of the cbs 40 th anniversary exhibition 7 november 2018 venue : international conference centre of seychelles president of the court of appeal principal secretaries board members, management and staff of the central bank of seychelles, distinguished guests ladies and gentlemen good morning. it gives me great pleasure to welcome you all here today, on behalf of the central bank of seychelles, to the opening of this exhibition being held in commemoration of the 40th anniversary of the establishment of a central banking institution in seychelles. the seychelles monetary authority, the precursor to the central bank of seychelles, was established a mere two years after seychelles gained its independence. this was the ultimate act that validated us as a sovereign state, with the ability to issue currency, manage our reserves, inspect banks and financial institutions and perhaps most importantly, set our own monetary policy objectives. fast forward forty years, and we are proud to say that we have achieved a lot in a relatively short space of time. through various technical assistance, capacity building exercises and exchanges with other central banks in the region, the central bank of seychelles has evolved into a well - respec ted institution, both at home and abroad. one notable achievement is that seychelles is the most financially included country in the sadc region, based on a study conducted in 2016. this means that our financial system is on the right path to ensure that all individuals and businesses have access to financial services and products that are affordable and that meets their specific needs. on the flip side of the coin, we face many challenges, some of which emanate from within our organisation, while others are unavoidable consequences of factors on the global market, to which our island economy is acutely susceptible. however, as a central bank, we cannot allow ourselves to fall in the face of these adversities, but rather, we strive to turn those challenges into opportunities for positive change. one of the biggest challenges that we β ve had to face during the four decades of our existence, was the global financial crisis of 2008. our debt - to - gdp ratio was at 151. 3 % in september of that year and our external reserves had depleted to below one month of imports as at october 2008. the country then embarked on a macroeconomic programme with the support of the imf and as the saying goes, the rest is history. in a mere ten years, we have steered clear of that crisis and have become one of the success stories not | 1 |
i often get : why do you have such an unusual name? the answer to this question is that my father was asian indian β and was, more specifically, from the state of andhra pradesh. ( i add that specificity because it matters : my last name is very much identified with that particular state β a state that has roughly one - fourth the population of the united states. ) my father immigrated to the united states in 1960 to attend graduate school in statistics, which is where he met my mother. my mother is of european descent. she grew up in a suburb of pittsburgh, pennsylvania, and her parents were both born in the united states. my parents got married when they were in grad school, and so i was able to attend my father β s ph. d. graduation ceremony. i probably didn β t appreciate the event as much as i should have. in my defense, i was only nine months old. my parents β household was β automatically β a diverse household. it was diverse in terms of food β something that mattered a lot to me as a child. it was diverse in terms of our family and friends. perhaps most importantly, it was diverse in terms of ideas. as a child, i read the lives and words of american heroes like abraham lincoln. but i also read the lives and words of indian heroes like mohandas gandhi. in this way, i learned at a young age that two different cultures can give us at least two different ways to think about a problem. i learned too that both of those different ways can provide valuable insights, even if they seem to be in conflict. perhaps as a consequence, i tend to follow many tracks β almost at once β in my thinking about problems. i have found this multipronged approach to problems helpful in many facets of my life. but it does have the potential to create communication challenges! i can sum up the overall impact of my beginnings in this way. when i was a child, and especially when i was a teen, my parents seemed, well, old - fashioned. i suspect that i was not the first nor the last child or teen to feel that way! but, looking back, i realize that, in many ways, my upbringing in the 1960s and 1970s was surprisingly well - designed for the 21st century that was to come. in particular, our internationally diverse household was ideal preparation for our increasingly diverse country and interconnected world. some final reflections on workplace diversity i β ve talked about two kinds | narayana kocherlakota : reflections on diversity speech by mr narayana kocherlakota, president of the federal reserve bank of minneapolis, at the council on asian pacific minnesotans 2014 asian heritage dinner, st. paul, minnesota, 9 may 2014. * * * thanks to dorothy bridges, duane carter and david fettig for their assistance with these remarks. i would like to thank state senator alice johnson and executive director sia her for the invitation to attend the 2014 asian heritage dinner. i am honored to participate in this prestigious event. my talk tonight will consist of some reflections on diversity. i β ll first talk about the regional diversity that lies at the heart of the federal reserve system. i β ll talk next about my journey to my current position and the role that international diversity played in that journey. finally, i β ll close with some thoughts on the role of workplace diversity. my remarks represent my own views, which are not necessarily those of anyone else in the federal reserve system. the federal reserve system : a regionally diverse central bank i β ll begin by telling you a few things about my organization, the federal reserve system. i will be highlighting the role of regional diversity in the federal reserve β s formulation of economic policy. relative to other central banks around the world, the federal reserve system is highly decentralized. the federal reserve bank of minneapolis is one of 12 regional reserve banks that, along with the board of governors in washington, d. c., make up the federal reserve system. our bank represents the ninth of the 12 federal reserve districts and includes montana, the dakotas, minnesota, northwestern wisconsin and the upper peninsula of michigan. this basic structure has a long history. in fact, this year is the centennial of the opening of the 12 reserve banks and the start of the work undertaken by the federal reserve system. it β s been a fascinating hundred years, with many twists and turns along the way. i β m sure that many of you have questions about that journey. the answers to all of your questions β and probably more β are on a new website that the fed has created at federalreservehistory. org. i encourage you to visit this site to learn more about the people, places and events that have shaped federal reserve history. over the course of its long history, the federal reserve system has performed many economic functions. in my view, its regional diversity improves its effectiveness with respect to virtually all of those functions. however, | 1 |
shows deviations from the 2019 average. 2. in the right - hand chart, figures for manufacturing are from the indices of industrial production and those for the other sectors are from the indices of tertiary industry activity. figures for nonmanufacturing exclude accommodations, eating and drinking services, services for amusement and hobbies, and transport. sources : cabinet office ; ministry of economy, trade and industry. chart 2 i. developments in economic activity and prices global economy and exports & production manufacturing pmi exports and production s. a., di, % points global s. a., cy 2019 = 100 united states europe emerging and commodity - exporting economies ( excluding china ) real exports jan. july jan. july jan. july jan. july cy 15 industrial production notes : in the left - hand chart, figures for global are the j. p. morgan global manufacturing pmi. figures for europe are the weighted averages of the pmis for the euro area and the united kingdom, and those for " emerging and commodity - exporting economies ( excluding china ) " are the weighted averages of the pmis for 20 countries and regions. for both indicators, countries'global gdp shares from the imf are used as weights. sources : ihs markit ( Β© and database right ihs markit ltd 2021. all rights reserved. ) ; imf ; haver ; ministry of finance ; ministry of economy, trade and industry ; bank of japan. chart 3 i. developments in economic activity and prices corporate profits and business fixed investment corporate profits business fixed investment s. a., tril. yen s. a., cy 2015 = 100 s. a., cy 2015 = 100 19 / q4 current profits cy15 machinery investment ( left scale ) construction investment ( right scale ) cy 15 notes : 1. in the left - hand chart, figures are based on the financial statements statistics of corporations by industry, quarterly and exclude " finance and insurance " and pure holding companies. 2. in the right - hand chart, figures for machinery investment show domestic shipments and imports of capital goods. figures for construction investment show private construction completed ( nonresidential, real ). sources : ministry of finance ; ministry of economy, trade and industry ; ministry of land, infrastructure, transport and tourism. chart 4 i. developments in economic activity and prices employment & income situation and vaccinations unemployment rate 4. 0 s. a., % nominal employee income vaccinated population share s | november 24, 2020 bank of japan policy measures to date and in the future, in response to the spread of covid - 19 - - lessons from the global financial crisis - opening remarks at the virtual conference co - hosted by the international monetary fund and the university of tokyo kuroda haruhiko governor of the bank of japan introduction it is my great honor to speak today at this virtual conference co - hosted by the international monetary fund ( imf ) and the university of tokyo. it has been a decade since the global financial crisis - - or gfc - - and two decades since japan's financial crisis and the asian financial crisis. today, we are facing a new crisis, triggered by the spread of covid - 19. this conference is intended to learn from our past experience and to gain insight into how best to respond to these extremely challenging circumstances. in this sense, the conference could hardly be more timely. i. policy responses to date regarding covid - 19 the spread of covid - 19 has had an even greater impact on the global economy than the gfc. the gdp growth rate for the april - june quarter of 2020 declined substantially in many countries. moreover, due to concerns over the deterioration in the real economy, global financial markets temporarily became volatile in march : there was a sudden drop in the prices of stocks and credit assets ; the cp and corporate bond markets became frozen ; and there were substantial outflows of capital from emerging economies. in response to these developments, governments, central banks, and international organizations have been swift to implement policy response measures, both fiscal and monetary, on an unprecedented scale. these responses have helped economic entities with their financing, markets to regain stability earlier than in the case of the gfc, and the global economy to start picking up. i would point to three particularly important elements in the policy responses taken so far to address the impact of covid - 19. the first is that swift and abundant liquidity provision by central banks and international organizations prevented the materialization of a negative feedback loop between economic and financial activities. one of the lessons learned from the gfc is that if market confidence is undermined amid heightening uncertainty, there is the possibility of the real economy and finance falling into an adverse spiral. there would be a significant credit contraction as financial institutions'funding becomes difficult. mindful of these risks, central banks have played a considerable role in recovering market confidence, acting as the global lender of last resort, with ample liquid | 0.5 |
ewald nowotny : toward a genuine economic and monetary union opening remarks by prof dr ewald nowotny, governor of the central bank of the republic of austria, at the workshop β toward a genuine economic and monetary union β, vienna, 10 september 2015. * * * dear colleagues, dear paul, dear otmar, ladies and gentlemen, it is a great pleasure to welcome you here in vienna to today β s and tomorrow β s workshop, hosted by the oesterreichische nationalbank and organized in cooperation with the euro50 group, a network of leading experts and policymakers in the field of european monetary integration. obviously, the title of our workshop, β toward a genuine economic and monetary union, β implies that economic and monetary union, or emu for short, is not genuine yet. but despite all its deficiencies, let us not forget that emu and the euro are major achievements. for its member countries, emu has anchored price stability and increased cross - border trade and financial integration. even during the financial crisis, the number of countries sharing the euro increased to nineteen, and is set to grow further. for the european union as a whole, the single currency is a symbol of a peaceful europe, a keystone of economic integration and political unity. and for the world, the euro has become a major player in the international monetary system and the global economy. yet, during the global financial crisis, emu was seriously put to the test. the fact that the socalled β sovereign β debt crisis ( which incidentally had also been caused by private debt accumulation ) occurred in europe and not in other regions with even higher debt levels is certainly related to the incomplete institutional setting of emu. while the monetary part of emu was fully implemented in 1999, the economic counterpart is still an unfinished business. but how can we ensure the smooth functioning of emu? the recently published five presidents β report β completing europe β s economic and monetary union β tries to address this question. the five presidents in question are those of the european commission, the european council, the eurogroup, the european central bank and the european parliament. their proposals rest on four pillars : first, an economic union that promotes convergence, prosperity and social cohesion ; second, a financial union that integrates banking and capital markets regulation ; third, a fiscal union that guarantees sound public households ; and fourth, a political union that strengthens democratic accountability, legitimacy and institution building. as an aside | decision and leadership from both asean and the eu. from the proceedings of the conference, it seems to me that there may be a need to develop a more entrenched mechanism to leverage further on our respective core capabilities and which seeks to find simpler, faster and more effective ways that would enhance our joint endeavours. a combination of insights, leadership, technical capacity and adequate preparation needs to be channeled into a general enthusiasm for both our regions to rise to the potential challenges and in the process become greater partners for success. in summary, the future direction of the asean - eu relations will be dependent on several multidimensional facets that would include : the changing strategic landscape amidst globalisation, asean's and the eu's desire to play a greater role in the global economy and international affairs, the eu's ability in managing its enlargement process, and asean's commitment to forge greater regional integration. i am certain that the passage of time and closer analyses of the issues discussed at this conference will yield more lessons that we could take to heart in making progress on expanding asean - eu economic and financial links. it is my hope that in the future we can continue to have such constructive exchanges of views and experiences that will further nourish the broader learning environment. in closing, allow me to thank the speakers for enriching the conference with their presence and their cutting - edge perspectives. i also wish to again thank the european commission for giving bank 1 / 2 negara the opportunity to co - host this conference. to all our participants from abroad, we hope you stay in kuala lumpur has been pleasant, and we wish you a safe journey home. 2 / 2 | 0 |
##preciate? south africa β s reserves, at just over usd42 billion, are relatively low for that type of exercise. furthermore, pegging the rand to the us dollar would not imply an automatic peg to other currencies, such as the eur, which is the currency of our biggest trading partner bloc. pegging also has the problem that if prices and wages are increasing, any competitive advantage will soon be eroded and there will be calls for changing the peg. aggressive reserves accumulation either in the context of a peg or to prevent or moderate appreciation also carries significant costs, given the wide interest rate differential between the interest paid on sterilization and the interest earned on reserves. this results in a negative cost of carry and places the bank β s income position at risk. the bank recorded a loss of approximately r1, 0 billion during the 2009 / 10 financial year. it is however important to point out that this loss was incurred as a direct result of the bank executing its public policy responsibilities rather than owing to any inappropriate risk taking or wasteful expenditure. over the past year, the bank continued to purchase foreign exchange as part of its strategy to steadily increase the level of foreign exchange reserves. gross reserves increased by approximately usd8, 0 billion from april 2009 to usd42, 3 billion in april 2010. the international liquidity position increased by usd5, 0 billion to usd38, 5 billion over the same period. apart from foreign exchange purchases by the bank, this increase in official reserves was also due to foreign currency deposits from government, the allocation by the imf of sdrs to south africa and valuation adjustments. although valuation adjustments contributed positively to reported usd official reserves over the financial year, there were periods where the bank published substantial declines in the level of reserves due to valuation losses stemming from the diversified nature of reserves in terms of currencies. the financial markets department continued to enhance reserves management policies in order to adjust and streamline our investment strategies. the investment policy, which provides a strategic and operational framework for reserves management, was reviewed during 2009 / 2010. the investment policy is reviewed every three years for governance purposes and also to ensure that it is responsive to and keeps pace with changes in the reserves management activities of the bank and the external environment. the recent global financial crisis provided an ideal opportunity to incorporate into the policy the lessons learned, while also aligning the policy with refinements to international best practice. conclusion the turmoil experienced in the euro zone with regard to sovereign | for their important contribution to the development of this forward - looking vision 2015. thank you. bis central bankers β speeches | 0.5 |
the euro area β s serious structural unemployment problem. 4. the ecb β s contribution to financial stability the ecb β s contribution to financial stability, and in particular the question of the provision of emergency liquidity to financial institutions in distress, is another issue upon which the interest of the european parliament is focused. allow me to explain some of the main considerations in this regard. the main guiding principle within the eurosystem with reference to the provision of emergency liquidity to individual financial institutions is that the competent national central bank would be responsible for providing such assistance to those institutions operating within its jurisdiction. the ecb does, however, have to be informed of this in a timely manner. in addition, in operations of relevance to the single monetary policy, the decision - making bodies of the eurosystem will be involved in assessing the compatibility of the envisaged operations with the pursuit of monetary stability. in the case of a general liquidity crisis resulting from a gridlock in the payment system, for instance, the direct involvement of the eurosystem could be expected. for the markets it would be sufficient to know that there is a clearly articulated capability and willingness to act if really necessary. it is not common practice among central banks to disclose the conditions and practicalities of emergency liquidity assistance arrangements. in particular, there are typically no official documents describing the conditions under which emergency liquidity would be extended or what procedures would be followed. indeed, ex ante commitments would be counter - productive in this field, since they would restrict the ability of the central bank to act to contain systemic disturbances with unforeseen features. moreover, this policy of β constructive ambiguity β can limit the associated problem of moral hazard. 5. improving cross - border retail payment services in the euro area finally, i should like to turn to a different issue which has also been raised by the european parliament on several occasions, namely the question of cross - border retail payment services in the euro area. the ecb is aware of the criticism that has been expressed with reference to the low level of efficiency and high costs involved in the processing of such payments and fully shares the concerns expressed by the european parliament in this regard. the current situation is particularly unsatisfactory in the area of cross - border credit transfers, whereas the situation in the area of cross - border card - based payments raises fewer concerns. as you will be aware, one of the basic tasks conferred upon the eurosystem by the treaty is the promotion | the european parliament. the treaty establishing the european community contains various provisions to ensure the democratic accountability of the ecb, one of the cornerstones of which is certainly the presentation of the annual report to the european parliament and the council of the european union. however, apart from this annual exercise, the ecb and the european parliament have established several other contacts. first and possibly most importantly, i should like to mention the regular hearings held by the european parliament β s committee on economic and monetary affairs. within the scope of these hearings, which β in line with the european parliament β s rules of procedure β take place on a quarterly basis, i provide detailed explanations regarding both our assessment of current economic and monetary developments and the decisions taken by the ecb. transcripts of these hearings are published on the websites of both the european parliament and the ecb. moreover, the european parliament has invited members of the executive board of the ecb and staff of the ecb to participate in additional hearings on a number of specific issues, including the external representation of the eurosystem, the preparation of euro banknotes and statistical matters. furthermore, the ecb has also had the opportunity to welcome delegations of members of the european parliament β s committee on economic and monetary affairs to its premises in frankfurt. the ecb attaches great importance to these visits and will be pleased to continue to host such events. however, since these visits to the ecb are of a more informal nature, it goes without saying that they have to be considered as an additional tool for communication between the two institutions and cannot be seen as a substitute for regular public hearings at the european parliament. in setting up its communication policy, the ecb decided to go beyond the transparency requirements of the treaty. thus, while the treaty requires the ecb to publish a quarterly report on its activities, the ecb has decided to publish such a report on a monthly basis, the monthly bulletin, which gives a detailed presentation of economic and monetary developments. in addition, there are a number of other communication tools that the ecb regularly uses. first, let me mention the extended press conferences that the vice - president and i hold immediately after the first meeting of the governing council of the ecb every month, transcripts of which are also accessible via the ecb β s website. you may also be aware of the broad range of publications that the ecb has issued on specific subjects related to its fields of responsibility. i should like to draw your attention | 1 |
with innovative solutions to deal with this major risk to the international financial system. the second problem statement seeks to encourage the participants to come up with technology solutions in forex and liquidity to enable settlement in more number of emerging market and developing economy ( emde ) currencies. the use of local currencies in cross - border payments can help to shield the emdes from global shocks, protect against exchange rate fluctuations and encourage the development of local forex and capital markets. multilateral payment platforms that support multiple currencies would offer a way to promote such local - currency payments. as things stand today, fx and liquidity risks associated with emde currencies can make the operation of multilateral platforms with emde currencies more challenging. it is in this backdrop that effective liquidity mechanisms need to be developed. the third problem statement which was intentionally kept broad, calls for technology solutions for multilateral cross - border cbdc platforms. it invited solutions and technologies for multilateral cross - border cbdc platforms which can contribute to interoperability across multi - cbdc platforms or domestic payment systems ; reduce operational cost ; and increase efficiency, while ensuring consistency in standards across multiple jurisdictions. i strongly believe, cross - border payments can be made more efficient through adoption of cbdcs and this is an area which should receive close attention. as all of us are starting on a clean slate on the cbdc front. the adoption of right technology platform, which is inter - operable, would be a great benefit to the future of cross - border payments ecosystem. i am happy to share that this g20 techsprint 2023 has witnessed encouraging participation from around the world with 93 proposals submitted across the three problem statements. in collaboration with the bis, 21 proposals in total ( 7 each for the three problem statements ) were shortlisted. these proposals have the potential to bring transformation in the cross - border payments ecosystem in line with the g20 priority. they have the power to provide solutions to maintain the integrity of the financial system, empower the underserved, reduce frictions in cross - border payments and amplify the resilience of financial systems. these proposals were evaluated by an eminent jury and three best submissions ( one for each problem statement ) have been chosen as winners. my congratulations to the winning teams. i would also like to thank all the participants for their efforts and encourage them to continue their innovative endeavours. i extend my gratitude to every participant, mentor, | ##entation in indian banking it is now commonplace to say that the 21st century will be the β knowledge century β and we are transiting from product - based to knowledge - based economy. the knowledge economy β an economy in which wealth is based upon the ownership of knowledge and the ability to use that knowledge to create or improve goods and services β presents significant challenges. all the more so due to the demographic transition underway now in our country, since knowledge resources such as know - how and expertise are as critical as other economic resources in this economy. india will probably have the world β s largest set of young people. even as other countries begin to age, india will remain a country of young people, potentially to our great advantage. the transformation of banking caused by the rapid development of information and communication technologies has provided banking entities with new ways of bringing their products to the customers. the banks would now have to increasingly deal with knowledge workers i. e. one who works primarily with information and uses knowledge in the work place. traditional banking has thus changed into electronic banking, and therefore the standard form of contact β personal contact β is taking a back seat to new, faster, more conformable, and cheaper means of communication. the introduction of electronic banking services also creates new tasks to be faced, such as the optimization of distribution channels and the security of data transfer. the customer will not purchase a service that fails to meet his requirements or a service that does not guarantee the required privacy and security. that is why banks are trying to devote enough attention to all aspects of the modernization of traditional banking. basic electronic banking includes services provided through self - service zones, internet banking, e - mail banking and phone banking etc. a new product is the electronic purse, sometimes called a " multipurpose payment card ", which is a payment instrument for making non - cash payments. the e - shop represents a specific form of electronic banking. electronic commerce comes in three basic forms : the e - shop, e - store, and e - exchange. india β s banking industry must strengthen itself significantly if it has to support the modern and vibrant economy which india aspires to be. focusing on enriching human capital will help the banking sector competitive. the banking sector needs to fundamentally strengthen institutional skill levels especially in sales and marketing, service operations, risk management and the overall organisational performance ethic. the last, i. e., strengthening human capital will be the single biggest challenge. old private sector banks also have | 0.5 |
sanction like situation in post - pokhran scenario, and border conflict during mayjune 1999. seen in this context, this robust macroeconomic performance, in the face of recent oil as well as food shocks, demonstrates the vibrancy and resilience of the indian economy. external sector the indian economy has evolved from a virtually closed economy until early 1980s to one that is opening up and rapidly integrating into the global economy since the commencement of major reforms in early 1990s. in terms of a traditional measure of openness, the ratio of exports and imports ( both goods and invisibles ) to gdp has risen steadily from 21. 1 per cent in 1991 - 92 to over 50 per cent in 2005 - 06 and is expected to have gone up further in 2006 - 07. both exports and imports have been rising above long - term trend in recent years. the merchandise trade deficit is currently close to 7 per cent of gdp ; however, the current account deficit is under 1. 5 per cent of gdp, mainly due to the knowledge and competitive advantage we have in services and the steady support from remittances from indians working abroad. the liberalisation of the current account took place in the early part of the reforms and we attained current account convertibility in august 1994. in india, capital account liberalisation is sequenced in response to domestic developments, especially in real and fiscal sectors, and the evolving international financial architecture. fiscal federalism under india β s federal system of government, the constitution allocates the revenue powers and expenditure functions between the central and state governments. the borrowing by the sub - national governments is in effect subordinated to prior approval by the national government. furthermore, state governments are not permitted to directly borrow externally. the fiscal management in the country has significantly improved, specially, after the adoption of the fiscal responsibility and budget management act, 2003 by the central government. the state governments are also adopting similar acts and have made consistent efforts to improve fiscal management. the fiscal consolidation, in terms of reduction in fiscal deficit, is taking place in the finances of both the central and state governments. the fiscal - management of central government is broadly in the direction of achieving the targeted ratio of gross fiscal deficit ( gfd ) to gross domestic product ( gdp ) to three per cent and eliminate revenue deficit ( rd ) by 2008 - 09. it may be noted that the gfd / gdp and rd / gdp ratios are already budgeted to reduce to 3. 3 per cent and | gdp growth generated from agriculture is only marginally above the rate of growth of the population, which is not adequate to ensure rapid poverty reduction. on may 29, 2007, our honourable prime minister announced a major scheme to double the growth rate of agriculture to 4. 0 per cent over the 11th plan period. the government would provide rs. 250 billion for new farm initiatives launched by states. a time - bound food security mission was also announced to counter rising prices of food products and to ensure visible changes in their availability over three years. second, the growth story in any developing country can not be complete without assessing its impact on the poverty and employment situation. the planning commission has stressed that india should strive for β more inclusive growth β. the number of people living below the poverty line has decreased from 36 per cent in 1993 - 94 to 22. 0 per cent in 2004 - 05. again, the issue is to bring more and more people out of poverty by providing them the productive employment opportunities. the approach paper to 11th five year plan suggests that doubling the growth of agricultural gdp to 4 per cent per annum will improve rural employment conditions, by raising real wages and reducing underemployment. however, even if this is attained, an overall growth of 9 per cent will further increase income disparity between agricultural and non - agricultural households, unless around 10 million workers currently in agriculture find remunerative non - agricultural employment. this poses a major challenge not only in terms of generating non - agricultural employment but also in matching its required location and type. third, delivery of essential public services such as education and health to large parts of our population is a major institutional challenge. it is strongly felt that education will empower the poor to participate in the growth process and the large gaps in availability of health care, in terms of minimum access to the poor, need to be filled. fourth, a critical constraint to economic growth in india in recent years has been the infrastructure deficit. the approach paper to the 11th five year plan has estimated that for accelerating the gdp growth from 7 to 9 per cent, there is a need for accelerating the current level of investment in infrastructure from 4. 6 per cent of gdp to 8 per cent during the plan period. the issue of providing adequate and quality infrastructure has already attracted attention of policy makers at all levels. the most important issues here are regulatory framework and overall investment climate, which are being addressed by the government. apart from higher levels of investment, issues of governance and management | 1 |
inflation goals as being roughly in balance, and i am attentive to the risks to both sides of our mandate. that better balanced position is partly a result of the monetary policy actions over the past few years, which i will review briefly. as you can see in figure 8, the fomc responded to elevated inflation by raising the policy rate 5 - 1 / 4 percentage points over about 15 months, starting in march 2022, and then holding the rate at that restrictive level for more than a year. this contributed to inflation easing from a 40 - year high to near current levels while maintaining a solid labor market. that outcome was historically unusual but greatly welcomed. by september of last year, i had growing confidence that with an appropriate recalibration of our policy stance, strength in the labor market could be maintained in a context of moderate economic growth and inflation moving sustainably down to 2 percent. the fomc reduced the federal funds rate by a full percentage point over the course of our final three meetings last year. as a result of those actions, our policy stance is now significantly less restrictive than it was when we began lowering the federal funds rate. given current economic conditions β specifically, inflation that remains modestly above our target and a labor market that is solid β and my projections of future economic conditions, i voted last week to maintain our current policy stance. as long as the economy and labor - 8market remain strong, i see it as appropriate for the committee to be cautious in making further adjustments. over the medium term, i continue to see a gradual reduction in the level of monetary policy restraint placed on the economy as we move toward a more neutral stance as the most likely outcome. that said, i do not think we need to be in a hurry to change our stance. in considering additional adjustments to the federal funds rate, i will carefully assess incoming data, the evolving outlook, and the balance of risks. as is always the case, monetary policy is not on a preset course. to that end, i could envision a range of scenarios for future policy. for example, if the economy remains strong and inflation does not continue to move sustainably toward 2 percent, we can maintain policy restraint for longer. alternatively, if the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, it may be appropriate to reduce the policy rate more quickly. our current stance of policy is well positioned to deal with the risks and uncertainties that we face | monetary policy, β a symposium sponsored by the federal reserve bank of kansas city, held in jackson hole, wyo. ( via webcast ), august 27. 7 see richard h. clarida ( 2020 ), β the federal reserve β s new monetary policy framework : a robust evolution, β speech delivered at the peterson institute for international economics, washington ( via webcast ), august 31 ; and richard h. clarida ( 2020 ), β the federal reserve β s new framework : context and consequences, β speech delivered at β the economy and monetary policy, β an event hosted by the hutchins center on fiscal and monetary policy at the brookings institution, washington ( via webcast ), november 16. 3 / 3 bis central bankers'speeches | 0.5 |
##s and loan books. insurance companies face an additional challenge in modelling the implications for their liabilities ( the risks they insure ). it is essential that the financial industry does a good job in taking on this challenge if the switch to sustainable forms of economic activity is to be facilitated and the risks to the household sector ( the ultimate owner of financial assets ) are to be minimised. in terms of supervisory strategies, regulators will need to conduct environmental / climate risk assessments in order to evaluate whether firms are meeting the expected level or risk management. furthermore, consumers and investors require that conduct regulators ensure that climate - related risks are properly disclosed to savers and investors that need to choose among different investment plans. for regulators and supervisors, several steps are required. first, clear expectations need to be laid out for regulated firms. for instance, the prudential regulatory authority in the united kingdom has published a draft supervisory statement that sets out expectations for banks, insurers and investments firms in relation to managing the financial risks from climate change. xiv there are four dimensions to this guidance : ( i ) governance ; ( ii ) risk management ; ( iii ) scenario analysis ; and ( iv ) disclosure. jointly with the financial conduct authority ( fca ), it is also establishing a climate financial risk forum to support best practice in the management of climate - related risks by regulated firms. second, sufficient information is required if climate risks are to be adequately assessed. as reflected in the discussion of climate stress testing above, it is not easy to work out climate risks at the macroeconomic or industry level : the degree of difficulty at the firm level is even more severe, given the variation across firms within an industry and the complexity of supply chains. accordingly, as highlighted by the work of the financial stability board β s task force on climate - related financial disclosures ( tcfd ), climate risk assessment requires each firm ( above a scale threshold ) to calculate and disclose its carbon exposures, on the basis of its private corporate information concerning both its current profile and future plans. in turn, at the portfolio level, ultimate savers and investors must rely on the information disclosed by intermediaries in relation to the environmental, social and governance ( esg ) characteristics of the underlying securities. climate change and the irish financial system | central bank of ireland | page 9 for such disclosures to be useful, some degree of standardisation is required in order to ensure comparability. furthermore, a common taxonomy is essential | economic letter climate change and the irish financial system philip r. lane vol. 2019, no. 1 climate change and the irish financial system | central bank of ireland | page 1 climate change and the irish financial system philip r. lane, governor of the central bank of ireland monsignor padraig de brun memorial lecture, nui galway 5 february 2019 in this economic letter, i describe the challenges posed by climate change for the irish financial system. an increase in the frequency of severe weather events has implications for macroeconomic outcomes, asset prices, house prices, credit risks and the cost and coverage of insurance contracts. in addition, the necessary transition to a low - carbon economy ( supported by a phased schedule of increasing carbon taxes ) requires considerable investment by households, firms and the government. if the pace of transition is too slow, a sharper adjustment will be ultimately required, posing macroeconomic and financial stability risks. as the macroprudential authority, the central bank will need to ensure that these financial stability risks are contained by improving the climate resilience of the financial system. as the prudential and conduct regulator, the central bank also has a lead role in ensuring that financial firms incorporate climate change into strategic and financial plans, while ensuring that consumers have sufficient information to navigate the financial risks posed by climate change. introduction our mission statement reads : β the central bank of ireland serves the public interest by safeguarding monetary and financial stability and by working to ensure that the financial system operates in the best interests of consumers and the wider economy. β if we are to fulfill this mission, it is a strategic priority for us to address the challenges posed by climate change for the financial system. this holds true for several reasons. first, climate change will be an important influence on macroeconomic outcomes in the coming decades : both directly through weather shocks and the shift towards low - carbon technologies, and indirectly through its impact on the evolving expectations of households and firms about the future trajectory of the economy. i second, although this is not the base case, i will argue later in this lecture that financial stability is threatened if we ignore the systemic risks associated with climate change. third, consumers are financially exposed to climate change through a variety of channels. fourth, given the environmental risks and structural changes in the wider economy associated with the transition to a low - carbon economy, our regulatory policies and supervisory practices must address the financing of the related shifts in the structure of the economy and the investments required to adapt to climate | 1 |
diminished 0. 9 % in real terms, explained mainly by the exchange rate effect in the valuation of the external component. this trajectory owes largely to the fact that the increases in corporate bond issuances observed since mid - 2016 have not translated into more borrowing. on the contrary, the low cash flow assigned to investment suggests that these funds have been oriented to the refinancing of liabilities, consistently with the lower interest rates. on the other hand, delinquency indicators, while still low, show a marginal deterioration with respect to the previous fsr. in the case of services, this increase has concentrated in some real - estate firms. as for the productive sectors, marginal rises are observed in several industries such as construction, transport and telecommunications, and electricity, gas, and water. meanwhile, in others such as mining, trade, and manufacturing, the declines identified in the last fsr continue. residential market figures have shown more stability in recent quarters. after the adjustment process described in previous reports, the sale of new homes in santiago has remained stable for several quarters. at the same time, in the second quarter this year, the various home price indicators β in the metropolitan region and nationwide β show positive but modest growth. residential building activity remains weak and different sources of information see no recovery anytime soon. moreover, the adjustment of the sector must be monitored before law 20, 958 on contributions to public space comes into effect, aimed at making real estate projects accountable for the impacts they have on local mobility. regarding housing credit, the stock of mortgage loans showed a rebound in the last quarter ( figure 11 ). the number of bank mortgage debtors with more than one housing loan continued to grow, reaching 29 % at the statistical close of this fsr. a subset of such debtors are investors who buy properties for rent. household financial indicators show no change in the risks identified in the last fsr, which are mostly related to the future evolution of the labor market. since the last report, bank mortgage debt increased, while consumer debt with banks decelerated, and accelerated with other sources. thus, as of the second quarter this year, the aggregate debt of the sector stood at 45 % of gdp ( figure 12 ), placing chile in the upper segment of a sample of emerging countries but below developed economies. however, the median financial burden has remained stable at around 20 % of income due to lower interest rates. in terms of financial gaps, there was a greater use of | in reduced imports in the coming months. in turn, final domestic demand β excluding inventories β was somewhat lower than expected, and continued to account for the dissimilar behavior of consumption and investment ( figure 3 ). consumption shows a somewhat stronger growth, with improvements in several of its fundamentals. one important concern about the economy early in the year was the deterioration of the labor market, in particular the salaried employment drop in annual terms. this was one of the risk factors that led us to accelerate the mpr reduction at the beginning of the year. this risk has faded in recent months. indeed, in the last few months salaried employment has resumed its positive annual variation rates and some of its quality indicators have ceased to deteriorate. among them, an increase in private employment under contract and a decrease in involuntary part - time work are worth singling out. self - employment, although growing at a higher rate than its salaried counterpart, has slowed down and the unemployment rate is now near its levels of a year ago, slightly higher than at the end of the first quarter ( figure 4 ). nominal wages'annual growth rate stopped falling. in june they expanded between 4. 4 % and 5. 0 %, compared with rates of 5. 5 % and 6. 0 % in june of 2016. real wages increased their annual variation, mainly due to low inflation. all this contributed to real incomes, measured by the real wage bill, slightly increasing their annual growth rate, to 3 %. add to this that consumer expectations have improved systematically in the last five months, although they are still in pessimistic territory. moreover, the cost of credit is at record lows, consistent with the expansionary instance of monetary policy ( figure 5 ). unlike consumption, investment remains weak, especially its construction and works component, which has steepened its annual fall from mid - 2016, hand in hand with a drop in housing investment and reduced public investment. investment in machinery and equipment, despite some annual deceleration from the previous quarter, continues to outperform recent years, especially after discounting the non - regular transportation item, thus accumulating a nine - month string of positive growth rates ( figure 6 ). on the external side, a more favorable scenario for the emerging world and chile has been strengthening. the terms of trade have improved, with copper prices above $ 3 per pound in recent weeks. this, in a context in which the price | 0.5 |
the recent period of turmoil. there is, however, no room for complacency. the regulator and the regulated entities must remain alert and future ready for the emerging challenges. external sector stability 20. india β s external sector has also exhibited strength and stability in the recent period. the current account deficit ( cad ) has remained within the manageable limit and stood at 1. 1 per cent of gdp in q1 : 2024 - 25 ( 0. 7 per cent in fy 2023 - 24 and 2. 0 per cent in fy 2022 - 23 ). during the first half of 2024 - 25, india β s merchandise exports recovered from a contractionary zone in 2023 - 24. services exports have remained buoyant and rose by 11. 0 per cent during h1 : 2024 - 25 ( 4. 8 per cent in fy 2023 - 24 ). the robust growth in services exports, coupled with buoyant private remittances, are helping to contain the current account deficit. 21. on the financing side, net capital inflows have been generally exceeding the cad and contributing to accretion in foreign exchange reserves. india has the fourth largest foreign exchange reserves in the world at us $ 682 billion as on october 31, 2024, sufficient to cover the entire external debt 7 and about 12 months of merchandise imports. 8 in terms of other key external sector indicators such as external debt to gdp, net 7 at end - june 2024. 8 annualised merchandise imports on balance of payments basis. international investment position ( iip ) and short - term debt to external debt, india β s position remains resilient. 22. our exchange rate policy is well - articulated and has remained consistent over the years. india β s exchange rate regime is market - determined, and the reserve bank does not target a level or band of the exchange rate. the forex interventions are carried out to ensure an orderly movement of the exchange rate and to curb undue volatility, anchor market expectations and ensure overall financial stability. 23. it is important to note that the exchange rate is also a barometer of an economy β s inherent strength. if the indian rupee ( inr ) has remained relatively stable despite severe external shocks including the largest and steepest tightening by the fed in 2022 and 2023, it speaks volumes about the sea change in our macro fundamentals from the taper tantrum days. 24. in | also expressed shortly after the end of world war ii. it was winston churchill, who in 1946 in zurich, argued in favour of β a kind of united states of europe β. in april of that same year, the need for a single european currency was voiced by the new post - war president of the nederlandsche bank, marius wilhelm holtrop, who wanted a strong and sound guilder which in due course would merge into one european currency. the past fifty years have shown, that the advent of a single european currency will certainly not include the β united states of europe β that churchill was talking about. soon after 1946, europe became politically divided into eastern and western hemispheres due to the cold war. with the foundation of the european economic community ( eec ) in 1957, western europe took the lead by starting economic cooperation. the objective of the treaty of rome, on which the eec was based, was to create a common market between france, west germany, italy and the benelux countries. this objective resulted in a customs union which became effective on 1 july 1968. however, the treaty remained vague about other aspects of economic cooperation. economic policy, for example, was considered a matter of common interest. as regards monetary cooperation, coordination was recommended, the exchange rate policy being regarded as a matter of common interest as well. the plan for economic integration designed in rome was not an objective in itself. it was based on political grounds. after all, the treaty aimed at achieving an β ever closer union among the european peoples β through economic integration. during the 1969 summit in the hague, representatives of the six member states agreed with the idea of the newly elected german chancellor willy brandt that this had to be realised via economic and monetary union ( emu ). the then prime minister of luxembourg, paul werner, came up with a detailed plan that was named after him. according to this plan, emu would be materialised in stages. in the final stage, monetary and budgetary competences of the national states were to be transferred to community bodies established for that purpose. and so, werner β s ideas were considerably more far - reaching than the agreements reached in rome thirteen years earlier. nonetheless, the philosophy of economic integration advocated in rome remained the moving spirit behind political cooperation : β it is true that we need not achieve a european confederation or federation tomorrow. but to arrive at this ultimate goal, we must first take the step of creating an economic and monetary currency union β, werner | 0 |
this version of the speech and the delivered german version the contribution of central banks, within their mandates, has largely been through supportive monetary policies, reforms to the international financial architecture, strengthening the resilience of the financial sector, leading the dialogue on global regulatory reform, playing a key role on the fsb, and assisting in developing strategies for sustainable economic growth. without too much chest - beating for my own guild, i do think that the contribution of monetary policy in addressing the economic challenges is beyond question. in fact, it has been widely recognised that there has, at times, been an overreliance on monetary policy to address the binding growth constraints in many economies. it is thus clear that the g - 20 has taken much action over the years, but the global economic recovery has nevertheless been less than inspiring. hence, we are now witnessing a rise in anti - globalisation rhetoric, a rise in populism, and countries developing greater nationalist tendencies. the g - 20 has an important leadership role to play in unpacking and addressing the reasons for this change in sentiment and highlighting the negative ramifications of an inward bias. we need to emphasise the positive spillovers of globalisation, but also accept that we may have underestimated the number of people were left behind and who did not share in the spoils of globalisation. it is with this in mind then, that germany β s focus on β shaping an interconnected world β and enhancing resilience is very pertinent. germany β s three main pillars for the g - 20 presidency β of ensuring stability, improving viability for the future, and accepting responsibility β reflect continuity of the g - 20 agenda over the years and also aim to tackle the issues i have just spoken of. the issue of accepting responsibility is borne out by the new agenda item, β compact with africa β, which speaks directly to achieving sustainable economic progress in africa as part of addressing some of the root causes for the various migration crises we have been observing. i will return to this later. disclaimer : there may be minor differences between this version of the speech and the delivered german version i must add that we certainly welcome the more streamlined agenda that the german presidency has put together, particularly in light of the fact that the agenda of the g - 20 had become more bloated over the years, with the increasing risk of detracting from the effectiveness, efficiency and credibility of this forum. we are looking forward to germany β | general government primary surpluses were recorded. gains in external competitiveness : the external deficit, which exceeded 15 % of gdp in 2008, was eliminated, underpinned by a substantial increase in labour cost competitiveness vis - a - vis our trading partners and an increase in the share of exports to 32 % of gdp today from 19 % in 2009. structural reforms, notably in the labour market, but also in the goods and services markets and in public administration. unlike in other member states that also experienced similar crises, the greek crisis did not come from the banking sector. in an adverse international economic and financial environment, greece was hit by a serious sovereign debt crisis that required three economic adjustment programmes that included, inter alia, substantial structural reforms and severe austerity measures. the sharp 1 / 5 bis central bankers'speeches deterioration of the macroeconomic environment that led to a loss of more than 25 % of gdp over these years bears testimony to the fact that the greek crisis is more far - reaching and lasted longer than initially foreseen. in this adverse macroeconomic environment, unemployment increased to historic high ( post - war ) levels, and disposable income dropped substantially. at the outset of the crisis, deteriorating macroeconomic conditions and sovereign downgrades blocked access to international capital and money markets, thus creating very tight liquidity conditions and pressures to the financial sector. as a consequence, banking sector developments were unprecedented including a large - scale deterioration of greek banks fundamentals and of asset quality. the extent of the deterioration can be described in terms of losses due to the restructuring of greek government bonds held by the private sector ( private sector involvement β psi ) : greek banks suffered losses of about β¬38 billion in 2011, which was close to 170 % of their total core tier i ( ct1 ) capital at that time. due to the liquidity squeeze, the role of banks as intermediaries was undermined, and the channels for financing the real economy were severely disrupted. in addition, substantial deposit outflows took place from september 2009 to july 2015, primarily relating to the uncertainty of depositors regarding economic and financial developments. it is worth mentioning that the difficulties of credit institutions to provide liquidity to the real economy were further exacerbated by procyclicality, as their capital base had to be used as a buffer against unexpected risks. as a consequence, even higher capital adequacy ratios had to be met, rendering it even more difficult for banks to | 0 |
##mediaries but to the detriment of the public ; and for not responding quickly enough when the crisis began to emerge. although there are many lessons to learn, not all of these criticisms are fair. the rapid, unconventional and coordinated response by central banks at the peak of the crisis undoubtedly averted a collapse of the system, and the vigorous measures to maintain the functioning of financial systems have been largely effective β so far. nevertheless, the crisis itself, and the very scale of the response, have brought central banks more into the foreground than ever before. as the full implications of what has happened unfold there will undoubtedly be questions about their role and the policies they pursue. the appropriate response to this is for central banks, international organisations, and government authorities to seize the initiative for reform so that financial crisis does not become a crisis of confidence in the system itself. since, as recent events have resoundingly demonstrated, the financial system is a global system, the reforms must be organised along international lines. the limited achievements in international co - operation following the asian financial crisis might make us sceptical. but, in fact, the signs are positive. co - ordination among central banks in crisis management has been effective. technical blueprints for regulatory reform on an international scale have already been drawn up. and the political will has been demonstrated in the commitment by the world β s largest economies to implement far - reaching reform. one area of progress is the movement towards greater participation by developing economies in international forums and in the process of reform. this is important, not just because of the growing influence of these economies β nor even because the leading international forums are currently dominated by the very economies that are now in the deepest trouble β but because the ordinary people of developing economies are usually the ones who suffer most in a global financial crisis. international co - operation will also, i hope, act as a countervailing influence against any repeat of the disastrous mistakes that were made in the 1930s. there has so far been a resistance to trade protectionism, although the idea has begun to gain some ground as a spurious answer to economic distress. there is a risk that the idea will spread to the financial sector, particularly if there is political pressure to include protectionist measures in rescue packages for troubled banking systems in the developed economies. i need hardly point out that β no less than trade protectionism β such a trend would deepen the hardship of the developing economies, many of which rely heavily on international finance | fair share. what is interesting, however, is that perhaps the most controversial action by the malaysian authorities in recent years β the response to the 1997 - 8 asian financial crisis β has now come to be understood as appropriate and effective. at the centre of this response was the imposition of capital controls to contain speculative capital flows, stabilise the ringgit, and give the economy a breathing space. this was widely criticised internationally as a retrograde step. yet it was a limited and temporary measure, which, along with other policies succeeded in stabilising the system and providing the conditions for economic recovery. the role of bank negara in promoting international understanding of this measure was crucial to its effectiveness. it is not, of course, my purpose to recommend capital controls as a general solution to financial crisis. the lesson here is that unorthodox measures can be effective, provided that they are well thought out and properly implemented. at a time like the present, when governments around the world have been ready to adopt measures that were barely conceivable a few months ago, this is perhaps a lesson that has already been quickly learned. the region's recovery from the asian financial crisis was nearly as rapid as the unfolding of the crisis itself, thanks to the vigorous measures taken by authorities in the region and the underlying momentum and vibrancy of the asian economies. the experience of this shock generated a determination in the region to try to ensure that such a crisis did not happen again, and to strengthen financial systems against other forms of crisis. it would be complacent to suppose that we have been completely successful in these aims. we are, after all, in the midst of a serious financial crisis that no efforts by this region on its own could have prevented. the region β s financial systems may have been largely undamaged by the first wave of that crisis. but the second wave is now upon us, and this second wave may well carry greater risks to emerging markets. even so, the determination among asian economies in the aftermath of 1998 to build strength against future crises has placed this region in a much more resilient position. the raw resources for maintaining financial stability β foreign exchange reserves β have more than doubled in most of the economies in this region over the past decade. many economies have embarked on financial - sector reform, with the aim both of ensuring that the banking system is well capitalised and of promoting other forms of intermediation. central banks have seen a strengthening | 1 |
), pp. 1449 - 75 or s. morris and h. s. shin, β social value of public information β, american economic review, 2002, 92 ( 5 ), pp. 1521 - 1534. policies. easy access to information also allows investors to better differentiate across economies, borrowers and companies. ultimately, this helps to lessen herding behaviour and contagion when market volatility increases. this is why transparency is so crucial. and in recent years, a lot of progress has been made to enhance transparency and to facilitate access to information as well as its dissemination to market participants. i give you one example. ten years ago, the nature of economic and financial data and the way they were reported varied significantly across countries. even simple concepts, such as debt, could be understood very differently around the world. this severely constrained our ability to compare financial vulnerability across countries. but thanks to work carried out at the imf, the special standards for dissemination of economic and financial data have become a widely recognised benchmark to which a large and increasing number of countries adhere. of course, there are still areas where more work needs to be done. one of them, for instance, is the reporting to the imf on the currency composition of countries β foreign exchange reserves. but overall, things are moving in the right direction. adopting good practices is a second principle which should continue to guide our efforts in reforming the governance of the world economy in macroeconomic and financial matters. here again, there have been a number of achievements. a large array of standards and codes for macroeconomic and data transparency, banking supervision, corporate governance, accounting, and payment and settlement systems have been subject to international agreements. such standards bring together what is widely considered as good practice or guidelines in a particular domain. they enhance domestic and international stability. in this respect, the imf and the financial stability forum β the only forum for cooperation among national and international entities in charge of supervision β have singled out 12 of these standards as being of particular importance for a sound and stable economic and financial system. but the work of the international community has gone beyond standard - setting. it now also focuses on implementation. progress has been made towards publicly examining countries β compliance with standards and codes. and there is one important lesson that we can draw from this experience. the international community does not always need to rely on rules and unilateral enforcement to make progress on certain fronts. goodwill and, at times | thomas jordan : swiss national bank monetary policy in light of financial market disruptions introductory remarks by mr thomas jordan, member of the governing board of the swiss national bank, at the end - of - year media news conference, zurich, 11 december 2008. * * * situation in the financial markets looking at the financial markets, we currently find ourselves in a historically unprecedented situation. the financial crisis has escalated dramatically since september. in the course of the past three months, it has taken hold in almost every market segment around the globe. at the time of the last news conference in june, we had already experienced three waves of money market turbulence ; now, a fourth wave has eclipsed all others ( cf. chart 1 ). 1 the situation in the money markets has calmed somewhat since november. this is due in part to the measures taken by central banks and governments, in particular the generous amounts of liquidity injected into the system, the recapitalisation of banks, the provision of state guarantees for bank liabilities and the transfer of risk positions. after unsecured money markets had all but frozen in the autumn, central banks increasingly found themselves acting as lender of first resort, in other words, they were becoming the primary supplier of liquidity to the financial system. to this end, new monetary policy instruments and facilities were introduced, and the liquidity supply was expanded significantly. despite the calming in the money markets, the situation in the stock and credit markets continued to worsen as a result of the rapid deterioration in economic conditions. i would like to illustrate the unique nature of the current situation with a comparison of the dow jones industrial average from five stock market crises ( cf. chart 2 ). 2 price declines this time round are significantly steeper than those in 2000 and 1973 and not at all comparable with 1987, when the stock markets recovered very quickly. measured by the extent of the dow jones losses, the current crisis can only be compared to that of 1929. although the financial losses suffered this time have probably already far exceeded those of 1929. the reason for this is the considerably higher market capitalisation of the stock markets, as measured by gross domestic product ( gdp ). what is more, the losses suffered today are not merely limited to the stock markets, they also affect practically every other type of asset, of which there are significantly more nowadays than back then. prices have plummeted across the board, from corporate bonds to structured products, from raw materials and emerging market currencies to | 0 |
any foreign capital tapped to finance it - whether in the form of debt, new equity, or retained earnings - will create no problems. in fact, corporate balance sheets in new zealand have generally remained healthy after the stresses of the late 1980s and early 1990s. but much of the demand for borrowed funds in recent years has come from the household sector, and has been secured by that favourite new zealand financial instrument, the house mortgage. this borrowing has taken the ratio of household debt to household disposable income from a relatively low 42 per cent as recently as mid - 1990 to almost 90 per cent currently ( graph 1 ) - from a level which was relatively low by international standards to around the levels of indebtedness seen in places like the united states. it has also taken the share of loans extended to the household sector from 31 per cent of total bank loans to 52 per cent of the total over the same period, an increase in the dollar amount from $ 16 billion to $ 50 billion in just seven years. as graph 2 illustrates, lending by major financial institutions to the household sector has been growing markedly more quickly than nominal gdp throughout most of this decade. some of the borrowing by the household sector has been undertaken as a relatively cheap and efficient way of funding small businesses owned by the household sector, and to that degree is β mislabelled β as household sector borrowing. but for the most part, the rapid growth in household indebtedness appears to have helped make possible the rapid rise in house prices seen in much of the country in recent years and, as employment, incomes, and wealth have risen, strong consumption growth. obviously, this sort of strong growth in lending to households cannot continue indefinitely, but while it does there is likely to be pressure on our external accounts. credit, after all, is designed to allow us to increase our investment without sacrificing current consumption, or alternatively to increase consumption now in the expectation of higher income in the future. both of these mean enjoying now a level of consumption beyond what is produced locally : and in simplified terms, that is what a current account deficit is. other things being equal, a strong demand to borrow tends to push up interest rates. it is those pressures which then draw in foreign capital. the capital inflow in turn tends to check the extent to which interest rates rise in response to the strong borrowing demand. the willingness of foreign investors to provide capital allows us, as a nation, much greater flexibility in making our own | much better performance than that of virtually any other developed country ( the exception, as to so much else, is singapore ), but it is a markedly smaller contribution to national saving than the public sector was making in, say, 1995 / 96. in that year public sector saving amounted to 3. 7 per cent of gdp. so in the last couple of years the trend in public sector saving has been unhelpful in terms of the balance - of - payments deficit, a reflection of a strong increase in public sector spending over the last two years and a reduction in tax rates. one way of reducing the balance - of - payments deficit might be to increase the public sector surplus again, although nobody should under - estimate the difficulties of doing that in a country where pressure to increase government expenditure is relentless. new zealand β s record of household sector savings seems to have been relatively poor for many years. there have doubtless been many reasons for this. in the high inflation 1970s and early 1980s, when many interest rates were controlled at artificially low levels, the after - tax real return on savings invested in fixed interest securities was strongly negative, creating a strong disincentive to save. this situation changed markedly in the mid - 1980s, with positive after - tax real interest rates, but at about the same time financial sector liberalisation greatly increased the ability of many households to borrow ; this too almost certainly discouraged net saving. and of course for most of the last half century new zealanders have been encouraged to believe that the things for which people save up in many other countries - education, medical care, and retirement - would largely be taken care of by government. we were effectively told : you don β t need to save and, by the way, if you do, you β re a fool, because government - sourced inflation will steal a large chunk of what you save anyway. i β m frankly not sure how this culture of low household - sector saving can be changed. clearly there is a significant section of the community that has no surplus income at all. to suggest that a solo parent living on benefit has scope for increased saving is absurd, and would be presumptuous in the extreme coming from me. but it is also true that too many new zealanders on higher incomes still have attitudes to their personal finances that only made sense in the high inflation 1970s and early - 1980s. the mind - set was that only a fool had personal savings, and the quick and the clever were in | 1 |
and convenience. all these issues are receiving due attention for prioritized resolution. rbi has also established national payment corporation of india for focused attention on development and implementation of requisite technologies for enabling new modes of delivery. electronic payment systems one of the areas where technology has facilitated significant revolution is payment systems. it started with the mechanization / automation of certain processes by introduction of cheque sorters and readers, micr based clearing etc. and has moved on to use information technology for efficient funds transfer mechanisms such as ecs, neft, cts, rtgs. the focus has shifted from the initial needs of capacity management for handling increasing volumes, to efficiency enhancement in transaction processing for the benefit of businesses, markets as well as retail customers. we are witnessing increasing utilization of these delivery mechanisms and have to think about the next higher level of technology and sophistication to bis central bankers β speeches meet the rising expectations of the market participants. rbi has already initiated work towards introduction of new generation rtgs, which will be able to handle rising volumes, provide better functionalities and has better technological adaptability. our journey towards leveraging technology for making our payment systems at par with the best in the world will continue with appropriate contributions from all concerned. another important benefit derived from information technology deployment is the ability of banks to provide innovative delivery channels. online banking, debit & credit card payments, atm access to other bank customers, point of sales terminals etc. have all changed the way bank customers are able to transact for their day to day needs, thereby creating a huge eco system of convenient banking facilities which substantially reduces the need for physical proximity and handling of cash. it also provides access to a large number of global retail markets to our citizens. use of it for improving internal effectiveness β significance and benefits focus of technology in indian banking, so far, has, mainly, been on transaction processing, data storage, service delivery, and rightly so. these were our priorities to make banking better, convenient and more accessible. now, that our banking has reached a stage where many of such services are running on tech enabled processes, we can look forward to improving other areas which were not, hitherto, focus of our attention and have huge scope for improvement, such as internal management and back end processes. currently, while data storage and retrieval are on computerized systems, the administrative processes are largely manual, warranting huge resource deployment. this adds to costs, impacts efficiency and reduces effectiveness of | k c chakrabarty : indian banking sector β pushing the boundaries valedictory address by dr k c chakrabarty, deputy governor of the reserve bank of india, at the 11th advanced management programme β towards the next orbit β indian banking sector β, organized by the international management institute ( imi ), new delhi, 14 february 2013. * * * assistance provided by ms dimple bhandia in preparation of this address is gratefully acknowledged. 1. dr pritam singh, director general, international management institute ( imi ), participants from reserve bank of india and the commercial banks! it is a pleasure to be amongst you today as you complete the first leg of the learning experience which is the advanced management programme. i believe that the programme is craftily designed with an appropriate blend of lectures and interactive sessions with some leading academicians, industry captains and management experts, both from india and from european business schools. it is a rare learning opportunity for all participants β to understand and gain insights into global banking systems and develop awareness and appreciation of the emerging business environment. apart from the opportunity to gain from structured classroom learning, such programmes also offer a unique forum through which participants can learn from each other and assimilate the best management practices across organizations. i hope all of you will take advantage of this wonderful opportunity. 2. being a part of the banking system, which forms the core of the financial architecture of the economy, you have an inimitable opportunity to influence the economic lives of the nation β s populace. we all know that banking plays a silent, yet crucial part in our day - to - day lives. the banks perform financial intermediation by pooling savings and channelizing them into investments through maturity and risk transformations, thereby keeping the economy β s growth engine revving. 3. the central theme of the programme, as in the previous year, is : β indian banking sector : towards the next orbit β. the theme is, arguably, even more relevant today than a year ago. while, on the one hand, the outlook for the global economy continues to be grim, the outlook for the domestic economy is also far more subdued than the last year. growth of the indian economy for 2012 β 13 is projected at 5 per cent β significantly below the 9 per cent growth rate envisaged during the twelfth plan and well below our desired goal of double digit growth rate. the indian banking sector has also faced significant challenges. asset quality of banks has come under | 0.5 |
to inform their capital distribution plans, and we will continue to use the supervisory process to reinforce this expectation. the third is the post - stress leverage requirement. as the federal reserve has long maintained, leverage requirements are intended to serve as a backstop to the risk - based capital requirements. by definition, they are not intended to be risk - sensitive. thus, i am concerned that explicitly assigning a leverage buffer requirement to a firm on the basis of risk - sensitive poststress estimates runs afoul of the intellectual underpinnings of the leverage ratio, and i would advocate removing this element of the stress capital buffer regime. of course, leverage ratios, including the enhanced supplementary leverage requirements, would remain a critical part of our regulatory capital regime, and we will maintain the supervisory expectation that firms have sufficient capital to meet all minimum regulatory requirements. to give these issues the careful consideration they deserve, i expect we will adopt a final rule in the near future, settling the basic scb framework while re - proposing certain elements. i expect that the first scb would not go into effect before 2020, and that ccar will remain in place in 2019 for firms with over $ 250 billion in assets or that are otherwise complex. however, we will consider whether we can move forward with any aspects of the scb proposal for ccar 2019, such as assumptions related to balance sheet growth, and i will ask the board to exempt firms with less than $ 250 billion in assets from the ccar quantitative assessment and supervisory stress testing in 2019. transparency in the meantime, several initiatives are also underway to provide additional transparency into stress testing. i expect you will soon see the federal reserve issue a policy statement describing governing principles around the supervisory stress testing process β and with it, a commitment to disclosing additional detail about supervisory stress test models and results, along with portfolios of hypothetical loans and associated loss rates. i expect we will begin providing some of this additional detail starting in early 2019. i also expect the board will seek comment on the advisability of, and possible approaches to, gathering public input on scenarios and salient risks facing the banking system each year. transparency matters not only because it provides additional due process to affected participants ; it also creates an opportunity for broader, more insightful comments from the public. as a result, it can allow us to be more nimble and better informed in our scenario design. however, we want to maintain incentives for firms to conduct their own stress tests rigorous | periods of destruction of the same. the financial system has come a long way since the time of emperor tiberius. while we have relearned some familiar lessons in recent years, we have also learned some new ones. we have had to develop a new regulatory framework, macroprudential institutions like the fpc and new policy approaches. over the next few years we will certainly need to refine all of these. the implementation of the detailed reforms will inevitably throw up unforeseen effects in particular places and where it is justified we will need to revisit issues. but we should be careful about talking about turning back the overall regulatory dial or trying to trade off the risk of financial instability for short term growth. bis central bankers β speeches | 0 |
7. 0 % in december. the key contribution to the decline in inflation in that quarter came from food prices again. growth in fruit and vegetable prices fell short of what would be a typical hike for that time of the year, while processed food prices declined through cheapening of their inputs, such as wheat and corn. market - determined prices of non - food products and services also grew more moderately than in the third quarter. this component of the consumer price index, which is most persistent and most responsive to monetary policy measures, has moved within the target tolerance band practically ever since the inflation targeting regime in serbia was introduced. as far as administered prices are concerned, the only significant hikes in the fourth quarter were recorded for natural gas and heating, but their contribution to headline inflation was modest. nevertheless, due to the high growth in the first half of the year, administered prices exceeded the growth framework planned for 2011. year - on - year inflation is expected to continue down, i. e. to return within the target tolerance band already in this quarter, which confirms our projections from last year β s inflation reports. medium - term, it is expected to remain within the target tolerance band, with occasional oscillations. the government β s decree imposing a 10 % restriction on trade margins on some food products led to their cheapening in january, but as the decree expires in july, these prices could bounce back. however, provided that primary agricultural commodities see no considerable hikes in the coming period, the prices of processed food will probably rise at a somewhat slower rate than those of non - food products. bis central bankers β speeches on the other hand, fruit and vegetable prices will probably outpace other prices in 2012. in view of their sharp fall in the season behind us, fruit and vegetable prices are estimated to be rather low currently, and are hence likely to rise even in the event of an average agricultural performance. we expect the contribution of fruit and vegetable prices to inflation growth to be most pronounced in the second quarter, with the onset of a new agricultural season. looking forward, growth in administered prices is likely to be slower than in earlier years as they have come closer to an economically sustainable level. their growth in 2012 will probably be modest until the formation of new republic and local authorities, but could catch up thereafter, in the second half of the year. a rise in import prices, prompted by the weakening of the dinar, may put pressure on domestic prices. we estimate | , however, that real marginal costs of net importers are still relatively low, and that importers will be able to offset a major part of the growth in import costs by cutting their margins. given the high unemployment rate and deteriorated outlook for economic growth at home and abroad, the disinflationary pressures stemming from low aggregate demand will persist over the coming period as well. a disinflationary effect will also be generated by inflation expectations. in the fourth quarter, they dropped to 6. 0 % from 8. 0 %. in light of a further decline in inflationary pressures, the downward tendency in inflation expectations is likely to continue this year. chart 15 one - year ahead expected and targeted inflation ( in % ) chart 16 world prices of primary commodities ( 2010 = 100 ) 7. 0 6. 0 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 financial sector ( gallup and strategic agency ) financial sector ( thomson reuters agency ) financial sector ( bloomberg ) financial sector ( ipsos ) targeted inflation tolerance band 12 2 4 6 8 10 12 2 4 6 8 10 12 2 4 6 8 10 12 2 4 6 8 10 12 ural oil prices corn prices wheat prices copper prices a decline in year - on - year inflation will be pronounced in the first months of 2012 as high price hikes from early 2011 drop out of its calculation. as a result, inflation will return within the target tolerance band already in this quarter. year - on - year inflation will reach its minimum level in march or april, when it should move around the lower bound of the target tolerance band. however, with the onset of a new agricultural season, higher growth in administered prices after elections, and the repeal of the decree limiting trade margins, inflation will return towards the target by the third quarter 2012. on account of these factors, in the first half of 2013 year - on - year inflation may temporarily stand at around the upper bound of the target tolerance band, only to return towards the 4Β±1. 5 % target thereafter. the key risks to the presented projection relate mostly to the international environment and fiscal policy at home. outlook for serbia β s economic growth and pressures on inflation will largely depend on developments in the euro area given that its members, together with countries in our region, are our major foreign trade partners. the speed and way of resolving the public debt crisis in some member states, as well economic activity | 1 |
and he has the data to support that statement at his fingertips. β the sale of durable consumer goods has grown by 4. 5 % in a year, share prices have risen by 13 % since the start of this year, the price of capital for non - financial firms is 7. 7 % β which is similar to pre - crisis levels. for banks, too, funding has become considerably cheaper. β in short, financial conditions have improved. β even though some critics said that quantitative easing would be less effective here than in the united states, because much of the financing is provided by banks. they forget that banks are listed on the stock exchange too. β but constancio disagrees that things are going well enough to already start tapering off quantative easing β inflation expectations are too low for that. until inflation comes sustainably close to 2 %, the ecb will continue to intervene in the financial markets, with the attendant risks such as rapid asset price increases and the disadvantage of low returns for pension funds. the sharp depreciation of the euro is another side effect. does constancio think that will result in a global currency war? β exchange rates reflect the economic situation in the various countries. the us economy, for example, is in a completely different phase of the business cycle than europe. that explains bis central bankers β speeches why monetary policy here is not the same as in the united states. the g20 also look at it that way. β do you feel responsible for the fact that dutch pension funds and insurance firms are struggling with the current low market interest rates? β all policy measures have their side effects. there is collateral damage, but we have a mandate and that states that we must maintain price stability. having said that, it is important to note that insurance firms especially have not done so badly in recent years. the value of their assets increased precisely on the back of the lower interest rates and they were able to push up the profit per share, more so than the banks could in any case. low interest rates are now causing problems, but it is exactly our objective to bring things back to normal. once we have price stability, interest rates will also go up again. β β here and there, we see that the maturity of the investments is out of sync with the maturity of liabilities. we also see that few strategies have yet been designed that would render insurance firms immune to this mismatch. that is why they should be cautious about the promises that | vitor constancio : interview in het financieele dagblad interview with mr vitor constancio, vice - president of the european central bank, in het financieele dagblad, conducted by mr marcel de boer and ms saskia jonker on 29 april 2015 and published on 4 may 2015. * * * front page the ecb β s controversial purchase programme will not be halted prematurely, even if the economy in europe is picking up more rapidly than expected, said vitor constancio, vicepresident of the european central bank ( ecb ), in an interview with het financieele dagblad. β the programme is working well. why should we think of discontinuing it when inflation is negative and inflation expectations are nowhere near our medium - term goal of close to 2 %? β so that option is not even on the table for the executive board of the ecb. β we only started it a few months ago. it would be very strange if we were already talking about stopping. β critics argue that the ecb is creating bubbles in asset markets because all markets are being driven up by the large - scale purchase programme ( known as quantitative easing ). but the portugese central banker is not afraid of that. β there is no generalised asset overvaluations in the euro area. β he acknowledges that quantitative easing is making investors take more risks because that is more profitable. β that is partly what we want to achieve through our programme, this so - called portfolio shift. the only danger is that the β search for yield β might get out of hand. we need to keep a close eye on that. it is the job of macroprudential policy, not of monetary policy, to avoid the build - up of bubbles β. article / q & a the view from the 41st and top floor of the european central bank β s new premises is overwhelming : huge buildings that suddenly look quite small, bright green patches of spring foliage, and aeroplanes in the distance glistening in the sun as they take off from frankfurt. vitor constancio contentedly takes in his surroundings as he enters the meeting room, slightly late but completely relaxed. slight of stature and wearing a grey suit, constancio, a portugese national, has every reason to be pleased : the ecb β s purchase programme is working, he says. β the european economy is moving in the right direction. β | 1 |
managing financial crises and alternative courses of action proliferate. politicians, whether or not they have the authority over the decision to intervene, want to satisfy themselves that intervention is justified and what is proposed is the right way forward. often the process of arriving at a consensus takes time and meanwhile the problem worsens and the effectiveness of the actions to be taken is eroded. i believe therefore that those responsible for the maintenance of monetary and financial stability should have the necessary emergency powers to do what is required independently and promptly. there is of course the need for transparency and accountability when exercising these powers to ensure appropriate checks and balances. at a time when many jurisdictions and international forums are reviewing the financial regulatory structure, the ability or inability of the financial authorities to take unusual action, independently and promptly, to protect the public interest should be addressed. my fourth and last issue is an involvement. this concerns the extent to which the authorities should be involved in the development of the financial infrastructure. i am sure you are aware of the huge amount of public money spent in all jurisdictions in the development of the physical infrastructure, building highways, bridges and airports to take people and goods from one place to another safely and efficiently, thus facilitating the conduct of economic activities for the benefit of all. authorities, however, seem to devote only disproportionately small amounts of resources to the development of the financial infrastructure to move money and financial instruments from one entity to another safely and efficiently for the purpose of enhancing financial efficiency that promotes economic prosperity. to some extent, the development of the financial infrastructure can be left to the market, with swift being a sterling example of private sector initiative in this area. but many of the important elements of the financial infrastructure are public goods, the provision of which, in a form that serves the public interest best, may not be financially viable for the private sector. furthermore, the conflict i mentioned earlier often comes in, affecting the willingness or the enthusiasm of the financial intermediaries to develop and use a financial infrastructure that promotes financial efficiency. i believe this is one of the main reasons why x in t + x in the settlement of some financial transitions is still a number other than zero, or why t + x is still not replaced by rtgs dvp even though the technology to do so has been available for some time. very simply therefore there is a case for the authorities to get involved, as a developer or a service provider, when a private sector solution that is in the public interest | darryl chan : opening remarks - treasury markets summit 2024 opening remarks by mr darryl chan, deputy chief executive of the hong kong monetary authority, at the treasury markets summit 2024, hong kong, 27 september 2024. * * * distinguished guests, members and friends of the tma, ladies and gentlemen : good morning. on behalf of the hkma and the tma, a very warm welcome to you all for joining this annual treasury markets summit. the annual event has been, and will continue to be, a great gathering that promotes the sharing of thoughts, ideas and friendship among professionals from the treasury markets and experts from related disciplines. i'd like to congratulate the tma team on curating a highly relevant and interesting programme for this year's summit. special thanks to our panellists who will generously share their insights and foresights on subjects that are so closely related to our day - today work such as china's economic outlook, and subjects that will or may have profound impact on the way financial markets including the treasury markets operate aβ¬ β here i am referring to cbdc and defi. and, speaking of china's economic outlook, these past couple of days were extraordinary. i am sure we can't wait to hear the sharing by our experts. and of course we also look forward to hearing what eddie has to say about offshore rmb business, a topic that i'm sure concerns almost every one of us here today, and a topic that is hugely important to sharpening the edge of hong kong as an international financial centre. but before we embark on the forward - looking journey, let me take a few minutes to highlight a number of remarkable achievements by the tma in the past year or so. in terms of market infrastructure, the tma's dedicated working group has done a wonderful job in helping market practitioners prepare for the smooth transition of libor to alternative reference rates and facilitating the adoption of hong kong dollar overnight index average, or honia, as an alternative to hibor. no fanfare, but the silence spoke volumes about the hard work behind the scenes. on the introduction this week of severe weather trading in our stock market, the tma has reviewed the arrangements of the financial benchmarks it administers and undertook to continue publishing hkd and cnh fx spot rates during severe weather conditions, facilitating the implementation of the new trading arrangement. the tma also actively provides market perspectives and advice in support of the development of | 0.5 |
toshihiko fukui : overall review of the bank of japan β s conduct of monetary policy statement by mr toshihiko fukui, governor of the bank of japan, concerning the bank β s semiannual report on currency and monetary control before the committee on financial affairs, house of councillors, tokyo, 28 october 2004. * * * introduction the bank of japan submitted its semiannual report on currency and monetary control for the second half of fiscal 2003 to the diet in june 2004. i am pleased to have this opportunity to present an overall review of the bank β s conduct of monetary policy. i. developments in japan β s economy japan β s economy continues to recover. overseas economies, one of the factors behind this recovery, are maintaining their expansion, although decelerating somewhat from their high growth so far. in the united states, growth in private consumption has decelerated due partly to the rise in crude oil prices. the pace of increase in the number of employees has also slowed compared with early spring. however, it appears that momentum for economic expansion is being maintained, since corporate profits and business fixed investment have been increasing. east asian economies, particularly the chinese economy, continue growing relatively fast. amid these developments in overseas economies, japan β s exports and production have been on a rising trend, albeit at a slightly slower pace, leading to an improvement in corporate profits and an expansion in business fixed investment. this virtuous cycle is a factor behind the current economic recovery. another factor behind the economic recovery is the considerable progress being made in dealing with structural elements such as excessive capital stock, debt, and labor in the corporate sector, and the vulnerability in the financial system, all of which had delayed the recovery of the japanese economy. as a result of the progress in these adjustments, corporate profits have increased substantially and the employment situation has been improving. looking forward, japan β s economy is expected to continue recovering with the ongoing expansion of overseas economies and the easing of structural adjustment pressure in japan, although attention should be paid to factors such as the effects of the significant rise in crude oil prices on both the domestic and overseas economies and developments in global it - related demand. on the price front, domestic corporate goods prices have been rising due to the strengthening at home and abroad of the prices of commodities such as crude oil and to the improvement in supply and demand conditions. consumer prices ( excluding fresh food, on a nationwide basis ), in contrast, continue to fall slightly on | months of 2009 amounted to $ 6. 98 billion, representing a yoy increase of 2. 8 percent. together, let us help overseas filipinos and their families put their money to optimal use, so that they can allocate their cash flows not only for consumer goods and leisure but also for smart spending and savings such as education, housing and investments. banks should also explore new products and services for overseas filipinos as well as guide them on the type of savings pattern and investments that are suitable for them. finally, baiphil can help develop teaching modules on saving, investment, and money management for adults and out - of - school youths in cooperation with the bangko sentral and the department of education β s bureau of alternative education. i am very pleased therefore that baiphil through president susan uranza, signed a memorandum of agreement with the bangko sentral last week to support our economic and financial education program including our savings promotion campaign which we call β banking on your future. β other organizations that have signed up as our partners for this program are the rural bankers association of the philippines, the chamber of thrift banks, the bank marketing association of the philippines and the bankers association of the philippines. the bsp has also set up economic and financial learning centers in our regional offices and branches where researchers can access economic and financial data generated and monitored by the bangko sentral. indeed, the bsp in coordination with the banking sector has taken a proactive stance to institutionalize an inclusive program for the economic and financial education of filipinos anchored on the theme, β financial education : building blocks for a stronger economy β. ladies and gentlemen. the bsp recognizes the need to continuously raise the bar of competency for banking professionals. at a macro level, the depth of skills of the entire banking sector workforce will be a crucial factor in building a stronger banking system. in this regard, i recognize that baiphil has been and will continue to provide support in strengthening the human capital base of our banks. the bsp, for its part, will remain committed and continue to craft appropriate monetary policies and banking reforms that will allow our economy to ride out the crisis. we will also move forward with reforms to protect consumers and investors. these initiatives, which we have vigorously pursued in recent years, are instrumental in instilling order and depth in the banking system, ahead of the onset of the global financial crisis. nevertheless, considering all that is happening in the global arena, we | 0 |
, the investment bank lehman brothers, and the insurance company american international group ( aig ). the federal reserve believes that, whenever possible, the difficulties experienced by firms in financial distress should be addressed through private - sector arrangements β for example, by raising new equity capital, as many firms have done ; by negotiations leading to a merger or acquisition ; or by an orderly wind - down. government assistance should be provided with the greatest reluctance and only when the stability of the financial system, and thus the health of the broader economy, is at risk. in those cases when financial stability is broadly threatened, however, intervention to protect the public interest is not only justified but must be undertaken forcefully and without hesitation. fannie mae and freddie mac present cases in point. to avoid unacceptably large dislocations in the mortgage markets, the financial sector, and the economy as a whole, the federal housing finance agency put fannie and freddie into conservatorship, and the treasury, drawing on authorities recently granted by the congress, made financial support available. the government's actions appear to have stabilized the gses, although, like virtually all other firms, they are experiencing effects of the current crisis. we have already seen benefits of their stabilization in the form of lower mortgage rates, which will help the housing market. the difficulties at lehman and aig raised different issues. like the gses, both companies were large, complex, and deeply embedded in our financial system. in both cases, the treasury and the federal reserve sought private - sector solutions, but none was forthcoming. a public - sector solution for lehman proved infeasible, as the firm could not post sufficient collateral to provide reasonable assurance that a loan from the federal reserve would be repaid, and the treasury did not have the authority to absorb billions of dollars of expected losses to facilitate lehman's acquisition by another firm. consequently, little could be done except to attempt to ameliorate the effects of lehman's failure on the financial system. importantly, the financial rescue legislation, which i will discuss later, will give us better choices. in the future, the treasury will have greater resources available to prevent the failure of a financial institution when such a failure would pose unacceptable risks to the financial system as a whole. the federal reserve will work closely and actively with the treasury and other authorities to minimize systemic risk. in the case of aig, the federal reserve and the treasury judged that a disorderly failure would | feedback loops between the two. this focus is different to the conduct - of - business - based rules that investment funds, for instance, have been subject to traditionally. the potential for collective action problems is the main rationale for a macroprudential perspective in the market β based finance sector, it is not concerned with idiosyncratic risk management issues at individual funds, although there are complementarities. progress has been made in strengthening the resilience of the funds sector since the financial crisis. for instance, the mmf regulation and aifm directive in the eu contain provisions that are more directed at increasing the resilience of funds and their managers. we at the central bank have been at the forefront of efforts to develop and operationalise the macroprudential framework for the funds sector. our strategy for this is based on two elements : first, examining the links between and risks from the fund sector to the domestic economy ; and second, given ireland β s role as a global hub for investment funds, participating in the global debate, seeking to advance the thinking on the development of the framework. the exposures of irish funds are largely international in nature but linkages to the domestic economy have been growing, especially via exposures to the commercial real estate market ( cre ). that is why we started a consultation last november on macroprudential measures for irish - domiciled property funds. our aim is to safeguard the resilience of the sector and ensure it is better able to absorb rather than amplify adverse shocks. we have had good engagement on these proposals and are now considering the feedback received before we finalise the design of the measures. we expect to announce the outcome over the coming months. we are working actively with colleagues β including taking leadership roles β at the fsb, iosco, esrb and esma as we develop the international macroprudential response to market based finance. key focus areas for us in these discussions are encouraging more use of certain liquidity management tools ( such as swing pricing ), achieving greater levels of consistency between asset liquidity and redemption terms ( especially for funds that invest in assets that generally do not trade ) and evaluating the wider approach to data for analysis of systemic risk from funds ( accounting for gaps in a proportionate and efficient way ). overall, it would be true to say that the macroprudential perspective ( for market - based finance ) remains underdeveloped, especially when compared with other parts of | 0 |
policy rather than as a broad based bottom - up movement. 48. i then reflected on the several infirmities of the indian cooperative sector, but argued that despite these infirmities, cooperatives have played a vital role in furthering financial inclusion. i then moved on to listing the main issues concerning the cooperative sector that we must address in order to revitalize it. finally, i raised five questions relating to the cooperative sector on the way forward that must engage the attention of this conference. 49. as i come to a close, i realize that i have been more cynical than i actually want to be. perhaps i should correct that. the cooperative ethic is unexceptionable. it has been and can be a powerful instrumentality for enfranchising the poor and the less privileged. indeed, there are numerous instances from around the world, and from india too, of successful bis central bankers β speeches cooperatives. yet for a variety of reasons, both financial and governance related, the credibility of cooperatives has got eroded, especially since cooperatives have come under the spell of several infirmities, some of them chronic. yet, it is possible to cure these infirmities and revive the cooperative structure into health and vibrancy. indeed this is not a matter of choice, but an imperative if we are to achieve our collective aspiration for inclusive growth. i hope this conference will help us find a way forward in this regard. my best wishes for the success of this conference. bis central bankers β speeches | said5, " - the conduct of supervision is a thankless task, one that is all too likely to tarnish the reputation of the supervisor. the best a supervisor can hope for is that nothing untoward happens. supervisors are only noticed when their actions anger the regulated entities, whether through restrictive or intrusive measures, or when they are criticized after a failure, such as a financial institution collapse or customer harm. despite the discussion around the need for allowing some degree of freedom for institutions to fail, supervisors inevitably face negative press when such events occur, regardless of the circumstances. " be that as it may, to conclude, while the task of supervision may be challenging but it is also essential for ensuring the stability and resilience of the financial system. as supervisors, it is through our vigilance, proactive measures, and continued evolution of supervisory frameworks that we can create a financial environment where institutions not only survive but continue to thrive in the face of emerging risks. as part of our vision for the next decade, rbi @ 100, the reserve bank of india aims to further engage with the central banks of the global south. we are dedicated to 2 / 3 bis - central bankers'speeches establishing a global model of risk - focused supervision, one that emphasizes strong risk discovery and compliance culture, and builds a " through - the - cycle " risk assessment framework. additionally, we are working towards creating a robust data analytics ecosystem to support our supervisory functions, ensuring that our approach remains forward - looking and agile in a rapidly changing world. with these thoughts, i look forward to an engaging and insightful panel discussion that will explore the evolving role of supervision in the face of emerging risks. thank you! 1 masciandaro, d and m quintyn ( 2013 ) " the evolution of financial supervision : the continuing search for the holy grail ", suerf 50th anniversary volume chapters : 263318. 2 a keystone is the wedge - shaped piece at the crown of an arch that locks the other pieces in place 3 mary dowell - jones & ross buckley, reconceiving resilience : a new guiding principle for financial regulation?, 37 nw. j. int'l l. & bus. 1 ( 2017 ). http : / / scholarlycommons. law. northwestern. edu / njilb / vol37 / iss1 / 1 4 principle 8 : supervisory approach of the basel core principles states an effective system of banking supervision requires the supervisor | 0.5 |
eu has strictly limited risk sharing arrangements between member states and none between the national banking systems. now, in the crisis, the divergence of the euro area economies has dramatically increased and the ecb could easily end up becoming such a risk sharing mechanism. the ecb or the eurosystem cannot become a mechanism for sharing fiscal risks between the member states. this is because its monetary policy and its independence could be compromised. the risks taken by the eurosystem must therefore be limited to what is required by monetary policy and by the goal of ensuring the transmission of the monetary policy to all parts of the euro area. there are very good reasons for not monetizing budget deficits in countries with a national currency. there are even more reasons for not doing so in a monetary union such as the euro area. before the crisis, it was too often argued that current account positions between members of a currency union are meaningless, and that there cannot be balance - of - payments crises within a currency union. the last couple of years have proven the fallacy of this view. the sovereign debt crisis carries all the hallmarks of a balance - of - payments crisis. it goes without saying that a central bank whose job it is to equalize monetary conditions between the crisis countries and the safe - haven countries will inevitably face a formidable task. it can only succeed if the imbalances within our currency area are solved, in the medium term, by real adjustments, including budgetary adjustment. the ecb is protected by its institutional independence. but as the crisis has demonstrated, this independence needs to be complemented by economic policies that avoid the build - up of serious imbalances within the currency area. all in all, the tradeoffs the ecb has dealt with during the crisis have been difficult. the challenge has been to do what is necessary to maintain a sufficient functioning of monetary policy transmission mechanism for the single monetary policy to operate, while at the same time avoid creating significant moral hazard and avoid making monetary policy a vehicle of fiscal transfers. the path between the two is narrow, and only time will tell whether we succeeded. conclusions the evolution of economics is driven by crises. the breakdown of the bretton woods system and the inflationary years of the 1970s gave impetus to an era of rapid progress of monetary economics. the result was a vast literature on central bank credibility, independence, transparency and price stability mandate. at the beginning of the new millennium, the development of monetary economics reached its culmination. | provide sustainable growth and to increase employment throughout the country. the role of monetary policies has been misunderstood for a long time. this wrong assumption is that the increase in inflation and growth are parallel to each other and growth rates can be accelerated by loosening the monetary policy. frankly speaking, in the framework of early economics literature, this assumption can only be verified in the short term, in countries where inflation rates are low and there is no credibility gap in monetary policies. however, the models developed and long - term analysis made after 1980s revealed that the loose monetary policy under high inflation conditions could only end up raising the inflation rate and growth would slow down due to uncertainties arising from inflation. we very well know from our own high inflation experiences in the past three decades and other countries β experiences that average growth slows down when inflation climbs and average growth accelerates when inflation falls. the high growth rates we achieved in the past three years, which were marked by the stability program, is a good evidence of this generalization. attaining price stability is a prerequisite for achieving sustainable growth. for this very reason, today, the primary objective of the central bank is to achieve and maintain price stability, which makes the biggest contribution to sustainable growth and increase in employment. distinguished participants, in this part of my speech, i would like to dwell on the three pillars of the change observed in inflation dynamics under falling inflation process. the first significant change observed in economies under falling inflation conditions is the decline in interest rates. if enough credibility has been established in the falling inflation process, significant decline is observed both in nominal and real interest rates and this process does not only lead to rise in expenditures but also in investments. within this framework, a more detailed examination of the struggle against inflation process in turkey reveals that decline in inflation also helped mitigate the fluctuations in inflation and this means less uncertainty and less volatility in economy. while decreased uncertainty brings along decline first in risk premium and then in nominal as well as real interest rates, it decreases borrowing costs from the consumers β point of view, and opportunity cost of investments from the producers β view point. at this point, i would like to draw your attention to a risk factor in which the decline in borrowing costs has a significant role. under chronic inflation conditions, consumers tend to renew durable goods such as automobiles, white goods and alike less frequently. however, when a certain point is attained in the process of reducing inflation, the consumers start purchasing their postponed needs. demand for | 0 |
required post - stress minimum capital ratios. indeed, a comparison with the original 2009 stress test shows the degree to which the 19 firms have improved their capital positions. the actual aggregate tier 1 common ratio of the 19 firms at the end of the third quarter of 2011 ( the beginning of the stress period ) was about 10. 1 percent, nearly double the 5. 3 percent aggregate ratio for the firms at the end of 2008 ( the start of the stress period for scap ). moreover, at 6. 3 percent, the post - stress aggregate ratio under the 2012 test would be higher than that actual aggregate capital ratio at the end of 2008, even assuming all proposed capital actions go forward during the stress period. as to qualitative conclusions from this year β s comprehensive capital analysis and review ( ccar ), most of the 19 bank holding companies have made considerable progress in their internal capital planning processes. however, there appears to be room for improvement at virtually every firm, and at some firms the amount of work needed is still significant. 2 this will remain a major focus of supervisory efforts, in next year β s capital review, and more generally. the 2012 experience in retrospect the 2012 exercise extended our supervisory emphasis on forward - looking, data - driven, horizontal assessments of the largest bank holding companies. it built upon, and incorporated, lessons learned from prior exercises. but these supervisory tools are still relatively new. just as capital planning and internal stress testing capacities could be improved at every firm, so we intend to consider both substantive and procedural improvements in our use of these tools. to this end, over the coming months we will be consulting extensively with academics, other analysts, and the banks themselves. substantively, the federal reserve will be focusing on potential refinements to supervisory models, such as modifying them to use more granular data. we will continue to pay considerable attention to model validation. among other things, we are forming an advisory group of academics and other experts to advise our internal model - validation team on an ongoing basis. then, later in the year, we intend to convene a modeling symposium to bring a broader array of voices into the discussion. we are, of course, mindful of the statements by some of the 19 participating bank holding companies that certain loss rates produced by the federal reserve β s model for the 2012 stress test significantly exceeded their own estimates. we may gain greater insight into the source of these differences as we proceed with the review of our modeling | klaas knot : how capital markets union can bolster monetary union speech by mr klaas knot, president of the netherlands bank, at the 47th international capital markets association meeting and conference, amsterdam, 4 june 2015. * * * mr. chairman, your excellency minister of finance, jeroen dijsselbloem, commissionner lord hill, esteemed icma - members and conference participants, 1. thank you for this opportunity to share my views on the european capital markets union. first, let me express my full support for the views expressed by his excellency, the minister of finance. i, too, very much welcome the initiatives by the commission geared at the further development and integration of european capital markets. i am confident that through the harmonization of regulation and the introduction of common standards we β ll be able to unlock important new ways of finance ; productive ways that will increase the resilience of the european economy, going beyond the traditional financing channels of banking. 2. it is true that in the euro area, small and medium - sized enterprises are still very much dependent on financing by banks. this implies that business investment in the euro area also depends on the availability of bank credit. and this creates vulnerabilities to the european economy. for example, when banks need to deleverage in order to strengthen their balance sheets. 3. the european bank - based financial system is often contrasted to the situation in the us, which is presumed to be more market - based. i should note that this difference is a bit more nuanced than is commonly acknowledged. for in the us as well, smes are similarly dependent on bank financing, in particular the smallest of firms. to the extent that smaller firms do access capital markets, this is mostly confined to specific sectors. a well - known example is the silicon valley industry, start - up tech - companies that are able to attract large sums of financing from venture - capitalists. 4. this refinement notwithstanding, in general it has been shown that well - developed access to market financing can complement bank financing. and economic research confirms that this can improve economic performance. the minister has eloquently explained how this would apply specifically to the european economy and set out how the capital markets union relates to the recently established european banking union. in my address, i want to focus on yet another perspective. i will give you my views on why the completion of a true european capital markets union | 0 |
hans reckers : interaction of market and credit risk welcome address by dr hans reckers, member of the executive board of the deutsche bundesbank, at the conference on the interaction of market and credit risk, berlin, 6 december 2007. * * * ladies and gentlemen i would like to warmly welcome you to our conference on the interaction of market and credit risk, which is being held jointly by the research task force of the basel committee on banking supervision, the deutsche bundesbank and the journal of banking and finance. as a board member of the deutsche bundesbank, i am proud that our institution is hosting this conference of distinguished researchers, bank practitioners, regulators, and central bankers. i am especially proud that the deutsche bundesbank offered to host this conference more than one year ago when it was not at all clear that the interaction of market and credit risk would be receiving as much attention as it is today. given recent events in the financial markets, the interaction of different risk types has become quite topical. the conference topic was not chosen as a result of outstanding forecasting power. rather, the main motivation of the research task force to form a working group on the interaction of market and credit risk was the diversification benefits between market and credit risk β which have not really made it into the headlines. instead, another aspect of the interaction of market and credit risk has become newsworthy. it is the question of how an economy is affected if credit risk starts to be traded or, in other words, if credit risk transforms into market risk. the uncertainty of who finally bears the risk can have more severe effects than market participants would have expected, say, one year ago. i will not talk too much about the ongoing turbulence in detail because i am sure that the reasons behind it deserve a rigorous analysis. instead, let me give you some information on how this conference came into being. at the risk of boring the members of the working group on the interaction of market and credit risk, i think it may help participants from academia, the industry and regulatory authorities to relate the topic of the conference to the interests of these three groups. traders in the front office have considered market and credit risk jointly for a long time, not only regarding counterparty risk but also for the purpose of capital arbitrage, for instance. by contrast, ten years ago this was hardly the case for the banking book, for which credit risk was mostly the only risk type considered. about a decade ago, the trading of | credit risk β either by securitisation or credit derivatives β started to grow rapidly. the chance to sell or buy credit risk, instead of holding loans until maturity, placed banks under increased pressure to know the present values of their assets well before maturity. this posed a challenge to risk modeling as present values depend in a complex way on market factors like interest rates or exchange rates. therefore, it is not surprising that the growth of credit trade was accompanied by rapid technological progress, for instance, by the development of new credit portfolio models. it is difficult to say which came first or β in other words β whether these new risk measurement techniques were the egg and the increased credit trade the hen or vice versa. technological progress has continued up to the present day. the interaction of market and credit risk is being taken into account by more and more sophisticated models. the increased trade of credit on the one hand offers an opportunity to further diversification of credit risk over the whole financial system and to contribute to financial stability. on the other hand, it can also be seen as a development incurring new risks, be it by an inadequate recognition of risks inside a single bank, be it by new adverse risk - taking incentives or by the imperfection of hedges, be it, finally, by new effects that no one had discovered before. these developments are a first reason for bank managers, regulators and central bankers to improve their understanding of the interaction of market and credit risk. in addition to these developments, some industry representatives were concerned that diversification effects between market risk and credit risk were being ignored by regulators, which could lead to too high minimum capital requirements. a deeper understanding of diversification effects and their relevance for risk aggregation in banks is a second reason to have a conference on the interaction of market and credit risk. at the end of 2005, the research task force project group on the interaction of market and credit risk received the mandate, first, to collect and summarise information on the state of the art of measuring the interaction of market and credit risk, and second, to set up and to conduct its own research projects in a rather broad field. as this was a vastly unexplored research area, the new working group has become one of the most research - oriented groups of the research task force. ladies and gentlemen, this conference contributes to bringing together three groups involved with the interaction of market and credit risk : bank practitioners, regulators, and researchers. the need to make them exchange their ideas and | 1 |
is accomplished by encouraging sound risk management and stronger balance sheets, and creating efficient systems of market, legal, and regulatory discipline. β’ but the learning process continues. for example, in this country, recent experiences have brought to light the need to do more to strengthen corporate accounting and disclosure standards, particularly with regard to guarantees and complex financial arrangements, such as those funded offshore or through special - purpose entities. β’ our ongoing efforts to revise the basel capital accord also reflect a learning process. we embarked on this voyage in the late 1990s because we realized that the original 1988 basel accord had been overtaken by advances in the financial sector β and in the broader economy. while the 1988 accord represented an important advance, new technology, the globalization of financial markets, and innovative financial products and services have changed the way that banks monitor and manage credit, market, and operational risks in a manner that the 1988 accord could not anticipate and does not address. β’ to ensure that the new accord remains flexible, forward - looking, and appropriate for the risks and capital needs of internationally active banks of the twenty - first century, the basel committee established several goals for its work, goals that the industry has embraced. g first, we intended to develop a framework that encompasses the " three pillars " necessary to support an effective system of regulatory capital : the appropriate measurement and minimum requirements, supervisory review, and market discipline. g second, we wanted to align the minimum requirements more closely with the actual underlying economic risks to which banks are exposed, which should help allocate capital resources effectively. g a third goal was to encourage banks to refine their measurement and management of risk over time. by creating incentives in the new accord for banks to re - evaluate and enhance their tools constantly, we expect that banks themselves will adopt a forward - looking perspective on risk. g i β m pleased to say that, through the committee β s efforts and the cooperation and support of other supervisors and the industry, it appears that the proposed framework will attain each goal. we can now count them among the milestones we've achieved. β’ however, though we have covered quite a bit of territory over the past three years, the last miles of any marathon are the toughest to finish. i β d like to turn now to the status of the new accord and of the issues we are still resolving. β’ since the second consultative document β s release 21 months ago, the members of the basel committee have worked collaboratively and publicly with supervisors | , a successful market - based, case - by - case approach also needs to be principled. i would suggest that the essence of an effective case - by - case approach is the development of viable plans that link broad, generally acceptable principles to the particulars of a given situation. g to achieve this, a clearer and more transparent articulation of the public sector β s objectives is necessary. greater emphasis and clarity are needed as to the purposes and limits of public intervention, and the extent to which those interests warrant different degrees, modes, and timing of public and private sector involvement, depending on the particular country and circumstances. in this way all parties will be better placed to understand current developments and how the international community might react to future strains. β’ there are, of course, other points of view. in particular, it has been suggested that an early recourse to broad suspensions of debt service, perhaps amplified or reinforced by capital controls, would increase the manageability of crises and enhance predictability. β’ my reading of the record convinces me that trying to preemptively override market processes would do the opposite. let me share a few thoughts with you on this point. g the desire for certainty and control which seems to underlie such proposals is understandable, as it appears to offer the promise of using less public money, and seemingly entails less risk that creditors will be bailed out for poor credit decisions. but the control and manageability that might result may be more seeming than real. g for one, a perceived disposition to preemptively lock the door seems likely to send investors heading for the exits all that much sooner. as a result, many avoidable crises soon may become inevitable. and the problem of contagion, whereby difficulties in one case spread to many, would seem likely to worsen. g moreover, a perceived weakening of the international community β s commitment to voluntary, market - oriented approaches and its support for honoring contractual commitments would likely create deep distrust, making it harder to encourage cooperation between debtors and creditors in ultimately resolving the crisis. g an overly quick recourse to payment suspensions also risks discouraging precisely the types of flows that we should wish to encourage, that is, longer maturities with better risk - sharing characteristics, such as long - term bonds and equities. in a crisis, the hottest money leaves first - - by definition. it seems counterproductive to seek to penalize those who stay. | 1 |
β integrating micro and macroeconomic perspectives on financial stability β, university of groningen, 26 may 2008. | while many liabilities were in foreign currencies β proved a constraint on monetary policy. central bankers understood that any reduction in the policy rate would likely weaken the currency, which in turn would raise the value of domestic borrowers β liabilities relative to their assets, with negative consequences for the solvency of both the nonfinancial corporate sector and the banking system. however, in the years following the asian crisis, currency and maturity mismatches were reduced substantially. in sum, stronger macroeconomic and financial fundamentals gave korean policymakers the flexibility they needed to respond to the crisis with more expansionary monetary and fiscal policies. improvements in the bank of korea β s monetary framework served the country well during the crisis and are likely to provide additional benefits in the future. over the past decade, many emerging market economies, including korea, have reoriented monetary policy toward domestic price stability and away from a focus on stabilizing exchange rates. the bank of korea, indeed, adopted a formal inflation targeting regime in 1998. since then, the exchange value of the won has become more flexible, inflation has declined to an average of about 3 percent, and β as i have discussed today β the ability of the bank to conduct appropriate countercyclical monetary policies has increased. this anniversary is also a good time to consider the challenges that the bank of korea and other central banks will face in the future. in the medium term, like the federal reserve and many other central banks, the bank of korea will have to manage its exit from accommodative policies. as is typically the case in the early stages of an economic recovery, the bank will have to weigh the risks of a premature exit against those of leaving expansionary policies in place for too long. because economic conditions vary, the appropriate timing of the exit is likely to differ across countries. to guide these important decisions, each central bank will have to carefully monitor economic developments in its own jurisdiction. financial reform is another important challenge facing central banks, including those in emerging market economies like korea. even though the origins of the recent financial shocks were largely outside the emerging markets, the international transmission of these disturbances was extraordinarily rapid. in the emerging market economies, these disturbances manifested themselves principally in terms of volatile capital flows, with capital outflows earlier in the crisis and capital inflows today each creating significant financial and economic challenges. strengthening the international financial system and ensuring that financial institutions are carefully regulated, well capitalized, liquid | 0 |
presentation of the 2018 annual report of the autorite de controle prudentiel et de resolution ( acpr ) press conference of 28 may 2019 speech by francois villeroy de galhau, governor of the banque de france, chairman of the acpr press contact : mark deen ( mark. deen @ banque - france. fr ). page 1 of 5 ladies and gentlemen, [ slide 1 ] i am pleased to welcome you to the presentation of the 2018 annual report of the autorite de controle prudentiel et de resolution ( acpr ), alongside bernard delas, vicechairman of the acpr, remi bouchez, president of the sanctions committee, and edouard fernandez - bollo, secretary general of the acpr. in 2018, the women and men of the acpr continued to work tirelessly to safeguard financial stability, in a context marked by the uncertainty β and at times the emergency β of brexit. i would like to thank them for their work. this morning, i shall focus on a topical issue β the profitability of banks and insurers in france and europe [ slide 2 ]. * * i. the profitability of french banks and insurers remains resilient the return on equity of france β s largest banks edged up by 0. 4 percentage points to 6. 7 % in 2018, i coming back in line with 2015 β s level. the maintenance of profitability levels needs to be viewed alongside the sharp rise in bank capital. french banks have strengthened their solvency and are now more robust. they have more than tripled their capital since the crisis. in parallel, they have raised their core capital ratios ( cet1 ) by nearly 8 percentage points since 2008, from an average of 5. 8 % to 13. 6 % in 2018 [ slide 3 ]. french banks β profitability is in line with the euro area average and well above that of their german counterparts. at an international level, only the us banks stand out as having an roe in excess of 10 %. french banks have come a long way in the past ten years, in a demanding economic, financial and regulatory environment. we need to be wary, therefore, about using two misleading points of reference, the first of which consists in comparing current roes to precrisis levels β when they were clearly too high β and the second in focusing on the cost of equity. apparently, the cost of equity | we have with the banks. i would therefore also like to thank the representatives of the supervised institutions for the mutual trust we have built up together. i am thinking in particular of the risk directorates. in the vast majority of cases, we work in a calm and constructive manner, in the common interest of a more resilient european banking sector. this is an important asset. given the difficult challenges that lie ahead in the very near future, in europe and around the world, we will need more than ever to rely on these relationships of trust. it's now time for me to conclude. i would like to thank you for your attention, both on site and remotely, and to thank the various speakers for the quality of the debates and presentations. let us continue to work together to ensure that the ssm remains the world - class supervisor that we have built : an asset for a resilient and competitive 2 / 3 bis - central bankers'speeches european banking sector, a token of confidence for european citizens and, last but not least, a support for our common currency and european integration as a whole. thank you all very much. 3 / 3 bis - central bankers'speeches | 0.5 |
allocates financial resources depends upon your doing it well. it is a heavy responsibility. but the official community equally has a responsibility to help in so far as it can. and we can help, i think, in three main ways. the first is through transparency in our macro - economic policies - in the provision of reliable data, and through clarity in both our monetary and fiscal objectives, in our analysis and in our decision - making, so that you are not exposed to wholly unpredictable behaviour and can make your own considered judgements as to how far our policies are likely to succeed. your judgements, of course, can in turn have an important bearing on our policy decisions. secondly we can help in providing robust infrastructures - and i have in mind not just the financial infrastructure, though sound financial systems are clearly hugely important, but much more widely the legal framework, accounting and disclosure standards, and governance structures, for example, as they apply throughout the private sector, so that again you can base your assessment of corporate credits on a fuller understanding of the risks. we have been making very considerable efforts in different international fora in recent years to establish codes and standards of best practice in all these areas which can be universally applied, but i don't need to remind you how far we all still have to go. and thirdly, in relation to sovereign debt, i think that the international community could, and should, do more to clarify the scale of official support that a country running into difficulties might reasonably look for, and the kind of conditions that it might expect to apply. as things stand at present neither the debtor countries nor their private sector creditors have much idea what to expect, and may be tempted to assume that they will be bailed out if things go wrong. greater clarity could help to persuade borrowers to face up to hard policy choices earlier, before things get out of hand, and enable the creditors to make a more objective assessment of the risks. i think, too, that it would be helpful if we could at least agree on best practice guidelines for a debtor country's handling of a situation in which it could not immediately honour its obligations. that, too, could help creditors better understand the risks that they are taking on. but while the official community can help in these ways, in the final analysis the buck stops with you, the investors. i find it encouraging that so many of you are attending this conference, at which many of the relevant risks, and | yandraduth googoolye : e - payment developments in mauritius keynote address by mr yandraduth googoolye, first deputy governor of the bank of mauritius, at a visa briefing on the economic benefits of e - payments, port louis, 8 october 2008. * * * good morning i am indeed glad to be here to share a few thoughts on the importance of electronic payment system for economic development. there is no doubt that the advent of electronic payment system has resulted in numerous benefits for consumers and suppliers in both developed and developing economies. empirically, it has been established that increased use of credit cards is positively co - related with economic growth and exports. in mauritius, the growth of e - payments, which cover the entire spectrum of use of the electronic media for settling transactions and would hence include among others, credit and debit cards, internet banking and mobile banking, has been tremendous. we, thus, had 382 atms in july 2008 as against 334 a year before and 293 in june 2005. the number of transactions using credit and debit cards went up from 3 million in june 2007 to 3. 7 million in july 2008 while the aggregate value of monthly transactions increased from about rs 5 billion to rs 6. 8 billion during this period. more than 1. 1 million credit and debit cards were in circulation at the end of july 2008, an average of more than one card per head of adult population. a few banks are already offering internet banking facilities while some others are in various stages of doing so. it is heartening to note that the use of electronic media is spreading to many other types of transactions rather than being confined to purchase of goods and services at points of sale, withdrawal of cash and to put through transactions on the b2c portals. thus, for instance, this year mra allowed on line payment of taxes through select banks which, coupled with efiling of tax returns, is a major step forward. the central bank has the responsibility of maintaining the stability of the payments and financial system. the bank of mauritius operates and manages mauritius automated clearing and settlement system which is the communication backbone for inter - bank settlements and for the real time gross settlement. we also play an enabling role by adopting a positive, though cautious, approach to development of e - payments in the country. the orderly development of any segment of financial sector would require sound regulatory framework. the present approach requires financial institutions under its purview to seek the bank β s | 0 |
expansions, losses, and eventually loan defaults. in many cases, of course, these loans regrettably end up being guaranteed by governments. if denominated in local currency, they can be financed with the printing press - - though with consequent risk of inflation. too often, however, they are foreign - currency denominated, where governments face greater constraints on access to credit. restructuring of financial systems, while indispensable, cannot be implemented quickly. yes, the potential risks to the banking systems of many asian countries and the potential contagion effects for their neighbors, and other trading partners, should have been spotted earlier and addressed. but flaws, seen clearly in retrospect, are never so evident at the time. moreover, there is significant bias in political systems of all varieties to substitute hope ( read, wishful thinking ) for possibly difficult pre - emptive policy moves, both with respect to financial systems and economic policy. there is often denial and delay in instituting proper adjustments. recent propensities to obscure the need for change have been evidenced by unreported declines in reserves, issuance by the government of equivalents to foreign currency obligations, or unreported large new forward short positions against foreign currencies. it is very difficult for political leaders to incur what they perceive as large, immediate political costs to contain problems they see as only prospective. reality eventually replaces hope, and the cost of the delay is a more abrupt and disruptive adjustment than would have been required if action had been more pre - emptive. increased transparency for businesses and governments is a key ingredient in fostering more discipline on private transactors and on government policymakers. increased transparency can counter political bias in part by exposing for all to see the risks of current policies to stability as they develop. under such conditions, failure to act would also be perceived as having political costs. we should strongly stress to the newer members of the international financial system - - the emerging economies - - that they should accelerate the restructuring of their financial systems in their own interests. but having delayed timely restructuring, many now find themselves with major shortfalls in bank liquidity and equity capital that put their systems at severe risk of collapse before any full restructuring is feasible. the imf, the world bank, and their major shareholders, the developed countries, may wish to facilitate adjustment through temporary loans to governments and the encouragement of private equity infusions to these banking systems. since | available to communities from public subsidies and tax credit programs that are targeted to lower - income people. in just the past two years, banks have reported making over $ 120 billion in community development loans nationwide. 2 this figure does not capture the full extent of such lending, because smaller institutions are not required to report community development loans to their regulators. evidence on cra and the subprime crisis over the years, the federal reserve has prepared two reports for the congress that provide information on the performance of lending to lower - income borrowers or neighborhoods β populations that are the focus of the cra. 3 these studies found that lending to lower - income individuals and communities has been nearly as profitable and performed similarly to other types of lending done by cra - covered institutions. thus, the long - term evidence shows that the cra has not pushed banks into extending loans that perform out of line with their traditional businesses. rather, the law has encouraged banks to be aware of lending opportunities in all segments of their local communities as well as to learn how to undertake such lending in a safe and sound manner. recently, federal reserve staff has undertaken more specific analysis focusing on the potential relationship between the cra and the current subprime crisis. this analysis was performed for the purpose of assessing claims that the cra was a principal cause of the current mortgage market difficulties. for this analysis, the staff examined lending activity covering the period that corresponds to the height of the subprime boom. 4 the research focused on two basic questions. first, we asked what share of originations for subprime loans is related to the cra. the potential role of the cra in the subprime crisis could either be large or small, depending on the answer to this question. we found that the loans that are the focus of the cra represent a very small portion of the subprime lending market, casting considerable doubt on the potential contribution that the law could have made to the subprime mortgage crisis. second, we asked how cra - related subprime loans performed relative to other loans. once again, the potential role of the cra could be large or small, depending on the answer to this question. we found that delinquency rates were high in all neighborhood income groups, and that cra - related subprime loans performed in a comparable manner to other subprime loans ; as such, differences in performance between cra - related subprime lending and other subpr | 0.5 |
assets can also be tokenized on other forms of distributed ledger technology. 6 request for information and comment on financial institutions'use of artificial intelligence, including machine learning, 86 fed. reg. 16837 ( march 31, 2021 ). 4 / 4 bis - central bankers'speeches | , they implement themselves, based on the terms specified by the parties. smart contracts may allow for what is called " atomic settlement. " rather than relying on each party to separately carry out its leg of the transaction, smart contracts can effectively combine the two, or more, legs of the transaction into a single unified " atomic " act that is executed by the smart contract. this may be an additional robust way to achieve delivery - versus - payment ( " dvp " ) and payment - versus - payment ( " pvp " ) functionality, such that one leg of a transaction settles if and only if the other leg settles as well. atomic settlement is useful because it can mitigate settlement and counterparty credit risks : it ensures that the buyer will not pay if the seller does not deliver ; and conversely, that the seller will not deliver if the buyer does not pay. in fact, private sector institutions are testing use cases to better understand the benefits and risks of this technology. firms have executed foreign - exchange trades using blockchain technology with smart contracts in an attempt to improve efficiencies. separately, financial institutions have used blockchain to facilitate intraday repo transactions. parties to these transactions may have more flexibility as to when the transactions settle, which in turn has the potential to create additional capital and liquidity efficiency. and blockchain's atomic settlement functionality may serve as another way to achieve an important risk mitigant : using repurchase agreements as an example, the repo " seller " can have confidence that it will receive the specified loan amount in exchange for the collateral it conveys ; while the repo " buyer " knows it will receive the specified collateral. 2 / 4 bis - central bankers'speeches these efforts are still in early stages, but i expect that as functionality expands with more currencies, eligible securities, and new products, there will be more participation and growth. that isn't to say that there aren't risks associated with tokenization and the use of smart contracts : smart contracts can have bugs and potential cyber vulnerabilities ; and instantaneous settlement raises its own set of risks. but there is considerable promise, and i look forward to seeing what private sector participants come up with to potentially enhance the way traditional transactions are conducted. artificial intelligence the second area i will discuss is artificial intelligence. can you go anywhere without hearing about ai? ai, as i am sure you know, is currently seeing a surge in interest thanks | 1 |
work of antoni gaudi. the modernistas looked to the past for inspiration, but applied modern tools and techniques to create something new with a focus on intricate details. of course, the basel ii framework does not have the beauty of gaudi β s sagrada familia, but i nevertheless think that both supervisors and the industry have accomplished something similar. basel ii builds on long - standing principles of bank safety and soundness, but with greater emphasis on modern tools of financial risk management and differentiation of drivers of risk. and, like the sagrada familia, the framework for basel ii is firmly in place but much work still remains until the plans are finally executed. as i β m sure you β re aware, with the publication of documents on trading book / double - default and downturn lgds last year, the basel committee has completed its work on basel ii policy development. our efforts are now firmly focused on the challenging task of implementing the framework as efficiently and effectively as possible. with that in mind, i would like to now touch on some issues relating to the calibration and implementation of basel ii, as well as work in both the committee and the industry on complex financial products and risk management calibration one of the committee β s objectives throughout the development of basel ii has been to maintain the overall level of capital in the banking system. to meet this objective, the committee introduced a socalled β scaling factor β of 1. 06 into the framework, with the agreement that this would be reviewed prior to final implementation. the committee has just completed its fifth quantitative impact study, or qis 5, and i would like to express my gratitude to those of you here today whose banks submitted data as part of this exercise. the basel committee will be meeting in berlin next week, and one of the main items on our agenda will be to discuss the results. we hope to be able to say more about calibration shortly thereafter. what i can say at this moment is that i have not seen anything that would call into question the framework, or which cannot be addressed through implementation.. we are carefully reviewing any dispersion of results to better understand the underlying reasons. some dispersion is to be expected within a risk - based system, but it is important that material dispersions are driven by actual differences in risk. in addition, while there is still a need for better data quality in the future, it appears that the quality of data | by lenders, which together with the higher economic uncertainty, might discourage them from lending. some lenders might react by demanding a higher risk premium on the interest rate charged on their lending operations, while others may instead decide to cut the amount they are willing to lend. this pattern has been observed in previous crisis episodes and, in particular, during the great financial crisis. for firms, the shock implies a significant fall in their turnover due to the lockdown measures introduced by authorities to prevent the spread of the virus. the turnover reduction together with the existence of fixed costs translates into an increase in firms β liquidity needs. firms may cover part of these needs by using their liquid assets or by resorting to the undrawn amounts in their credit lines, but in many cases these buffers will not be large enough considering the size of the shock. therefore, firms will try to cover their remaining liquidity needs by resorting to fresh borrowing. the result will be an increase in credit demand against the background of a possible contraction in credit supply. the severity in firms β liquidity risks depends on the amount and composition of liquidity shortfalls and the buffers firms have to cover them. according to micro simulations conducted by banco de espana staff, 68 % of firms would have liquidity shortfalls2 between the definition used here considers that a firm has a liquidity shortfall when cash inflows, basically arising from the sales of products or services, are below the payments relating to their operating activity ( supplies, rentals, financial expenses and personnel costs ) and those arising from their decisions to invest in fixed assets and debt repayments. april and december 2020, almost 10 pp higher than under a counterfactual scenario of no pandemic3. it is estimated that the corporate sector β s overall liquidity shortfalls between q2 and q4 2020 will amount to around eur 230 billion. ignoring liquidity needs associated with investment in fixed assets, which are less relevant for liquidity risks as this expenditure has a lower degree of commitment and can more easily be avoided, the liquidity shortfall during the same period is estimated to be around eur 25 bn higher than under the no - pandemic counterfactual scenario. additionally, results show that more than half of these liquidity needs could not be covered through the use of both firms β liquid assets and the undrawn amounts of their credit lines. these simulations also show that a prominent portion of firms β aggregate liquid | 0.5 |
its strong commitment to the rapid implementation of the basel iii agreement. as it was already said earlier in this eurofi colloquium, great attention is presently given to this very important piece of legislation, to verify and make sure that it is fully in line with the agreements reached at global level through the basel committee, the fsb and the g20. i am confident that this work will be satisfactorily concluded. sifis another important step taken to strengthen the resilience of the financial markets is the agreement reached on global systemically important financial institutions. a key lesson from the crisis is that incentives need to be put in place for banks to reduce their β systemic footprint β. so i am very pleased that at end - june this year the group of governors and heads of supervision, which i had the privilege to chair, adopted the consultative document regarding global systemically important banks. the envisaged measures have several objectives. these objectives include reducing the probability of an adverse event occurring, reducing the extent or impact of the failure of a systemically important bank and reducing the cost to the public sector. the framework is built on two building blocks that increase the loss absorbency of global systemically important banks. the first building block is a gradual capital surcharge based on the degree of systemic importance, ranging from 1 % to 2. 5 % of risk weighted assets. bis central bankers β speeches the second building block is that the additional capital requirements have to be met with common equity. the unambiguous choice of common equity as the unique instrument to meet the capital surcharge should ensure robustness. these measures complemented with supervisory judgement should capture structural and cyclical changes in the banking system. shadow banking the introduction of more stringent capital requirements for credit institutions under basel iii as well as the requirements for global systemically important banks, may provide incentives for banks to shift part of their activities outside the regulatory perimeter. it is therefore decisive that we continue our work to improve our capacity to identify and assess the potential risks stemming from the shadow banking system. we need to develop a better understanding of the interconnections between regulated and non - regulated entities. we also need to explore the possible channels of contagion that may result in adverse market dynamics. gaining a better understanding of the functioning of the shadow banking system is a key element of and a precondition for improving the efficiency of financial regulation and supervision across markets and jurisdiction. i strongly encourage the fsb | jean - claude trichet : intervention at the eurofi financial forum 2011 speech by jean - claude trichet, president of the european central bank, at the eurofi financial forum 2011, wroclaw, 15 september 2011. * * * ladies and gentlemen, it is a great pleasure for me to be back here at the eurofi financial forum. these events always provide a very good opportunity to exchange views on issues that are central to the effective functioning of the financial sector and its key task of supporting sustainable growth in the real economy. as we are all well aware, this is a very challenging time for the advanced economies. we avoided a dramatic economic depression in the autumn of 2008 β following the collapse of lehman brothers three years ago to this very day. but we still have a long way to go to move beyond this crisis. at the pittsburgh summit two years ago, the g20 leaders reiterated their promise to do β everything necessary to ensure recovery, to repair our financial systems and to maintain the global flow of capital β. now, more than ever, we need to make significant progress in delivering on those promises. today, i would like to focus on what has been achieved so far by our collective efforts to repair our financial systems β in particular, the establishment of the new european supervisory structure, the agreement on basel iii and the global framework for systemically important financial institutions ( sifis ). but i also want to look at the road ahead : we must not stop here and leave our task halffinished. there is still very important work to be done on a number of regulatory challenges. and with all our reforms and with all our new institutions of economic and financial governance, we must ensure timely implementation so that we can ensure that we have done everything to make a difference as regards the resilience of the global, regional and national financial systems. the esrb let me start with some of our accomplishments before moving on to highlight some key areas where we need to make progress. the first accomplishment is the establishment of the european systemic risk board ( esrb ) earlier this year. as you know, the esrb brings together the policy makers such as central banks, supervisors and the commission, thus fostering a broad - based review of risks and vulnerabilities and a deeper understanding of interlinkages and spillovers between different parts of the financial system. this wide - ranging perspective, which encompasses both micro and macro elements, is an essential feature of the new european supervisory framework and it | 1 |
has expanded in recent years through numerous programmes ( app, pepp, tltros,.. ) and is now just short of 9 trillion euros. it would not be consistent to keep a very large balance - sheet for too long in order to compress the term premium, whilst at the same time contemplating tightening policy rates above neutral. in addition, rising remuneration on very large excess reserves may alter the transmission of the desired tightening through the bank channel. but obviously, this question is less pressing than the rise of interest rates to neutral, and should come only at a later stage. let me simply put forward at this stage a few preliminary principles that could in my personal view guide the normalisation of our balance sheet, in due time : first, our key interest rate should remain our primary instrument to adjust our monetary policy stance. the size of our balance sheet should be used as a complementary policy tool, whose effects are more difficult to calibrate or finetune. page 11 sur 14 second, we should follow a clear sequencing regarding the various programmes : ( i ) the reimbursement of tltros comes first, and we should avoid any unintended incentives to delay repayments by banks ( ii ) at the other end, pepp should be reinvested until the end of 2024, as stated ( iii ) this leaves inbetween app for which the governing council has said that reinvestment will continue in full until β well past the date when it started raising the key ecb interest rates β. here we could start earlier than 2024, maintaining partial reinvestments but at a gradually reduced pace. third, the phasing out of the asset portfolio should be orderly, announced cautiously and well in advance. the β stock effect β of asset holdings, which is the key transmission channel, primarily depends upon the expected end - point of the balance sheet normalisation, in terms of both the terminal date and size. fluctuations in the pace of the run - off during the travel to destination do matter less. fourth, as taught by us experience in 2017 - 2019, the pace of the balance sheet reduction should not be left completely on β automatic pilot β. starting slowly, assessing markets reaction, and gradually accelerating seems like a sound approach. some flexibility should be kept, in case of sudden liquidity shocks. indeed, the β flow effect β may temporarily play a role when market liquidity abruptly dries up. iii. a sensitive co | potential output? the decline in the working age population due to ageing should negatively affect potential output in the long run, through the decrease in the labour force contribution and productivity, all other things being equal. i must stress here that france has a specific advantage : its population is expected to keep on growing fast for some decades thanks to a relatively high fertility rate and a dynamic migration policy ; while our german neighbours for instance are on a decreasing trend. overall, based on european commission projection trends, we estimate that the expected decline of 1. 5 % in the working age population in the european union between 2010 and 2020 could take 1 percentage point off its potential output. but there are ways to offset this evolution. a rise in the participation rates of the young, seniors and women is one of them. pension and labour market reforms implemented in europe are certainly a step in the right direction and should be further pursued. bis central bankers β speeches provided that the necessary reforms are implemented and that some changes in working habits are made, we expect that the euro area will be able to cope reasonably well with the expected fall in the population and working age population over the long run, notably in terms of the potential growth rate. nevertheless, ensuring that public spending dynamics remain sustainable in the face of population ageing will continue to be a challenge, given the current debt situation in europe. 2. impact on savings and investment how are savings likely to evolve, both in terms of levels and structure? levels of savings if we follow the consumption smoothing theory, individual savings behavior is driven by the life - cycle : individuals tend to increase their savings as they earn more and then decrease their savings until they actually become negative when they retire and earn less, thus leading to a hump - shaped pattern for their accumulated wealth. consequently, as the proportion of the aged population increases, private savings, as a proportion of income, should decrease. however, this decline may be gradual with the negative impact of ageing on the levels of savings prevailing in the longer run. structure of savings in terms of structure, the fact that elderly people account for an increasing share of the population could change savings habits and have an impact on the demand for certain classes of assets. in particular, given that elderly people are more risk adverse, this could increase the already high demand for low - risk assets. investment the standard production function exhibits two productive inputs : labour and capital. if the labour force tends to decrease or decelerate because of demography, then the | 0.5 |
5. 8 per cent as on march 31, 2022 and 7. 3 per cent as on march 31, 2021. the crar at 16. 1 per cent at end december 2022 is also much above the minimum regulatory requirement. macro stress tests for credit risk indicate that scbs would be able to comply with the minimum capital requirements even under severe stress scenarios. 9. nevertheless, the recent events in the banking landscape of the us and europe suggest that risks for an individual bank could crop up from segments of its balance sheet which might have been considered relatively safer. hence, we expect the management and board of directors of each bank to continually assess the financial risks and focus on building up adequate capital and liquidity buffers even beyond the regulatory minimum for continued resilience and sustainable growth. 10. let me now focus on operational resilience. this would mean that a bank should be able to deliver critical services even in the face of disruptions. cyber risks and possible cyber - attacks are on top of the list so far as such disruptions are concerned. 11. cyber risk has been identified as the foremost in top ten operational risks for 2023 based on a global survey1 of financial institutions. the bank for international settlements ( bis ), while revising the principles for sound management of operational risk in 2021, introduced a specific principle on'information and communications technology ( ict ) risk management'reflecting the importance of this risk. robust it and information security governance would help in increased predictability and reduction of uncertainty in operations, minimise losses from information security related incidents and enhance operational resilience. given the extensive level of outsourcing being 2 / 6 bis - central bankers'speeches done by the banks and also by other regulated entities, there is even greater need for ensuring that effective policies and practices are in place in this regard. even the g20 finance ministers and central bank governors are focusing on risks arising from third party dependencies. the rbi has taken a slew of measures in the recent years with usage of advanced analytical and surveillance tools along with techniques like phishing simulation and cyber reconnaissance exercises to push for enhanced it and cyber security governance processes in banks and other supervised entities. in the context of the growing exposure of regulated entities ( res ) to various risks from dependency on third - parties which provide technology and it - enabled services, the reserve bank has recently on april 10, 2023 issued comprehensive guidelines on information technology outsourcing2 by banks, nbfcs, and | ##ing the indian financial system and provide the required support for sustainable growth. i am confident that this global conference on financial resilience organised by the college of supervisors with participation of experts from india and abroad will add considerable value to the body of knowledge in the area of resilient financial systems. i have been informed that many research papers on identified themes have been received and select papers have been made part of the maiden issue of the journal of financial resilience, which was released today. i am sure the deliberations during the conference would provide a lot of food for thought and bring new perspectives on the evolution of financial regulation and supervision. i wish the conference all success! thank you. 1 source : risk. net 2 master direction on outsourcing of information technology services 6 / 6 bis - central bankers'speeches | 1 |
, l. sigalotti ( 2016 ), β an indicator of inflation expectations anchoring β, banca d β italia, mimeo neri s., a. notarpietro ( 2014 ), β inflation, debt and the zero lower bound β, banca d β italia questioni di economia e finanza ( occasional papers ), no. 242 rey h. ( 2013 ), β dilemma not trilemma. the global financial cycle and monetary policy independence β, federal reserve bank of kansas city economic policy symposium bis central bankers β speeches | - performing loans to total loans fell to 18. 2 % at the end of 2016, at the same level as in the previous year. therefore, the reduction of non - performing loans and creation of stimuli to boost sound lending has been and remains a priority issue for us. the bank of albania has worked in several aspects to address this problem. first, the assessment of the credit risk and the recoverability of non - performing loans have been subject to intensive monitoring during our on - site examinations. in parallel, we have maintained a prudent approach in assessing lending policies and practices applied by banks. second, the bank of albania has fulfilled its engagements under the national plan for the reduction of non - performing loans. in this regard, the bank of albania has made regulatory amendments to clarify the concept of non - performing loans write off and the administration of properties taken into ownership as a result of collateral enforcement. moreover, the bank of albania has cooperated with the imf to review the regulatory framework about the licencing of companies that purchase bad debt. third, we have strengthened the regulatory and reporting requirements for banks as regards the due management of credit risk, in accordance with european practices. fourth, we have intensified the communication with the banks to address the credit portfolio quality, concerning both the treatment of non - performing loan borrowers and loss loan write off. fifth, the coordinative role of the bank of albania has produced results in terms of restructuring borrowers exposed to more than one bank and will continue in this year to prepare an interbank cooperation platform for a solution to common borrowers ; the bank of albania is drafting it in cooperation with world bank β s finsac project. in our judgement, the steps taken insofar for resolving non - performing loans will contribute to a fruitful environment to boost sustainable and sound lending. this is a major priority, which requires a multidimensional action matrix and a broad cooperation between state authorities and the banking system. in this aspect, the bank of albania drafted and promoted the signing of a joint memorandum of understanding for the sound growth of credit in albania1. in the supervisory process, the bank of albania has supported the pursuit of pro - active policies 5 / 8 bis central bankers'speeches against potential risks, with regard to both the quality of the risk analysis performed by banks, and the creation of adequate provisions. this new approach, introduced a year ago, has required amending the regulatory framework, as well as internal practices and capacities | 0 |
bank of japan β s december report of recent economic and financial developments1 bank of japan, 20 december 2001. * the bank β s view * * japan β s economy is deteriorating broadly, as private consumption is weakening in addition to a decline in exports and business fixed investment. with regard to final demand, net exports ( real exports minus real imports ) continue to decline and business fixed investment is also decreasing. housing investment remains sluggish and public investment is on a downward trend. moreover, private consumption is weakening recently. industrial production continues to decline considerably, reflecting these developments in final demand and the still strong excessiveness in inventories mainly in materials. corporate profits are falling and business sentiment keeps on worsening. the weakness in household income is becoming noticeable amid the decrease in the hours worked and the rise in unemployment, and consumer confidence is becoming cautious. turning to the outlook, as for exporting conditions, inventory adjustments in it - related goods worldwide are showing steady progress, and this has strengthened the view that adjustments will be mostly completed by around next spring. however, as final demand of it - related goods still remains stagnant, a distinct recovery in exports of the sector is unlikely for the time being. moreover, the world economy has decelerated further since the terrorist attacks of september 11, and there is considerable uncertainty about future economic developments especially for the u. s. therefore, such concern still exists that downward pressure may be exerted on japan β s exports and production once again depending on the developments in overseas economies such as the u. s. meanwhile, with respect to domestic demand, business fixed investment is expected to follow a downward trend amid the fall in corporate profits. private consumption will also continue to be weak along with deteriorating employment and income conditions and the more cautious consumer sentiment. government spending is basically projected to follow a downward trend while domestic private demand generally weakens on top of the uncertainty about exporting conditions. consequently, it may take quite a while for economic activity as a whole to stop declining, even though the decrease in industrial production may moderate somewhat in line with the progress in inventory adjustments such as of it - related goods. overall, japan β s economy will inevitably continue to deteriorate for a while. in this situation, continuous attention should be paid to the risk of a negative impact on the economy induced by developments in foreign and domestic financial markets. with regard to prices, import prices continue to decline reflecting the softening of international commodity prices. domestic wholesale prices are declining | faster from the effects of the fall in crude oil prices in addition to the continuous decreases in prices of electrical machinery and materials. consumer prices are weakening owing mainly to the decline in prices of imported products and their substitutes. corporate service prices continue to decrease. as for the conditions surrounding price developments, crude oil prices remain weak. also, as the economy will continue to deteriorate, the balance between supply and demand in the domestic market will increasingly exert downward pressure on prices. furthermore, in addition to the declining trend of machinery prices caused by technological innovations, the decreases in the prices of goods and services reflecting deregulation and the streamlining of distribution channels will continue to restrain price developments. overall, prices are expected to follow a gradual declining trend for the time being. moreover, given the high degree of uncertainty regarding future economic developments, the this report is based on data and information available at the time of the bank of japan monetary policy meeting held on december 18 and 19, 2001. the bank β s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on december 18 and 19 as the basis for monetary policy decisions. possibility that weak demand will further intensify downward pressure on prices warrants careful monitoring. in the financial market, the overnight call rate is moving around zero percent as the bank of japan provided ample liquidity to the money market by aiming at maintaining the current account balances held at the bank at above 6 trillion yen. interest rates on term instruments basically continue to be level. the japan premium remains negligible. yields on long - term government bonds are virtually flat, and are mainly moving around 1. 35 percent recently. as for the yield spreads between private bonds ( bank debentures and corporate bonds ) and government bonds, while spreads between bonds with relatively high credit ratings and government bonds remain mostly unchanged, those between bonds with low credit ratings and government bonds continue to expand slightly. stock prices are weakening recently. in the foreign exchange market, the yen is currently being traded in the range of 127 - 129 yen to the u. s. dollar, moving around the lowest level for this year. with regard to corporate finance, private banks appear to be more cautious in extending loans to firms with high credit risks while they continue to be more active in extending loans to blue - chip companies. the lending attitudes of financial institutions as perceived by firms are becoming more cautious. in corporate bonds and cp markets, the fund - raising conditions continue to | 1 |
jean - pierre roth : recent economic and financial developments in switzerland introductory remarks by mr jean - pierre roth, chairman of the governing board of the swiss national bank and chairman of the board of directors of the bank for international settlements, at the half - yearly media news conference, berne, 14 june 2007. * * * the swiss national bank is raising the target range for the three - month libor with immediate effect by 0. 25 percentage points to 2. 00 β 3. 00 %. with this move, the national bank is ensuring that inflation prospects remain favourable. the snb intends to hold the rate in the middle of the target range for the time being. switzerland's economy is in excellent shape. indeed, the economy is developing even better than expected back in march. for 2007, the national bank now expects real gdp to grow at a rate of close to 2. 5 %. the healthy economy in the neighbouring countries and exchange rate developments have been contributing factors. together with a renewed rise in oil prices, this has led to a slight deterioration in inflation prospects β even after today's increase in the interest rate. assuming that the three - month libor remains unchanged at 2. 50 %, the national bank expects an average annual inflation rate of 0. 8 % in 2007, 1. 5 % in 2008, and 1. 7 % in 2009. consequently, forecast inflation continues to rise. however, at present there is considerable uncertainty with regard to the assessment of the inflation outlook. on the one hand, structural changes in the economy still have a dampening effect on prices. on the other hand, given the high level of capacity utilisation and movements in the exchange rate, there is a danger that higher production costs will increasingly be passed on to prices. should economic momentum remain unchanged or should movements in the swiss franc result in a further relaxation of monetary conditions, further increases in the interest rate are likely in the months ahead. economic outlook the international environment has a strong impact on economic developments in switzerland. according to the imf forecasts, the global economy is poised to grow at a sustained rate of approximately 5 % in 2007. while the economic activity in the united states has been satisfactory, it is a little less dynamic than expected. by contrast, the economic situation in europe is clearly healthier than we had expected. this encouraging development has had a favourable impact on our economy. economic activity in switzerland continued to be dynamic in the first months of the year. in | thomas jordan : the challenges of the global economic crisis β can switzerland master them? summary of a speech by mr thomas jordan, vice - chairman of the governing board of the swiss national bank, on the occasion of a panel discussion at the central bank of the republic of austria, vienna, 1 february 2011. the complete speech can be found in german on the swiss national bank β s website. * * * many countries are facing major economic challenges as a result of the financial and economic crisis. which of these are of particular importance for switzerland? and how can we tackle them? switzerland is currently facing three key challenges. first, the crisis has shown that countries can encounter serious difficulties due to systemically important banks. switzerland has two systemically important banks, in fact, these big banks are systemically important even at the global level. thus for our country, in particular, it is essential that the stability of the financial system be sustainably reinforced. second, the crisis has substantially changed the economic environment in which switzerland β an economy with an extremely global orientation β operates. on the one hand, our country has to cope with the appreciation of the swiss franc, particularly against the euro, which has come under pressure because of the sovereign debt crisis affecting certain european countries. on the other hand, the crisis has reinforced the shift in economic power towards the emerging economies. consequently, switzerland must do everything it can to secure its competitive position in this changing world β now and in the future. third, convincing answers will be needed to counter the international pressure on switzerland, which has increased considerably of late, particularly in connection with the question of the tax compliance of foreign assets in switzerland. these are formidable challenges. however, switzerland is well equipped to meet them with confidence. what is essential is that we are able to benefit from the strengths that characterise the country now as in the past. these success factors include ( a ) a social and political culture that builds on inclusiveness and the ability to reach a consensus, ( b ) innovative ability and flexibility, and ( c ) political and economic stability. bis central bankers β speeches | 0.5 |
cycles as the matured economies do. in the matured market economies, due to the obvious cycles in economic growth, the adjustment of interest rate also show a periodic feature, that is, raising the interest rate in one period and cutting the rate in another. the pattern of economic cycles in china is not yet that stable, so it β s not appropriate to say that we have entered a certain period. the central bank β s decision on raising the interest rate will be based on the close monitoring of the changing economic and financial situation and timely analysis of the development of macroeconomic indices. with regard to the β negative interest rate β, we shall understand that interest rate policy is not meant to ensure that the real interest rate is positive at any particular point of time. instead, it depends on various factors. first, the month - on - month cpi in china is significantly affected by seasonal factors. it may be high in one month and much lower in another. as regards the year - on - year cpi, it should not be used as the sole basis for judging whether the real interest rate is at an appropriate level, since the base figure of the same period of the previous year may contain some abnormal factors. therefore, we should base our judgment on careful analysis and forecast. second, the saving rate in china is very high. large amount of savings have been channeled to investment projects, leading to overheating in some sectors. the premier β s report on the work of the government pointed out that steps will be taken to boost domestic demand by expanding consumption. high interest rate on deposit will adversely affect the efforts to increase consumer demand. third, investment can be financed by savings through many channels, including the banking system, capital market and direct investment. in china, an excessively large share of financing is made through the banking system, while that made through the capital market and direct funding is relatively low. so the asset - liability ratio or debt to equity ratio of the enterprises is unduly high. we will take measures to promote the funding of investment through channels out of the banking system. in sum, whether the interest rate of deposit is positive or negative is not the only consideration in formulating the interest rate policy. there are various factors that need to be considered in setting an appropriate interest rate level. reporter : on march 16, 2005, the central bank announced its decision to modify the policy on individual housing loans. the new policy prescribes that preferential interest rate is no | with a significant rise in uncertainty. this scenario captured many channels likely to affect the canadian economy, including foreign demand and commodity prices. it also attempted to capture some amplification from elevated household debt. it did not, however, include the effects of any financial turbulence coming from international markets. 6 see c. a. wilkins, β the age of leverage β ( remarks to ubc vancouver school of economics and cfa society vancouver, vancouver, british columbia, march 14, 2019 ). - 5is that in times of stress, redemptions of fixed - income etf shares could amplify volatility in the value of these shares and in prices in the underlying corporate bond market. other riskier forms of lending, such as leveraged loans, which are increasingly being packaged into collateralized loan obligations ( clos ), have been growing rapidly too. 7 globally there β s about us $ 700 billion of clos outstanding and issuance is strong. the financial engineering behind the structure has been improved since the crisis, but there is still room for concern. for one, the quality of the underlying loans has declined, and many of them lack the usual protections through covenants. the dynamics in an unwind of any of these more complex instruments could look a lot like a case of deja - vu. those in montreal during the financial crisis will remember that complexity of financial engineering and liquidity mismatch were at the heart of more than one problem. the first line of defence against these risks is clearly with people like you in this room β understanding and mitigating your own risks and building contingency plans in case something goes wrong. the bank is stepping up our own monitoring too, especially as it pertains to non - bank financial intermediation, and is leading an initiative to build greater information sharing among federal and provincial regulators. 8, 9 now, how could the trade war create a perfect storm? what i mean by a perfect storm is a combination of an economic downturn and financial stress. an increase in uncertainty or bad trade news could be the trigger. this, in turn, could spark a sharp reversal in risk premiums and lead to a drop in prices for assets, including for houses. creditors would see more defaults, especially from corporations with lower credit ratings. moreover, if enough investors rushed to adjust their portfolios at the same time, liquidity would dry up, amplifying the effects. 10 all of this would find its way to the | 0 |
today, we want to promote the equal access of all persons within our country to the conveniences of this nature that the financial sector provides. it comes across, for example, in the ways that we endeavour promote modernised delivery channels for services that do not impose the same product constraints as a physical banking network. it also comes across in simplified regulations to make it easier for all persons inside our borders to have access to legitimate banking services β whether they are employed or not ; and whether they are bahamians or not. also, recognising that a focus, rightly, is to keep illicit activities from infiltrating our financial services it comes across in being more attentive to those who could pose such risk, rather than treating all users and their transactions with suspicion. we will continue to do more work in this area. exchange controls have always been synonymous with the important tools we deploy to preserve the one - to - one value of the bahamian dollar against the american currency. 1 / 3 bis central bankers'speeches successive central bank governors have led reforms to liberalise these administrative processes. the constraint that you constantly faced on the speed of change was how swiftly the financial management practices and reforms on the government β s end materialised, to leave open a stable path for permanent change. another constraint was the speed at which the central banks β own capacity increased to manage foreign reserves usage through less administrate channels. we have made more progress in these areas than is even realised or acknowledged. the exchange control department has gone from being the largest operating units in the bank to one of the smallest. it is transforming more and more to data gathering and intelligence operation. today, firms in the private sector that have a positive nexus to foreign exchange earnings activities or those that promote strategic national development priorities enjoy direct access to capital raising in foreign currency. they operate within limits that would rarely constrain the small and medium - sized operations that should be engines of growth in any economy. now, the entrepreneurial set also has expanded access to establish businesses outside the bahamas, or to use such access to establish firms in international financial services sector. the examples of those who have taken advantage of these facilities is increasing, although not as fast as we would like. going forward, the key word for the central bank is being β progressive ". we are open to reforms in our policies and administrative processes and to advocating when necessary, for pre - requisite reforms elsewhere in the economy that would make our | defined nine different categories of business model, ranging from large universal banks and domestic lenders to specialised asset managers. we then place each bank in one of these categories and can thus compare it to its european peers. like all supervisors, we ask one very general question : can a bank generate sufficient returns within a framework of suitable risk appetite and on the basis of a clear and sustainable funding structure? 1 / 3 bis central bankers'speeches for us, a business model is viable if it can generate such returns over the year ahead. and it is sustainable if it can generate such returns over a three - year period and through a full business and economic cycle. the first step we take when we analyse a business model is to map out the general strategy of the bank. we try to understand its main sources of profit and how they might be affected by economic developments. we then refine the map by comparing the bank with its peers across the euro area. as i just mentioned, this is one of the main benefits of european banking supervision. the next step is then to derive an automated score. this score is based on indicators such as the return on assets and the cost - to - income - ratio. and as i already said, we then complement the scoring with expert judgement. in doing so, we take a forward - looking approach. and what we look for are key vulnerabilities. we assess how profits might evolve over time. we analyse the bank β s strategic plan ; we take into account its financial forecasts and assess how it might be affected by internal and external factors. in the light of this assessment, we might adjust the score. the final result then feeds into the srep and guides us when we determine supervisory capital add - ons and other measures. as the ecb is still a young supervisor, we still need to learn more and dig deeper. that β s why, in 2016, we launched a thematic review of banks β profitability drivers at firm level and across business models. that review is still ongoing and will provide some more tools to support us when we analyse business models and monitor profitability. it will strengthen our ability to identify banks with structurally low profits ; and it will examine in depth how banks respond to weak profits β now and in the future. the thematic review will conclude at the end of this year. are we satisfied with the business models of banks in the euro area? are we satisfied with the progress banks have made by learning the lessons | 0 |
, truong, and vehbi ( 2019 ). 13 kent ( 2015 ) ; kent ( 2019 ). 14 jacob and van florenstein mulder ( 2019 ). figure 7 : monetary policy transmission15 ocr new zealand dollar exchange rate market interest rates lending rates inflation expectations deposit rates import prices debt servicing costs imports exports house prices saving borrowing consumption investment gdp employment inflation source : reserve bank of new zealand, monetary policy handbook. even with the same debt levels, lower interest rates reduce servicing costs and free up cashflow. lower interest rates will also be associated with higher asset prices, creating a wealth effect through to consumption. 16 furthermore, many of the other channels, such as the exchange rate channel, will still work regardless of debt levels. finally, it fits with recent experience that monetary policy does still have bite even in this low interest rate world. in new zealand, we lifted the official cash rate by 100 basis points over the course of the first half of 2014 to head off an expected increase in inflationary pressure. when this did not arrive as expected, the tightening in monetary policy ended up being one factor that contributed to the slowing in the economy into 2015. internationally, we have also seen the us federal reserve tighten monetary policy through to 2018, and this is one factor that has contributed to the moderation in us growth and inflationary pressure into 2019. these are ongoing examples of monetary policy continuing to play a key role in inflation dynamics. so if we think that inflation dynamics are changing and that monetary policy is still an effective tool, how are we applying that in new zealand β s current economic environment? 15 more on the transmission mechanism and other topics can be found in the monetary policy handbook, available at https : / / www. rbnz. govt. nz / monetary - policy / about - monetary - policy / monetary - policyhandbook. 16 wong, ( 2017 ). our august 2019 monetary policy statement as our monetary policy committee met earlier this month, our starting point was a new zealand economy where the labour market was operating near maximum sustainable employment, but annual core inflation remained persistently below the 2 percent mid - point of our target range. we discussed the slowdown in global growth and global risks that lay ahead, and how this might affect new zealand. we also addressed the loss of momentum in the domestic economy since mid - 2018, through both tempered household spending and restrained business investment. as part of the assessment, our discussion also touched on the decline that had occurred | . and the hackers came close to getting away with usd $ 1 billion. new zealand has been less exposed to cyber - heists than many other countries, ranking 18th of 19 in the list of most attacked countries in the asia pacific region ( australia is 16th and pakistan 1st ) 2. but with the landscape evolving so rapidly, it is important that the industry remain ahead of the game on cyber - security and be cautious when adopting new technologies and payment solutions. network effects are inherent in payment systems and other fmis, and result in a high degree of systemic risk. if fmis are not well managed, they can become a conduit for the contagion of shocks across the financial system. this challenge concerns central banks and other payments regulators. how can we make fmis more robust under stress, and how can we mitigate the potential contagion effects resulting from an fmi failure? international policy response international policy makers are responding to these growing risks in the fmi sector. financial regulation since the global financial crisis has been strengthened, and this is also true for fmis, particularly where systems are deemed to be systemic. many new prudential standards now apply to fmis, including the principles for financial market infrastructures ( pfmis ) 3 developed by the committee on payments and market infrastructures ( cpmi ) and the international organisation of securities commissions ( iosco ) ; the otc derivatives reforms agreed by the g20 and the key attributes of effective resolution regimes from the financial stability board ( fsb ) 4. this year has seen the first internationally agreed guidance on cyber security from the bis : guidance on cyber resilience for fmis5. many jurisdictions, particularly within the g20, are implementing these reforms. 2 / 5 bis central bankers'speeches the reserve bank β s response this leads me to the new oversight framework that the reserve bank and financial markets authority ( the fma ) have been developing for fmis in new zealand. the case we make for oversight is driven by potential market failures inherent in many fmis, in particular negative network externalities where operators or participants might not fully consider the wider social costs of their actions, particularly in stress situations. while the reserve bank has had responsibility for overseeing the payments system for over a decade, we believe the current legislation is no longer fit for purpose. the lack of crisis management powers and our limited ability to induce system improvements mean we are not able to fully meet our mandate of promoting a sound and efficient payments | 0.5 |
mark carney : summary of the latest monetary policy report update opening statement by mr mark carney, governor of the bank of canada, at a press conference following the release of the monetary policy report, ottawa, 21 january 2010. * * * good morning. paul and i are pleased to be here with you today to discuss the january monetary policy report, which we published this morning. β’ the global economic recovery is underway. economic and financial developments have been slightly more favourable than we projected in october, and the outlook for global economic growth through 2010 and 2011 is somewhat stronger. β’ although the recession in canada was severe, with real gdp contracting for three consecutive quarters, the magnitude of the downturn was more modest than in other major advanced economies. in particular, domestic demand held up much better in canada than elsewhere, reflecting the soundness of canada β s banking system, relatively healthy household and corporate balance sheets, and the speed and scale of monetary policy actions. β’ economic growth in canada resumed in the third quarter of 2009 and is expected to have picked up further in the fourth quarter. nevertheless, considerable excess supply remains, and the bank judges that the economy was operating about 3 ΒΌ per cent below its production capacity in the fourth quarter of 2009. β’ in canada, the recovery is expected to evolve largely as anticipated in october, with the economy returning to full capacity in the third quarter of 2011. this recovery is still expected to be more subdued than usual. the main factors supporting the canadian recovery are : monetary and fiscal policy support, increased confidence, a firming global economy, and higher terms of trade. β’ at the same time, the persistent strength of the canadian dollar and the low absolute level of u. s. demand continue to act as significant drags on economic activity. β’ for the year as a whole, the canadian economy contracted by an estimated 2. 5 per cent in 2009. it is projected to grow by 2. 9 per cent in 2010 and 3. 5 per cent in 2011. β’ as a result of year - over - year increases in energy prices, total cpi inflation turned positive in the fourth quarter of 2009, as had been anticipated. β’ in spite of the large amount of excess supply in the economy, the core rate of inflation has been slightly stronger than expected in recent months. this stickiness of core inflation is likely related to the fact that wage growth had remained high relative to the underlying trend in productivity. β’ the core rate of inflation is projected to increase gradually, | determined by sequential decisionmaking, subject to an understanding of the structure of the economy and of the likely responses of the other policymakers to one β s policy actions. in my view, the process works as follows. the administration and the congress together make decisions that determine the fiscal part of the policy mix. over the last 20 years, these decisions generally have been based on considerations that have more to do with long - run objectives such as promotion of higher longer - term growth, than with short - run stabilization. making these decisions takes considerable time because of the dynamics of the annual budget process and the legislative process. the current year β s decisions are incorporated and the following years β decisions are anticipated in the fiscal policy assumptions underlying the federal reserve β s forecast, extending out a year or two. the federal reserve then sets its policy to achieve the broad objectives assigned to it, specifically, price stability and full employment. fiscal decisions are, in turn, affected by budget forecasts that are partly contingent on monetary policy assumptions. in effect, fiscal policymakers make the fundamental decision about the policy mix. monetary policymakers smooth the transition to the new equilibrium, by minimizing the effect on output relative to full employment and on prices. because monetary policy adjusts continuously to changes in the economy, including those resulting from fiscal policy, it makes sense to think that fiscal policy decisions are made first and monetary policy decisions are conditional on the fiscal decisions. so does this mean that monetary policy responds directly to fiscal policy actions? i believe it is more accurate to say that the fed β s response is indirect. that is, monetary policy responds to changes in fiscal policy in much the same way that it responds to other influences on the economy, such as equity prices, exchange rates, or the demand for us exports due to changed growth prospects abroad. each and all of these developments affect both the macroeconomic developments and the forecast that drive adjustments in monetary policy in pursuit of full employment and price stability. it is also important not to overstate the role monetary policy plays in shaping the policy mix. indeed, the fiscal policy decision uniquely determines the policy mix. in terms of our diagram, the game is fundamentally over when the fiscal decision pins down the intersection of the is curve and the vertical line at full employment. the only question remaining is how the lm curve will come to intersect at the same point. one possibility, of course, is that the federal reserve adjusts its open market operations to move the interest rate to this | 0 |
muhammad bin ibrahim : raising performance standards and improving consumer protection in the malaysian insurance industry speech by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia, at the insurance and takaful industry annual dinner 2013, kuala lumpur, 15 november 2013. * * * it is my great pleasure to join all of you this evening at the insurance and takaful industry annual dinner 2013. this is indeed a significant and unique gathering as we have the whole of the insurance and takaful industry represented here tonight. the collective wisdoms of those present in this hall tonight, if harnessed well, could significantly alter the insurance landscape towards a more diversified, efficient, and competitive industry. we are facing an increasingly complex business environment characterised by rapid advancements in technology, more discerning consumers and mounting competition, that necessitate the industry to adapt and continually innovate to remain competitive and relevant. of importance is for the industry to remember that the fundamental of insurance is premised on safeguarding consumers β interest against financial loss when things go wrong. consumers β interest is always at the heart of the matter. my remarks this evening will touch on some regulatory changes that have taken place, in response to the changing operating environment. my remarks will have strong focus on consumer protection. the financial services act and the islamic financial services act 2013 which came into force in june this year has provided the bank with statutory duty to foster fair, responsible and professional business conduct amongst financial service providers. such regulatory developments mark an important milestone in modernising malaysia β s financial sector which goes beyond the mandate of preserving financial stability. these laws ensure a robust financial consumer protection regime. the new legislations provide explicit powers for the bank to set and enforce standards on business conduct for financial service providers that ensure financial consumers are treated fairly. the laws also specifically prohibit financial service providers from engaging in unfair or deceptive business conduct including making false, misleading or dishonest representations, and tied selling. it is important to highlight that the new legislation also provides enhanced protection in respect to consumers β pre - contractual disclosure obligations in consumer insurance contracts. among others, an insurer or takaful operator must pose specific questions to consumers for its underwriting purpose. the legislation also sets out various remedies that an insurer may rely on depending on the type of pre - contractual misrepresentation made by the consumers. changes were also introduced under the new laws to deliver a more efficient regulatory regime for insurance and takaful intermedia | stability. among the institutions that was established to support the development of the domestic bond market was the establishment of the domestic rating agencies and cagamas, the mortgage corporation. the malaysian bond market has since evolved to become the largest in south east asia to now account for 110 % of gdp. this market has since been liberalised to allow foreign corporations to raise funding in both domestic and foreign currency. in these recent few years, there has been a number of successful reminbi bond issuance from our market to finance investment opportunities in china. various other key financial infrastructures were also put in place to enhance the efficient functioning of the intermediation process of the overall financial system. this included the infrastructure to support robust payment and settlement systems. in 2012, we introduced onshore settlement of reminbi transactions in our real time gross settlement system rentas via a local onshore settlement institution. as part of the development of our domestic financial infrastructure the malaysia deposit insurance corporation was establish to provide a comprehensive deposit insurance and insurance benefit system for the banking and insurance sector. this institution not only imposes discipline for risk management by the financial institutions through the imposition of differential premiums based on the risk profile bis central bankers β speeches of institutions, but it also is the resolution authority in the event of failure of a financial institution. underpinning the financial sector growth was also the development of a more robust surveillance, regulatory and supervisory framework. as the malaysian financial system evolved to become more complex, sophisticated and diversified, the regulatory and supervisory approach has correspondingly evolved from detailed and prescriptive rules to a risk - based approach that combined greater supervisory judgment and intensity with highlevel principles of sound practice. this is complemented with effective surveillance that is forward looking and focused on addressing the risks to overall financial stability. this decade has also seen the modernisation of the legal framework, that has included the enactment of two comprehensive laws this year to govern the financial sector under a single legislative framework for the conventional and islamic financial sectors. the implementation of these laws have strengthened malaysia β s financial sector by providing a consistent approach to regulation and supervision and enhancing the central bank β s power to take timely intervention actions in relation to financial intermediation activities that occur outside the banking system. following the global financial crisis, such shadow banking systems have come under greater regulatory scrutiny. specifically, regulators have been concerned with the scope that exists for non - bank financial institutions to perform financial intermediation activities in a way that replicates the | 0.5 |
international assets by about us $ 309. 4 billion in march 2013 as against us $ 250 billion in march 2012, though some improvement has been observed with net liabilities at us $ 296. 9 billion in june 2013. 5. this increasing integration of the global economy is, in fact, far from a phenomenon peculiar to india. in fact, in the years preceding the global financial crisis, global economic integration grew and grew sharply. world trade, as a percentage of global gdp, rose from a little over 20 per cent of gdp to well over 30 per cent in 2007. cross border capital flows, as a percentage of global gdp, also rose from about five per cent in the mid - 1990s to about 20 per cent in 2007. the ratio fell sharply as the crisis emerged but global capital flows have recovered since then. as a result of financial globalization, international financial openness ( measured by the sum of countries β external assets and liabilities as a share of gdp ) more than doubled from 150 per cent of world gdp in mid 1990s to 350 per cent in 2007. 2 greater interconnectedness of the global economy was also reflected in, and, in fact, reinforced by the strong increase in international banking activities and the associated rising share of cross - border ownership of financial institutions. according to the international banking statistics of the bis, the value of external assets and liabilities of banks as a share of world gdp doubled, from about 30 per cent in 1990 to about 60 per cent in 2007 with most of this increase taking place in the 2000s. 6. even as globalisation intensified in the early part of this century, the deepening was characterised by some interesting trends and features : i. first, while advanced countries dominated international cross border flows, emerging markets also joined the fray with their share in world capital flows increasing from seven per cent to 17 per cent between 2000 and 2007 ; ii. second, while flows from advanced economies to emerging markets were largely driven by increased investment opportunities in many emerging market economies and by a substantial reduction in home bias in advanced economies, rising outflows from emerging and developing economies were mainly driven by reserve accumulation ; iii. third, the growing globalisation was accompanied by widening global imbalances. the creditor positions of germany, japan, china and major oil producers strengthened while the united states, spain, france, italy and the united kingdom oecd economic outlook, volume 2011 / 1 bis central bankers β speeches became more indebted. the absolute sum of surplus | of the ecb β s policy response. this led to the introduction of a variety of what we call β non - standard β measures to complement the reduction of policy interest rates. john taylor and john williams ( 2011 ) and nassim taleb ( 2007 ). bis central bankers β speeches permanent alertness is my lesson on how to deal with the unpredictability of events. but alertness per se may suggest that we should simply be ready to adopt a specific, known reaction, once we observe a certain, possibly unpredictable, event. the problem in situations of β knightian β uncertainty is that we are also uncertain in our assessment of the overall consequences of the unpredictable event and how we respond to it. let me again illustrate this point with an example. once the crisis intensified in september 2008, central banks faced the major new difficulty of assessing how the combination of this exceptional event and of the unprecedented response of policy authorities would affect the medium - term outlook. we normally employ various statistical tools to help make this assessment, but would these tools provide useful guidance at this particular time? figure 2 provides an answer showing the evolution of our projections for annual economic growth in the euro area in 2009 together with the corresponding forecasts from a range of private sector and international organisations. observations correspond to forecasts for gdp growth in 2009 made at different points. over the months, information is updated and the forecast horizon becomes shorter and shorter. at the end of 2009, forecasting gdp growth in 2009 is almost tantamount to forecasting the past, so forecasts converge to the actual value indicated by a constant red line. in 2008, all projections were strongly lagging actual developments. only at the end of the year did public and private institutions begin to make downward adjustments to their growth forecasts for 2009, while nonetheless clearly underestimating the actual developments. there is a similar pattern in figure 3, which shows the forecasts for 2010 produced during the period 2009 β 10. in this case, forecasts systematically underestimated the strength of the recovery. in 2009, most forecasters expected very slow growth in 2010. as more positive news emerged in the second half of 2009, the forecasts were steadily revised upwards but still remained well short of the final outcome until the last quarter of the year. the lagging nature of the information contained in most projections, together with the large projection errors, highlight the relative inadequacy of standard tools to deliver accurate forecasts during times of heightened economic distress | 0 |
the dodd - frank act in the united states. the tale of u. s. financial markets after 2004, which i have just described, shows how loose regulations went wrong and resulted in bitter consequences. in this regard i fully understand the rationale of such regulatory reforms. having said that, i am afraid that the global debate on these reforms has sometimes been based on the β wishful thinking β of a quick return to normality, that is, on the assumption that the new regulatory frameworks would be implemented in the normal times that are supposed to prevail in the immediate wake of a brief crisis. the bank of japan repeatedly cautioned against such wishful thinking, having experienced prolonged problems after japan β s financial crisis in the 1990s. the bank warned that downward pressure stemming from financial crises is likely to be persistent, and any signs of recovery observed shortly after the crisis could be a β false dawn β. it also emphasized the risk of bank deleveraging and balance sheet adjustment, especially when the adverse impacts of the crisis remain. indeed, what we had to tackle after the crisis was not leveraging and excessive risk - taking by the banking sector, but deleveraging and malfunctioning of credit intermediation. moreover, we had to deal with these problems under severe constraints on macro - policies, with interest rates close to the zero - bound and fiscal balance deteriorating. unfortunately, developments in the global economy after the lehman crisis seem almost to have confirmed our fears. moreover, many advanced economies are now experiencing both the downward pressures associated with financial fragility and the structural adjustment pressures from population ageing. suppose the contrary. when advanced economies were not under severe pressure from population ageing, counter - cyclical fiscal policies were broadly effective because market participants were able to believe that any deterioration in fiscal balance should be temporary and, consequently, a large - scale increase in sovereign risk premiums was avoided. however, the fundamental fiscal balance of many advanced economies is now broadly expected to worsen as a result of population ageing and reduced growth potential. in such an environment, the policy effects of fiscal easing are likely to be substantially reduced by an increase in sovereign risk premiums. thus, i would say β this time may truly be different β, mainly because many advanced economies have to tackle widely ranging challenges, including population ageing and the consequent decline in potential growth rate, more intense constraints on fiscal policy and the persistent balance sheet adjustment pressures stemming from the financial crisis. indeed | their behavior premised on deflation and take positive initiatives toward making active investment and raising productivity further. 11 japan has experienced stagnation and deflation for a long time. the bank of japan aims at achieving price stability, thereby contributing to the sound development of the national economy. from now on, when a children's book is written, i would prefer not to see a phrase such as " it is a very difficult place to live because there has been a decades - long stagnation. " thank you for your attention. there are arguments that the stabilization of the macroeconomy in the short term affects economic growth in the long term. for details, see bank of japan, research and statistics department, " minutes of the 7th joint conference organized by the university of tokyo center for advanced research in finance and the bank of japan's research and statistics department : new developments in macroeconomic analysis : interaction between business cycles and economic growth, " boj reports and research papers, 2018, http : / / www. boj. or. jp / research / brp / ron _ 2018 / ron180330a. htm / ( available only in japanese ) ; and souhei kaihatsu et al., " interaction between business cycles and economic growth, " bank of japan working paper series, no. 18 - e - 12, 2018, http : / / www. boj. or. jp / en / research / wps _ rev / wps _ 2018 / wp18e12. htm /. has japan's economy changed? : challenges and prospects speech at the japan society in new york october 3, 2019 masazumi wakatabe deputy governor of the bank of japan outline introduction i. achievements and changes ii. challenges ahead conclusion chart 1 introduction demographics working - age population ( aged 15 - 64 ) total population 2. 0 y / y % chg. 2. 0 y / y % chg. united states united states 1. 5 1. 5 japan 1. 0 1. 0 0. 5 0. 5 0. 0 0. 0 - 0. 5 - 0. 5 - 1. 0 - 1. 0 - 1. 5 - 1. 5 - 2. 0 cy80 - 2. 0 cy 80 japan source : oecd. chart 2 introduction potential growth rate recent developments y / y % chg. developments in the 60s - 80s average y / y % chg. labor | 0.5 |
##coin transactions, encryption keys have sometimes been entrusted to a third party in a centralized manner, but there have been some incidents such as the failure of mt. gox in 2014. in this case, people tried to avoid the cost of managing keys accompanying decentralized - type information processing by entrusting their keys to a third party, mt. gox. but their trust was destroyed by the misconduct of the third party. in this regard, the problem of the mt. gox case did not stem from dlt itself but was similar to classic cases of misconduct in the financial industry. as this case illustrates, decentralization - oriented technologies will not eliminate centralized frameworks due to the limited information - processing capacity of financial service users. furthermore, this incident clearly showed that maintaining β trust β is critically important in any financial services, regardless of the types of applied technologies. i believe that it is entirely possible and desirable to realize the co - existence of β trusted centralized systems β and β decentralized systems, β used as and when necessary. we need to make a great effort to design the optimum framework for economic society through utilizing the available technologies. these frameworks should take into consideration the various incentives of economic entities to ensure people β s β trust, β which is indispensable to financial activities. information technology and central banking the central bank is the only entity that can provide β central bank money β without constraints. central bank money has β finality β in the sense that people no longer have to worry about β payment unwinding β or β the issuer β s credit risk. β formerly, the central bank provided central bank money solely through paper - based and printing - related technologies such as banknotes and paper - based ledgers. with the development of the economy, the central bank has adopted newer technologies, improved its own infrastructure and continuously provided advanced infrastructure such as electronic - based wholesale rtgs systems. if the central bank had rejected digital technologies and only provided banknotes as payment instruments with finality, 5 / 7 bis central bankers'speeches then economic development would have been substantially constrained. as this fact illustrates, the central bank must appropriately adopt available technologies so as to provide the optimal core infrastructure for economic society. that means the central bank itself must keep abreast of technological innovation. banknotes are payment instruments with finality and can be used at any time, by any one, and in this regard some have recently argued that the central bank should issue | in these economies. what creates such differences? my answer is that the forecasts of prices based on past inflation have performed well in japan, as the inflation rate was persistently low for a long time during the deflationary period since the second half of the 1990s. during this period, if the actual inflation rate in the previous year was 0 percent, for example, it was reasonable to project that the inflation rate would be 0 percent again in the following year, rather than rise to 2 percent. however, professor milton friedman - - a distinguished scholar of economics - - made the following argument, stating that how inflation expectations are formed among the public is subject to change. if wages are unchanged in a situation of continued inflation, employees'real income will be lost to the extent of inflation. they would not tolerate such a situation forever ; rather, they eventually will start to forecast future inflation in a forward - looking manner and demand wage increases based on the forecast. this is an example for wages, but the same mechanism will be in place for retail prices of products and services ; in an inflationary phase, firms will start to anticipate future inflation and raise their retail prices based on their forecast. as for the outlook, the year - on - year rate of increase in consumer prices is expected to accelerate, as upward pressure on wages heightens amid a further tightening of labor market conditions, and as a positive contribution of energy prices to inflation increases. friedman's argument suggests that, during this inflationary phase, inflation expectations in japan will become less affected by past inflation, with a gradually increasing number of people formulating their inflation expectations in a forward - looking manner, as is the case in the united states. furthermore, as i will talk about more later, the bank will continue to pursue powerful monetary easing with the aim of achieving its price stability target of 2 percent. against this backdrop, although uncertainty about future developments in inflation expectations warrant attention, japan's inflation rate is likely to gradually increase toward the price stability target of 2 percent. ii. thinking behind the conduct of monetary policy next, i would like to talk about the thinking behind the bank's conduct of monetary policy. since last september, the bank has been conducting monetary policy under the framework of " quantitative and qualitative monetary easing ( qqe ) with yield curve control. " this framework consists of two components ( chart 10 ). the first is an inflation - overshooting commitment. this is the bank's | 0.5 |
stephen s poloz : unveiling of new $ 10 note remarks by mr stephen s poloz, governor of the bank of canada, at the unveiling of the new $ 10 note, halifax, nova scotia, 8 march 2018. * * * it is the bank of canada β s job to design, produce and distribute bank notes that canadians can use with confidence and pride. bank notes are designed to be not only secure and durable, but also works of art that tell the stories of canada. i am confident that you will agree that this new $ 10 note fits the bill. trust is vital to everything we do as canada β s central bank. and the most tangible way we earn canadians β trust is by supplying the highest quality bank notes. you handle them every day, trusting that they are durable, safe and easy to use. even though people have more ways than ever to make electronic payments, the number of bank notes in circulation continues to climb. and thanks to past innovations, such as the introduction of polymer, counterfeiting rates remain low, and our bank notes last longer and wear better. but at the bank of canada, we continually strive to innovate and improve. i am immensely proud to say that a great deal of innovation went into the note you are about to see. for starters, there was the question of whose portrait would appear on the front. both the minister of finance and i agreed that it was long past time for a bank note to feature an iconic canadian woman. that has been a goal of mine since i became governor. but with so many excellent choices, we took a new approach to involve canadians directly in the decision - making process. and boy, did canadians get involved. we received over 26, 000 nominations from coast to coast to coast. a great national conversation took place β in schools, in the press, and in social media β about the important contributions so many iconic women have made to our history. i thank all canadians for their engagement β it made the journey to develop this bank note truly unique. i would also like to give a special thanks to the independent advisory council that we set up to help us narrow down the nominations. this eminent group of academics, as well as sports, culture and other thought leaders, were invaluable throughout this process. several of them are here with us today β so thank you once again. as you know, nova scotian viola desmond was ultimately chosen to appear on the new note. | and it β s also in the public interest to protect some degree of privacy. 12 universal access would need to be another key feature of a central bank digital currency. that means ensuring that remote and marginalized communities β including but not limited to the underbanked and unbanked β are not left out of this new way to pay for goods and services. as part of our advancing work, the bank has been researching and experimenting with different technologies. in addition, we recently engaged three university project teams to independently develop proposals for what a digital currency ecosystem could look like. their reports will be released tomorrow. this blue - sky thinking will help inform our research going forward. we are also carefully considering what the business model for a canadian central bank digital currency might look like : what role would the private sector play in its development, distribution and transfer? how would this product interface with canada β s core payments systems that transfer funds among financial institutions to settle both retail and large - scale payments? j. chiu and t. koeppl, β payments and the dna of big tech. β presentation at the future of money and payments : implications for central banking, bank of canada annual economic conf erence, november 5, 2020. r. j. garratt and m. r. c. van oordt, β privacy as a public good : a case for electronic cash, β bank of canada staff discussion paper no. 2019 - 24 ( july 2019 ). modernizing our core payments systems long before the pandemic hit, efforts to modernize canada β s core payments systems had already begun. this work is important, and with the rapid expansion of the digital economy accelerated by the pandemic, we can now see the benefits more clearly. led by payments canada, several key players in the payments ecosystem β such as interac, commercial banks and other stakeholders β have been working to bring these payments systems fully into the modern digital age. the bank of canada is heavily involved as a central bank, a regulator and, in some cases, a participant. over the next year or so, these improvements will start to come online. this is important for canadians because it will mean greater speed, convenience, competition and choice in how people pay for goods and services. right now, the fastest and most immediate money transfers we see are e - transfers. but the new real - time rail system β which will go live in 2022 β will provide real - time payments beyond what is | 0.5 |
including, of course, economic and financial developments, at our meeting in september and are prepared to employ these tools as appropriate to promote a stronger economic recovery in a context of price stability. conclusion let me conclude with just a few words on the longer - term prospects for our economy. as monetary and fiscal policymakers consider the appropriate policies to address the economy β s current weaknesses, it is important to acknowledge its enduring strengths. notwithstanding the trauma of the crisis and the recession, the u. s. economy remains the largest in the world, with a highly diverse mix of industries and a degree of international competitiveness bis central bankers β speeches that, if anything, has improved in recent years. our economy retains its traditional advantages of a strong market orientation, a robust entrepreneurial culture, and flexible capital and labor markets. and our country remains a technological leader, with many of the world β s leading research universities and the highest spending on research and development of any nation. thus i do not expect the long - run growth potential of the u. s. economy to be materially affected by the financial crisis and the recession if β and i stress if β our country takes the necessary steps to secure that outcome. economic policymakers face a range of difficult decisions, and every household and business must cope with the stresses and uncertainties that our current situation presents. these are not easy tasks. i have no doubt, however, that those challenges can be met, and that the fundamental strengths of our economy will ultimately reassert themselves. the federal reserve will certainly do all that it can to help restore high rates of growth and employment in a context of price stability. bis central bankers β speeches | condition for the economy to realize its full potential for sustained increases in living standards. i doubt that high inflation was the proximate cause of the 1973 productivity slowdown, which persisted for a decade after 1983 to 1986, the period the authors give for the end of the great inflation. and i agree with them that low inflation was not the only cause of the great moderation, but i am confident that we would not have experienced more than two decades of nearly uninterrupted growth if the federal reserve had not brought inflation down in the early 1980s and kept it low thereafter. low inflation reduces distortions from signals in market prices and facilitates longer - term planning. low and stable inflation also anchors inflation expectations ; in turn, anchored expectations make it easier for the central bank to control inflation with smaller variations in real activity. that brings me to my second major lesson : expectations are critical to policy success. expectations about future policy help to determine the financial conditions that affect spending and inflation. in most situations, policy will need to be conducted so that expected real interest rates are positive ; a policy that pushes expected real rates below zero would be appropriate only in special circumstances, such as when real activity is expected to be persistently weak and inflation undesirably low. likewise, inflation expectations are critical : increases in expectations of inflation elevate the cost of returning to price stability, and unanchored expectations make it very difficult to understand where the economy is and where it is going. as a consequence, i do not agree with the authors β assertion that central banks pay too much attention to inflation expectations. those expectations may not be as much of a leading indicator of the inflation trend as i would like β although i am not sure that i find the paper β s conclusion, that the trend leads expectations, all that persuasive. indeed, if i accept the authors β assertion that post - 1984 expectations have been a lagging indicator of the trend, then, when expectations rise and stay elevated, i should weight that observation heavily, not lightly. policy cannot be conducted based solely on such a lagging or coincident indicator of inflation, but, of course, it is not. we pay close attention to those factors that are influencing the outlook for inflation, as for example, the level of resource utilization highlighted in our recent announcements. but a clear lesson of the 1970s is that a central bank must keep a very close eye on sustained movements in inflation expectations. i think a third lesson is hum | 0.5 |
supervision that constitutes the bulk of our ongoing engagement with the industry and through which our policy objectives are given effect. this division of labor is important for lawyers and policymakers to think about deeply because the processes of regulation and supervision are necessarily different in crucial respects. regulation establishes a binding public framework implementing relevant statutory imperatives. because a rule is designed to apply generally, rules must be based on general principles intended to achieve general aims, rather than reverse - engineered to generate specific effects for specific institutions. given their general applicability, there must be a general process for all those with an interest β industry, academics, citizens, congress β to have notice of, and opportunity to comment on all rules, ensuring that all potential effects and points of view are taken into account in the rule β s crafting. and given their general function, rules must be clear and public : those affected must know what to expect and what is expected. supervision, by contrast, implements the regulatory framework through close engagement with the particular facts about particular firms : their individual capital and liquidity positions, the diverse composition of their distinct portfolios of assets, their business strategies, the nature of their operations, the strengths and weaknesses of their management. much of the granular information used by supervisors is, accordingly, proprietary and confidential, and many of their judgments and decisions are closely tailored to specific circumstances. given the strong public interest in the safe, sound, and efficient operation of the financial industry 1 / 7 bis central bankers'speeches and the potential for hair - raising and widespread adverse social consequences of private misjudgment or misconduct in that industry, close and regular supervision of this sort can help us all sleep restfully. yet, the confidential and tailored nature of supervision sits uncomfortably with the responsibilities of government in a democracy. in the united states, we have a longstanding, well - articulated framework for ensuring that regulations conform with the principles of generality, predictability, publicity, and consultation described above. supervision β for good reason, in my view β is not subject to this formal framework. but it is currently not subject to any specific process constraint promoting publicity or universality. this leaves it open to the charge, and sometimes to the fact, of capriciousness, unaccountability, unequal application, and excessive burden. here, then, is a conundrum. we have a public interest in a confidential, tailored, rapid - acting and closely informed system of bank supervision. and we have a | be participating today - i hope we manage to play a small part in sending you down that path. 1 / 2 bis - central bankers'speeches finally, on that note, i would like to encourage everyone to reach out to others joining today. strong networks of both mentors and peers can be a lifeline. they are critical to entering and completing advanced degree programs. they help navigate the professional landscape. and they will offer both support and advice as you advance in your career. and we do hope that for some of you, that path is economics, and you will make the federal reserve a stop along the way. thank you for joining us and enjoy the day. 2 / 2 bis - central bankers'speeches | 0.5 |
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