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andrea m maechler : how negative interest works and changes in the management of foreign exchange reserves speech by ms andrea m maechler, member of the governing board of the swiss national bank, at the media news conference of the swiss national bank, berne, 10 december 2015. * * * accompanying charts can be found at the end of the speech. in my remarks today, i will begin by talking about developments on financial markets since the middle of the year. then i will discuss the way in which negative interest works. i will conclude with a report on changes in the way we manage our currency reserves. situation on the financial markets i will start with the situation on the financial markets. financial market developments since the middle of the year have mainly been shaped by three topics : the uncertainty surrounding the first interest rate move by the federal reserve, monetary policy easing measures by the european central bank ( ecb ) and concerns about growth prospects in the emerging economies, particularly china. in mid - august, disappointing economic data and an unexpected depreciation of the renminbi against the us dollar resulted in a sharp decline in the chinese stock market. the fallout was also felt by stock markets of other emerging and advanced economies in short succession. after volatility on the stock markets had increased sharply at times, investors β appetite for risk gradually returned at the end of september. favourable economic data from the us and the euro area contributed to the more positive sentiment. in addition, concerns about growth in china recently slipped into the background again. the stock markets of the advanced economies, which have since been able to partially recoup their losses, were the main beneficiaries of this recovery. by contrast, in the emerging economies, the wave of selling has had a lasting impact. in the most recent period, the msci emerging markets index β calculated in local currency β was still approximately 12 % below its level at the end of june. stronger signals of diverging monetary policy stances between the euro area and the us were also reflected on the foreign exchange markets. on the one hand, the prospect of higher interest rates in the us boosted the us dollar. on the other, it put the currencies of emerging economies under pressure. since mid - year, the us dollar has appreciated by 4. 5 % on a tradeweighted basis. the euro initially gained ground at times as a result of uncertainty in the emerging economies. however, after the ecb had held out the prospect of further | philipp hildebrand : the swiss national bank β s ability to act in the crisis summary of a speech by mr philipp hildebrand, vice - chairman of the governing board of the swiss national bank, at the executive mba hsg, universitat st gallen, st gallen, 21 january 2009. the complete speech can be found in german on the swiss national bank β s website ( www. snb. ch ). * * * the global financial system is in the midst of the biggest crisis of the postwar years. above all, the crisis is the most complex of this period. problems in the us sub - prime mortgage market led to the breakdown of both markets and general trust. in particular, the interbank market, the nerve centre of the financial markets, froze up for several months. governments and central banks managed to prevent the financial system from collapsing. the interbank market has been revived and risk premia have come down from their former record levels. in the meantime, however, the financial crisis has worked its way through into the real economy, which is now moving into a sharp downturn. in order to fight the crisis, the central banks have lowered their key interest rates aggressively. the instrument of the swiss national bank ( snb ), the repo rate, has practically reached zero. however, this certainly does not mean that the snb is incapable of action. if needed, there are other options available. the national bank can extend the terms of repo transactions or give consideration to the purchase of government and corporate bonds. where necessary, the snb may also, for example, sell an unlimited amount of swiss francs against foreign currency in order to prevent an appreciation of the swiss franc or even to bring about a devaluation of the national currency. the snb is very well aware that the determined route it is pursuing in fighting this historic crisis is associated with long - term risks. at the same time, it is firmly convinced that the risks involved in not following this course would be considerably greater. in this spirit, it is facing up to the task of fighting the crisis while at the same time maintaining a watch on the longterm aspects. at some point, the moment will come when the national bank decision - makers will need the courage to do what is right in the long term even if it is not popular in the short term. | 0.5 |
opening statement by tiff macklem and carolyn rogers governor and senior deputy governor of the bank of canada press conference following the release of the financial system review june 9, 2022 ottawa, ontario good morning. i β m pleased to be here with senior deputy governor carolyn rogers to discuss the bank of canada β s financial system review ( fsr ). the fsr is our annual assessment of the key vulnerabilities of and risks to the canadian financial system. our goal in identifying these is to help households, the private sector, financial authorities and governments take actions to reduce them. we have just come through the biggest shock i hope any of us ever have to face β two years of a pandemic and unprecedented economic and social upheaval. we are pleased to report that our financial system is strong and weathered the crisis well. now, the global economy is dealing with a new set of challenges : high inflation, rising interest rates, russia β s unprovoked invasion of ukraine and financial market volatility. so this is a good time to discuss existing and emerging vulnerabilities and risks. in nearly every fsr, we warn about the high debt that many canadian households are carrying, and we warn about elevated house prices. those are not new vulnerabilities, but the pandemic has affected them. over the course of the pandemic, household balance sheets shifted as both spending and incomes adjusted. on average, household wealth increased as a result of rising asset values, including real estate, and markedly higher savings. this improvement, and the rise in savings in particular, is remarkable considering the devastating and lasting impacts the pandemic could have had. but to assess vulnerabilities we need to look beyond the average and examine the distribution of changes across households. what we see is that, even as the average household is in better financial shape, more canadians have stretched to buy a house during the pandemic. and these households are more exposed to higher interest rates and the potential for housing prices to decline. two - thirds of canadians are homeowners. just under half own their home outright, and the rest have a mortgage. of those, 70 % have a fixed - rate mortgage that is not immediately affected by higher interest rates. the other 30 % β or 10 % of canadian households β have a variable - rate mortgage. throughout the pandemic, a growing number of canadians took out mortgages that were very large relative to their incomes | benjamin e diokno : opening remarks during the signing of the establishment of a supervisory college for financial conglomerate supervision opening remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), during the signing of the multilateral mou on establishment of supervisory college for financial conglomerate supervision, manila, 24 january 2022. * * * good morning. it is my pleasure to welcome our financial sector forum principals, emilio aquino, chairman of the securities and exchange commission ; dennis funa, commissioner of the insurance commission ; and sandra diaz, senior vice president of the philippine deposit insurance corporation to witness another momentous event for the forum. in line with the principles for the supervision of financial conglomerates of the basel committee on banking supervision, the financial sector forum created the financial conglomerate supervision committee which is tasked to work towards identifying conglomerate risks in the financial system ; and to plan ahead supervisory initiatives to mitigate conglomerate risks. the basel principles highlight, among others, the need for a clear legal framework that provides supervisors with the necessary powers, authority and resources to perform, with independence and in coordination with other supervisors, comprehensive group - wide supervision. the principles re - affirm the importance of supervisory cooperation, coordination and information exchange. in the 2020 financial sector assessment program technical note on supervision and regulation of financial conglomerates, the international monetary fund recommended the implementation of a multilateral agreement among financial sector forum member agencies on the establishment of supervisory college to agree on the approach of group level risk assessment for financial conglomerates. the establishment of a supervisory college is an important regulatory platform in achieving effective and efficient supervision of financial conglomerates. it is also an international practice amongst international financial supervisory authorities. thus, this memorandum of understanding shall govern the establishment of an inter - agency cross - sectoral supervisory college which shall serve as the forum, to facilitate cooperation and coordination between and among the financial sector forum member agencies specifically, for the supervision of financial conglomerates in the philippines. this supports a clear process for coordinating various roles and responsibilities of the financial sector forum with clearly delineated responsibilities for effective supervision. as such, we would like to re - affirm the spirit of collaboration by signing the memorandum of understanding on the establishment of supervisory college for financial conglomerate supervision. finally, let me share a quote from the american industrialist and business magnate, henry ford. he said that aβ¬Εcoming together is a beginning, staying together is progress, and working | 0 |
reducing banking spreads. sbp is further developing capacities to monitor operational risks associated with weak internal control systems, delays in adoption of information technology solutions and outsourcing of processes by banks. | t t mboweni : recent economic developments speech by mr t t mboweni, governor of the south african reserve bank, at the dinner for heads of foreign missions, pretoria, 1 december 2003. * 1. * * introduction dean of diplomatic corps - ambassador alzubeidi members of the diplomatic corps, ambassadors and high commissioners representatives of : the united nations system - mr ohiorhenuan the european union - ambassador lake the international labour organisation - dr andoh the world bank - mr omar foreign affairs - ddg : africa, ambassador mamabolo management & staff of the south african reserve bank ladies & gentlemen as a relatively open developing economy, south africa was again affected considerably by world economic conditions during the past year. the weak and fragile global economic recovery impacted on domestic economic growth, low world inflation contributed to a decline in domestic inflation and substantial financial inflows led to a further recovery in the external value of the rand. 2. international economic developments global economic activity suffered a setback in the second half of 2002 when business confidence was detrimentally affected by revelations of corporate accounting malpractices, a further decline in stock exchange prices and a threat of war against iraq. in the first half of 2003 equity prices began to rise somewhat and the war in iraq was concluded without severely impacting on oil production. yet the international economy continued to move at a sluggish pace, with the result that most analysts downgraded their initial forecasts for world growth in 2003. more recently there have been encouraging signs that the macroeconomic environment has improved somewhat. production growth in the united states of 8, 2 per cent in the third quarter of 2003 seems to confirm that the much - anticipated economic recovery is gaining momentum. this acceleration in the pace of growth impacted favourably on the demand for labour, causing the us unemployment rate to edge lower to 6 per cent in october 2003. the real gross domestic product of japan also increased at stronger - than - expected rates during 2003, while growth in china remained high. a strong domestic demand, improved export performance and fiscal and monetary policies in the rest of asia are expected to support growth in the rest of this continent. in contrast economic activity in the euro area was weaker than expected in the second quarter of 2003, but indicators for this region indicate that economic activity could firm somewhat in the coming months. rising net exports and real exchange rate developments are expected to lead to a modest recovery in latin america. global inflation remains low and monetary and fiscal policies were | 0 |
term. cross - checking the monetary analysis with the economic analysis therefore supports the case for vigilance to ensure that the risks to price stability over the medium to longer term do not materialise. the preservation of a solid anchoring of inflation expectations for the euro area as a whole at levels in line with price stability, as reflected in available surveys and indicators, has contributed to a sustained decline in risk premia across the whole maturity spectrum since the creation of the euro, thereby leading to lower levels of both short and long - term interest rates. the ecb β s high level of credibility and its stability - oriented policy have contributed to the very favourable financing conditions observed over the past few years for investors. they have also preserved the purchasing power of consumers, which is of greatest importance for all people and especially those with low incomes. it is essential that this important asset of the euro area economy is preserved. the governing council will exercise vigilance so as to continue ensuring the solid anchoring of medium to long - term inflation expectations at levels in line with price stability. such vigilance is indeed warranted, taking into account the present upside risks to the outlook for price developments and the historically low level of both nominal and real short term interest rates. as regards fiscal policy, recent information points to somewhat better than expected outcomes for 2005 in a number of countries and for the euro area as a whole. looking ahead, the targets presented in the latest round of stability programme updates are consistent with a moderate fiscal consolidation, although in some countries imbalances would still persist for a number of years. with the improvements in economic growth, determined fiscal consolidation is now even more important. in particular, countries with excessive deficits must take this opportunity to reduce their fiscal imbalances in a decisive and sustainable manner. this would strongly support the european fiscal framework as established by the stability and growth pact. delaying consolidation would be both inappropriate in the short term and risky in the longer term. adjustment efforts should be based on credible, fully specified measures as part of a comprehensive consolidation programme. moreover, windfall gains from higher than expected growth or other factors should be allocated to speeding up deficit reduction. this would help to prevent a repeat of past experiences, when complacency in good times contributed to persistent budgetary disequilibria. with respect to structural reforms, these remain an essential ingredient for improving competitiveness and growth performance in the euro area. let me also add that, given the services sector β | treatment as possible to such issues as new types of transactions accompanying progress in information technology ( i. e., fund transactions using customers β computer terminals ). | 0 |
1992 is around 50 bps per quarter. bis central bankers β speeches course, even after paying down debt following the crisis, uk households β indebtedness is high by historical and international measures so there may not be a great deal of room for growth in this area if we want to avoid vulnerabilities building up in the economy generally. the growth in credit since the crisis, however, has been in emerging markets rather than in advanced economies which brings me to the last risk β an unfortunate event from some form of a hard landing in major emerging markets. these are now a large part of the world economy and debt stocks in many emerging economies have grown sharply over the last eight years. this could amplify the stresses many of these economies already face from the inter - related effects of slower emerging market economy growth, much lower commodity prices and a stronger dollar. a more severe slowdown and debt - related financial stress in key emerging markets could well have an impact on advanced economies, including the uk, through a number of channels. one reassuring point is that the major uk banks and building societies were tested against precisely this scenario by the bank of england in 2015 and demonstrated they had the resilience to weather such a shock and carry on lending to the uk economy. conclusion looking back over the last two years, i think that the slow healing story can still explain where we are and provide a guide to our future prospects. but the story has to be adapted in the face of more uk and world weakness than i had expected and this weakness might be signalling that there are deeper structural factors at work. nonetheless, my central projection remains that the uk economy will continue to grow solidly and that inflation will return to target over the next few years. but, as always, policymakers need to be alive to the possible meaning of disappointments, to be very sensitive to the possibility of changing temperatures around them, and to the risk of unfortunate events. we have a range of tools at our disposal and should be ready to use them whichever risk materialises. bis central bankers β speeches | that a number of firms must have made substantial losses on the positions they had, there have not been many visible signs of severe financial distress. for most longer - term investors the stress has been seen as rather limited. credit spreads have not particularly blown out with rising β risk - free β rates. for example, yields on italian and spanish bonds were remarkably stable for most of this period ; advanced economy equity prices largely recovered ; and β cov - lite β loans have continued to be issued at a record pace. overall the system seems to have survived in reasonable shape and for many market participants the β shock β is seen as a healthy correction to what had become a complacent outlook. as reported in the record of the recent fpc meeting published yesterday, staff from the fca, pra and bank have carried out some analysis of the sensitivity of borrowers and financial institutions to upward movements in long - term interest rates and credit spreads. 3 that preliminary work suggested that β a moderate rise in long - term interest rates did not pose an immediate threat to major banks and insurance companies. but borrowers would become more exposed to an increase in interest rates were debt levels to rise. and counterparty classes with higher leverage or exposures to market liquidity risk or credit spreads were more affected... β. the committee did not draw too much comfort from this assessment and has asked that more detailed work be done to assess the risks. what have we learned from this episode? i will pick out a few of the highlights for discussion. first let me note that the β stress β so far has not involved any actual exit from accommodative policies in the advanced economies. the change in the outlook was initiated by speculation about the possibility that the fomc might start to slightly reduce the rate at which it is adding stimulus! it would have been a more severe stress if policy rates had actually been changed. many firms for whom maturity transformation is a major part of their business model will actually be better off if the short - term rates at which they fund themselves are relatively unchanged while longer - term rates rise. have markets got it wrong? if so then in my view that was not obviously in the price reactions since may ( although the extent of the fixed - income sell - off may turn out to have been overdone, especially for the uk ) β rather it was the expectations that had become embedded prior to may which had become overly certain even if, at that time, it | 0.5 |
setting of narrowing but still yawning gulf between the macroeconomic conditions of india and the financially developed, capital - surplus nations. i am reminded of what fisher black is reported to have once remarked, β the markets look more rational from the banks of charles than from the banks of hudson. β the rise, fall and fate of principles based regulation - julia black lse law, society and economy working papers 17 / 2010 london school of economics and political science law department. bis central bankers β speeches 31. this brings me to my last and the most important point. the role of authorised dealers and fedai in times to come. the authorised dealers led a very protected life in the fera regime and never had to apply their mind to the permissibility of a foreign exchange transaction because it had to be based on an rbi permit or some other permit, for example, an import license. today, it is not so. when fedai was formed in the 1950 β s its role mostly evolved round computation of various forex rates and mostly interbank transactions. in the times to come, both authorised dealers and fedai will have to play an active role in ensuring that customer transactions are compliant with the regulations. the more we move towards a principle based framework, the more arduous will be the responsibility of the authorised dealers. this includes the issue of fair pricing as well. indeed, our success in moving to a principle based framework will depend on the involvement of ads. you will have to gear up for that responsibility. 32. finally, let me briefly recapitulate some of more important issues. a. in foreign exchange market, as in any other market, freedom is the default and any restraint by way of regulation has to justify itself. the regulation has to be based on sound economic principles and not on dogmas or evangelism. b. though the superiority of free markets as a way of organising economic activity is well recognised, there are many areas where the limitations of market have been widely discussed in the literature and are well accepted. there is no accepted standard for optimum regulation which is often idiosyncratic. the regulation of forex markets has to be seen in that context. as chesterton remarked, β don β t ever take a fence down until you know the reason it was put up. β c. more products go towards market completion and enable better hedging against risks, but are limited by the wisdom of the participants to use them. d. exact | ##s β, this new shared infrastructure would tackle markets which still rely on manual processes and lack standardisation, such as otc markets and unlisted stocks. 3 / 4 bis - central bankers'speeches a crucial first step will be to make central bank money available on this infrastructure : this makes it all the more important to offer a wholesale cbdc solution in the short term to prepare this long term target. let me conclude with billy wilder, the director of some like it hot. he once gave this sound piece of advice : " if you have a problem with the third act, the real problem is in the first act. " this leads me to a twofold conclusion : first, that it is the right time to engage in the design and experimentation of market infrastructures of the future ; second, that fast - paced transformations should not be at the expense of past achievements in financial stability, and increase risks. central bank money must remain the settlement asset at the core of the financial system, whether tokenised or not. under this condition, our common technological breakthroughs could contribute to meeting our major challenges. thank you for your attention. i regulation ( eu ) no 909 / 2014 on improving securities settlement in the european union and on central securities depositories ii esma ( european securities and markets authority ) proposes to move to t + 1 by october 2027, 18 november 2024. iii dlt stands for " distributed ledger technology ", which underpins the tokenisation of assets. iv villeroy de galhau ( f. ), innovation by central banks : the sooner the better, speech at the bis innovation summit, 6 may 2024. v villeroy de galhau ( f. ), wholesale cbdc : as decisive as retail cbdc, and actively experimenting, speech, 3 october 2023. vi ecb, exploratory work on new technologies for wholesale central bank money settlement, 4 december 2024. vii carstens ( a. ) and nilekani ( n. ), finternet : the financial system for the future, bis working paper, 15 april 2024. viii bis ( bank for international settlements ), project agora : central banks and banking sector embark on major project to explore tokenisation of cross - border payments, updated on 16 september 2024 4 / 4 bis - central bankers'speeches | 0 |
glenn stevens : overview of the australian economy and future challenges opening statement by mr glenn stevens, governor of the reserve bank of australia, to the house of representatives standing committee on economics, canberra, 26 november 2010. * * * when we last met with the committee in february this year, it was becoming clear that the recovery in the global economy was proceeding faster than many had expected. it was also clear that the strongest performance was in the emerging world, while recoveries in countries that had been at the centre of the financial events of 2007 and 2008 were relatively subdued. global financial markets had continued to improve, but were paying close attention to the rise in sovereign debt in a number of countries. at that time, people were talking about an expansion in global gdp of something like 4 per cent in 2010. as it turns out, it looks like the outcome will be stronger than that : current estimates for the year are about 4ΒΎ per cent, which is above trend. the pattern of growth is still rather uneven. the additional strength has been concentrated in the emerging countries, with growth in china and india running at a pace of around 10 per cent in 2010. in contrast, growth of about 2Β½ per cent for the g7 group, after a contraction of around 3Β½ per cent in 2009, will leave a considerable margin of spare capacity and particularly of unemployed labour. financial markets and policymakers have maintained, and indeed increased, their focus on issues of sovereign debt sustainability. first greece, and now ireland have sought financial assistance from european partners and the imf, after a change in economic circumstances and a large rise in market borrowing costs left authorities with little other option, even with deep cuts to spending. across continental europe and the united kingdom, governments are embarking on a path of fiscal consolidation, in order to put public finances on a sounder footing in the face of increased obligations and reduced revenues. these programs will unavoidably have some short - term dampening effects on economic activity, which will likely become clearer during 2011. but the scope of alternative possibilities open to the governments concerned is really rather limited. in this environment it is no surprise that the major central banks are mostly maintaining very low interest rates and in some cases increasing the sizes of their already expanded balance sheets via asset purchases. these actions are designed to impart some further stimulus through reducing long - term interest rates even further or via effects on private - sector balance sheets. yet at the same time many other countries have moved to tighten | karnit flug : productivity in israel β the key to increasing the standard of living : overview and a look ahead speech by dr karnit flug, governor of the bank of israel, at the israel economic association conference β productivity in israel β the key to increasing the standard of living : overview and a look ahead β, tel aviv, 1 june 2015. * * * highlights : β’ macroeconomic policy aims to achieve the potential growth in the short term. potential output is determined on the basis of investment in growth drivers that we first made many years earlier. we need to focus long term policy on an effort to break the productivity barrier, in order to ensure sustainable and inclusive growth, prosperity, and a suitable standard of living. β’ despite the growth in labor input, the output gap between us and advanced economies isn β t closing. this is a result of low capital stock and investment, poor infrastructures, inadequate government investment in research and development, and an inefficient business environment. β’ expected trends in world trade, global growth, demographics, and human capital development, will reduce the growth of israel β s economy in the coming decades. the convergence of employment rates among the arab and ultra - orthodox sectors, and of the relevant educational patterns among the ultra - orthodox, to those of the overall population will be able to reduce the extent of the negative impact on per capita gdp and support a broadening of export industries and destinations. β’ the economy β s relatively good macro situation enables us to focus on dealing with the longer term economic challenges. there are many, complex, challenges, but dealing with them is critical to our success, and to the benefit of the entire population in the coming years. β’ in order to ensure our economic and social future, we must courageously look at the current situation, and begin even now to work to ensure an increase in productivity that will allow an extended increase in the standard of living of all citizens of the country. israel β s economy, as is known, made it through the global crisis better than most other advanced economies, and we benefit from a relatively good macroeconomic situation, among other things due to proper macroeconomic management in the years prior to the crisis, and determined management of policy during and after the crisis. correct macroeconomic policy is obviously a very important component in ensuring growth and prosperity. however, it must be remembered that at any given time, macroeconomic policy acts within a framework of long term economic variables. macroeconomic policy | 0 |
( iosco ) revisions to the 1996 market risk amendment ( mra ). since adoption of the mra, banks'trading activities have become more sophisticated and have given rise to a wider range of risks that are not easily captured in the existing value - at - risk ( var ) models used in many banks. for example, banks are now including more products related to credit risk, such as credit - default swaps and tranches of collateralized debt obligations, in their trading books. these products can create default risks that are not captured well by the methodologies required under the current mra rule β which specifies a ten - day holding period and a 99 percent confidence interval β thereby creating potential arbitrage opportunities between the banking book and the trading book. recent events relating to us basel ii implementation as most of you know, there have been two important recent events related to basel ii implementation in the united states, both of which occurred on february 15. the first was the release of a report by the government accountability office ( gao ) on u. s. implementation of basel ii. the second was issuance of proposed basel ii supervisory guidance by the u. s. banking agencies. gao study the federal reserve welcomes the recent gao report on basel ii implementation in the united states. we believe this report will help move the u. s. basel ii process forward. while i do not intend to summarize the gao report here, i would like to offer a few thoughts on the report's conclusions. the federal reserve concurs with the report's finding that the basel i capital rule is particularly inadequate for large banking organizations ; the report states that the agencies should continue their efforts to finalize the u. s. basel ii capital rule and proceed with the parallel run and transition period to basel ii. we agree with the report's conclusion that finalizing the u. s. basel ii rule would generate crucial information to enable the agencies to make future assessments of the strengths and weaknesses of the basel ii rule for the u. s. banking system. we also agree with the gao's finding that establishing basel - ii transitional floors will prevent a bank's regulatory capital requirements from declining precipitously during the transition period. and finally, we agree with the gao that any further delay in the u. s. implementation of basel ii creates potential competitive disadvantages for u. s. banks when they are compared with foreign banks. the gao report also raised issues about transparency and | independence can be misunderstood, its defense misconstrued, its threats dismissed, and the consequences of its breach underestimated. in the balance of my remarks, i will discuss these issues. central bank actions at the water β s edge the congress is currently immersed in a significant policy debate on the role of the central bank, as part of legislation described by its authors as comprehensive, fundamental regulatory reform. 3 and it is worth remembering that the federal reserve is the nation β s third significant experiment with a central bank. 4 as the federal reserve nears its centennial, the fed β s longevity should not allow our memories to fail us on its origin and the scope of its remit. let me explain. the grant of authority to the central bank is a considered judgment of the nation β s elected representatives. central bankers are entrusted with a revocable privilege. so, declarations of independence by fed policymakers are heartening. but independence is ours to demonstrate, not principally to declare. and central bankers err if they presume that independence is some inalienable right, some entitlement. a misconception on the nature of the central bank β s authority gives succor to fed critics. the fed is not independent from government. it is independent within government. and elected representatives have every right to redraw the central bank β s authority, even if a fuller reading of economic history considers it unwise. actual inflation in check. see ben s. bernanke ( 2005 ), β what have we learned since october 1979? β federal reserve bank of st. louis, review, vol. 87 ( march β april ), part 2, pp. 277 β 82. see kevin warsh ( 2010 ), β regulation and its discontents β, speech delivered at the new york association for business economics, new york, february 3. the first bank of the united states was founded in 1791, and its charter expired in 1811. the second bank of the united states was founded in 1816 and lost its public charter in 1836. the federal reserve β s defenders also err if they seek to extend the fed β s vaunted independence to the full range of its activities. my reading has it that the congress granted the fed independence in the conduct of monetary policy. in my view, no particular deference is owed β no promise of non - intervention due β in the conduct of regulatory policy, consumer protection, or other responsibilities granted to the federal reserve. this | 0.5 |
the financial sector. however spreads are still high compared to pre - august 2007 levels ( see slide 8 ). even sovereigns have not been immune to the increased credit risk valuations ( see slide 9 ). following the announcement of the rescue packages, the cds - spreads for sovereigns seem to have stabilized. the mandate of the sub - committee is to aim at promoting further the integration and better functioning of eu government bond markets thereby impacting positively on the financial markets as a whole. in relation to issuance terms in this volatile market the bond yields have been declining compared to level in july 2008 ( see slide 10 ). this movement has primarily been driven by a flight to safety. nevertheless the demand for government securities can be quite volatile. the latest round of financial turmoil has indeed lead to pronounced increase in the volatility both in the stock and bond market ( slide 11 ), which from an issuers standpoint makes it difficult to manoeuvre in terms of coming out with timely issuances in such an unpredictable market environment. in addition increased credit risk and demand for liquidity have widened the yield spread to german government securities and thereby aggravating the relative issuance terms for other emu - countries ( see slide 12 ). under the assumption that the yield spread between member states purely can be explained by differences in credit risk and liquidity, one may use prices on credit default swaps ( cds ) as an approximation for the credit risk premium. the liquidity risk may then be defined as the residual of the yield spread after deducting the credit risk premium ( see slide 13 ). the calculation shows that the widened yield vis - a - vis germany in 2008 compared to 2007 is predominately caused by increased credit risks. the financial turbulence has elucidated the role of the government securities as safe havens ( see slide 14 ). under normal market conditions the swap market may function as a substitute for government securities especially in terms of it's virtues in regards to pricing. however the increasing credit and liquidity premiums imply that this type of substitution is no longer valid. market conditions in general banks are under pressure. they experience rising funding costs and declining market value ( see slide 15 ). the capacity of the balance sheet is constrained making it more difficult to handle the intermediation phase between issuers and end - investors. in addition, the constrained balance sheets combined with increased volatility have lead to widened bid offer - spreads in the secondary government | factor in decisions about housing versus equities, direct versus portfolio approaches, and onshore versus offshore investments. from this individual point of view, housing - heavy investors may look to be acting rationally. in particular, capital gains on housing assets are usually tax exempt, while those on financial assets are often not. in addition, households can negatively gear investment properties so a loss is created, which can be deducted from income for tax purposes. but it is not the purpose of this speech to examine the implications of tax policy for household decision - making. i focus here on the wider concerns - the implications of holding too many eggs in one basket, the exposures generated by gearing decisions, and the lack of ready access to local equity by new zealand firms. there are specific difficulties interpreting the data on equities. in particular, new zealand is a country of small firms and farms, almost all privately owned, most of them through families. an important form of debt is mortgage financing on the owners β house ( s ). this raises the statistical complication that the household sector holds more equity than is initially apparent. an additional complication comes from the inconsistent treatment of family trusts, and the assets held by them. we estimate that about 15 percent of households now hold assets through family trusts. furthermore, globalisation is complicating things considerably. our official data on offshore equity holdings by new zealanders probably under - estimates the real situation. statistics new zealand surveys new zealand resident institutions as to their offshore holdings and bases their measure of direct holdings on ird returns. as a result, offshore holdings of private equity and equity paying low dividends are unlikely to be fully captured. migrants into new zealand pose particular measurement challenges, especially when they retain ownership interests in offshore operations where they continue to have family or corporate ties. of course the government itself has significant holdings of equity and it would be rational for householders to take these into account in their savings decisions. through various crown financial institutions, and in particular the new zealand super fund, the government indirectly holds about $ 600 million of new zealand equities onshore and about $ 1, 800 million offshore. through its state owned enterprises and holdings in air new zealand, it holds another $ 10 billion directly. local government also holds significant equity positions. there are three particular types of corporate in new zealand that have been untouched by foreign ownership because their form and modus operandi prevents this. they include state owned enterprises, and other government companies | 0 |
richard dzina : advancing the fed's wholesale services in an era of unprecedented challenge and change remarks by mr richard dzina, executive vice president of the financial services group of the federal reserve bank of new york, at the securities industry and financial markets association's operations conference and exhibition 2017, boca raton, florida, 9 may 2017. * * * thank you and good morning. in leading the federal reserve β s wholesale services i am continually reminded that my stewardship responsibilities for this extraordinary business run in at least three directions. organizationally, i am accountable to principals across the federal reserve system and to the directors of the federal reserve bank of new york. managerially, i am accountable to the men and women who make this business function, as capable and as dedicated a cadre of public servants as has served our nation anytime, anywhere. operationally, and the sensation i feel most keenly standing before this audience of industry leaders, i am accountable to our depository institution customers, and their end users, which rely upon our services to send and receive time critical payments ; to transfer, maintain, and provide safekeeping for fedwire - eligible securities ; and to settle positions derived from transactions in other markets. i β d like to thank sifma for the opportunity to participate in today β s program, and for the visceral reminder of accountability that comes with this invitation. i have long maintained that the federal reserve β s wholesale services represent the franchise when it comes to our nation β s financial market infrastructure. it is a bold assertion, but not necessarily an unreasonable one, reflecting the dollar value of transactions processed across the fedwire funds, fedwire securities, and national settlement services ; the interconnectedness and dependencies between these services and other systemically important infrastructures ; our role as central securities depository and as fiscal agent for the issuance, maintenance, and redemption of all fedwire - eligible securities ; and as the platform across which the federal reserve ultimately settles its monetary policy operations. any one of these elements would likely qualify the wholesale services as β systemic β ; in the aggregate they represent a staggering portfolio on which the execution of both our nation β s fiscal and monetary policies ultimately depends. in recognition that a wholesale service outage risks a significant shock to the united states, and in light of the escalating threat landscape in which collectively we operate, last year before this audience i shared a series of reflections endeavoring to advance a new paradigm for resili | is complex far beyond the security and resiliency domain. financial market infrastructures face an unprecedented volume of technological change, market developments, and regulatory scrutiny. for the fedwire funds service, at least two market developments promise to have major strategic implications over a 3 - 5 year horizon : the advent of real time retail payments, which the federal reserve is actively promoting as a desired outcome in its strategies for improving the payments system ; and the trend toward global adoption of iso 20022 payment message standards. for the fedwire securities service, the successful modernization in november 2015 of the application suite and hardware platform supporting this critical business presents an historic opportunity to articulate a future vision that responds to customer and stakeholder needs. straddling both domains, the emergence of new technologies such as distributed ledgers presents both challenge and opportunity. a key desired outcome identified in the federal reserve β s strategies for improving the payment system ( sips ) is to increase the speed of retail payments. an unmistakable global trend toward real time retail payments has emerged reflecting the advent of new technologies, the rapid pace of private sector innovation, the proliferation of mobile payment devices, and the recognition that a world of 24x7 commerce requires a payment system that can keep pace. as this trend inevitably accelerates, the question of interbank settlement to address credit exposures that may accumulate outside of conventional banking hours must be addressed. reflecting the federal reserve β s historical interest in the mitigation of settlement risk, and in anticipation of the emergence of real time retail payments in the united states, we are currently exploring an expansion in operating hours of the national settlement service to support the final and irrevocable settlement of interbank positions in central bank money. we are pursuing this interest in three phases. in 2015, we expanded the nss operating window modestly, opening an hour earlier at 7 : 30am and closing a half hour later at 5 : 30p. m. subsequently, we announced our readiness to open nss as early as 9 : 00 p. m. on the prior calendar date, consistent with the operating window of the fedwire funds service, if requested. finally, we are currently evaluating prospects for weekend settlement hours, perhaps encompassing a 24x7 operating window for nss, for which we are validating demand prior to finalizing our direction. it is critical to consider these matters in advance of the advent of real time retail payments to anticipate the needs of customers and to respond to the interests of policy | 1 |
of the service sector. so, to continue with the news analogy, here β s the lede : i expect gross domestic product, or gdp, to increase around 5 Β½ to 6 percent this year. my current forecast accounts for strong growth in the first half of 2021, but also balances some slowing of growth in the remainder of the year relative to the first half. now i β ll turn to employment, something i know many of you as business leaders watch closely. job gains by and large have been strong in recent months. on average, 750, 000 jobs were added per month over the three months through august, and the unemployment rate now stands at 5. 2 percent. at the same time, we β re seeing indications that the labor market recovery is being impaired by the recent covid surge. job gains slowed noticeably in august, with the weakening concentrated in sectors most sensitive to the pandemic, including leisure and hospitality. health concerns, early retirements, and childcare challenges continue to weigh on labor supply. 1 / 4 bis central bankers'speeches anecdotally, a lack of immigration and work visas is affecting labor supply as well. another storyline that β s taken hold is the cycle of hires and quits in the labor market. clearly, demand for workers is very high β we see this in an elevated number of job postings and hires. at the same time, people are leaving their jobs in large numbers, either to look for new work or exit the labor force altogether. these conditions reflect the extraordinary nature of the pandemic, and also illustrate that we still have a long way to go until we achieve the federal reserve β s maximum employment goal. in fact, there are over five million fewer jobs today than before the pandemic, and the unemployment rate is still far above levels reached early last year. when tracking progress toward maximum employment, it β s important to take two points into consideration. first, even if job postings are at a record high, job postings are not jobs. these vacancies won β t be filled instantly β it takes time for employers to find the right workers. and second, a full recovery means a recovery in employment, not just lower unemployment. employment dynamics are driven by both the unemployment cycle and the labor force participation cycle. because employed workers are more likely to remain attached to the labor force, these cycles are interrelated, as lower unemployment raises participation by reducing labor force exits. this relationship also means | like investments that fall due, income is generally reinvested. therefore, foreign exchange reserves tend to rise even when we do not need to purchase additional foreign exchange. the other component of returns is changes in the value of foreign exchange reserves. we value all investments at market prices and in swiss francs. consequently, changes in the prices of interest - bearing paper and shares as well as exchange rate movements have a direct impact on the net result for investment. if the swiss franc strengthens against the investment currencies, this results in a valuation loss on the foreign exchange reserves. the chart shows the net investment result since the first quarter of 2010 for the foreign exchange reserves, as well as for the individual components. the dominant role of exchange rate movements is clearly evident. in the past, too, exchange rate movements have posed by far the greatest risk to our portfolio. taking a long - term view, exchange rates have been responsible for about 80 % of the total risk on the foreign currency reserves. reform of interest rate benchmarks following last year β s revelations that libor interest rates had been manipulated, various activities to reform the libor and other interest rate benchmarks are under way. the snb is involved in these reform activities at both international and national level. the objective is to improve the credibility and acceptance of the existing interest rate benchmarks or, where appropriate, to take steps to ensure the provision of robust alternative interest rate benchmarks. international efforts are being coordinated by the financial stability board on behalf of the g20 countries. they involve not only central banks and supervisory authorities but also an international group of private sector financial market participants. they are examining, first, the extent to which the existing libor interest rates fulfil the requirements laid down by securities supervisors last july ( the iosco standards ). second, they are investigating whether there are alternative interest rate benchmarks which would better meet the needs of the market and the requirements of supervisory authorities in the longer term. alternatives to the libor are being developed by the private sector group, which also includes swiss representatives. the financial stability board plans to present the results of its work in the middle of next year. at the international level, activities are also under way to regulate the interest rate benchmarks as well as other important reference variables on the financial markets. in bis central bankers β speeches london, the libor is already now subject to a supervisory regime. in brussels, a bill has been proposed which would regulate all interest rate bench | 0 |
jean - pierre roth : switzerland - a platform for global business keynote address 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 consulate general of switzerland / swiss - american chamber of commerce, new york, 1 june 2006. * * * it is a great pleasure for me to be with you today and i would like to thank my dear friend, ambassador loretan, for hosting this lunch of the swiss - american chamber of commerce. swiss people always feel at home, here, in this fascinating city. new york is a unique place, not only because of its size, its beautiful skyline, its location, but foremost because of its openness to the world and its multiculturalism. compared to new york, is switzerland anything more than just a small village located in the heart of europe, a country of watchmakers and chocolate producers? is there anything to see other than the matterhorn and the water fountain on lake geneva? it is interesting to note that, despite the strong presence of swiss multinationals abroad and, of course, the very well - known swiss flag β thanks to the red cross flag β switzerland is largely ignored in international surveys and is almost non - existent in european statistics. β to live happily, live out of sight! β ( pour vivre heureux vivons caches ) is a well - known proverb. this may well be true, but it serves to fuel many cliches ; and misconceptions are generally counterproductive. let me show you the hidden side of switzerland. you will see that modern switzerland is adjusting rapidly to the changing reality of the world economy. let's consider a few facts : β’ with 7. 5 million people, switzerland is indeed a small country. although we have no natural resources, we have a highly developed economy and a gdp per capita that clearly exceeds the european average. contrary to the situation among some of our neighbours, our population is still growing, thanks to immigration. our foreign population now represents about 20 % of the total population and 25 % of the labour force. despite strong immigration, our unemployment rate β 3. 5 % β is relatively low. β’ switzerland remains a slow - growing country when compared to the united states. our weak growth performance is due in part to the full employment, the relatively high level of personal income and the limited scope for domestic investment. however, in recent years, the | ##eu β namely the green transition and digitalization β might put a positive pressure on the potential output growth. investments in green and digital technologies could boost labor productivity and foster sustainable growth. consequently, the ultimate question we policy makers must find answers to is which factors will be dominating in the near future. with such long - term developments and the current circumstances, how should we balance economic slowdown and increasing prices? to be more precise, what weight should we give to the taylor rule variables and what time dimension of projections should we focus on? there is some merit to believe that structural forces that push neutral interest rate lower such as demographics, globalization and digitalization may not fade out - globalization may be an exception to some extent as i tried to explain - and a threat of the too - low inflation may return to our agenda. in other words, if the interest rate changes affect prices in one - to - two years β time only, how strong should we be in reducing our monetary policy accommodation? nevertheless, this does not change the fact that in the current environment we must tighten monetary policy to keep inflation expectations from increasing to unsustainable levels. de - anchored inflation expectations would make it much more difficult for the central bank to achieve its mandate of price stability. overall, i think we should gradually raise rates to retain credibility. we must be apprehensive, that, as the neutral rate is currently much lower, we cannot increase policy rates to the levels seen 15 - 20 years ago. still, as of this moment, it is extremely important to prevent the situation in which inflation expectations become entrenched at significantly higher levels than our inflation targets over the medium term. looking at the longer horizon, at the next strategy review, it is worth discussing what monetary policy framework is mostly fit for the new issues that relate to climate change risks, retreating globalization, and returning geopolitical threats. to this end, i am grateful for this opportunity to exchange the views in this panel discussion. monetary policy | 0 |
why sme lending is currently highly concentrated among a handful of large banks that have the scale and capacity to diversify idiosyncratic risks by investing or lending to a broad enough range of smes. in other words, smes will remain largely dependent on a subset of banks for the foreseeable future. the key question then becomes, in the context of an already - accommodative monetary policy stance, how the role of banks in providing sme finance be structurally improved? i believe there are two channels. first, through the asset quality review transparency will be increased and investors β confidence can be restored. removing the blockages created by non - performing legacy assets can unclog banks β balance sheets. once banks β balance sheets are cleansed and strengthened and the market is reassured about the stability of european banks, they should be able to begin lending again. second, connecting sme financing needs with the funds of bank and non - bank investors via securitisation of sme loans can assist banks β ability to fund and distribute risk. both channels have the advantage of not interfering with the allocation mechanism of a market economy. as the asset quality review is already receiving much attention, thus i will focus the remainder of my talk on the second channel. bis central bankers β speeches the benefits of sme loan securitisation let β s pull together what we know right now. first, we know that sme lending in weak economies is risky. second, we know that many banks are reluctant to take on additional risk on their balance sheets and indeed are trying to deleverage and reduce their balance sheet risks. third, we know that non - bank investors in many parts of europe and abroad are seeking investment assets with maturities and returns that match their liability profiles. i am thinking both of insurers and pension funds, but also alternative investors such as hedge funds. there are also many banks willing to hold abss 1, but are reluctant to do so, for reasons that i will address later. so we have a situation where certain banks own assets with risks and capital charges that they do not wish to bear. on the other side, there are investors who are willing to bear those risks. in my view, this is a match that should happen in an efficient financial system, and securitisation of sme loans is the way to achieve it. what is more, the funds received by banks from transferring bundled sme loans to outside investors can help support | yves mersch : banks, smes and securitisation speech by mr yves mersch, member of the executive board of the european central bank, at the deutsche borse β clearstream β exchange of ideas β event, london, 7 april 2014. * * * overcoming the current challenges faced by small firms ladies and gentlemen, it is a pleasure to speak at this conference today. in my remarks i would like to address what i see as the key challenge in the euro area today : how to fix the flow of credit to the real economy. during the crisis the credit transmission channel has become impaired in three mutuallyreinforcing ways. first, as regards quantity, aggregate loan growth continues its steady deceleration and remains very heterogeneous across the euro area. second, as regards price, low eurosystem policy rates are simply not being passed on in certain countries. third, as regards distribution, smaller firms appear to be suffering more from price and quantity effects, especially in weaker economies. certainly, the reasons for these blockages relate in part to demand - side factors, but the supply - side β banks β capital levels and risk assessments β remains an important part of the story. a malfunctioning credit channel has several unwelcome consequences for the real economy. it impairs the transmission of monetary policy throughout the euro area. for borrowers in weaker economies that are undergoing a relative price adjustment, tight credit means that real interest rates are rising while relative prices are falling, thus pushing up the real cost of servicing debt. and it also impairs the allocative efficiency of the real economy, as credit is allocated away from the smaller and younger firms that are by nature more risky yet create the most net jobs. as 99. 7 % of firms in the eu are smes, this is a crucial issue to be solved. the fortunes of the euro area economy are intertwined with the financial health of smes. one solution to this problem could be for firms to bypass the bank lending channel and replace bank finance with capital market finance. this trend has already been observed for larger corporates, with european corporate bond issuance expanding rapidly in the last few years. however, for smes accessing non - bank finance is often simply not an option. indeed, non - specialised investors and lenders are often wary of firms facing high degrees of competition and limited growth prospects, particularly if those firms have only existed for a short while. that is | 1 |
solidarity framework β the european stability mechanism. it can provide financial assistance to member states in difficulty, thereby reducing threats to financial stability in the euro area as a whole. but we need continuous efforts, particularly in the area of financial policies. the β four presidents β of the eu were mandated to provide a vision for europe. in the context of our discussion today, i would say that they were tasked with identifying and outlining the minimum conditions to ensure the full viability of the euro area β which are the same as the minimum conditions to ensure continued trust in the euro. four pillars have been identified : a banking union with a single supervision and common resolution framework ; a fiscal union to prevent and correct unsustainable fiscal paths ; an economic union that can guarantee sufficient competitiveness to sustain high employment ; and a political union that can deeply engage euro area citizens. as i discussed accountability, let me say a word on the last pillar, political union. i think that the general issue here is to clarify who does what, to establish a network of responsibilities. the notion that the euro is a currency without a state is in my view misguided. the euro is a currency with a state β but it β s a state whose branches of government are not yet clearly defined. the ecb is part of the construction of economic and monetary union, with a very clear but very limited mandate. the other parts β i am thinking in particular of the delineation between the commission and the council β still require clarification. the proposal put forward by jean - claude trichet of a β euro area treasury β would be an important step in that direction. the ecb is independent and fully accountable, but it needs clearly identifiable and fully empowered interlocutors. peter bofinger, jurgen habermas and julian nida - rumelin : β einspruch gegen die fassadendemokratie β, frankfurter allgemeine zeitung, 3 august 2012. dirk schoenmaker ( 2011 ) : β the financial trilemma β, economic letters 111 ( 2011 ) 57 β 59. bis central bankers β speeches we all have in mind robert schumann β s prediction that β europe will be built through concrete achievements which first create a de facto solidarity β. now that the euro area crisis has created de facto solidarity, there is a need for concrete achievements to complete emu. this, together with the individual commitment of each government to restore balanced growth and employment, | close many of the newly emerging opportunities were located, let me give you some comparisons : vienna is no further from bratislava, the capital of slovakia, than stamford 1 is from new york ; getting to budapest, the capital of hungary, from vienna is like getting to albany for you ; prague, the capital of the czech republic, is as far as boston ; and ljubljana, the capital of slovenia, as far as washington. the proximity together with cultural similarities and a shared history gave austrian banks some advantages on these new markets, and they did not miss their chance. their strategy for the years after 1989 clearly was : go east! the engagement of austrian banks in the central and eastern european countries has been very successful, and it has been beneficial for all parties involved β and even for some uninvolved. for austrian banks, the investments in the region proved to be highly profitable and contributed most favorably to their earnings over the past years. stamford, connecticut, is part of the new york metropolitan area and hosts a cluster of corporate headquarters, many of which moved from new york in the 1980s both to lower their tax bill and to be closer to the homes of their top executives. at the beginning of the transition in central and eastern europe the domestic financial corporations in these countries were unable to fund the elevated rates of economic growth sustainably ; in some cases, banks as we know them hardly existed. even ten years after the beginning of transition, the ratio of private credit to gdp was much lower in these countries than in the mature eu economies. therefore, foreign investors and financial intermediaries were highly welcome to fill the gap. after decades of centrally planned economic activities, domestic banks in these countries often lacked the experience or the corporate governance to support the establishment of dynamic markets. foreign banks contributed to the necessary financial deepening in the region and thereby allowed for a smoother transition process. but in many eastern european countries, access to financial intermediation is still far beyond the levels in oecd countries, and therefore the extension of financial activities in that region will offer an attractive business opportunity for austrian banks and other international intermediaries in the future. this financial strengthening of transition economies provided positive spillover effects by raising the demand for imported goods and services from the mature economies which were already members of the european union. thus, the financial integration of central and eastern europe fuelled the prosperity of the whole continent. around 20 % of all euro area exports went to the 10 new eu member states in central and | 0 |
finally, i would like to leave you with these words from steve jobs as food for thought, β i am convinced that about half of what separates the successful entrepreneurs from the nonsuccessful ones is pure perseverance. β let β s persevere, and make namibia a truly competitive, global player. ladies and gentlemen, it is therefore a great honour for me to present the awards to the winners of the business idea competition. i thank you! bis central bankers β speeches | . inflation has been low and stable ; fiscal policy has been prudent and sustainable ; and our external balance has been healthy over the years. moreover economic growth has been positive, resulting into modest gains in per capita income. recently the world bank reclassified namibia from being a lower - middle - income country, to an upper - middle - income country. this should bolster us to want to do more. we are one of only a few countries in sub - saharan africa that has an investment credit rating. with a credit rating, we are able to access international capital markets at relatively better terms. while we may not need to borrow externally for now, external borrowing may be necessary during times of crisis or when in need of additional capital to support faster economic growth. we also have one of the highest savings rates in the world, almost comparable to rates in east asia. however, i remain concerned that up to now we failed to transform all our savings into domestic investment. over the years we wasted precious time engaging in useless debates as how to utilise our own capital to generate higher economic growth. it is simply no longer credible on our part to request other countries to financially assist us while we are happy to continue exporting our own capital. this remains a challenge that we can no longer afford to ignore. equally, on the social front our achievements have been many and laudable. today there are many more children in schools than at independence. our national spending on education as a percentage of total spending is among the highest in the world. more health facilities have been constructed since independence. at least 90 percent of all namibians have access to safe drinking water. this is an achievement that even some of the dynamic fast growing emerging market economies is yet to achieve. so our achievements are numerous and we should celebrate. while our achievements are impressive, our challenges are equally daunting. the risk is that if we do not address the challenges facing us as a matter of priority, the gains we have achieved thus far might be eroded. as to whether we are likely to achieve v2030, according to our research the picture does not look too encouraging. indications are that on the two key goals of per capita income and employment creation, we are not making sufficient progress. the current per capita income is us $ 4, 200. at the current growth rate, we project that by 2030, our per capita income will be us $ 10, 000. this is no near the required level of us $ | 0.5 |
the financial system, the higher would be the demand for governance as regulation and supervision cannot cover all risk elements in their supervisory processes. 1. 3 the next critical pillar or imperative is risk management ; i. e. identification, assessment, continuous monitoring of risks ( real or hypothesized ) and risk mitigation, while maximizing returns. in financial business, risk can emanate from many areas. the wellknown risks are credit, liquidity, market, operational and human capital risks. there are several other risks, such as cross - border product risks, illiquidity risks etc. the new and complex products that are being offered by foreign financial markets or institutions can have cross - border risks as their distribution can bring in serious contagion risks across global markets. most financial institutions do not view equity as risk capital. in banking, risks must include situations of drying up of liquidity. a case in point is the northern rock episode in which the bank exposed itself to the illiquidity risk. the need to bring in new capital to cover illiquidity was not given adequate attention by northern rock. such risks should also be analysed by banks and financial institutions and include them in their risk management framework. ignoring this risk or not taking action to mitigate can be construed as the β moral hazard β we often speak about. moral hazard leads banks and financial institutions to expect the public to rescue their institutions and continue to run on an illiquid basis, until they hit serious drying up of liquidity. if managed properly, risks can be confined to the institution concerned. if not, any one of these risks or a combination can affect a group of financial institutions or the entire financial services industry thereby creating a systemic risk. as martin wolf, a well known financial times journalist said β the financial services industry is famous for privatizing its gains and socializing its losses in that it expects the society at large to rescue them through public funds β. 1. 4 the third component is compliance, which relates to laws and regulations, internal policies and procedures. literally, compliance means obedience or dutifulness, but it has broad scope and various interpretations. compliance generally covers matters such as observance, application of standards of market conduct and managing conflicts of interests. more recently, compliance has expanded its scope to cover specific areas such as operations of money laundering and terrorist financing and even tax laws that are relevant to financial services. in brief, | free movement of goods etc. the underlying argument is that, if a country is self - sufficient in all its requirements, it can manage its affairs even in the worst conditions. in contrast, a country dependent on others, will have to follow a complaisant foreign policy so as not to antagonize them. it does not enjoy the freedom which self - sufficient countries have in charting their domestic and foreign policies based on national ideologies. raymond lim, singapore β s minister for transport and second minister for foreign affairs, referred to this limitation in the context of a country dependent on global trade, as β β¦ β¦. not having the luxury of pursuing a foreign policy of abstract ideals β. it is, however, to be noted that such freedoms should not necessarily imply higher welfare. this is because the level of welfare of a country is dependent on the quantum of wealth created and the level of real consumption and quality of life of its people. yet, the critiques of the services sector based growth have often voiced these concerns and labeled such growth as illusive. the examination of the economic history of countries shows that there is a set pattern of the transformation of the structure of economies. the pattern has been from agriculture to industry and then to services. this trend has been equally observed in both developed and developing economies alike. in the first stage, which covers the pre - industrial era, the almost entirety of the economic value was created by agriculture. with fast industrialization, the source of a country β s economic value got shifted to industry. the wide - spread development of markets, first internally and then globally, led to the creation of a new growth sector in the form of services. this is because, the existence of an efficient services sector was necessary for further growth in both the agriculture and industry. when the natural resource endowment of countries set an effective limit on further expansion of agriculture or industry, the vacuum was filled by a sudden boom in services. good examples of this phenomenal development from the modern era are hong kong and singapore. both these countries have been able to create wealth through rapid industrialization supported by a strong and dynamic services sector. β staying relevant in the midst of globalisation β, experience singapore, july, 2006. p. 12 throughout its history, sri lanka has been a beneficiary of being an active partner in global trade. in addition to be located on a very convenient naval route, conducive policies adopted by successive rulers have been a booster | 0.5 |
decline in the price of betelnut and lower imported prices of food and fuel, supported by the appreciation of the kina exchange rate. underlying inflation as indicated by the exclusion - based and trimmed mean measures were 7. 7 percent and 6. 5 percent in the december quarter of 2011, respectively. these outcomes were lower than the forecast made in the september 2011 mps, despite the strong domestic demand associated with the png lng project and high government expenditures. the bank projects annual headline inflation for 2012 to be around 8. 0 percent, while trimmed - mean and the exclusion - based inflation are projected to be around 7. 5 percent. the forecasted headline inflation is lower than the 8. 4 percent average for 2011, due to the strength of the kina, lower imported inflation, and stable international food and fuel prices. the kina is expected to remain strong through 2012, mainly due to high capital inflows and export receipts. while this has the effect of lowering inflation, it can adversely affect the traditional export sector. on the other hand, firms must be fair in the conduct of their businesses by passing the benefit of kina appreciation through lower prices to consumers. inflation in png β s major trading partners eased in the second half of 2011 and is expected to pass through to domestic inflation in 2012. food, in particular cereal, and fuel prices dropped in the second half of 2011, though both have increased slightly in the first few months of 2012. however, inflationary pressures still prevail, attributable to domestic demand pressures arising from the ongoing construction of the png lng project and subsequent increase in business activity in 2012, and increased private and public spending in relation to the national elections. the elections will also increase the transactions demand for money. bis central bankers β speeches supply - side shocks in early 2012, attributable to bad weather and subsequent damage to agricultural output and transport infrastructure are also expected to contribute to inflation. for the medium term, headline inflation is projected to be around 7. 5 percent in 2013 and 7. 0 percent in 2014. these projections are based on a number of factors including the winding - down of the construction phase of the lng project in late 2013, the continued strengthening of the kina and easing global demand ( see chart 1 ). there are upside risks to these projections, including higher domestic demand and associated inflation expectations by firms due to the png lng project, any substantial increase in food and fuel prices | high agricultural and mineral export receipts, combined with inflows related to the construction phase of the png lng project. the kina appreciated against the australian dollar by 8. 3 percent to a $ 0. 4276 over the same period. the appreciation was attributed to cross currency movements, as the australian dollar weakened against the us dollar. as a result, the trade weighted index ( twi ) appreciated by 12. 6 percent during the same period. the real effective exchange rate ( reer ) also appreciated by 7. 6 percent during the december quarter of 2011 ( see chart 3 ). the increase in international reserves led to the growth in money supply and liquidity. annual growth in broad money supply ( m3 * ) and monetary base in 2011 were 17. 3 percent and 61. 7 percent, respectively. the increase in broad money supply resulted mainly from increases in nfa of the depository corporations, while the substantial growth in monetary base mainly reflected increase in commercial bank deposits at the central bank. lending to the private sector continued to grow moderately as a result of firms utilising own funds while those associated with the png lng project received funding from the project. the bank issued net new central bank bills ( cbbs ) totaling k1, 102. 0 million, to diffuse some of the bis central bankers β speeches excess liquidity. however, domestic interest rates continued to fall, given the persistent high level of liquidity, with cbb rates at around 2. 0 percent and treasury bill rates at around 3. 0 percent. total liquidity of the banking system further increased by 37. 2 percent to k8, 888. 4 million in 2011, due to high government expenditure and foreign exchange inflows. net claims on the government declined by k846. 7 million in 2011, mainly due to increased deposits in the trust accounts. in the first quarter of 2012, the bank issued additional net cbbs of k92. 4 million. excess liquidity continued to remain high, therefore the bank increased the crr by an additional 1. 0 percent. in 2012, broad money supply is expected to increase by 14. 8 percent, driven mainly by increase in nfa of the banking system. monetary base and private sector credit are projected to grow by 33. 2 percent and 7. 0 percent, respectively. the bank considers the projected growth in monetary aggregates appropriate to support economic growth, but is also mindful of their inflationary impact, for | 1 |
wrong, they would not be rescued at taxpayers β expense. thus, the separation could protect depositors and, at the same time, would reduce moral hazard as it would become more difficult to finance risky areas of business through insured deposits. in addition, the separation of business areas could simplify group structures, thereby counteracting incentive and information problems which increase disproportionately with the size of banks. this would make banks more transparent and easier to manage, benefiting supervisory boards and management as well as supervisory authorities. however, separating banking functions will not prevent future banking crises. remember that, during the financial crisis, governments had to save many specialised banks in order to bis central bankers β speeches prevent systemic disruptions. the lehman bankruptcy caused precisely such contagion, but not because customer deposits were at risk. rather, it had many connections to other financial institutions including, above all, many counterparties in derivative transactions. essentially the same applied to aig which was not even a bank at all, but an insurer. even if there were a clean organisational separation, the interconnectedness of the financial sector and the resulting systemic importance of individual institutions would not be entirely eliminated. economic linkages would remain. financial institutions are linked not only through direct business relationships, but also indirectly through payment and securities settlement systems. it is also difficult to decide how and where to draw the line between β good β and β not so good β. the boundaries between customer business, hedging transactions, market making and proprietary trading are very much fluid. and problems in drawing clear boundaries generally result in loopholes and incentives for regulatory arbitrage. we should not neglect the danger of transactions and risks being shifted from the banking sector to areas which are less closely monitored and regulated, such as, for example, the transfer of proprietary trading to hedge funds. all in all, i do not see a clear case for separating banking functions. in other words, i do not believe this to be the first - best solution. 2. 2 introducing credible resolution regimes given these difficulties, what else can be done to end too big to fail? for me, rather than intervening in financial institutions β business structures, the preferable regulatory solution is the credible threat of an orderly market exit. and the decisive factor here, as always when it comes to money and finances, is credibility. only the credible threat that even systemically important financial institutions may exit the market, and that this can be executed in an | , we must also pay attention to the cumulative effects of, and the interplay between, individual regulatory initiatives. where there is a lack of consistency there is a danger that different measures may create conflicting incentives or may even cause countervailing effects. this then may diminish, or even completely prevent, the desired effects of new rules. take, for example, the interplay between the capital requirements directive / capital requirements regulation, which serve to implement the basel iii rules in europe, and solvency ii : the former seeks, among other things, to place bank funding on a more stable, long - term basis. however, solvency ii may, under certain circumstances, benefit short - dated bonds, impacting insurers β asset allocation and thus banks β funding costs. 4. implementing basel iii ensuring consistency clearly calls for intensive cross - border cooperation. this holds especially true as the reform process is shifting from policy development to implementation. countries must live up to their commitments and ensure the timely and globally consistent implementation of agreed policies. this applies, above all, to basel iii, which is without doubt the central achievement of our reform efforts. although it has become apparent that some countries are having difficulties sticking to the timetable, i urge all authorities involved to implement the framework as internationally agreed. recently, there has been a somewhat disconcerting discussion about the perceived shortcomings of basel iii. some argue that it is not enough. others argue that it is too complex. yet, neither of these criticisms is convincing. first, one clear lesson from the crisis is that banks β risk absorbing capacity was way too low. therefore, basel iii substantially raises capital requirements, reducing the probability of bank failures and the associated risks to financial stability and to taxpayers. second, while risk measurement will never be perfect, simplicity can sometimes come at a cost, too. operating exclusively on a simple non - risk - based ratio may counteract one of the basel framework β s overarching principles : more risk - taking means higher capital requirements. having said this, i fully agree to the leverage ratio β s overall intention which is to deliver a simple, transparent and credible ratio, complementing the risk - based capital requirements β and not replacing them. it should just serve as a backstop. there is no alternative to implementing basel iii on a global scale. in particular, i call on my colleagues in the us not to unexpectedly question the whole framework in the 11th hour β after taking part in its negotiation during the entire | 1 |
shortcoming of the current expansion has been the dearth of job creation over the past two years. last week β s report that employers added 308, 000 workers to their payrolls in march was encouraging and may signal that the recovery in the labor market is gaining traction. even so, the level of private employment remains more than 500, 000 - or 1 / 2 percent - below that at the trough of the recession in november 2001. the weak performance of the labor market over this period has been quite unusual by the standards of past economic recoveries, and, indeed, it is even weaker than during the infamous β jobless recovery β of the early 1990s. for example, employment rose about 2 percent in the twenty - eight months following the 1990 - 91 recession. and, in the other seven post - world war ii recoveries, employment growth averaged more than 8 percent over a period of comparable length. economic forecasters β consensus is that, as the expansion matures, employment will continue to improve sufficiently to make noticeable gains in the utilization of labor resources. i judge that to be a reasonable assessment. nonetheless, one cannot definitively rule out the possibility that hiring will fall short of expectations over the next several months as it had up until the most recent report. in particular, the lackluster performance we have seen in the labor market, even as real gdp has been moving up strongly, raises the question of whether an unusually large portion of the job cuts implemented by firms in recent years represent permanent layoffs that will only gradually be offset by job creation elsewhere in the economy. a number of hypotheses have been put forth as potential causes of the generally disappointing performance of the labor market, and, indeed, it seems likely that several factors have contributed to the shortfall in hiring. but any meaningful explanation must account for the surprising strength in productivity growth in recent years. in particular, labor productivity in the nonfarm business sector rose 4 - 1 / 4 percent in 2002 and nearly 5 - 1 / 2 percent in 2003, the largest back - to - back increases since the early 1960s. let me review the major hypotheses advanced to explain labor market developments. one possibility is that the same factors that induced businesses to take an unusually cautious approach to capital spending also influenced their willingness to add new workers. if so, then some of the surprising weakness in employment growth and some of the strength in productivity may have reflected a tendency by employers to stretch their existing work forces beyond a level | and watch. in general, recent financial markets developments are indicative of evolving uncertainties for emes with significant challenges for the conduct of monetary policy and for ensuring financial stability in their economies. as central bankers, we will have to enhance our vigilance. iv. challenges for monetary policy recent financial developments have drawn attention to the trying challenges facing central banks in the conduct of monetary policy, in particular, the limitations imposed by financial markets. these developments highlight the dynamic and complex links between central banks and financial markets. while the dynamics of financial markets are being driven by a combination of a global search for yields, complacency about risks, financial innovations and unprecedented liquidity, the spread of more independent, rule - based central banks has facilitated risk taking through perception of a low probability of short term management or β intervention risk β. this is set against the background of a shift in the balance of economic power within the global system, in particular, in favour of emerging asia. while taking a view on the debate, it is important to recognise the changes in the landscape of financial markets β transformation in structure, process and products of financial markets, consolidation in banking, increased electronic data flow and dramatic rise in volumes and volatility. the key issue for central banks is to differentiate between providing short term liquidity and operating medium term monetary policy and communicate the difference credibly. the conduct of monetary policy is also complicated by a host of factors which seem to be simultaneously at work : risk of sustained contagion ; global capacity constraints ; rising food prices ; record high international crude oil prices ; tensions in inflation expectations ; evolution of sovereign pools of foreign exchange reserves ; extent of effectiveness of monetary policy ; surveillance and risk monitoring systems ; and downgrade risks. in this evolving scenario, central banks may find it necessary to blend the traditional setting of monetary policy with some rethinking and non - traditional policy options which could include coordinated interventions, assurances of liquidity, backed by timely and credible action ; emergency liquidity plans, business continuity plans and disaster management strategies. admittedly, heightened uncertainties continue, even after taking into account the recent central bank activities in key jurisdictions. it is not even clear whether all the related issues have come to the surface for us to make meaningful assessment. i expect that i can't conclude this address without saying a few words on the domestic situation in india. the best way of doing this is to quote the governor from his recent speech in mexico city. " available | 0 |
to rise at a solid pace. continued softness in consumer spending and weaker housing activity early in the second quarter also suggest less momentum in economic activity so far this year. payroll employment continued to rise at a solid pace in april and may, though slightly slower than in the first quarter, partly reflecting increased immigrant labor supply. despite some further rebalancing between supply and demand, the labor market remains tight. the unemployment rate edged up to 4. 0 percent in may, while the 1 / 7 bis - central bankers'speeches number of job openings relative to unemployed workers declined further to near its prepandemic level. labor force participation dropped back to 62. 5 percent in may, which suggests no further improvement in labor supply along this margin, as labor force participation among those aged 55 and older has been persistently low. at its current setting, our monetary policy stance appears to be restrictive, and i will continue to monitor the incoming data to assess whether monetary policy is sufficiently restrictive to bring inflation down to our target. as i've noted recently, my baseline outlook continues to be that inflation will decline further with the policy rate held steady. and should the incoming data indicate that inflation is moving sustainably toward our 2 percent goal, it will eventually become appropriate to gradually lower the target range for the federal funds rate to prevent monetary policy from becoming overly restrictive. however, we are still not yet at the point where it is appropriate to lower the policy rate, and i continue to see a number of upside risks to inflation. first, much of the progress on inflation last year was due to supply - side improvements, including easing of supply chain constraints ; increases in the number of available workers, due in part to immigration ; and lower energy prices. it is unlikely that further improvements along this margin will continue to lower inflation going forward as supply chains have largely normalized ; the labor force participation rate has leveled off in recent months below pre - pandemic levels ; and an open u. s. immigration policy over the past few years, which added millions of new immigrants in the u. s., may become more restrictive. geopolitical developments could also pose upside risks to inflation, including the risk that spillovers from regional conflicts could disrupt global supply chains, putting additional upward pressure on food, energy, and commodity prices. there is also the risk that the loosening in financial conditions since late last year, reflecting considerable gains in equity valuations, and additional fiscal stimulus could add momentum to demand, | are estimated to have contributed both to the increase in the structural level of exports and to their geographical diversification towards markets with greater growth potential, thereby resulting in a favourable market - share performance. at the same time, imports have been seen to be flatter in relation to the rise in final demand, despite the momentum of exports in firms and sectors with a high import content. that likewise points to an improvement in the competitiveness of the resident productive sector compared with foreign competitors. the pick - up in our competitive capacity is highly tangible in terms of spain β s unit labour costs relative to those of the rest of the euro area. these costs fell by 14 % between 2008 and 2019, after rising forcefully during the pre - crisis years. the gains in competitiveness vis2 / 6 a - vis the euro area were reflected, in the early stages of the crisis, in heavy job destruction, and throughout the subsequent period, in wage moderation. contributing to this were the successive amendments to the labour market legal framework during the crisis, which proved to be effective levers for boosting the recovery in employment. overall, these developments enabled the competitiveness lost in relation to the other euro area countries β measured via relative unit labour costs ( ulcs ) β to be restored. specifically, while for the market economy as a whole ulcs growth in spain from 1999 to 2008 exceeded that observed in the euro area by 16 pp, the current relative level is 5 pp below that of 1999. we must add to these improvements the enhanced financing conditions for resident agents as a whole. included among these agents are spanish firms which, from end - 2012, saw their financial costs ease strongly. also, most particularly, there was a correction to the differences in the interest rates they had previously to pay compared with their competitors in the core euro area countries. in this setting, the ecb β s clearly expansionary monetary policy stance, the institutional reforms to the financial governance of the eu, and the cleanup and restructuring of the national financial sector were all pivotal in significantly reducing the degree of financial fragmentation in the euro area between 2010 and 2012. deleveraging by the non - financial private sector has also notably influenced competitiveness. this ongoing process is very advanced both in the case of non - financial corporations and of households. in the case of companies, for instance, the debt / gdp ratio has fallen by more than 40 pp from its peak, meaning it now stands below the average for euro area firms. this has all contributed | 0 |
year. during the period under analysis, exports in value continued their upward bis central bankers β speeches trend having started since 2010 q1 and expanded by 45. 4 % y - o - y. however, following a speeded - up growth over the first two months of the year, our export growth rates were significantly mitigated in march. during the same period, imports grew by 15. 9 % y - o - y. the division of imports according to their final use highlights the rapid growth of imports of intermediate and capital goods. the outlook of these trends may be associated with expanded current account and trade deficits in the country. the bank of albania is very attentive to this development, since it significantly conditions the external balances of albanian economy and the foreign exchange market. monetary expansion during 2011 q1 was in line with economic agents β money demand, marking a steady year - over - year growth of roughly 11 %. the 6. 2 % y - o - y growth of real money supply remained close to historical lows. moderate growth rates of m3 aggregate and other monetary indicators are in line with so - far assessments of existence of contained monetary inflation pressures. this trend is also supported by developments of currency outside banks. this indicator continued to fall y - o - y, and together with the shift of deposit structure to longer maturity terms, it indicates economic agents β lower preference for liquidity. in march, the annual broad money expansion was supported by increased private sector credit, which rebounded in line with its seasonal trend path. the upward contribution of private sector β s demand for money has offset the gradual decline in net foreign assets. public sector β s demand for money has been upward, supportive to the government β s more active stance over the first quarter of the year. in annual terms, the private sector loan portfolio grew by 11. 5 % from 10. 3 % in february. business loan remains the main contributor to expanding the private sector lending. in the meantime, in march, household loans also showed positive signs. overall, financial markets performed positively during the first four months of 2011. the information transmitted from financial markets shows agents β anchored inflation expectations. key interest rate rise at end - march is passed - through to short - term money market interest rates, leading to a slight flattening of t - bill yield slope. in deposit market, interest rates continued to fall, reflecting also the correction of their high rates having been marked after 2008. the foreign exchange market has | stimulus. in advanced economies, the positive global demand momentum has led to increased aggregate demand, while the upward inflationary pressures have made the central banks respond by tightening the monetary policy. in financial markets, the public balance health has determined the yield performance in several countries, while the political tensions have elevated the demand for safer instruments. the outlook remains highly uncertain, as a consequence of higher global prices, fiscal consolidation in some euro - area countries and less space for fiscal and monetary stimulus. returning to albanian economy, the latest data on 2011 q1, obtained from business confidence surveys, the performance of external trade activity, and monetary and fiscal indicators, support the continued recovery of the domestic economic activity, primarily due to positive contribution of production sector. external demand and fiscal stimulus are factors of major influence on this growth. the data analyzed by the supervisory council show that q1 β s budget spending rose by 16. 8 %, sustained in part by all 12. 5 billion budget deficit increase, compared to the same period a year earlier. april β s data show a decelerated growth of budget revenues over this period, underlining the necessity of taking measures to observe the budget deficit projection. real economy data suggest a slow consumption growth, due to uncertainties about employment outlook. on the other hand, better performance of business credit and increase in capital goods imports suggest that investments have been positive, reinforcing the grounds for a sustainable economic growth in the future. continued business investments in turn require the response of consumer demand, about which the bank of albania judges that there is room for recovery. on the other hand, long - term investment growth will be conditioned by the ability of the albanian economy to attract foreign capital. in this context, responsible institutions at macro and microeconomic level should further strengthen the work for structural reforms, which develop the comparative advantages of the albanian economy and enhance our economic competitiveness in goods, labour and capital markets. the bank of albania judges that preserving the macroeconomic stability parameters is an indispensable condition to orient its work towards maintaining price stability and supporting financial stability at home. 2011 q1 β s data on trade activity performance at home show a slight trade deficit narrowing, due to increased imports and decelerated export growth over march. merchandise trade deficit shrank by roughly 0. 3 % y - o - y, accounting for 22. 1 % of gdp. import coverage by exports ratio averaged 44. 5 %, or up 9 percentage points from the same quarter of the previous | 1 |
to enjoy the convenience of banking at anytime and anywhere without the hassle of having to queue at the bank counter or hiring employees to perform daily banking activities. among other benefits of online banking and ibg is that, it offers faster movement of funds compared to payment using cheques. for example, the transfer of funds through ibg performed before noon allows a person to receive the funds within the same day compared to cheques that will take a couple of days to three days. for a beneficiary who has an account within the same bank with the payer, which is known as intrabank, the funds will be credited instantaneously. the program for today includes the showing of three video clips on online banking and ibg, which can be downloaded through youtube and abm and aibim β s website, including presentations by two banks. in addition, 17 banks and myclear ( the national payment system operator ) have also set up exhibition booths to showcase their respective electronic payments and funds transfer solutions. this is indeed an opportunity not to be missed as you will be able to learn and ask questions about online banking solutions and sign up for the special offers such as free security tokens or waiver of monthly subscription fee for business internet banking as provided by some of the exhibitors today. bis central bankers β speeches in conjunction with today β s roadshow, i am pleased to announce that 2 banks namely, bank simpanan nasional and ocbc bank, together with 8 banks in temerloh1 in kuantan will hold their β open day β from today, 2 december until this friday, 6 december. during the weeklong β open day β, visitors can enquire and learn more about e - payment solutions from the branch staff. the β open day β event is open to all businesses and the general public to complement the efforts of the roadshow to reach out to smaller towns and i encourage all participants to take this opportunity to visit the bank branches in kuantan and temerloh. based on the β open day β events held in 8 towns in 4 states for the past 2 months, more than 900 ( 911 ) banks β customers have signed up to use the online banking services. for information of all participants, to date, cheques are still widely used in our country. based on the last 3 years data, an average of 205 million cheques amounting to about rm2 trillion are issued on an annual basis. in terms of the | has also witnessed a dramatic transformation of the islamic financial landscape. it has been marked by sustained rapid growth and the widening of its geographical reach, resulting in more diverse islamic financial institutions and the generation of a wide spectrum of innovative products, particularly in the high - growth segment of the sukuk market. in this decade, islamic finance has also evolved from being domestic - centric to become increasingly internationalised. in this dynamic environment, the scope of the islamic finance business has expanded from simple retail and trade financing to include private equity, project finance, sukuk origination and issuance, as well as fund and wealth management products. today, the total global size of the islamic financial assets has surpassed more than 1 trillion us dollars. there are now more than 600 islamic financial institutions operating in 75 countries. the vision for the islamic financial system in malaysia was articulated in our first financial sector masterplan that was launched in the year 2001, in which the plans for building the foundations for the islamic financial system were outlined. this included strengthening and diversifying the financial intermediaries in the financial system, building and developing the financial markets, and enhancing the regulatory supervisory, shariah and legal framework. ten years later, in 2011, a new financial sector blueprint was launched, charting the path for islamic finance to transition to become increasingly internationalised, and thus to become more integrated into the mainstream of the global financial system. whilst islamic finance has all the ingredients and the potential to meet the needs of the global economy, the channelling of funds to productive activities in islamic finance today is still largely being carried out through non - participatory contracts, that includes the mark - up sale ( murabahah ) and the lease - based ( ijarah ) structures, which continue to remain essential to cater for financing trade and the purchase of assets. such contracts are similar to lending instruments which expose the islamic financial institutions mostly to credit risk elements. whilst non - risk - sharing contracts will continue to contribute to the future growth of islamic finance, the wider use of risk - sharing transactions and undertakings under participatory finance models have significant scope in evolving a broader representation of islamic financial products that will spur the next phase of industry growth and development. this includes participatory or equity - based contracts such as mudarabah and musharakah that support ventures involving entrepreneurship endeavours. greater use of equity - based models in islamic financial solutions has been observed in the more recent period | 0.5 |
and nbfi2 exposures. 3 others have also pointed to the gaps in regulatory and supervisory frameworks and the long period of low interest rates and ample liquidity. while these latter factors are all true, this episode has shown that even today some banks still fail to comply with basic risk management and governance practices. but what are the fundamentals of risk management and oversight by banks? beyond the basel committee β s 2015 corporate governance principles for banks, 4 there is no single approach to good corporate governance. the clear objective is to achieve sound risk management and decision - making. banks β board of directors, senior management and risk management function should be able to ask the right questions in a timely manner and take credible decisions to strengthen operational and critical resilience. this seems to be the real challenge, even today. banks should be able to respond promptly to material developments such as rapid growth, an excessive concentration on funding sources, ineffective asset - liability management, misconduct incidents, changes in the economic environment ( such as policy normalisation or economic growth ), or their ability to consider stress - test scenarios. non - banking financial institutions. hernandez de cos, april 2023 https : / / www. bde. es / bde / es / secciones / prensa / intervpub / discursos _ del _ go / gobernador - - bis - innovation - hubeurosystem - centre - - - regtech - and - suptech - in - the - context - of - cryptocurrencies - and - decentralised - finance -. html. https : / / www. bis. org / bcbs / publ / d328. htm. based on our experience in the ssm, banks have improved their governance structure and design in recent years. however, challenges remain in implementing these changes and making them effective. the thematic review conducted in 2015 was the first horizontal exercise that led to tangible improvements in the design of banks β management bodies. however, efforts still need to be made to improve boards β oversight role and challenging capacity. progress has been made in some areas such as board composition ( collective knowledge and diversity ), self - reflection on board effectiveness and the quality of board documentation and minutes. however, some challenges remain, particularly with regard to boards β oversight and challenging capacity, insufficient internal suitability policies for the recruitment and assessment of board members, the inclusion of an appropriate risk perspective in discussions and | ##th o f nearly 7 %. fo r more details o n these sub - indices, see pacce, m., a. del rio and i. sanchez - garcia ( 2022 ), β the recent perfo rmance of underlying inflatio n in the euro area and in spain β, analytical articles, economic bulletin 3 / 2022, banco de espana. this sub - index includes β clo thing and fo otwear β, β ho using β excluding energy and ho me maintenance expenditure, β health β, β co mmunications β, β educatio n β and β miscellaneo us go ods and services β. it includes rental o f ho useho lds β main residence. above all, of the interest rate differential ( hence the different monetary policy response ), the increase in global risk aversion and the fact that the energy shock entailed a deterioration in the terms of trade in the euro area ( not in the united states ). the pass - through of this depreciation may have been faster than in the past taking into account possible non - linear effects 9, since there is evidence that the pass - through is stronger when the exchange rate fluctuations are relatively large, limiting importers β capacity to absorb foreign exchange rate shocks. 10 however, in the second half of 2022 and so far in 2023 this depreciation has partially reversed. in this context, this could also be passed through to lower consumer prices. as in the case of energy prices, this raises two questions. first, how long depreciation will persist. second, whether its effects will be symmetric in both speed and amount. this is again an issue we need to monitor in the coming months. developments in labour markets and wage pressures the evolution of wages and mark - ups will be another key determinant of inflation looking ahead. in particular, if higher inflation is significantly transmitted to wage increases, this could lead to further increases in prices, in particular if firms attempt to preserve or even increase their profit margins. the eurosystem december forecast projected wage growth, as measured by compensation per employee, to increase from 4. 5 % in 2022 to 5. 2 % in 2023 before declining to 4. 5 % in 2024 and 3. 9 % in 2025 as inflation declines. the latest signals from negotiated wages would be in line with such projections. in particular, contracts signed during the fourth quarter of 202 | 0.5 |
turmoil β the trigger for the recent financial market turbulence, the speed at which it spread across global financial markets and its persistence were not foreseen, but that does not conflict with my statement. far from it β financial stability analysis does not aim for clairvoyance. instead, it is most likely that financial crises will continue to emerge in spite of perceptible progress in financial stability analysis. but the crucial point is that their impact can be alleviated by warnings, moral suasion and β if necessary β adjustments to the institutional and regulatory framework. for this reason, further improvement in the framework for financial stability analysis is a very high priority for central banks. 3. 2 dealing with episodes of financial instability there is yet another reason why central banks need to keep well - informed on financial market developments. the turmoil that has been affecting global financial markets since summer last year has been a further example of central banks not only taking a predominantly passive role in analysing and commenting on financial stability, but also of playing an active part as well. indeed, the role of central banks in crisis management dates back to the 19th century and was reflected in the views of thornton and bagehot. both noted that a central bank should β under specific conditions β provide liquidity to the banking system as a lender of last resort. and that is exactly what happened when the crisis in the us subprime market triggered a rapid loss of confidence among financial intermediaries on a global scale. as a result of it, uncollateralised interbank lending has been muted β the reasons for which are twofold. on the one hand, banks β willingness to lend has fallen sharply due to mounting counterparty risks. on the other, the uncertainty banks face with respect to their own longer - term liquidity planning has increased considerably. to alleviate ongoing tensions in interbank money markets, central banks from all over the world have acted as liquidity providers of last resort to the banking system. as for the eurosystem, we have so far stood the test in this challenging environment. owing to the broad design of our liquidity operations toolbox, the eurosystem β s operational framework has had to change only slightly since the outbreak of the financial market turbulence. what is more, the eurosystem succeeded fairly quickly in reestablishing confidence in the functioning of the euro money market by promptly injecting additional funds on a temporary basis. we shall continue to provide liquidity flexibly | there is a kernel of truth in the argument that the us dollar is strong, the united states has, up until recently, enjoyed a very favourable competitive position for almost a decade. these ups and downs in exchange rates, and thus also in terms of price competitiveness, are entirely within the realm of normal fluctuations. in any case, the thesis that foreign currency manipulation is to blame for the strength of the us dollar at the moment is definitely not backed up by the facts. i might also add that the most recent increase in the value of the dollar will probably be a home - grown phenomenon, having been triggered by the new administration β s policy announcements. the fact that germany β s economy is highly competitive certainly isn β t the outcome of manipulative policy, either. its competitiveness does, however, have something to do with the external value of the euro, which, besides other factors, is being depressed by the ecb β s monetary policy, which has not been undisputed in germany. it β s a fact of life that the single monetary policy is geared not to the above - average economic situation in germany, but to the weaker euro - area average. the german economy β s price competitiveness at the moment is roughly 6Β½ % higher than its long - term average, as measured since 1975. but german enterprises are above all competitive because they are excellently positioned in global markets and boast innovative products. and it β s not just businesses like basf, boehringer ingelheim or schott we should be thinking about here. germany is also home to hidden champions, remember β small and medium - sized enterprises which, outside the public eye, have risen to become global leaders in their respective markets β many of which are based here in the state of rhineland - palatinate. now, you don β t need me to tell you that germany doesn β t just export a great deal β we also export far more than we import. this means that we have a very high current account surplus, which has been held against us in the european and global arena on repeated occasions, not just of late by the new us administration. but what should we make of it? let β s begin by saying that a current account surplus indicates that a country is saving more than it invests domestically. of course, it does not make sense for a national economy to produce more than it consumes and invests. because of the foreseeable demographic change, current account surplus | 0.5 |
exchange rate, measured on a trade - weighted basis, adjusted for the relative prices between new zealand and our trading partners. this captures the fact that new zealand faces many exchange rates, and a weighted measure of individual bilateral exchange rates is necessary to summarise the country β s exchange rate position. 25 for discussion on the role of the exchange rate as a shock absorber, see : karagedikli, et al. ( 2013 ). 26 the drivers of new zealand β s exchange rate are examined in mcdonald ( 2012 ). 27 graham & steenkamp ( 2012 ) outline the macroeconomic balance model. 28 for discussion on recent developments in new zealand β s nfl, see bascand ( 2017 ). 29 for discussion surrounding drivers of core inflation in new zealand, see kirker ( 2010 ). 30 a number of core inflation measures are discussed in ranchhod ( 2013 ). 31 β the sectoral factor model provides a measure of core inflation that distinguishes between price movements in the two major sectors of the economy, and hence helps to identify where inflationary pressures are coming from. β ( price, 2013, pg. 2 ). 32 for further details on the econometric assessment of the sectoral factor model, among others, see kamber & wong ( 2016 ). 11 / 11 bis central bankers'speeches | bank β s medium - term outlook for key economic variables ( such as the terms of trade ). however, it yields no further reduction in nfl - gdp from its current level. a lower new zealand dollar would be needed to lower nfl - gdp and our external vulnerabilities further. indeed, from a growth point of view, a lower real exchange rate would help rebalance growth towards the tradables sector, especially as not all traded industries are benefiting from the current high terms of trade. 28 Ο * β core inflation as noted earlier, monetary policy typically has little influence on many underlying trends in the economy. but it does influence inflation, and expectations about future inflation, even if we cannot influence every price. a useful concept for a flexible inflation - targeting central bank is core inflation, which abstracts from one - off or highly volatile price movements, like large changes in the price of an individual product ( e. g. oil ). this is important because while idiosyncratic price 6 / 11 bis central bankers'speeches movements can materially affect headline cpi inflation, they may not reflect fundamental or persistent sources of inflation pressure. consequently, central banks often use core inflation as an important measure of inflation over which it has some control. 29 specifically, core inflation abstracts from noise and provides a clearer picture of how far inflation is from our objective under the policy targets agreement. because inflation is affected by factors outside of the bank β s control, and people β s expectations need not coincide perfectly with the bank β s mediumterm objective, we monitor a range of core inflation measures to gauge current inflation pressure. the measures of core inflation we examine include, among others, model - based measures and exclusion - based measures. 30 the model - and exclusion - based measures reflect the current central tendency of price movements, while other measures focus more directly on future ( beliefs about ) inflation outcomes. our sectoral factor model reflects, in part, both concepts of core inflation. 31 the sectoral factor model is our preferred measure of core inflation because it best predicts where headline inflation will converge to in the future once the transient noise dissipates, and is smoother than our other ( relatively ) more volatile core inflation measures. 32 based on this measure, core inflation is currently estimated to be 1. 4 percent ( figure 5 ), and has broadly tracked sideways over the past year. so while inflation pressures have lifted from the lows seen in early 2015, they still appear to be relatively | 1 |
or overreact to boom and bust cycles. many of the global imbalances in the world today can be related to the process of globalisation, which facilitated almost unlimited cross - border flows of funds. the wave of financial globalisation and innovation that has flooded over financial markets during the past two decades has also complicated the formulation and implementation of monetary policy. i would like to also make a few comments in this regard. globalisation has been brought about by a number of factors, including : - the increasing free flow of capital across national borders ; - the emergence of global financial institutions ; - a technological revolution that made geographical location almost irrelevant ; - an explosion of new financial instruments ; and - new insights and developments in the areas of asset management and risk management. these developments facilitated the significant cross border flows that emanated from global savings imbalances and a search for higher yields at a time when interest rates in developed markets were low. emerging markets have been affected by these changes in very particular ways. emergingmarket assets have increasingly become an acceptable and desired asset class in diversified global portfolios, recognised as both yield - enhancers and risk - reducers through diversification. this is partly attributable to the improved macroeconomic and financial profiles of many emerging markets. on the one hand, this appetite for emerging market assets has contributed to a steadier and more sustainable flow of funds to emerging markets : once accepted as part of an investment mandate, certain portions of portfolios are allocated to these assets for longer periods. on the other hand, large inflows of capital relative to the size of domestic financial markets have a significant impact on domestic asset prices, volatility, liquidity and external vulnerability. domestic asset prices become very sensitive to changes in sentiment or risk appetite among global investors. significant foreign investment flows to emerging markets have also to some extent contributed to imbalances between domestic and foreign assets and liabilities. countries that have received large amounts of inflows, while enjoying the benefits of these, should always keep in mind that they are also building up increasing foreign liabilities, which are likely to affect future outflows of dividends and interest payments. this holds equally true for foreign direct investment and portfolio investment. there is also an ever - present risk that foreign investors could withdraw again if the global environment changes. south africa is a classic example of a country with such an exposure, and it is precisely for this reason that the south african reserve bank has used the | actually grew by 26. 3 percent ( from 991 to 1252 ) between 2010 and 2015 but your branches in 1st to 5th class municipalities grew by 37. 5 percent ( from 304 to 418 ). certainly, the bulk of your branches are still in 1st and 2nd class municipalities but i am encouraged by the expansion elsewhere. what were just 35 branches in 3rd to 5th class municipalities in 2010 are now 73 branches as of end 2015. the numbers may be modest in absolute terms but the pace of growth is not trivial. which brings me back to your conference theme : β thrift banks : sustaining the momentum for inclusive growth β. now, a critical question comes to mind - - how can / do thrift banks contribute to inclusive growth? i think with some pragmatism and humility, we would be well - served to β scope β the response to this and say that thrift banks play a role in financial inclusion, which promotes inclusive growth. inclusive growth and the role of the thrift banks there are several policy issues which are being considered in the space of financial inclusion. for thrift banks, i think two of these are most relevant. first, we would want to ensure that there is symbiotic relationship between financial inclusion and financial stability. certainly, it defeats our prudential purposes if the attainment of one comes at the expense of the other. here, your expanding footprint strategy is a critical element. as banking services are offered outside of the traditional city - centers, the expectation is that the dynamics between inclusion and stability can very well change. the bsp and the bis are currently writing a paper on the relationship between inclusion and stability to explore the empirical linkages. the preliminary results suggest that information between a bank and its clients as well as the relationship between a bank and other banks in the vicinity do matter. this sounds rather straightforward but the implications on the operations of banks are not simple. in practice, this means each bank must maintain a continuing dialogue with its stakeholders. this kind of transparency is not just β another disclosure regime β. rather, it is communication that prevents surprises and allows stakeholders to make informed decisions, avoiding the sharp spikes that often create and / or exacerbate evolving issues. bis central bankers β speeches furthermore, banks must be cognizant that stakeholders do look at the localized community of financial service providers. in this day and age of electronic communication and affordable channels, financial consumers demand β banking services β, which may no longer | 0 |
precisely to prevent the recurrence of dislocations whose magnitudes are felt worldwide. the basel 3 accord, financial market infrastructures, systemically important financial institutions, corporate leverage, liquidity, shadow banking, large exposures, interconnectedness, managing capital flows, otc derivatives, consumer protection. these are but some of the components of the evolving global reform agenda. the change institutionalized by each one of these is structured precisely to better achieve financial stability. the significance of the moa this is why today β s event is nothing short of a milestone. bis central bankers β speeches the five institutions represented here publicly recognize that financial stability matters. we appreciate that the task is extensive and challenging but we are driven by our common commitment to nurturing the gains that we have already achieved by recognizing the intricate nature of financial risks. this healthy respect for financial risks balances the rewards that we can reasonably expect from such exposures as against the need to remain prudent in taking on acceptable risks. we likewise fully appreciate that each of the institutions will continue to oversee their respective markets and / or pursue their respective mandates. but the financial system is certainly much more than the collective sum of the parts. this synergy brings forth the risks and rewards that are at the heart of financial stability. the progress thus far ladies and gentlemen, we mark a historic day for the financial system by signing a document that binds five financial authorities towards pursuing the financial stability agenda. the truth is that our work on financial stability does not only start today. the various committees have invested their time and effort for over a year now. they have been evaluating global, regional, local developments, with the end in view of pro - actively positioning our financial market for evolving challenges. for the silent but diligent work that the five workstreams, our steering committee and the administrative team have put forward to - date, we in the executive committee sincerely thank you. we recognize the enormous challenge before you and as a small token of our appreciation of your efforts, may i call on everyone to give these men and women a hearty round of applause. with a collective commitment and a shared responsibility to implement the financial stability agenda, i am sure that we will be able to rise to this challenge. thank you very much and i wish you all a pleasant day. bis central bankers β speeches | amando m tetangco, jr : the pursuit of financial stability β a daunting but necessary prudential agenda speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the financial stability co - ordination council ( fscc ) moa signing, manila, 29 january 2014. * * * securities and exchange commission chairperson teresita herbosa, insurance commissioner emmanuel dooc, philippine deposit insurance corporation president valentin araneta, national treasurer rosalia de leon, representing dof secretary cesar purisima, members of the monetary board, our partners from the various government institutions, my colleagues from the bangko sentral ng pilipinas, members of the media, ladies and gentlemen, good morning. the bsp is honored to host this signing of the memorandum of agreement formalizing the creation of the financial stability coordination council. today, the five agencies represented here β the dof, sec, ic, pdic, and the bsp β publicly affirm our collective resolve to pursue financial stability as the norm for prudential policy. with that resolve comes the commitment to identify, monitor and mitigate the build - up of system - wide financial risks and deploy as necessary so - called macroprudential measures. the bigger picture this is certainly not the first time that we have publicly mentioned financial stability and our desire to make it the pillar of financial market oversight. however, financial stability is prone to being misunderstood, if not under - appreciated. perhaps, it is the sheer enormity of the tasks ahead that creates confusion. or perhaps, it is the absence of a holistic and formalized textbook framework that makes the journey to financial stability and maintaining it quite daunting. the financial stability agenda talks of co - mingled risks, and systemic consequences. this is not the type of language or focus that we have been used to in organizing our prudential oversight of our respective segments of the financial market. yet, the dislocation that comes with financial instability has been very evident for everyone to see and, unfortunately, for many jurisdictions to experience. from the breakdown of wall street to the difficulties in the eurozone and general weaknesses in consumer protection, we saw for ourselves how previously unmonitored and unrecognized risks could create system - wide consequences that are a burden borne ultimately by financial consumers. the global reform agenda is thus designed | 1 |
kevin m warsh : hedge funds testimony of mr kevin m warsh, member of the board of governors of the us federal reserve system, before the committee on financial services, us house of representatives, washington dc, 11 july 2007. the original speech, which contains various links to the documents mentioned, can be found on the us federal reserve system β s website. * * * chairman frank, ranking member bachus, and other members of the committee, i appreciate the opportunity to appear today on behalf of the board of governors of the federal reserve system to discuss the systemic risk implications of the growth of hedge funds. the board believes that the increased scale and scope of hedge funds has brought significant net benefits to financial markets. indeed, hedge funds have the potential to reduce systemic risk by dispersing risks more broadly and by serving as a large pool of opportunistic capital that can stabilize financial markets in the event of disturbances. at the same time, the recent growth of hedge funds presents some formidable challenges to the achievement of public policy objectives, including significant risk - management challenges to market participants. if market participants prove unwilling or unable to meet these challenges, losses in the hedge fund sector could pose significant risks to financial stability. the board believes that the " principles and guidelines regarding private pools of capital " issued by the president's working group on financial markets ( pwg ) in february provides a sound framework for addressing these challenges associated with hedge funds, including the potential for systemic risk. 1 the board shares the considered judgment of the pwg : the most effective mechanism for limiting systemic risks from hedge funds is market discipline ; and, the most important providers of market discipline are the large, global commercial and investment banks that are their principal creditors and counterparties. the emphasis on market discipline neither endorses the status quo nor implies a passive role for government. in recent years, the global banks have significantly strengthened their practices and procedures for managing risk exposures to hedge funds. but, further progress on this front is needed β in no small part because of the increasing complexity of structured credit products such as collateralized debt obligations. 2 the board believes that even those banks with the most sophisticated risk - management practices must further strengthen their enterprise - wide systems to put the pwg principles fully into practice. as the pwg principles rightly emphasize, supervisors of global banks are responsible for promoting market discipline by monitoring and evaluating banks'management of their exposures to hedge funds. as the umbrella supervisor of u. s | of rising inflation. history has shown that many of the countries that have tried to exploit this alleged connection eventually experienced both : high inflation and high unemployment. thus, low inflation and not high inflation, is conducive to fostering sustained economic growth and job creation. concluding remarks i would like to sum up as follows : central bank independence is not an end in itself. as a matter of fact, such independence is, instead, a precondition for a stability - oriented monetary policy and helps to enhance its credibility. a monetary policy of this kind keeps inflation contained and inflation expectations solidly anchored. an environment of low inflation is, in turn, a prerequisite for sustained non - inflationary economic growth. therefore, a central bank β s best contribution to the economic development of a society is to pursue, above all, the goal of maintaining price stability. it is with good reason that central bank independence and the associated credibility of monetary policy are highly valued. thus, governments are, as a general rule, strongly advised not to interfere with a credible and independent central bank, but to value its contribution to overall stability and to the social as well as economic development of the country or region concerned. in this context, one should always remember that monetary policy credibility, β which is of utmost importance for the stable value of money β is hard won. it can, however, be easily lost, leading to longterm negative repercussions for the overall performance of an economy. references deutsche bundesbank, monetary policy transparency, monthly report, march 2000. deutsche bundesbank, the value of stable money, annual report 1996, pp. 78 β 88. european central bank, the accountability of the ecb, monthly bulletin, november 2002. issing, otmar, communication, transparency, accountability : monetary policy in the twenty - first century, federal reserve bank of st. louis review, march / april 2005, ( part 1 ), pp. 65 - 83. neumann, manfred j m, monetary stability : threat and proven response, deutsche bundesbank ( ed. ), fifty years of the deutsche mark β central bank and the currency in germany since 1948, oxford 1999, pp. 269 - 306. woodford, michael, central bank communication and policy effectiveness, presented at the federal reserve bank of kansas city symposium, β the greenspan era : lessons for the future ", jackson hole, wyoming, 2005. | 0 |
action where necessary. boundaries in nance are being redrawn, as new players disrupt markets, or disappear altogether. in payments, for example, we have seen that new rms can often have different business models, can initially target market subsegments, and are often better equipped to utilise data and attract younger clients. we also see a trend to more frictionless payments, with some incumbents struggling to keep pace with technological change. these changes create opportunities but also pose challenges and risks. to deal with these in the decade ahead will require awareness, understanding and agility on the part of consumers, industry and central banks. it β s a constant learning process, for everyone. moving from the nancial system to the wider economy, there is considerable uncertainty around the scale and pace of any decline in uk trade now that it has left the single market. the central bank has modelled an eu / uk free trade agreement scenario with the results showing that irish output would be around 3. 5 per cent lower by 2028 than if the uk had remained an eu member. and if wto rules applied, output would be 5 per cent lower. 13 in the long term, what matters is productivity growth. as paul krugman has said, β productivity isn't everything, but, in the long run, it is almost everything. a country β s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker. β 14 the world is experiencing a global productivity slowdown. and as the oecd and the imf have indicated, understanding productivity in the irish economy is important if we want to assess the longer run prospects for ireland β s future prosperity. 15 16 productivity, along with the rise of non - bank nance, technological innovation and the future economic relationship with the uk are just a few of the challenges we will face over the next decade. and i haven β t even mentioned climate change. so how should we meet these challenges? it β s about continuing to focus on the fundamentals, about managing the short term while planning for the medium term, ensuring our frameworks are t - for - purpose and learning the lessons of the past while preparing for the future. it β s also about being prepared to challenge ourselves. 17 economic transitions have been a feature of society throughout history. building economic resilience is the most effective way to help societies manage them. 18 there is no one - off solution to the challenge | ##sopoulos, v. ( 2002 ) women on boards : not just the right thing... but the β bright β thing. report, 341 β 02 : the conference board of canada, ottawa. ; see procter & gamble β s β connect and develop β tool which increased research and development productivity by 60 per cent. 11 scott page, the difference ( princeton university press, 2004 ). 12 scott page, the difference ( princeton university press, 2004 ). 13 scott page, the difference ( princeton university press, 2004 ). 14 james surowiecki, the wisdom of crowds : why the many are smarter than the few and how collective wisdom shapes business, economies, societies and nations ( knopf doubleday, 2004 ). 15 elizabeth g. chambers, mark fouldon, helen handfield - jones, steven m. hankin, edward g. michaels iii 1998, the war for talent, mckinsey quarterly ; elizabeth l. axelrod, helen handfield - jones, and timothy a. welsh 2001, the war for talent, part two, mckinsey quarterly. 16 ed michaels, helen handfield - jones, beth axelrod, the war for talent, harvard business school press boston, massachusetts, copyright 2001 mckinsey & company, inc ; edward e. lawler iii 2008, talent : making people your competitive advantage, jossey - bass, a wiley imprint ; growth reimagined. the talent race is back on, 14th annual global ceo survey, pwc. 17 stephen frost, the inclusion imperative : how real inclusion creates better business and builds better societies, 2014. 18 executive survey finds a lack of focus on diversity and inclusion key factor in employee turnover. 19 stephen frost, the inclusion imperative : how real inclusion creates better business and builds better societies, 2014. 20 central bank of ireland - financial globalisation and central banking in ireland - governor philip r lane. 21 central bank of ireland. address to the association of compliance officers - ed sibley. 22 vivian hunt, dennis layton, and sara prince, mckinsey & company, january 2015. 23 central bank of ireland - gender breakdown of applications received for certain roles in regulated firms 2012 to 2016. 24 central bank of ireland - financial globalisation and central banking in ireland - governor philip r lane. 25 the gender earnings gap in the gig economy : evidence from over a million rideshare drivers cody cook, rebecca diamond, jonathan hall, john a. list, and paul | 0.5 |
until productivity growth stabilizes and the higher rate becomes anticipated it will be possible to operate at resource utilization rates beyond what is sustainable over the longer run without inflationary consequences. it is perfectly reasonable to take advantage of this opportunity, as long as care is taken to return to more sustainable utilization rates as the disinflationary force of the upward shift in productivity growth dissipates. of course, policymakers must also weigh the option of β opportunistic disinflation β in such a circumstance β the possibility of reducing inflation toward their long - run target without depressing, even temporarily, resource utilization rates. however, if inflation is already at its target, the option of permitting temporarily higher output and employment clearly dominates. the apparent increase in the productivity trend probably has been an important disinflationary force over the last few years. some of the benefits in this case have been taken in the form of lower inflation and some in the form of temporarily higher resource utilization rates. an important issue therefore is whether current utilization rates are sustainable, once productivity growth stabilizes. this issue motivated my next question and answer. 2. is the economy overheated, or is there a threat of overheating? an overheated economy is one operating beyond the point of sustainable capacity and therefore experiencing excess demand in labor and product markets. the importance of the concept follows from the reasonable expectation that excess demand in labor and product markets is a proximate source of higher inflation. so, is the economy overheated? there are two ways to identify such a condition. the first is to find some proxy for excess demand in labor and product markets. we have to satisfy ourselves with proxies because excess demand is not directly measurable. the second is to look for the consequences of overheating, in the form of acceleration in wage gains or prices. proxies for excess demand are utilization rates in the labor and product markets β such as the unemployment rate in the labor market and capacity utilization in the product market. capacity utilization is measured only in the β industrial β sector, so it is a narrow measure of generalized excess demand in the product market. nevertheless, it remains an important proxy for the balance of supply and demand in the product market. at any given time, a lower unemployment rate or higher capacity utilization rate implies greater demand relative to supply in the respective market. but we are also searching for an absolute concept, the point of balance between supply and demand in the | market reform where we need significantly more flexibility in a number of economies. wsj : this is your last year as ecb president. how important is it that the choosing of your successor by governments be a smooth process? trichet : i have very hard work until the end of october and i expect to exert, with all my colleagues, my impressive, inspiring and profound responsibilities until the last day. as regards my succession i have full confidence in the heads of state and government. it is their responsibility. wsj : what has surprised you, both good and bad, over the last 12 years of the euro? what do you think the euro zone will look like in 2015? trichet : i will not say that i was myself surprised because i have been deeply involved in the negotiation of the maastricht treaty and the setting up of the euro. but i guess that a number of external observers are very positively surprised to see that price stability with the euro has been, over 12 years, better than with the previous national currencies and that as many as 17 countries and 331 million peoples are in the euro area since the beginning of 2011. but this is not time for complacency. as all of the advanced economies we have to draw β without any complacency β all the lessons from the present global crisis, in particular in terms of governance. wsj : the fed is doing more quantitative easing, while the ecb warns of inflation risks even though both regions are recovering in a broadly similar fashion. are fed and ecb policies diverging, and does it pose a risk to global financial stability? trichet : on both sides of the atlantic we have each of us our responsibilities that are very important. we are placed in different economies, particularly in terms of the financing of the economy, and of the nature of the shocks we have to cope with. but we are united in purpose : to deliver price stability in medium term and to solidly anchor inflation expectations. bis central bankers β speeches | 0 |
underlie our views on the right policy mix for the euro area. we take monetary policy decisions with a view to attaining our primary objective of price stability. thereby, we establish a stable nominal anchor for the private sector, which in turn is a fundamental precondition for overall macroeconomic stability. without prejudice to this objective, we take financial stability risk seriously and monitor closely whether severe imbalances are emerging in the financial sector. in this context, we consider the financial stability risks related to our policy measures to be contained. should risks emerge, macro - prudential policy is best suited to safeguard financial stability. macroprudential instruments can be targeted more efficiently to those sectors and countries where systemic risks may be materialising 13. finally, we encourage national authorities to do whatever is in their power to place the euro area on a more dynamic growth path, thereby creating attractive investment projects that generate high, but fundamentally justified, returns. these are the conditions for unconventional monetary policies to bring economies back to a stable and sustainable growth path, both at home and abroad. β reinforcing financial stability in the euro area β, speech given by vitor constancio, vice - president of the ecb, at the omfif city lecture, london, 8 may 2015. bis central bankers β speeches bis central bankers β speeches | cycle and regain monetary independence, provided that they show clarity in purpose and resolve in implementation. for emerging markets and smaller advanced economies, there is also evidence that while the global financial cycle has indeed been a dominant factor for the last two decades, the arrangement of open macro policies such as the exchange rate regime and financial openness still have direct influence on sensitivity to the financial cycle 2. explaining the difference in this respect between large advanced economies and emes would take us far beyond today β s discussion. let me only suggest that the existence of deep, diversified local currency denominated capital markets makes a crucial difference to help decouple from the global financial cycle. this incidentally suggests that capital market union as it is currently planned in europe, on top of its allocative benefits, can help strengthen our economic and monetary independence. the global exchange rate adjustments should be therefore seen as a natural by - product of such move towards monetary policy independence and divergence. while the exchange rate is not a policy target for the ecb, it is nonetheless important for growth and price stability. also, the exchange rate movements we have seen over the past few months are not unprecedented relative to the experiences of other major central banks with regards to announcements of quantitative easing policies ( such as qe2 and qe3 in the united states and qqe in japan, as well as the bank of england β s apf ). 3 this notwithstanding, global policymakers need to be mindful that global monetary policy divergence can also lead to some tensions that are due to global monetary policy spillovers. many discussions in the context of global monetary divergence have centred on the issue of monetary policy spillovers and the exposure of emerging market economies to volatile capital flows. yet, as i have argued elsewhere 4, there is no broad international consensus on the size and persistence of such spillovers. 5 more generally, there is little evidence that capital flows to emerging markets have been excessively volatile over most recent years, contrary to what is often claimed. they have been strong since the global financial crisis, decreased somewhat see aizenman, j., chinn m. and ito. h, ( 2015 ) β monetary policy spillovers and the trilemma in the new normal : periphery country sensitivity to core country conditions β, nber working paper no. 21128, april 2015. qe 1 which was implemented at the height of the financial crisis was followed by a sharp appreciation of the us dollar. similarly, | 1 |
remarks by ms caroline abel governor of the central bank of seychelles launching of the cbs strategic plan 2019 - 2023 monday 19 november 2018 venue : central bank of seychelles minister for finance, trade, investment and economic planning, ambassador maurice loustau β lalanne, board members, management and staff of cbs distinguished guests ladies and gentlemen good afternoon. it gives me great pleasure to welcome you all here today, to witness the launching of the new strategic plan of the central bank of seychelles. the 1st of december of this year will mark 40 years of the existence of a central banking institution in our island nation. and today β s official launch of our new strategic plan for 2019 to 2023, highlights the progress made by the bank, after standing decades of trials and triumphs. we have indeed come a long way and witnessed significant evolution in the face of various challenges both locally and on the external front, while striving to remain true to our mandate, which is to contribute towards the sustainable economic growth and development of seychelles through monetary policy and maintenance of a sound financial system. guided by a solid set of objectives, we have been able to discharge our responsibilities and make significant strides in achieving our vision. over the past few years, the institution, backed by its workforce, has worked tirelessly to maintain domestic price and financial system stability, strengthen the payment systems, enhance financial consumer protection, promote greater engagement with external stakeholders and continuously engage in capacity building. and as we stand here today, we can rightly be proud of our progress. nevertheless, we are not going to be complacent. we are now a more mature institution and we need to take on more responsibilities, if we are to continue improving. this responsibility rests on all of us, from our board, management, staff, our stakeholders - from both the public and private sector - and the public in general. this is our third strategic plan and it builds on the successes of previous ones. the strategic plan 2019 to 2023 has been prepared so we can enhance achievements made thus far and to continue focusing on achieving our mandated goals and objectives. the global economy is ever changing and we have to take a proactive stance, if we are to keep in pace with the developments. we need to ensure that our monetary policy implementations are effective, that we keep abreast with innovation, including the continuous modernization of our payment systems, and equally important is to ensure our population is empowered to make informed and sound financial decisions. planning for the future | responsibilities and must see protecting depositors or policy - holders as a major part of their responsibility. β’ third, external auditors must also be held to account and they must recognize that depositors, creditors and shareholders are looking to them for an independent opinion ; and β’ fourth, that investors also have a responsibility to understand the trade - off between risk and reward and to remember the old maxim β if it is too good to be true, it probably is. the present economic downturn also carries powerful lessons that we could refuse to learn, to our peril. one compelling lesson is that oil and gas brought us to where we are but that our reserves are by no means limitless and indeed they may be even smaller than we would like to believe. on this basis, we need to move quickly to establish a sustainable fiscal position and accelerate efforts at meaningful diversification. this is indeed a daunting task and would require close collaboration between government and private sector. if the non - energy export sector is our hope to medium - term economic viability, the inescapable consequence is that we would need to significantly increase our productivity levels. our recent intensified emphasis on education and training is a step in the right direction but these needs to be complemented by a much great focus on ict. finally, we need to fully exploit the opportunities offered by small business activity in niche industries. in case you have any doubts, i have tremendous confidence in this economy, in its resilience to overcome the current difficulties and its ability to meet the medium - term challenges that confront us. we like to boast about our native creativity, our enterprising spirit and our ability to overcome hurdles. i happen to believe that all this is true and that when the chips are down we will make the right decisions. however, we have a knack for putting off the difficult decisions for too long. let β s hope we don β t, this time around. let me again congratulate ansa merchant bank for showing continued faith in the economy of trinidad and tobago. thanks for inviting me. | 0 |
in line with our supervisory expectations. given the difficulties to assess the exposure to and the impact of climate - related risk we have not assigned to this exercise quantitative objectives, beyond providing participants and us with a first bottom up assessment of their exposure, based on common assumptions, assessment which appears to be moderate by 2050. in particular, we didn β t set as an objective to assess the extent to which the current regulatory framework is sufficient and well suited to absorb climate - related risks, and whether additional supervisory capital requirements would be legitimate. models, metrics and methodologies developed so far are still in their infancy and the data too sparse to allow drawing firm conclusions about the loss absorption capacity of current capital levels. nonetheless, we already see at the acpr these exercises as prudential tools, as they have proved helpful to us at incentivizing financial institutions to give the proper level 1 / 3 bis central bankers'speeches of priority and resources to the monitoring and management of climate - related risks. the publication in november 2020 of the ssm guide on climate and environmental - related risk was driven by the same logic and the preparation underway of an ssm stress test should provide an additional step at european level towards more supervisory scrutiny in the process of fully integrating these risks into the day - to - day risk management of banks. 2 - there are also a few lessons that can be drawn from our experience from a methodological standpoint, as the use of such scenario analysis by supervisors is likely to be repeated and is likely to spread among supervisors. i would like to highlight two of them. first, tremendous progresses have been made in the domain of climate risk scenarios under the aegis of the network of central banks and supervisors for the greening of the financial sector, the ngfss. thanks to this β coalition of the willing β, gathering today more than 90 central banks and supervisors across the world, high level scenarios were published in july last year, updated a couple of weeks ago by a set of 6 scenarios. this set of global reference scenarios provide a good basis for financial authorities. of course, the ngfs should continue to develop and refine those scenarios. however, there will remain the need to tailor those scenarios to the circumstances of each jurisdiction, for instance specifics of their climate policies, or more precise meteorological data at the national level. in addition, st may legitimately differ along other methodological dimensions. a case in point is the use or not of a dynamic balance sheet assumption | innovation and evolution in bond markets. i β ve hopefully given you a sense of how the bank is developing its approach, much in the same way that it has been evolving to the needs of the markets it operates in for the last 330 years. on the one hand we β re normalising our balance sheet, transitioning to a new normal that in terms of our participation will frame the environment for further innovation. and on the other, we β re actively working with the market to utilise the significant technological developments we β re seeing within the settlement infrastructure we operate. we are mindful that the shocks in recent years have shown that we cannot take stability for granted, and so one core principle underpinning all our work to innovate and evolve, as well as in terms of our direct participation in markets, is the objective to maintain monetary and financial stability for the good of the people of the united kingdom. i would like to thank johnny elliot, richard lewis, ed kent and rachita syal for their help in drafting this speech, as well as many other bank colleagues for their helpful comments and suggestions. 1. these data on balance sheet holdings are reported on an initial purchase proceeds basis, whereas the data displayed in chart 1 shows gilt holdings in market value terms. 2. bank underground ( 2019 ), β the great war and the bank of england as market maker of last resort β 3. goodhart ( 2018 ), β the bank of england, 1694 - 2017 β 4. kynaston ( 2017 ), β till time β s last sand : a history of the bank of england 1694 - 2012 β 5. for further detail, see the bank of england β s quarterly bulletin article β financial stability buy / sell tools : a gilt market case study β 6. for further detail, see andrew hauser β s speech β β less is more β or β less is a bore β? re - calibrating the role of central bank reserves β 7. for further detail, see dave ramsden β s speech, β quantitative tightening : the story so far β 8. the tfsme is a lending operation backed by collateral and is not indemnified by hmt. it is held on the bank β s balance sheet rather than in the apf. 9. the bank is also developing the liquidity tools it has for supporting financial stability. this includes building a new backstop facility capable of lending to non - bank financial institutions ( n | 0 |
laundering monitoring and analysis center to detect, distinguish suspicious criminal information in time and cracking down seriously and strictly money laundering and terrorist financing activities, in particular, underground banking criminal activities. 4. continue to conduct anti - money laundering examination and expand examination scope to securities and insurance companies to encourage the β first protection line β function of financial institutions in anti - money laundering and terrorist financing. 5. strive to join the fatf as a full member and strengthen cooperation with other countries and regions within bilateral or multilateral frameworks based on equal and mutual beneficial principles in information exchange, training, investigation assistance, property seizure and criminal suspects extradition and repatriation. 5 / 5 | considered in some important decisions. it was especially emphasized that stakeholders should be involved in the insolvency process. fourth, the stakeholders should have access to necessary information on managing the company. the oecd again revised the five principles in 2004. in this revision, the protection of stakeholders and whistle blowers is emphasized. it, to a larger extent, stresses the rights of employees and creditors. there are three main aspects. first, it clearly states to establish a mechanism that enhances the participation of employees. stakeholders, including individual employees and their representatives, shall be able to freely express their views to the board with respect to any illegal or immoral activities in the company. employees β views and their rights to express the views shall be respected and protected. it shall be ensured that information can flow safely and confidentially to the board. second, corporate governance shall ensure the enhanced participation of employees, so that the employees β special skills can be put to use in the company, benefiting the company directly or indirectly. the examples of employees β participation include increasing representatives of employees in the board, adopting the plan of employee stocks holding and establishing a profit sharing mechanism such as pension contribution. for instance, pension contributions can be pooled into an independent fund and the fund manager shall be independent from the company β s management in terms of business operation. third, it stresses the important role of creditors in corporate governance and external supervision. it also states that effective and efficient liquidation framework and credit rights enforcement mechanism are important supplement to effective corporate governance, ensuring effective protection for the rights of the shareholders. the importance of employees and creditors is further stressed in the new version. china wishes to learn from international experiences and practices in the process of building a socialist market economy with chinese characteristics. it can be said from the point of view of a socialist market economy, china should do better in terms of employees β status and their involvement in managing companies. however, we do not have any established principles or framework related to stakeholders. we will learn by doing and reviewing experiences. why have we not done better compared with many traditional western economies in this aspect? it has to do with the mistakes in the past. for any country learning from the history and past experiences is a very important, though not an easy task, and one that is liable to misunderstanding. an example at hand is the americans β review of the great recession in 1929. the reviews generated different conclusions right after the recession and in the 30 β s and 40 β s | 0.5 |
##polating further when structural factors supporting high volumes remain intact. terms of trade, including gold, weakened 6. 3 % from 2011q1 to 2014q2. excluding gold, the decrease is 7 %. physical volume production, iron, 2005q1 to 2014q2. bis central bankers β speeches it is also worth noting that south africa β s export markets continue to shift. in particular, the african market is becoming much more important for us. 3 europe the trajectory of europe remains an important determinant of global macroeconomic conditions and for south african outcomes. in recent years, weakness in the european economy has meant that there have been few real benefits to sa despite major rand depreciation against the euro. 4 as with the united states, we appear to be witnessing a seachange in european policy β although this could not possibly be described as normalisation. the question for south african monetary policy is whether these changes will offset us normalisation, fully, partially, or not at all. from a real economy perspective, a sustainably growing europe is crucial, but this may take considerable time to materialise. it is very hard to imagine europe returning to growth with its current institutional configuration and policy settings. the contradictions are too overwhelming. household consumption and investment across euro area has and will remain weak so long as banks remain in financial distress and property values and the housing markets are depressed. europe β s financial sector needs a clearing out of bad debt. the emphasis on fiscal austerity β clearly correct for over - indebted sovereigns β would, cumulated across europe, weigh too heavily on growth in the absence of any other demand stimulus and an exuberantly strong currency. germany has stood out for its strong growth in the midst of stagnation by its neighbours, but its longer - term interests cannot be served by endless stagnation in the euro area. the country seems too integral to the rest of europe, via positive and negative spillovers, to continue indefinitely on a real depreciation - based economic strategy. it cannot declare independence from europe. rather, europeans probably need to think of themselves less like we do these days β less as small open economies subjected to the vagaries of currency fluctuations and capital flows β and more like a continental super - economy if the region as a whole is to prosper. it is, perhaps, out of recognition that the old β normal β cannot go on that the ecb has moved resolutely in the | mugur isrescu : 50th anniversary of romania's entry to the circuit of international financial institutions speech by mr mugur isrescu, governor of the national bank of romania, on the occasion of 50 years since romania joined the international monetary fund and the world bank, bucharest, 31 january 2023. * * * distinguished audience, in december 1972, romania joined the international bank for reconstruction and development ( world bank ) and the international monetary fund ( imf ). at that time, romania was the first β and remained until 1989 - the only country from the treaty of warsaw and comecon ( council for mutual economic assistance ) that had entered the circuit of international financial institutions. to mark this anniversary, the national bank of romania has launched into circulation, for numismatic purposes, a silver coin. the obverse of the coin depicts the old palace of the national bank of romania, the inscription " romania " in a circular arc, the coat of arms of romania, the face value " 10 lei " and the year of issue " 2022 ". the reverse of the silver coin has the logos of the international monetary fund and the world bank and the inscriptions in romanian " romania's accession to the international monetary fund and the world bank " and " 50 years ". that moment in 1972 became part of a number of further positive decisions that put romania in the global economic family : joining the general agreement on tariffs and trade ( gatt ) in 1971 ; acquiring preferential trading status with the european common market in 1973 ; being granted the most - favored - nation status by the united states congress in 1975 ; obtaining facilitated access to credits from the export - import bank and the commodity credit corporation ( ccc ). over the same period of time, mixed capital companies were established in romania as well as abroad, including, within the banking sector : banque franco - roumaine, anglo - romanian bank, banca italoromena, frankfurt bukarest bank ag, misr romanian bank. the brand of the american bank - manufacturers hanover trust - was visible in university square, right in the heart of bucharest, and in premium data technology romcontroldata was operating in the country. unfortunately, during the 1980s the authorities in bucharest weakened the relationship between romania and the west, including those with the bretton woods institutions, almost close to severing all ties. after the fall of the communist regime, the normalization of the relationship led to a new beginning. as | 0 |
). number of business insolvencies down 6. 6 % in 2017 year on year, press release 91, march 2018. wiesbaden. financial stability board β fsb ( 2011 ). key attributes of effective resolution regimes for financial institutions, october 2011. basel. financial stability board ( 2017 ). framework for post - implementation evaluation of the effects of the g20 financial regulatory reforms. basel. foster, l., cheryl grim, john c. haltiwanger, and zoltan wolf ( 2018 ). innovation, productivity dispersion, and productivity growth, nber working paper 24420, national bureau of economic research ( nber ). cambridge, ma. international monetary fund β imf ( 2017 ), world economic outlook database, october 2017. washington dc. international monetary fund β imf ( 2018 ), world economic outlook update, january 2018. washington dc. pellegrino, giovanni ( 2017 ). uncertainty and the real effects of monetary policy shocks in the euro area, melbourne institute working paper no 15 / 17, june 2017. melbourne. rajan, raghuram g., and luigi zingales ( 2003 ). the great reversals : the politics of financial development in the twentieth century. journal of financial economics 69 ( 1 ) : 5 β 50. rajan, raghuram g., and rodney ramcharan ( 2016 ). constituencies and legislation : the fight over the mcfadden act of 1927. management science 62 ( 7 ) : 1843 β 1859. 1 for example, empirical results for the us show that monetary policy shocks affect output and investment more strongly in times of low financial market volatility than during spells of heightened volatility ( eickmeier, metiu, and prieto 2016 ). similar results were found for the euro area ( pellegrino 2017 ). 2 these numbers are based on data from the federal statistical office of germany available at www. destatis. de / en / factsfigures / indicators / longtermseries / insolvencies / lrins01. html. 3 these numbers are based on data from the bundesbank β s mfi interest rate statistics and calculated as a share of domestic banks'credit volume with a respective fixed interest rate of the total volume ( measured by the 5 / 6 bis central bankers'speeches volume of new business ). the time series is part of the system of indicators for the german residential | . given the deceptive tranquillity in the financial markets, we are at risk of forgetting what the crisis has taught us about public finances. but that would have dire consequences. as i emphasised in my opening remarks yesterday, the markets do anticipate that reforms will be finalised and that public budgets will be consolidated. thus, any doubts over the sustainability of public finances can send huge shockwaves across the euro area. in addition, mountains of private and public debt block the way towards sustainable economic growth. and on a side note : at this stage of integration in the euro area, euro - bonds would not be the right path to choose as they would weaken the incentives for prudent fiscal policy. nevertheless, to me, the recent debate about the stability and growth pact shows something else. it seems that there is an expectation that, in the end, monetary policy will provide the ultimate backstop. this expectation, however, is dangerous and cannot be the guideline for policy action β or rather inaction. bis central bankers β speeches monetary policy certainly helped prevent the crisis from escalating. still, there is one thing we should be clear about : monetary policy cannot solve the underlying causes of the crisis. it can only buy time. and it is up to national governments to use that time to dig out the root causes of the crisis. failing to do so will push us back into dangerous territory. we must not let that happen. conclusion ladies and gentlemen i have presented what i consider to be good news. the german economy is gaining in strength and the euro area has embarked on the path to recovery. nevertheless, we should keep in mind, what the irish horse racing jockey tony mccoy said : β there is no place for arrogance or complacency in racing because you are up there one minute and on your backside the next β. keeping up economically is certainly a race and we should avoid the risk of landing on our backside. thus, my warning : beware complacency. as a final point, let me emphasise that i have very much enjoyed attending this seminar. it has certainly helped strengthen the ties between the central bank of the republic of turkey and the deutsche bundesbank. personally, i am looking forward to more visits next year when turkey assumes the g20 presidency. thank you very much. bis central bankers β speeches | 0.5 |
rate by 1 percentage point, all else being equal. 4 / 4 | leveraged homeowners would be forced to sharply curtail their spending. to be sure, indexes of house prices based on repeat sales of existing homes have significantly outstripped increases in rents, suggesting at least the possibility of price misalignment in some housing markets. but a destabilizing contraction in nationwide house prices does not seem the most probable outcome. to be sure, the recent marked increase in the investor share of home purchases suggests rising speculation in homes. ( owner occupants are rarely home speculators because to sell, they must move. ) 10 however, nominal house prices in the aggregate have rarely fallen and certainly not by very much. and even should more - than - average price weakness occur, the increase in home equity as a consequence of the recent sharp rise in prices should buffer the vast majority of homeowners. for statistical methodology see karen dynan, kathleen johnson, and karen pence ( 2003 ), " recent changes to a measure of u. s. household debt service, " federal reserve bulletin, vol. 89 ( october ), pp. 417 - 26. a new survey by the national association of realtors reports that purchases of vacation homes and homes for investment amounted to more than a third of total existing home purchases last year. mortgage originations data reported under the home mortgage disclosure act ( hmda ) indicate that the share has been rising significantly since 1998. house prices, however, like those of many other assets, are difficult to predict, and movements in those prices can be of macroeconomic significance. there appears, at the moment, to be little concern about corporate financial imbalances. debt - toequity ratios are well within historical ranges, and the recent prolonged period of low long - term interest rates has enabled corporations to refinance liabilities and stretch out bond maturities. * * * the resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit, which, according to the congressional budget office, will rise significantly as the baby boomers start to retire in 2008. our fiscal prospects are, in my judgment, a significant obstacle to long - term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances. one issue that concerns most analysts, especially in the context of a widening structural federal deficit, is inadequate national saving. fortunately, our meager domestic savings, and those | 0.5 |
level the playing fields β. it is indeed so that regulation and liberalisation happen in cycles, and periods of deregulation are often followed by periods of re - regulation. given the devastating effects of the most recent global financial crisis, the astronomical social costs resulting from it, and the perceptions around the role that financial engineering and technology alongside deficient supervision and regulation played in the run - up to the crisis, we have inevitably been catapulted into an epoch of re - regulation. regulators and economic agents alike face a number of challenges at this point in time. these include : 1. international standards have been developed β for markets, regulators and participants β to assist with the management of risks and even behaviour. whether they are encapsulated in the new basel iii requirements for capital or liquidity, or in the principles for financial market infrastructures, or in the codes of conduct, these standards are introducing requirements that require adherence. non - compliance with these standards is likely to lead to hefty penalties. there is a strong demand for participants to be accountable and responsible, and to incur liability if they are not playing by the rules. this has resulted in numerous large financial - sector firms being slapped with fines running into billions of dollars. 2. standards are inextricably linked to the next point, which is governance arrangements and remuneration. governance arrangements have been a focal point for some time oecd directorate for science technology and industry, 2012, innovation for development. bis central bankers β speeches now, and recent events in international markets have highlighted the importance of good governance and of ethical behaviour from all stakeholders. the global financial crisis has also refocused the attention of regulators on the remuneration structures of management and other individuals participating in financial markets and systems. this, in some ways, can be related to what economist describe as the β agency problem β and which under certain conditions may result in risk - shifting. this is a key area of focus of reform in attempts to promote the soundness of the financial sector in particular, hence governance arrangements and remuneration continue to be intensely discussed at various international regulatory forums. 3. β shadow - banking β and β new ( non - bank ) participants β have come into sharp focus since the global financial crisis due to their role in the run - up to the global financial crisis and in financial regulatory arbitrage. efforts to regulate these entities will intensify. this is likely to draw criticism from certain quarters but | of asset - backed securities and cdos and to the proliferation of vehicles such as abcp conduits and sivs. in this respect, the failings of lighttouch regulation and the short - sighted focus on the banking system appear overwhelmingly clear. on the one hand, the tail risks hidden in the payoff profiles of highly rated securitisations were not understood by financial supervisors. on the other hand, the migration of risks outside the traditional banking sector into a thinly capitalised shadow banking system lacked appropriate oversight. this process resulted in a weakening of the prudential rules, a sharp deterioration in bank capital, an overall decline in lending standards, an unsustainable growth of leverage, a persistent under - appreciation of risks and, ultimately, in an unprecedented degree of fragility and interdependence in the financial system. looking ahead, supervision will have to move towards taking a proactive and forward - looking approach. likewise, the regulatory net needs to be cast wide enough to encompass all financial institutions and activities capable of generating systemic effects. finally, an assessment must be made of how the supervisory authorities applied the tools available to them and whether their decisions were taken on the basis of an independent judgement or were somehow influenced by external factors. historical experience offers ample evidence that inadequate arrangements as regards the independence of the supervisory authorities contributed to the emergence of financial instability. the east asian crisis of 1997 β 1998 is a frequently quoted example of weak regulations and forbearance, resulting from political interference in supervisory activity and leading to a financial crisis. institutional arrangements should ensure that supervisors are independent from the political authorities and not at risk of regulatory capture by the supervised institutions. in some cases the desire to enhance the competitiveness of domestic financial institutions may have influenced decisions that allowed such institutions to behave in a less prudent manner. these are important issues, and should be part of the international debate on how to enforce effective supervision so as to strengthen the capacity to mitigate future financial crises. 3. compensation of top executives let me now turn to the topic of executive compensation. remuneration of top executives has recently attracted special attention, notably in the financial sector, where the distribution of sizeable severance payments, entirely disconnected from the institutions β performance, has caused a public outcry. moreover, the financial crisis has revealed that inappropriately designed compensation mechanisms could lead to excessive risk - taking and should therefore be subject to policy intervention. the principles for sound compensation practices elaborated by | 0 |
. 2 standard eurobarometer 89, spring 2018. 3 banca d β italia, financial stability report no. 2 β 2018. 4 results of the oecd β s piaac survey. 5 β sul tempo della ratifica della ced β 1 march 1954 in einaudi, lo scrittorio del presidente ( 1948 β 1955 ), giulio einaudi editore, torino, 1956. 5 / 5 bis central bankers'speeches | christian noyer : building on euro area achievements to prepare for enlargement speech by mr christian noyer, governor of the bank of france, at the 2007 annual conference on macroeconomic and economic policy issues, bank of latvia, riga, 10 october 2007. * * * ladies and gentlemen, it is a great pleasure and honour for me to address this conference hosted by the latvijas banka. having just passed the european union 50th anniversary, it is an appropriate time to reflect upon the essence and future of this extraordinary endeavour. never before, in the whole history of mankind, have democratic nations pursued and reached, through peaceful cooperation, such a close degree of interdependence, involving, in many crucial areas, deliberate pooling of sovereignty. of course, the process has not been without difficulties and tensions, many of which are still apparent and acute. of course, numerous challenges remain. but, for the first time in more than a thousand years, europe is at peace and prosperous, with democratic regimes everywhere. this is, by historical standards, an exceptional achievement. the whole process of european integration was based on a strong intuition : by sharing the instruments and policies underpinning economic prosperity, european nations would create an irreversible situation of interdependence and solidarity where conflicts and wars of the past would become impossible. the creation of the euro area is the natural consequence of this original intuition. it results both from a political vision and an economic and financial necessity. the process of monetary cooperation was launched as a response to the potential financial and economic instability stemming from the collapse of the bretton woods system. it met with many obstacles and went through several crises. at some point, it came close to being abandoned altogether. but today, the euro is alive and well : since 2002, it has been the sole currency with legal tender in all countries of the euro area, providing more than 300 million of european citizens with a new, practical unifying symbol as well as many direct economic benefits. before addressing the euro area enlargement issues let me first elaborate on the successes and challenges of monetary integration in europe. enlargement should both preserve these successes and help handling the challenges. the first, and most obvious achievement of the euro, is price stability. over the last five years, inflation has stayed broadly in line with the price stability objective set by the european central bank, i. e. inflation below but close to 2 % over the medium - term. | 0.5 |
and individuals, we see a greater need and significant prospects for new forms of blended finance to support the recovery process and meet transition challenges. to this end, the bank is engaging with the financial industry, including dfis, and other key stakeholders on strategies to combine commercial lending with alternative funding sources such as philanthropic funds and social finance instruments. this includes upscaling existing pilot programmes. such blended finance solutions will be important to reduce debt levels and future risks to growth and financial stability. during this period, the bank has also established concessionary financing facilities dedicated to help smes automate and digitalise their operations. this will enable them to take advantage of new technologies to enhance income streams and build greater resilience. thirdly, we believe collaborative partnerships will play a larger and more critical role in shaping financial policy going forward. the world around us is changing so rapidly, and the challenges we face so multi - faceted, that our best hope for creating sensible financial policy and effective conditions for sustainable development must lie in working together. this has certainly been our experience in malaysia, particularly in recent periods. let me just mention three of these partnerships. in islamic and sustainable finance, the value - based intermediation community of practitioners or vbi cop has played a key role in driving the industry - wide implementation of vbi principles. the cop has been instrumental in developing practical frameworks, tools and guidance that have 2 / 3 bis central bankers'speeches been widely adopted by the industry in supporting the offering value - based financial solutions that are aligned with the sdgs. as an example, for green finance, the islamic banking industry is supporting approximately 4, 500 renewable energy and green projects worth more than usd2. 2 billion. on climate, the bank and securities commission malaysia have established the joint committee on climate change or jc3 to pursue collective climate actions. the committee brings regulators and the financial industry together to promote alignment and drive climate actions in five areas β risk management, governance and disclosures, green finance and innovation, data and capacity building. finally, sustainable finance would ring hollow without ensuring that our communities β especially our most vulnerable communities β have the means and ability to make good financial decisions. to this end, the bank, together with securities commission malaysia and various government ministries and agencies, collaborate through the financial education network to increase the level of financial literacy and access to information and resources on financial matters. the financial education network also serves as a focal point to drive the implementation of malaysia β s | their resources, systems and reported performance. a second, more comprehensive quantitative testing exercise has also been planned for the third quarter of this year. going forward, the bank will be intensifying our monitoring and engagements with insurers and takaful operators on their preparations in the run up to 2021. conclusion looking ahead, a more optimistic outlook for the global economy will support favourable conditions for a smooth transition to ifrs 17. but the work must start now, and it must start right by taking a broader and integrated approach to implementation. today β s workshop aims to bring some of the most important issues in implementation to light, and provide you with valuable insights from our distinguished speakers and subject matter experts. with greater clarity and knowledge to inform careful preparations, insurers can be confident of not just achieving a smooth transition to ifrs 17, but of laying strong foundations for long term growth and success. 4 / 5 bis central bankers'speeches that is the ultimate goal. 5 / 5 bis central bankers'speeches | 0.5 |
than during the 1970s. however, it is most likely that a better monetary policy has played some role in the increased real economic stability. we have thus established what a central bank β s primary tasks should be : to maintain price stability, to promote stability in the financial system and β as long as the nominal anchor formed by the price stability target is not threatened β to try to stabilise the real economy. there may nevertheless be reason to provide an example of what is not an appropriate objective for a central bank. as i have tried to emphasise, the real economic objectives that central banks have entail stabilising real quantities such as production and employment. by stabilising i mean that one tries to reduce the fluctuations around the long - term trend. however, it is important to realise that this long - term trend development is not something that monetary policy can directly influence. for example, a country β s long - term growth is determined by developments in the quantity of labour and real capital and technological progress. the best that monetary policy can do is, as i have already observed, to indirectly contribute to favourable economic developments by ensuring that inflation is kept low and stable and that financial stability is good. although it might be tempting, it is therefore meaningless β and often counter - productive or even damaging β to give the central bank the task of " creating " growth or employment. if one tries to affect growth and employment by systematically keeping interest rates low and increasing liquidity in the economy, or by allowing public sector projects to be financed directly by the central bank, the profits will be only short term. inflation will rise in a way that will sooner or later become difficult to control β the nominal anchor will loosen β while developments in the real economy risk being poorer than they would have been otherwise. i believe that it is correct to claim that a lack of insight and excessive see, for instance, bernanke, b. s., ( 2006 ), β the benefits of price stability β, remarks at the center for economic policy studies and on the occasion of the 75th anniversary of the woodrow wilson school of public and international affairs, princeton university, february 24. see, for instance, bernanke, b. s., ( 2004 ), β the great moderation β, remarks at the meetings of the eastern economic association, washington, dc, february 20. optimism regarding the role monetary policy can play in long - term real economic growth was one important reason why inflation was so high during | leong sing chiong : remarks - official opening ceremony of the fm global centre remarks by mr leong sing chiong, deputy managing director ( markets & development ) of the monetary authority of singapore, at the official opening ceremony of the fm global centre, singapore, 8 november 2022. * * * thank you, mr malcolm roberts, distinguished guests, ladies and gentlemen, good morning. it is a pleasure to join you at the official opening of the fm global centre. 2 the launch of the fm global centre is yet another significant milestone in fm global's long and rich journey with singapore. since 37 years ago, the singapore office has grown significantly, and became the asia pacific headquarters for fm global in 2019. today, it provides commercial property, risk advisory and engineering solutions to over 400 clients, across 36 markets in singapore and the region. the global centre is the second biggest centre, outside of the us. 3 the choice of singapore to house the fm global centre is very timely, and is reflective of two key factors. first, strong growth prospects. asia's property insurance industry is projected to grow from s $ 122 billion in premiums in 2020, to almost s $ 200 billion in 2025. 1 this is due to continued commercial expansion and infrastructure development as part of the region's growth. second, it also reflects asia's growing need for natural catastrophe and climate risk financing solutions, given the region's significant exposure to climate risk. by 2050, it is estimated that climate change losses could cost asia more than a quarter ( 25. 6 % ) of 2019 gdp. 2 4 insurers are important partners in helping governments and businesses manage physical and transition risks. the fm global centre's testing and research on how properties can be impacted by fire, floods and natural hazards at varying levels of intensity, can provide valuable data insights. these data insights can support the development of ex - ante climate risk insurance solutions for businesses in the region. it goes to the heart of insurance solutions aβ¬ β which should increasingly focus on ex - ante risk reduction and loss prevention, beyond just ex - post risk financing. the centre will also provide hands - on loss prevention education to businesses and individuals, through interactive simulation labs and learning areas. 1 / 3 bis - central bankers'speeches 5 the insurance industry can also play an important role in empowering the development of the green economy in asia. singapore, for instance, as part of our energy decarbonisation | 0 |
ed sibley : the importance of diversity in financial services remarks by mr ed sibley, deputy governor ( prudential regulation ) of the central bank of ireland, at the " importance of diversity in financial services " event of the fusion network ( the financial services inclusion network ), dublin, 13 february 2018. * * * i am delighted to be here this evening and to have the opportunity to speak about diversity and inclusion in financial services at the first fusion event of 2018. i would like to thank francesca mcdonagh for the invitation. 1 2 i strongly believe that diversity in all its forms is important, and that there remains a serious deficit in diversity of background, experience, and, critically, thinking at senior levels in financial services in ireland. this needs to change. in my remarks this evening, i will cover : some background on the roots of my interest in diversity ; the business case for improving diversity and inclusion, the central bank β s approach to diversity and inclusion ( from both an internal and external perspective ) ; and outline how we are seeking to drive improvements in diversity across regulated firms. it is important to note that the opportunities and benefits that can accrue from increasing diversity in the workplace are dependent on creating an inclusive workplace, where different views, background, experiences, cultures, etc., are valued and nurtured. i will conclude that meaningful and sustained improvements in diversity and inclusion can help to improve the safety and soundness of financial services firms and contribute to the restoration of trust in the financial system in ireland. my background i have been working in financial regulation and supervision since the onset of the financial crisis, firstly, in the uk, and now in ireland. as deputy governor, prudential regulation at the central bank, my role spans the entire irish financial services system. it is also a very international role. i am a member of the supervisory board of the single supervisory mechanism ( ssm ), the pan european banking supervisor. i am on the board of supervisors for both the european banking authority ( eba ) and the european insurance and occupational pensions authority ( eiopa ) and the general board of the european systemic risk board ( esrb ). in other words, i occupy an extremely privileged position of being able to see across the financial services system both here in ireland, and across europe. i also have the privilege of engaging with, debating with and disagreeing with international colleagues with diverse opinions, backgrounds, incentives and views. i am also privileged in many | savenaca narube : productivity and ethics opening address by mr savenaca narube, governor of the reserve bank of fiji, at the rotaract club of suva β s business seminar, suva, 28 february 2009. * * * introduction ms roshika deo, immediate past president of the rotaract club of suva members of the rotaract club ladies and gentlemen good morning and a very warm welcome to everyone. this is the second time that i have addressed your rotaract club early on a saturday morning! the first was in september 2007. a lot has happened since then in fiji and the world. back then everyone thought that the sub prime problem was virtually over perhaps with a short tail. how very wrong we were. as you know, the crisis has deepened and widened beyond anyone β s imagination. what is happening around us is unprecedented. while fiji is isolated from the financial mess, we unfortunately cannot avoid its economic fallouts. then the heavens opened up last month and flooded most of fiji. the impact is widespread and devastating. there is a lot of rehabilitation work to complete to rebuild livelihoods, businesses and industries. these two events have significantly effected our livelihood and we must do all we can to address them. if ever a time that the country needs to work together to build our economy this is one of them. the economy is our bread and butter. it is our livelihood. it puts food on the table. it pays for our children β s education. it protects the future of our grandchildren. so we should all play a part in building this economy right now. we should avoid the blame game. we should focus all our energy in getting things done in a coherent and consistent fashion. productivity if i may then ask, β what is the role of rotaract in economic building, and perhaps on a wider scale, in nation building? β how are you going about executing this role? productivity is an obvious way that your organisation can help lift the economy. i have talked at many productivity conferences. i have always emphasised that one of the easiest way to grow the economy is to raise productivity. fiji β s rate of productivity growth is extremely disappointing. my estimate is that if we raise productivity growth by 1 percentage point it will raise gdp by at nearly twice that. i β m very pleased that productivity is a theme of your seminar today. productivity is first a way of thinking and second a mechanical process. you can have | 0 |
privilege to call upon his honour the vice president of the republic of zambia, mr rupiah banda to deliver the official opening speech for the seminar. your honour sir! thank you. | be given a charter which includes a strong commitment to price stability, and the freedom and sufficient scope to pursue it. this means that while central banks may not have goal independence, they should have operational or instrument independence to effectively pursue their primary objectives. in a democratic society, transparency and accountability are essential if central bank independence is to remain β acceptable to the public β. providing for a sufficient degree of transparency can help not only to increase the understanding of monetary policy which ultimately enhances central bank credibility. your honour, this conference follows a similar one held in botswana hosted by the botswana central bank from 5 to 6 february, 2007 and supported by the bis governance forum and the imf. it also comes shortly after our very successful conference held at this same venue in november last year on the theme, β central bank independence, does it hurt the treasury? β all these activities are part of the building blocks to a bigger project we have been undertaking in the sadc region aimed at developing a model central bank act. for us in zambia, efforts at perfecting the governance as well as the operational efficiency of the financial sector are being done through the financial sector development plan ( fsdp ). under the plan we have already developed corporate governance guidelines for the financial sector as a whole. many of these have a lot of relevance to the central bank as well. through the fsdp, even issues such as who should chair the board of the central bank are being discussed. lastly, let me say that we expect to learn from what other central banks have done, and what challenges they have faced in their quest for enhanced central bank governance. however, it should be noted that each country should establish a legal framework for its central bank governance, which best fits that country β s own history and institutional evolution. this should also take into account international best practice. your honour, apart from zambian delegates, this international seminar has drawn participation from several other countries including : angola, ghana, kenya, lesotho, madagascar, malawi, mauritius and mozambique. other participants are from namibia, nigeria, sweden, tanzania, swaziland and uganda. with this wide participation, i have no doubt that the seminar will be thought - provoking and highly participatory, given also the high calibre of resource persons from institutions such as the international monetary fund and the bank of international settlements. i therefore wish all of you good deliberations and a memorable stay in livingstone and zambia in general. it is now my | 1 |
is the highest ever recorded after independence second only to china in the contemporary world. this has emanated from an upsurge in the domestic savings rate ( 23. 5 per cent in 2001 β 02 to 37. 7 per cent in 2007 β 08 ) supported by the step up in investment rate ( from 22. 8 per cent to 39. 1 per cent ) in an environment of moderate inflation and macro - economic stability. although the contagion from the global economic crisis had brought the growth down to 6. 7 per cent in 2008 β 09, large fiscal stimulus and accommodative monetary policy ensured that the economy performed better than expected in 2009 β 10. the planning commission in the eleventh five year plan document ( 2007 β 12 ) identified a number of priorities to hasten an inclusive growth process so that the economy can grow at a rate of around 9 per cent during the plan period. while the success of the same revolves around a number of wide ranging issues adequately flagged in the plan document, certain basic problems need to be addressed first. these are agriculture reforms, governance reforms and infrastructure reforms. in today β s address, i would confine myself to the third issue β that is infrastructure β finance as well as the beyond. role of infrastructure and the traditional constraints as regards finance 3. if we have to maintain high growth rate, we require better infrastructure ; as simple as that. infrastructure is also a key driver of inclusive growth. it is already identified as one of the serious impediments to high growth in india in the coming years. with fast pace of economic growth and urbanisation, availability of adequate facilities as well as upgrading the quality of existing infrastructure would assume paramount importance. infrastructure development in new townships is a priority to redistribute the influx of growing population. attention is to be paid to the rural infrastructure provision such as irrigation, electrification, roads, drinking water, sanitation, housing, community it service, etc. financial issues are often cited as the key constraint to the availability of provisions in an emerging economy like india. the infrastructure projects are characterised by non - recourse or limited recourse 4. financing, i. e., lender can only be repaid from the revenues generated by the projects requiring to the large scale of investments. the share of high initial capital and low operating cost in infrastructure projects explains why financing infrastructure involves a mix of complex and varied contractual arrangements. wrong projections, collection risks of the payables and | , this is not a settled issue. there is no onesize - fits - all answer, as is clear from the variety of regulatory models around. each country and each central bank will have to resolve this issue according to its specific circumstances. central banks and financial stability while there is broad agreement that financial stability is neither automatic nor inevitable, there is less agreement on whether it should be explicitly included in the mandate of central banks. one argument is that explicit inclusion would be redundant, because financial stability is a necessary β although not sufficient β condition for achieving the conventional central bank objectives relating to inflation, output, and employment. on the other hand, there is a growing view that unless financial stability is explicitly included in the mandate of central banks, it is likely to fall through the cracks. complicating matters, defining financial stability in a precise, comprehensive, and measurable manner is proving to be difficult. nevertheless, we now know that there are two attributes of financial instability : excessive volatility of macro variables such as interest rates and exchange rates that have a direct impact on the real economy ; and financial institutions and markets threatened by illiquidity to the extent of jeopardizing systemic stability. do central banks have the instruments to address the mandate of financial stability? one clear instrument for preserving financial stability is the lender - of - last - resort function. during the crisis, central banks pumped in enormous amounts of liquidity to unfreeze the system through the lender - of - lastresort window. while this made individual institutions liquid, the market remained illiquid, thereby revealing the limitation of the window instrument in combating illiquidity. a central bank can infuse liquidity, but it β s hard to ensure that the available cheap and abundant money is used to purchase assets whose value is rapidly eroding. the only option may be for the central bank to buy the assets. this means that the central bank must be not only the lender but also the market maker of last resort. these issues have yet to be clearly defined, let alone resolved. but they must be resolved soon. managing the costs and benefits of regulation to safeguard financial stability, the reserve bank of india used a variety of prudential measures, including specification of exposure norms and preemptive tightening of the risk weights attached to assets and the requirements for loss provisioning. but these measures often carry a cost. for instance, tightening risk weights arguably tempers the flow of credit | 0.5 |
of thumb to form their short - term inflation expectations. and current inflation seems to be the most widely used heuristic in this respect, making some degree of inflation persistence a natural and inevitable phenomenon. developments over the past year, however, mark a clear and visible departure from past regularities. as you can see on the right - hand chart, a growing gap has emerged between the inflation expectations of market participants on the one side, and households and professional forecasters on the other. this is not about differences in the level, which β as i have argued before β may not mean much. this is about different dynamics, with the two - year moving correlation between market - based and household expectations dropping from 0. 8 in the summer of last year to below 0. 3 in june, the lowest level in nearly nine years. so, unlike the situation in late 2014 and early 2015, when inflation expectations fell sharply across the population, and when we launched the asset purchase programme, today households are much less sceptical about the future. this raises two important questions. the first is what happens to inflation if financial market participants and households hold diverging views on the future direction of inflation. 5 / 13 bis central bankers'speeches the second question is why we are seeing this divergence in views, and whether it is temporary or likely to persist. let me try to answer each of these two questions in turn. which expectations matter most? existing research casts some doubt on the macroeconomic relevance of professional inflation forecasts, including those of financial markets. there are three related strands in the literature that suggest that household inflation expectations are often better predictors of future inflation outcomes. 13 the first is that financial market participants are not particularly good at predicting future inflation. i β m not claiming that central banks are particularly better. you can see this on my next slide. but as you can see on the following one, financial market participants repeatedly failed to correctly project even the very near - term outlook for inflation in the euro area. 6 / 13 bis central bankers'speeches there are two sides to this finding. one is the automatic stabilising role that market - based inflation expectations play despite, or precisely because of, their poor track - record in projecting inflation. as market participants react in real time to any news potentially relevant for the medium - term inflation outlook, they support the monetary policy transmission process : they tend to frontload accommodation when inflation risks are skewed to the downside, and they tend | and investment decisions that drive the business cycle. understanding these channels better is at the heart of the agenda to enhance the monetary analysis that is being pursued by eurosystem staff at the behest of the governing council. 3 four avenues for further research in order to deepen our monetary analysis have been identified. first, new money demand equations are being developed, which can better explain monetary developments observed over the past few years. second, the indicator properties of monetary developments for inflation are being investigated in greater detail, with a focus on the relationship over longer horizons. third, the governing council has commissioned further work on structural models of the economy that incorporate an important role for monetary and financial variables. finally, the governing council seeks tools that will aid its cross - checking of the economic and monetary analyses, which is central to the ecb β s monetary policy strategy. scenarios constructed using structural models are one such approach, while the integrative framework provided by the new euro area accounts is another. work on these four avenues is ongoing. our ambitious agenda not only challenges those developing the monetary analysis ; it also creates new data demands and statistical requirements. it is to those that i now turn. statistical requirements for enhancing the monetary analysis what are the statistical requirements for enhancing the monetary analysis? see β monetary analysis in real time β, ecb monthly bulletin october 2004 and b. fischer, et al. ( 2008 ) β money and monetary policy : the ecb experience 1999 - 2006 β in eds. a. beyer and l. reichlin the role of money β money and monetary policy in the twenty - first century ( ecb ). see r. adalid and c. detken ( 2007 ) β liquidity shocks and asset price boom / bust cycles β, ecb working paper no. 732. see j. stark β enhancing the monetary analysis β, speech at the conference β the ecb and its watchers ix β, frankfurt 7 september 2007 ( http : / / www. ecb. europa. eu / press / key / date / 2007 / html / sp070907 _ 1. en. html ). first, the availability of long runs of historical data is crucial to the development of appropriate models and tools. there is thus a vital need for long monetary time series that are consistent over time. meeting this requirement is crucial to developing a better understanding of the leading indicator properties of money for future price developments over longer horizons, and thus for constructing the policy - relevant | 0 |
their home or in third countries. for their part, the u. s. authorities have clearly stated that they will be flexible during a transition period so that the relevant foreign banks can more easily meet the required standards, but national treatment policies will apply. discussions within the aig on this issue - as well as bilateral discussions with affected banks and their supervisors - have been productive, and i think the associated problems will be addressed. however, one issue appears to be particularly difficult in more than one jurisdiction : the allocation of capital for operational risk among the legal entities within and across jurisdictions. problems do not come more practical than this. operational risk is generally measured on a consolidated basis, often by business line. that diversification benefits exist on a consolidated basis suggests that operational risk estimated from the bottom up - by, say, legal entity - would not only be more difficult but might well add up to more than the total from the top down. the problem is only made more complicated by the understandable focus of supervisors in each jurisdiction on ensuring that the entities under their supervision are sufficiently capitalized to absorb risk. we have come a long way in global banking, with deference to home consolidated supervisors, but the legal entity supervisor still needs the assurance that capital is protecting risk in the individual unit. basel ii is not going to succeed or fail on this practical problem or on similar problems - and this will certainly not be the last. through the aig a compromise will be developed on the issue of operational risk capital to ensure that capital is sufficient and is allocated in a reasonable way. other issues, including home - host tensions, will be resolved in similar ways as the member countries hear comments, conduct analysis, and then seek out a viable compromise solution. the process the practical give and take of discussions is exactly how the first and now the second capital accord have been and will be developed. we are at a critical stage of that process with changes in significant provisions being studied and modified. examples are the shift in standard to unexpected loss only and the review of securitization, credit card, and credit risk mitigation, all of which are now being actively studied. it may seem strange that this far into the process - approaching year six - that such changes are being made. these changes, however, show how seriously the basel committee and its participating national authorities regard the public comment process and benefit from the analysis of bankers and other interested parties. when analysis and evidence were put forward, the committee responded. the | janet l yellen : welcoming remarks speech by ms janet l yellen, chair of the board of governors of the federal reserve system, at the community banking in the 21st century, the third annual community banking research and policy conference, cosponsored by the federal reserve system and conference of state bank supervisors, federal reserve bank of st. louis, st. louis, missouri, 30 september 2015. * * * thank you. it is truly a pleasure for me to join president bullard and chairman cotney in welcoming you to the community banking research and policy conference, which i am proud to say has been cosponsored since its inception by the federal reserve system and the conference of state bank supervisors ( csbs ). this is the third year for this conference, which i consider a milestone. the first time you organize a conference like this, all you can be sure about is that there was indeed enough research and interest for such a conference. the second time it is held, you proved that you could do it again. but the third year, this year, is when we can start to feel we have established a tradition. if this year β s conference comes even close to being as successful as the first two were, and i expect it will be, i hope that we have established an ongoing role for this gathering, which provides such a great opportunity for bankers, regulators, and academic researchers to come together to share ideas and insights about the issues that matter most in community banking. based on the agenda and conference materials i have seen, i expect participants over the next two days will tackle some of the most important issues facing community banks, provoke discussion and debate about opportunities and challenges, and generate some promising ideas about how community banks can continue to play the indispensable role they have played in so many communities. the lineup of speakers, which includes my federal reserve board colleague, governor brainard, is impressive. she and others will delve deeply into the important research questions and other issues facing community banking. my role today is to welcome you on behalf of the federal reserve board. in the interest of getting to the important work of this conference, i will be brief, but if i accomplish anything by speaking to you today, i hope it is to convey the board β s understanding of the unique and important role of community banks in our financial system as well as the board β s commitment, at the highest level, to consider how our supervisory and regulatory decisions affect those institutions. my | 0.5 |
a purpose for the citizens of europe. it must offer them prosperity, security and freedom. in germany, european integration has thus far been largely a project for the political, economic and academic elites. our constitution does not provide for direct referendums, so many people are now saying β i wasn β t asked β. this is made all the more important by the fact that a monetary union is ultimately also partly a political union. i therefore suggest that we now engage in open political debate on what europe should look like ten years from now. in this we face a trilemma, which martin hoppner, armin schaefer und hubert zimmermann put well in an article on 27 april in the β frankfurter allgemeine zeitung β : β enlargement, deepening and democracy β the trilemma of european integration. of the three aims of the eu, only two can ever be achieved at the same time, at the expense of the third β. my choice would be deepening ( of the euro area ) and democracy. others may have other ideas. this is something that can and must be discussed. the advantages of monetary union are so great that we should stabilise them through deepening. this means a fiscal union and a financial market union ( banking union ) as well as a democratically legitimised political union. my first ideas on this are : i ) in the area of financial market union, europe is facing two central challenges : first, the close financial links between banking sectors and public finances in an environment of slowing growth has often led to a downward spiral. an economy that is barely growing or in recession has an effect on the budget situation and, as a consequence, on the prices and yields of the relevant government bonds, many of which are held on banks β balance sheets. at the same time conditions for banks deteriorate. all this leads to the aforementioned liquidity shortages on the interbank markets. these, in turn, can cause solvency problems. but the loss of confidence means there are fewer and fewer private investors willing to give the banks the capital they need. and the government has less and less leeway to push the recapitalisation or restructuring of the banks forward itself β and so the situation spirals further and further down. second, european financial market regulation and crisis management suffer from a potential conflict of interest. while national supervisory authorities are supposed to ensure the functioning of the european financial market, they are politically accountable | the economic and monetary affairs committee of the european parliament. these are just some initial ideas, and i think an open discussion on where europe should be in ten years would be worthwhile. thank you very much. bis central bankers β speeches | 1 |
not displace, that of a firm's consolidated supervisor ( which, as i noted earlier, all systemically critical financial institutions should have ). under this model, the firm's consolidated supervisor would continue to have primary responsibility for the day - to - day supervision of the firm's risk - management practices, including those relating to compliance risk management, and for focusing on the safety and soundness of the individual institution. another key issue is the extent to which a systemic risk authority would have appropriately calibrated ability to take measures to address specific practices identified as posing a systemic risk β in coordination with other supervisors when possible, or independently if necessary. for example, there may be practices that appear sound when considered from the perspective of a single firm, but that appear troublesome when understood to be widespread in the financial system, such as if these practices reveal the shared dependence of firms on particular forms of uncertain liquidity. for example, while the existence of supra - normal profits in a market segment may be an indicator of supranormal risks, it also may be the result of innovation on the part of one or more market participants that does not create undue risks to the system. other activities that a systemic risk authority might undertake include : ( 1 ) monitoring large or rapidly increasing exposures β such as to subprime mortgages β across firms and markets ; ( 2 ) assessing the potential for deficiencies in evolving risk - management practices, broadbased increases in financial leverage, or changes in financial markets or products to increase systemic risks ; ( 3 ) analyzing possible spillovers between financial firms or between firms and markets, for example through the mutual exposures of highly interconnected firms ; identifying possible regulatory gaps, including gaps in the protection of consumers and investors, that pose risks for the system as a whole ; and ( 5 ) issuing periodic reports on the stability of the u. s. financial system, in order both to disseminate its own views and to elicit the considered views of others. thus, there are numerous important decisions to be made on the substantive reach and responsibilities of a systemic risk regulator. how such an authority, if created, should be structured and located within the federal government is also a complex issue. some have suggested the federal reserve for this role, while others have expressed concern that adding this responsibility would overburden the central bank. the extent to which this new responsibility might be a good match for the federal reserve, acting either alone | miranda s goeltom : macroeconomic impact of climate change β opportunities and challenges ( closing remarks ) closing remarks by prof dr miranda s goeltom, senior deputy governor of bank indonesia, at bank indonesia β s annual international seminar on β macroeconomic impact of climate change β opportunities and challenges β, nusa dua, bali, 1 - 2 august 2008. * * * fellow governors, distinguished speakers and chairpersons, honorable guests, ladies & gentlemen, on behalf of bank indonesia, i would like to express our most sincere thanks to all of you for the honor that you have just bestowed upon my invitation to participate in the annual international seminar of bank indonesia in our island of gods, bali. also, i would like to thank all honorable guest speakers, chairpersons, and participants for your valuable presentations and fruitful discussions during this one and a half day seminar held in such salubrious settings. in my belief, the sharing of views and experiences among central bankers, commercial bankers, academicians, bureaucrats, and the business community will enhance more productive policies with regards to global climate change phenomenon, to support sustainable growth in the long - run, as well as maintaining financial stability and alleviating poverty. my dear colleagues, distinguished participants, we have just completed an invigorating and very productive discussion. for the past oneand - a half day we have deliberated on a wide range of global issues related to climate change impact, in which all of them are import ant, some of them are crucial to the life of human being and the planet. we have been through the rigorous deliberations, and energetic but always friendly discussion. we also have summoned the spirit of this seminar and drawn inspiration to contribute within our own justification a better macroeconomic and financial stability in conjunction of global climate change. the evidence of global warming has become apparent as the consequence of human activities. we have learnt that it is not fiction or propaganda, but it is a fact and real. the costs of policies to address climate change can be contained by ensuring that mitigation policies are well designed. it will be crucial to aim at a framework that is sustainable and provides incentives for country participation. we have made just another step in the long journey of our inspirations to mitigate the global climate change impact. indeed, as has always happened, after every seminar that we convene such as this, we grow more unified in our thoughts, more coordinated in our actions, and more effective in participation | 0 |
climbed to a record high with the additional effect of the significant rise in the labor force participation rate ( graph 24 and 25 ). the most recent data indicate that the rise in the unemployment rate continued with further acceleration in the first quarter of 2009. within this framework, it is estimated that the current conditions will continue to curb the upward trend in unit labor costs and the rise in domestic demand. graph 24 : non - agricultural employment graph 25 : non - agricultural unemployment ( seasonally adjusted, million people ) ( seasonally adjusted, percent ) 16. 5 16. 0 15. 5 15. 0 14. 5 14. 0 source : turstat, cbt. 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 source : turkstat, cbt. the rapid policy rate cuts coupled with the fiscal stimulus plan designed to revive domestic economic activity are expected to underpin domestic demand as of the second quarter of 2009. as i have mentioned earlier in my speech, reaching lasting stability in the global economy will take time and therefore, no notable recovery is expected in domestic economic activity in the short run. within this framework, aggregate demand conditions are expected to continue to support disinflation for some time ( graph 26 ). in sum, compared to the january inflation report, the revised inflation forecasts are based on increased favorable contribution from aggregate demand conditions to disinflation. graph 26 : output gap ( percent ) - 2 - 4 - 6 - 8 - 10 00 00 01 01 02 02 03 03 04 04 05 05 06 06 07 07 08 08 09 q1 q3 q1 c3 q1 q3 q1 q3 q1 q3 q1 q3 q1 q3 q1 q3 q1 q3 q1 source : cbrt. the problems in global economy and tighter credit conditions still persist. following recent financial measures and policy rate cuts, domestic demand is expected to gain a relatively stable trend in the second quarter of 2009 and growth is expected to generate positive rates as of the final quarter of 2009. meanwhile, considering the current global economic outlook, it is estimated that access to foreign financing facilities will remain limited for a while, economic agents will continue their cautious stance and no significant pick - up will be observed in aggregate demand in the short run. moreover, when the sharp decline in non - agricultural employment is taken into account, it is estimated that the level of disposable income will remain low for | durmus yΔ±lmaz : recent economic and financial developments in turkey speech by mr durmus yilmaz, governor of the central bank of the republic of turkey, at the press conference for the presentation of the inflation report, ankara, 30 april 2009. * * * distinguished guests and members of the press, welcome to the press conference for the presentation of the april 2009 inflation report, one of the most important communication tools of the inflation - targeting regime. the report typically elaborates global and domestic macroeconomic developments and presents the medium - term inflation forecasts revised in line with the previous quarter developments. it also presents six boxes examining the recent monetary policy decisions and the relevant economic developments. now, i would like to give you a short summary of our evaluations and the central bank β s revised inflation forecasts in the inflation report, which will be posted on the cbt website today. 1. inflation developments distinguished members of the press, the world economy has been undergoing a period dominated by dynamics quite unlike to those of previous years. with the loss of confidence resulting from the on - going financial crisis, the global economy entered a significant contraction trend after a long period of time. impacts of the crisis on real economic activity deepened in the first quarter of 2009. thus, inflationary pressures, which were perceived as a major concern until the last quarter of 2008, were overtaken by fears of deflation in developed countries in the first quarter of 2009. in this context, i would like to start my speech by once more underlining that inflation developments in turkey in the first quarter of 2009 should be considered in the light of these global conditions. in the first quarter of 2009, consumer prices increased by 1. 05 percent and annual consumer inflation became 7. 89, remaining within the limits of the uncertainty band. backed by the significant slowdown in economic activity and improvement in cost - based effects, the decline in inflation gained ground and spread across all subgroups. in addition, the short - term exchange rate pass - through on consumer prices remained limited in the previous quarter. the contribution of all main groups excluding tobacco and gold, which posted high - rated price hikes to annual inflation weakened in the first quarter of the year. while the contribution of food and energy to annual inflation decreased especially due to the marked decline of annual inflation in energy prices, the contribution of services prices also continued to diminish owing to the fall in costs and the slowdown in domestic demand ( figure 1 ). | 1 |
are fewer domestic investment opportunities and growth prospects are muted. japan therefore exports capital abroad and has a current account surplus. there are thus structural reasons why countries have a current account balance above or below zero for an extended period. surpluses or deficits therefore do not necessarily indicate an overvalued or undervalued currency, or present a risk for the country and the global economy. 5 how can we distinguish between those current account surpluses or deficits that can be explained by fundamental factors, and those that cannot? the imf has developed a model for conducting a thorough analysis of the impact of various economic drivers on individual countries β current account balances. these drivers include demographics, the level of development of a country, and fiscal policy β in other words, factors that influence savings and investment. the results of the model are incorporated into an annual report, the external sector report, which i mentioned in my introduction. nevertheless, it is not enough just to apply the model in a mechanistic way. the imf therefore also takes country - specific circumstances and features of balance of payments data into account in its assessments. in switzerland β s case, it concludes that the current account surplus is in line with macroeconomic conditions and is not the result of an undervalued currency or inappropriate monetary or fiscal policy. this brings me to the factors contributing to the persistent current account surplus in switzerland. factors contributing to the persistent current account surplus in switzerland switzerland β s current account surplus, reported in accordance with international standards, is driven by special factors. first, our current account surplus or savings surplus is overstated due to statistical distortions. second, structural factors are in play that tend to contribute to a savings surplus. one of these is demographics, which have a decisive impact on the high levels of household saving in switzerland. high current account deficits may occasionally lead to refinancing problems, so - called balance of payments crises. this speech does not address the financing side of current account deficits in any detail, but focuses solely on the current debate concerning exchange rate manipulation in connection with current account surpluses. page 7 / 13 then, third, we must consider the industrial structure of the swiss economy, which means that the current account and the economy as a whole do not necessarily move in parallel when the exchange rate changes. in switzerland, two industries are largely responsible for the trade surplus, namely pharmaceuticals and merchanting, the net exports of which are only slightly impacted by exchange rate movements | favourable housing market developments. third, exports were relatively resilient to international headwinds. fourth, as we have already seen, monetary policy acted to limit the negative impact of the swiss franc β s massive appreciation. let me now elaborate on the structural factors that have played an important role in strengthening the resilience of the swiss economy to shocks. i will start by focusing on some interesting shifts that have taken place in the structure of swiss international trade. 4. 1 innovative and diversified swiss international trade looking at the structure of switzerland β s international trade will allow me to dispel some wellestablished preconceptions about the swiss economy. if i asked you to list some core swiss economic sectors, you would probably mention banks, watches and chocolate. but switzerland is much more than that. the swiss economy is in fact highly diversified. for example, the share in total value added of the sector comprising financial, insurance and bis central bankers β speeches business services is smaller than the eu average ( 20. 3 % vs 26. 2 % in 2012, according to oecd figures ). by contrast, the share of the manufacturing sector is significantly larger. overall, the amount of goods and services that switzerland sells abroad is equivalent to half of its gross domestic product ( gdp ). goods dominate export activity but, with a share of one - third, the contribution of services is by no means negligible. the export intensity is significantly above the oecd average. switzerland is surpassed by the benelux countries, however. part of the gap with the benelux reflects the extensive re - exports of imported goods generated by the activity of the world - class ports in belgium and the netherlands. admittedly, access to the sea is not a key comparative advantage of switzerland β¦ in order to maintain competitiveness, the swiss export sector has gone through profound structural changes during the last decades. first, there has been a shift in the composition of the export sector ( figure 4 ). the pharmaceutical industry has gained in importance, whereas the share of exports of machinery has declined. in passing, let me just mention that the popular cliche which associates switzerland with watches is actually true. their share in total goods exports is sizeable ( 11 % ). note, however, that this has nothing to do with cuckoo clocks, which were invented and are produced in germany. a closer look at the development across industries reveals that this compositional shift is important in understanding swiss performance during the crisis. | 0.5 |
david dodge : views on the canadian economy and monetary policy opening statement by mr david dodge, governor of the bank of canada, to the standing senate committee on banking, trade and commerce, ottawa, 3 may 2006. * * * good afternoon, mr. chairman and members of the committee. we appreciate the opportunity to meet with this committee twice a year, following the release of our monetary policy reports. these meetings help us keep senators and all canadians informed about the bank's views on the economy, and about the objective of monetary policy and the actions we take to achieve it. when paul and i appeared before this committee last october, we said that the global and canadian economies were continuing to grow at a solid pace, that our economy appeared to be operating at full production capacity, and that it would remain at capacity in 2006 and 2007. total and core inflation were projected to average close to 2 per cent, beginning in the second half of this year. this projection assumed oil prices at roughly us $ 64 per barrel, a level then indicated by futures prices. our projection also assumed stable commodity prices, government spending that was growing roughly in line with revenues, and a canadian dollar continuing to trade in a range of 85 to 87 cents u. s. in our april monetary policy report ( mpr ), we say that the global economy has shown a little more momentum than had been anticipated : oil prices have been roughly us $ 10 per barrel higher than assumed ; metals prices have risen significantly ; and the canadian dollar had been trading in a range of 85 1 / 2 to 88 aΒ½ cents u. s. in our report, the bank projects economic growth of 3. 1 per cent in 2006, 3. 0 per cent in 2007, and 2. 9 per cent in 2008. total cpi inflation will continue to be volatile and affected by developments in the markets for crude oil and natural gas, and will average close to 2 per cent in 2007 and 2008 ( excluding the effect of any changes in the gst ). core inflation is projected to rise to 2 per cent in the second half of this year and remain there through to the end of 2008. this projection is based on three key assumptions : first, that energy prices will remain roughly as indicated by futures prices ; second, that canadian governments will continue to run budgets that are roughly in balance ; and third, that the orderly resolution of global imbalances will involve a gradual depreciation of the u. s. real effective exchange rate. | they may not be paying close enough attention to the aggregation of their exposures or concentrations that arise in the resulting portfolios of business. also, rapid growth can place considerable pressure on an organization's management information systems, change - management controls, strategic planning, credit concentrations, and asset / liability management, among other areas. many of the companies that have attracted public attention in recent years due to serious breaks in controls failed to focus on process changes and critical investments in their risk management and control systems that were needed to successfully support their business plans. an organization must also understand how its various business components dynamically interact. a successful enterprise - wide risk management process can help to meet many of these challenges. at the same time, it is clear that risk management practices need to be applied in a manner appropriate to the size and complexity of the organization. while the leading - edge risk - management practices used at the largest, most complex banks may have some applicability at smaller, less complex banks, data and cost limitations require greater use of more generalized models and the use of outsourcing to supplement the knowledge base of the institution. and as most of you know, running a smaller or less complex bank presents different types of challenges and requires a risk - management framework appropriately tailored to the institution. for example, transactions may be conducted more on a relationship basis and may be less data - intensive. in such a case, bank management needs to develop risk - management tools that allow it to ensure that risks are still being appropriately addressed. further, smaller organizations often face a challenge of ensuring independent review of processes and decisions since officers and staff often have multiple responsibilities that can present conflicts of interest. many of you are probably familiar with the enterprise risk management framework published over a year ago by the committee of sponsoring organizations of the treadway commission, or coso. the coso framework provides a useful way to look at enterprise risk management. notably, the coso framework states explicitly that, while its components will not function identically in every entity, its principles should apply to institutions of all sizes. small and mid - size entities, for example, may choose to apply the framework on a less - formal and less - structured basis and scale it to their own needs - - as long as quality is maintained. this underscores the message from bank supervisors that good risk management is expected of every institution, regardless of size or sophistication. naturally, some tension will still exist between what supervisors expect and how bankers | 0 |
ardian fullani : bank of albania exhibition β β the currency and financial literacy through it β speech by mr ardian fullani, governor of the bank of albania, at the opening ceremony of the exhibition of the bank of albania, tirana, 4 october 2013. * * * dear mr speaker of parliament, dear participants, in pursuit of alternatives to present the 100 - year journey of central banking, the bank of albania opens today an exhibition on β the currency and financial literacy through it β. the consolidation history of the state and the currency shows they have walked hand in hand over the centuries. we are all aware of the importance of currency in everyday events of our civilisation. cash, lek, franc, ecu, euro, dollar... instruments. call it as you wish. money is important! it is important not only for its functions to pay, save, or deposit, but also as an historical and artistic legacy of a nation β s journey through the centuries. to the religious, love for money was the root of all evil. to generals, it was the strongest weapon in the battlefield. to revolutionaries, it represented shackles on the workers wrists. what is money, after all? a mountain of silver, a ceramic tablet, or a piece of paper? how did it evolve into its presentday form, when we seldom see physical money? more often than not, a set of digits on computer screens? where does money come from and how did it evolve? as you will shortly see in the displays, this exhibition seeks to give an answer to these questions in a comprehensive language for all of us. above all, however, it commemorates an important date in history. the opening date for the exhibition β... the bank for albania is a second victory, after freedom... β is 4 october 2013. today 100 years ago, on behalf of the provisional government of albania, ismail qemal bey vlora signed the first concession agreement on establishing an albanian national bank. at the opening of this exhibition, i feel happy and excited at the same time, not only as the governor of the central bank, but also as an albanian citizen. the exhibition brings to the fore for the albanian public one of the meritable contributions of the father of the country β s independence, placing him on the pedestal he rightfully earned through the activity and vision of a real statesman. the history tells us that central banking was not built in a day. it did | on real - sector developments over the fourth quarter has confirmed our projections for a weak aggregate demand and below - potential economic growth. however, it has shifted to the downside the balance of risks around the projection. low business and consumer confidence, sluggish labour market and tight lending terms continue to weigh on private demand. disposable income increased and consumer balances were liquid. however, consumers are reluctant to spend and tend to save. on the other hand, lack of final demand and unutilised capacities curbed private investments. the latest data on external trade show an annualised 13. 5 % widening of the trade deficit for december. exports of goods continued to trend up but import growth at double - digit paces bis central bankers β speeches led to a higher trade deficit for this period. imports widened as traders intensified their importing activity, one month in advance, awaiting the entry into force of the new fiscal package in january 2014. imports rose 15. 8 %, while exports rose 19. 5 %. fiscal policy was easing in 2013, giving 1. 3 percentage points impulse to economic growth. fiscal stimulus was reflected in higher expenditures and lower fiscal revenues. thus, budget spending increased 4. 7 % in annual terms, while fiscal revenues fell 0. 5 %. however, budget deficit was lower than expected, reaching 4. 8 % of the gross domestic product, from 6. 2 % projected. in 2014, the fiscal policy is expected to be cautious, reducing the budget deficit and fiscal stimulus. in view of this policy, arrears payment will improve the private sector balances and will create better conditions for the recovery of demand. the bank of albania has requested and supported taking of measures to maintain public debt sustainability. in spite of short - term costs, maintaining public debt at subdued and sustainable levels would lead to lower uncertainty, higher space for private sector and higher flexibility of public finances. in a longer term, we deem that an efficient and transparent fiscal rule should be adopted. in response to easing monetary policy and calm liquidity situation, financial markets appear calm in terms of trading and tend to slightly reduce the interest rates. the inter - bank market is characterised by higher volumes and low interest rates. following the seasonal increase at year start, the government security yields tended to fall again in february but did not reach december β s levels. as already expected, deposit and loan interest rates fell over the last months. monetary indicators performed in line with the real - economy developments and | 0.5 |
like to wrap up with a brief discussion of some of the other decision points we will encounter as we continue the process of normalizing our balance sheet. in particular, what does the committee judge to be normal in regard to the type and duration of assets that we will hold? on composition, in line with our previously announced normalization principles, i favor a return to a balance sheet with all treasury securities, allowing our mortgage - backed securities ( mbs ) holdings to run to zero. in those principles, we also state that while we do not expect sales of mbs as part of the normalization process, later we would be open to limited sales to reduce or eliminate residual holdings of mbs. in regard to duration, moving to shorten the duration of our 2 / 3 bis central bankers'speeches holdings could increase the fed's ability to affect long - term interest rates if the need arose. however, it might be preferable to have the composition of our treasury holdings roughly match the maturity composition of outstanding treasury securities, minimizing any market distortions that could arise from our holdings. over the course of our upcoming meetings, i look forward to what promises to be an interesting discussion on these issues with my colleagues. finally, in assessing our balance sheet policy, it is important to point out that the fed remains entirely focused on meeting its statutory dual - mandate objectives of maximum employment and price stability. the normalization of the balance sheet is not a competing goal. if ever it appears that our plans for the balance sheet are running counter to the achievement of our dual - mandate objectives, we would quickly reassess our approach to the balance sheet. 1 these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. 2 for more information, see the committee β s statement regarding monetary policy implementation and balance sheet normalization, which is available on the www. federalreserve. gov / newsevents / pressreleases / monetary20190130c. htm. board β s website at 3 the committee β s policy normalization principles and plans were adopted on september 16, 2014, and can be found on the board β s website at www. federalreserve. gov / monetarypolicy / files / fomc _ policynormalization. pdf. the fomc adopted addenda to the policy normalization principles and plans on march 18, 2015 ( pdf ), and | lael brainard : understanding the disconnect between employment and inflation with a low neutral rate speech by ms lael brainard, member of the board of governors of the federal reserve system, at the economic club of new york new york city, 5 september 2017. * * * overall, the u. s. economy remains on solid footing, against the backdrop of the first synchronized global economic growth we have seen in many years and accommodative financial conditions. this benign outlook is clouded somewhat by uncertainty about government funding and the fiscal outlook, and geostrategic risk has risen. while the heartbreaking human toll exacted by hurricane harvey is already all too clear, it will take some time to assess the macroeconomic impact. the labor market continues to bring more americans off the sidelines and into productive employment, which is a very welcome development. nonetheless, there is a notable disconnect between signs that the economy is in the neighborhood of full employment and a string of lowerthan - projected inflation readings, especially since inflation has come in stubbornly below target for five years. with normalization of the federal funds rate under way and the start of gradual balance sheet normalization widely anticipated, i will want to take some time to assess the path of the federal funds rate that will best support a sustainable move in inflation to our 2 percent goal. 1 sustainably achieving our inflation objective is especially important, given the apparent persistently low level of the neutral rate and the resulting limited room for maneuver above the effective lower bound. let me start by reviewing the economic outlook. there has been a noteworthy pickup in business investment this year compared with last year. investment in the equipment and intellectual property category has risen at an annual rate of 6 percent so far this year after remaining roughly flat last year. the latest data on orders and shipments of capital equipment suggest that solid growth will likely continue in the second half of the year. in addition, oil drilling had rebounded this year after dropping sharply last year, although hurricane harvey creates uncertainty about drilling in coming months. while lackluster consumer spending was one of the key reasons for the weak increase in first - quarter gross domestic product ( gdp ), growth in personal consumption expenditures ( pce ) bounced back strongly in the second quarter, and recent readings on retail sales suggest another solid increase in consumer spending this quarter. of course, the likely economic effects of hurricane harvey raise uncertainties about the economic outlook for the remainder of the year. based on past experience | 0.5 |
acri association of italian savings banks 2019 world savings day address by the governor of the bank of italy ignazio visco rome, 31 october 2019 the economic outlook the trade tensions, the slowdown in china and the persistent uncertainty concerning the united kingdom β s withdrawal from the european union have continued to affect the global economy. international trade, which has been declining since last autumn, seems to have contracted in the second quarter as well ; for the year as a whole, it is expected to increase but at a rate of less than 1 per cent, the lowest since 2009. in recent weeks, the international monetary fund revised downwards its growth forecast for 2019 and 2020 for nearly every country. going forward, global demand may benefit from the stimulus measures implemented in the major economies, but the risks remain significant and are aggravated by the high level of public and private sector indebtedness in many countries. in the euro area, the sharp drop in industrial activity, especially in germany, has thus far been partially offset by the performance of the service sector. however, this sector has also started to show signs of weakness. among the main economies, gdp decreased in germany while it continued to grow in france and spain in the second quarter. if the contraction in the german economy persists, it will inevitably spread to other countries. in italy, economic activity seems to have remained substantially unchanged during the summer, after having grown just slightly in the second quarter. the manufacturing sector has suffered heavily from the close production and trade ties with germany, as well as from the negative effects stemming from the global context ; the sector β s weakness seems to have been offset by a slight expansion in services and construction. in the surveys carried out by the bank of italy between september and october, firms expressed less unfavourable opinions on the economic situation and on the trend in demand for their own products in comparison with the opinions expressed at the start of the year. the higher planned investment likely also reflects the reintroduction of tax incentives in april ; instead, firms that sell in germany further downsized their expenditure plans. despite the contraction in world trade, exports continued to grow in the second quarter ; italy β s current account surplus has helped to further reduce its net foreign debtor position, which is now close to balance. the new tariffs applicable to the european union, announced by the united states administration, will affect a limited share of italian exports to the us but the indirect effects could be significant. thanks to the decline in uncertainty surrounding | inclusiveness is not only an antidote to inequality, it is also a powerful driver of economic development and resilience. that is why we need to pursue inclusive growth. in labour markets, o. bandiera, a. kotia, i. lindenlaub, c. moser and a. prat, β meritocracy across countries β, nber wp no. 32375, 2024. w. dauth, o. schlenker and s. findeisen, β organized labor versus robots? evidence from micro data β, iza dp no. 19192, 2024. l. lagos, β union bargaining power and the amenity - wage tradeoff β, iza dp no. 17034, 2024. c. lipowski, a. salomons and u. zierahn - weilage, β expertise at work : new technologies, new skills, and worker impacts β, zew dp no. 24 - 044, 2024. j. m. barrero, n. bloom and s. j. davis, β the evolution of work from home β, journal of economic perspectives, 2023. this means tackling the barriers that have long marginalized certain groups, including migrants and women. the literature has increasingly recognized the important role of immigrants in the economy β in particular their contribution to innovation, labour market fluidity and female participation β and has found that their skills are primarily complementary to those of natives. 7 another important aspect, that has received less attention, is the impact of highskilled immigration on firms. a paper on this topic, to be presented tomorrow, demonstrates the positive impact of high - skilled migration on firm performance and employment. 8 regardless of how important these aspects are, we cannot avoid mentioning the host of challenges posed by the ageing of advanced societies, a particularly pressing concern in italy. the political debate has often focused on illegal immigration, but awareness is growing that a proper management of migration flows is important to counter the decline in labour force caused by ageing. another part of the solution to the ageing problem must come from increasing labour force participation. policies in this area are also essential, and involve, inter alia, promoting female participation in the labour market ( another pressing concern in italy ). regarding the study of gender gaps, we are honoured to have as our second keynote speaker professor claudia olivetti, a leading economist in this important field. | 0.5 |
addition, in line with the best practices issued by the international standard setters, the deposit guarantee schemes directive ( dgsd ) recognized dgss as fully - fledged participants of the safety net. under the dgsd, member states may allow dgss to perform more than a reimbursement function and use the available financial means to prevent the failure of a credit institution ( preventive interventions ) and to finance measures in the context of national insolvency proceedings ( alternative interventions ), subject to certain conditions and limitations ( notably the least cost criterion ). 4 the use of measures other than payout has significant advantages. not only are they less costly than payout, but from a system - wide perspective they also help to safeguard depositors β confidence and overall financial stability, mitigating the disruptive effects of piecemeal liquidation. 5 italy β s longstanding experience confirms the central role of dgss in crisis management. since the establishment of the two italian dgss, 90 interventions out of 93 have been preventive or alternative and only 3 have been payouts. 6 alternative measures proved to be paramount to solve banking crises and a real strategic partnership can be identified among banca d β italia and the two italian dgss. see article 11 ( 3 ) and 11 ( 6 ) of the dgsd. piecemeal liquidation is therefore the worst crisis management option, with negative impacts on public confidence and on overall financial stability, while interventions other than payout ensure the continuity of the bank β s borrowing relationships and the preservation of the enterprise value and of the employment level, and a high degree of depositor protection. see β the banking crises of 2023 : some initial reflection β, speech by paolo angelini, deputy governor of banca d β italia, at the event β promoting accountability in times of crisis β, november 2023 ; a. de aldisio, g. aloia et al., β towards a framework for orderly liquidation of banks in the eu β, notes on financial stability, 15, august 2019 ; and β protecting depositors and saving money β, occasional paper series, ecb, frankfurt am main, june 2023. more specifically, the interbank deposit protection fund ( fitd ) has managed 16 interventions since 1987, of which 9 were alternative interventions, 2 were depositor payouts and the remaining 5 were preventive interventions. the deposit guarantee scheme for cooperative banks ( fgdcc ) has carried out | . csef, working paper no. 577. 2 celerier c. and matray a. ( 2019 ). " bank - branch supply, financial inclusion, and wealth accumulation ". the review of financial studies, 32 ( 12 ) : 4767 β 4809, 04. bachas p., gertler p., higgins s., and seira e. ( 2021 ), " how debit cards enable the poor to save more ", the journal of finance, 76 ( 4 ) : 1913 β 1957. 3 demirguc - kunt a., klapper l., singer d., and ansar s. ( 2022 ). " financial inclusion, digital payments, and resilience in the age of covid - 19 ", the world bank group. 4 brunnermeier m. k., limodio n., and spadavecchia l. ( 2023 ), " mobile money, interoperability, and financial inclusion ", nber working paper series, ( 31696 ), september 2023. maze r., and gratz s. ( 2024 ), " fast growth and slow policy : a decade of digital credit in kenya ", oxford review of economic policy, 40, 82 - 103. gubbins, p. and heyer a. ( 2022 ), " the state of financial health in kenya : trends, drivers, and implications ", fsd kenya. 5 cantu c., frost j., goel t., and prenio j., " from financial inclusion to financial health ", bis bulletin no. 85. 6 bianco, m., marconi, d., romagnoli a., and stacchini, m. ( 2022 ) " challenges for financial inclusion : the role for financial education and new direction ", banca d'italia, questioni di economia e finanza ( occasional papers ), no. 723. 3 / 3 bis - central bankers'speeches | 0.5 |
##ntial and accounting standards. while the latter has included the borrowers, investors and institutions that participate in the process. sovereigns, corporations and multinational and multilateral entities have accessed the international markets while the institutions and investors have been a source of financing. indeed, these funds are either raised directly from international banking institutions or through bonds and equity issues in international markets. it has not only expanded the investor base, but reduced the cost of capital and enhanced its liquidity. by operating beyond their domestic borders, financial institutions also provide their services from different geographical locations. there has also been greater use of international financial institutions by corporations, households and funds to increase their ability to diversify their risks. investments in the domestic economies have also been financed by foreign capital. international firms have also participated in local markets through islamic based financial structures. with increased liberalization, there is also increased foreign presence in terms of foreign entry into the domestic financial system. this is an area where malaysia is taking a step forward during the course of this year. the globalisation process has also taken place in terms of participation by firms in international capital markets through cross listings. my remarks today will focus on the strategies on the approach to accelerate the transition of islamic finance towards being an integral part of the international financial system in terms of both the international financial architecture of the islamic financial system and the development of a comprehensive domestic financial infrastructure. the establishment of the islamic financial services board ( ifsb ) has been an important initiative in the development of the international islamic financial architecture. it has been established to promulgate the international regulatory and supervisory standards for islamic financial institutions aimed at achieving best practices and to secure soundness and financial stability in islamic finance. in this regard, the ifsb has already made progress in developing the prudential standards on the capital adequacy and risk management framework, and has commenced work on developing standards on corporate governance. appropriate accounting standards have also been put in place to reflect the true and fair value of banking operations that would lead to greater accountability and responsibility on the part of financial institutions. while the accounting and auditing organisation for islamic financial institutions ( aaoifi ) has made a significant contribution in formulating and issuing accounting and auditing standards for islamic financial institutions, efforts need to be intensified to promote of the adoption of these standards. the international islamic financial market ( iifm ) further provides the environment that will encourage active participation by both islamic and non - islamic financial institutions in the secondary market for islamic financial instruments. | zeti akhtar aziz : towards creating an islamic financial system as an integral part of the international financial system - strategies and challenges speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the asian islamic banking & finance summit, kuala lumpur, 21 september 2004. * * * β the integration of islamic finance with international financial markets and institutions has demonstrated its viability, competitiveness, resilience and sustainability as a form of financial intermediation. this trend has contributed towards facilitating greater cross border flows in terms of increased trade and investment transactions thereby strengthening the global economic and financial linkages. as this international integration process intensifies, it not only raises the prospects for more balanced global growth but also allows for greater diversification of risks thus contributing towards greater global stability. at the core of this financial globalisation process is the robustness and resilience of the domestic islamic financial system. the development of a sustainable islamic financial system that is able to withstand the challenges of the uncertainties and instabilities inherent in the global financial system, thus not only requires an effective global financial architecture but a system that is also supported by an appropriate, comprehensive and sound domestic financial infrastructure. these mutually reinforcing structures would not only accentuate wealth creation and foster greater potential for trade but would also promote global financial stability and breakthroughs in new business relationships β. distinguished guests, it is my honour to be invited to address this distinguished audience at this β asian islamic banking & finance summit - developing a comprehensive islamic financial system β, organised by the euromoney seminars for the asian region. while the overall development of islamic banking and finance for more than three decades has been evolutionary, the pace has intensified in recent years. islamic financial concepts have been incorporated into many financial products to meet the changing needs of consumers, businesses and investors. new islamic financial institutions are being established ranging from the traditional banking institutions to more specialised financial institutions. this islamic financial landscape has been supported by a well - developed regulatory, prudential, legal, accounting, framework and reinforced by the necessary research and development. initiatives to promote greater awareness and education amongst muslims and non - muslims have also been intensified. in this recent decade, we have seen the financial globalisation of islamic finance with the participation of both the authorities and the private sector. in the case of the former, attention has been given to developing the financial infrastructure, including the financial markets, institutions and agencies as well as establishing the necessary prude | 1 |
2008 β 09 ( chart 6 ). subbarao, d. ( 2009 ), β impact of the global financial crisis on india : collateral damage and response β, speech delivered at the symposium on β the global economic crisis and challenges for the asian economy in a changing world β organised by the institute for international monetary affairs, tokyo, february 18. bis central bankers β speeches on the back of substantial monetary and fiscal stimulus, growth bounced back quickly. however, inflation also picked up. consequently, the policy focus shifted to exit from accommodative monetary policy in a calibrated manner starting in october 2009. to begin with all special liquidity measures were withdrawn which was followed by hikes in policy rate. as the real policy rate turned positive it started to have an impact on inflation. going into the financial year 2012 β 13, growth declined and headline wpi inflation showed a clear sign of moderation. this prompted the reserve bank to reduce the policy rate ( chart 7 ). bis central bankers β speeches as the economic conditions appeared to be stabilising, volatility in the financial market returned following the announcement in may 2013 of the fed β s intention of likely tapering of qe. this prompted the reserve bank to resort to somewhat unconventional monetary policy measures besides drawing down of foreign exchange reserves to meet the immediate shortfall ( chart 8 ). let me give you the flavour of key measures. β’ in terms of monetary policy, the upper bound of the policy rate corridor ( i. e., msf rate ) was raised by 200 basis points and the quantity of central bank liquidity available through the laf window was restrained. this had the desired effect of tightening the monetary conditions and raising the effective policy rate sharply to the msf rate. β’ in order to signal that the above measure is temporary so that the interest rates at the longer end do not harden a form of operation twist was tried by conducting outright omo purchase of government securities alongside sale of short - term government cash management bills. this inverted the yield curve, though accompanied by some increase in long - term rates. β’ with a view to containing the current account deficit ( cad ) on the balance of payments ( bop ), gold imports were restricted. β’ the non - resident deposit schemes and banks β borrowing abroad were further liberalised with incentives for swapping these inflows directly with the reserve bank. this substantially augmented foreign exchange reserves despite some outflow on account of directly meeting the foreign exchange requirement of | foreign exchange committees have committed to developing a set of global high - level principles on fx trading. closer to home, there have also been a number of initiatives aimed at improving culture and behaviour at a firm and individual level, including the uk parliamentary commission on bis central bankers β speeches banking standards, the banking standards review council ( bsrc ), and widespread efforts by individual firms to strengthen internal controls. the introduction of malus, bonus clawback and the senior managers and certification regime in the uk will strengthen accountability as well. is it enough? this range of initiatives should make markets more fair and effective. but we need to make sure that taken together they add up to a comprehensive solution to fix the barrel and to get rid of the bad apples. a primary aim of our review is to take stock, and ask whether the extent of regulatory, organisational and technological change since the crisis will be sufficient to ensure ficc markets are fair and effective in the future. over the next three months, we want to hear from those directly active in those markets, from the companies and households who rely on them, from academics, and from public authorities globally. our approach will be explicitly forward looking. and we have no hidden agenda. where we judge changes that are already under way to regulation, firm - level controls, market structure and technology are sufficient to restore fairness and effectiveness, we will say so. where we do not, we will make recommendations on the most important priorities for change. a defining characteristic of our review is a recognition that improving fairness and effectiveness is a shared responsibility between individuals, firms, the market as a whole and the public authorities. as i said at the outset, we believe that markets β when they work properly β are the best source of dynamism, prosperity and progress. so i expect that a key part of the review β s final recommendations will consist of firm - and market - led initiatives. with that in mind, we will draw on input from an independent panel of senior market practitioners, chaired by elizabeth corley of allianz global investors, and bringing together senior representatives of internationally active market participants and investors, market infrastructure providers, major corporate users of financial markets, and independent members. the final recommendations of the review will be made by me and my co - chairs with the support of the excellent team we have assembled. but we hope the panel will help launch and take forward those parts of the final recommendations requiring active market ownership. where firm - led solutions are not enough to | 0 |
is the basis for the initial conditions when we use nemo and when we make our policy decisions β and hence of core importance to monetary policy. theory and experience suggest that a weighted average of forecasts from different models is often more accurate than forecasts provided by individual models. norges bank β s short - term forecasts are based on combinations of statistical and econometric models, where each model is assigned a probability depending on past density forecasting performances. currently, we are working on how to incorporate mechanically density predictions from sam into nemo. the few examples that i have just described show how research on macro modeling and forecasting is important for our work. we are well aware that there will always be ample room for improvement in our toolbox, and we are fortunate to have such prominent speakers with us here today. this workshop is a great opportunity for us to become familiar with recent advances in bayesian econometrics. in addition to the pleasure of the scholarly discourse, i also hope you will have the opportunity to enjoy oslo. bis central bankers β speeches | fund β s value. this is reassuring since it implies that the fund β s capital is not being depleted. above all we should recognise that future returns on the fund are uncertain. ultimately, returns depend on the pace of growth in the world economy and the share of that growth that accrues as value in the companies and bonds in the fund β s investment portfolio. these variables are uncertain. growth in the world economy may come to a halt. governments may default on interest payments. real properties may fall in value when bubbles burst. to achieve returns, we must take on risk. the fund features a very long investment horizon and a sizeable capacity to bear short - term risk. if we can exploit these distinctive features when making investment choices, it should be possible to obtain a return in excess of average market return. shareholders are last in line when company profits are to be distributed. they bear a considerable risk. as compensation, shareholders have received a higher return over time β a risk premium. it is a good strategy for a fund such as ours to exploit this risk premium to seek excess returns. this is why the chosen allocation to equities is relatively high. in addition, a reasonable distribution between bonds and equities can contribute to reducing the fund β s overall risk, as bond and equity prices tend to move inversely. the bond portfolio may thus be seen as a kind of hedge against a drop in equity prices. in recent years, the fund has also invested directly in real estate. in the light of its size and long horizon, the fund is well positioned to make gains in low liquidity markets. real estate investment is an example. the mandate provides for an increase in the real estate allocation up to 5 percent, while the allocation to fixed - income instruments is to be reduced from 40 percent to 35 percent. a few years from now, almost two - thirds of the fund will thus be invested in real assets. this is a fairly high share. a pertinent question may still be whether as much as a third of the fund should be invested in low - yielding instruments. in the long run, a bond allocation of 20 β 25 percent should suffice to maintain the fund β s needed hedge against a fall in equity prices. risk management must encompass the fund β s overall risk. this can only be achieved if total risk is managed and controlled. this is why the fund is an integrated entity located in norges bank. norges bank works to preserve the fund | 0.5 |
services efficiently. various banking models can be successful in this task, if sufficient competition is maintained and decision - making is not distorted by expectations that some banks are too big or too important to fail. the key objective is to ensure a banking sector that is capable of financing the real economy and fulfilling its other important functions. at the same time, this objective cannot be achieved bis central bankers β speeches without restoring and further enhancing the resilience of banks and the confidence in the banking sector as a whole. we need a banking sector that is sustainable and does not rely on any extraordinary taxpayer support. this is the aim of the reforms, when more capital and better liquidity buffers are required. this is also the objective of the proposals, which aim at separating insured deposits from high risk - taking activities such as proprietary trading in securities. these prudential and structural reforms and the banking union are actually complementary, supporting each other. we should see that they are carried out. bis central bankers β speeches | accommodative for an extended period and will contribute to the euro area β s growth outlook, both short - term and long - term. it has been recently argued that there has not been danger of a deflationary spiral in the euro area. i for one have to say that i don β t remember or see it that way in light of the empirical evidence. for instance, the european commission in 2013 β 14 was very concerned about the spectre of deflation, and expressed that also publicly. on its part, in january 2015, the ecb launched an expanded asset purchase programme, since the degree of monetary accommodation prevailing at the time was insufficient to adequately address the heightened risks of a prolonged period of low inflation. hicp inflation had indeed been below 1 % since october 2013, and the reasons for low inflation, which were long seen only as temporary, started to indicate second round effects with a deflationary impact. in january 2015, the overall hicp inflation rate was only at 0. 6 %. moreover, the markets were pricing negative inflation in the time horizon of 2 - 3 years with the probability of about 50 %. the degree of monetary policy accommodation was examined and reinforced many times since then. 1 / 3 bis central bankers'speeches only in june 2018 was the governing council able to conclude that progress towards a sustained adjustment in inflation had been substantial. the threat of a deflationary spiral was subsequently avoided. a key lesson of monetary policy of the last 10 years is that timely action is essential to avoid the zero lower bound and an extended period of too low inflation. we don β t want to be in the midst of a deflationary spiral until we take action. this is also one of the key lessons of the japanese experience. fast - forward to early 2019. due to the rapidly worsening outlook, the normalisation of monetary policy that started in june 2018 had to be put on hold. the decisions to restart the easing phase in march this year and to resume the net asset purchases in september were timely and taken in response to the continued shortfall of inflation with respect to our aim. ladies and gentlemen, while i have focused on monetary policy, many factors that weaken the economic outlook originate beyond its realm. yet the connection between seemingly non - monetary challenges and risk factors on the one hand, and monetary policy on the other, is actually much stronger than initially appears. this is because many of these challenges, if more permanent, have the potential of affecting | 0.5 |
yaseen anwar : promoting an inclusive financial sector in pakistan speech by mr yaseen anwar, governor of the state bank of pakistan, at the closure ceremony of term sarmaya certificate ( tfc ) issued by tameer microfinance bank, karachi, 24 january 2013. * * * mr. nadeem hussain, president / ceo of tameer microfinance bank ladies and gentlemen β good afternoon! it is a pleasure for me to witness the successful closure of the first ever term finance certificate ( tfc ) issued by any microfinance bank in pakistan. this is indeed a significant achievement for the microfinance industry and capital markets that has been made possible by collaborative efforts of the diverse stakeholders involved in such a complex transaction. as someone once said : β coming together is a beginning, staying together is progress, and working together is success. β therefore, i would like to congratulate tameer microfinance bank, standard chartered bank, igi investment bank, jcr vis, karachi stock exchange, secp, and my colleagues at sbp, for collaborating together to make this tfc issuance a success under the sbp β s microfinance credit guarantee facility. i sincerely hope that this first issuance of tfc by tameer bank would open up new funding avenues for microfinance providers and would give further impetus to our efforts in promoting an inclusive financial sector in the country, thereby enhancing the financial sector β s stability and viability in the long - run. the importance of financial services in the development of any economy cannot be overemphasized. there is no denial of the fact that access to finance has positive impact on economic growth as it promotes entrepreneurship, generates employment, fosters innovation, reduces poverty levels and enhances social equality. the financial sector in pakistan remains restricted in its outreach both in terms of its depth and breadth. according to the access to finance study of 2008, hardly 12 % of the population has access to formal banking services and another 32 % is informally served whereas 56 % of the adult population is totally excluded. similarly in pakistan, the estimated size of the microfinance market is in the range of 25 β 30 million clients which indicates that the current level of microfinance access at 2. 4 million clients is only 10 % of the potential market. financial inclusion has progressively assumed greater priority in sbp β s financial sector development strategy. sbp is pursuing a multi - pronged approach to tackle the challenge of high | a new series of banknotes is currently being introduced. the β¬50 banknote was issued recently and will be followed by the β¬100 and β¬200 banknotes soon. and you β re withdrawing the β¬500 banknote from circulation? exactly. we β re no longer printing the β¬500 banknote because it has become too popular for money laundering purposes and other unsavoury uses. so we β re stopping it. a great deal of our time is also occupied by payments, all the techniques used to transfer money from one account to another. just a month ago, we launched a real - time payment system which allows all euro area banks, if they want, to make person - to - person transfers within a matter of seconds. there β s a second thing i wanted to ask you. what is qe, or quantitative easing? it β s incomprehensible to the general public, but it β s a staggering programme : over the past few years, ecb traders β your traders β have purchased β¬2. 5 trillion in public and private 1 / 8 bis central bankers'speeches debt. the programme has been halted. what purpose did it serve? yes, that β s right. over four years, between 2015 and 2018 β our last net purchases were made a few days ago, just before christmas β we bought european public and private debt amounting to β¬2. 6 trillion. why? it β s very simple : to reduce the cost of financing in the euro area. the central banks β they teach this in high school β steer the overnight interest rate. but, this is not sufficient as firms borrow over a period of three, five, ten years. so the three - year, five - year and ten - year interest rates also need to be lowered. to do this, we buy government bonds, and this has considerably improved financing conditions, which, in turn, boosts consumption and investment in the euro area. β¬2. 5 trillion, mr cΕure β you say this has given a boost to consumption and investment. but ultimately if we look at growth, all this money quite frankly doesn β t seem β at least to people in france β to have gone to them, into their pockets, into a rebounding economy... of course it β s gone to them! through all the mechanisms that make the economy work : lowering interest rates for lending to companies, which we did not only in france and germany, but also in greece, | 0 |
##gt werden mussen, da sie immer wieder auf die probe gestellt werden : 1956, noch vor der formellen grundung der bundesbank, forderte bundeskanzler adenauer, man solle die erhohung der leitzinssatze um ganze 100 basispunkte verschieben. die deutsche zentralbank lieΓ sich jedoch nicht darauf ein und uberzeugte die deutsche bevolkerung von ihrer politik sowie davon, dass sie dafur sorgen wurde, dass der geldwert erhalten bleibt. in den folgenden 50 jahren gab es viele weitere herausforderungen : das ende des bretton - woods - systems, groΓere olkrisen, die wiedervereinigung, die grundlagen des europaischen wahrungssystems sowie die vorbereitungen zur wirtschafts - und wahrungsunion β um nur einige zu nennen. allen diesen herausforderungen begegnete die bundesbank mit souveranitat und festen grundsatzen. als prasident der erstmals unabhangigen banque de france bin ich stolz darauf, dass ich gemeinsam mit vertretern der bundesbank an der vorbereitung der wirtschafts - und wahrungsunion β auf der grundlage des vorrangigen auftrags der preisstabilitat und der klaren unabhangigkeit der ezb von politischer einflussnahme β mitwirken konnte. die formulierung des vertrags und die zusammenarbeit mit den hauptakteuren auf deutscher seite habe ich als besonders bereichernd empfunden. diese personlichkeiten haben entscheidend zur gestaltung und zum funktionieren des maastricht - vertrags beigetragen. hier mochte ich auf jeden fall horst kohler, den jetzigen bundesprasidenten, erwahnen, | many challenges in front of us. the much talked about foreign exchange issues, the unbanked, high liquidity, break - down in monetary policy transmission and sovereign wealth fund are just some of the issues that we must address collectively internally and with other government institutions. in addition, international geopolitical issues that has economic implication brings another dimension of challenge we are faced with ; in our implementation of policies and surveillance of the financial system and the foreign exchange market. we must develop in - house skills and resources to address these issues and withstand headwinds from global economic developments. g. one bank i have mentioned some of the areas within the bank that have achieved important milestones since our last anniversary. be assured i am well aware that these were not the only significant steps forward we made in our 44th year. with this in mind, let us think about the notion of one bank one bpng, which is one of our key aims, outlined in the bank β s strategic plan 2016 β 2020. our aim is to present one face to the world, rather than a number of units stitched together to create departments. we have come a long way, through reworking the structure of the bank to reflect function rather than historical hierarchy. last but not the least. i would like to thank my fellow board members for their support during the past 12 months. our board is active and involved. ladies and gentlemen, it is my pleasure to introduce our newly appointed board member, mr christopher hnanguie, who is the chairman of the securities commission of papua new guinea. welcome to the bank of papua new guinea mr hnanguie. my sincere thanks go to our senior executives, deputy governor dr gae kauzi ( at this juncture, i kindly ask everyone to remember deputy governor in your prayers for a continuous and speedy recovery ), assistant governors mrs elizabeth genia, mr joe teria, mr ellison pidik for their commitment and leadership. thank you also to the director fasu, mr benny popoitai and department managers for helping us establish the path forward to one bank, and working collaboratively to make it happen. 3 / 4 bis central bankers'speeches and a heartfelt thank you to our staff. you really are the key to ensuring one bank becomes a reality. i look forward to standing here next year at our 45th anniversary ball, thanking you all for playing your part in achieving that goal. finally, i have considered a new initiative, to support, recognise | 0 |
foreign currency liquidity it provided to tackle the crisis. however, the bank has maintained its base rate at the low level of 2 percent, in consideration of the high degree of uncertainty at home and abroad. my dear colleagues, the korean economy is expected to post much stronger growth this year than it did last, despite weakening of the expansionary policy effects, as private sector growth momentum strengthens led mainly by consumption and investment. uncertainties surrounding the korean economy β s growth path still exist, however, given the possibilities of delayed recoveries in advanced countries, of a recurrence of global financial market unrest, and of hikes in oil prices. prices are forecast to remain stable on the whole, but may face growing upward pressures from the second half on. while the korean economy is expected to do better overall this year than last, there are many tasks yet to be carried out if we are to fully escape the influence of the crisis and return our economy onto a firm track of growth. first, in implementing macro - economic policy, priority should be placed upon ensuring that the economic recovery is on a solid footing. in micro terms, our policy efforts need to concentrate on solving the problem of stagnant employment that has worsened significantly since the crisis. efforts should be redoubled to increase the growth potential of the national economy, from a medium - and long - term perspective, by actively nurturing the engines of future growth and enhancing the quality of the services industry. together with this, it is necessary to further strengthen the economy β s capacity for absorbing external shocks, applying the valuable lessons learned from the recent global financial crisis. to ensure efficient discharge of the financial stabilization duty, reasonable role - sharing and close cooperation between the government, the supervisory authorities and the central bank are essential. improvement and modification of the relevant systems must be carried out to achieve this. close attention should also be paid to the movements of household debt and asset prices, to prevent the excessive credit expansion and consequent asset market bubbles that have been major triggers of financial crises in developed markets. to improve economic health, continuous restructuring in every sector of the economy is also important. with korea taking on the role of g - 20 chair nation this year, full exercise of our leadership is essential, to help find reasonable solutions to current global economic concerns, including preventing recurrence of another financial crisis. my dear colleagues, i would like to talk now about the tasks the bank of korea should place its greatest emphasis on this year. | the quality and quantity of bank capital in order to better absorb future shocks. they also suggest introducing a bank leverage ratio, although this will have different effects in the us and the eu unless there is convergence in accounting standards. more generally, there is agreement on the need to require banks to build - up countercyclical buffers in good times that can be drawn down during bad times. in addition, the basel committee and the cebs ( committee of european banking supervisors ) are developing new standards for liquidity. the european union has also enhanced its macro - prudential framework by creating the european systemic risk board, with responsibility for issuing early warnings and recommendations. the second lesson was that incentives need to be aligned on creating long - term value rather than short - term profits. the final lesson of the crisis was that it clearly revealed the need to improve cooperation in surveillance and oversight. this requires better links between the two pillars of financial supervision : the micro approach, which focuses on individual institutions, and the macro approach, which focuses on systemic risk. 2. 3 new ideas to prepare for the future i have described the immediate challenges linked to exit strategies and the longer - term process of financial reform that is already underway. let me now comment on some new ideas advanced in the wake of the crisis to prepare for the future. in a financial times column entitled β how to save banks without using taxpayers β money β professors wolff and vermaelen describe a financial instrument called contingent convertibles ( also known as coco bonds ). in the recent crisis, these could have helped distressed institutions to convert debt to equity, reducing the need for capital injections from the state. the advantage of contingent convertibles is that they would not require a negotiated decision by the firm or an intervention by the authorities, but would convert debt to equity automatically when the value of equity falls below a level specified in advance. the process appears to be transparent, predictable and dictated by market developments. professors wolff and vermaelen add a twist by providing the original shareholders with a call option to buy back the converted debt. this serves to smooth the conversion process and avoids an incentive problem that can create so - called β death spirals. β i expect professor vermaelen, who will speak next, will provide more details. turning to other β new ideas, β the β tobin β tax on financial transactions reappeared in the recent policy debate to finance the cost of future bailouts. this is an old idea dressed up in new | 1 |
cycle and banks often face incentives to offer credit more generously in booms and less generously in busts. regulators do not want their rules to magnify the cyclicality of bank lending, and hence the extent of economic cycles and any associated strains on the financial system. however, some aspects of the new basel ii capital framework have the potential to provide banks with additional incentives if not monitored closely. 10 under basel ii, it is possible that overly optimistic assessments of risk at a good point in the economic cycle might feed through to the capital banks hold and encourage further pro - cyclical lending. for example, if banks were to underestimate the long - run risk of borrowers defaulting or overestimate the realisable value of collateral ( e. g., a mortgage over a house ) and that fed through to their capital requirement they might be encouraged to lend more. when implementing basel ii capital requirements in coming months, we will be working to ensure that the average level of capital a bank is required to hold for regulatory purposes is sufficient for all stages of the business cycle and any changes do not accentuate the lending cycle. on a different topic but still with banks, we are also looking at the role securitisation plays in the new zealand financial system as part of our basel ii activity. in simple terms, securitisation is the parcelling up of a stock of assets ( such as bank mortgages ) and the on - selling of such parcels to interested investors. basel ii is a new set of bank capital adequacy requirements being implemented in many developed countries. for more details see : yeh, a, j twaddle and m frith ( 2005 ), β basel ii : a new capital framework β, reserve bank of new zealand bulletin, 68 ( 3 ), 4 β 15. given the dominance of banks in new zealand, and the concentration of their activity in mortgage lending, the securitisation of some of their mortgage books has the potential to reduce the concentration of mortgage loans on banks β balance sheets and to distribute the credit risk associated with those loans more widely. in addition to spreading risk more widely, securitisation gives investors another product in which to invest their funds and provides banks with another way of sourcing funding and reducing maturity mismatches on their balance sheets arising from a preponderance of short - term funding and longer - term lending ( e. g. fixed rate mortgages ). it | emmanuel tumusiime - mutebile : the uganda securities exchange β s efforts in deepening and broadening capital markets speech by prof emmanuel tumusiime - mutebile, governor of the bank of uganda, at the nation media group shares cross - listing luncheon, kampala, 19 october 2010. * * * the chairman, nation media group, mr. wilfred kiboro the chairman, capital markets authority, uganda, mr. haji twaha kawasse the ceo, uganda securities exchange, mr. joseph kitamirike the ceo, nation media group, mr. linus gitahi directors and staff of nation media group, shareholders, investors, distinguished guests, ladies & gentlemen i am pleased to have been invited to attend and make key remarks at this luncheon commemorating today β s cross listing of east africa β s premier media house, the nation media group. i want to commend and appreciate nation media group for the gesture. the building block of the success of the uganda securities exchange that we witness today is largely attributed to government and we must applaud its efforts in creating an environment in which the economy can thrive. together with the government, the role of the bank of uganda in particular consists of providing a supporting environment for rigorous economic activity through sound and coherent macroeconomic policies. the central bank β s efforts towards supporting macroeconomic environment have centered on preserving price stability. ensuring a reasonably low level of inflation helps reduce uncertainty in economic decisionmaking so that individuals and investors have a reliable basis for long - range decisions and plans. the bank β s efforts to keep inflation in check have so far been successful. a continuing commitment to prudent macroeconomic policies builds confidence in uganda as an investment destination and boosts the country as a whole. the use has played it role in providing an efficient, well regulated exchange that has made the investment process as simple, affordable and transparent as possible. however, the underlying investment decision is dependent upon perceptions of the future performance of uganda as a whole. in conclusion, i wish to highlight some critical factors that will govern the progress of the use going forward. firstly, will be the steadfast commitment to taking a regional and global view for purposes of deepening and broadening our capital markets. secondly, our regulatory and enforcement structures should be responsive to today β s market place. in conclusion, i want to congratulate the nation media group β s board of directors, the management and staff for this monumental achievement | 0 |
##spicacious article in 1981 on cyclical policies in norway in the 1970s : β it will otherwise always be a problem for economic policy that the statistics are prepared more or less after the events, and that it takes time after the statistics are published before we are aware of whether new trends have begun to emerge. [... ] moreover, the analyses were based on projections of productivity growth that proved to be too high. β as i pointed out in my introduction, there was strong growth until 1973, and it took time before it became apparent that there had been a negative shift in potential output. the red dotted line in the chart shows what gdp would have been if the growth rate had been the same after 1973 as in the previous 10 years. because the negative shift in the level of potential output was not discovered in time, a counter - cyclical policy was employed in an attempt to sustain the output level. whereas the output gap was believed to be negative, it subsequently proved to be positive, as illustrated by the chart. similarly, in a study of previous us monetary policy, ophanides11 finds that central banks overestimated the level of output that was consistent with stable inflation in the 1970s because they were not aware of falling productivity growth in time. as a result, the output gap was underestimated and policy was too expansionary. also in the 1990s, we saw an increase in productivity growth, and even though the mistake from the 1970s was not repeated, there was a vigorous debate concerning different targets for trend growth and the output gap. in addition to the difficulty of capturing changes in potential output fast enough, there is also considerable uncertainty about the level of actual gdp. as an example, norway β s gdp figures were extensively revised in june 2002. growth in mainland gdp was revised upwards by an average of 1 percentage point per year for the period 1995 - 1999. the largest revision was for 1999. as late as in may 2002, we believed that growth in 1999 had been 1. 1 per cent. the revised figures now show that growth was in fact 2. 7 per cent. it is obvious that such revisions can have a considerable impact on the actual output gap. norges bank is currently systematising different vintages of national accounts figures. we can then go back and evaluate monetary policy in β real time β to learn how we should respond to uncertain data. frank knight ( 1921 ) differentiates between β risk β and β uncertainty β. 12 with risk, we know | thirachai phuvanatnaranubala : asian bond fund speech by mr thirachai phuvanatnaranubala, deputy governor of the bank of thailand, at euro 50 group roundtable, tokyo, 12 june 2003. * * * mr. chairman, on the issue of asian monetary cooperation, thailand is certainly of less importance than japan ; therefore i have to apologize for speaking before director - general watanabe. since it is late in the day and time is short, i will try to make it interesting by going directly to the question and answer session. however, i will be the only one asking the questions, and giving the answers. but i will restrict myself to only five. the first question : there are a lot of initiatives on financial matters going on in asia. does it mean that we are aiming for a monetary union of sort in asia soon, or something leading up to a single asian currency? i cannot speak for other asian countries, and i do not know whether something is being planned for the more advanced countries, like japan and korea, or not. however, looking through the eyes of someone in thailand, which is part of asean, the final goal of monetary union, should it exist, is still around many corners. in my opinion, the level of economic integration in asia is still much looser than europe at their early stage of integration. you may point to the rapidly expanding inter - regional trade in asia. but if one looks closely, one will find that a good portion of this are raw materials, parts, and components produced in one country and sold to another for further processing or assembly for sale to a third country within or outside asia. the production of goods for final consumption in asia is still low, with the exception of japanese and korean brands. and while china β s imports from asean have increased substantially in the past few years, their consumption is still mainly in food products, raw materials and low value added products. for luxury goods, their being brand - conscious, asean products have not been able to compete well. this will change over time when asian products gain more differentiation and sophistication. for example, at the moment, thai palm oil is no different from malaysian. there can be no mutual trade. but when it becomes part of the national cuisines, trade and exchange could occur. the more value is added, the more asia will trade with each other for eventual consumption. but for the moment, the emphasis is more | 0 |
, a., veron, n., and wolff, g. b., 2012. what kind of european banking union, bruegel policy contributions, n. 12, june 2012. rossi, s., 2013. post - crisis challenges to central bank independence, speech given at the lbma / lppm precious metals conference. rossi, s., 2014. verso l β unione bancaria europea : in fondo a una strada lunga e tortuosa, speech given at the conference β banking union and the european financial system β universita degli studi di modena e reggio emilia. spinelli, f., and trecroci, c., 2006. β maastricht : new and old rules β, open economies review, vol. 17, pp. 477 β 492. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | r. g., 2012. β illiquid banks, financial stability, and interest rate policy β. journal of political economy, 120 ( 3 ), pp. 552 β 91. bis central bankers β speeches eichengreen, b., and dincer, n., 2011. who should supervise? the structure of bank supervision and the performance of the financial system. nber wp 17401. eijffinger, s., and masciandaro, d., 2011. handbook of central banking, financial regulation and supervision. edward elgar, cheltenham. feldman, r. j., kim, j., miller, p., and schmidt, j. e., 2003. β are banking supervisory data useful for macroeconomic forecasts? β the b. e. journal of macroeconomics, vol. 3 ( contributions ). gaiotti, e., and secchi, a., 2013. monetary policy and fiscal dominance in italy from the early 1970s to the adoption of the euro : a review, banca d β italia occasional paper no. 141. goodhart, c., 1988. the evolution of central banks. mit press, cambridge. goodhart, c., 2000. the organizational structure of banking supervision, occasional papers, no. 1, basel : financial stability institute, november. goodhart, c., and shoenmaker, d., 1995. should the functions of monetary policy and banking supervision be separated? oxford economic papers, vol. 47 ( october ), pp. 539 β 560. mishkin, f., 2001. β prudential supervision : why is it important and what are the issues? β in frederic mishkin, ed., prudential supervision : what works and what doesn β t, chicago : university of chicago press. oreski, t., and pavkovic, a., 2014. β global trends in financial sector supervisory architectures β, in proceedings of the 5th international conference on design and product development. phelps, e. s., 1967. β phillips curves, expectations of inflation and optimal unemployment over time β, economica, vol. 34, pp. 254 β 281. phelps, e. s., 1968. β money - wage dynamics and labor - market equilibrium β, journal of political economy, vol. 76, pp. 678 β 711. pisani - ferry, j., sapir | 1 |
disadvantages in their levels of human capital relative to what is seen in other leading economies. for example, according to eurostat figures, the level of educational attainment of the self - employed is lower than the euro area average. specifically, in spain 40. 5 % of the self - employed and 35. 1 % of employers have a low educational level, compared with 24. 8 % and 20. 1 %, respectively, for their european counterparts. moreover, managing a company requires certain skills β interaction, strategic, operational and control abilities β that also appear to be comparatively lower in spain than in countries such as germany, the united kingdom, france and italy. in any event, the indicators available on business management should be viewed with caution. it is not clear they distinguish appropriately between entrepreneurial capabilities per se, as opposed to structural problems arising from an institutional framework that constrains the capacity to organise firms β productive resources. for instance, excessive spanish labour market segmentation does not facilitate on - the - job training of either temporary or permanent workers. thus, on top of improving entrepreneurial and employee capabilities, doing away with the excessive duality of employment contracts is fundamental for raising productivity. to conclude my thoughts on the importance of human capital, allow me to refer also to the need to improve the relationship between general government and the firm in two spheres : that of vocational training and that of innovation. on vocational training, it is essential that firms should be involved in the guidance of youths seeking their first job. but it is likewise necessary that the administration should evaluate and adjust the vocational training system as business needs evolve. recently there has been much discussion of the virtues of dual vocational training, based on the positive results in other countries. but it is difficult to define how best to transfer a system such as germany β s, with a high prevalence of large industrial corporations, to spain β s very different business sector. see zamarro, g., c. hitt and i. mendez ( 2016 ) β when students don't care : reexamining international differences in achievement and non - cognitive skills β edre working paper no. 2016 - 18. 14 / 18 the first papers to have evaluated this experience in spain do not offer conclusive findings. and that underscores the challenge of adapting another country β s successful model to our circumstances. 6 it is therefore important to conduct pilot programmes enabling us to determine which design is most suitable for us. also, in addition to improving | decades are largely responsible for the results achieved by the spanish economy, and improving education and training today is, once again, pivotal to our future growth. when assessing the functioning of the economy, we often refer to differentials with other peer economies in terms of inflation, productivity and many other variables. and it is right to do so since, against a backdrop of international openness and integration, relative behaviour and, in short, competitiveness are essential for the continuous improvement of well - being. however, the most serious gap between spain and the other major industrialised countries is in the field of education. true, we have improved in this area in recent years. the proportion of the population aged 25 - 64 with a secondary education has risen from 24 % in 1992 to 48 % in 2005. but we have yet to reach 50 % when the figure is 83 % in germany, 72 % in the united kingdom, 66 % in france and over 80 % in the nordic countries. conceivably, these differences might be heavily influenced by the relatively recent nature of our educational development ; but looking at the percentages for young people in the 25 - 34 age group, it can be seen that, despite the progress recorded, a gap exists which, though moderate ( 64 % in spain compared with figures of over 80 % in most of the major countries ), remains illustrative of our continuing laggardness. in the current decentralised state, the central government retains few responsibilities in respect of education, which means that educational progress in spain is fundamentally in the hands of the regional governments. these may thus be said to have a major responsibility in determining our longterm growth prospects and the future functioning of the spanish economy. and this conclusion is further reinforced when considering the changes that have come about in budgetary policies. hence, insofar as the decentralised structure of the state has played a very positive role in growth in the recent past, as i said at the start of my address, when speaking of the future it emerges once again as a determinant of the first order. as is known, public spending by territorial governments is more than two and a half times that of central government. it is clear from this that what regional and local governments do is, for the purposes of maintaining the public spending / gdp ratio, much more important than what central government does. the budgetary stability laws have taken this essential change in the structure of the state into account when establishing the budget | 0.5 |
be a catalyst for the going abroad endeavor. promoting the two - way interaction of foreign enterprises coming to china and chinese ones going abroad is conducive to the economic complementarity and helps promote common prosperity, global harmony and progress. on this front, the financial sector definitely will do a lot more to provide support. in conclusion, i wish the forum a complete success. thank you. | of national economic and social reform becoming clear, and with market mechanism, government administrative capacity, macro - policies transparency being improved and more channels reflecting problems in the economy, in coordinating macro - policies our aim is to make the commercial banks pay more attention to macro - policies. we should also enhance the effectiveness of monetary policy through better transparency and stronger credibility of the central bank. b. commercial banks shall pay more attention to various legislations and incorporate state laws, regulations and supervisory requirements to their internal controls, guided by the business philosophy of maximize profits within the legal framework. β’ most financial risks stem from malpractice ; β’ legal risks and regime risks are greater than operational risks ; β’ legal department and auditing department should become two of the most important departments of commercial banks. c. commercial banks shall put more emphasis on national industrial policy and credit policy in conducting industrial analysis, allocating loans, seeking profitable opportunities and avoiding risks. the sustainability of china β s economy is restrained by limited supply of primary energy, land and water. in building a well - being society, the government advocates scientific development approach. industrial policies will definitely be oriented to energy - efficiency. commercial banks should keep this in mind while lending in order to avoid future losses. in industrial analysis commercial banks can also consider outside sources, such as credit policy guidance of the central bank and research of consulting firms. ii. the commercial banks shall improve risk pricing ability while implementing differentiating lending policy a. it is essential for macroeconomic adjustment that commercial banks enhance loan - pricing ability and control risks using economic capital in their efforts to improve credit structure. loan pricing requires proper risk identification and measurement that rely heavily on accumulation of historical data. in transitional period, it is a practical choice for commercial banks taken into consideration changes in industrial policy, trends in sectoral development and the advantages and disadvantages of businesses in decisions concerning asset pricing and capital allocation. b. it is crucial to cultivating potential customers and generating profits that the commercial banks to take full advantage of risk pricing and differentiate customers. although mature clients provide banks with stable sources of profit, with the development of the capital market, good businesses obtain financing by tapping corporate bond market and issuing commercial papers in a way to lower their costs. as a result, banks cannot avoid competing for a handful of good customers unless they turn to find potential customers among a sea of small and medium businesses. small - and medium - sized businesses are an important engine for social economic development and provide a crucial source of jobs | 0.5 |
in order to enhance its effectiveness, the fsb, represented at this workshop by mr rupert thorne, deputy secretary general, is now seeking to incorporate a broader range of participants into its activities. for example, it has created regional consultative groups that bring an additional 70 countries into the policy discussion. in a similar vein, emerging and developing countries are represented on the committees of the basel committee on banking supervision, and the basel consultative group was established to facilitate a broad dialogue with non - member countries. but there is no such thing as a free lunch. those of us from emerging market and developing countries, who participate in the international standard - setting bodies, where financial regulatory reforms are discussed, now have an obligation to use our voice in these forums in a responsible manner. this means that we need to be actively engaged in meetings, be ready to take constructive positions on the various items on the reform agenda, including on otc derivative reforms, which positions are supported by solid research, and convincing arguments. we also need to pay due regard to the concerns of both those emerging markets and developing countries that are participants in these meetings, and those that are not at the table. we have previously witnessed how putting forward well - reasoned positions can have positive outcomes. for example, south africa, together with other emerging market and developing economies helped to bring about refinements to certain elements of the liquidity coverage ratio ( lcr ) under the basel iii framework. based on research, including our participation in the financial stability board β s β study of effect of regulatory reforms on emerging market and developing economies β, which clearly demonstrated the potential adverse, albeit unintended, consequences of some elements of the proposed lcr, the standard - setting bodies recognized that the lcr required refinement. the revised lcr standards were announced in early 2013 and they accommodate the concerns of jurisdictions, like ours, which have a shortage of adequate high quality liquid assets as defined. similarly, the combined efforts of affected countries, including emerging markets, are making progress in reviewing the net stable funding ratio ( nsfr ) proposals, and ensuring that any unintended adverse impacts bis central bankers β speeches are limited. the proposed otc derivative reforms, particularly the role of central counterparties ( ccps ) in derivative markets, is another topic that runs the risk of undermining one of the core objectives of the rule - making bodies, namely global parity. fortunately, the fsb appreciates that international regulatory standards can have unintended | daniel mminele : otc derivatives reform β lessons from the financial market regulatory reform process closing remarks by mr daniel mminele, deputy governor of the south african reserve bank, at the 2013 emerging markets dialogue on otc derivatives reform, johannesburg, 12 β 13 september 2013. * 1. * * introduction good afternoon ladies and gentlemen. thank you to the deutsche gesellschaft fur internationale zusammenarbeit ( giz ) and the federal ministry for economic cooperation and development ( bmz ) for inviting me to deliver the concluding remarks at the end of the two - day workshop of the emerging markets dialogue on over - the - counter ( otc ) derivatives reform, as well as for sponsoring this very important and topical event. i would also like to extend my thanks to our co - hosts, namely the national treasury, in particular deputy minister nene, and the financial services board through deputy chief executive officer bert chanetsa. last but certainly not least, i would like to thank the many staff members from all organisations co - hosting, who have contributed to the organization and success of this event. unfortunately, i have not had the benefit of listening to the various panel discussions and what i am sure were thought - provoking comments made by the various speakers over the last two days. therefore, to avoid the risk of repeating what others may have said, i thought i would take a broad approach to the subject and offer some thoughts on the lessons that emerging market and developing economies can draw from the financial market regulatory reform process that has taken place over the past 5 years and how this can be applied to the otc derivative reform process. 2. the headwinds were strong and remain strong in washington in 2008, the g - 20 committed to fundamentally reform the regulation of the global financial system. the objective was to correct the regulatory failures that in part contributed to the global financial crisis, and to build a safer, more resilient financial system that could better serve the needs of the real economy. this global financial regulatory reform process began, and continues to be undertaken, in a period which is characterized by subdued economic growth, elevated unemployment levels, and volatile financial markets. in these extraordinary circumstances, policy makers have resorted to non - conventional measures both on the monetary and fiscal policy side and have tried to balance the competing short - term need to promote economic growth and create jobs with the longer term imperative to construct stable financial systems and achieve sustainable growth paths and healthy public finances. despite this complex | 1 |
is longer in developed countries. overall, therefore, in the light of past experience, i think we would be taking an unjustified risk if we deliberately set out to lower the existing regulatory demand for capital. crisis management and payments standstills : i want to turn now from crisis prevention to crisis resolution and from domestic banking to more general international liquidity crises. while the banking system was a source of instability in many countries during the asian crisis, a more immediate problem was the liquidity crisis triggered by the sudden outflow of capital from the region. it is the free movement of capital that i would like to discuss and, in such a regime, the need for arrangements that would deal with a liquidity crisis where developing countries get into payment difficulties. the international capital market global capital flows have exploded since the 1970s. between 1970 and 1996, real gdp in the g7 economies more than doubled. over the same period, world trade volumes rose by roughly twice this amount. but since 1970, real gross private capital flows have risen by a factor of more than eight double the growth in world trade and four times the growth in world income. rising capital flows have delivered huge benefits to the developing countries. capital liberalisation, like trade liberalisation, has facilitated β catch - up β in the levels of income of these countries. it delivers a permanent, and potentially huge, welfare gain. the experience of the asian tigers from the 1970s onwards, and before that of germany and japan during the 1950s and 1960s, is testimony to that. but large - scale capital flows also bring risks. capital flows are not just large, but volatile too. the financial crises in mexico in 1994, across south - east asia in 1997, in russia in 1998 and in brazil last year are the most recent and visible examples. but the incidence of financial crisis has in fact been rising since the early 1980s. and the cost of financial crises are considerable. in the stricken south - east asian countries, capital flow reversals and output losses were anywhere between 5 % and 20 % of gdp. in many of these cases, there has been encouraging evidence of a v - shaped recovery in output and asset prices following crisis. but the depth of the v is clear evidence of the potential cost of volatile capital movements. capital markets have of course been prone to β panics, manias and crashes β for as long as they have existed. it would be naive to think we can ever entirely prevent crises - and indeed it may be undes | into four phases based on growth - inflation outcome and the rapidly changing monetary policy response : phase i of 5 years of 2003 β 08 of high growth but rising inflation concern towards the later part of the period when repo rate was raised from 6 per cent to 9 per cent and the cash reserve ratio ( crr ) was raised from 4. 5 per cent to 9 per cent. phase ii of 2 years of 2008 β 10 following the global financial crisis when the repo rate was reduced from 9 per cent to 5. 25 per cent and crr was reduced from 9 per cent to 5. 75 per cent. phase iii of 2 years of 2010 β 12 of monetary tightening responding to rising inflation when policy rate was raised from 5. 25 per cent to 8. 5 per cent but crr was reduced to 5. 5 per cent. http : / / rbidocs. rbi. org. in / rdocs / publications / pdfs / idgsr08082013. pdf ( on august 8, 2013 ) bis central bankers β speeches phase iv of over a year of monetary easing in 2012 β 13 and 2013 β 14 so far with the repo rate reduced to 7. 25 per cent and crr lowered to 4. 0 per cent ; though since mid - july 2013, the rbi has tightened the monetary and liquidity conditions without changing the policy repo rate and crr to address exchange market volatility. monetary policy stance in any particular phase is generally conditioned by the growthinflation balance, the outlook for growth - inflation in a forward looking context and an assessment of macroeconomic risks. essentially, monetary policy aims at attaining high growth in a non - inflationary manner. but at times high growth in excess of potential growth could trigger inflation putting the sustainability of the very growth path to risks. hence, monetary policy tends to do a careful balancing act so that it is not too accommodative of growth in excess of its potential and at the same time not too stimulative of inflation. however, there could be periods of rising inflation and falling growth below its potential. this could arise from several sources such as the lagged impact of policy stimulus from earlier phases and adverse supply shocks, both domestic and external, which persist. the challenge of rebalancing growth and inflation is evident from the four phases of growthinflation presented in table 1 and chart 1. in the first phase, high growth coincided with low inflation. however | 0 |
they are certainly the forecasts which involve the greatest interaction between ecb and ncb staff experts. the eurosystem β s macroeconomic forecasts are produced using a number of inputs. first, a variety of macroeconometric models of the euro area are used. employing a suite of models, each embodying a different view of the world or estimated using a different methodology, is preferable to relying solely on a single - and inevitably imperfect - framework. second, the projections produced by these models are influenced and adjusted using the technical judgement of staff experts both at the ecb and at the ncbs. introducing such adjustments is standard forecasting practice and a necessary component of an effective forecasting procedure. given this description of the eurosystem β s forecast process, it should be clear that forecasting is not treated as a mechanical exercise. realistic forecasts cannot be produced by the mechanical application of a single model. nor should they be. the ecb forecast is thus produced twice per year by the staff of the eurosystem and is based on the staff β s technical expertise. the forecast is therefore an input into the policy making process. the forecast does not embody the policy judgement of members of the governing council. when the public evaluates forecasts published by the ecb, the fact that forecasts are an input to policy making will be extremely important to keep in mind. the published forecast does not necessarily represent the opinion of members of the governing council. policy makers will always need to exercise a policy judgement in deciding how to interpret the staff forecast and the uncertainties around it. this exercise of judgement is part of what has been called the β art of central banking β - it is what distinguishes policy making from a purely mechanical or technical exercise. any blurring of the distinction between policy making - which is the preserve of the governing council and is ultimately captured in the final monetary policy decisions - and preparing technical analysis as input to the decision making process - which is the responsibility of central bank staff - will only serve to cause confusion. precisely because the exercise of policy judgement remains the preserve of the governing council, one should not expect policy decisions to feedback mechanically from developments in the published macroeconomic forecast. forecasts are only one - albeit important - input into the policy process. they are always evaluated in the context of other analyses and indicators. this is, by the way, true for all central banks. to my knowledge, there is no central bank in the world which bases | also at forecasts produced by other organisations as well as financial market expectations, for example as embedded in bond yields. all this information should form the basis for decisions by the governing council and allows for the best possible insight into the situation. all these remarks should make clear that the eurosystem forecast does not constitute the sole or even necessarily the main vehicle for policy decisions. on the contrary, a key feature of the eurosystem β s strategy is that it permits a diversified approach to the assessment of economic developments and encourages cross - checking between different forms of analysis. this robust approach is intended to help avoid major policy errors. my remarks should also have made clear that neither the eurosystem β s strategy as a whole, nor the second pillar within it, should be characterised as inflation targeting. more specifically, it certainly should be clear that monetary policy decisions do not feed back from deviations of the inflation forecast ( based on the assumption of unchanged policy interest rates ) from an inflation target at a specific time horizon. publication of macroeconomic forecasts would thus not change the ecb β s monetary policy strategy. in particular, the role of forecasts in decision making which i have described at some length will be unaffected. the ecb has adopted a new and distinct strategy which reflects the complexity of implementing monetary policy in a large and diverse single currency area consisting of soon to be twelve different sovereign nations. this complexity is compounded by the challenges posed by the novelty of the monetary policy regime, which implies that the tools and approaches used to identify risks to price stability as well as the procedures used to produce macroeconomic forecasts for the euro area need to be continuously re - evaluated and monitored closely. even less than would be possible under β normal β circumstances, in such an environment monetary policy cannot be reduced to reacting in a quasi - mechanical manner to monetary developments or inflation forecasts. the complexity of the environment requires a more sophisticated approach, embodied in the ecb β s strategy. let me finally say that i am hopeful that the publication of macroeconomic forecasts will improve the presentation and explanation of monetary policy decisions to the public. by publishing an important input into the decision making process, the considerations facing the governing council when taking a decision should become clearer to the public. however, for this to be the case, both the assumptions underlying the forecast and the role of the forecast as an input into the policy process need always to be kept in mind. 5. the communication aspect of the strategy - transparency | 1 |
##desbank, the potential macroeconomic impact of us tax reform, monthly report, february 2018, pp. 14 β 16. 9 / 10 bis central bankers'speeches 8 see g. felbermayr ( 2018 ), beobachtungen zur us - leistungsbilanz, ifo schnelldienst 9 / 2018. 9 g. felbermayr ( 2018 ), zolle im transatlantischen handel : worauf, wie viel und wie gerecht?, ifo schnelldienst 6 / 2018, p. 8. 10 see l. cernat, d. gerard, o. guinea and l. isella ( 2018 ), consumer benefits from eu trade liberalisation : how much did we save since the uruguay round?, european commission, dg trade, chief economist note, no 1. 11 quoted in n. doll, β protektionismus und abschottung haben keine zukunft ", www. welt. de / wirtschaft / article181410812 / bdi - kritisiert - regierung - protektionismus - und - abschottung - habenkeine - zukunft. html, 4 september 2018. 12 c. fuest ( 2018 ), der dritte systemwettbewerb, frankfurter allgemeine zeitung, 27 july 2018, p. 18. 13 see deutsche bundesbank, on the weakness of global trade, monthly report, march 2016, pp. 13 β 35. 14 see deutsche bundesbank, the realignment of the chinese economy and its global implications, monthly report, july 2018, pp. 39 β 56. 15 f. a. von hayek, inaugural lecture on 18 june 1962 at the university of freiburg. 16 j. - c. juncker, state of the union 2018 β the hour of european sovereignty, speech given on 12 september 2018. 17 c. fuest, ein europaischer wahrungsfonds muss die steuerzahler schutzen, wirtschaftswoche, 15 december 2017, p. 68. 18 see f. heinemann ( 2018 ), how could the stability and growth pact be simplified?, european parliament, in - depth analysis, euro area scrutiny. 19 k. r. popper, the open society and its enemies | jens weidmann : breaking the sovereign - banking nexus guest article by dr jens weidmann, president of the deutsche bundesbank, entitled β stop encouraging banks to load up on state debt β in the financial times, published on 1 october 2013. * * * it appears to be another case of the β principle of unripe time β β the notion coined by the late english classicist f. m. cornford β that people should not do at the present moment what they think right at the moment, because the moment at which they think it right has not yet arrived β. the financial and sovereign debt crisis have underpinned the importance of breaking the disastrous sovereign - banking nexus β in which shaky bank balance sheets degrade the solvency of their sovereigns, and vice versa. a european banking union is an important step towards escaping this deadly embrace. to this end, and to complement the banking union, a reassessment of the regulatory treatment of sovereign exposures of financial institutions is crucial. the current and incoming regulatory framework implies preferential treatment of sovereign exposures in various forms. while bank exposures to a single counterparty are limited, in principle, to a quarter of their eligible capital, exposures to sovereigns are exempted from that large exposures regime. sovereign exposures are also privileged by low or zero capital requirements. preferential regulatory treatment makes it highly attractive for financial institutions to invest in government bonds β and those of their home countries in particular. during the crisis, this has become more attractive still. the share of euro - area sovereign bonds in total bank assets in the eurozone increased over the past five years by one - third β from 4 per cent to 5. 3. and in most countries the home bias, which decreased over the first decade of monetary union, increased again during the crisis. average figures mask important differences from bank to bank and country to country. recent studies, including one by the bundesbank, find that larger banks, less capitalised banks and banks that are dependent on wholesale funding invest more in sovereign bonds than others. hence, the more vulnerable banks are, the more they expose themselves to sovereign debt. weak banks invest in high - yield sovereign bonds and refinance at currently low interest rates. such β carry trades β sustain the low profitability of those banks and postpone necessary adjustments of their business model. the reasons for the increased exposures of banks to their domestic sovereigns may vary : the search for yield | 0.5 |
during the expansionary phase since 2004, the rapid growth in housing and consumer credit was flagged as a concern and as a temporary counter cyclical measure, the risk weight applicable to these loans was increased by 25 basis points in october 2004. second, in the context of continuing high credit growth, the limitations of the prudential framework in capturing the ex - ante risks of procyclical nature of bank credit were explicitly recognized in october 2005 which triggered an across the board increase in provisioning requirement for standard assets. third, to counter the possibility of an asset bubble in addition to concerns about credit quality led to risk weight on banks β exposure to the commercial real estate ( cre ) and capital market being increased from 100 per cent to 125 per cent in july 2005. fourth, given the continued rapid expansion in credit to the commercial real estate sector, the risk weight on exposure to this sector was increased to 150 per cent in may 2006. fifth, the general provisioning requirement on standard advances in specific sectors, i. e., personal loans, loans and advances qualifying as capital market exposures, residential housing loans beyond rs. 20 lakh and commercial real estate loans was increased from 0. 40 per cent to one per cent in april 2006 and further to two per cent on january 31, 2007. reserve management the bis paper notes that large foreign exchange reserves expose central bank balance sheets to significant losses mainly from two sources : losses on holding of reserves due to exchange rate appreciation and carrying costs β the difference between the interest rate cost of funding the reserves and the return on foreign assets is the carrying cost of reserves. the bis central bankers β speeches guiding objectives of foreign exchange reserves management in india are similar to those of many central banks in the world β safety, liquidity and returns. in india, given that the domestic interest rates are higher than return on reserves, the carrying cost is positive. this cost has to be traded - off with the benefits associated with higher reserves in terms of confidence it provides to the market and serving as key ammunition to face crisis. the exchange rate movement of major currencies is exogenously given to any reserve manager. the reserve manager has to devise strategies so as to minimise the losses or gain from the movement in exchange rate. the foreign currency assets are invested in multi - currency, multi - asset portfolios as per the existing norms which are similar to the best international practices followed in this regard. the broad strategy for reserve management including currency composition | is sometimes a tendency by the authorities to try to solve all problems by more regulation. it is true that we could regulate away all the risks in the banking sector β but such regulation would hamper economic development. there must be a balance. thus for each regulation we introduce we must also conduct a fair analysis of its costs, also non - financial, as well as its benefits, also non - financial. i agree that this is not easy, partly since in most cases you will not find any clearly measurable indicators, but the process of conducting the cost / benefit analysis will in itself help you in your decision. supervision good regulation is closely linked to good supervision. supervisors must be able to build their work on a broad and relevant regulatory framework. supervisors must also possess the necessary powers and other prerequisites to conduct efficient work. there are at least four important aspects : first, the supervisory authority must have operational independence from industry as well as from politicians. these must not interfere in the operational decisions of the supervisors, e. g. to take remedial measures or to close banks. such decisions must be taken on purely prudential grounds. of course, the supervisors are still responsible for their actions and could be criticized afterwards, e. g. in parliament hearings, but they must be able to perform their operational duties independently. also the bank, its owners and management should be able to sue the supervisors for malpractice and they may receive compensatory payments. however, this should not stop an action started by the supervisor to deal with a presumed problem in the bank. the supervisory management and staff must also have reasonable protection should they be sued for their bona fide decisions taken as supervisors. in some countries the supervisors are harassed by frivolous lawsuits by bank owners, managers or other parties. even if the supervisor is in the end acquitted from any guilt, the process may take years. during this time the supervisor will be severely hampered in performing her job having to concentrate on her defence. such lawsuits will also reduce the willingness of other supervisors to take necessary supervisory decisions, since they are themselves afraid of being sued. a first line of defence is to take all major supervisory decisions in a collegiate fashion at the top level. thus only the agency such can be sued as an institution. nevertheless, should individual supervisors be sued, they must be provided assistance in the court proceedings, such as legal counsel and protection against any costs. of course, if the supervisor is finally found guilty | 0 |
prices alone explains more than half of the headline inflation figure. in the medium term, it is critical whether rising energy prices will increase inflation expectations and wages or change firms'pricing behaviour. energy inflation and supply chain bottlenecks alone would not lead to a sustained acceleration in inflation unless there are major second round effects, leading to a wage - price spiral. unlike in the united states, with its labour market red hot, wage inflation in the euro area has been rather moderate β until recently, that is. we have seen clear signs of acceleration in the first months of this year. that β s why we must be mindful of not letting inflation expectations become unanchored, which would be very damaging to price stability. this is now the single most critical factor in determining the course of monetary policy. last december, the ecb governing council started the gradual process of monetary policy normalisation. and we have been fortunate to have our renewed monetary policy strategy in place as we face the current turmoil. the ecb strategy review was a critical turning point in ecb monetary policy. it was the final step in the process of making the ecb a modern central bank since mario draghi β s β whatever it takes β speech. the ultimate reason for the strategy review was the emergence of profound structural changes in the euro area and the world economy. these include the change in the relationship between the spare capacity of the economy and inflation, the fall in natural interest rates, and sluggish productivity growth. according to the revised strategy, price stability β the primary objective of the ecb β is best maintained by aiming for 2 % inflation over the medium term. the inflation target is symmetric : the governing council considers both inflation above and below this 2 % target to be equally undesirable. the new strategy was worked out in 2020 β 21 in a disinflationary, even deflationary environment, and it serves to ensure that the economy does not get stuck in a situation of too slow inflation for a prolonged period. the governing council also stated that inflation may also be temporarily moderately above the target. the medium - term orientation of monetary policy allows for a better emphasis in decision - making on other objectives that are important for all euro area countries, such as full employment, without, of course, jeopardizing price stability. i tell you this also to illustrate how quickly the operating environment of monetary policy has changed. it was still less than a year ago, i recall, that some commentators | global growth outlook is likely to persist for some time, and we need to be mindful that the prevailing financial crisis has already lasted five years, with no end in sight, the challenges facing the domestic economy are daunting. but not all of our problems can be ascribed to these global factors. there are numerous underlying structural problems in the economy which are exacerbated, but not necessarily caused, by these global developments. in line with the weak and deteriorating global outlook, the bank has been progressively downgrading its economic growth forecasts over the past year. growth in 2012 is expected to average around 2, 7 per cent, down from 3, 1 per cent in 2011. the most recent forecast for bis central bankers β speeches 2013 is a growth rate of 3, 8 per cent, but the risks are seen to be on the downside. according to reuters, the market consensus forecast for 2013 is 3, 3 per cent. growth rates of this order of magnitude will not have an appreciable impact on south africa β s unemployment rate which currently stands at 24, 9 per cent. it is instructive that during the high growth years between 2004 β 2007, when growth averaged around 5 per cent, unemployment declined to 21, 9 per cent but this was quickly reversed following the crisisinduced recession in 2009. so if these patterns are to be repeated, we would need a number of years of significantly higher growth than we are currently expecting simply to get back to pre - crisis levels of unemployment. however, the sustainable growth rate itself is constrained by the potential output of the economy, which, in turn, is determined by capacity and other structural constraints. at a simple level that implies that if we have unemployed resources or spare capacity in the economy, output can be increased in a non - inflationary manner. research done in the bank prior to the crisis showed that the potential output growth of the economy was between 4 and 4, 5 per cent. since the crisis, that has declined to around 3, 5 per cent. this decline may have been due in part to some destruction of capacity and we also now know that growth will be constrained by the lack of adequate electricity provision until sometime next year at the earliest. i should note that this does not imply that a growth rate in excess of 3, 5 per cent would necessarily be inflationary. currently the economy still has a negative output gap, which we estimate to be around 3, 5 per cent, which is indicative | 0 |
happening. but if the event does actually happen in the prescribed time frame, which forecast was more accurate? unfortunately that β s hard to assess. in the end, track records built up over time can help you sort out luck from skill. time frames help here too. beware the β i told you so β forecaster. put a prediction out there without any expiry date and many years down the track when the event actually happens then β i told you so β. pick the one in 100 event that no one saw coming. was the forecaster really good? or were they the monkey that wrote hamlet? closely related to β i told you so β is β just wait, it β s still coming '. tetlock highlights an example from 2012 when a bunch of luminaries wrote a petition that quantitative easing ( qe ) in the us would generate high inflation and currency debasement. six years down the track, inflation in the us is struggling to stay above 2 per cent. but without a time limit on the prediction, they might one day claim to be right. to be a useful prediction, it needs some time frame and some probability of occurrence. the best australian example of this might be a housing market crash. 1 / 2 bis central bankers'speeches ideally the probability of something occurring gets updated through time as new information comes to hand so you can say whether it is getting more or less likely. this is the bayesian approach that underpins nate silver and the fivethirtyeight team β s approach to prediction described in nate β s book the signal and the noise. continually update your assessment of likely outcomes as new information comes in. journalists ( and policymakers ) need to filter and clarify. filtering all the predictions out there is hard. clarifying what they actually mean is hard. how do you assess the validity of the claims? should you assess them or just report them? how much editorial input should you bring to bear? what is the motivation of those making the claims? are they rewarded by the headline or the click? are you reporting the story that will deliver the best headline, the most quotable quote or are you reporting the more boring, more likely outcome? to give an example, often the most accurate statement about why the stock market rose today is that it occurred for any one of a hundred different reasons, or for a mix of all of them. 2 or my favourite explanation : because there were more buyers than sellers. not as punch | down on your seat and begin to feel comfortable, you would expect or hope for a smooth and swift journey to your final destination : success β however you define it. to your big surprise, this is not what it is going to be. it is not a non - stop train and it annoyingly makes many stops on the way. every time the train stops, there are new passengers boarding the train and, as your cabin is already full, you will always have to fight to protect your seat, or else you may be forced out from your seat. occasionally, misfortune may fall on you. not only do you lose your seat, but you are also bumped off the train at one of the stops. while all these passengers who got bumped off the trains will naturally feel aggrieved and frustrated, they can have two kinds of responses. some would complain to the station master about the unfair or rough way they are treated on the train and demand β justice β. however, some may decide that, since they still have the train tickets in their hands, they β d rather not waste time complaining to the station master about the fierce competition or bad luck, but they should instead try to board the next train that stops at this station. if you belong to this latter category, you may be able to find yourself a seat on the next train, or even a better seat than your previous one. however, there is a difference this time : you have to work really hard, and much harder than before, as you are a late passenger trying to board a train that is already full. the simple truth is, unless you are on a train, you don β t have the chance to move forward and will never come closer to your destination : success. bis central bankers β speeches 5. if you feel that i should not be depicting a rather scary train journey on this auspicious and joyful occasion, then please forgive me and let me try another scenario for you to think about, again using my train journey story. 6. suppose that you have been bumped off the train once or twice and have found your way back onto the next trains to carry on with the journey. you will gradually realise that there are certain rules and disciplines on the train that determine who get the good seats, who can be upgraded from the economy cabin to the business class and then the first class cabin. there are also rules and booking system that govern who can enjoy a good meal at the dining car and when | 0 |
, the real power will be a shared power. it will be women and men working together leveraging on each others comparative strengths, experience and knowledge that will allow us to make the difference that best suits our circumstances and that is able to bring us to the best level of performance and progress. bis central bankers β speeches | a broader range of individuals and institutional investors. for islamic banks, the iap creates a differentiated product that presents a new source of income and funding profile. there is also the potential for institutions with specific mandates including government agencies to strategically collaborate with the iap and islamic banks to form public - private partnerships to facilitate the efficient channelling of grants or funding and to facilitate financing opportunities for identified strategic ventures. the role of the iap that is launched today is envisaged to transcend beyond our domestic borders to become an effective channel to further enhance financial interlinkages in the regional and global economy. it can also be enhanced to become a multi - currency investment platform to provide a marketplace for local and international investors to invest in real economic activity and projects denominated in various currencies and financed by islamic banking institutions from different jurisdictions. this will be a first of its kind shared global platform for islamic finance. in facilitating cross - border transactions, the iap will also contribute towards drawing new foreign investors while also allowing for participation in the financing of projects outside the country. the iap, together with the existing components of financial intermediation will form a more complete, and yet mutually complementary financial ecosystem. to ensure its success, there has to be greater awareness and understanding on the key features of the iap and its embedded mechanisms by all the stakeholders. of importance is for islamic banks, investors and entrepreneurs to have a clear understanding on the risk and return relationships that are embedded in the variations of shariah contracts used in such investment account products. expectations need to be aligned with the various approaches adopted to managing these relationships according to the contractual and operational requirements. it is also paramount for islamic banks to uphold the best practices in the conduct of discharging their fiduciary duties and in performing its administration. of importance is the required due diligence, performance monitoring, suitability assessment and investment management. this would ensure that the iap is always a trusted medium of investment that is transparent and competitive in providing a seamless experience for investors. this would address the concerns of investors on the risks associated with the asymmetry of information. such features would contribute towards strengthening the ability of the iap to attract a wider range of investors, therefore enabling the platform to cater for different types of risk profiles of the different ventures. this shared infrastructure for advancing the delivery of the investment account product offerings represents an important platform to take this proposition forward. i wish to congratulate the six financial | 0.5 |
financial institutions β profits. however, i think it is of notable significance that the longheld belief that nominal interest rates cannot be negative was overturned, and that the idea evolved into an actual policy option. the fourth approach is reducing real interest rates by influencing people β s inflation expectations, instead of by cutting nominal interest rates. in the case of japan in particular, where deflation has persisted and the deflationary mindset has become entrenched among people, it is necessary to re - anchor medium - to long - term inflation expectations by exerting influence on people β s expectations. this will require the central bank β s strong commitment to achieving the inflation target, clear and consistent communication to the public, and determined actions to realize the commitment. let me now explain the bank of japan β s monetary policy after the global financial crisis, while bearing in mind the four measures composing the evolution of monetary policy to overcome the zero lower bound that i just mentioned ( chart 4 ). in response to the collapse of lehman brothers in 2008, the bank immediately reduced short - term policy interest rates, as did other central banks. as the pace of economic improvement remained sluggish, the bank in october 2010 decided to introduce the comprehensive monetary easing policy. specifically, it reduced the target level of short - term interest rates to 0 to 0. 1 percent and committed itself to maintaining the virtually zero interest rate level β until it judges that price stability is in sight. β in addition, it established the asset purchase program, through which it provided longer - term funds at a fixed rate and purchased various financial assets such as japanese government bonds ( jgbs ), corporate bonds, and exchange - traded funds ( etfs ). as these measures show, in order to overcome the zero lower bound, the bank affected longer - term interest rates through jgb purchases and forward guidance, and started to compress risk premiums through purchases of corporate bonds and etfs. in terms of the four approaches that i explained earlier, the bank adopted the first two. 5 / 15 bis central bankers'speeches although the bank continued to provide accommodative financial conditions through measures such as an expansion of the asset purchase program and strengthening of forward guidance, this did not result in a significant improvement in economic activity and prices. thus, the bank newly introduced an extremely powerful policy package in april 2013 β namely, qqe. under this framework, the bank shifted the main operating target from interest rates to the monetary base, | financial system in japan has regained stability mainly because financial institutions have mostly resolved their nonperforming - loan problems, and as a result financial institutions'precautionary demand for liquidity has declined substantially. the year - on - year rate of change in the cpi has become slightly positive recently, and therefore the policy commitment has to a significant extent lost its influence on the formation of longer - term interest rates. thus, the stimulative effects of the quantitative easing policy on economic activity and prices are coinciding with the effects of short - term interest rates being at practically zero percent. the effects of monetary easing are being amplified by low interest rates maintained during the improvement in economic and price conditions. given this situation, the bank will thoroughly examine economic activity and prices, and decide a change of the policy framework appropriately according to the commitment based on the cpi. conclusion japan's economy continues to recover steadily. the current economic expansion has lasted four years, since january 2002, based on the cabinet office's reference dates of business cycles. this already makes it the third - longest expansion phase in the post - world war ii period. as for the outlook, the economy is likely to experience a relatively long period of growth, albeit at a moderate pace, and the bank will continue its close monitoring of developments. the bank will also continue to examine the state of the economy in each region thoroughly through such means as research conducted by its branches. the bank conducts monetary policy to realize sustainable growth of the economy through the pursuit of price stability. the bank is determined to firmly support japan's economy from the financial side to achieve sustainable growth with price stability by maintaining an accommodative financial environment, based on careful examination of developments in economic activity and prices. | 0.5 |
yandraduth googoolye : mauritius β a regional financial services hub address by mr yandraduth googoolye, first deputy governor of the bank of mauritius, at the opening ceremony of the symposium on the theme β mauritius β a regional financial services hub β, organised by the mauritian management association, pointe aux piment, 10 october 2012. * * * honourable anil kumar bachoo, gosk, vice - prime minister, minister of public infrastructure, national development unit, land transport & shipping & acting minister of foreign affairs, regional integration and international trade dr rajun jugurnuth, president, mauritian management association mr marc hein, chairman, financial services commission ms madhavi ramdin, head of acca mauritius chief executives distinguished guests ladies and gentlemen good morning i am delighted to be in your midst for the opening of this symposium. i extend my warm appreciation to the mma for this laudable initiative which comes at a very opportune time when the country, having embarked on a rapid development path, is increasingly in need of professionals who are pragmatic in their approach but modern in their mind, to say but the least. the financial sector is at the core of the economic system, providing a range of services which are necessary for domestic and trade related industries to function efficiently and enabling consumers to effectively manage their inter - temporal consumption - savings requirements. while economic growth tends to induce accompanying financial sector growth, empirical research demonstrates a well - established causal link from financial sector development to economic growth. in short, having a financial sector that meets the financing and investment needs for consumers, businesses and governments as efficiently and competitively as possible, increases the nation β s capacity to grow. efficiency and competitiveness are more likely to be evident in an economy that is open to international competition and world β s best practices. countries that have highly efficient and competitive financial sectors are also likely to be exporting those services. mauritius has a comparative advantage in many parts of its financial sector compared with most other countries in the region. while we remain a very open trading economy overall, our exports and imports of financial services as a percentage of gdp are, by international standards, relatively low. the opportunities for leveraging off our financial services skills and expertise, in the region and beyond, are potentially enormous. the financial sector in mauritius is an important contributor to national output, employment, economic growth and development. the sector accounts directly for around 10. 0 per cent of gdp | cooperation. i wish to return to the subject of corporate governance which i am sure will be of great relevance to the audience. we have in august issued a revised guideline on corporate governance with a view to bringing improvements in the corporate governance framework of our financial institutions. the guideline has been aligned to the new recommendations of the basel committee on banking supervision and greater emphasis is now being laid on the independence of directors. we are requiring, amongst others, that the chairperson of a board in a local bank be an independent director. we have further requested the setting up of local advisory boards for the branches of foreign - owned banks. additionally, greater transparency is being required regarding the role of the board of directors, particularly on ethical standards and corporate values. we believe that the soundness and resilience of the banking system, and by extension the financial system, involves, inter alia, the proper functioning of various mechanisms which inevitably entail accountability and transparency. regarding transparency, the bank of mauritius has succeeded with the collaboration of banks, in disclosing the overall camel rating of individual banks on its website and on a biannual basis. mauritius is among the few countries and the first in the sub - saharan region to have gone public with those ratings. i believe that the publication of the camel ratings has brought in higher market discipline in the banking system and is encouraging banks to improve their performance. certain jurisdictions have even embarked on the dissemination of stress - testing results of their commercial banks. we have constantly been modernizing our payments system. the bank of mauritius launched the bulk clearing and cheque truncation system in september 2011. this system allows for electronic clearing of cheques as well as low value payments. we are presently working on a national switch project. as you may be aware, the regional payment and settlement system ( repss ) of the comesa has become operational effective 3 october 2012. the repss is an initiative of the comesa clearing house and is fully endorsed by all comesa member states. the bank of mauritius is the settlement bank in the repss and the status of a settlement bank for such a huge market, spread over a total area of 12. 8 million square kilometres and with a population of 413 million, is a coveted position and will benefit the country ultimately. the repss opens another opportunity for our country to enhance its role in the region. in fact, an efficient cross border payment system is a necessity for trade integration and the future of repss is very | 1 |
christine m cumming : enhancing payment system speed, efficiency and security keynote remarks by ms christine m cumming, first vice president of the federal reserve bank of new york, at the tch annual payments symposium and business meeting, new york city, 5 july 2013. * * * it is a great pleasure to be here today to speak to you about the evolution of the u. s. payments system and the federal reserve banks β role in that evolution. the views i express will be mine and not those of the federal reserve system or the federal reserve bank of new york, although i will draw on the considerable work being done in the federal reserve on the future payments direction. without question, we are living in an once - in - a - lifetime period of change in the u. s. payments system. payments providers are seeking ways to bring mobile technology to payments, an integration widely seen as a game - changer by payments industry participants. person - to - person payments mechanisms have grown rapidly, and the potential for those funds to be immediately credited to the receiver could be another game - changer. commerce increasingly integrates with a payments mechanism, especially as information about spending patterns are a source of value to firms and loyalty discounts and points become an important part of the business value proposition to customers. indeed, rather than talk about a payments industry, we find ourselves talking about a payments ecosystem, a web of banks, service companies, alternative payments providers and commercial firms. some have called these developments a second internet revolution. end - user demands and new industry participants ( i. e., non - banks ) are driving innovation, with technology enabling faster processing, more convenience to users, and the extraction and use of valuable information that accompanies payments. as the term β second internet revolution β implies, these developments represent another instance of high levels of innovation, fueled by disruptive technology, challenging traditional business models. but this time, they are not just any business models β they are our business models. how are end - users driving innovation? let me mention my personal hypothesis : that we may be seeing fundamental change in the way households, small businesses and some merchants manage their finances. we β re seeing trends in financial data and bankers are seeing the trends in practice : less reliance on debt and closer attention to cash balances to manage spending. some nonbank e - wallet providers are facilitating the management of the points, coupons and discounts that have become an important source of value to customers | to take steps to mitigate the vulnerability of the economy to a sharp rise in long - term rates. this includes monitoring banks β exposure to duration risk and the quality of their risk management and capital planning, while also looking outside of the banking system because some risks may reside elsewhere. in this regard, agency mortgage reits and the risk of large outflows from bond mutual funds are issues that deserve ongoing attention. conclusion the fomc is committed to the dual objectives of maximum sustainable employment in the context of price stability. currently we are falling well short of our employment objective and the restrictive stance of federal fiscal policy is a factor. on inflation, we are also falling short, but by a considerably smaller margin. as a consequence, we need to keep monetary policy very accommodative. i do not claim that there are no costs or risks associated with our unconventional monetary policy regime. but i see greater cost and risk in moving prematurely to a policy setting that might not prove sufficiently accommodative to ensure a sustainable, strengthening recovery. bis central bankers β speeches i remain confident that the benefits of a stronger and earlier economic recovery will trump the costs associated with our unconventional monetary policy measures. thanks for your kind attention. i would be happy to take a few questions. bis central bankers β speeches | 0.5 |
were unanticipated. this encouraged obscurity over openness and clarity. however, lost in the debate after lucas β statement was the message that monetary policy always affected nominal variables like inflation, even if fully anticipated. two nobel laureates in the 1980s, two economists, also nobel winners, finn kydland and ed prescott, argued that fully transparent rules rather than discretionary policy were more efficient and credible. bis central bankers β speeches this was the beginning of the push towards rules over discretion and greater central bank transparency. change in us fed the most eloquent illustration of this shift from obscurity towards transparency is the change in the communication strategy of the us fed. it is hard to imagine from today β s perspective, but prior to 1994, the us fed did not disclose the fed funds rate ; the market was supposed to infer the rate from the timing, sequencing and magnitude of the fed's open market operations. in sharp contrast, today the fed not only announces the rate but also gives a clear indication of future policy trajectory. communication as policy β extended period sometimes, communication, instead of being a vehicle for policy, becomes the policy itself. drawing yet again from the us experience during the crisis, the fed realized that its repeated announcement of keeping rates low β for an extended period β led markets to reach a certain inference on what β extended period β could mean. in this context, some policy analysts argued that a step that the fed should modify the language of the statement to communicate to investors that it anticipates keeping the target federal funds rate low for a longer period than what the markets were factoring it to be. in fact, the fed did just that β by saying explicitly that the low interest rate regime will last into 2014, much more specific that what the market wanted. yet another factor that has motivated central banks into placing larger emphasis on communication is their hard earned autonomy in the years before the crisis. central banks have increasingly embraced more open communication to counter the criticism that an autonomous central bank comprising unelected decision makers was inconsistent with a democratic structure. communication in reserve bank in the reserve bank, we have tried to improve communication not only on monetary policy but across the entire spectrum of our mandate. we have make efforts to demystify the reserve bank. we continue to make explicit efforts to improve the communication of the reserve bank. i. streamlined the policy documents ii. forward guidance β manage the risk that market does not ignore the conditionality and | mario draghi : interview with der spiegel interview with mr mario draghi, president of the european central bank, and der spiegel, published on 30 december 2013. * * * spiegel : mr draghi, do you know andrea nahles? draghi : i have heard the name before but i don β t know her personally. spiegel : ms nahles is the new german labour minister and boss of jorg asmussen, your former colleague in the executive board of the ecb. that he gives up this prestigious job has caused great surprise in germany. did you chase him out? draghi : jorg and i had an excellent personal and professional relationship. i consider it as a great loss for us that he is returning to the government. of course we did not agree on every occasion. spiegel : asmussen is the third german central banker to give up his job prematurely, after bundesbank boss axel weber and the former ecb executive board member jurgen stark. why aren β t the germans happy at the ecb? draghi : you can β t compare these cases. jorg has made it clear that it was only family reasons which prompted him to go back to berlin. i have no reason to doubt that. spiegel : in any case, weber and stark resigned because of your policy, which led to your famous remark in london a year and a half ago about doing β everything necessary β to save the euro. that means, in an emergency, buying up the government bonds of the crisis - ridden countries and taking on risks amounting to billions for which in the end german taxpayers above all would be liable. can you understand that many german citizens are at odds with this? draghi : weber and stark resigned before my arrival at the ecb. but the truth is that conditions in the euro area have improved considerably since then. consider the latest developments : crisis - ridden countries such as ireland and portugal are exiting the bailout programme, the risk premia for loans to crisis - hit countries in southern europe are declining, and investors from all over the world are once again investing in europe. in other words, most of the financial - economic data are turning in the right direction. spiegel : are you saying the euro crisis is over? draghi : no, but the fears felt by some sectors of the public in germany have not been confirmed. what haven β t we been accused of? when we offered european banks | 0 |
of financial institutions and the central government are not included. the present - day currency system is built on a complex network consisting of the central bank, financial institutions that provide deposit money, and financial markets where financial institutions carry out their activities. therefore, to secure the ease of use of money and its value, maintenance of financial system stability β the stable functioning of financial institutions and financial markets β is essential. failure of one financial institution to meet its payment obligations may lead to problems for other financial institutions that had been expecting the transfer of funds from the troubled institution, and this may lead to a chain reaction of defaults, that is, the materialization of " systemic risk. " in order to prevent the materialization of such systemic risk, central banks may temporarily extend necessary funds to financial institutions facing funds shortages. this is called the " lender of last resort " function of the central bank. in the period from the latter half of the 1990s to the early 2000s, when japan's financial system was in turmoil, the bank extended such emergency loans, the so - called nichigin tokuyu, to financial institutions. this is an example of the central bank assuming the role of lender of last resort. in addition, to prevent the materialization of systemic risk, central banks should always monitor whether activities of financial institutions and the functioning of the payment and settlement system are sound, and provide advice as necessary. to this end, the bank is continually monitoring the situation in financial institutions and in financial markets. the bank also conducts on - site examinations of financial institutions, in which the bank's staff visit the premises of these institutions to examine in detail their financial soundness and risk management. 3. conduct of monetary policy the last item on my list of central banking operations is the conduct of monetary policy, which aims at maintaining stability in the value of the currency, in other words, at maintaining price stability. central banks maintain price stability through controlling the amount of currency they supply and the level of interest rates, that is, the price of money. if the bank supplies abundant funds to the market, the market interest rate β the uncollateralized overnight call rate β will decline, reducing the funding costs of financial institutions. this will influence other interest rates such as those on loans to households and firms. through the change in interest rates, the cost of funds necessary for the economic activities of firms and households will change, and this will stimulate overall economic activity. as a result, this will | horizon. we are taking into account the different factors affecting the outlook, such as the behavior of the exchange rate, the strength of the expansion of demand and activity, and the perspectives of lower interest rates in the world, among others. two years into the crisis, the world economy has entered a new stage, in which fiscal policy is increasingly being discussed. the joint effects of monetary and fiscal policy have been central in averting a much deeper crisis. however, disentangling the effects of each one on the economy β s performance and determining the best course of action remains the topic of heated debate within academia and in policy circles, in particular, on the speed and timing of the fiscal retrenchment. this is largely dependent on the strength of each country β s fiscal accounts. the ten papers to be presented during the conference will be organized into three sections. the first will assess the effects of fiscal policy on macroeconomic outcomes. the first contribution to this section, by tommaso monacelli, roberto perotti and antonella trigari, will focus on the effects of tax cuts on the labor market. joachim voth will present work that analyzes the extent to which fiscal retrenchment can take place before civil unrest is provoked. rodrigo caputo and miguel fuentes will examine the long - run effects of fiscal transfers and investment on the real exchange rate in a broad panel of countries. mauricio villafuerte, pablo lopez - murphy, and rolando ossowski will close with an examination of fiscal policies among resource - exporters in latin america and the caribbean. the second section will investigate the interactions of fiscal and monetary policy. in the first presentation, gauti eggertsson will analyze how the fiscal multiplier is affected by the degree of coordination between the fiscal and monetary authorities. then, giancarlo corsetti will question the conventional wisdom that fiscal policy is more expansionary under a fixed exchange rate than under a floating regime. finally, luis felipe cespedes, jorge fornero, and jordi gali will present a paper that estimates the effects of chilean fiscal policy on consumption and income using a framework that relaxes the assumption of ricardian equivalence. the final section will focus on fiscal policy in emerging market economies. jeffrey frankel will discuss the structural fiscal spending rule implemented in chile in 2001. eduardo engel, christopher neilson, and rodrigo valdes will conduct a welfare analysis of the effects of chile β | 0 |
task. however, it is reassuring that, in the face of these inherent handicaps, the group seems to have made significant achievements, which go beyond the immediate compulsions of crisis management and address some of the key structural issues. the underpinning for this progress, as i have alluded to earlier in the presentation, is the recognition by all parties involved that the process of globalization has potential benefits for everybody as long as it is controlled in some way. the basis of control is, as the g20 demonstrates, common principles, on which are based common, or at least compatible standards for both conduct and enforcement. but, control does not mean homogenization. as long as common standards can be reconciled with differences in practices and institutions, which allow individual countries to effectively address their domestic priorities, the arrangement is eminently workable. just as each country needs to maintain a balance between acceptance and adherence to global standards, the group needs to accommodate a possibly thin and blurred line between conformity and autonomy. its effectiveness on all the issues that it seeks to address, but particularly on the structural ones, will depend heavily on this accommodation. every member of the group must feel that there are some tangible benefits from continuing to associate and in turn, that perception depends on the space that the is available to pursue legitimate domestic priorities, which do not impinge on the interests of the other members of the group. by this benchmark, the group has done quite well. in the midst of significant differences, some of which i have pointed out, meaningful consensus on, for example, safety nets, financial regulation and reform of the international monetary fund suggest that it has found a way to accommodate the balance on a number of significant issues. the nature of this consensus has been widely reported on and debated in the wake of the recent finance ministers and central bank governors β meeting in gyeongju, korea, so i do not want to go into the details here. the point i want to emphasize, though, is that the common feature of both the process of arriving at consensus and the agreements themselves was precisely the acceptance of common principles and standards, which do not come in the way of allowing each country to organize its internal systems in ways that it thinks is best. this is not to say that there are no disagreements or unresolved issues within the group. it would be naive to expect that there wouldn β t be. however, as in the case of all collective activity, the presence of disagreements, even | ##ment capacity. banks will have to evolve policies to address this issue while providing vulnerable groups opportunities to engage in activities that supplement the household income at times of natural calamities. development of appropriately priced insurance products is obviously a challenge especially id such insurance has to be affordable and sustainable. price risk in agriculture is inherent, having regard to the nature of agricultural operations where supply cannot respond to prices immediately. hence, price support policies have been followed over the years. a more recent development is the futures markets, which can provide opportunity to hedge risks. however, the players in these markets are mostly traders and speculators. there is a need to find ways in which commodity markets can be used to provide price support to farmers. o micro finance a separate strategy for micro finance may have to be evolved, as this involves providing low income families with access to banking. invariably banks have found it advantageous to partner with community based organisations and ngos working in the area for microfinance. promoting shgs, nurturing them and transforming them from micro - finance to micro enterprise is something many banks are already engaged in. banks could explore the possibilities of working with the state governments by offering them efficient technology solutions, such as smart cards for distribution of budgeted allocations for nregp, pension payments and various other social sector expenditures. as some of you may be aware, a pilot project is under way in andhra pradesh ( ap ), where the ap government will tie up with banks, who will offer smart cards to bpl families / pension recipients / nregp workers for disbursements of wages, pensions and other benefits. these smart cards can be operated at village level through vos β federated shgs registered as cooperatives β that are eligible to be used as business correspondents by banks. it is expected that as the shg members get used to the smart cards, there will be return flow of funds as they use their bank accounts for savings. the cards could also be used as normal debit cards at merchant establishments. o regional rural banks ( rrbs ) as partners one in every three rural / semi urban branch in the country is an rrb branch. moreover, the staff members of rrbs belong to the region and have knowledge of local language and customs. these are significant strengths and need to be leveraged by sponsor banks, who should view rrbs as their partners in rural banking. the initial costs for up scaling technology and skills in the rrbs will be amply rewarded | 0.5 |
##ch, chair of the supervisory board, to mr eero heinaΒ€luoma, mep, on banking supervision, 28 october 2024 4 / 4 bis - central bankers'speeches | euro has coincided with a remarkable deepening of financial integration. the financial landscape has already changed enormously in most market segments. well - integrated financial markets and diversified portfolios reduce the extent to which firms β and households β saving and spending decisions are dependent on economic and financial developments in a specific country, region or sector. as a result, credit and risk - sharing channels are increasingly helping to attenuate the impact of shocks in a specific euro area country or sector. this financial market - based mechanism essentially means that consumption does not need to follow movements in regional output. there are two reasons for this : first, consumers can borrow from abroad ; and second, their financial wealth is less dependent on local conditions thanks to well - diversified international portfolio allocation. this also gives rise to greater competition, resulting in more favourable financing conditions for consumers and firms. in this regard, there is a very interesting study looking at the united states that i like to cite. according to this study, the us capital markets smooth out 39 % of shocks to gross state product ( equivalent to our gdp ), the credit channel smooths out 23 % of such shocks, and the federal budget smooths out 13 %. 25 % of the shock is not smoothed out. thus, according to this study, financial markets and financial institutions absorb 62 % of idiosyncratic shocks in the united states : an effect much larger than that of the federal budget. the euro area is moving in this direction, and i am sure that financial market - based risk - sharing will become increasingly important over the coming years. c ) the third area of strength is the fact that the euro area as a whole has become more resilient to external developments than its individual member countries ever were before the launch of the euro. national economic policies have become better coordinated, and of course the risk of possible speculative attacks on national currencies has been removed. not so long ago, the impact of movements of the us dollar vis - a - vis major european currencies was significantly aggravated by big tensions inside the exchange rate mechanism namely between the currencies that have now merged to form the euro. this can no longer happen. this increasing resilience is illustrated by the fact that the major shocks of the last ten years have not played a significant role in the dispersion of output growth and have not contributed to economic divergence. * * * ladies and gentlemen, let me now conclude. although there is still some persistent diversity across euro area | 0.5 |
yves mersch : shaping a new regulatory framework β international banking at the crossroads speech by mr yves mersch, governor of the central bank of luxembourg, at the conference β the emerging framework to strengthen banking regulation and financial stability β, organised by the financial stability institute, bis, and hosted by the arab monetary fund, abu dhabi, 8 november 2010. * * * let me start by thanking the arab monetary fund and the fsi of the bis for providing the opportunity to present my views on financial sector reform in the post crisis era from the perspective of international banking. the topic is vast, and i shall not attempt to deal exhaustively with its numerous dimensions, but rather concentrate myself on one key component, namely cross - border banking flows. i will describe their main drivers, explore their impact on financial stability, and review major reforms currently discussed and aimed at maximizing the benefits of international banking. international banking : drivers, effects and impact on financial stability cross - border flows have expanded enormously in the last three decades. since the second half of the 19th century, the internationalization of banking has proceeded in several waves. the most recent waves followed the liberalization of the early 1980s and the expansion of subsidiaries and branches in emerging and developing economies since the second half of the 1990s. measured by the expansion of cross - border lending and the local claims of foreign banks, the scale of international banking increased dramatically since the beginning of 1980s, also in the gulf states ( figure 1 ). while international claims vis - a - vis developing countries are less than 20 percent of claims to developed countries, there has been a recent acceleration of the former. in the last half of this decade, the increase in the share of loans to non - banks in the gulf states is noticeable, and it reflects the internationalization strategy of banks which have favored extending credit by local affiliates to cross - border lending. until the beginning of this decade, international banking growth tracked well the increasing world integration as measured by international trade growth. more recently, however, cross - border flows have grown faster than international trade reflecting the emergence of risk transfer and securitization thus making international banking an important component of a broader process of globalization and integration. capital flows have not been uniformly distributed across countries, and a crosscountry analysis of net international positions show large imbalances and persistent net creditor and debtor positions ( figure 2 ). the most important ultimate macroeconomic drivers of international banking are the regulatory environment and technological developments. while | klaas knot : beyond the rules - promoting an ethical culture in central banks and supervisory authorities speech by mr klaas knot, president of the netherlands bank, at the netherlands bank ethics and compliance conference, amsterdam, 7 november 2024. * * * at the eurovision song contest of 1980 β that was long before the time when artists were disqualified for alleged misconduct - the dutch singer maggie macneal came in fifth with the lyrics'amsterdam, amsterdam, de stad waar alles kan '. in english, this means :'amsterdam, amsterdam, the city where anything goes '. now, especially for compliance officers this may sound like a particularly alarming statement. you may wonder : is this an appropriate venue for a conference on ethics and compliance? but i can reassure you, things have changed, and even in this city some degree of law and order has returned. so when i became governor of the dutch central bank 13 years ago, i could not have imagined that one day i would be confronted with the issue of a stolen coat. it was a white coat, a woman's coat that was stolen at our coffee bar sometime last year. with bicycle keys and all. not very material in terms of value lost, but a serious breach of trust among colleagues. so our compliance officers investigated. unfortunately, the coat was never recovered. what this story is telling me, and why i am telling it to you, is that the people working in our institutions are just a cross - section of society. at the same time, we work for organisations that perform a very special public task. keeping the financial system safe and sound. people trust us. if we breach that trust, it not only damages our organisation, it affects the entire financial system. what's more, as a supervisory authority we impose all kinds of standards on the financial sector, including ethical ones. if we do not live up to the standards we impose on others, we lose all authority. this means that we have to set the bar on ethics and compliance in our own organisations very high. at dnb we set up a professional department and integrity framework in 2008. the framework includes controlling the risk of fraud and corruption, insider trading, lobbying, and conflicts of interest. we also placed additional emphasis on inappropriate behaviour and its prevention. similarly, at the ecb i have witnessed the development of one of the most stringent ethical standards in the world. the ecb was among the first to establish an ethics committee | 0 |
banks have responded to these challenges by reaching out through new branches. however, banks need to be mindful of the fact that the many of our people who need these services most of all are not able to bear the heavy charges that are sometimes levied, and the goal of inclusion will stand to be compromised if this matter is not addressed. the bank of zambia is in the process of engaging the banks with a view to finding a solution to the high cost of banking which is often cited as the main hindrance to access to finance. i therefore appeal to all the banks operating in zambia to critically assess the level of their charges and to continue playing the supportive role to development that they have in the past. in this regard, i am particularly pleased to make mention of the spirited efforts that standard chartered bank continues to make in financing sme β s and micro - finance. the experiences of many economies show that these sub sectors have the capacity to create a middle class and to emancipate both rural and urban dwellers from their poverty trap. zambia has many promising entrepreneurs whose only constraint is affordable funding. as you explore the opportunities that this new venture will bring you, i urge you to focus on the customers who may appear small today, but could grow with the bank if they are given the right support. i wish you every success as you embark on this journey into north western province. | to restore the sustainability of the public finances, which were weakened by the bis central bankers β speeches deep recession. as regards this process, it is not at the end yet. the process is not even at the beginning of the end. but perhaps it is at end of the beginning ( churchill ). what can we do in our own countries? we manage to navigate through unchartered waters by simply keeping our house in order ; taking care of the competitiveness of our economies, not letting public finances deteriorate too much and by investing for the future. bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches | 0 |
steven maijoor : managing climate and environmental related risk stepping up the pace speech ( virtual ) by mr steven maijoor, executive director of supervision of the netherlands bank, at afore consulting's 7th annual fintech and regulation conference, 8 february 2023. * * * hello everyone. almost ten years ago, in 2014, an article on'the secret life of passwords'was published in the new york times. 1 the author of the article, ian urbina, was fascinated by what people use as passwords. and after collecting stories about passwords for some time, he heard about scholarly research on a gigantic password hack. a few years earlier, in 2009, a database of 32 million passwords had been published on the internet. and this triggered a group of academic researchers from the university of ontario institute of technology to start analysing the database. not only with a security focus, but also with a linguistic, psychological and anthropological focus. and they found that for every ten passwords, one turned out to be a name, or a name plus a year. for every 1000 passwords, two turned out to be the word - " password ". and the most commonly used verb turned out to be to " love " β tellingly, more often in combination with a man's name than with a woman's. none of these popular passwords are safe options, of course. so it is no wonder that the overall conclusion one of the researchers drew, was not overly optimistic. he was worried about the fate of our privacy. to him, " the database made clear that humans really are the weak link when it comes to data security. " this was almost ten years ago. a lot has happened since then. today, when you log in on your device, you often still use a password, but probably in combination with facial recognition, fingerprints, or a piece of unique hardware. unfortunately, however, humans remain the weak link in data security. last year's global risks report from the world economic forum2 says that 95 percent of cybersecurity issues can be traced back to human errors. the report also says that, in 2020, there was an increase of 435 percent in ransomware compared to 2019. many of you are probably familiar with the ransomware attack on a big american insurer a few years ago. this insurer ultimately had to pay 40 million dollars to retrieve its data and regain control of its systems. the report also says | ##ness, dependency and concentration along with it, the more difficult it becomes for a financial institution to estimate if, how and when it runs the risk of a cyberattack. let me now turn to the netherlands. in its studies from 2021 and 2022, de nederlandsche bank found that, on average, five percent of financial institutions in the netherlands had to deal with the repercussions of a successful cyberattack at some point. " successful " in this case does not necessarily mean that corporate operations were in danger or that data was stolen, but it does mean that there was a security breach. 2 / 5 bis - central bankers'speeches but overall, it remains hard to pinpoint exactly how many cyberattacks occur in the netherlands, and what the success rate is. so that begs the question : how well - prepared for cyberattacks is the dutch financial sector? the tiber - nl program, developed and coordinated by de nederlandsche bank, gives us an idea. tiber is short for threat intelligence - based ethical red teaming. financial institutions participate voluntarily in staged test attacks, using them to gauge their cyber resilience. the aim is to gain insight into strengths and weaknesses, and to identify areas for improvement. afterwards, they share experiences and improvement plans with other institutions. over the past five years, de nederlandsche bank has coordinated over 40 tiber tests on vital dutch institutions. and in many of the cases, ethical hackers successfully accessed critical parts of the financial institutions'systems. the results of the tiber tests have led financial institutions to take measures to increase their cyber resilience. but the results also tell us that we need to remain vigilant at all times. i am pleased that our tiber program has inspired the european central bank to draw up the tiber - eu framework. this is important. because increasing cyber resilience will, at least partly, need to happen on a european level. simply because cyberattacks know no borders. that is why i am also very pleased with the finalisation of the digital operational resilience act β dora. from 2025 onwards, financial institutions will have to comply with this european regulation aimed at increasing cyber resilience. this means, among other things, that third parties will have to comply with certain cyber security criteria. hence, they will become part of the supervisor's scope. with tiber, we already have an instrument that supervisors could use to | 1 |
mark carney : opening statement before the house of commons standing committee on finance opening statement by mr mark carney, governor of the bank of canada and chairman of the financial stability board, before the house of commons standing committee on finance, ottawa, ontario, 30 october 2012. * * * good afternoon. tiff and i are pleased to be here with you today to discuss the october monetary policy report, which the bank published last week. β’ the global economy has unfolded broadly as the bank projected in its july mpr. growth has slowed in all major regions. the economic expansion in the united states is progressing at a gradual pace. europe is in recession and recent indicators point to a continued contraction. β’ in china and other major emerging economies, growth has slowed somewhat more than expected. however, there are signs of stabilization around current growth rates. β’ notwithstanding the slowdown in global economic activity, prices for oil and other commodities produced in canada have, on average, increased in recent months. global financial conditions have improved, supported by aggressive policy actions of major central banks. sentiment, though, remains fragile. β’ in canada, while global headwinds continue to restrain economic activity, domestic factors are supporting a moderate expansion. following the recent period of belowpotential growth, the economy is expected to pick up and return to full capacity by the end of 2013. β’ the bank continues to project that the expansion will be driven mainly by growth in consumption and business investment, reflecting in part very stimulative domestic financial conditions. β’ housing activity is expected to decline from historically high levels. the household debt burden is expected to rise further before stabilizing by the end of the projection horizon. β’ there are upside and downside risks around the evolution of household imbalances. residential investment could regain momentum, thereby reinforcing existing imbalances. conversely, continuing high household debt levels could lead to a sharper - than - expected deceleration in household spending. in this context, canadian authorities are co - operating closely to monitor the financial situation of the household sector, and are responding appropriately. β’ canadian exports are projected to pick up gradually, but remain below their prerecession peak until the first half of 2014, reflecting weak foreign demand and ongoing competitiveness challenges. these challenges include the persistent strength of the canadian dollar, which is being influenced by safe haven flows and spillovers from global monetary policy. β’ after taking into account revisions to the national accounts, which had the effect of raising | . with that summary, i would be pleased to take your questions and begin our discussion. 2 / 2 bis - central bankers'speeches | 0.5 |
are not purely voluntary or that have elements of compulsion. we call for the avoidance of any credit events and selection default or default. let me add that i am from time to time surprised by the narrow view of private sector involvement that is generally taken in the present debate. we should not forget that private capital is also mobilised when embarking on privatisation. privatisation is a good way of mobilising private capital and is something that we have encouraged considerably, particularly in the case of greece. it is an effective way of mobilising private capital and has positive consequences not only on the financing of the country, but also in terms of positive structural effects on growth and employment. finally, the private sector involvement that everybody is aiming at is to go back as soon as possible to private sector market financing. thank you for your attention. bis central bankers β speeches | ensure that this happens. norwegian legislation must be updated in line with the new directive. this will improve the pricing of risk in the banking system. we will not bail out the shareholders. ultimately, bank owners and management must ensure that banks are run prudently. it is crucial that they are aware of their responsibilities. we cannot regulate banks to death. i am confident that owners and managers of norwegian banks will act responsibly. at the same time, banks must be regulated. capital requirements must be high and we must ensure that banks are solid and well - run. this will reduce the risk of a systemic crisis. this will also give banks β owners a stronger motive to take account of long - term risk. banks themselves and finanstilsynet ( financial supervisory authority of norway ) have done a good job to ensure a solid norwegian banking sector, so that the authorities avoid having to bail out banks. bis central bankers β speeches | 0 |
, in the modern world, higher productivity enables an economy to grow even with a smaller working - age population, and hence to avoid the demographic trap. if a country can maintain a decent productivity growth even after it has exploited imported technology and an underutilized labor force, that country is likely to succeed in growing its way out of the middle - income trap. discussion of the myth of asian miracles also highlights the importance of total factor productivity. well before the asian currency crisis of 1997 β 1998, paul krugman argued that the rapid growth of the nies or asian tigers was not sustainable because their high growth was not sufficiently supported by total factor productivity. 8 history vindicated his assessment : the asian currency crisis was in part an inevitable transition toward more sustainable and balanced growth. let me confirm this point using data, with the usual disclaimer regarding the large uncertainty associated with estimates of total factor productivity. in graph 6, the vertical axis is per capita gdp growth, while the horizontal axis is total factor productivity growth. in the left panel, which describes the period preceding the asian currency crisis, the dots representing high growth asian economies are generally located well above the regression line. this means that their economic growth could be explained relatively more by expansion of inputs, such as demographic bonus and investment boom, than by total factor productivity growth. the right hand panel, which describes the situation in recent years, after the great financial crisis, shows that asian economies are much closer to the regression line than they were in the 1990s. this looks encouraging in terms of balanced growth. one caveat, however, is that asian dots are located closer to the zero - vertical line as well : total factor productivity growth is generally lower than it was in the 1990s. in other words, economic growth appears to be more balanced, but it may have also lost some strength. this is a bit disturbing because population aging is about to accelerate in some countries, with stronger demographic headwinds therefore to be expected. remember that once a country falls into demographic onus, it needs to offset negative demographic forces with higher growth in total factor productivity just to maintain per capita growth, and hence living standards. this is exactly why total factor productivity growth is the crucial issue for a number of asian economies. the next question then is, how do we raise total factor productivity growth? the answer may be a pessimistic one if we think that productivity growth is only exogenously determined. if this is the case, all we can do | , a mispricing of capital resulted in cheap funding and overinvestment. 11. developed economies are equally prone to the risks of mispriced capital. the subprime mortgage crisis, which precipitated the global financial crisis less than three years ago, is another example of mispriced capital leading to excessive risk taking and leverage. low interest rates in the us fuelled both a housing and a credit bubble that eventually burst, dragging down investors and intermediaries alike. 12. in emerging asia, today, high levels of domestic savings coupled with large capital inflows pose the risk of unproductive investments and asset bubbles. when capital inflows slow down, as they inevitably must, the consequent unwinding will be rapid and possibly unpleasant. asian policymakers have been responding to the situation in various ways 13. first, they have allowed the price of capital to rise β either through exchange rates or interest rates or both. second, they have regulated the demand for capital through fiscal tools, such as transaction taxes and stamp duties. third, they have regulated the supply of capital through administrative tools, ranging from restrictions on bank lending to selective capital controls. 14. the most effective way is to price capital correctly. several asian economies have been raising policy interest rates, though real interest rates still remain rather low. there has also been a fair amount of exchange rate appreciation. since mid - 2009, most regional currencies have appreciated by about 5 to 6 per cent in real effective terms. monetary policy in asia is likely to remain tight in the months ahead. this should help to get the price of capital right, tame asset price inflation, and reduce the risk of misallocated resources. 15. indeed, as emerging asia continues to grow, allowing the exchange rate to steadily appreciate over the medium term is vital to ensuring that capital inflows are moderated and capital is allocated to productive investments. 16. but interest rates and exchange rates cannot take the burden of adjustment entirely, especially over the short term, given the scale and pace of capital inflows. therefore, bis central bankers β speeches macroeconomic policy adjustments have been complemented in some asian countries by macroprudential measures, like reductions in banks β loan - to - value ratios and debt - to - income ratios. in exceptional cases, resort to capital flow management measures may be necessary to bring the situation under control. strengthen infrastructure for allocating capital 17. next, emerging | 0.5 |
mandate. in the case of equities, i believe that we cannot hold a strong conviction in either regard. the link between overnight reserves and prices of equities is too remote and indirect, and the impact of equity prices on the balance of aggregate supply and demand is too uncertain, for those prices to be a target of policy. to be clear, this is not an argument for never considering prices in asset markets when determining how well we are likely to do in achieving our goals. monetary policymakers follow developments in the equity and other asset markets as part of the process of evaluating and forecasting economic conditions. that is, the values of equity claims affect spending decisions and help forecast economic activity. but, in that regard, a similar role is played by many other important determinants of spending, including long - term interest rates, the foreign exchange value of the currency, the government's fiscal position, and economic activity abroad. we can employ our one instrument to temper or augment the net effect of changes in these factors on spending and production, but we do not have the tools to respond to each individually. our tool is most efficiently deployed to adjust overnight interest rates. there is a more general principle at work here. no doubt, the balance sheet of the federal reserve is large and the attention paid to our pronouncements intense. nobody would deny that central banks can be quite powerful and that monetary policy works, over time. but in the scheme of things, a central bank's ability to smooth asset prices ( if it wanted to ) or to buffer shocks to spending or production is somewhat limited. the textbooks teach that monetary policymakers can vary interest rates to offset fluctuations in aggregate demand. the reality is that when the shortfall in desired spending is large or arises quite quickly, as was the case last year when businesses slashed their investment plans in light of a perceived overhang of capital, the initial monetary policy offset can be only partial and not necessarily synchronous. eventually, of course, monetary policy does work ; but the lags continue to be unpredictable and both the level of rates and the time required for policy to have the desired equilibrating impact depend greatly on the force of the macroeconomic instability that must be confronted and are not knowable at the start of a cyclical event. similarly, the central bank can meet elevated demands for liquidity during times of crisis, but the private sector cannot look to the central bank to eliminate all risk, just | the institutional reform work within the european union is approaching a stage which makes the union ready for enlargement. i am pleased to hear that denmark, now holding the eu presidency, has the firm intention to continue this process and to tackle some of the core issues during the second half of 2002. my own institution, the osterreichische nationalbank has been an active partner for central banks in transition countries since the very start of transition. initially, our contribution to institutional development consisted in technical assistance. gradually, this has evolved into technical cooperation and finally into working relationships. by now, these relationships have become integrated in joint efforts of the whole european system of central banks. being a member of this system, my bank has complemented its bilateral relations by actively promoting a dialogue between the eurosystem and the central banks of the accession countries. in addition, i would like to point out that those of you who are interested in getting more information about all these issues may consult the most recent editions of the " focus on austria " as well as the " focus on transition " of the oesterreichische nationalbank, whose general theme ties in with the topic of this year's vienna international summer university. both publications provide a number of interesting and high - quality papers related different aspects of eu enlargement. conclusion in concluding, i would like to reiterate that emu and the euro are in many respects europe's strategic response to global competition and the associated challenges it poses. emu underpins europe's role in the world and strengthens the position of our economy in the face of growing international competition. emu triggered not only monetary convergence, but also the real convergence of our economies. structural reforms geared toward efficient and flexible product, capital and labor markets, as well as sounder fiscal policies have made our economies more shock - resilient and will ultimately increase our non - inflationary growth potential. this positive and stabilizing influence is not only felt within the euro area, but also in the countries that have close ties to the euro area, such as the countries currently conducting accession negotiations with the eu. thus, with the euro as a stable anchor, emu creates a zone of stability that is even larger than the euro area itself. in this way, the euro is a catalyst for the future political and economic integration of europe. thank you for your attention! | 0 |
smes from access to markets : - where markets are present, the site are not serviced with necessary social amenities. - smes lack market information and marketing skills. - lack of adequate local markets. - inadequate, inefficient and ineffective distribution and supply network in the local market, such that products / service takes time before reaching target markets. - limited capacity to meet sme expectations in terms of providing finance as well as providing non - financial support. - entrepreneurship skills training into both practical and non - practical sector specific training in order to achieve relevancy to the needs of the small business community. as you may all be aware, smes play critical role in the country β s economic development. smes are often considered as the drive to creating local demand and consumption. in fact, smes related matters are high priorities on the government agenda. on that note, the central bank in coordination with government is closely working with the commercial banks in light of the risks associated with sme finance, to come up with a strategy for sme lending. the central bank is also currently engaged in exploring the feasibility to expand participation in the credit information system ( cis ) to all lenders not regulated by the central bank, including government lending agencies or programs and commercial firms that engage in hire β purchase activities. in this regard work is being undertaken with the world bank to enact a credit information system law which would broaden the scope of the cis in seychelles to include other entities and activities that are not regulated by the central bank. furthermore, with the aim of modernising the national payment system, by broadening the scope of innovative payments schemes and reducing paper instruments as a means for payment, the central bank in collaboration with the seychelles banking association are looking into the possibility of implementing a national payment switch. ladies and gentlemen, with no doubt, services provided by the financial system has a prime impact on economic growth. the level of development plays a significant role in the growth of businesses, enhancing innovation and competition. it is however, equally important that in support of the broader objective of financial sector development and financial inclusion, access to financial services are of the highest quality and convenience, affordable and also operated in an environment where consumers are adequately protected. ensuring that there is an effective consumer protection framework to address the balance of power between financial institutions and their consumers is vital in order to enhance public confidence in the financial system and the use of innovative financial services. there is no need for me to overempha | and private stakeholders to achieve the development and implementation of the national strategy. in fact, the procurement for consultancy services to assist with the development of the strategy is currently being initiated. ladies and gentlemen, these initiatives and engagements towards financial consumer empowerment echo the recent global tempos in respect of financial education. there has been an increased focus on financial literacy internationally, particularly since the 2008 financial crisis which has exposed the effects of lack of financial education amongst consumers, leading many countries to develop or start developing national financial education strategies. whilst other countries are yet to roll out strategies at the national level, ample efforts are being put into designing financial education programmes or interventions for specific groups of the population. the message is clear : financial education matters and it matters at many levels. primarily, from a social welfare perspective, it matters in terms of the ability of people to manage their financial affairs prudently and live within their means. financial education is meant to empower individuals in the financial marketplace, in terms of increasing their ability to make informed decisions and meaningful participation in the markets, allowing them to better manage personal and household finances and resources. financially savvy consumers who interact effectively with providers of financial services are more likely to achieve their financial goals and therefore improve their households β welfare. moreover, financial education is instrumental in supporting financial inclusion policies through creation of awareness of the availability of financial products and services and through developing confidence in the use of such products and services. accordingly, financial education contributes to the development of financial systems and markets as well as to the promotion of more transparent competition amongst financial service providers. in fact, financial education is very much considered as the first line of defence and protection for consumers of financial products and services, since it complements the regulatory and supervisory measures in place. it is widely recognised that individuals across the globe, living in different economic, financial and social circumstances have to take more responsibility for their future financial well - being and protection. it is important to consider that while authorities will devote resources and work towards establishing mechanisms that will support financial consumer empowerment, it is important to acknowledge that the ultimate responsibility rests with the individual to ensure that financial knowledge and skills acquired are transformed into positive financial behaviour. ladies and gentlemen, allow me to stress that cbs and its partners remain committed to the development of the financial sector in line with our respective mandates. the successful development of the financial sector must be sustained, amongst other factors, by appropriate legislative and supervisory frameworks, including an effective regulatory framework for financial consumer protection, | 0.5 |
yves mersch : reaping the benefits of payment services in a new regulatory environment speech by mr yves mersch, member of the executive board of the european central bank, at the european banking federation's executive committee, frankfurt am main, 22 february 2018. * * * the revised payment services directive ( psd2 ) has featured high on the agenda of the payments industry for some time and it will continue to do so. the regulatory technical standards ( rts ) on strong customer authentication and common and secure open standards of communication, which have been submitted by the european commission to the co - legislators for scrutiny, strike a fair balance between the previously diverging views of the different players. they should soon be finalised and then published in the official journal. the new legislative framework will support innovation and competition in retail payments ; it will enhance the security of payment transactions and the protection of consumer data. it will introduce major changes to which all payment service providers ( psps ) will have to adapt, and i encourage all psps to ensure the highest level of security in their payment services and adopt the requirements of the rts ahead of time. banks should also grasp the opportunity to work towards a single and standardised interface to communicate with third - party providers ( tpps ) across europe in a safe and efficient manner. cooperation with tpps and users is crucial in this context in order to deliver innovative, efficient and competitive services to the people of europe. let me explain this in more detail. security requirements during the transition period as co - chair of the european forum on the security of retail payments ( secure pay ), the ecb has contributed in particular to the rts in respect of strong customer authentication and common and secure open standards of communication, the guidelines on security measures for operational and security risks of payment services and the guidelines on major incident reporting. it is still involved in the finalisation of the guidelines on fraud data reporting requirements. now that member states have transposed or are about to transpose the psd2 and almost all pieces of secondary legislation have been finalised, i think we can say that the european market has taken a major step towards : increasing the protection of payment service users against fraud and possible abuses of their financial information, fostering the resilience of psps through harmonised minimum security requirements, and towards enabling competition in the field of payment services by introducing innovative payment services such as payment initiation services, account information services and issuing cardbased payment instruments where a | been made to the united states and the question has been asked as to why europe us unable to effect as strong expansionary measures. many reasons exist that make comparisons with the united states infeasible. firstly, the expansion of the us public deficit is largely due to an increase in military expenses, which can hardly be regarded as counter - cyclical expansionary economic policy. furthermore, there was, and still is, substantially more genuine room for manoeuvre in the us economy in this respect. contrary to the euro area, us public finances were clearly in surplus when the country entered into recession. for demographic reasons alone the outlook for us public finances clearly outweighs that for the euro area. furthermore, the tax rate is markedly lower in the us in comparison to the euro area, which also gives the united states substantially latitude in taxation. finnish economy if the expected recovery of the world economy begins, the finnish economy will, without doubt, follow suit. however, forecasts suggest that the growth rate would only return to a 2 β 3 % level. one trend in which finland has taken the lead in international comparisons is population ageing. the problem of ageing is not exclusive to finland, but it has started to manifest itself here exceptionally early. in effect, the increase in labour growth in finland has virtually come to a halt and is expected to make a downwards turn in the near future. this will inevitably be reflected in all sectors of the finnish economic policy decision - making. in the next few decades, population ageing will pressure finland into increasing spending on its public sector, amounting altogether to some 6 % of the gdp. the funds accumulated in the pension scheme cover only one third of these upward pressures. can the remainder be met with increases in taxation? i doubt it. in fact, there is increased pressure to reduce taxes further in the future. another easily distinguishable future trend is tightening competition over the location of companies. finnish companies are increasingly a part of a global business world with operations in finland. in such a world the relocation of operations to places where costs can be kept to a minimum becomes the norm. a small, expensive, rapidly ageing and remote country is hardly in the best possible position when an international company is contemplating where to locate operations. labour mobility is gradually changing from a theoretical possibility into a reality that shapes economic policy. what kind of prospects does finland have for succeeding in international competition? political stability and security, a reliable legal system, a still solid infrastructure | 0 |
david klein : israel β s economy after the elections speech by mr david klein, governor of the bank of israel, for the israel - japan friendship society and chamber of commerce, 9 january 2003. * * * following the elections we will have a new government. this may be an opportunity to assess the economic and social policy for the term of the next government. a reasonable starting point would be to ask where the economy will be heading if the present background factors β namely the world slowdown and the conflict with the palestinians β will endure, and we continue with present policies. a not improbable answer would be that : - the economy will keep contracting, - the rate of unemployment will increase, - more families will find themselves below the poverty line, - the government debt will increase, - tnterest rates, short and long, will remain high. none of these is unavoidable if policies will be adjusted there is a good chance to steer the economy away from continued recession with all its repercussions. what, then, are the required changes? i will sum them up for you, but not before stating that we are fortunate not to have on our plate two major constraints that limited our ability to grow in the past, namely : - shortage of foreign currency, - inflation. foreign currency we don β t have a problem of foreign currency because we abolished exchange controls on one hand, and let the market determine the daily exchange rate on the other. when a foreign analyst wants to convey the salient features of the israeli economy from this perspective, this is what he says to - day : - foreign currency reserves are high and stable. in the last six years they reached a level of 5 - 6 months of imports, some usd 24 billion, - net foreign debt of the economy as a whole is low and declining. in the last two years it amounted to a negligible 2 % of gdp, - short - term assets of the economy exceed by a wide margin its short - term liabilities, meaning that we should not expect any liquidity problem, - the foreign currency market, created by the bank of israel in mid - 94 β, keeps widening in terms of daily turnovers and number of participants, operating at reasonable spreads and characterized by relatively low volatility. inflation when one is reviewing the progress we have made in taming inflation, the noteworthy landmarks are : - we have succeeded in going down from three - digit inflation in the first half of the 1980s | forget : our primary mandate is price stability in the euro area as a whole. interest rates are set according to this medium - term objective. and the intervention programme is such as to allow the best possible transmission of our policy in the euro area as a whole. why did you say that you would prefer the european financial stability facility ( efsf ) to buy government bonds rather than the ecb, if what is at stake is restoring monetary policy transmission? it is because certain governments, individually, have behaved in an abnormal manner, and because all governments have fallen short in their collective supervisory duties that we are seeing anomalies in the behaviour of certain markets. the governments have to meet their responsibilities. it is for this reason, in particular, that i have asked for the efsf to be enhanced, in quality and quantity. the possibility for the efsf to purchase government bonds is part of this thinking. the euro area has gone through a rocky period because of the sovereign debt crisis in certain countries, to the point of doubt being cast on the sustainability of the single currency. do you believe the measures being taken concerning the efsf are appropriate to avoid a similar situation arising again in the future? the euro is a currency which inspires confidence. it is credible for the next ten years, and beyond. moreover, the situation in the euro area as a whole is in many respects better than that in comparable economies. our current account is in balance, which is far from being the case in all major industrial countries, and our consolidated annual government deficit for 2011, as a proportion of gdp, should be half those of the united states and japan. the monetary union part of economic and monetary union ( emu ) is working well, thanks to the fact that we are constantly on our guard. on the other hand, there is still much to be done as regards economic union. this is because some countries have not had satisfactory budgetary policies, and because the supervisory system in place since the creation of the euro has not functioned correctly. our message has always been that, in the context of a single currency without political federation, there has to be an extremely strong framework of budgetary stability. we signalled this again most forcefully when in 2005 a number of major member countries, including france, germany and italy, tried to weaken considerably the stability and growth pact by denouncing what they said to be its excessive orthodoxy. having lived through the recent challenges, both individual and collective, nobody | 0 |
that nurture its development. | marion williams : fund management in the caribbean β rapid growth and regulatory challenges address by dr marion williams, governor of the central bank of barbados, at the caribbean centre for monetary studies ( ccms ) 11th annual policy level seminar, port - of - spain, 25 may 2007. * * * mr. chairman, dr. ramsaran ; minister sahadeo ; governor ewart williams ; deputy governors ; mr. kelvin sargeant. i wish to congratulate the caribbean centre for monetary studies centre ( ccms ) on the choice of the theme for this year β s seminar. the ccms is in the process of restructuring itself. as part of the restructuring it is intended that the ccms spreads the scope of its coverage beyond central banks and commercial banks to include investment banks, mutual funds and securities companies, as well as insurance companies, some of which currently fall under the jurisdiction of some central banks. the timing of this seminar is also in recognition of the fact that an increasing proportion of funds are now invested under management. regional issues also, in the glare of globalisation and regionalisation the region is facing both old and new challenges, among them is the need to increase the ratio of our savings and investment in order to fund development. some of the more pressing features and challenges include : β’ slow growth in some jurisdictions ; β’ rising fiscal debt burdens ; β’ sluggish and disproportionate job creation ; β’ loss of economic and human capital / potential ; β’ global competition from new economies β attacks on both the trade and service sectors ; β’ an increasingly ageing population - a threat to the subsistence of national social security systems. these challenges, however, also offer opportunities. there can be positive outcomes if the correct procedures and frameworks are put in place and these challenges can also serve to harness fully the growth enhancing potential of the financial sector and enhance its role in the region β s development. with increasing assets under management, the investment industry faces several challenges that must be addressed to ensure that the interests of both the investors and the asset managers are best served. in some jurisdictions growth of funds outside the banking system has been more rapid that the growth of deposits of commercial banks. this means that the funds management sector deserves increasing attention. in recent years, there has been an increase in investor interest and consequently, a rapid emergence of investment products being offered to both retail and institutional investors. there has been a spurt in the growth of investment vehicles such as mutual funds, pension funds | 1 |
driving the resilience of individual firms is critical in ensuring that consumers can trust that deposits are safe, investments are protected and insurance policies will pay out when a claim is due. in addition, prudential and conduct supervisors have a shared interest in : business model sustainability ; governance, risk management and control arrangements ; and the culture of regulated firms. our new strategic plan builds on our extensive existing consumer protection framework and reinforces our strategic focus on the conduct of firms. this is essential, given the wide range of financial misconduct scandals internationally and domestically, including the tracker mortgage scandal. it is also reflected in the evolution of our supervisory approach in recent years to strengthen its focus on conduct and cultural issues. the supervisory phase of the tracker mortgage examination is now in the final stages. as of end - february 2019, lenders have identified nearly 40, 000 customers who suffered unacceptable 1 / 5 bis central bankers'speeches harm from tracker mortgages - related failures. this overall number is unchanged since our last update based on date at the end of december. total redress and compensation paid has increased by β¬18 million since the end of december to β¬665 million now. by the end of this month, we expect the number of customer accounts awaiting redress to be down to about three hundred, which will be mostly paid in april. in finalising our supervisory work, our focus at all times is to ensure that all affected groups of customers have been identified and remediated. this work has now been completed at the majority of lenders. in the case of the remaining lenders, we are working to ensure that these have addressed satisfactorily any remaining issues affecting groups of customers and all eligible groups of customers have been included for redress and compensation. we expect this work to conclude in the coming weeks, with a final report published thereafter. while the β project β phase of our supervisory work is nearing completion, any further individuals or groups that are identified will receive the same treatment under our standard supervisory approach. finally, our enforcement work is ongoing. these investigations are detailed and forensic, involving the scrutiny of thousands of documents and the conduct of interviews to establish the exact circumstances of matters under investigation, including the actions of regulated entities and individuals. while we have a strong suite of existing powers, the findings of our report into the behaviour and culture of the irish retail banks last year set out additional reforms that include the proposed introduction of a new individual accountability framework. this would ensure clearer lines of accountability | 90 days continued to decline in q4 2018, marking the twenty - first consecutive quarter of a fall in the number of accounts in this category. the number of pdh mortgage accounts that were classified as restructured at end - december was 111, 504. of these restructured accounts, 87 per cent were deemed to be meeting the terms of their current restructure arrangement, the same as last quarter. nonetheless, secured property lending does require that the underlying property can be repossessed as a last resort. the extensive protections that are in place for distressed borrowers do not preclude loss of ownership β although the ccma and related protections has meant that repossessions in ireland are relatively low in an international context. in 2018, 877 primary dwelling properties have been repossessed : one third as a result of court actions and the remainder through the sale or surrender of the property. 3 / 5 bis central bankers'speeches we are acutely conscious of the vulnerabilities of those borrowers at risk of losing their homes and maintain the focus of our supervisory work on ensuring all lenders adhere to the ccma. furthermore, we continue to urge all borrowers and lenders to engage and seek solutions that minimise loss of ownership. notwithstanding the extensive use of forbearance and restructuring, other tools also have a role to play. in particular, the sale of loan portfolios to non - bank investment funds reduces the risk of financial instability in the event of a future downturn, since the risk is spread more widely across the financial system. in terms of national risk management, the transfer of credit risk and funding risk to investment funds that buy loan portfolios constitutes a national reduction in macrofinancial risk, given that investors in these funds are primarily overseas. critically, the sale of such portfolios does not affect statutory consumer safeguards β the strong legislative framework ensures that borrowers benefit from the same consumer protections regardless of whether their loan is held by a bank or a non - bank. our twin focus on resilience and consumer protection explains why we have grave concerns about the β no consent, no sale β bill. given that the consumer protection framework is identical whether a loan is held by a bank or a non - bank, the bill would not add any extra degree of regulatory protection for consumers. at the same time, it would severely damage resilience, since the transferability of loans is a central feature in a modern financial system. in addition | 1 |
is, it appears likely to be lower than recent outcomes, but closer to the top than the bottom of the 2 - 3 per cent target range. with that outlook, the board decided in february to maintain the existing setting of cash rates. we will be maintaining a close watch on what incoming information tells us about the prospects for inflation. the apparent softening in underlying inflation in the december quarter was certainly very welcome, but it is not as yet clear to what extent it signals a persistent, as opposed to a temporary, phenomenon. most of the indicators we have available still suggest a very fully employed economy. so there would be some risk of inflation remaining uncomfortably high were demand growth to be unexpectedly strong in the near term. hence the outlook for demand, and the extent to which capacity constraints are easing in a range of sectors, must be key elements in forming a judgment about the outlook for inflation, and the appropriate stance of monetary policy. i turn now to payments policy, which i know is of interest to this committee. you conducted a very extensive set of hearings last year into payments issues and we believe that was very useful as a way of airing the views of the various participants. in 2002, when the payments system board announced the credit card reforms, it committed to reviewing the outcomes after five years. we will meet that commitment with a review that will take up this year and part of next. the review will be broad in scope and will include all the bank β s reforms to date. i know that some industry participants have expressed reservations, including to this committee, about the bank, rather than another body, conducting the review. i note that the committee was not convinced by their arguments and concluded that the bank should conduct the review. from our point of view, having publicly committed to carry out such a review, we feel we could hardly do otherwise. moreover, it would be very odd indeed for the payments system board, which has been charged by the parliament with making payments policy, to ask some other body to review its policy decisions. it is, of course, open to the parliament, including via this committee, to review the reforms in any way that it sees fit and to ask the payments system board to account for its decisions. in december last year, the payments system board announced the outline of the review, after inviting input from industry participants. the formal part of the review will begin mid year, when the bank releases an issues paper, which we hope will form the basis for an initial | round of consultations. as background to the review, we will also be undertaking some detailed research into costs and usage patterns of the various payments methods, including cash. this will update and broaden the study on costs carried out seven years ago. the review will be an open process, which will include a conference towards the end of this year bringing together policy - makers, specialist academics and industry practitioners. we plan to release our preliminary conclusions in the first part of 2008 and then we would again consult widely before making any changes to the current arrangements. we expect the review to be completed in late 2008. this is a lengthy process, but it has to be if the discussion is to be based on the facts, everyone with something to say heard, their views considered carefully and the psb to undertake proper deliberation. it is important to add that while the payments system board β s reforms to retail payments systems have attracted a good deal of attention, the board is concerned with a much broader set of issues, including the stability of the payments systems. the board β s main focus here is the operation of the high - value payments systems. these systems continue to operate with a high degree of reliability and security, but continued attention and investment on the part of the principal players, including the rba, is needed to ensure that this remains the case over the years ahead. mr chairman, that concludes my introductory remarks. my colleagues and i are here to respond to your questions. | 1 |
durmus yilmaz : financial security and stability speech by mr durmus yilmaz, governor of the central bank of the republic of turkey, at the forum β measuring and fostering the progress of societies : the oecd world forum on statistics, knowledge and policy β, istanbul, 28 june 2007. * * * dear guests, i would first like to welcome you all to istanbul, the city where the two continents meet. and today it is so delightful to see that it is a meeting point for high level delegates from all the continents. in that regard, it is a great pleasure for me to be given the opportunity to share my views on financial stability and security with such a distinguished audience. today, i would like to begin my speech by underlining the importance of financial stability, why and how we should keep an eye on the stability of the financial system, including the turkish perspective. finally, i will try to emphasize the interrelatedness between financial security and stability. importance of financial stability β¦ as a result of the liberalization and deregulation processes, financial markets became more integrated and underwent radical transformation, starting, in fact, with developed countries in the late 70 β s and spreading to developing countries in the 80 β s and 90 β s. at the same period, capital movements were seen to have accelerated and reached to high levels. this, in turn, led to financial innovation and heavy use of sophisticated instruments. the degree of sophistication in financial markets urge all market participants to increase their focus on risk management and policy makers to monitor closely the developments and identify risks in these markets. this shift in market participants β perceptions is particularly important, considering the lessons derived from painful experiences of crises, which especially occurred during the last two decades all around the world. these lessons taught us how costly and disruptive financial instability can be and how effective risk management can be to avoid adverse conditions in advance. even though there is no consensus on how to define financial stability, its importance is widely accepted. due to the financial crises experienced on the road to globalization, along with financial liberalization and technological improvements, β financial stability β in line with the target of achieving price stability, has become one of the leading policy issues of central banks. however, i should point out that, although price stability has a commonly accepted and clear definition, i can say that it is much more difficult to define financial stability. the european central bank defines financial stability as the financial system capability | emerging technologies possess the potential to revolutionize financial services, making them faster, more efficient, and more secure. notwithstanding this promise, challenges remain in their application to critical financial market infrastructures whose operational integrity represent a non - negotiable pre - requisite for our financial system. as we enhance existing services or develop new ones, our consideration of new technologies must strike an appropriate balance to ensure the risks are thoroughly 4 / 5 bis central bankers'speeches understood before their transformative potential is realized. in pursuing this suite of initiatives straddling the wholesale services, we seek to advance both the interests of customers and policy makers during this era of unprecedented challenge and change. standing before you today convicts me that our success as stewards of this business depends absolutely upon our active engagement with the depository institutions and end users to which we are operationally accountable. across this sphere and all others, either intentionally we are progressing or inevitably we are regressing ; there is no idleness. thank you for your generous attention today. i β d be pleased to respond to a few questions. 5 / 5 bis central bankers'speeches | 0 |
board's role to provide oversight, asking the right questions and holding the management accountable for executing the bank's strategy within the agreed risk appetite. in this context, it is imperative that the views of the board are clearly articulated and documented in the minutes of the meetings of the board and its various subcommittees. it is said that the'palest ink is better than the best memory '. proper documentation serves as a vital record of the board's deliberations, decisions, and rationale behind those decisions, ensuring transparency and accountability in governance. clear minutes not only provide a historical account of the board's discussions but also serve as a reference for future decision - making, helping to maintain continuity and clarity in governance practices. boards should prioritise proper succession planning for top management. having just one whole time director ( wtd ) can create potential vulnerabilities, especially in times of transition or unforeseen circumstances. without a well - thought - out succession plan, 2 / 5 bis - central bankers'speeches the bank may face leadership gaps that could disrupt operations and affect strategic decision - making. a broader pool of experienced leaders also contributes to better governance and more resilient management structures. we observe that while the sfbs are strengthening their boards by bringing in new directors, some sfbs are yet to ensure the presence of at least two whole time directors. i would request these banks to expeditiously consider appointing more wtds. empowering assurance functions boards should accord due importance to assurance functions, namely, risk management, compliance and internal audit. these functions play a critical role in identifying and mitigating risks, ensuring compliance with laws and regulations as well as safeguarding the organisation's integrity. boards should ensure that heads of assurance functions are positioned appropriately within the organisational hierarchy and granted direct access to the board. dual - hatting, or combining assurance responsibilities with operational or management duties, undermines the independence and objectivity of assurance functions by creating conflicts of interest. therefore, any dual hatting of assurance functions, should be avoided. key risks to reflect upon small finance banks have demonstrated strong growth since their inception, now accounting for 1. 18 percent of total banking assets ( as of march 2024 ). this is a substantial rise from 0. 44 percent in march 2018. the deposit base has grown at a 32 per cent compounded annual growth rate ( cagr ) over the last five years whereas net advances recorded a cagr | extend my best wishes for successful deliberations during this three - day conference and commend the organisers for their efforts. may the next three days be filled with fruitful exchanges, innovative ideas, and collaborative solutions that would contribute to the process of keeping our financial system resilient, future ready, and crisis resistant. 1 dr sheri marina markose, professor of economics, university of essex, colchester, uk & cbdc academic advisory group, bank of england & uk hm treasury. 2 dr. hiroko oura, head, financial sector assessments and policies division, mission chief, fsap, india, imf, washington dc, usa. 3 through a combination of training programs, workshops, seminars, and conferences, the college equips supervisors with the knowledge, skills, and tools necessary to fulfil their responsibilities effectively. 4 the gross non - performing assets ( gnpa ) ratio for the scheduled commercial banks ( scbs ) was 2. 74 per cent at end march 2024 ( provisional ), down from 3. 87 per cent as on march 31, 2023 and 5. 82 per cent as on march 31, 2022. the capital to risk weighted assets ratio ( crar ) at 16. 8 per cent at end march 2024 is also much above the minimum regulatory requirement. the gnpa ratio of nbfcs was 3. 96 per cent at end march 2024 ( provisional ), down from 5. 03 per cent at end march 2023, and 6. 29 per cent at end march 2022. the capital to risk - weighted asset ratio ( crar ) at 26. 58 per cent at end march 2024 is also well above the minimum regulatory requirement. 5 the erstwhile departments of banking supervision, non - banking supervision and cooperative banking supervision were merged to form a single unified department of supervision. 6 refer paragraph 2 of governor's monetary policy statement dated june 7, 2024 ( https : / / www. rbi. org. in / scripts / bs _ pressreleasedisplay. aspx? prid = 58049 ) 5 / 6 bis - central bankers'speeches 6 / 6 bis - central bankers'speeches | 0.5 |
both sides will benefit from each other β s know - how. prior to the finalisation of the detailed rules of this supervisory model, a public consultation will be held this autumn. β’ fourth, a comprehensive assessment of the banks that will be directly supervised by the ecb. as this comprehensive assessment β which will involve a risk assessment, balance sheet assessment and a stress test β is currently attracting most attention, i would like to deal with it in more detail. for it makes clear that the banking union can only be a success if we take the correct approach from the out - set. for various reasons, two stress tests have not led to a restoration of confidence in the european banking sector. this will be our third and last chance. before launching the single supervisory mechanism, we should know the state of the banks that we will be supervising. we want to be free of old liabilities when we take on our new task. but it is also beneficial for the supervised banks themselves for us to have a clear picture of the health of each individual institution. bis central bankers β speeches by performing the comprehensive assessment we will provide transparency for investors β and that is exactly what is required to sustainably reinforce confidence in the banking sector. the average price / book ratio for large and complex banking groups in the euro area is currently just over 0. 5. this reflects the opinion of investors that banks overestimate the value of their assets, will not deliver the expected rate of return or will require fresh capital. moreover, confidence in the banking sector is much lower in some euro area countries than in others. that also causes fragmentation in the single market, as reflected in the difficulties some banks face in obtaining market funding. the results of our β inventory β are then incorporated in a stress test, which the european banking authority ( eba ) will perform in close cooperation with us. our staff members are now elaborating the methodical details of the comprehensive assessment. the final decisions will be made as soon as the legislation comes into effect and the decision - making supervisory board is in place. to enable the supervisory board to start operating promptly, the chair and vice - chair should be appointed as soon as possible after the final adoption of the legislation. we should now consider how to deal with any weak spots that are revealed during the assessment. funding for any capital shortfalls should preferably come from the market. but we also need a backstop in the event that some banks fail to raise the necessary capital. this is | that an entire decade β s worth of job growth was lost. household wealth declined sharply as well during the great recession due to losses both in equity and real - estate wealth. the household saving rate increased in reaction to this negative shock to household wealth ( chart 8 ). several factors were likely behind the higher saving rate. first, as already noted, households likely increased their saving rate to begin to rebuild their wealth. second, given the deterioration in the labor market, households would also have a strong β precautionary demand β for saving to help buffer their consumption in the event of a job loss. finally, homeowners might react to falling house prices by increasing their saving rate in order to rebuild the capacity to make a down payment on a future tradeup house. in more extreme cases where house price declines have put owners in a negative equity position where the value of the house is now less than the balance on the mortgage, homeowners may increase their saving rate to have the capacity to pay off their mortgage to avoid a costly foreclosure. at the same time that the real economy was contracting there was an on - going crisis in financial markets. the balance sheets of banks and securities firms were under severe strain and liquidity was drying up. a good barometer for problems in the financial sector is the price for credit default swap ( cds ) contracts for financial firms ( chart 9 ). these cds prices started to rise in 2007 as news of losses for subprime mortgages began to hit markets. there was a bis central bankers β speeches jump in cds prices in march 2008 when bear sterns was taken over by jpmorgan chase. for a brief period over the summer of 2008, cds prices retreated. this was more evident for securities firms and may reflect the opening of the primary dealer credit facility ( pdcf ) that allowed primary dealers to obtain liquidity from the federal reserve on a collateralized basis. following the bankruptcy of lehman brothers in september 2008, these cds prices increased dramatically. in response to the deterioration in the economy as well as to mounting loan losses, banks tightened their lending standards and credit spreads increased. this can be seen using data from the federal reserve β s senior loan officer opinion survey ( chart 10 ). values above zero represent tightening of standards, widening of spreads and weaker loan demand. all three were taking place as the economy entered the recession. a consequence was a sharp contraction of lending activity ( chart 11 ). to the extent that the decline | 0 |
bandid nijathaworn : challenges for central banks in the new globalisation remarks by mr bandid nijathaworn, deputy governor of the bank of thailand, at the bank of thailand international symposium 2010 β challenges to central banks in the era of the new globalisation β, bangkok, 15 october 2010. * * * i think it is clear from the discussion we had that the post - crisis global economy will not be the same as the one we remember three or four years ago. the global financial crisis was serious, causing much dislocation to the global economy, the banking sector and financial markets, and the process of regaining full normality will take time. therefore, at least for the next few years, the post - crisis global environment will be characterized by a world of two halves : the advanced economies and emerging markets, each exhibiting different growth prospects, different economic challenges, and different policy stance. and it is this divergence in policies and performance that will drive uncertainty and volatility in global financial markets, accompanied by shifts in risk appetite, global asset allocation, and relative prices. this, in essence, is the context in which new challenges for central banks are being shaped. what implications will this post - crisis environment have on central banks β roles and responsibilities in maintaining economic stability? to me, three implications are clear. the first is the need for central banks to expand their mandates to formally recognize both price and financial stability as their core policy objectives. an important lesson learned from the current crisis is that price stability alone is not sufficient to ensure financial stability. therefore, financial instability or crisis can occur even in the environment of stable prices and well - anchored inflation expectations. this implies that to ensure overall economic stability, central banks will need to go beyond the primary objective of price stability and to systematically embrace financial stability as another policy objective. the relevance of this dual mandate has become very clear in the last few years, in light of the global financial crisis, implying greater roles and responsibility for central banks. the second implication from the global crisis is that, under the new globalisation underscored by more integrated financial markets, the major source of risk and instability that central banks will have to deal with to ensure stability will be external. typically, this includes the impulse on domestic inflation from global prices, especially fluctuations in commodity prices. another is the risk to financial stability steming from unintended consequences linked to the spillover effects of policies implemented by other economies. but for | most emerging markets at this time, the most serious external risk is the challenges posed by large and persistent capital inflows. the first challenge involves a macroeconomic dilemma that centres around the tension between appreciation pressures, inflation dynamics, and growth prospects. the second stems from financial stability concerns associated with potential build - ups of macroeconomic imbalances, risk of asset price bubbles, and the possibility of an abrupt reversal of inflows. in the past, as we all know, reversals of capital have trigged serious debt defaults, banking distress, and currency crises. so, with the nature of risk becoming more external, the abilities of central banks to respond effectively to the new challenge based on domestic measures will be limited. this calls for a reconsideration of policy coordination, both in the context of within - country coordination, and cross - country coordination. the third implication from the global crisis is the heightened expectation and trust that the public now has on central banks, as guardian of stability, to do its utmost to avoid financial crisis, and to do it professionally and independently. in the west, the current crisis has diminished public trust on the roles of government and financial institutions in safeguarding and upholding public interest. to this end, central bank independence is seen as an important pre - condition for ensuring safety, continuity, and stability. this is a challenge that central banks will need to recognize in performing their duties. so, given this backdrop, challenges facing central banks going forward will be more demanding. and to meet these challenges, central banks will need to be thinking clearly on at least two issues. the first is the right policy framework to respond to the challenge. in the case of monetary policy, from our experience here in thailand, combining inflation - targeting with macroprudential measures under a flexible exchange rate regime has proven to be a good workable policy framework for meeting the challenge posed by the dual mandate of maintaining price and financial stability. nonetheless, in an environment of large and persistent capital flows, having the right policy framework alone may not be adequate. monetary policy will need to be supported by and coordinated with other policies to ensure the best outcome. for example, well - aligned fiscal and monetary policy is important at a time of strong capital inflows to help moderate the adverse impact of capital flows on domestic demand. this means fiscal policy will need to be less procyclical as domestic interest rates rise. next, deeper and more diverse local financial markets will help lessen | 1 |
seen a significant upturn in long - term interest rates in the euro area since the end of may. this development was certainly affected by the continued increase in bond yields in the united states over the same period. more recently, however, domestic factors have probably played a more important role in the determination of domestic bond yields than was previously the case. these factors include financial market perceptions of more evidence pointing to a further strengthening in economic activity in the euro area during the year, accompanied by a modest pick - up in inflation expectations from the low levels seen in recent months. the more positive market sentiment regarding the prospects for euro area output growth has also been reflected in a narrowing over recent weeks of the relatively wide differentials between us and euro area bond yields. exchange rate developments do not yet reflect these very same factors. as we have said on earlier occasions, the governing council believes that the euro is firmly based on internal price stability and therefore, has the clear potential to achieve a stronger external value. the governing council reaffirmed its view at today β s meeting that the monetary policy of the eurosystem will safeguard the euro β s internal purchasing power and will thereby support its international value. the prospects for a more broadly based and sustained recovery in the world economy have become stronger. the outlook has improved further, in particular in relation to expectations of continuously strong growth in the us economy and some tentative indications that the prolonged decline in activity in japan may have come to a halt. in addition, recent developments in economic and financial indicators for the emerging market economies suggest that a recovery is under way in south - east asia. moreover, to the extent that the kosovo conflict may have had a negative impact on economic sentiment in a number of countries, its end has eliminated a risk to the outlook for economic developments in the euro area. as recent developments in latin america indicate the outlook has improved only moderately. with reference to developments in economic activity in the euro area, some important data have been released since our last meeting. most notably, eurostat has now started to publish euro area national accounts data which are based more closely on data compiled in accordance with the new esa 95 methodology. according to these estimates, the quarter - on - quarter rate of real gdp growth increased to 0. 5 % in the first quarter of this year, compared with 0. 3 % in the previous quarter. at present there is insufficient experience with regard to the properties of the new esa 95 data, in particular their susceptibility to revision | early 1999, the expectation of a strengthening in economic activity in the course of 1999 and a further acceleration next year all indicate that any upward pressures on prices will have to be monitored very carefully. let me now give the floor to the vice - president to introduce two additional topics we discussed during the governing council meeting : in addition to reviewing the main monetary, financial and other economic indicators, the governing council also considered the days on which the target system would be closed in the year 2000. with regard to the calendar of target operating days for 1999, the ecb announced on 31 march 1999 that the target system would close on 31 december 1999, in addition to saturdays and sundays, christmas day and new year β s day. however, considering the financial and social cost of keeping the target system open on days which are traditionally public holidays ( or bank holidays ) in most of the euro area, and in view of the indication given by the european banking industry that it would welcome the closing of target on such days, the governing council today decided in principle that next year β in addition to saturdays and sundays β target will be closed on new year β s day, good friday, easter monday, 1 may ( labour day ), christmas day and 26 december. in countries where one of these days is not a public holiday, the national central bank will endeavour to close the national rtgs system on the day in question or, when this is not possible, will seek to limit domestic payment activity as much as possible. you will find further information relating to this decision in the separate press release to be issued today. last and certainly not least, it is my great pleasure to announce a very important milestone along the road to the introduction of the euro banknotes. the production of the euro banknotes has begun and, by the end of this month, euro banknote production will be under way in printing works in several euro area countries. as you will remember, we presented the draft euro banknote designs in december 1996. the designs were subsequently adjusted and refined in order to meet the technical specifications in full. intensive work then began to convert the detailed designs into the origination material, in other words the final dies, films and plates which enable printing plates to be made. production of the pilot series started in september 1998 and was completed a few months ago. the printing of this pilot series involved the production of several million banknotes under normal operating conditions. this was a success and we therefore agreed that the participating national central banks could | 1 |
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