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any case. in terms of the restructuring of payments in emu and the rearrangement of business relationships - in other words, including acquisitions - fairness should take priority over everything else. what matters, after all, is successfully realising the joint project of monetary union on an enduring basis. | would agree that no monetary policy strategy should be set in stone. instead, it should adapt to changing circumstances, and circumstances have certainly changed over the past 18 years. in this sense, our current review should translate this strategy to the challenges of our time. 3 personal relationship otmar, with your firm commitment to monetary stability and central bank independence, based on your strong academic reasoning, you should serve as a role model for every central banker. and you have personally given me guidance and advice on numerous occasions as well. 1 / 2 bis central bankers'speeches even in my days as a student, i became well acquainted with your perspective by studying your textbooks. i preferred your books to others because they offered better explanations of the intricate interrelations of monetary policy and also introduced the reader to the challenges and issues of practical monetary policymaking. many years later, i had the privilege of working together with you personally. in the aftermath of the global financial crisis, you chaired the working group neue finanzmarktarchitektur. this working group was convened by chancellor angela merkel and was better known as the issingkommission. its task was to prepare the german agenda for dealing with the financial crisis for a packed series of g20 summits over the subsequent years. it was a very intensive and productive time that i remember vividly. today, i enjoy being able to exchange ideas about monetary policy and central banking with you – sometimes as a sparring partner. when we converse over the phone, i feel that we see many things from a very similar perspective, but what makes these exchanges so valuable and engaging is the sharpness of your intellect. and for this i offer my sincerest thanks. 4 conclusion although you already celebrated your 85th birthday a few weeks ago, i would nevertheless like to take this opportunity to wish you many happy returns as well as continued good health and vitality. your word carries weight beyond our country ’ s borders, even to this day. i hope that we will continue to hear your clear, credible, and authoritative voice in policy debate for many years to come. thank you and all the best! 2 / 2 bis central bankers'speeches | 0.5 |
may also borrow. for mixed evidence of the countercyclical behaviour of u. k. pension funds during the crisis, see a. haldane, “ the age of asset management? ” ( speech delivered at the london business school, london, u. k., 4 april 2014 ). www. bankofengland. co. uk / publications / documents / speeches / 2014 / speech723. pdf. recent increases in long - term interest rates have also improved solvency ratios. also see k. ambachtsheer et al., “ risks of a prolonged low - interest - rate environment for the pension sector ”. report submitted to the global risk institute, rotman school of management, university of toronto. ( september 2013 ). in their search for yield, pension funds should avoid taking in “ crowded ” positions and taking other common exposures that reduce market diversity and their contribution to financial stability. canadian pensioners ’ mortality, canadian institute of actuaries, final report, february 2014. www. ciaica. ca / docs / default - source / 2014 / 214013e. pdf? sfvrsn = 4. outside of canada, some pension plans have transferred longevity risk to insurance companies, for example. bis central bankers ’ speeches a third challenge has been the introduction of fair - value accounting for pension promises and the interaction with regulatory solvency requirements. the new accounting rules, which use the yield of aa corporate bonds to discount liabilities while valuing assets at current market prices, have led to an increase in balance sheet volatility. in response, many funds have attempted to “ de - risk ” their plans with higher allocations to long - term bonds, which provide a better hedge against the impact of interest rate fluctuations on their liabilities. however, to compensate for the opportunity cost of a smaller equity weight, some funds have also leveraged their bond portfolios. while the use of leverage may help to raise returns, it also increases risk, because such a position may be difficult to roll over in stressed markets. 14 the pressure to minimize the volatility created by fair - value accounting and solvency rules may also entice some funds to favour strategies that shorten their investment horizons. 15 however, such “ short - termism ” may be costly, since it could detract from the contribution that pension funds can make to financial stability. fortunately, most funds are committed to disciplined rebalancing, which will | but we also know that persistently high inflation would be harder. our decision yesterday to raise the policy rate was not taken lightly. it was something we felt was necessary, based on the accumulation of evidence that i outlined for you today. we are committed to restoring price stability for the benefit of all canadians. thank you for your time. i am ready for your questions. see d. h. autor, d. dorn and g. h. hanson, “ the china shock : learning from labor - market adjustment to large changes in trade, ” annual review of economics 8 ( 2016 ) : 205 – 240. | 0.5 |
the region. it would also be conducive to the stability and integrity of the financial system. i would emphasise the word “ international ” as there is no reason to develop regional standards different from those that have already been developed by international financial institutions and professional bodies, together with supervisory agencies. 17. the fourth element concerns the strengthening of co - operative efforts in financial system development. as i have already noted, in asia we have been making good progress in our efforts to develop the domestic and regional debt markets through various regional forums and involving the international financial institutions. in the context of developing asian bond fund 2, for example, we have achieved a few firsts, including the introduction of the first exchange - traded bond index fund in asia, arranging for two asian markets to allow exchange - traded funds for the first time, and opening up the renminbi inter - bank bond market for the first time to foreign investors. 18. the final, and probably most difficult, step towards creating an integrated asian financial market involves the relaxation of statutory restrictions on cross - border capital flows. it is likely to be the most difficult, in part because it depends on the ability of the financial system in individual jurisdictions to cope with the ensuing risks. 19. this last point brings me to the next issue i wish to touch upon in my remarks, namely, the need for a strong and efficient regulatory framework that is adapted to the integration of the domestic financial system with that of other jurisdictions. 20. greater financial integration across jurisdictions brings about at least two new sources of risk facing domestic financial institutions. the first and most obvious is the risk of currency mismatches when cross - border transactions involve the use of different currencies, as they are likely to do in asia for the foreseeable future. although monetary integration is a topic that is often mentioned in the region, its realisation, if indeed it occurs, is almost certainly going to take considerably more time than it will take for financial markets to become more closely linked. in the meantime, financial systems will have to be robust with respect to fluctuations in exchange rates that may impact assets and liabilities of financial institutions differentially. of course, the financial turbulence in 1997 and 1998 has already alerted both regulators and the private sector to these risks, but if financial integration leads to increased cross - border financial commitments for domestic financial institutions, the size of the risks may become larger. 21. if integration has the desired effect of increasing cross - jurisdiction intermediation | , it has to be admitted that food and energy prices affect the cost of the consumer basket more than in older euro area member states. thus, consumer prices accelerated to 5 % in estonia. 3. estonia stands strong, compared to the eu average. in the midst of a crisis, we demonstrated our ability to quickly fix the balance in times of trouble. we now need to make plans for regulating our behaviour at times of joy. 4. our state budget strategy has set out a budget policy framework for the medium perspective. unfortunately, we have yet to see the binding nature of the document in the decision - making process. for example, the budget strategy prepared in the spring of 2011 set its sights on restoring the consolidated budget surplus. as at 2012, the attainment of the objective has been postponed. this is worrying. it shows that the current framework enables to change long - term goals too easily. the current framework also provides no solutions to managing the cost increase at times of growth. it would thus be reasonable to establish rules for restricting expenditure alongside the established rules for ensuring a balance. these rules would reduce the volatility of the cost increase, prevent unjustified expectations and alleviate the pains of cost - cutting. 5. at the beginning of 2012, the euro area heads of state and government resolved to launch the european stability mechanism sooner than initially planned. 6. in public relations, eesti pank has repeatedly emphasised that central banks are being forced to take on a role that does not suit them. functions that are alien to the eurosystem are best left to the european stability mechanism. there are two advantages to such a solution. firstly, establishing conditions for the award of financial support allows guiding the recipient country ’ s economic policy in the desired direction. as we all know, monetary policy measures cannot be used for eliminating the causes of the sovereign debt crisis. secondly, this will tighten the control of the member states ’ governments and parliaments over crisis measures and ensure a better overview of the costs of the crisis measures. [ to sum up ] 1. the right decisions can only be made when we understand the economy. it does not serve our interests to monitor just our own activities – we also need to monitor the development plans and objectives of other euro area countries ( and not only greece or portugal ). the european economic and monetary union already has all the good characteristics for the achievement of which the union was established to begin with. we now need to enhance the union ’ s efficiency, | 0 |
yaron amir : competition in the banking system speech by mr yaron amir, governor of the bank of israel, at the banking supervision department conference on competition in the banking system, jerusalem, 2 april 2019. * * * summary : some of the significant measures and reforms aimed at enhancing competition have already come to fruition, and others are in the process of coming to fruition. there are additional supporting processes that are required now, such as the development and application of financial and technological instruments, and the deepening of the capital market, which will contribute to competition in the credit market and increased consumer well - being as they advance. these processes are becoming possible mainly in view of the development and application of advanced technologies that were not available until just recently. removing information gaps, leveraging existing information, and utilizing technological ability for informed analysis and learning in real time about the credit market will enable more correct pricing that is more in line with the risk to various layers of the credit market — households and small and medium businesses — thereby contributing to development of the market. the market must be developed while managing risks and developing proper regulation, in order to make sure that, despite the risks, the benefit from these processes will make them worthwhile. two financial instruments that should be advanced in order to make the capital market more sophisticated and deeper, and which will contribute to the continuing increase in competition, are securitization and long - term interest rate derivatives. * * * good morning. first, i would like to congratulate the banking supervision department on this conference, and welcome the honored guests. the issue of competition in the financial system is one that occupies many people in israel and abroad. advancing competition has been a top priority of the public and of the bank of israel in recent years, and for good reason. advancing competition in the financial system, when done properly, has many positive effects on all entities in the economy, first and foremost the broad public. today, i would like to discuss various aspects that can enhance competition in this market, thereby increasing consumer well - being and economic growth. some of the significant measures and reforms aimed at enhancing competition have already come to fruition, and we are already enjoying the results. others are in the process of coming to fruition. and there are additional supporting measures that are now required, such as the development and application of technological and financial instruments, and deepening the capital market. as these are advanced into the future, they will in turn contribute to | the financial system — i have discussed this morning. these developments and innovations involve some risks, but they also may open the door for more efficient financial technologies for both consumers and the various supervisory bodies. as such, financial stability does not necessarily stand in contradistinction to increased competition and increased efficiency. the bank of israel will work to improve the efficiency and assiduously maintain the stability of the capital market and the financial system, and will work to integrate new financial technologies and instruments gradually and under careful control. 4 / 5 bis central bankers'speeches i again congratulate the banking supervision department on this conference, and i welcome the upcoming speakers, who contribute much to the advancements in this area and to the important professional discussion of these issues. thank you. 5 / 5 bis central bankers'speeches | 1 |
. similarly, borrowing hk dollars to fund the deficit would involve a shift in ownership of those dollars around the economy, but no net increase in quantity. the mechanics of financing the deficit ought not therefore raise any concerns in hong kong in the context of monetary stability. nevertheless, in practice the markets do appear to exhibit a degree of negative reaction to the deficit. why? a number of possible explanations come to mind. • first, and rather obviously, there is hong kong ’ s basic law, which indicates that deficits should be avoided. it ’ s understandable for markets to become nervous if they suspect that the law might be infringed. • second, many people, whether in hong kong or elsewhere, anyway have a gut feeling that getting into debt is imprudent. this does not stop them individually from borrowing money, or from being tolerant of their government being in debt, but they may nevertheless be uncomfortable about it. the underlying rationale for holding this view may not be well articulated, but it does not need to be – if the view exists, that is enough for it to have an impact. and the impact may be reinforced if the government ’ s record appears to run counter to what it has itself been preaching. • this leads to the third point, which is that hong kong has boasted since long ago about its budget surpluses and the absence of government debt. this makes it intellectually difficult to deny the significance of the deficit. not that anyone is trying to downplay it – the expressions of concern from government officials have been numerous, sincere and unambiguous. but in some ways this serves to highlight the difference. the present position is seen to represent a sea - change in the financial circumstances of hong kong, whereas other economies more familiar with deficits might be able to take a deterioration in public finances more easily into their stride. • fourth, there is the more specific concern, that either of the two available means for financing the deficit - by, as now, realising foreign currency investments or by government borrowing – would impact adversely on hong kong's financial standing in the eyes of rating agencies and others. of course, it is by no means obvious that these financing activities would necessarily endanger monetary stability or weaken the exchange rate. indeed, there are plenty of examples of economies with low foreign reserves or high government borrowing having enjoyed firm currencies and strong credit standings, and it's hard to see why, for example, the act of the hong | glenn stevens : economic conditions and prospects speech by mr glenn stevens, governor of the reserve bank of australia, to the american chamber of commerce ( qld ) amcham iinet business luncheon, brisbane, 3 april 2014. * * * i thank alexandra rush for assistance in compiling these remarks. thank you for the invitation to be in brisbane again. economic conditions in queensland have been quite varied over recent years. in some ways the forces at work have been in parallel to those in the national economy. on the one hand, the expansion of the mining and gas sectors has driven strong growth in some of the regions. in the past four years, business investment in queensland rose by 75 per cent, totalling $ 230 billion over that time and almost $ 70 billion during 2013 alone. the proportion of national investment occurring in queensland has been unusually high. investment in the mining sector may now have peaked, but the capacity put in place is supporting strong growth in exports. queensland ’ s coal exports reached record highs over the past year and exports of lng are expected to commence in late 2014. on the other hand, more prudent behaviour by households, after an earlier period of fairly free spending and borrowing, has kept demand in the urban areas more restrained. there was also a marked slowdown in the property sector in the southeast of the state, perhaps more so than in other states, which has been a dampener on economic activity. part of the story here is that in an earlier environment of fairly easy access to credit, dwelling prices rose too high relative to incomes in some areas. there was also perhaps, in some instances, too much construction of the wrong sort of dwelling. some people involved in or exposed to the property sector also had too much leverage. when credit conditions tightened and there were not enough buyers, prices fell and construction slowed down significantly. after growing at an annual average pace of 12 per cent between 2002 and the peak in late 2009, dwelling prices in brisbane fell and remain around 5 per cent below their peak. about a third fewer dwellings were constructed in the year to september 2013, compared with the peak in 2008. building approvals have been relatively strong in the resourceexposed regions in recent years, but elsewhere in queensland approvals for new detached houses are at around half the 2008 level. this is something that american members of amcham who are exposed to the us housing sector would have also felt over recent years. the us construction sector, while now established on the path of recovery | 0 |
but we still need to enhance the countercyclical use of our macroprudential instruments by providing adequate macroprudential space to support robust lending and the real economy throughout the cycle. equally, we urgently need to develop and, where appropriate, deploy the necessary macroprudential instruments for non - banks as well. finally, we must also pursue the ambitious plans laid out under the cmu to create a deep and integrated european capital market. all of this will allow us to improve financial stability across the wide array of financial institutions and markets that make up the financial system. 1 see the history of the construction of the esm in : european stability mechanism ( 2019 ), safeguarding the euro in times of crisis : the inside story of the esm. 2 klaus regling at press conference after eurogroup meeting, luxembourg, 14 june 2019 : www. esm. europa. eu / press - releases / klaus - regling - eurogroup - press - conference - 19 3 for additional details on the risks, see ecb ( 2019 ), financial stability review, may. 4 see draghi, m. ( 2019 ), “ twenty years of the ecb ’ s monetary policy ”, speech at the ecb forum on central banking, sintra, 18 june. 5 see decision of the european central bank of 22 january 2014 amending decision ecb / 2004 / 2 adopting the rules of procedure of the european central bank ( ecb / 2014 / 1 ). 6 in december 2016, the ecb ’ s governing council issued a statement calling for the implementation of legislative frameworks for borrower - based measures in all euro area countries. 7 on the basis of article 458 of the crr, belgium has implemented a 5 percentage point add - on and a 1. 33 risk weight multiplier for exposures secured by domestic real estate assets, finland has implemented a risk weight floor of 15 % on domestic real estate exposures, and luxembourg has recommended a 15 % floor on the same exposure. 8 for a detailed overview of macroprudential measures, see the ecb ’ s website ( updated quarterly ). 9 the ccob is based on article 129 and 160 crd iv, transposed in national legislation. exemptions for small and medium - sized investment firms are possible. the ccob is part of the combined buffer requirements to which g - sii, o - sii, systemic risk buffer and countercyclical capital buffer pertain. | line from the european stability mechanism, for instance. 4 / 4 bis central bankers'speeches | 0.5 |
that this style of investment can also come into conflict with the mandate of central banks in preserving stability and orderly markets. so, the challenge is to achieve a proper balance. thank you, mr. chairman. | , geographical and cultural proximity, may vary greatly from country to country, but have no doubt played a part in lubricating the wheels of trade and investment in the east asian region. going forward, domestic demand in the region will continue to grow and further support growth in intra - regional trade. the lowering of tariffs in most asia - 9 economies and bilateral free - trade agreements have supported the development of the “ pan - asia ” supply chain. it has been estimated that once an fta between asean - china is signed, a collective 1. 7 billion consumers with a combined gdp of almost us $ 2 trillion will be a powerful force supporting sustainable growth, especially as per capita incomes continue to rise and trade barriers continue to fall in the region. finally, a move of regional exchange rates towards greater flexibility will continue to support this increase in trade, with more market - oriented exchange rates sustaining further growth in intra - regional trade. in the past, despite the various exchange rate regimes adopted in asia - 9 economies – which have included both fixed and flexible exchange rate regimes – intra - regional trade has nonetheless grown at a substantial rate. the recent move by the chinese and malaysian authorities in the middle of last year to introduce greater flexibility to their exchange rates will help to further support this increased trade. the managed float exchange rate system will allow the exchange rate among asia - 9 to move in close alignment with one another which will make it conducive to trade within the region. you may be wondering why i have focused on developments in china and asia - 9 and how that is relevant to this audience today. i think this is extremely relevant. allow me to elaborate further. as one coming from east asia to this esteemed gathering, i would like to invite our hosts to “ look east ”, in the same way that the east asian region has embraced the policy to “ look west ”. a number of initiatives have already started, such as the current negotiations over an asean - india free trade agreement, which will further help to cement this relationship. the private and public sectors of both sub - regions could benefit from this synergy and ride on the momentum of growth towards what many have termed “ the asian century ”. there is an immense potential to realize from the individual comparative advantages of all the countries in south and east asia. while china ’ s trade share with india as a fraction of india ’ s total trade stands at 7. 7 %, another 15. 6 % of india ’ s trade is with | 0.5 |
. the proportion of the financially excluded on the other hand has been falling steadily from 39. 3 % in 2006 to 31. 4 % in 2009 and now stands at 25. 4 % of the adult population. equally and more striking, the proportion of the population using informed financial services has declined to 7. 8 % from 35. 2 % in 2006 and 26. 8 % in 2009. these findings demonstrate impressive achievements and vindicate policy strategies and reforms undertaken by government and initiatives and innovations by the financial sector players ’ as having helped expand financial inclusion. it is even more interesting to note from the results that many more people are now accessing and using financial services and products supplied by diverse providers. this shows that people are now moving towards using a broader portfolio of financial services and products to satisfy their needs. the use of combinations of all formal prudential, formal non - prudential, other formal and informal financial services except the excluded has been rising from 16 % in 2006 to 25 % in 2009 and to 29 % in 2013. these patterns demonstrate that financial sector participants require choices and therefore the need to maintain diversity and encourage competition amongst providers of the different financial products in different market segments. ladies and gentlemen : the survey results we are releasing today are as a result of developments in the wider economy, policy and regulatory reforms, increased competition and innovation and advances in information and communication technology. these developments have set off a dramatic shift away from the traditional delivery of financial services. in the banking industry, the introduction of automatic teller machines ( atm ) a few years ago already moved customers out of the physical branches. and now more than ever, access through point - of - sale ( pos ) devices, the internet and mostly through mobile phones platforms have accelerated and are still poised to accelerate the swing to branchless banking. we, however, still have some ground to cover in expanding access to financial services, given that about 25 % of the population remains totally excluded. bis central bankers ’ speeches ladies and gentlemen : the information generated by the past three finaccess surveys will help financial service providers identify where opportunities exist. i am delighted that the sector now has such useful information resource at its disposal. in conclusion, ladies and gentlemen, let me also observe that the finaccess studies have been championed and driven by a partnership between public and private institutions. i commend and support such initiatives and hope that this lays the foundation for a deeper and sustained partnership between the public and private sector in | demonetisation — a step in the fight against corruption by dr. patrick njoroge on september 30, 2019, the withdrawal of the old series ksh. 1, 000 notes was successfully concluded. this demonetisation commenced on june 1, 2019, following the launch of kenya ’ s new generation notes. the new notes symbolize green energy, agriculture, social services, tourism and governance, that are the drivers of a newly reborn and prosperous kenya. in deciding to withdraw the older series ksh. 1, 000 notes, the central bank of kenya ( cbk ) assessed the grave concern that these notes were being used for illicit transactions and financial flows, in kenya and in the region. more recently, there has also been the emergence of counterfeits. both these concerns posed a threat to the credibility of kenyan currency, and required swift action. in designing the demonetisation strategy, cbk examined the experiences of other countries, such as australia, european union, pakistan, united kingdom, and most recently india. all considered, the critical consideration was to balance the objective of addressing illicit financial flows and counterfeits while ensuring that the process was not disruptive to the public and the economy. in this regard, a gradual approach over four months was preferred over an abrupt shock and awe approach. four key elements underpinned the strategy. first, ample public awareness was doubly important, also given that cbk had concurrently launched the new generation currency. it was critical that kenyans across the length and breadth of the country were made aware of the ongoing demonetization but also the features of the new currency. to this end, cbk with support from the banking sector and other stakeholders traversed the country — from nairobi to lunga lunga, kisumu to garissa, wajir to kakuma — engaging all kenyans in market places, barazas, streets, and bank branches. a multi - channel campaign was also executed, with over 15, 000 advertisements, coverage in social media, television, newspapers, and over 80 mainstream and vernacular radio stations. second, it was important to quickly provide and maintain a wide availability of the new currency. cbk worked closely with banks to ensure a smooth rolling out of new currency across the country and its availability. cbk ’ s immediate support to banks and other players was needed to recalibrate the verification and note - counting machines, atms, and parking payment machines so as deal with the new notes | 0.5 |
##s more favourable financing conditions. we need to see whether, at some point, there might be side effects that work in the opposite direction. we have to look at this again every time. our monetary policy has so far had a clearly positive impact on financing conditions for firms and households, and is thus supporting growth and inflation. how low can interest rates go before they start to have a constraining rather than a stimulative impact? the traditional view is that interest rates can continue to fall up to the point at which people withdraw their money and put their cash in a safe. for some time now, other economic effects have also been taken into account, with the question being whether, as a whole, further interest rate cuts have the desired monetary policy effect. if people don ’ t earn any interest these days, they need to save even more for their old age and can consume less as a result. yes, but you do need to see the overall picture. the size of incomes is the key factor when it comes to economic development and, in the final analysis, also savings : the higher are incomes, the more can be saved. and expansionary monetary policy boosts incomes, partly through employment and wage growth. furthermore, there are not just savers ; there are also borrowers who benefit from low interest rates. so you could lower interest rates even further? yes, we see enough leeway for further interest rate cuts, should they be necessary. there are some countries, like denmark and switzerland, that have lowered interest rates even further. could the ecb cut interest rates as far as those countries have? we do of course look at the examples in other countries. that said, the euro area is a much larger economy than denmark or switzerland, so the situations there are only comparable to a limited extent. your monetary policy works through the entire financial system. how important is it in this context for the banks to make decent profits? it can be important at least. this is why we adopted “ tiering ”, or allowances up to which banks can deposit excess liquidity with the ecb at 0 % interest. a monetary policy problem would arise 3 / 6 bis central bankers'speeches if the banks became reluctant to grant loans due to excessively weak earnings. but we haven ’ t observed that yet. nevertheless, people are asking whether, with such low interest rates, we are approaching the point where monetary policy is no longer effective. monetary policy is still effective, as | we ’ ve seen over recent years. the fundamental mechanisms have not changed. at the same time, it is clear that we need to act with great care as our interest rates are already negative and we ’ ve already built up a large portfolio of bonds. so why is inflation reacting so little to your monetary policy? we see that wages are rising, particularly in germany. for some time, prices followed suit. but companies are now facing huge uncertainty, due mainly to brexit and the trade conflicts. this is why they are reluctant to pass on the increase in labour costs to their customers. i have a technical question in this context. the ecb is only permitted to buy around onethird of the government bonds issued by each country. some economists have calculated that, with new purchases of €20 billion each month, you will already reach a limit, primarily in germany, after less than a year. according to our calculations, this may not become a problem for an extended period of time, and in any case not for at least as long as we can project bond availability conditions with some confidence. it is important to keep in mind that the forecasts depend on many parameters you assume. one of these is the price elasticity of those investors who hold the bonds in the private sector. building on past experience, these investors have proven more willing to sell, even in response to relatively small price adjustments, than we had anticipated. this makes our life easier as it eases constraints. for some time to come means that you believe the limits for germany will not be reached in the next one to two years? if we had seen any potential constraints in this regard in the near future, we would have included this in the calibration of the additional purchases. do you assume that some countries will increase their debt? no, such considerations do not play a role in our calculations. we work on the basis of whatever the governments have already agreed. if the limit is reached, the ecb could of course also deviate from the key according to which purchases are weighted by the size of the respective euro area countries. we will continue to purchase with a view to bringing the share of the pspp portfolio into close alignment with the respective national central banks ’ subscription to the ecb capital key. some critics also accuse the ecb of effecting its monetary policy primarily via the exchange rate. the sole objective of our monetary policy is to fulfil our mandate of maintaining price stability. the exchange rate | 1 |
celebrated the nbr ’ s 130th anniversary since its establishment which made it the 16th central bank in the world in chronological order. the fact is that the history of the romanian monetary system is closely linked to the history of the modern romanian state. feel free to discover this reality by visiting the space dedicated to the leu in the lobby of the euro exhibition. moreover, the nbr museum has on display valuable exhibits testifying to a “ culture of money ” dating back to ancient times in our region. the nbr museum has made substantial efforts to raise awareness about the history of the national currency, the features of banknotes and coins, as well as the role of money in the economy. for instance, in 2005 – 2006, the national bank of romania conducted an extensive communication campaign on the leu ’ s redenomination, and in view of the prime function of a central bank, namely currency issue, keeps the public informed about the leu ’ s security features. at the same time, apart from these efforts, our central bank often includes among its strivings to increase financial education, themes related to the history of the bis central bankers ’ speeches european single currency. it is only natural that romanians be well aware of the currency of the club that we aim to be part of. keeping the public informed is an ongoing process, prepared and unfolded long before romania ’ s euro adoption. this is why we appreciate and support the ecb ’ s effort to showcase this travelling exhibition to the eu member states to the benefit of all european citizens. i therefore totally agree with mr. jean - claude trichet, the ecb ’ s president, who said precisely one year ago ( on 10 march 2010, when this exhibition was inaugurated in frankfurt ) that “ the euro should speak both of europe ’ s diversity and its common culture, its history and its future ”. the euro speaks clearly about europe ’ s diversity through the architectural motifs of the euro banknotes as well as through the cultural symbols on the national sides of the euro coins. for romania, as a euro area hopeful, thorough preparation in order to fulfil all criteria, with no exception, is crucial. as i stated before, it is important to define a target ( horizon ). even if changed, the target must exist so that the commitment to implementing reforms does not wear off. the creation within the nbr of a committee for preparing euro adoption in february 2010, to whose meetings we have invited ever since | mugur isarescu : the history of the romanian monetary system in a european context opening speech by mr mugur isarescu, governor of the national bank of romania, on the occasion of the inauguration of the euro exhibition at banca nationala a romaniei, bucharest, 10 march 2011. * * * dear mr gonzalez - paramo, your excellencies, distinguished guests, it is an honour for us and we are glad to welcome you today, at the opening of an exhibition not only educational and attractive, but also relevant considering romania ’ s euro adoption. we do hope the euro exhibition that the national bank of romania is hosting, on behalf of romania, will prove successful all the more so as our country is destination no. 10 of the european central bank ’ s travelling exhibition. let me thank mr. jose manuel gonzalez - paramo for accepting to jointly launch the euro exhibition today in bucharest where it will be open for about three months, here, in the old financial centre of bucharest where the romanian leu was born. the leu - euro relation is thus acquiring a symbolical dimension with a certain meaning in the current european context. the reference to the european context is neither conventional nor formal. it reveals that the romanian leu is one of the strong historical bonds that put our country on the european map. its roots in the olden leeuwendaalder or the dutch lion - thaler show not only its descent from the former dutch coin ( and therefore its being related to the us dollar ), but also its european dimension as ever since its birth, shortly after the creation of the modern romanian state, our leu currency was french. this means that the 1867 monetary law was designed in terms of the latin union, most of all france. the law stipulated that metal coins should be minted in french style. but our bonds with europe were broader as the law set forth that the gold and silver coins issued by france, belgium, italy and switzerland ( all members of the latin union ) should be accepted by all exchange houses, along with the romanian ones. thus, romania ’ s european aspirations were strongly asserted, while spreading to germany through king carol i of hohenzollern, whose effigy was placed on the first romanian gold and silver coins, and to spain, mr. gonzalez - paramo, via its latin spirit. ladies and gentlemen, it is my pleasure to restate here with you what i have often underlined throughout 2010 when we | 1 |
mr greenspan discusses recent trends in the management of foreign exchange reserves speech by the chairman of the board of governors of the federal reserve system, alan greenspan, at the world bank ’ s conference on recent trends in reserves management, washington, d. c., on 29 april 1999. one way to address the issue of the management of foreign exchange reserves is to start with an economic system in which no reserves are required. there are two. the first is the obvious case of a single world currency. the second is a more useful starting point : a fully functioning fully adhered to, floating rate world. all requirements for foreign exchange in this idealised, i should say, hypothetical ; system could be met in real time in the marketplace at whatever exchange rate prevails. no foreign exchange reserves would be needed. if markets are functioning effectively, exchange rates are merely another prices to which decision makers - - both public and private - - need respond. risk - adjusted competitive rates of return on capital in all currencies would converge, and an optimised distribution of goods and services enhancing all nations standard of living would evolve. public and private market participants would require only liquid reserves denominated in domestic currency. and in the case of a central bank of a fiat currency regime, such reserves can be created without limit. but, clearly, the real world is not perceived to work that way. even if it did, it is apparent from our post world war i history, that national governments are disinclined to grant currency markets unlimited rein. the distributions of income that arise in unregulated markets have been presumed unacceptable by most modern societies, and they have endeavoured, through fiscal policies and regulation, to alter the outcomes. in such environments it has been the rare government that has chosen to leave its international trade and finance to what it deems the whims of the marketplace. such attitudes very often are associated with a mercantilist view of trade that perceives trade surplus as somehow good, deficits bad. since in the short run, if not in the long run, trade balances are affected by exchange rates, rates that are allowed to float freely are few and far between. in a crisis, of course, monetary authorities are often overwhelmed, and lose any control of the foreign exchange value of their domestic currency. most nations, for good or ill, have not been indifferent to the foreign exchange value of their currency. i say most, but not all | by unmarried parents, compared with 47 percent for the lower half of households with children. distributional statistics for families with children are based on a sorting of only families with children. congressional budget office historic budget data. income security programs include ui, ssi, snap eitc, and other family support and nutrition programs. see jeffrey p. thompson and timothy m. smeeding ( 2013 ), “ inequality and poverty in the united states : the aftermath of the great recession ( pdf ), ” finance and economics discussion series 2013 – 51 ( washington : board of governors of the federal reserve system, july ). see james j. heckman, seong hyeok moon, rodrigo pinto, peter a. savelyev, and adam yavitz ( 2010 ), “ the rate of return to the highscope perry preschool program, ” journal of public economics, vol. 94 ( 1 - 2 ), pp. 114 – 28 ; and clive r. belfield, milagros nores, steve barnett, and lawrence schweinhart ( 2006 ), “ the high / scope perry preschool program : cost - benefit analysis using data from the age - 40 followup, ” journal of human resources, vol. 41 ( winter ), pp. 162 – 90. bis central bankers ’ speeches states, since local funding is often important. 25 in 2010, the united states ranked 28th out of 38 advanced countries in the share of four - year - olds enrolled in public or private early childhood education. 26 similarly, the quality and the funding levels of public education at the primary and secondary levels vary widely, and this unevenness limits public education ’ s equalizing effect. the united states is one of the few advanced economies in which public education spending is often lower for students in lower - income households than for students in higher - income households. 27 some countries strive for more or less equal funding, and others actually require higher funding in schools serving students from lower - income families, expressly for the purpose of reducing inequality in resources for children. a major reason the united states is different is that we are one of the few advanced nations that funds primary and secondary public education mainly through subnational taxation. half of u. s. public school funding comes from local property taxes, a much higher share than in other advanced countries, and thus the inequalities in housing wealth and income i have described enhance the ability of more - affluent school districts to spend more on public schools. | 0.5 |
central bank of chile july 2020 “ the chilean peso as an eligible cls currency : second workshop cls - cbc ” opening remarks by mario marcel, governor of the central bank of chile july 21st, 2020 – santiago, chile ( via webex ) i. welcoming remarks good morning everybody and welcome to the second joint workshop between cls and the central bank of chile ( cbc ) dedicated to the “ nostro ” service, a fundamental business in the cls payment system operation. this event is part of the process of incorporating a new currency into the cls system. this belongs to the due diligence and analysis phase that cls and the cbc are respectively finalizing. then we should move to the implementation phase. this workshop complements the provision of information on cls and the bilateral meetings that bankers have been holding with cls and the cbc for some time, to assist banks in assessing the benefits, prospects and opportunities in participating in the system, either as a settlement member or nostro. i am looking forward to the banking sector ’ s active participation in this workshop that features representatives of the nostro banks and cls experts. ii. the chilean peso incorporation process • the process of incorporating the chilean peso in cls, started last year when we sent the letter of intention to cls to demonstrate our commitment to the process and initiate the engagement stage. • after the change in our legislation in 2016, which established the finality of payment irrevocability on a legal level, we felt it was timely to resume previous conversations with cls. our legislation now should fully meet all the high standards and requirements for the peso to operate in cls. • after demonstrating our interest to cls, i met personally with the vice - governor of the federal reserve board to express our interest. the federal reserve board and the new york fed are respectively in charge of the regulation and supervision of cls, hence the importance of their opinion about the benefits and performance of the system. besides, the fed presides the oversight committee along with 23 central banks representing the 18 currencies that settle in cls. then, it was important for us to show our commitment with the process in order to be part of this committee once the peso is incorporated. • we subsequently moved on to the due diligence stage last july 2019, when together with cls we held the first workshop at the cbc for the private sector. iii. benefits of the cls | bank of uganda key note address by louis kasekende ( phd ) deputy governor, bank of uganda at the 7th annual international leadership conference organized by makerere university business school ( mubs ) topic : governance in the financial sector : is the financial sector over regulated? entebbe, uganda november 29, 2017 heads of regulatory bodies within uganda ’ s financial sector, the principal, makerere university business school ( mubs ) invited guests, ladies and gentlemen, good morning. i would like to begin by commending the makerere university business school for organising this international leadership conference and by thanking the principal of the business school, prof. balunywa, for inviting me to give a keynote address. the theme of my address this morning is financial regulation. i want to explore the objectives and the economic rationale for regulating the financial sector. i will then address the question of whether the financial sector is over regulated in uganda. what is the rationale for regulation of the financial sector? throughout the world, in both developed and developing countries, the financial sector is one of the most heavily regulated sectors of the economy. many types of financial institutions are subject to a raft of regulations, such as capital requirements, restrictions on their business activities and financial disclosure requirements which are not applied to most other types of business. for the most part, non - financial sector businesses, such as manufacturing, construction or agriculture, are subject to health and safety standards to protect their employees and some minimum product standards to protect their customers. however, apart from that, the governance of their business activities is left to the market and is not subject to regulation by a public agency. why is the financial sector different? there are two fundamental reasons why the financial sector is much more highly regulated than other sectors of the economy : leverage and information. the combination of high levels of leverage in financial institutions and informational imperfections provide a prudential rationale for financial sector regulation which is not relevant for non - financial sector businesses. many types of financial institutions are highly leveraged ; their borrowings – their debt liabilities – are a multiple of their capital, in contrast to most nonfinancial sector businesses. the ugandan business sector as a whole has equity and reserves which are almost as large as its debt liabilities. 1 in contrast, the ugandan banking industry has debt liabilities ( mainly deposits ) which are almost five times larger than its equity and reserves. this means that if a bank fails, the consequences | 0 |
been lent out. which is the whole point, of course. at the same time, the banks are unable to renew their loans in the market as they mature, which means they cannot meet their obligations to deposit customers or creditors in the market and they collapse like a house of cards. and without banks the financial system cannot function. if not even the most basic functions can be upheld, people will not receive their wages and will not be able to pay their bills. the economy will grind to a halt. but even though we managed to save the financial system through rescue packages, the costs of the crisis have been immense. the reason for this is that a crisis in the financial system has far - reaching consequences for the whole economy. the financial crisis causes large falls in production, rising unemployment and increased budget deficits as incomes fall and expenditure rises in the wake of the recession. there is thus a big difference, from society ’ s point of view, between banks in distress and ordinary companies suffering problems. this is why we need special regulations for the banks. it is no news to us swedes that crises are extremely expensive. we only need to look back to the crisis in the 1990s for a reminder. but this time the crisis was on a global scale. for the first time since the second world war we have experienced a fall in production in the world economy. it is clear that the world will suffer the consequences of this for a long time to come. but we swedes have also been hit hard this time, too. not least because we are a small, export - driven economy that is very vulnerable to developments abroad. because when the credit taps are turned off, orders that have been made are withdrawn and no new ones are made. in 2009 total production in sweden, gdp, fell by around 5 per cent – the largest fall in a single year since the 1940s. such a large fall in the production flow entails an irrevocable dent in the long - term curve. gone forever. if one converts it, it corresponds to about sek 20, 000 per swedish inhabitant. this is money we could have used for consumption and welfare. and let us remember that this is just one of the effects. add to this the reduction in wealth in the form of falling values of companies, financial instruments and other assets. contagion effects in a globalised financial market the origins of the crisis lay in us subprime mortgages. although swedish banks had very little exposure to | failing to function, or a human error that puts the bank at great risk. some of you may remember how the british bank barings collapsed in 1995 as a result of speculation and unchecked risks taken by a single employee. risk management is about protecting oneself against such undesirable and unexpected outcomes. in short, one wants to take calculated risks. according to earlier agreements within the basel committee, the banks have the possibility to develop models themselves to calculate the size of their risks and this is an opportunity most of the major banks have used. over time, their risk calculation models have become increasingly sophisticated. but during the crisis it turned out that not even the most advanced models managed to capture the real risks. sometimes it was not the model that was inadequate ; there was a lack of available data for assessing the risk. in many cases there was quite simply not enough historical data, as the financial instruments were such fresh inventions. you may have heard of various types of complicated derivative, such as cdos, cdss and so on. in other cases, there was a change in the relationships between prices and other factors that had been previously observed. the calculated probabilities quite simply did not reflect the reality. it is easy to make a comparison with swedish humorist tage danielsson ’ s classical sketch about the probability of a nuclear accident : as harrisburg had just happened, there was absolutely no risk that history would repeat itself. or to look at it another way, as the complicated financial instruments had previously escaped sudden price falls, one need not expect any sudden price fall in the future. slightly exaggerated. underestimating risks and taking excessive risks are two sides of the same coin. and this was just what happened, right up until the us house price bubble burst and the crisis was upon us. it is thus clear that there is a need to ensure that risk management is tightened and that the deficiencies in the banks ’ balance sheets are corrected. the basel committee therefore requires that the banks assume that many financial instruments – including the derivatives i just mentioned – are much riskier than the banks previously assumed. so under the new regulations the banks must leave a good margin for substantial losses possibly arising when they buy and sell risky instruments. moreover, the basel committee is introducing a new risk measure – a leverage ratio. behind this term lies a fairly simple measure of risk that is not based on any advanced risk calculation models. the bank ’ s capital is examined in relation to all of its assets, | 1 |
emsley tromp : opening of the 2011 cfatf assessment welcome remarks by dr emsley tromp, president of the central bank of curacao and sint maarten, on the occasion of the 2011 cfatf assessment, willemstad, 22 august 2011. * * * good morning. i would like to welcome you to the central bank and at the same time express my appreciation for the commitment of cfatf over the past years to help its members combat and deter money laundering and terrorist financing. as a member of the cfatf and the fatf, we applaud the efforts of the cfatf to continuously perform evaluation of its member jurisdictions. these evaluations serve as an excellent tool for the member jurisdictions to receive an independent opinion on their aml & cft regime and take the necessary actions to further strengthen their aml & cft regime. the central bank has played an important role in the fight against money laundering and terrorist financing in our jurisdiction. since public confidence in the supervised institutions and the financial system can be easily undermined by adverse publicity as a result of the misuse of institutions by criminals for money laundering and terrorist financing purposes, as a regulatory authority, we are constantly vigilant in deterring criminals from misusing the supervised institutions for money laundering and terrorist financing purposes. the central bank has been instrumental in the drafting of several legislations governing aml and cft, including the national ordinances on the reporting of unusual transactions and national ordinance on identification when rendering services. these legislations were enacted in 1996 and lastly amended in 2009. the central bank has also issued sector - specific provisions and guidelines in the area of aml and cft for the various sectors under its supervision. these guidelines date back to 1991 and were lastly amended this year. the sector - specific provisions and guidelines have significantly increased the awareness of good compliance under the supervised institutions. as a result hereof, we have noticed that the industry is increasingly devoting more resources to combating money laundering and terrorist financing and that the compliance function has taken an even more prominent place in the supervised institutions. furthermore, the compliance programs of the supervised institutions are regularly being subjected to our review during our on - site examinations at the institutions. the aml and cft deficiencies identified during our on - site examinations are communicated to the supervised institutions and the institutions are in that respect requested to take corrective measures in a timely manner. the bank has also been instrumental in the drafting of the list of indicators that must | , it also can translate into higher productivity. in this context, the government, being an important employer, can lead by example and provide the possibility of more flexible working to the civil servants. flexible working allows female employees to better balance their work and family life. especially in the case of single mothers, flexible working can be decisive in whether to work or not. ladies and gentlemen, as i mentioned earlier, the decision of whether or not to participate in the labor market depends to a great extent on its opportunity costs. individuals balance the income from work against other sources of income or any costs involved. in this regard, the system of taxation might act as a disincentive to work. as in most countries, the second earners in married couples are taxed more heavily than single individuals, discouraging their participation. this is especially the case in the middle income groups. hence, the government should consider reforming the tax system so that it becomes more attractive for the second earner to join the labor force. for many women, the decision to participate in the labor force also depends on the availability and affordability of childcare facilities and public transportation. for example, in the tourism industry, where working hours are irregular, these two factors play an important role. in curacao, childcare is still relatively expensive and in most cases not available in the evening hours. public transportation is also a challenge for those travelling in the evening hours or from one side of the island to the other. both the government and the employers can take actions in these areas. for example, employers could provide childcare facilities to their employees, either for free or at reduced costs. the government could also stimulate employer support of childcare through tax incentives. as for public transportation, several hotels on the island provide transportation to their employees. however, i believe that government as the provider of public goods should be responsible for providing public transportation that is safe and accessible at all times. therefore, a reform of our current public transportation system also is crucial to increasing women ’ s participation in the labor force. bis central bankers ’ speeches ladies and gentlemen, with over 200 employees, the central bank of curacao and sint maarten is an important employer on the island. i can proudly say that our female staff is highly educated, reliable, and very committed to their work. for that reason, more than 50 percent of our staff is female and, over time, its share has been increasing. also, many women are | 0.5 |
specific monetary policy measures are designed. but undoubtedly the eurosystem ’ s determined response contributed to overcoming the economic fallout of the pandemic. 3 conclusion another achievement, and one that brings us to the subject matter of our conference, has been the establishment of a high - level task force on central bank digital currency. the crisis may have changed the overarching agenda, but the topic of digital payment solutions is as cutting edge as it ever was. 1 / 2 bis central bankers'speeches indeed, the pandemic has tilted consumer behaviour towards contactless payments. whether this shift will be permanent remains to be seen. also, the private initiatives to offer digital means of payment, like the project launched by the libra initiative, have been further advanced, highlighting the demand for an instantaneous, internet - ready means of payment and the need to keep the payment systems that we central banks own up to speed. this notwithstanding, i am sure that cash will continue to be an important payment medium for the foreseeable future. one particularly interesting example of cash is the greek €1 coin : its national side shows the owl of athena which was depicted on an ancient coin. the little owl associated with the goddess athena became a symbol of wisdom – maybe the “ little bit of wisdom ” that you, christine, were referring to in your first press conference as ecb president. we are now impatient to hear what you have to say. christine, the floor is yours. thank you for your attention. 2 / 2 bis central bankers'speeches | in germany is yet perceptibly higher than that of the euro area as a whole, employment is on maximum - value and confidence is quite high, for both, consumer and enterprises. the bundesbank ’ s economists expect the economy to grow at a rate of 1. 8 % in 2017, too. but this is nothing compared to the figures forecasted for slovenia. the european commission is projecting growth rates of 3. 0 % in 2017 and 2018 due to higher consumer spending and accelerating investment. the robust economic upswing and rising capacity utilisation in the euro area will also drive up price pressures gradually. of late, however, inflation has risen even more strongly than expected in the december projection, recently hitting 1. 8 %. this sharp increase in prices, however, is attributable mainly to base effects and the higher oil prices of late – since the end of november, 1 / 9 bis central bankers'speeches oil has become significantly more expensive. assuming that oil prices do not rise any further, i see two notable developments. first, inflation this year is likely to be well in excess of the figure projected to date ; for germany, an upward revision of around one - half percentage point is expected – and this might also be the case for the euro area as a whole. second, we are likely to return to somewhat lower inflation rates by the end of the year. this is because domestic price pressures are still comparatively low at present. core inflation, for example, which looks through energy price fluctuations and other volatile components of the consumer price index, stands currently at around the 1 % mark. according to eurosystem forecasts, however, it will slowly increase as the euro area continues its economic recovery and it is expected to reach 1. 7 % at the end of the forecast horizon in 2019. in this constellation, an accommodative monetary policy certainly continues to be appropriate, though opinions differ over the right degree of monetary accommodation and the point in time at which the price outlook will have firmed enough to justify a change in communication and ultimately in the monetary policy stance. in this context, in my view some thoughts are worth sharing. first, monetary policy is automatically looser in the coming months, even without central bank action : due to the increased inflation, the real interest rate declined. the effects are similar to a central bank rate cut. second, in the euro area, we are now far removed from the threat of deflation, which is to | 0.5 |
interest rates also continued to decline in the quarter. the weighted average yield on the 1 - month, 3 - month and 6 - month treasury bills declined by 78 basis points, 35 basis points and 51 basis points, respectively to 7. 48 per cent, 7. 40 per cent and 7. 48 per cent at the auctions in the december 2010. yields have continued to decline falling by an average of 2 basis points at the auctions in january, with all tenors significantly oversubscribed. the external community has also continued to demonstrate its confidence in jamaica ’ s creditworthiness. average yields on jamaican sovereign bonds have fallen from about 10. 50 per cent at the end of january last year – just before the implementation of the jamaica voluntary debt exchange ( jdx ) – to 7. 57 per cent at the end of january this year. bis central bankers ’ speeches this occurred in the context of a fall of about 2 percentage points in the average spread between jamaican sovereign bonds and us treasury bonds – an indication that investors perceive a meaningful reduction in the risks associated with investing in jamaican securities. when compared with other emerging markets, jamaica ’ s bonds have also performed well. the spread between jamaican sovereign bonds and the benchmark emerging market bond index ( known as the embi ) fell by more than 3 percentage points over the course of 2010. also reflective of the increasing confidence about the near - term prospects for the economy, the foreign exchange market was relatively stable for the december quarter. in this context, there was a marginal appreciation of 0. 45 per cent in the weighted average selling rate of the jamaica dollar for the review period. this was in comparison to average depreciation of 3. 0 per cent for the last five december quarters. for the calendar year 2010, the value of the jamaica dollar appreciated by 4. 4 per cent against the us dollar. this was in contrast to the depreciation of 10. 2 per cent in 2009. the appreciation in the value of the domestic currency in the quarter was associated with increased net private capital inflows which were more than sufficient to offset the impact of increased demand to satisfy payments for current account transactions. in the context of this excess supply of foreign currency in the market, the bank made net purchases of us $ 51. 9 million during the quarter. these purchases along with the purchase from government of the proceeds of a us $ 200. 0 million loan from the inter - american development bank, contributed to an increase of us $ 197 | was temporary. in this regard, the bank is projecting that there will be a moderation in inflation in the march 2011 quarter, within the range of 1. 0 per cent to 2. 0 per cent. the projected deceleration in inflation in the march quarter is largely predicated on the expected price reversals for agriculture crops which occurred in the december quarter. in addition, we are expecting continued stable domestic capacity and declining inflation expectations to have a moderating impact on inflation. however, the bank is projecting continued increases in international commodity prices, which should be the major influence on inflation in the quarter. real sector the bank estimates indicate that real gdp contracted in the range of 0. 0 per cent to 1. 0 per cent for the december quarter, similar to the contraction in the september quarter. similar to our forecast in november 2010, all industries are estimated to have contracted with the exception of mining & quarrying and hotels & restaurants. underlying aggregate demand is estimated to have remained weak due mainly to continued declines in consumption and investment. for the march 2011 quarter, the bank is projecting that there will be marginal growth in economic activity. this will be largely driven by continued expansion in mining & quarrying and hotels & restaurants as well as growth in electricity & water supply. the strength of the expansion in these sectors is expected to offset the slower rate of decline in the other sectors. outlook the consensus is that the global economy grew at a faster rate in 2010 than was previously expected, led by emerging economies such as china and india. although the prospects for global growth in 2011 have also improved, this is expected to be at a slower rate than in 2010. this expectation of slower growth is in the context of monetary tightening being undertaken by some emerging economies. nonetheless, the forecast for continued growth in the world economy, particularly the usa, bodes well for remittance inflows and tourist arrivals to jamaica. in spite of the improvements in the global economy and the expected marginal growth in the march quarter, the jamaican economy is projected to contract in the range of 0. 0 per cent to 1. 0 per cent for fy 2010 / 11. the projected contraction is a direct result of the declines that were experienced in the first three quarters. however, we are expecting that growth in the march quarter will continue into the next fiscal year with all sectors being projected to register expansion. given the forecast for the march quarter, the bank is expecting inflation for fy 2010 / 11 to fall within our original | 1 |
value, it is made clear that money is one variable which we look at very carefully in order to examine whether inflationary or deflationary pressures are tending to emerge. we do not, however, react mechanistically to changes in money growth. the formulation of the second pillar is also prompted by the potential changes in economic behaviour on account of the introduction of the euro. it is a broadly based assessment of the outlook for price developments on the basis of an analysis of monetary, financial and economic developments. in this context interest rates, the yield curve, wage developments, public finance, the output gap, surveys of economic sentiment and many other indicators are analysed. use is also made of forecasts produced by other bodies and internally for inflation and other economic variables. this brings me to the role of the exchange rate of the euro in our strategy. since our primary objective is price stability and since the euro area as a whole is a relatively closed economy with an export share of 14 % of gross domestic product, we do not have a target for the exchange rate of the euro, for example, against the us dollar. this does not mean, and it is good to underline this once more, that the ecb is indifferent to the external value of the euro or even neglects it. the external value of the euro is one of the indicators we look at in the broadly based assessment of the outlook for price developments. within that framework, we constantly monitor exchange rate developments, analyse them and shall act on them, if and when this becomes necessary. however, such action will never be mechanistic, nor will it be isolated. the external value of the euro and its development are analysed and considered in the context of other indicators of future price developments. the ecb also tries to assess international confidence in the still very young euro. of course, the level of international confidence in the euro is not the only factor determining its external value, nor is the exchange rate the only indicator of confidence in the euro. it is, for instance, encouraging to see how the euro has been received on the international money and capital markets. i am sure that an internally stable euro will also strongly underpin international confidence in this currency, as it has for other currencies in the past. as the currency of a very large area, the issue of the international role of the euro naturally arises. the ecb takes a neutral stance regarding this role. it will neither be stimulated, | effectiveness of a central bank. the better it is understood, the more successful a central bank is. apart from the activities i have already mentioned, transparency is achieved in several ways. every month, after the first meeting of the governing council, the vice - president and i give a press conference. i start the conference with a comprehensive introductory statement, in which i explain the decisions taken by the governing council and the underlying analysis and arguments for and against. this introductory statement is published immediately on the ecb ’ s internet web site. this is followed by a question and answer session attended by several hundred journalists. the questions and answers are also published on the internet shortly afterwards. all the members of the governing council frequently make speeches, give interviews and contribute to journals and books. thousands of people visit the ecb and the national central banks each year and, for our part, we and our staff attend many conferences and other public events. eu enlargement the european integration process continues. the euro should be made a success. i have already explained how we have started the process of doing that. some observers have criticised the eu for its “ obsession with its own internal dynamics ”, in particular in the context of european economic and monetary union ( emu ). with all energies focused on meeting the convergence criteria and the preparation for the launch of the euro, europeans outside the eu have wondered whether emu and enlargement are not mutually exclusive objectives. let me briefly comment on this issue. after the historic decision to complete the european single market in the 1980s, it was felt that economic integration should not stop at that point. to fully reap the rewards of economic integration within the community, a single currency was felt necessary ; a logic pointedly encapsulated in the title of one report : “ one market, one money ”. hence, the underlying idea of emu was to advance european integration and to ensure that full use would be made of the economic potential of the single market. this idea continues to be the focus of european policy - makers, as evidenced by the association agreements and the ongoing accession negotiations with a number of european countries, poland among them. good and mutually beneficial economic relations with third countries in europe and further afield are a pillar of eu policy orientation. recognising this, the principles of an open market economy with free competition are enshrined in the treaty on european union. emu will not weaken this commitment, but rather reinforce it. closer co - operation | 1 |
##scuring the assessment of risks, with attendant uncertainty. given the flux associated with both the financial markets and the monetary policy settings globally, india cannot be immune to these developments. the policy challenge for the reserve bank, now, is to manage the current transition to a higher growth path while containing inflationary pressures and focusing on financial stability. contextually, we in the reserve bank are, therefore, maintaining enhanced vigilance to be able to respond appropriately to the prevailing heightened uncertainties in global financial as well as monetary conditions. we expect to provide a detailed assessment of the evolving macroeconomic conditions as part of the mid - term review of the annual policy due to be released on october 30, 2007. the technical advisory committee on monetary policy is meeting on october 25, 2007, which will, as usual, provide valuable guidance for the review. iii. medium term : challenges and prospects for a large and diverse economy like india, with a low per capita income that is undergoing structural transformation in a highly uncertain global environment, challenges for public policy are manifold. i would like to focus on a few challenges that have been articulated in the latest annual report of the reserve bank of india – a document that reflects the views of the distinguished members of our board of directors on the subject. first, the recent upward trends in global prices of major food items have significant implications for the domestic agricultural sector and overall macroeconomic and financial stability. although the share of agriculture in overall gdp has declined over the years from around 38 per cent in 1980 - 81 to less than 20 per cent in 2006 - 07, agriculture continues to play an important role in the indian economy. the proportion of the population dependent upon agriculture remains large at almost 60 per cent. since the mid - 1990s, however, the growth of the agricultural sector has been low as well as volatile. volatility in agricultural production has implications not only for overall growth but also, as the experience of 2006 - 07 amply demonstrated, for maintaining low and stable inflation. thus, enhanced growth of the agricultural sector is vital for ensuring food security, poverty alleviation, price stability, overall inclusive growth and sustainability of growth of the overall economy. in view of significant weather and price risks, appropriate risk mitigation policies would need to be put in place to provide relief to distressed farmers as well as enhance the efficiency of production. in view of small and fragmented farm holdings, the population dependent upon agricultural activity will have to increasingly rely on non - farm sources of income in | ##zing such grievances. banks and rbi alike have established help desks, may i help you counters, grievance redressal cells and citizen ’ s charters to disseminate information with that objective in mind. thus, the point is that compliance and customer service have to co - exist, strike a balance with each other and iron out inconsistencies in application so that the larger good of customers results, aided and abetted by able customer communication. customer protection and compliance customer protection is the basic premise on which most regulations focus. all financial operations have an underlying requirement of ensuring customer protection, and in the process, where necessary, co - operating with civil and criminal authorities when customer grievances result in litigation and instituting quick and effective compensation practices for customers who have incurred losses on account of negligence on part of banks / frauds etc. it is this sense of caution and precaution that has increasingly found a voice in rbi ’ s regulatory and supervisory guidance to banks for optimum use of technology to advise customers to not fall prey to fictitious offers for cheap funds, prevent on - line frauds and scams, advocate judicious use of debit, credit and atm cards, not compromising security features such as passwords with a view to prevent phishing mishaps and deploy an adequate risk based transaction mechanism to serve the best interests of customers. banks also hugely benefit by adopting such precautionary steps. while some of these regulatory and supervisory missives may be a tad too repetitive, it must also be understood that they are a re - iteration of rbi ’ s concerns to address operational risk in banks, prevent escalation of legal risk in the form of disputes and litigation and enhance confidence of customers in banks in the long run. where stricter rigors of compliance harp on safety and security of the customer, there would possibly be no harm done if the customer is displeased to some extent. is complaint handling an art or science? can dictates be employed in such art or science? complaint handling, by itself is a complex art requiring references from customers being identified as grievances or requests for information. once the reference has been slotted as a grievance, all efforts should be undertaken for prompt and satisfactory redressal. handling customers adequately as well as creditably requires more than banking and technical knowledge. it requires humanitarian and human resource skills which can be accentuated and enhanced with training initiatives. here, i would | 0.5 |
emu. these developments support the assessment of a slower underlying pace of monetary expansion and low inflationary pressures over the medium term. the declining pace of monetary expansion since the last quarter of 2008 continues to be accompanied by volatility in the short - term developments of m3 and its components. this reflects to a large extent the impact that absolute and relative changes in interest rates have had on the allocation of funds between financial investments inside and outside m3 and between the different deposit categories within m3. in this respect, the shift in allocation from short - term time deposits to overnight deposits within m3 has led to a further substantial strengthening of annual m1 growth in june. the flow of bank loans to the non - financial private sector remained subdued in june, albeit with differences across borrowing sectors. the flow of loans to non - financial corporations turned substantially more negative owing to a sharp contraction in short - term lending. at the same time, the flow of loans to households was slightly more positive than last month. the ongoing uncertainty seems to have dampened borrowers ’ demand for financing. however, according to the latest euro area bank lending survey, lenders tightened their credit standards to a significantly lesser extent. given the challenges that lie ahead, banks should take appropriate measures to strengthen further their capital bases and, where necessary, take full advantage of government measures to support the financial sector, particularly as regards recapitalisation. to sum up, the information and analyses that have become available since our meeting on 2 july 2009 confirm the view of the governing council that the current key ecb interest rates remain appropriate. as anticipated, annual hicp inflation in july fell further into negative territory, reflecting mainly temporary effects. after a return to positive inflation rates during the second half of the year, we continue to expect price developments to remain subdued over the policy - relevant horizon. recent data releases and survey information still suggest that economic activity over the remainder of this year is likely to remain weak, although the pace of contraction is clearly slowing down. this assessment takes into account adverse lagged effects, such as a further deterioration in labour markets, which are likely to materialise over the coming months. looking ahead into next year, after a phase of stabilisation, a gradual recovery with positive quarterly growth rates is expected. available indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the governing council ’ s aim of keeping inflation rates below, but close to, 2 % over the medium term. a cross - check of | appropriate wage - setting and sufficient flexibility to get the unemployed back into work are crucial to prevent the crisis from having a lasting negative impact on labour markets. it is therefore essential to create appropriate incentives to work. at the same time, policies to speed up restructuring and investment, in line with the principle of an open market economy and free competition, will create the business opportunities and productivity gains needed to spark a sustained recovery. we are now at your disposal for questions. | 1 |
hole symposium proceedings, sept. 2013. bis central bankers ’ speeches | opening remarks by francois groepe, deputy governor of the south african reserve bank, at the workshop on the impact of ifrs 9 on banks and regulators in africa, jointly hosted by the working group on cross - border banking supervision and the south african reserve bank south african reserve bank, pretoria 26 september 2017 introduction good morning, distinguished guests, ladies and gentlemen. it gives me great pleasure to warmly welcome you to this workshop on the impact of international financial reporting standard ( ifrs ) 9 on banks and regulators in africa, which the south african reserve bank ( sarb ) is hosting jointly with the working group on cross - border banking supervision. i would like to thank the association of african central banks and, in particular, the working group on cross - border supervision of the committee of african banking supervisors for being present here today. we are indeed privileged to host fellow central bankers and regulators from across the african continent to discuss matters relating to the implementation of ifrs 9. the sarb truly values the cooperation with its peers from the continent and opportunities like this allow us to nurture networks and build relationships, share experiences and learnings, and contribute towards improving the overall quality of our continent ’ s prudential supervision of the financial sector. page 1 of 9 financial reporting it is believed that luca pacioli, a franciscan monk known as the father of accounting, was the first to codify the double - entry system of bookkeeping in his mathematical textbook titled summa de arithmetica, geometria proportioni et proportionalita which was published in venice in 1494. the celebrated german writer johann wolfgang von goethe sang the praises of this system and described it as the finest invention of the human mind as it allowed the merchant to survey the whole of his business activities at any time ; he even suggested that ‘ every prudent master of a house should introduce it into his economy ’. as any system, however, this system also has its challenges and shortcomings, and the renowned investor warren buffet warns that financial accounting is an imperfect language and that to understand accounting one needs to understand its nuances. buffet further warns that, ‘ in the long run, management ’ s stressing of accounting appearance over economic substance usually achieves little of either ’. it is therefore critical that, to extract the most from the system of financial accounting, one is mindful of the inherent shortcomings of the system. in order to address some of the challenges in this area, much progress has been made towards | 0 |
i have no doubt about this commitment in our debate on the future of emu. and i hope that the debate in this country in the coming years will confirm that there can be no doubt about this commitment in britain. many thanks for your attention. bis central bankers ’ speeches | jose manuel gonzalez - paramo : globalisation, international financial integration and the financial crisis – the future of european and international financial market regulation and supervision speech by mr jose manuel gonzalez - paramo, member of the executive board of the european central bank, at the institute of international and european affairs, dublin, 19 february 2010. * * * introduction 1 i would like to thank the institute of international and european affairs for organising this conference and for giving me the opportunity to speak in front of such a distinguished audience. i am particularly glad to be able to participate in the institute ’ s series of speeches dedicated to the theme of “ fixing finance ”. both the prominence of the subject and the high quality of past contributions have made this series of speeches an important source of interesting ideas and proposals on how to render our financial systems more stable and resilient. following the nature and objective of the series, i will dedicate part of my address to the issue of the future framework for european and international financial market supervision and, in particular, to the role of the ecb in macroprudential supervision in the european union, but first let me briefly discuss the relationship between international financial integration and the financial crisis. international financial integration and the financial crisis over the past decade or so, financial crises seem to have become more frequent and perhaps more disruptive than in the past. they also seem to propagate more rapidly. this experience has spurred intense interest among academics and policy - makers in understanding the link between financial integration and crises, and in better assessing the merits of financial integration in general. the debate on the benefits of international financial integration is certainly not uncontroversial : • one extreme opinion sustains that integrated financial systems improve the allocation of productive resources, foster entrepreneurship and innovation, enhance market discipline, and help countries to insure against macroeconomic fluctuations. • at the other extreme, it is argued that the free flow of capital widens the wealth gap between rich and poor countries and exposes domestic financial systems to the risk of instability. 2 more recently, the financial crisis of 2007 – 08 and its aftermath have shown that increased geographical interconnection among financial markets and the deepening of cross - market integration, when coupled with the under - regulation of securitisation and other banking activities as well as with significant complexity in the design of financial instruments, may i am grateful to frank dierick, alex popov and marco protopapa for valuable inputs. fecht, f. | 0.5 |
views on the global perspective on equality and the possible explanations for increased inequality in many developed economies during recent decades. as i have said, the contribution from monetary policy to equality should in my view in general be minor. • i do not think you can talk about globalisation without also talking about technology. some argue that increased inequality in many countries is due to the latest technological progress having been skills biased, resulting in a rise in the skill premium and the decline of some labour market institutions in advanced economies, emerging markets and developing countries 4. the decline of labour market institutions includes lower trade union membership, which reduces the relative bargaining power of labour, and more flexible labour market institutions that can pose challenges see, for example, the effects of the monetary policy pursued by the federal reserve in connection with the financial crises in bivens ( 2015 ), the effects of monetary policy in the usa since 1980 in coiboin ( 2016 ), the effects in advanced economies since 1990 in panel data - analyses in furceri et al. ( 2016 ) and effects of the monetary policy conducted by the ecb in connection with and after the financial crises, with a focus on germany in bundesbank ( 2016 ). 4 one example is that a decline in trade union membership ( union rate ) reduces the relative bargaining power of labour, exacerbating wage inequality ( frederiksen and poulsen 2010 ). another is that more flexible labour market institutions ( although positive for reallocating resources to more productive firms and enabling firm restructuring ) can pose challenges for workers, especially those with low skills, and hence play an important role in explaining inequality developments ( alvadero et al 2013 ). 3 for workers with low skills. technological progress combined with globalization seems to have played at least some role in increasing inequality within countries. • the discussion of the effects of globalization is interesting. globalization has for long been a natural part of the nordic economies. our dependency on foreign trade is much higher than the global average. there is among the nordic countries an acceptance on the positive long term net effects on productivity, growth and employment. globalization creates opportunities for new jobs. • the reason for the positive view on globalisation in the nordic countries might be a broader social security net and public policy that help people who lose their jobs due to trade as well as technology. training and education improve employability and reasonable replacement ratios in unemployment benefit and other social benefits can mitigate the negative short - term effects of globalization. these are | ; leaning against the wind as it is usually called. but if one weighs the advantages of conducting this policy against the disadvantages, i reach the conclusion that there is no justification for it in sweden today. as i see it, the advantages are small. we do not have a general credit boom in the swedish economy that needs dampening. however, we do have problems with high housing prices that lead to high household indebtedness and risks associated with this. but it is difficult to use monetary policy to influence household indebtedness without this having very negative consequences in the form of poorer target attainment for inflation and poorer stability in the real economy in the coming years. poorer target attainment over a long period of time also entails costs and risks in itself which must be taken into account. the framework in which monetary policy is conducted in sweden and in many other countries is based on the mandate of maintaining price stability, often specified as a target for inflation, as we have in sweden. and it is this mandate that is the reason why central banks in general have been allocated a greater degree of independence than other public bis central bankers ’ speeches authorities. over the past two decades, the clear objectives for monetary policy and the independent work by central banks to attain them, have proved effective in anchoring inflation expectations and creating stability in the economy. however, the framework is based on the central bank actually delivering. if inflation is allowed to deviate from an established target over a long period of time it can affect the general public ’ s understanding of the policy conducted and their confidence in the inflation target. the more the central bank stretches its task of delivering the set objective, the more difficult it will be to understand and evaluate the policy conducted. and then the greater the risk will be that the general public ’ s attitude to the framework deteriorates. i intend to try to describe my opinion on these questions today and on how they tie in with my view of the role of the central bank and how monetary policy should be conducted within the current framework. it may be useful to start by describing the framework we have lived with for a good twenty years now. why do we have an inflation target and an independent central bank? why an inflation target and independence? from credibility problems for the fixed exchange rate... when the international monetary system of fixed exchange rates – what was known as the bretton woods system – collapsed at the beginning of the 1970s, sweden needed to find a new nominal anchor for | 0.5 |
##fis can play a big role. green finance is also one of the topics of the conference tonight. the pbc has been proactively promoting green finance. by the end of june this year, the outstanding green loans in china had reached around rmb14 trillion, growing 26 percent year on year. by the end of september, the outstanding green bonds in china had exceeded rmb1. 1 trillion, increasing 35 percent year on year. based on international experience and the specific practices in china, we need to address the following four respects to better guide market capital to support green development. first, we should refine green classification criteria. the pbc led and finished the task of revising the green bond endorsed projects cataloguethis year. we are also planning to jointly issue the china - eu shared classification catalogue for green financewith relevant authorities of the eu to drive the cross - border flows of green capital. meanwhile, as the co - chair of g20 sustainable finance working group, the pbc will proactively promote the alignment of classification criteria of various countries by playing its role in the international organization. second, we should enhance the disclosure of climate change information. recently, the pbc has formulated and issued the guidance on environmental information disclosure for financial institutions based on international experience and common criteria to guide financial institutions in disclosing information like carbon emissions. third, we should manage the transition risks related to the climate. the pbc has been organizing climate risk stress tests. financial institutions should also proactively assess and manage relevant risks through environmental risk analysis. fourth, we should improve the pricing mechanism of carbon emissions. currently, the national carbon trading market in china has already been up and running. it gives full play to the role of the market, which is conducive to maximizing the incentives and constraints of carbon emission prices. financial institutions can actively carry out research in this regard. in addition, the pbc has been working on the launch of support instruments for carbon emission reduction which provide low - cost funds for qualified financial institutions to support the development of clean energy and enhance china ’ s overall energy supply capacity. 2 / 3 bis central bankers'speeches in the coming years, the pbc will continue to refine the policy framework for regulating china ’ s sifis and effectively maintain financial stability. we also expect that systemically important banks within and outside china can jointly establish climate - friendly visions and goals to drive more market capital to support green, low - carbon | combine with governments'thrift and the workings of law and regulations to determine the real basis for economic welfare. credibly reassuring market participants and the public at large about price stability over the medium run, and acting in a determined manner to fulfil this promise, is the best contribution that a prudent monetary authority can make to social welfare. any attempt on our part to correct this balance of real forces in the short run at the expense of the stability of the currency would only be futile and self - defeating. the treaty establishing the european community recognises this fundamental dichotomy. consequently, it forged a thoughtful and harmonious institutional construction, in which overlaps of competence are carefully avoided. for our part, we welcome the construction designed by the treaty and respect the separation of policy responsibility on which it rests. the ecb's mandate to maintain price stability is perfected by the independence it was assigned. the current situation our strategy has been in operation successfully since 1 january 1999. when confronted with risks to price stability, the governing council has never hesitated to take resolute action in a timely manner. from november 1999 to october 2000, the ecb's interest rates were raised by a total of 225 basis points each in response to upward risks to price stability. these decisions preserved successfully positive outlook for the maintenance of price stability in the euro area. where do we stand now, six months after our last interest rate change? starting with the analysis conducted within the framework of the first pillar of the ecb's monetary policy strategy, in the second half of 2000 and in early 2001 we have been witnessing a downward trend in the dynamics of both money and credit. over the period january – march 2001, the three - month average of the annual rate of growth of m3 was 4. 8 %. this is 1. 1 percentage points lower than over the corresponding period 12 months earlier and close to the reference value of 4½ %. the ecb focuses on the three - month average of annual m3 growth rates since monetary data can sometimes be distorted. in march 2001, annual m3 growth was 5. 0 %. while this was 0. 3 percentage points higher than in february, the march figures should not be read as a change in the underlying trend. in fact, if calendar effects were filtered out, in march 2001 m3 growth would have been lower. in addition, in interpreting the latest developments we need to be aware that there is some evidence that over recent months purchases | 0 |
david opiokello : business continuity and risk mananagement regional workshop in uganda speech by mr david opiokello, acting deputy governor of the bank of uganda, at the opening of the regional workshop on business continuity and risk management, entebbe, 5 february 2007. * * * distinguished resource persons our colleagues from bank of tanzania and central bank of kenya, reserve bank of malawi directors, ladies and gentlemen i would like to take this opportunity to welcome all of you here today. i would most especially like to welcome mr. christian vollmer and mr. wolfgang forttinger from the centre for technical central bank cooperation at the deutsche bundesbank and mrs. sue milton of the centre for central bank studies ( ccbs ) at the bank of england. the two institutions have partnered with bank of uganda to make this workshop a reality. mrs. sue milton ’ s pivotal role in putting together this program at the invitation of bank of uganda is especially acknowledged and appreciated. i am also very happy to welcome all the delegates to this workshop and in a special way i would like to recognize our colleagues from the reserve bank of malawi. reserve bank of malawi is placed in a slightly different position here, because central bank of kenya and bank of tanzania may be considered, within the context of the east african community, to be joint hosts. bank of uganda attaches great importance to this workshop and this is demonstrated by the fact that the entire senior management team of the bank have put aside tight schedules for an entire week to attend to this workshop. when bank of uganda approached the centre for central bank studies in 2005 about this program, bank of uganda had just adopted a standard approach to risk management in the bank which came 2 years after the business continuity program that started in 2003. the decision to move along this direction was prompted by the desire to adopt internationally acceptable best practices as well as adhering to good corporate governance. running parallel to these developments within the bank of uganda are the regional efforts towards a common monetary and political union of the countries in the region. to achieve such integration, harmonisation of policies and practices ( especially in the central banks ) has been taken seriously. as such harmonisation demands that cooperating institutions adopt uniform internal procedures, practices and policies on various issues on central banking. towards this end the bank of uganda, bank of tanzania and central bank of kenya have, through the monetary affairs committee of the east african community not only been meeting to take decisions on various policy issues but they have | also been conducting joint seminars such as this one to share experiences and learn from one another. this workshop therefore comes at such an opportune moment to assist our central banks to achieve the internal and regional objectives. the workshop offers various opportunities to all of us in a number of ways : • first, this is an opportunity to jointly re - assess and evaluate our performance in the areas of business continuity management and risk management over the period. • secondly, it provides us with an opportunity to learn from organisations that have run risk management and business continuity programs for many years. • third, this is an opportunity for each of our central banks with programs in their infancy to lay the correct foundation to implement sound and resilient risk management and business continuity programs. • fourth, this is an opportunity to obtain uniform training for each of the key players in their respective roles. with a common foundation, the objective of harmonisation in the region will draw closer to reality. bank of uganda would greatly benefit if the following areas are specifically addressed within this workshop : • performance measurement : what are the key indicators that central bank management should use to know that their business continuity and / or risk management programs are giving them the intended benefits? • evaluation : how does the central bank evaluate performance over time and which tools are recommended? • reporting : what should be reported about risk and business continuity at the different levels of the organisation including the board? • incident reporting and monitoring : how does the central bank ensure that all risk incidents are systematically reported and monitored? • culture change : what are the different approaches to organisational culture change towards risk and business continuity? i would like to conclude by again thanking you all for coming to this workshop and to thank the centre for central bank studies and the centre for technical central bank cooperation for the technical support. bank of uganda is greatly indebted to them. i wish you fruitful deliberations. it is now my pleasure to declare this workshop officially opened. | 1 |
respect to j. de boer / j. a. kamps – dollarisatie op de nederlandse antillen. een verkennende studie. una cahier, no. 21, june 1986. dollarization of the antillean economy, as they thought it sensible to first investigate the situation of similar countries with an experience in dollarization. to my knowledge, no followup has been given to this study. the discussion was again brought up in 2005 when it became clear that curacao and st. maarten would become separate entities within the kingdom, while the bes - islands ( bonaire, saba and statia ) elected to become an integral part of the netherlands. de nederlandsche bank ( conditionally ) advised to form a monetary union between the various islands instead of dollarizing the economy. this was in full conformity with the recommendation made in 2004 by the working group on governmental and financial relations headed by mr. jesurun ). 2 de nederlandsche bank also mentioned that a credible and independent central bank is important when forming a monetary union and that the bna has proved to be well - equipped for this task. 3 7. concluding remarks in view of the forthcoming changes in the kingdom ’ s statutes, curacao and st. maarten will have to decide on a very short term what to do with regard to their legal tender. although these islands are deemed too small to justify the costs associated with maintaining a local currency, our experience in aruba, which entails the existence of a local currency linked to the us dollar and a credible central bank, gives us strong arguments to continue with our dollar - linked florin. in choosing for such an option, curacao and st. maarten could continue to benefit from the financial soundness of the dollar, while still maintaining a certain degree of monetary independence. last but not least, i would like to point out that the currency choice, whether at the end it would be a local currency or the us dollar, is purely a stage for an economic act. depending on the actors, the outcome of the play would be a drama or a happy one. in the choice of a dollarization, the role of the central bank would be limited if not nihil, while that of the government would become even more prominent. there is a significant shift of responsibility. while the starting fiscal position for both st. maarten and curacao would be | between monetary and fiscal policies, their roles and limitations for macroeconomic stabilisation and the adequacy of the current stability and growth pact are ever more at the forefront of the policy debate. all these issues need to be addressed. i have already underlined the importance of a coherent and sound legal and institutional framework. we must, however, be aware that, even with appropriate rules and institutions, a monetary union is not immune to exogenous shocks and specific problems in any of its members. the emu needs stabilisation mechanisms to support member states facing serious financial difficulties while safeguarding the stability and cohesion of the group. this need is one of the major lessons of the financial crisis and the reason for the creation in 2010 of a temporary rescue fund, the european financial stability facility ( efsf ), and subsequently, in 2012, of a permanent institution, the european stability mechanism ( esm ). both the efsf and the esm have played a vital role in safeguarding the stability of the euro area as a whole, functioning as a common firewall and providing support to the most affected member states to resume or maintain access to sovereign bond markets. together with fiscal and structural reforms at european and national levels, the ecb ’ s unconventional monetary policy and the establishment of the banking union, these funds were instrumental in dealing with the worst of the crisis and to save the integrity of the euro. reform of the esm is on - going to reinforce its role, its operational capacity and the effectiveness of its instruments. this reform must be seen as an integral part of the agenda on deepening emu and needs to be ambitious. i have always argued that the esm should evolve towards a true european monetary fund, a robust crisis management body, incorporated into eu law. an independent and accountable institution with a clear mandate and adequate resources and firepower. these are necessary conditions for the development of win - win solutions. the work currently underway on the esm treaty should therefore not be seen as the final result, but as a step towards a more ambitious long - term goal. let me conclude. 3 / 5 bis central bankers'speeches during its first 20 years of life – and contrary to the initial bad omens – the euro ’ s institutional framework has proven its ability to overcome the difficulties stemming from the coexistence of economies in different stages of development, and sovereignty - sharing mechanisms have acted as a proxy for a central political power. today ’ s | 0 |
at the height of the housing boom. these government - sponsored enterprises were assigned goals around affordable housing that contributed dramatically to the growth in subprime credit and the decline in lending standards that led to the crisis. fannie and freddie clearly fit the pattern of what paul volcker said we must avoid : “ private when things are going well and public when things are going badly. ” several studies have found that the various subsidies received by fannie and freddie have done little to lower mortgage rates. instead, the vast majority of such benefits accrued to fannie and freddie ’ s stockholders or was used to gain political favor. for example, only two months before fannie mae and freddie mac were put into conservatorship in september 2008, media accounts detailed how both had made the list of washington ’ s top 10 lobbying spenders over the previous decade. together, they had spent a total of $ 170 million. 1 at that time, fannie employed 51 lobbyists and freddie paid 91, with both counting former members of congress among their hired guns. this was only two years after the federal election commission levied a $ 3. 8 million penalty against freddie related to charges it was illegally involved in 85 political fundraisers. considering the high level of political activism on the part of these gses, it should not surprise you to learn that both fannie and freddie are considered “ heavy hitters ” on the center for responsive politics ’ website, opensecrets. org, which provides a wide range of usa today, july 17, 2008. data on money ’ s influence on u. s. elections and policy. that designation means that both are among the biggest donors to federal - level politics since 1989. so, while fannie and freddie have spent millions on lobbying and building influence in washington, their losses could cost taxpayers as much as $ 363 billion, according to recent estimates – and those are just the direct losses. the overall losses that could be attributed to the gses are likely to be several multiples higher when we consider that without their implied “ federal guarantee ” and related incentives around risk, the markets might have been far more cautious and the financial crisis far less prolific. more stunning perhaps, had these institutions been held to stricter financial standards, far fewer households would have suffered the tragedy of foreclosures, the lost home equity and the loss of personal savings and wealth that today continues to hold back our economic recovery. given the costs and market distortions these | seen so far. the attempts to address capital markets and their role as the “ financial foundation for main street, ” appear to place a much higher value on rhetoric than on substance and necessary reform. as a nation, we have violated the central tenants of any successful system. we have seen the formation of a powerful group of financial firms. we have inadvertently granted them implied guarantees and favors, and we have suffered the consequences. we must correct these violations. we must reinvigorate fair competition within our system in a culture of business ethics that operates under the rule of law. when we do this, we will not eliminate the small businesses ’ need for capital, but we will make access to capital once again earned, as it should be. the inevitable crisis the banking system has gone through an unprecedented era of change starting in the 1980s when lawmakers began removing the roadblocks to interstate banking. this evolution continued to pick up speed in the years that followed through a number of legislative moves that validated the creation of ever larger banks. the scope of activities continued to grow through the 1990s and by the end of the decade we saw the merger between citicorp and travelers group. that merger required the divestiture of certain activities, but this became unnecessary with the passage of the gramm - leach - bliley act. the legislation allowed a single financial company to engage in commercial banking, investment banking, insurance underwriting and brokerage. this expansion of activities, some argued, created a stronger system overall because the institutions were more diversified. for example, rather than being entirely reliant on a single community or industry, such as real estate, a stronger system was being created because banks were serving a broader nationwide base. a downturn in a single market would be offset by stability in other areas. although this new era of finance was widely supported, a critical ingredient was missing on the road to expansion and innovation : a framework that would limit dangerous excesses or the development of perverse incentives. undoubtedly, the most important omission was a way to deal with the larger firms that were using the new growth opportunities to become “ too big to fail ( tbtf ). ” although banking legislation in 1991 specifically tried to limit the federal deposit insurance corporation ’ s ( fdic ) ability to protect failing banks and their creditors, regulators could make an exception for large institutions whose failure might pose a threat to the economy or to financial stability. as a result, tbtf was embedded in our | 0.5 |
recessions in 2001 and 2008 / 9, the economic downturns in australia around those times were relatively mild. it has been 20 years since the australian economy experienced a year of negative growth. this represents the longest period of uninterrupted growth in australia ’ s economic history, and one for which there are few precedents among the developed economies. why have the paths of the two economies diverged? i don ’ t think i can provide an exhaustive or conclusive answer to this question, but there are a couple of factors that have clearly played significant roles. first, both the 2001 and 2008 / 9 recessions in the united states were to a large degree the consequence of financial misadventure. the former was heavily influenced by the collapse of the “ tech ” bubble, and the latter by the collapse of the sub - prime housing bubble. australia was not affected nearly as seriously by either of these events. the tech bubble largely missed australia. in fact, in the late 1990s australia was constantly being berated for bis central bankers ’ speeches being an old - world economy in that it did not have a home - grown information technology industry. as it turns out, being a heavy user of technology, but not a manufacturer of it, was an advantage. the australian economy was not distorted by the tech bubble that built in the late 1990s, and it did not weaken as much as the us economy when the price of tech stocks collapsed in 2001. the mildness of the 2001 economic slowdown in australia meant that the reserve bank was able to normalise interest rates relatively quickly thereafter. in the event, this helped australia avoid the worst of the excesses in housing markets that subsequently built up in many other countries. the housing market was most “ frothy ” for australia as a whole around 2002 – 2003, and it cooled noticeably in 2004 as interest rates rose. while there were subsequent price increases in particular cities, the speculative element in the market had subsided considerably in most states by the time the global financial crisis hit in 2008. aside from increasing interest rates, the reserve bank also warned repeatedly around that time about the danger of excessive increases in house prices and borrowing, which may have, at the margin, curtailed some speculative activity. it was also helpful that the australian prudential regulation authority ( apra ), the prudential supervisor, pressed the banks to maintain relatively high lending standards. while there was some sub - prime lending activity in australia, it was on | generally been taken as a sign of weak consumption overall. but the national accounts showed that household spending on services has been strong. households are spending more on entertainment, eating out and travel, particularly overseas travel. at one level, this was surprising given the clear signs of caution among households, but it is less surprising when account is taken of the on - going fast pace of increase in household income. for a time, this increased income was used to rebuild saving, but with the household saving ratio having stabilised in recent quarters, income growth is now providing the wherewithal to fund consumption. the national accounts also showed that australia ’ s gdp continues to be affected by the severe effects on mining activity of the floods over the australian summer. taken literally, the weakest sector of the australian economy over the past year has been the mining sector, where output has fallen by 9 per cent over the past year. we know this is in the process of being reversed, so we need to look through it to judge the underlying strength of the economy. our estimate of the underlying trend in mining - related activity over the next couple of years is for increases in the order of 10 to 15 per cent. the rest of the economy on the other hand, is growing at an annual rate of only about 2 per cent. this is below what would have been regarded as normal in the past. this slow pace of growth in the non - mining sector is not simply a matter of a shortfall in demand. there are signs that the capacity of this part of the economy to supply goods and services has also slowed. for one thing, growth in the working - age population has slowed markedly over the past couple of years, due largely to a slowdown in immigration. also, bis central bankers ’ speeches productivity growth continues to be low. for growth in the non - mining economy to pick up, it is likely that these trends will need to reverse. labour market data are available up to august. they continue to point to soft outcomes for employment, after the surprisingly fast increase last year. the unemployment rate has also risen by 0. 4 percentage points over the past few months, after having been steady at around 5 per cent for much of the year. these trends could be an indication of the economy having slowed recently to a pace that is below its potential. on the other hand, there are some aspects of labour market numbers that have a stronger feel. contrary to the slowing in the number of people employed, there has been | 1 |
the cycle on international interest rates will probably also be an increase in the volatility of those rates. coverage against interest rate volatility is an additional argument in favor of integrating the emerging country economies with that of the world. 4. monetary policy another by - product of the new information technology is the blurring of the traditional definitions of money. it is now clearly possibly for the non - banking private sector to create money substitutes on demand. this development will tend to render inefficient the regulation of limited definitions of money as a tool to influence economic activity and prices. if this is so, interest rates will reign unchallenged as a monetary policy tool, while inflation targeting will be in the forefront as a nominal anchor for the economy. by the way, under these conditions it will become extremely difficult to differentiate between financial and non - financial firms. until a greater synchronization of the cycle becomes evident, the need for an independent monetary policy will necessarily lead to floating exchange rates. as the cycle, or perhaps i should say if the cycle, becomes synchronized all over the world, the need for independent monetary policies may fade away. gradually, the number of currencies in the world will decrease through time. this is not economic fiction : a tendency in this direction is already present among smaller countries in latin america with large trade and investment relationships with the united states. however, a world tendency to a significant decrease in the number of currencies is probably a very long run one, where keynes ’ dictum on the long run comes to mind. in any case, i am convinced that, as rogoff argues in a recent paper, it may not be desirable to pursue currency consolidation all the way. meanwhile, in the short and medium run, the increase in productivity provides more room for monetary policy to maneuver. productivity growth alleviate inflationary pressures providing more room for monetary policy to exert its short run influence on the real economy. 5. flexibility the key word for an emerging economy in a changing world is flexibility : in exchange rates and interest rates, to accommodate shocks without concentrating their effects in one particular market ; in factor markets, both labor and capital, to minimize the cost of transition from one state of the economy to another. the task before us, in an emerging economy like chile, is to increase flexibility in all markets. we have been working on that in recent years following a careful, gradual approach, to make sure that we put in place the necessary | to significant savings in the business - to - business supply chain. one of the implications of this increase in the availability of information is a great improvement in inventory management. the optimal level of inventories is becoming smaller, so that the real economy reacts faster to demand and / or supply shocks, reducing both the length and the width of the cycle. and shorter cycles make for a more effective monetary policy. krugman, p. “ crisis : the price of globalization? ” paper presented at jackson hole, wyoming, 2000. world economic outlook, may 2001, chapter iii : “ three current policy issues : impact of the global technology correction on the real economy ”, page. 57 - 66. brookings institution ( 2001 ) : “ the economic payoff from the internet ”. www. brook. edu / es / research / areas / it / ipibisummary. htm. blinder, alan ( 2000 ) : “ the internet and the new economy ”, brookings institution policy brief n°60, june. altig d. y peter rupert ( 1999 ) : “ growth and the internet : surfing to prosperity? ”, federal reserve bank of cleveland economic commentary, september. for instance, robert gordon ( does the “ new economy ” measure up to the great inventions of the past? journal of economic perspectives, fall 2000 ) mentioned “ the new economy has meant little to the 88 percent of the economy outside of durable manufacturing ; in part of the economy, trend growth in multifactor productivity has actually decelerated, despite a massive investment boom in computers and related equipment ”. page 72. optimal inventory management in an increasingly open international economy will not only imply shorter, but also, most probably, more synchronic cycles. a by - product of this development is an expansion of the geographical limits of optimum currency areas a la mundell. 3. terms of trade shocks and emerging economies the synchronization of the cycle increases volatility in commodity markets, an important source of international transmission of the cycle to a good number of emerging economies. the synchronization and shortening of cycles will probably also increase the volatility of international interest rates. economies with liquidity constraints and limited access to international financial markets will suffer the most. the policy prescription here is to strengthen fundamentals and open and deepen the integration of both product and capital markets with the rest of the world. the effect of synchronization and shortening of | 1 |
of ways in which the market may be improved. moreover, as the issuance of securitized products has stagnated since its peak in fiscal year 2006, we need to revitalize the securitization market as well. bis central bankers ’ speeches bank borrowings. abl may thus lead to the enhancement of the surveillance capacities of financial institutions through the necessity of continuous monitoring of such firms. the promotion of this kind of abl could contribute to the enhancement of economic growth potential, and i believe it is a useful scheme also for asia in the future. in this regard, the bank of japan established the “ special rules for equity investments and asset - based lending to enhance the fund - provisioning measure ”, which has been in effect since summer 2010. the special rules were established with the aim of further enhancing financial institutions ’ efforts to strengthen the foundations for economic growth through the use of a wider range of financial techniques. ( 5 ) to enhance financial inclusion the fifth challenge is financial inclusion. from the perspective of developing deep financial markets, it is also important to improve infrastructures so that more of the world ’ s population has access to financial services. there are reportedly more than 2. 5 billion adults who are excluded from accessing financial services, and also tens of millions of small enterprises that are facing serious financing problems. financial inclusion is a project with the aim of resolving the problem of inaccessibility to fundamental financial services. the project is expected to improve the lives of underprivileged people, and provide fundamental financial support to small enterprises, leading to the realization of sustainable economic growth through the increase in personal consumption and the creation of job opportunities. as the european debt problem gets worse and uncertainties grow in the global economy, financial inclusion has an important role to play in improving the welfare of emerging markets and developing economies with high growth potentials, and thus in ensuring global economic stability ( chart 7 ). financial inclusion has been discussed in the framework of international forums such as the g - 20 and apec. meanwhile, in the area of financial education, closely related to financial inclusion, the oecd has introduced valuable initiatives to enhance global cooperation by, for example, publishing the report, “ recommendation on principles and good practices for financial education and awareness ” in 2005, and also by establishing the international network on financial education. i support wholeheartedly further development of these initiatives, as financial education, like financial inclusion, is essential for the stability of the global financial | hence offset an increase in demand stemming from additional fiscal measures. under such circumstances, the output gap will not improve and prices will not rise. that said, whether or not a central bank can control bond prices depends not on its intention but on market judgment. it is for that reason too that i emphasize the importance of fiscal consolidation. see sims ( 1999 ), christiano and fitzgerald ( 2000a, b ), leeper ( 1991 ), cochrane ( 2000 ), and woodford ( 1996, 2001 ) for details regarding the fiscal theory of price level. bis central bankers ’ speeches concluding remarks a. government ’ s commitment for fiscal consolidation now, let me sum up. in my speech today, i have repeatedly emphasized the importance of fiscal consolidation. indeed, the japanese government has already said that it will halve the deficit in the primary balance relative to gdp by fiscal 2015 from the level registered in fiscal 2010. furthermore, it is committed to turning the primary balance from a deficit to a surplus by fiscal 2020. those moves constitute an important part of the government ’ s commitment to fiscal consolidation and are now widely accepted by the international community. accordingly, the government decided to raise the consumption tax from 5 to 8 percent in april ; moreover, the tax rate is scheduled to be raised to 10 percent in october 2015. down the road, we may hear more discussion concerning whether the consumption tax of 10 percent is enough to make the fiscal structure sustainable. whatever the discussion might be, it is important to acknowledge that the government will take a crucial first step toward fiscal consolidation, given mounting social security spending. there is no question about that, and financial markets understand the government ’ s intention on that. b. qqe based on fiscal consolidation recent long - term rates have been stable in light of signs of overcoming deflation. that is not just due to the effects of the bank ’ s jgb purchases. it also hinges on the fact that market participants and businesspeople have full confidence in the government ’ s strong commitment to fiscal consolidation. that enables the bank to conduct massive jgb purchases without being trapped in fiscal dominance. the bank offers full support to the government ’ s commitment. the commitment for fiscal consolidation by the government is imperative so that the qqe – which is designed to overcome deflation – should not be perceived as the means for “ financial repression ”. at the same time, a problem will arise if the government creates a fiscal cliff, as epitomized by the enforcement | 0.5 |
account and if programmes are so detailed that the country in question no longer has any freedom of action. in that respect, the imf was on the wrong path. things are changing at present, however. i fully support the strategy of focusing in future more on the objectives of securing the borrowing country's ownership and of dispensing with detailed requirements for implementation ( technical assistance should continue however ). but let us not deceive ourselves : the freedom of a patient is limited in any case. it may become even smaller, if the imf keeps out completely. the constraints of the facts may be overwhelming. diseases are likely to take their toll. on the other hand, there is certainly a realistic chance that healing powers are at work. these powers, however, have to be actively supported by the patient ( with or without the imf ). ix much has been done with regard to “ private sector involvement ” ( psi ). but we have not yet arrived at final conclusions. sometimes it seems that this is only a matter of crisis solution. in fact, however, it is not. it is, in my view, predominantly a matter of crisis prevention. that is because the manner of operating in the event of crisis has a crucial influence on expectations. these, in turn, determine the actions of investors at a very early stage and thus the scale of the risks and of susceptibility to crisis. short - term financial assistance from the imf in the event of crisis may be essential, both for the countries directly affected and, as a result of contagion, for the rest of the world. a regular bail - out of the private sector, however, is likely to be counter - productive : · it may have a detrimental effect on the risk - awareness of private investors and obscure the optimal allocation of resources ; · large - scale financial packages may support unsustainable exchange rates ; · large - scale financing by the imf brings about financial burdens that cannot be covered by the fund ’ s resources ; · and, last but not least, endless financing may encourage resistance to the implementation of reforms. my conclusion at this point : the role of the imf should be predominantly a catalytic one. for that purpose, the fund ’ s main instruments should be convincing advice and programmes, not money. priority has to be given to the private market participants. the leitmotif of the fund has to be “ bail - in ”, not “ bail - out | , one of the authors of the federal reserve act, the fed was established to " provide a means by which periodic panics which shake the american republic and do it enormous injury shall be stopped. " 2 today, however, we know that placing the primary focus on financial stability turned out to be problematic. when speculative lending ballooned in the late 1920s, the fed, in pursuit of its mandate, tightened monetary conditions in a situation when inflation rates were already slightly negative. while the fed could not stop asset prices from soaring, its interest rate moves contributed to an economic downturn. this disconnect threw into sharp relief the mispricing in the asset markets. the crash of october 1929 was then followed by waves of bank failures. 1 / 7 bis central bankers'speeches having seen the impact of the great depression, central banks increasingly shifted their focus towards macroeconomic objectives : price stability and – in the case of the fed – employment. financial stability, by contrast, dropped off monetary policymakers ’ radar. the deutsche bundesbank is another example of the role which crises played in the definition of a central bank ’ s mandate. when the bank was established exactly 60 years ago, there was a broad understanding that its primary objective should be to " maintain the stability of the currency ". after the german population had suffered the loss of their savings twice in the first half of the 20th century – in the early 1920s due to hyperinflation, and after the second world war due to the suppressed inflation caused by the wartime economy and the ensuing currency reform – they held price stability in very high store. and so it was widely appreciated by society that the bundesbank interpreted its mandate as meaning that it should maintain price stability. the oil crises of the 1970s and 80s were further events that shaped central banking. it was during this time that the merits of politically independent central banks like the bundesbank and the swiss national bank came into sharp focus. they were able to disconnect their economies from the worldwide inflation train by pursuing policies which were aimed squarely at preserving price stability. as a consequence, their institutional design formed the basis for the global consensus about monetary policy – a consensus which is still in place today : 3 1. central banks should primarily aim to maintain price stability, that is to say, consumer price stability. 2. central banks should be independent of their governments. 4 3. the credibility of central banks ’ commitment to low, but slightly positive inflation – by anchoring inflation expectations | 0.5 |
, services, capital and labour. trade, fdi and the labour market are the key channels for the macroeconomic effects of brexit. any agreement which keeps the uk access to the single market largely intact would have a more limited impact but the scale of the impact could be much more significant under a more restrictive agreement. in the short - term, downside risks for the irish economy, the uk and the broader european economies, arise mainly from the macroeconomic, financial and currency market effects of brexit related uncertainty. an important element of this uncertainty revolves around the terms of the relationship between the uk and the eu, how long it will take to work out that relationship and how it will impact in the interim. this heightened uncertainty could act to dampen consumer demand and investment decisions by firms. while the irish economy has become less reliant on the uk for trade over recent decades, the uk remains a particularly important market for many indigenous firms. some sectors, including agri - food, clothing and footwear and tourism continue to have a relatively high dependency on exports, consequently could be affected disproportionately. 5 / 7 bis central bankers'speeches the banks most recently published forecast for the irish economy and an updated projection to be published next week have taken account of the potential negative brexit effect. compared to a no - brexit baseline, projected gdp growth has been revised down by 0. 2 per cent in 2016 and by about a half of one percent in 2017. nevertheless even after these revisions, the outlook for the economy remains positive. ireland remains on track to be the fastest growing economy in the eu this year, for the third year running and a similar outcome is in prospect for next year. to conclude, against a backdrop of balance sheet repair for irish banks ’ combined with on - going deleveraging by irish households and smes, the irish economy continues to deal with the legacies arising from the crisis. risks and uncertainties remain, notably from the uk ’ s decision to leave the european union. nonetheless, economic activity continues to expand at a reasonably healthy pace. i would like to thank mary everett, mary cussen, terry quinn and micheal o ’ keeffe and for their contribution to this speech. the views expressed in this speech are personal and do not reflect the views of the commission of the central bank of ireland, or the eurosystem. see deaton angus, ( 2015 ) ‘ statistical objectivity is a | investment activity is subdued. the central bank's judgement remains that the domestic banking system is resilient to this downturn. in residential housing, an ongoing deficit in supply continues to drive prices domestically, and around 52, 000 new homes per annum could be needed to meet demand. despite these imbalances, there are no signs of excessive risk taking in mortgage credit, while aggregate mortgage credit growth remains moderate. more broadly, the irish economy is growing strongly and modified domestic demand is expected to grow in 2024 and 2025 at a faster pace than at the time of the last review. however as international investment and multinational enterprises ( mnes ) are central 1 / 2 bis - central bankers'speeches to the domestic economic model, driving a significant share of growth, public finances and employment, ireland is particularly exposed to global developments at a time of increased geopolitical and geoeconomic risk. moreover, with an economy performing at or above capacity, expansionary fiscal policy risks aggravating domestic pressures. irish households and businesses have been supported by a growing economy, but are also exposed to global shocks. households have weathered the period of higher interest rates, with the amount of income spent on debt repayments remaining stable. this follows a substantial decline in interest expenses in the decade after the global financial crisis ( gfc ). however, a shock to international trade could have knock - on effects for the labour market here, as well as the performance of domestic firms. irish small and medium - sized enterprises ( smes ) have shown resilience, but there are pockets of risk, for example with insolvencies rising in the accommodation / food and other services sectors although we have continued to observe employment growth in these sectors. domestic bank profitability has likely reached its cyclical peak, following strong growth over the last couple of years. however the banking sector is resilient and is well - placed to withstand any softening in profits. against this backdrop, we are maintaining an unchanged policy stance for macroprudential capital buffers. the counter - cyclical capital buffer ( ccyb ) rate remains at 1. 5 per cent. the central bank's mortgage measures aim to ensure sustainable lending standards and evidence suggests the measures continue to meet their objectives. recent developments in new mortgage lending show a shift towards lti and ltv limits, but the share of new lending in the most risky categories is contained. borrowing levels relative to incomes continue to be materially lower than in the early | 0.5 |
moral hazard between the banks, it will be crucial to have a risk - adjusted levy system for contributions by the resolution fund. as the most of you do, i would have preferred a pure european solution, instead of an intergovernmental agreement, but i have to accept the constraints in national laws. nevertheless, i am hoping for a compromise on the srm and srf, because starting the ssm in november without clarity about the resolution system would clearly be disadvantageous. thank you for your attention. i am now at your disposal for questions. bis central bankers ’ speeches | of cash is decreasing more rapidly. [ 10 ] visa and mastercard intermediate two - thirds of eu card payments and, along with paypal, dominate online payments. [ 11 ] a recent survey identified over 200 new payment solutions, of which more than one - third were provided by start - ups. for a detailed analysis of these solutions, see ecb ( 2019 ), “ implications of digitalisation in retail payments for the eurosystem ’ s catalyst role ”, july. [ 12 ] see panetta, f. ( 2018 ), “ fintech and banking : today and tomorrow ”, speech at the bicentennial annual reunion of the harvard law school association of europe, rome, 12 may. [ 13 ] stablecoins are digital units of value designed to minimise fluctuations in their price against a reference currency or basket of currencies. to this end, some stablecoin initiatives pledge to hold a reserve of state - issued currencies or other assets against which stablecoin holdings can be redeemed or exchanged. global stablecoins are initiatives which aim to achieve a global footprint, without necessarily relying on existing payment schemes and clearing and settlement arrangements. see bullmann, d., klemm, j. and pinna, a. ( 2019 ), “ in search for stability in crypto - assets : are stablecoins the solution? ”, occasional paper series, no 230, ecb, august. [ 14 ] see panetta, f. ( 2020 ), “ the two sides of the ( stable ) coin ”, speech at il salone dei pagamenti, 4 november. [ 15 ] a run could occur whenever users – who bear all the risks – expect a decrease in the redemption price of the stablecoin. a run is possible even when the stablecoin issuer provides a financial guarantee, if such a guarantee loses credibility over time as doubts emerge about the issuer ’ s capacity to absorb potential losses. [ 16 ] moreover, large investments in safe assets by stablecoin issuers could influence the level and volatility of real interest rates, with adverse effects on market functioning and the implementation of monetary policy. [ 17 ] reserve assets are the assets against which the stablecoins are valued and redeemed. [ 18 ] in the current situation the viability of such a business model is however challenged by the fact that short term rates are negative. [ 19 ] if allowed to invest the reserve assets | 0 |
and that inflation can be kept at a low and stable level also in periods with high domestic cost inflation. however, if developments in the real economy are to be satisfactory over time, real wage growth must be adapted to underlying productivity growth. a precondition for countering a possible downturn by means of monetary policy easing is slower growth in labour costs. monetary policy cannot prevent an increase in unemployment that is caused by a significantly higher rate of growth in labour costs in norway compared with other countries. nor can an expansionary fiscal policy counter a cost - driven rise in unemployment. growth in real wages is far higher than the underlying growth in productivity. if higher costs cannot be passed on to customers, earnings decline and the wage share increases. many businesses will have to adjust their workforces to maintain profitability. this leads to a fall in employment and increased productivity. for some companies, this may be a prerequisite for maintaining operations in norway. the alternative is to close down or relocate production to another country. while the wage share has risen sharply in manufacturing, it has remained fairly stable in other industries. import firms have wider margins, suggesting that the appreciation of the krone has not fully benefited customers. we also know that employment in some service industries has fallen. many companies in the service sector have adjusted their workforces to maintain profitability. to some extent, higher costs can also be passed on to customers through higher prices in this sector. manufacturing employment is declining. in the public sector, where employment growth has been strong the last few years, budgets will only allow a moderate increase in employment in 2003. overall, employment is projected to fall by ½ per cent in 2003 and remain unchanged in 2004. employment followed a similar course in the early 1980s. at that time, employment rose markedly as a result of continued strong growth in the labour force. labour force participation in norway is currently at a record - high level, and the demographically determined supply of labour is low. at the same time, labour force growth may be lower than implied by demographic trends for various reasons. more people may choose to study until the situation in the labour market improves. some of the unemployed may exit the labour market on retirement schemes. outflows from the labour market and low labour force growth as a result of demographic trends may limit the increase in unemployment. nevertheless, unemployment is projected to rise, especially in manufacturing. the increase through 2002 primarily reflects a rise in unemployment in the service sector. manufacturing unemployment remained stable until | on the culture of firms, and the individual accountability of the 3 / 5 bis central bankers'speeches people who run them. we need a financial system that fosters trust, where consumers and investors are protected, deposits are safe and insurance reserves are adequate to meet liabilities. we work with the other parts of the state ’ s consumer protection framework – such as the financial services and pensions ombudsman and the competition and consumer protection commission – to deliver this. but we also need a strong culture of compliance. when it comes to issues like culture, the responsibility rests first and foremost on the leadership of firms. organisations make their own cultures and it is the responsibility of boards to ensure the development of consumer and compliance - focused cultures that the irish public deserves. if the sector wishes to regain trust, it must earn it by demonstrating trustworthiness. that is no easy feat and the public will rightfully be the ultimate adjudicators. i welcome the creation of the irish banking culture board as a positive sign of intent. the individual accountability framework that we have proposed should also help address some of the issues in the banking sector. mortgage arrears and market - based finance i want to turn to one ongoing challenge and one emerging risk. mortgage arrears the protection of borrowers in mortgage arrears continues to be a key priority for the central bank. the regulatory framework provides a significant number of protections for borrowers in arrears. this is important given the strain, stress, and vulnerability of people who are at risk of losing their homes. the central bank ’ s approach to resolution has focused on ensuring the fair treatment of borrowers and ensuring that lenders have appropriate arrears resolution strategies in place. significant progress has been made in terms of restructuring mortgage arrears, and critical to this has been the implementation of alternative repayment arrangements ( aras ). but it ’ s also true to say that a sizeable arrears problem persists and engagement between lenders and borrowers remains essential if this is to be addressed successfully. arrangements should be appropriate and sustainable for the borrower, regardless of whether a bank or non - bank holds the loan. it is important that any arrangement addresses the underlying problem for borrowers. as part of our supervisory work, we will continue to focus on ensuring the long term sustainability of any alternative arrangements. we will continue to press all firms to engage and work to find solutions for both firms and borrowers which address the underlying issues | 0 |
corporate financing instruments may be employed as a central bank. since outright purchases of cp essentially undertake the credit risks of individual firms, they constitute an exceptional step taken by the central bank in light of the bank's fundamental position that the main purpose of central bank operations is to provide liquidity. looking back on the history of central banks in leading countries, the only cases where central banks have purchased corporate financing instruments outright are the bank of japan's purchasing of abcp, abss, and corporate stocks in the first half of this decade and the federal reserve's purchasing of cp mentioned earlier. nevertheless, it becomes difficult to draw a clear line between measures to provide liquidity and those that take on credit risk in crisis situations. central banks are expected, based on the current economic and financial situation, to fully recognize the importance of their responsibilities in ensuring the stability of prices and of the financial system, and to make judgments on specific and practical matters in view of appropriately assuming these responsibilities. the bank, in providing support to corporate financing, will examine the scope of undertakings that are necessary and appropriate for a central bank, as well as appropriate ways, including the involvement of the government, to ensure the bank's financial health and confidence in the currency. closing remarks today, i have discussed the conditions of global financial markets and the world economy, the economic situation in japan, and the conduct of monetary policy, and also presented some outlook for the coming year. currently, the world economy is in a severe situation never experienced for many years that i may venture to call a crisis situation. the immediate task is " fire - fighting " against this crisis, and we are doing our utmost. at the same time, however, looking back on the developments in the world economy for the past two decades or so, the phenomenon of the rise and bursting of bubbles seems to have increased in frequency and become visible across a wider range of economies. considering the background to these experiences, it seems necessary to remember that responding to crises with excessive policy actions may lead to larger crises later on. in the current crisis, many issues have surfaced in central banking circles in areas such as the basic ideas behind the conduct of monetary policy and the regulation and supervision of financial institutions. i am sure that various issues are also being reconsidered in the field of corporate management, given the progress of globalization in economic and financial activities. the bank, through exchanging views with you, will do its utmost as a central bank to facilitate the | masaaki shirakawa : global financial crisis and policy responses by the bank of japan speech by mr masaaki shirakawa, governor of the bank of japan, to the board of councillors of nippon keidanren ( japan business federation ), tokyo, 22 december 2008. * * * introduction i am honored to have this opportunity to speak before business leaders in japan here today. time flies, and it is only about a week before the turn of the year. looking back, this year has been a particularly severe one both for overseas economies and japan's economy. the slowdown in the world economy gradually became pronounced, reflecting the turmoil in global financial markets since the summer of 2007, and the situation changed significantly especially since the bankruptcy filing of lehman brothers in mid - september. many in corporate management have expressed the view that the sharp downturn in overseas economies and japan's economy over the past several months is one they have never experienced before, and the severity of the situation is clearly shown in the recent economic data. today, i would like to take this opportunity to review this year's developments in global financial markets, the world economy, and japan's economy, talk about the background to the current global financial crisis, and lastly explain the bank of japan's thinking on the conduct of monetary policy. i. global financial markets and the world economy i would like to start with developments in global financial markets and the world economy. as you know, the turmoil in global financial markets since the summer of 2007 was caused by declines in the prices of securitized products backed by subprime mortgages. it is not appropriate to limit our understanding of this trouble as " the subprime mortgage problem " or interpret it as " the financial sector's fault ". in essence, it was caused by the bursting of a global credit bubble – a phenomenon generated by a combination of the rise in asset prices and the increase in credit and leverage. during the period of the credit bubble, firms in general enjoyed the fruits of high growth in the world economy. the rise and bursting of the credit bubble was observed to the greatest degree in the u. s. economy, but other economies also experienced similar phenomena, albeit with some differences in degree. the turmoil in financial markets surfaced as " liquidity constraints " when conduits and aggregators of securitized products and financial institutions faced difficulties in raising funds. losses incurred by financial institutions eventually expanded due to declines in the prices of | 1 |
have been reached at the end of last year. coincident and forward - looking indicators increasingly point to improvements in economic conditions. a similar picture is reflected in financial market expectations, especially those embedded in bond yields. the economic fundamentals of the euro area are sound and there are no major imbalances that would require a lengthy process of adjustment. the expectation of a recovery in the euro area in 2002 is furthermore supported by favourable financing conditions and by real disposable income benefiting from past and expected future declines in inflation. there is also increasing confirmation that economic activity outside the euro area is picking up, which should lead to a gradual strengthening of the external demand for euro area products and services. while the strength of the recovery remains uncertain, there are good reasons to expect a return of economic growth to levels in line with potential towards the end of the year. turning to short - term price developments, annual consumer price inflation picked up substantially in january. part of this increase was expected, as it related to base effects stemming from falling energy prices in early 2001 and to higher indirect taxes in some euro area countries. furthermore, the increase reflected a considerable rise in unprocessed food prices due to adverse weather conditions in parts of europe. part of the latter effect seems to have been reversed in the meantime, as preliminary data for february indicate. some increases have also been observed in oil prices and in the rate of growth of services prices in january. while there might have been an impact on specific service categories in january, overall there is no evidence that the euro cash changeover has had a significant upward effect on the average price level in the euro area or that the declining trend in annual inflation rates has been affected recently. in the coming months, the effects of past increases in energy and food prices should gradually subside and annual inflation rates should fall to below 2 %. the recent behaviour of producer prices also points in this direction. beyond that horizon, we expect little upward pressure on prices from aggregate demand and, barring unforeseen developments, inflation rates to be in line with price stability. however, the current favourable outlook for inflation fundamentally rests on the assumption of a continuation of wage moderation. as i already noted last month, there is some cause for concern with regard to ongoing wage negotiations. a continuation of wage moderation in the euro area is crucial not only to foster employment growth but also to support monetary policy in its task to maintain price stability. with regard to fiscal policy in the | that they more accurately reflect changing economic weights in the world economy, and so that they have more legitimacy and effectiveness. • further work will need to be done on the details of some of these reforms, their ultimate test will be the extent to which they genuinely solve current problems and avert future ones. it is important for us to ensure their swift and comprehensive implementation to convince markets of the benefits to come. but the key issue here – in my view – is confidence. what we ultimately need to achieve is to rebuild confidence in the financial system and among market participants. only confidence will bring about the normal functioning of markets, the intermediation process and of all transmission mechanisms. we are now in the middle of a storm, but it ’ s still worth thinking well ahead and envisaging new circumstances and opportunities. remember that when the delegates from the 44 allied nations gathered at the mount washington hotel in bretton woods, new hampshire, in the summer of 1944, the second world war was still underway. yet the conference laid down principles and established institutions that governed the global economy for three decades. many of them are still in place today, more than 60 years later. the difficult phase we are passing through now, while certainly not as cataclysmic as 1944, may well prove to be a watershed. we had the original bretton woods system until 1971. since the turn of the millennium, we have had what some have called a market - led “ bretton woods ii ”. let me ask then : should we move now to a “ bretton woods iii ”, that is, to a new order for the global financial and monetary system? and if so, how? this question requires deep thinking and cannot obviously be resolved in a few minutes. i would like nevertheless to give you some food for thought. one point to consider is that any new bretton woods should combine issues related to trade, finance and macroeconomic policies. the three are closely intertwined, not only in good times but also in bad times. we are seeing a paralysis in world trade, not because of protectionism, as in the 1930s, but because of the absence of trade finance, so essential to commerce in today ’ s world. trade issues are dealt with by the wto, but closer ties need to be established with the imf and the world bank, given that global imbalances have both a trade and a financial dimension. another thought is that in a globalised world all countries tend to | 0.5 |
environment, and in the face of adversity, caution is key, and risks must be very carefully managed. second, regardless of whether the world is topsy - turvy or not, a bank must be capable of turning a profit at any level of interest rates. that may include restructuring its own business model in order to be less dependent on interest rate business. given the challenges facing the sector, supervisors are interested in examining exactly what burdens for the institutions are truly justified in order to avoid placing any further, unnecessary obstacles in their way. and third, i would like to stress that we must not concentrate solely on the interest rate level. we face a number of quite different challenges, too. to name just one example, i expect that the london banks that are likely to move to germany and to frankfurt as a result of brexit will try to poach qualified staff from local banks. to paraphrase helmut qualtinger, an austrian actor, author and cabaret artist : a lot of things get worse by looking at them, but nothing gets better by looking away. 1 to this end, the room for manoeuvre must be recognised and utilised. i now look forward to the other speakers at today ’ s event and am interested to see what issues they will focus on. thank you very much for your attention. 1 helmut qualtinger, austrian actor, writer and cabaret artist ( 1928 - 1986 ). 5 / 5 bis central bankers'speeches | by roughly 30 %. however, you must remember that the european banking sector previously experienced immense balance sheet growth. the balance sheet reduction we have been witnessing since 2008 therefore has to be seen in the light of a significantly larger – probably excessively large – balance sheet expansion in the preceding years. back in 2014, the european systemic risk board was already sounding warnings of excess capacity. and the international monetary fund confirmed in 2016 that this problem was far from resolved. more work therefore still needs to be done to pare back the excess capacity that has accumulated over a number of years. to neglect structural change would be to jeopardise our ability to evolve and adapt. if economic realities change, banks and savings banks must likewise adapt. that is my message to german banks, without wishing to appear in any way cynical. there is an awful lot banks can do to ensure their long - term survival. many institutions have recognised this and are increasingly taking the appropriate action. i could say a lot just on the subject of digitalisation and the changes happening in the banking sector. it would simply be naive to neglect these changes. other areas also leave plenty of scope for entrepreneurial activity. specifically, i am referring to specialisation and mergers, and of course the subject of cost - cutting. german banks ’ cost - income ratio averaged 69. 2 % in 2016, only slightly better than in 2015 and towards the bottom of the european league table. that means there is scope for improvement. how banks go about effecting such improvements is up to each individual institution. supervisors should not get involved in the competition to see where the future of banking lies and should certainly not be responsible for corporate earnings. when we examine business models, we do so primarily under the aspect of capital adequacy. we are not the better bankers and should keep out of any business decisions as much as possible. 4. the role of supervisors in a topsy - turvy world as supervisors, we are interested, first and foremost, in a healthy and stable banking system. for this, we have a clear mandate. that certainly does not involve pleasing all credit institutions, but it does mean that we have to supervise the sector diligently and conscientiously. nonetheless, we too have some leeway in deciding when and where we impose what measures. that is particularly true when interest rates are topsy - turvy. we are therefore justified in looking to see where we can mitigate the burden for banks and savings | 1 |
, we have constructed a measure of underutilisation that takes account of the part - time workers who want to work more hours. this measure adds the extra hours sought by these workers to the hours sought by those who are unemployed ( graph 3 ). [ 2 ] these extra hours are equivalent to around 3. 3 per cent of the labour force, which, taking account of conventional unemployment, means that the underutilisation rate is 8. 1 per cent. this hours - based measure is preferable to heads - based measures of underutilisation that treats an unemployed person in the same way as a part - time worker seeking a few more hours. graph 3 unlike the unemployment rate, which has trended down over the past 20 years, the underemployment rate has been relatively stable. these different patterns in unemployment and underemployment suggest that fewer inroads have been made into spare capacity in the labour market than suggested by looking at the unemployment rate alone. this is something we take into account in thinking about monetary policy. there is, though, one other perspective on the measure of underemployment that i would like to share with you. in the past, when part - time work was not as readily available, many people – mostly women – faced the choice of taking full - time paid employment or no paid employment at all. many chose to, or had to stay outside the labour force because working was not a realistic option. from the perspective of society as a whole, this was a serious form of underutilisation – it just wasn't measured as such by the abs. given the trend towards part - time and more flexible jobs, people have more options than they had before and many have chosen to join, or have deferred leaving, the labour force. [ 3 ] from the perspective of adding to the productive capacity of the nation, this is a good outcome and if there was a measure of underutilisation that took account of exclusion from the workforce, it would surely have declined. i don't want to downplay the issue of underemployment, but it is worth recognising this broader perspective, and remembering where we have come from. flexibility of the supply side this naturally brings me to my second window into spare capacity in the labour market – the flexibility of labour supply. over the past 2½ years, the working - age population has increased at an annual rate of around 1¾ | an unexpected loss of all or part of their income. common reasons for this are the loss of a job, ill health or relationship breakdown. these occur even when economic conditions and lending standards are good. so there will always be some baseline level of mortgage arrears. indeed, from a system - wide perspective, a mortgage arrears rate of zero would be undesirable, because it would imply that lending standards were too tight and that credit - worthy borrowers were being denied access to credit. widespread increases in arrears are driven by macroeconomic factors, in particular : rising unemployment rates, which lead to a widespread loss of income ; rising interest rates, which create a higher regular expense for borrowers ; and falling housing prices, which can make it more difficult for borrowers who are behind on their payments to get out of arrears by selling their property. appropriate lending standards that ensure that borrowers have reasonable income and equity buffers can mitigate the impact of macroeconomic factors on arrears, while poor lending standards amplify their effect. in all states, increases in the share of housing loans that are 90 + days in arrears have been mainly driven by loans remaining in arrears for longer rather than by more loans entering arrears ( graph 2 ). this suggests households are finding it harder to resolve their situation than previously and is consistent with the softer housing market conditions. this is especially so in western australia, where housing prices have been falling for some time. liaison with banks suggests that more lenient https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 11 - 15. html 2 / 6 18 / 11 / 2019 mortgage arrears | speeches | rba forbearance and foreclosure policies have also contributed to the increase in longer - term arrears rates. graph 2 financial stability review in the recent, we used the bank's securitisation dataset to look at how different types of home loans have performed in western australia over the past few years. as might be expected, loans that were originated with higher repayments relative to income, and loans with higher starting loan - to - valuation ratios have had larger increases in arrears in western australia. larger increases in arrears have been seen for self - employed borrowers, who tend to have more volatile income than salaried employees. arrears rates for investors have | 0.5 |
a challenge not only to emerging economies but also to the more developed financial systems and economies. lessons from the financial crisis while there are benefits to be gained from the internationalization of financial systems, the risks to financial stability have also increased immensely. the risks generally emanate from the greater prospects for contagion following the greater degree of interdependence. these risks would be even more pronounced in emerging economies in which financial systems have yet to become more developed and matured. to be better positioned to reap the benefits from internationalization of financial systems in emerging economies, the crisis provides us with several lessons. firstly, is to recognize that the different parts of the domestic financial system is highly interconnected. this also includes those parts that may not be under the regulatory capture. financial stress in a specific segment may no longer be confined to that segment but may rapidly be transmitted to the rest of the financial system. thus, a piecemeal policy response would not be sufficient. it would require a comprehensive response to ensure that such stressed conditions does not evolve into a major financial crisis. secondly, the build - up of risks to financial stability need to be identified early. pre - emptive action would reduce the cost of the crisis on the financial system and the economy. third, the regulatory authorities need to be accorded the necessary powers to manage the risks to financial stability. fourth, the optimal policy mix may not only include policy actions to address immediate term issues but would also need to simultaneously address the underlying structural problems. fifth, is to give recognition to the importance of enabling conditions that will render the implemented policies to yield the desired outcomes. finally, to facilitate effective policy decision making there needs to be a platform and governance process for policy coordination across agencies within an economy and for this to be extended for regional and international collective action. following the recent global financial crisis, the policy response at the national level has been extensive and on an unprecedented scale. while there has been wide ranging financial reforms at the international level to strengthen the resilience of the financial sector, the cross bis central bankers ’ speeches border dimension of policy - making has not been as extensive. this is despite the swift spread of financial and economic shocks throughout the global economy and international financial system following the eruption of the financial crisis in 2008. despite these increased challenges, the institutional arrangements for policy cooperation and coordination have yet to reach the levels that are commensurate with the degree of global economic and financial integration. while the individual efforts | transformation of human resource strategies. given that in this new environment human capital has become a key factor that will drive results, it is therefore not only the investment in talent that has become key, but also their management. human capital management therefore needs to be a top priority in organisations. certainly this is the case for financial institutions for which the demands and expectations are high. new approaches and strategies for human capital management will be required. these strategies need to be aligned with the strategic objectives of the organisation. a vital part of this is the capacity building of the human capital management team itself to ensure that they will best serve their organisation. there also has to be strong engagement between the leadership and the human capital management team. there has to be an acute awareness of how the forces of change and the new environment is reshaping the demand and supply of talent and how the existing talent needs to be transformed to meet the objectives of the organisation in a highly dynamic environment. human capital management is no longer about the efficient delivery of support services. it is now about the management of talent in the organisation to strengthen and enhance its performance. the human capital management also needs to be well supported by an integrated information system that can allow for rigorous analysis that can become an important basis for decision making. finally, there need to be continuous socialisation of the human capital reforms to ensure the effective implementation of the difficult reforms and changes in the organisation. conclusion let me conclude my remarks. as we advance forward into the future, the economic and financial landscape can be expected to be continuously redefined. if we are to stay ahead of the curve and be well positioned to meet the new challenges, high priority needs to be given to talent development and management. education and capacity building to generate the new talent with the right skills, mindsets and values is only one part of the solution. new bis central bankers ’ speeches strategies and approaches for the effective human capital management is an equally important part of the equation. many of these issues are likely to be discussed at this symposium. let me thank the speakers, especially those who have travelled here from a far for their contribution to this symposium. let me take the opportunity to wish you an engaging and productive symposium. bis central bankers ’ speeches | 0.5 |
##ised towards addressing contemporary issues facing the ummah. from ending poverty and hunger to promoting responsible production and consumption ; providing affordable housing ; better healthcare and education – shariah deliberations on islamic finance matters should reflect on the evolving needs of the economy and society. shariah scholars are constantly challenged to have a thorough and sound understanding of other fields of expertise such as economics, law, psychology and technology to formulate well - rounded and pragmatic ijtihad. with shariah scholars at the forefront of multi - disciplinary knowledge, the shariah fraternity can play a more prominent role in the global call for action for the financial sector to better respond to the contemporary challenges facing our world today. closer engagement with wider stakeholders, be it the financial industry, regulatory authorities, central banks and the public sector, has never been more pressing than before. it is the way forward. it is the way to ensure that the islamic finance industry continues to be able to deliver on the intended objectives of shariah. 1 / 2 bis central bankers'speeches transparency of shariah rule - making my second point relates to the importance of transparency of shariah reasoning and credibility of shariah rulings. this will encourage a deeper understanding of shariah requirements and outcomes beyond a compliance mindset. pronouncing a clear and comprehensive hukum is certainly not easy ; shariah deliberations would need to be anchored to a comprehensive and robust decision making approach that captures holistic considerations including legal, risk, accounting, operations and also stakeholder implications. it is equally important that shariah rulings are well - understood by everyone. this calls for an effective communication strategy to advocate the intended outcomes of each rulings and the underlying reasons for each decisions. platform such as this gathering – offers all of us the opportunity to learn and exchange views from each other ’ s experiences. best practices in shariah methodology and governance can be shared and deliberated to elevate the quality of rulings and stature of shariah advisory authorities globally. connectivity among centralised shariah advisory authorities the final point is on increasing connectivity among centralised shariah advisory authorities to promote mutual respect and knowledge - sharing. islam has flourished with a strong foundation of knowledge, wisdom and tolerance among its scholars. differences in ideas and open discourses to assess the veracity of knowledge – have always been practiced in many islamic societies. while achieving consensus is ideal – full appreciation of differences | zeti akhtar aziz : asia ’ s role as an important growth centre in the global economy opening address by dr zeti akhtar aziz, governor of the central bank of malaysia, at the first asian central banks ’ watchers conference, organised by the official monetary and financial institutions forum ( omfif ) and the lafferty group, kuala lumpur, 1 november 2011. * * * it is with great pleasure that i welcome you to the first asian central banks ’ watchers conference organised by the official monetary and financial institutions forum ( omfif ) and the lafferty group. bank negara malaysia is very pleased to host this event here in kuala lumpur. central banks have generally been the most watched organisations given the significance and far reaching implications of their actions on financial systems, the economy and the economic well being of the public at large. this is even more so during periods of financial stress and economic distress. during such periods, central banks have generally been at the forefront in managing such crisis and its consequences. indeed, this current global crisis has prompted central banks in the united states and europe to be closely watched given the impact of their actions on not only their own national economies but also on the rest of the world. with the growing significance of the emerging economies in the world economy, our policy actions have increasingly drawn significant interest. in particular, given asia ’ s role as an important growth centre in the global economy and the growing significance of the financial markets in asia as a destination for global financial flows, there has been increased focus on central banks in asia. asian economies for several decades have established strong financial and economic linkages with the rest of the world. in this recent decade in particular, asia has experienced significant structural changes that have altered the dynamics of the global economy and growth patterns. since 2000, per capita income levels in asia have risen twofold. with a growing middle class population that will reach 3. 3 billion by 2030, asia is projected to become the world ’ s largest market for consumer goods and services. low unemployment and a resilient financial sector has reinforced this trend. domestic demand has continued to strengthen while the growth in intra - regional economic and financial activities has been sustained. intra - regional trade now represents more than 50 % of total trade, increasing from 32 % in 1995. similarly, intra - regional portfolio investments have risen from 20 % of total assets holdings in 2001 to 28 % today. the growth in cross - border trade and investments in | 0.5 |
the rules of the environmental game can change very quickly. the authorities in china are getting serious about cutting emissions and pollution, as the requirement by the beijing municipal government on the shougang steel group to cut back its output has shown. the problem in china is that regulations are not always strictly enforced. but this can change overnight, resulting in major compliance problems for the companies concerned and increased risk for the banks that have lent to them. hong kong banks which lend into china would therefore be well advised to keep this in mind. finally, banks should pay close regard to their own “ corporate ecology ”. banks can contribute to environmental protection by the way in which they manage their use of resources in their own operations. in this way banks can be responsible corporate citizens while at the same time reducing business costs. the type of measures that can be adopted include saving on energy consumption, recycling of paper, waste management, purchasing environmentally friendly products and use of video conferencing to cut down on unnecessary travel. use of office automation such as email can also help to reduce the consumption of paper, provided of course that staff can be encouraged not to print out the messages. the important aspect of this, as with other areas of environmental management, is to try to set measurable objectives for green initiatives, to assign management responsibility for monitoring performance and to offer staff guidance and training on how to achieve the desired results. as noted earlier, the progress should be communicated to the outside world in the bank ’ s environmental report. i would like to close by expressing my appreciation for being allowed the opportunity to speak to you today on this important topic. doing the research for my speech has certainly helped to raise my own awareness of the importance of environmental issues in general and the implications of these for financial institutions in particular. i hope that you will find this conference to be useful and informative, and that you will pick up lessons and advice on environmental issues that you can take back with you to build into your business operations and decisions. the need to do this is the keynote of my speech and the main theme of this conference. | joseph yam : international financial system – challenging issues welcome address by mr joseph yam, chief executive of the hong kong monetary authority, at the sibos 2009, hong kong, 14 september 2009. * * * sibos was last held here in hong kong in 1991. so it has taken you 18 years to come back to hong kong. i wonder what took you so long. a lot has happened here in this free and open international financial centre in the past 18 years that ought to have interested you enough to bring you back here earlier. i can think of, for example, the establishment of the hong kong monetary authority in 1993! seriously, financial globalisation and innovation have made life here, where there is a high degree of market freedom and ample liquidity, rather challenging, perhaps a little too challenging for the financial authorities. and on a couple of occasions we had to take controversial, remedial action to safeguard monetary and financial stability. on top of this, there were of course the market excitement, or interestingly the lack of it, surrounding the reversion of sovereignty ; the inevitable bursting of the housing bubble that did not, i repeat not, lead to a collapse of the financial system ; the construction of our multi - currency and multi - dimensional financial infrastructure that made rtgs dvp and pvp possible for anybody wanting to manage risks more properly here in this time zone ; and the emergence, more recently, of the rmb offshore market here that is also serving as a laboratory for testing financial liberalisation on the mainland, a development that is of increasing importance to global finance. but it is still a great pleasure, after all these years, to welcome sibos back to hong kong. i understand that the objectives of sibos this year are “ learning lessons from the past, exploring the post - crisis landscape and paving the way for future innovation ”. these are indeed important objectives, having regard to the current state of global finance. indeed, for the past couple of years they have been occupying much of the time of the financial authorities and the industry. the g20, the financial stability board and its standing committees, and the standard setting bodies are all working hard and there is no lack of specific subjects to address – the basel capital framework, the accounting standards for valuation and for off - balance sheet activities, capital requirements for trading activities, compensation practices, central counterparties, principles for the oversight of hedge funds, supervisory colleges, cross - border cooperation on crisis management, | 0.5 |
countries at such a phase in the cycle. the problem is that growth does not always take place as expected. the years of strong global growth before the global financial crisis were followed by a slowdown, which extended even to india, showing how much more integrated we had become with the world. strong demand projections for various projects were shown to be increasingly unrealistic as domestic demand slowed down. moreover, a variety of governance problems coupled with the fear of investigation slowed down bureaucratic decision making in delhi, and permissions for infrastructure projects became hard to get. project cost overruns escalated for stalled projects and they became increasingly unable to service debt. i am not saying that there was no malfeasance – the country ’ s investigative agencies are looking into some cases such as those where undue influence was used in getting loans, or where actual fraud has been committed by diverting funds out of a company, either through over - invoicing imports sourced via a promoter - owned subsidiary abroad or exporting to related shell companies abroad and then claiming they defaulted. i am saying that, typically, there were factors other than malfeasance at play, and a number of genuine committed entrepreneurs are in trouble, as are banks that made reasonable business decisions given what they knew then. the sources of lending distress : poor monitoring and collection the truth is, even sensible lending will entail default. a banker who lends with the intent of never experiencing a default is probably over - conservative and will lend to too few projects, thus hurting growth. but sensible lending means careful assessment up front of project prospects, which i have argued may have been marred by irrational exuberance or excessive dependence on evaluations by others. deficiencies in evaluation can be somewhat compensated for by careful post - lending monitoring, including careful documentation and perfection of collateral, as well as ensuring assets backing promoter guarantees are registered and tracked. unfortunately, too many projects were left weakly monitored, even as costs increased. banks may have expected the lead bank to exercise adequate due diligence, but this did not always happen. moreover, as a project went into distress, private banks were sometimes more agile in securing their positions with additional collateral from the promoter, or getting repaid, even while public sector banks continued supporting projects with fresh loans. promoters astutely stopped infusing equity, and sometimes even stopped putting in effort, knowing the project was unlikely to repay given the debt overhang. the process for collection, despite laws like sarfaes | and to small enterprises. the more appropriate conclusion then is that public sector banks were shrinking exposure to infrastructure and industry risk right from early 2014 because of mounting distress on their past loans. private sector banks, many of which did not have these past exposures, were more willing to service the mounting demand from both their traditional borrowers, as well as some of those corporates denied by the public sector banks. given, however, that public sector banks are much bigger than private sector banks, private sector banks cannot substitute fully for the slowdown in public sector bank credit. we absolutely need to get public sector banks back into lending to industry and infrastructure, else credit and growth will suffer as the economy picks up. these charts refute another argument made by those who do not look at the evidence – that stress in the corporate world is because of high interest rates. interest rates set by private banks are usually equal or higher than rates set by public sector banks. yet their credit growth does not seem to have suffered. the logical conclusion therefore must be that it is not the level of interest rates that is the problem. instead, stress is because of the loans already in chart 2, the latest negative growth april number may be an aberration because of uday bonds being transferred from bank loan books to investments ). bis central bankers ’ speeches on psb balance sheets, and their unwillingness to lend more to those sectors to which they have high exposure. there are two sources of distressed loans – the fundamentals of the borrower not being good, and the ability of the lender to collect being weak. both are at work in the current distress. the sources of lending distress : bad fundamentals why have bad loans been made? a number of these loans were made in 2007 – 2008. economic growth was strong and the possibilities limitless. deposit growth in public sector banks was rapid, and a number of infrastructure projects such as power plants had been completed on time and within budget. it is at such times that banks make mistakes. they extrapolate past growth and performance to the future. so they are willing to accept higher leverage in projects, and less promoter equity. indeed, sometimes banks signed up to lend based on project reports by the promoter ’ s investment bank, without doing their own due diligence. one promoter told me about how he was pursued then by banks waving checkbooks, asking him to name the amount he wanted. this is the historic phenomenon of irrational exuberance, common across | 1 |
taught us that assessing systemic risk is key, as are sound arrangements for the application of tools to mitigate it. the final crossroads is faced by economic policy, as a result of the changes i have described. in short, it can be said that the tasks at hand are shifting from the achievement of stability to promoting growth, and from crisis management to longer - term development. in terms of monetary policy, this can be seen in the monetary policy committee ’ s shift of its bias from monetary easing to neutral. this does not mean that interest rates cannot be lowered further, but it does mean that because inflation appears to have hit bottom, economic recovery has begun, and the effective policy rate is closer to equilibrium than before, it is not as clear what direction upcoming interest rate decisions will take. the next steps will be determined more by the newest indicators of economic developments and prospects than they have been in the recent past. at its next meeting, the monetary policy committee will probably assess whether and how the icesave referendum results and the newly published capital account liberalisation strategy will affect monetary policy in the near future. the strategy divides liberalisation into two main phases, with phase i dedicated to unwinding offshore krona positions by allowing owners to exit through auctions or by investing in the icelandic economy. only when these measures have generated acceptable results can controls on residents ’ capital outflows be lifted. if conditions are right, the latter phase could proceed relatively quickly, but if not, it will be executed more gradually. it is difficult to say how long phase i will take, as its duration will depend on a number of uncertainties, such as access to foreign credit markets. but it is important for near - term monetary policy that phase i be designed to minimise potential negative effects on the exchange rate and the foreign exchange reserves, at least at first. it is only in phase ii that the interest rate differential with other countries begins to assume much greater importance as regards exchange rate developments. in the recent past, monetary policy has been an element in the larger economic policy formulated by the icelandic authorities in co - operation with the international monetary fund. the key features of that policy have been exchange rate stability, fiscal sustainability, and financial system reconstruction. in spite of delays in execution, the programme has, on the whole, been very successful. our collaboration with the imf according to the current economic programme will conclude in august, but of course, our long - standing co - operative relationship with the fund | favourable economic developments that have characterised the economy for much of this decade. instrumental in the changes that have taken place has been the liberalisation, and i might say marketisation, of the economy. in our present situation it is of paramount importance to safeguard the stability of the economy and quickly reduce inflation again. the central bank will continue to pursue a monetary policy geared to that end. credit rating the success in economic management did not escape the attention of the rating agencies. the republic of iceland was first assigned a rating by standard & poor ’ s and moody ’ s in the late 1980s. the initial long - term rating from both agencies was in the middle of the single a category. in 1996, both agencies raised iceland ’ s rating by one notch and in 1997 moody ’ s raised iceland ’ s rating again and that time into the double a category, to aa3. the short - term rating is a - 1 + and p - 1. both agencies have assigned ratings to the long - term obligations of the republic of iceland in domestic currency, aaa and aa +. the improved rating demonstrated a welcomed recognition of the progress made in icelandic economic management in recent years. in our own view, the rating improvements were overdue, first because our economic performance was in quantitative terms fully compatible with that of countries with a higher rating than iceland, and, secondly, because it seemed obvious that the reception of icelandic borrowing operations in the markets indicated that financial institutions have consistently assessed icelandic risk differently from, or one might say more favourably than, the rating agencies. structural changes other speakers at this conference will touch on structural changes in the economy, particularly in the financial sector. i only wish to emphasise that it is not an overstatement to say that the icelandic financial system has undergone radical changes since the middle of the 1980s. the market was deregulated, a stock exchange was established, and new institutions and financial services flourished. last but not least, all restrictions on the movement of portfolio capital between iceland and other countries were removed as alluded to earlier. the market is now similar to that in other developed countries, except for volume of course, while the role of the government through ownership of financial institutions stands out. the privatisation process is under way and there is room for considerable improvements in efficiency in the financial sector. one should expect mergers of individual institutions to take place in the period ahead. competition among domestic financial institutions is fierce. in the rest of the economy, significant efficiency gains have been | 0.5 |
toronto and vancouver, the markets that are still adjusting to lower oil prices in alberta and saskatchewan, and the markets that are functioning normally almost everywhere else. after slowing sharply beginning in 2017, the toronto area market appears to be stabilizing, while resales and prices continue to fall in the vancouver area. prices in both areas remain 40 to 60 per cent higher than they were four years ago, suggesting that housing imbalances remain an important macrofinancial vulnerability. the housing market as a whole continues to benefit from solid fundamentals, including population growth and strong job creation. one more main vulnerability from the last fsr that we continue to watch is the possibility of a major cyber attack on a financial institution or market infrastructure, such as the payment systems that we all rely on every day. cyber threats remain a key structural vulnerability, and the number of incidents that have or could have resulted in substantial financial losses has increased steadily over the past decade. financial system participants are particularly concerned about cyber incidents at third - party service providers. the bank has been working with major banks and financial market infrastructures to improve coordination and information sharing, which is crucial for improving resilience. 1 / 2 bis central bankers'speeches in this fsr, we have placed more focus on two other vulnerabilities. one relates to corporate debt funding. the level of non - financial corporate debt in canada is well above its historical average. while the average firm has enough liquid assets to manage an increase in interest rates or a decline in income, some companies have relatively few liquid assets and less capacity to service their debts. in this context, lower - rated firms are relying more on us high - yield bonds and leveraged loans, and borrowers in these markets are more vulnerable to sudden swings in investor sentiment. we will be monitoring the situation. we are also putting more emphasis on the vulnerability related to crypto assets. these continue to pose little threat to the financial system. but crypto markets and the uses of the underlying technology are changing quickly. so, implications for financial stability might arise suddenly. i would add that recent swings in prices for crypto assets and losses at crypto companies underline the need for investors to understand all the risks before they enter these markets. we have also added a new vulnerability : climate change. there is a broad range of authorities that are tasked with assessing and mitigating the impacts of climate change. for central banks, the focus is on the risks that climate change poses to | those anticipated in october, although its profile is marginally firmer. both total and core inflation are expected to moderate in 2012 before reaching 2 per cent by the third quarter of 2013, as excess supply is slowly absorbed, labour compensation grows modestly and inflation expectations remain well - anchored. several significant upside and downside risks are present in the inflation outlook for canada. bis central bankers ’ speeches the three main upside risks to inflation in canada relate to the possibility of stronger - than - expected inflationary pressures in the global economy, stronger - thanexpected growth in the u. s. economy and stronger momentum in canadian household spending. the two main downside risks to inflation in canada relate to sovereign debt and banking concerns in europe and the possibility that growth in household spending could be weaker than projected. overall, the bank judges that these risks are roughly balanced over the projection horizon. reflecting all of these factors, the bank yesterday maintained the target for the overnight rate at 1 per cent. with the target interest rate near historic lows and the financial system functioning well, there is considerable monetary policy stimulus in canada. the bank will continue to monitor carefully economic and financial developments in the canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2 per cent inflation target over the medium term. with that, tiff and i would be pleased to take your questions. bis central bankers ’ speeches | 0.5 |
##ly on its consistency with a country ’ s domestic macroeconomic and structural policy framework. this being said, the choice of an exchange rate regime should rest on the following principles : – so - called “ corner solutions ” are not necessarily the only available options. free floating rates may help to accommodate volatile capital flows and asymmetric shocks ; however, they might not prevent misalignments leading to balance of payments desequilibrium, they might prove disruptive for the real sector of small open economies, which often lack the size for developing the necessary market infrastructure to cope with exchange rate instability. currency boards can be warranted only under very specific circumstances. – requirements for sustaining pegs have become very demanding in an environment of high capital mobility ; however, “ intermediate solutions ” may still remain a relevant option for a number of countries ; particularly for open economies with close links to a partner country or a partner single currency area that maintains price stability or for countries experiencing high inflation, where anchoring the currency provides a simple and credible rule for monetary policy. needless to say that the intermediate solutions are considered particularly appropriate in the european framework where the belonging to an exchange rate mechanism plays a major role in the preparation to join the single currency. – in cases where countries need to respond to very large capital inflows and related risks of inflation and real appreciation, greater exchange rate flexibility might become desirable. let me conclude these considerations with two observations : – first, we should concentrate all our efforts on implementation of existing codes and standards. implementation is the key word at present times. applying standards and codes in all economies of the world, including emerging economies and economies in transition is an immense, challenging and urgent endeavor. – second, as regards the private sector involvement, i will recommend being as pragmatic and as consistent as possible. pragmatic because a case by case assessment is always needed and there is, in my opinion, no mechanistic “ a priori ” approach which would be advisable. consistent, meaning that once the assessment is made by the international community on the concept of the participation of the private sector in the crisis solution, we have to stick to it. 2. let me turn now to the second topic of my presentation which relates to the economic strengths of the euro zone and its impact on the euro itself more specifically, i would like to stress the three reasons which make me confident in the euro zone and therefore convinced that the euro will significantly appreciate in the future : | moderate pace in coming quarters, with the unemployment rate declining only gradually. fomc participants generally expected that inflation was likely to run at or below the committee ’ s inflation goal of 2 percent over the next few years. the committee also judged that there were significant downside risks to this outlook, importantly including the potential for an intensification of strains in europe and an associated slowing in global growth. federal reserve ’ s recent policy actions all of the federal reserve ’ s monetary policy decisions are guided by our dual mandate to promote maximum employment and stable prices. with the disappointing progress in job markets and with inflation pressures remaining subdued, the fomc has taken several important steps this year to provide additional policy accommodation. in january, the committee noted that it anticipated that economic conditions were likely to warrant exceptionally low levels of the federal funds rate at least through late 2014 – a year and a half later than in previous statements. in june, policymakers decided to continue through year - end the maturity extension program ( mep ), under which the federal reserve bis central bankers ’ speeches purchases long - term treasury securities and sells short - term ones to help depress long - term yields. at its september meeting, with the data continuing to signal weak labor markets and no signs of significant inflation pressures, the fomc decided to take several additional steps to provide policy accommodation. it extended the period over which it expects to maintain exceptionally low levels of the federal funds rate from late 2014 to mid - 2015. moreover, the committee clarified that it expects to maintain a highly accommodative stance of monetary policy for a considerable period after the economic recovery strengthens. the fomc coupled these changes in forward guidance with additional asset purchases, announcing that it will purchase agency mortgage - backed securities ( mbs ) at a pace of $ 40 billion per month, on top of the $ 45 billion in monthly purchases of long - term treasury securities planned for the remainder of this year under the mep. the fomc also indicated that it would continue to purchase agency mbs, undertake additional asset purchases, and employ other tools as appropriate until the outlook for the labor market improves substantially in a context of price stability. the open - ended nature of these new asset purchases, together with their explicit conditioning on improvements in labor market conditions, will provide the committee with flexibility in responding to economic developments and instill greater public confidence that the federal reserve will take the actions necessary to foster a stronger economic recovery in a context of price | 0 |
on products and pricing, manage risk, innovate, adapt, change and grow. ( viii ) role of small, locally - oriented financial service providers : the importance of small organizations should not be minimized ; they are often the most significant, if not the only, financial service providers in many communities. small financial service providers can be expected to penetrate their markets, seeking alliances with others and through networks to offer a greater range of products and services. 15. though financial sustainability is essential for massive and swift expansion of services, to maximize client - level benefits it is essential to ensure social sustainability of financial inclusion programs. while intertwined with financial sustainability, social sustainability demands that : ( i ) effective community and social mobilization is critical to success of financial inclusion strategy. it involves using participatory process to raise awareness, mobilize and involve local leadership, institutions and communities to organize for collective action for common goals and objectives to reach poor, women and the disadvantaged. community investment fund ( cif ) provides a useful tool to reach the poorest decile of population. the experience of successful cifs demonstrate that savings - based and self help groups ( shg ) based cifs are some of the most successful models for achieving better social outcomes on sustainable basis. externally funded cifs have lower odds of success as they have to swim against the stream of natural incentives of group members. it is prudent for external funders to provide support services to cif instead of injecting loan capital. ( ii ) targeted support programs. most pertinent in this context would be the community and rural support programs which catalyze employment opportunities. whether they are by way of subsidized lending program mfis ( or those who support them ) should be able to report on how ( or whether ) the stated goals they have promised ( i. e., improved earnings, reduced vulnerability, increased empowerment, etc. ) are being realized. ( iii ) properly structured credit enhancements : design credit enhancement in a way that mfis use of the facility is subject to fulfilling social sustainability criteria to yield better social outcomes. ( iv ) social performance demands keeping a close watch on the financial bottom line through better retention of clients and reduction of costs, quality of services, improvements in client lives through proper economic empowerment which could be through business opportunities, education, health, or agricultural extension, with additional appropriate funding. 16. in a nutshell, evidence suggests that poverty reduction strategies are successful | question of “ access. ” direct intervention to build financially inclusive system is critical as one recognizes fully ( i ) financial markets failures and imperfections such as information asymmetries, lack of sensitivity to gender and redistributive dimensions of resources and wealth and high transaction costs etc. ; ( ii ) high price and non - price barriers such as lack of credit history and collateral and connection ; and ( iii ) other constraints such as lack of literacy and entrepreneurial skills, etc. 4. over the years, there has been substantive development in the architecture and thinking on financial inclusion. while there is no “ one - size fits all ” financial inclusion strategy or approach but it is important to recognize few core or necessary and sufficient conditions that are needed to maximize the benefits derived from such strategy. 5. at the outset, it is critical to understand the size and dimension of financial exclusion. despite complexities of estimation, a recent study 3 concluded that average level of financial an alternative definition of poverty ( $ 2 a day ) gives an estimate of 2 billion poor in asia. however, for monitoring progress of mdgs, world bank uses the $ 1 / day definition as it reflects extreme poverty. the world bank, global monitoring report, 2007. beck, thorsten, asli demirgc - kunt, and maria soledad martinez peria ( 2007 ) " reaching out : access to and use of banking services across countries. " journal of financial economics 85 ( 1 ). exclusion, as measured by the percentage of the adult population with access to an account with a financial intermediary, in poor developing countries is as high as the level of financial inclusion in advanced industrialized countries where it is rare not to have at least some access to basic financial services in remote parts. in developing countries, level of financial exclusion is steepest in sub - saharan africa ( a reflection of extreme poverty and difficult economic condition ). situation in asia, present a mixed picture. south asia ( average access rate being 31 percent ) lags behind in expanding financial access relative to south east asia ( average access rate being 47 percent ). advanced transition economies of central europe have progressed well in rebuilding access. there has been relatively little progress made in central and south america despite a relatively robust economic base, particularly among larger countries. 6. to design strategy and policies, there is further need to understand what the reasons for exclusion are? is it voluntary or pure denial of services and what the barriers of access to finance are | 1 |
lisa d cook : exploring careers in economics welcoming remarks by ms lisa d cook, member of the board of governors of the federal reserve system, at the " exploring careers in economics " conference, sponsored by the board of governors of the federal reserve system, washington dc, 4 april 2023. * * * good afternoon, and welcome to " exploring careers in economics. " i am disappointed i cannot be with you in person, but i am thrilled you will hear from boston fed president susan collins. she is an outstanding colleague and economist, a good friend. you are in for a fantastic discussion. this event has a fairly self - explanatory title - exploring careers in economics. but the broad range of opportunities is anything but straightforward. economics touches every aspect of daily life, and you can see its impact in the world outside your door - and inside as well. some of you are veterans of economic study, while some of you are just " econ - curious. " either way, i hope that when you sign off today, you will have a totally different view of what economics can offer you. i was raised by academics in a college town, but even that access and insight did not give me the full picture of what was out there. a career in economics can take you in directions you never thought possible. we live in a constantly changing world, which means there is always new research to undertake, questions to be posed, and ground to break. my own studies allowed me to investigate everything from the impact of patents on the nation's economic growth to the banking system in post - soviet russia. they also took me to the archives of the kremlin and to university in the united kingdom and senegal. and that was just during my education! my career has taken me all over the globe. economics can take you just about anywhere, figuratively and literally. so i do hope that we do a good job of showing you the world of possibilities in the field. because economics needs you. any field that studies the behavior of an entire population, as economics does, should reflect the population it studies. we all come to the table with different experiences and backgrounds, which give each of us unique perspectives. your generation has seen two once - in - a - century economic events within two decades. your economic experiences are different from anyone else's. that insight and understanding will be critical to policymakers. the economics profession needs your perspective. future fed staff, governors, and chairs may | , we have been through several waves of higher infection rates and strict containment measures. nevertheless, economic activity has rebounded strongly from the trough in spring 2020, and many of those who became unemployed have fortunately re - entered the workforce. we are now pleased to note that infection rates are heading downward and that the reopening of society is underway. there is still uncertainty about the road ahead, but we can see the light at the end of the tunnel. thank you for your attention. 4 / 4 bis central bankers'speeches | 0 |
the supply side pushes one further to the right of the schematic picture in chart 8. chart 8 : lags in the inflation process mean that, when the policymaker is uncertain about supply, there ’ s a trade - off between a better understanding of the economy and the timeliness of the policy response the lag between movements in spare capacity and inflation is longer and the price one pays for this extra information, in time, is therefore higher. there are clearly risks in moving only when you see “ the whites of inflation ’ s eyes ”. but it may still be a price worth paying. the two graphs below ( chart 9 ), derived from a simple model of inflation in which there ’ s incomplete information about the shocks hitting the economy [ 7 ], help to cement the point. in this representation inflation can be moved around by four underlying drivers – demand, productivity, firms ’ mark - ups and movements in the nairu – but the policymaker has only three observable variables from which to deduce them ( output, unemployment and inflation itself ). importantly, he or she is assumed to understand how variable these underlying disturbances are ( estimates that can be built up over time ). but there is nonetheless what is sometimes called a “ signal extraction ” problem, and one can estimate only imprecisely, in real time, what is driving what. and, in doing so, the policymaker will lean on a greater range of information. chart 9 : more weight put on unemployment when there ’ s uncertainty about underlying productivity growth ; uncertainty about the nairu means wage and price inflation matter too sources : ons and bank calculations. first panel plots the contribution of activity and unemployment data to the estimated variance of the output gap, where along the x - axis we increase the standard deviation of the supply shock relative to the others. second panel charts the contributions of unemployment and inflation to the estimated variance of the output gap, where along the x - axis we increase the standard deviation of the shock to u *. the graphs plot two pairwise comparisons of the relative importance of the observable series for estimates of the output gap, depending on the variance of ( and therefore uncertainty about ) the underlying shocks. as uncertainty about underlying productivity growth rises, the policymaker puts increasing weight on developments in unemployment rather than gdp growth. when the nairu is more uncertain, inflation becomes more significant. as that happens, the variability of inflation itself rises, because policy has a less precise understanding | is based on the superiority of free trade as the organizing principle of international economic interaction. ” 4 lessons from the crisis the joint, massive, and unprecedented policy responses that were put in place as the crisis unfolded surely deserve due credit. as mr. subramanian here at the peterson institute noted in the financial times in late december 2009 : 5 “ what is striking about the influence of economics is that similar policy responses in the fiscal and monetary areas, and non - responses in relation to competitive devaluations and protectionism, were crafted across the globe. they were evident in emerging - market economies and developing countries as much as in the industrial world ; in red - blooded capitalist countries as well as in communist china and still - dirigiste india. if ever there was a great consensus, this was it. ” a key lesson from the crisis is the need for multilateral cooperation and collective action. it relates to the framework for polices on prevention, resolution, reform and implementation. it also relates to the institutional set - up. the international community turns to the imf in times of crisis, in part because it is an effective institution that performs the vital functions that are called for, but also for the very simple reason that the world has no one else to turn to. the imf has played a pivotal role in presenting the initial lessons from the crisis, in providing finance to countries with temporary balance of payments needs, and in preparing the overall framework for the international policy response. when the good times return, we must avoid memory failure and remember these facts of life. the financial crisis has left a legacy. large public and private debt, high unemployment and wide global imbalances continue to challenge the global framework for economic policy. shaping the global governance structure in recent years, increasingly assertive non - statutory bodies have emerged in the area of international economic and financial collaboration, most notably the g20. the global crisis pushed the g20 into closer cooperation and at new levels. as an effective and powerful group, the g20 featured prominently in the broad international efforts to stabilise the global economy in late 2008 and early 2009. without its prompt and comprehensive action, the consequences of the crisis would have been much worse. it is in the interest of all that the large and systemically important countries discuss issues of common interest. their successful collaboration benefits not only themselves, but also the rest of the world. among the g20 measures of 2009 were the efforts to strengthen confidence in international financial institutions, | 0 |
mario draghi : significant progress in 2012 and prospects for 2013 address by mr mario draghi, president of the european central bank, at the new year ’ s reception of the frankfurt chamber of commerce and industry, frankfurt am main, 22 january 2013. * * * minister - president bouffier, lord mayor feldmann, president muller, ladies and gentlemen, it is a great pleasure for me to be here with you this evening, and i would like to thank the chamber of commerce and industry very warmly for inviting me. i am pleased to meet many representatives of the business community and public life of the region rhein - main and frankfurt, the city in which the ecb is so well hosted and where i also feel personally very comfortable. a new year ’ s reception is always the occasion to look back on what has happened in the past year and to look forward to what lies ahead. 2012 was a year full of challenges. yet it was also a year of surprises and new beginnings. we began the year in an environment of exceptional uncertainty. the euro area was faced with deep, even existential challenges. this led some experts to make bleak predictions about the future. they doubted the resilience of our economies. they worried about the stability of our single currency. they even questioned its future existence. to illustrate just how far some doubts went, let me quote the from the economist ’ s annual publication “ the world in 2012 ”, which in the autumn of 2011 said the following : “ if you were sitting down with a blank sheet of paper, you would advise the euro zone to complement its one - size - fits - all monetary policy by pooling sovereignty and creating new institutions. you would set up a european mini - imf with enough funds to assist troubled countries that adjust their economies. a pan - european banking regulator and a bail - out fund could ensure that large european banks were not at the mercy of their vulnerable sovereign borrowers. [ … ] and, to stop governments from exploiting these mechanisms, euro - zone countries would agree to submit their fiscal policies to the say - so of everyone else. it amounts to a blueprint for the united states of europe. and it is utterly beyond reach. ” 1 if we look back at 2012, on virtually all of these issues, europe is moving forward or is already there. so the ambition is not “ utterly beyond reach ”. indeed, it bears out what walter hallstein, the first president of the european commission, | once said : that “ anyone who does not believe in miracles in european matters is not a realist ”. 2 due to resolute actions by euro area governments and european institutions, the year 2012 turned out quite differently than predicted. the darkest clouds over the euro area subsided. countries renewed their commitment to reforms. the euro area took strides forward in its common governance. the economist : “ the world in 2012 ”, 16 / 11 / 2011. walter hallstein : „ wer in europaischen dingen nicht an wunder glaubt, ist kein realist “. bis central bankers ’ speeches europe ’ s policy - makers, including the european central bank ( ecb ) within its mandate, left no doubts about their commitment to our common currency and to its stability. we can begin 2013 on a more confident note, precisely because significant progress was made during 2012. significant progress in 2012 first of all, governments did their part to ensure stability. during the last year, an important change took place “ on the ground ” in the economies of europe. the necessary rebalancing of the euro area economy gathered pace. a comprehensive adjustment in the deficit countries is now taking place. many countries are making solid progress in bringing their public finances under control. they are enacting structural reforms to increase competitiveness. this is especially true for the countries under an eu / imf programme, where adjustment has been extensive. reducing the imbalances is certainly a difficult and painful process. but it is essential to restore sustainable public finances and growth. the people in the countries concerned have broadly understood this and backed this course of action. the progress made deserves public recognition and respect. governments also came together in 2012 to strengthen the euro area and its ability to prevent and react to crises. the european stability mechanism became active and provides a solid safety net if needed. the new rules for governing the euro area economy were applied to strengthen oversight of budgets and to monitor emerging imbalances more effectively. member states agreed to put debt brakes in their national constitutions. most importantly, europe ’ s leaders recognised that monetary union needs to be complemented by a financial union, a fiscal union, a genuine economic union and eventually a deeper political union. discussions are underway with clear timelines in the months ahead. the most urgent project – financial union – is now taking tangible shape. the ecb is expected to become the single supervisor for the biggest part of the euro area ’ s banking sector. this is | 1 |
banks have developed implementation plans, and many have started to progressively improve their practices. there are some areas where banks have made substantial progress. for instance, roughly half of them have started to integrate climate risks into their client due diligence. they have developed dedicated client questionnaires to better understand the climate risks to which they are exposed, and they use this information when deciding to whom they grant credit. in addition, roughly half of banks are now integrating climate risks into their lending policies, sometimes requiring that a specialised climate - related risk function advises them on higher - risk transactions. what is remarkable is that the progress we are seeing on all these fronts was identified in banks from different countries, with different business models and different asset volumes. some banks have also been proactively trying to overcome the scarcity of climate - related data by independently developing their own indicators – such as financed carbon emissions, financed technology mix and energy performance certificates – to identify corporate clients with high sensitivity to climate transition risks. they have then set limits at portfolio level to manage those risks. and one bank has developed a climate risk dashboard to present to its board ’ s risk committee on a quarterly basis. this shows that data scarcity can be overcome. finally, some banks have already started to identify and manage other environmental risks beyond climate, such as those associated with biodiversity loss and pollution. for instance, one bank has started to develop a methodology to measure the biodiversity footprint of its investment and lending portfolios, while others have developed a dedicated group policy regarding their commitments and lending criteria related to biodiversity risks. in our guide, we recognise that other environmental factors related to the loss of ecosystem services, such as water stress, biodiversity loss and resource scarcity, have also been shown to drive financial risk. and we therefore expect banks to evaluate all environmental risk - related information, beyond climate risks, to ensure that their risk profile is sufficiently covered against them. 4 these practices are proof that, contrary to some of the industry ’ s claims, what the ecb is asking is not unreasonable or impossible. some banks have effectively raised the bar, and those lagging behind should take inspiration from them and follow suit. conclusion to conclude. for all their many flaws, national accounts data continue to be extremely useful for policymaking to this day. they have been extensively reviewed and gradually harmonised – the same path we should expect for climate data and the architecture supporting them. no, climate data are not harmonised yet. and yes, they are | a decline in longer - term interest rates and risk premiums through both the interest rate channel and the portfolio channel. the declines would influence firms ’ borrowing costs, a range of asset prices including stock prices and foreign exchange rates, and bank lending, thereby influencing households ’ and firms ’ spending and eventually have positive effects on economic activity and prices. looking at the developments following the february decision based on this consideration – in the form of effects on longer - term interest rates and people ’ s risk - taking appetite brought about by prospects, that is, valid expectations for future aggressive monetary policy conduct – the 2 - year government bond yield has declined, the yen has depreciated, and stock prices have risen. the depreciating trend of the yen and the rise in stock prices were already evident prior to the february decision, reflecting the mitigation of global risk aversion, improvement in the u. s. economy, and japan ’ s trade deficit. the decision at the monetary policy meeting in february also appears to have contributed to establishing the trend. the clarification of the bank ’ s powerful monetary easing stance and decisive policy action seem to have exerted a strong commitment effect and a policy duration effect. these spilled over and lowered longer - term interest rates – including the 5 - year government bond yield – enhanced people ’ s risk - taking appetite – lowering required risk premiums in turn – and thereby enhanced the effects to improve financial conditions. i pointed out earlier that firms ’ investment spending might have been restrained due to sluggish stock prices, the appreciation of the yen, and the slowdown in the global economy. if the current improving trend in financial conditions continues in tandem with the improvement in overseas economies, these improvements could induce a favorable turn in bis central bankers ’ speeches corporate profits and business sentiment, increase forward - looking investment, and concurrently enhance growth potential and value creativity. the depreciation of the yen and the rise in stock prices might also lead to an improvement in consumer sentiment and an increase in tourists from abroad, thereby further stimulating domestic demand. such developments would likely work to induce a sustainable economic recovery and a moderate rise in prices. as cautious views remain with regard to future uncertainties, the headwind japan ’ s economy faces is likely to continue. nevertheless, what i have just discussed suggests one channel through which powerful monetary easing could lead to overcoming deflation. if the path of improvement induced by powerful monetary easing can be forecast and grasped by market participants, the improvement | 0 |
for them not to be needed. there is trust between the borrower and the bank. the bank is trusting that the borrower will repay the loan. the bank can do a lot of due diligence on the borrower to be reasonably confident that the lender will repay. but ultimately there will be some trust involved. the bank needs to trust that the borrower has provided accurate information and will act in good faith. there will, however, always be a gap between what the bank can learn through its due diligence and what it needs to be completely confident the loan will be repaid in full. because the process of financial intermediation often has a number of links in the chain, there also needs to be trust between financial institutions. many financial transactions don ’ t just involve one bank lending out its deposits to the end - borrower. often the funds are on - lent to one financial institution after another, before ultimately finding its way to the end - borrower. so trust needs to be present at every stage in the chain. one breakdown in this chain of trust between counterparties can throw a spanner in the works of the whole process. ultimately there is only so much due diligence that can be done. risk is always present in the financial system. information asymmetries will always be present between the two parties in a financial transaction. transparency can reduce but not eliminate the risk from these asymmetries. bis central bankers ’ speeches finally, there has historically been trust between regulators and financial institutions. ( i am not sure there is all that much of this trust at the moment, as i will discuss later. ) “ trust me, i know what i ’ m doing ”, was the banker ’ s exhortation for the light touch approach to regulation that was pervasive prior to the crisis in many countries, most obviously the uk. the argument was that banks should be broadly left to their own devices, with the discipline provided by the market deemed sufficient to keep them on track. the breakdown of trust having described the critical role that trust plays in the process of financial intermediation, i will now describe how trust has broken down over the course of the financial crisis. the period leading up to the financial crisis saw what might be labelled, in the context of my talk today, the development of lazy trust. things were generally going along fine, so my due diligence was that i will take you, the lender, at | on risk and uncertainty ”, address to risk australia conference, sydney, 31 august. bis central bankers ’ speeches without any security ( unsecured lending ). in plain english, this means that banks would only lend to another bank if the borrowing bank would provide something like a government security or a portfolio of mortgages as collateral to the loan. then even if collateral was provided, the length of time they were willing to provide the loan for shortened, because of a concern that the borrower would not survive long enough to repay. this placed some financial institutions in significant financial difficulty. concerns mounted as to whether some institutions would be able to fund themselves at all. as a result of this, the european central bank ( ecb ) announced that it would provide as much funds as banks in europe required through three year loans. so the european central bank has become the intermediary of last resort for the european banking system because the banks do not trust each other. more recently, as the lack of trust of some of the governments of europe has intensified, the ecb has had, in effect, indicated its willingness to act as intermediary of last resort to these governments too. one of the main reasons the ecb has decided to do this is because of the lack of trust in the longevity of the euro. investors are concerned about the possibility of redenomination risk : the possibility they are left holding an asset whose value is markedly decreased, when a country leaves the euro area and re - introduces its own currency. as a result of this mistrust, we are witnessing a balkanisation of the financial system in europe. investors in one european country don ’ t trust banks or governments in other countries. they pull back from financing across borders, preferring instead to invest their money close to home. this almost certainly is not an optimal allocation of funds to their most productive use. on top of this dangerous state of affairs in europe, and amplifying the diminution of trust in the financial sector, recent controversies in the banking sector have hardly provided any justification for the public regaining trust in the banking system. to the extent that trust was slowly being restored in some parts of the banking system over the past few years, it was shattered by the recent revelations surrounding the libor scandal, allegations of money laundering and the like. the restoration of trust so all in all, the state of the financial system in many parts of the world is not in good shape. so what is to be done | 1 |
, stable and sustainable finances to ensure and support welfare and wellbeing. this is a balancing act that requires all of us to weigh in. for there are many challenges that can disturb the balance. wh thi k f th t i fi i l h ll i ti f th id when we now think of the most pressing financial challenges our societies face, the rapid revival of inflation stands out. the strong price increase for energy and commodities in particular has hit societies all over the world with force. pushed past its point of inflection, inflation eats away at consumption and investment capacity and frustrates financial planning. in response, the ecb rallied to raise policy rates to calm down the business cycle and keep inflation expectations anchored. we will continue doing so until the inflation outlook has stabilized around our 2 % target in the medium term. this can however hardly be considered a walk in the park. first of all, some of the most important inflationary drivers are of an imported nature. this not only makes us collectively poorer as we spend more euros or koruna ’ s abroad, but also makes inflation more complicated to control. secondly, central bankers are having to walk a tight rope between controlling inflation and preserving financial stability. in the aftermath of the pandemic, debt levels and asset valuations peaked. both make our system vulnerable to disorderly market corrections and cross - border spillovers. given these considerations, one might ask oneself what we can do. recent analysis by dnb staff confirms that high inflation has been driven not only by negative supply shocks but to a significant extent - also by positive demand shocks. with the tightening of monetary policy, european governments should be mindful not to implement generic fiscal support measures. instead, targeted fiscal measures should focus on distributing support where needed most. this would also demonstrate our commitment to budgetary discipline. but our interdependence goes much deeper. the early days of the pandemic serve as a stark reminder that - in our globalized economies - inward - looking policies almost always lead to a negative sum game. this means that financial institutions, businesses and governments should each consider the wider impact of their decisions. each of us has a role to play when it comes to limiting the perils of cross - border spillovers. to maintain our balance, we rely on the international coordination of policymakers and industry leaders. our teamwork determines the resilience of the real economy and, in particular, its financial system. for the longer term | relative price movements are welfare enhancing and not something that we should be concerned about. in practice, the world is not so simple and markets are not perfectly competitive. relative price movements do not always occur freely, and adjustments to changes in preferences or technology can be costly. monetary policy cannot and should not influence relative prices within the euro area to offset divergences between sectors or countries. those relative prices are determined by real factors. instead, the best contribution that monetary policy can make to society ’ s welfare is to stabilise the general euro area price level. that reduces the noise in relative price changes, and therefore improves the workings of the price mechanism. nonetheless, central bankers do monitor divergences. why do we monitor divergences if there is nothing we can do about them? first, our knowledge of the monetary transmission mechanism is incomplete. information about the various parts of the economy, including divergences, adds to our knowledge of the economy as a whole. we are particularly conscious of this in the euro area where we are still in the process of developing and enhancing indicators for the euro area as a whole. the second reason for our interest is that regional or sectoral differences in economic performance can provide early signals of area - wide developments, as us experience has shown. if monetary policy cannot and should not react to divergences, what about other policy areas? as i mentioned earlier, allowing relative price changes to occur is often the best approach, so that resources are allocated to their most effective uses. accordingly, structural reforms that allow the relative price mechanism to operate are generally sensible. and, hearing central bankers call for structural reforms is nothing new! my colleagues and i on the ecb governing council have been regularly calling for further structural reform. for example, labour market reform that stimulates the movement of labour around the euro area is likely to reduce euro area unemployment overall, as well as reducing disparity in prices, wages and unemployment rates between regions. central bankers in other countries make similar points. another approach would be to use fiscal policy to try and dampen national divergences. however, given the planning and implementation lags, it is not easy to use fiscal policy in a counter - cyclical manner. in addition, the main objective of fiscal policy is not normally to reduce cross - country or cross - sector divergences. even though fiscal policy is normally formulated within a multi - year framework, elements of discretion remain. any discretion should be used to reduce, | 0.5 |
there are no theoretical or empirical grounds to indicate that the swiss economy will be adversely affected by the proposed regulation. even though, in the short term, the transitional phase would generate some costs for those regulated, this is clearly outweighed by the long - term advantages. is international competitiveness being weakened? the second concern expressed is that tougher banking regulation would have negative repercussions for the swiss financial centre if it is stricter or too strict compared with other countries in relative terms. critics say that this would be a disadvantage in international competition, with far - reaching consequences such as a weakening – or even redimensioning – of the swiss financial centre. they claim that customer assets and international companies would move abroad, since the swiss financial centre would no longer offer a comprehensive range of banking services. switzerland would therefore lose jobs and create less added value, they believe. key factors for international competitiveness one significant aspect of the discussion about the repercussions of regulatory differences is that other factors are at least as decisive for the international competitiveness of the swiss banks. these include favourable tax conditions, political and economic stability, a high degree of legal certainty, excellent asset management expertise and high standards in the banking business generally. overall, this “ swissness ” represents a crucial success factor for the banks when it comes to competing internationally with other financial centres. nor is there a connection, empirically speaking, with passing on the banks ’ financing costs to customers : during the phase when the banks were constantly reducing their capital ratios, the spread between the borrowing rate and the lending rate did not narrow ( cf. kugler, 2011. presentation in vienna ). bis central bankers ’ speeches secondly, we should bear in mind that a country - specific difference in banking regulation is nothing new. even before the financial crisis began in 2007, both the swiss big banks were subject to stricter regulations in terms of capital requirements than their competitors in many other countries. as already mentioned, finma ruled, in autumn 2008, that as of 2013, both big banks will have to hold double the amount of capital specified in international minimum standards. the current “ swiss finish ” therefore calls for an extra 100 %! however, these regulatory differences do not seem to have harmed the swiss financial centre in the past. on the contrary, switzerland ’ s banks have always had a tradition of a “ swiss finish ”. stability is one of the swiss financial centre ’ s clear competitive advantages and has made a significant contribution | pace instead of a quarterly one, and app purchases could therefore end in q3, at some point to be discussed. in parallel, another way to enhance optionality could be to remove the word “ shortly ” from the forward guidance on asset purchases. this would be a possibility to break the quasi automatic temporal link between the two instruments whilst retaining the sequencing. optionality would mean that the lift - off could possibly take more time, if warranted. this temporal decoupling could give more scope for fine - tuning, which is an advantage in uncertain times. rather than forcing ourselves to act on both instruments almost simultaneously ( which could fuel fears of an excessively brutal effect ), we could give ourselves more time and consider the latest inflation outlook before deciding about the calendar of rate hikes : a decision that anyway we don ’ t need to make before our june meeting. any speculation about this calendar of future lift - off is at this stage premature. the forward guidance on interest rates let me stress here an important semantic point about our monetary stance : the steps i am discussing here are about the normalization of our monetary policy, not about tightening. it ’ s still the exit from exceptional instruments and an extremely accommodative monetary policy ( increase of the already large assets stock, negative interest rates ). it ’ s the first phase of a gradual return towards a more neutral stance, which we are still far from. tightening would be another story, going beyond a neutral stance, which is not within our present policy horizon. let me then remind you of the three state - dependent criteria on our forward guidance : “ the governing council sees ( i ) inflation reaching 2 per cent well ahead of the end of its projection horizon ; ( ii ) and durably for the rest of the projection horizon ; and ( iii ) it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term ”. today, in my personal judgement, it might be considered that the first criteria ( with a headline inflation significantly above 2 % since summer last year and expected to remain there for months ahead ), and the third one ( with underlying inflation around or above 2 % by most definitions ) are fulfilled. at this stage, according to our december forecasts, the remaining one ( about inflation remaining at or above 2 % for the rest of the projection horizon ) is not met. this could possibly change in the next quarters. however, we should | 0 |
in the utilisation of bank credit. furthermore, the reserve bank relaxed the requirement of plr being the floor rate for loans above rs. 2 lakh. thus, in april 2001, commercial banks were allowed to lend at sub - plr rates for loans above rs. 2 lakh. however, the divergence in plrs and the widening of spreads for borrowers continued to persist. the plrs turned out to be rigid and inflexible in relation to the overall direction of interest rates in the economy. in order to address these issues, a bplr system was introduced in april 2003. 5. however, the bplr system evolved in a manner that did not meet the objectives. competition in an environment of excess liquidity had forced the pricing of a significant proportion of loans far out of alignment with bplrs undermining its role as a reference rate. furthermore, there was a growing public perception of under - pricing of credit for corporates and over - pricing of credit to agriculture as well as small and medium enterprises. several requests were received by the reserve bank from banks suggesting a review of the bplr system. 6. the lack of transparency in the bplr system also hindered transmission of monetary policy signals. in view of the concerns pertaining to the shortcomings in the bplr system raised by the public and those recognised by the reserve bank, the annual policy statement for 2009 – 10 announced the constitution of a working group on bplr to review the bplr system and suggest changes to make credit pricing more transparent. on the basis of the recommendations of the working group ( chairman : deepak mohanty ) and after taking into account the views of various stakeholders and discussions with banks final guidelines on the base rate system were announced on april 9, 2010. ii. the base rate system 7. the base rate system will replace the bplr system with effect from 1st july 2010. base rate shall include all those elements of the lending rates that are common across all categories of borrowers. banks may choose any benchmark to arrive at the base rate for a specific tenor that may be disclosed transparently. banks are free to use any other methodology, provided it is consistent, and is made available for supervisory review. banks will determine their actual lending rates on loans with reference to the base rate and by including such other customer specific charges as considered appropriate. 8. with the introduction of the base rate system, all categories of loans will be priced only with reference to the | has been on a limited scale up to now. at the end of 2002 it amounted to €103 billion, or less than 20 per cent of the gdp of the countries of the area. a quarter of this investment was by eu businesses, 2 per cent by italian ones. firms from mediterranean countries play only a small role in italy, almost exclusively in the energy and media sectors ; there are a few cases of equity interests in italian banks and industrial companies. closer links exist with the productive sectors of other european countries, but they are still of marginal importance. the openness of the mediterranean countries ’ financial systems, centred on banks, is limited. in many countries banks are still largely owned by the state. the development of the financial system is hindered by shortcomings in the legal framework and the governance rules for firms and markets. the key feature of the euro - mediterranean partnership is a new strategic approach on the part of the european union to the problem of these countries ’ development. no longer are they seen as single entities to trade with and provide with technical assistance through bilateral agreements, but as an area in which to promote the start of a process of faster growth through institutional and economic reforms and the coordination of private and public investment. to this end there needs to be a continuing financial commitment on the part of the european institutions but also more intense contacts and exchanges of experience between the institutions and operators of the mediterranean countries on the one hand and their european counterparts on the other. the decision taken in naples last december to establish a euro - mediterranean foundation can reinforce the links between the countries involved through training programmes and initiatives aimed at fostering mutual understanding and a dialogue between cultures. in the last few years the drive to bring about a radical renewal of the mediterranean economies has lost momentum, partly as a consequence of the prolonged stagnation of the world economy. progress has been made, albeit to a varying extent, in all the mediterranean countries in terms of institutional reforms, market building, liberalization programmes and reducing the role of the state in the economy ; coordination of the action aimed at the integrated development of the area is still lacking. there are risks of marginalization with respect to a world economy that is changing rapidly. this seminar, organized by the european central bank and the bank of italy, can be a stimulus to renew the initiative. in three working sessions, reserved to the central banks, it will address a series of problems regarding economic integration, exchange rate management, and banking and financial systems. it | 0 |
and caters interoperability as the core service to the community. the retail payments in the next 3 – 5 years are likely to be driven essentially through mobile payments. this is to ride on over 1 billion mobile connections in the country and the financial inclusion drive. 7. in order to participate in the ensuing payment revolution and to take advantage thereof, we need to be taking certain strategic actions. these are as follows : a ) expanding the acceptance ecosystem : the proliferation of digital channels is evident mostly in the tier i & tier ii centres of the country. in order to promote digital channels, it is incumbent on the ecosystem which includes the banks, network partners and others. to ensure that there is adequate availability of digital channels and enablers such as debit cards, internet banking registrations, etc. in tier iii to tier vi centres as well. it is of critical importance that the population in over 6 lakh villages in the country is exposed to the alternate delivery channels. some estimates indicate that to reach the average levels of bric countries, india will need 20 million pos terminals as against the current 1. 2 million. this is a tall order. b ) government initiatives : there have been attempts to move the government direct benefit transfers onto electronic channels. i believe that with over 946 million aadhaar numbers having been issued, electronic benefit transfer is a clear strategy to promote efficient payment systems. c ) interoperability : interoperability of the digital channels as i mentioned earlier is a key driver to promote digital channels. the digital channels by definition should be available anywhere & anytime. d ) simplicity and standardization : end customers need to have simple ways of accessing the digital channels. this can be brought about through seamless processes driven by the ecosystem partners. and for this, standardization of the processes, right from registration to delivery and post delivery services is an imperative. e ) security : no electronic payment mechanism can undermine the role of security and risk mitigation in promoting digital channels. there has to be continuous and concerted efforts to ensure that the digital channels are safe & secure. the confidence of customers shall be a key to deepening the usage of digital channels. 8. with these steps, and in association with the key stakeholders like the reserve bank, the government, the banks, the payment system participants and the catalysts like npci, the reserve bank is quite sanguine that india will reap the advantages of the payment revolution. 9. i wish npci and | payments community all the very best to shape the banking of future and future of banking. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches | 1 |
on 5 may 2011 confirms continued upward pressure on overall inflation, mainly owing to energy and commodity prices. a cross - check of the outcome of the economic analysis with that of the monetary analysis indicates that the underlying pace of monetary expansion is gradually recovering. monetary liquidity remains ample, with the potential to accommodate price pressures in the euro area. furthermore, the most recent data confirm the positive underlying momentum of economic activity in the euro area, while uncertainty remains elevated. overall, our monetary policy stance remains accommodative, lending support to economic activity. on balance, risks to the outlook for price stability are on the upside. accordingly, strong vigilance is warranted. on the basis of our assessment, we will act in a firm and timely manner. we will do all that is needed to prevent recent price developments giving rise to broad - based inflationary pressures. we remain strongly determined to secure a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2 % over the medium term. this is a prerequisite for monetary policy to make an ongoing contribution towards supporting growth and job creation in the euro area. turning to fiscal policies, all parties involved in the preparation of the 2012 national budgets must ensure that they are fully in line with the requirement to support confidence in fiscal policies. a comparison between the latest economic forecasts by the european commission and the fiscal plans embodied in the stability programmes points to the need for many countries to underpin their budget targets with concrete consolidation measures in order to correct their excessive deficits by the commonly agreed deadlines. the implementation of credible fiscal adjustment strategies is crucial in view of ongoing financial market pressures. at the same time, the implementation of ambitious and far - reaching structural reforms is urgently required in the euro area to strengthen substantially its competitiveness, flexibility and longer - term growth potential. in particular, countries which have high fiscal and external deficits or which are suffering from a loss of competitiveness should rapidly carry out comprehensive economic reforms. in the case of product markets, policies that enhance competition and innovation should be vigorously pursued to facilitate productivity growth. regarding the labour market, the priority must be to enhance wage flexibility and incentives to work, and to remove labour market rigidities. we are now at your disposal for questions. bis central bankers ’ speeches | longer - term refinancing operations ( ltros ) to be allotted on 27 july, 31 august and 28 september 2011 as fixed rate tender procedures with full allotment. the rates in these three - month operations will be fixed at the average rate of the mros over the life of the respective ltro. as stated on previous occasions, the provision of liquidity and the allotment modes for refinancing operations will be adjusted when appropriate, taking into account the fact that all the non - standard measures taken during the period of acute financial market tensions are, by construction, temporary in nature. let me now explain our assessment in greater detail, starting with the economic analysis. in the first quarter of 2011, the euro area recorded strong real gdp growth of 0. 8 % quarteron - quarter, following the 0. 3 % increase of the fourth quarter of 2010. recent statistical releases and survey - based indicators point towards a continued expansion of economic activity in the euro area in the second quarter of this year, albeit at a slower pace. this easing reflects the fact that the strong growth in the first quarter was partly due to special factors, which will cease to play a role in the second quarter. hence, it is appropriate to look through such short - term volatility and to emphasise the positive underlying momentum of economic activity in the euro area. looking ahead, euro area exports should be supported by the ongoing expansion in the world economy. at the same time, taking into account the bis central bankers ’ speeches favourable level of business confidence in the euro area, private sector domestic demand should contribute increasingly to economic growth, benefiting from the still accommodative monetary policy stance and the measures adopted to improve the functioning of the financial system. however, activity is expected to continue to be dampened somewhat by the process of balance sheet adjustment in various sectors. this assessment is also reflected in the june 2011 eurosystem staff macroeconomic projections for the euro area, which foresee annual real gdp growth in a range between 1. 5 % and 2. 3 % in 2011 and between 0. 6 % and 2. 8 % in 2012. compared with the march 2011 ecb staff macroeconomic projections, the range for 2011 has been revised upwards, while the range for 2012 remains broadly unchanged. the june 2011 eurosystem staff projections are broadly in line with recent forecasts by international organisations. in the governing council ’ s assessment, the risks to this economic outlook remain broadly | 1 |
switch card and mobile money interoperability platform. the increasing use of digital financial services help to accelerate the rate of financial inclusion, and to close the gender gap in access to finance. 14. while the economic outlook remains unclear, our financial system is relatively strong following reforms carried out in the last three years, and is positioned to continue to play a key role in supporting economic recovery going forward, and helping to promote financial inclusion and in particular to reduce the gender gap. 15. the recent launch by the ghana government of the national financial inclusion and development strategy, the digital financial services strategy, and the cash - lite policy, is intended to improve access to financial services from 58 % in 2015 to 85 % by 2023 through increased digital financial services that will help promote economic empowerment of the poor and marginalized. as one of the implementing agencies under these policy initiatives, the bank of ghana will continue to use its policy and regulatory tools to promote safety and soundness of banks and sdis and digital financial services to the benefit of all economic actors. 16. the bank of ghana remains committed to delivering on our commitments under afi ’ s maya declaration, denarau action plan, and kigali statement, and in keeping with our role as an afi gender inclusion ambassador, we will continue to make progress on promoting a gender - inclusive financial services ecosystem, and promoting sustainable finance. building on our existing sex - disaggregated data collection portal for mobile money services, we are developing a more comprehensive disaggregated reporting regime for all our regulated institutions through a new online regulatory and analytics surveillance system to be fully operational by the end of the year, to help shape more gender - specific policy and regulatory measures going forward. 17. as we look ahead and armed with lessons from the past, let us explore the opportunities that the current pandemic presents to us as policy makers and regulators in the afi network, and let us identify ways in which we can adopt new approaches to addressing the gender gap in access to finance. this is not the time to leave any one behind, and we must begin to be more intentional about bridging the financial inclusion gap and the disparities that exist from a gender perspective. this is critical to making progress in our inclusive socio - economic growth and development aspirations. fortunately, this webinar and the lineup of speakers and discussions, promises to help in that direction. i wish us all fruitful deliberations. thank you for your attention. | the capital conservation buffer for banks from 3 percent to 1. 5 percent ; a reduction of the cash reserve requirement for banks from 10 percent to 8 percent ; a reduction of the 8 percent primary reserve ratio of savings and loans companies, finance house companies, and rural and community banks to 6 percent, and the 10 percent primary reserve ratio of micro finance companies to 8 percent. a reduction in provisioning for loans in the “ olem ” category from 10 percent to 5 percent for all banks and specialized deposit - taking institutions ( sdis ) ; preparedness to provide liquidity support to banks, savings and loans companies, and finance houses as needed and in strict compliance with statutory requirements, and to support the rural and community banks and microfinance sectors working with the arb apex bank ; loan repayments by customers of sdis which had been classified as “ past due ” for up to 30 days, were to be reclassified as “ current ” ; all mobile money users were permitted to send up to gh¢100 ( usd 18 ) for free ( excluding cash out ) to recipients on the same network or other networks through the interoperability platform ; mobile money subscribers were allowed to use their existing mobile phone registration details for on - boarding of minimum know your customer ( kyc ) account and daily and aggregate monthly transaction limits as well as mobile money wallet limits were increased ; and increased public education on mobile money and other electronic money fraud. 12. these measures have released a significant amount of liquidity to banks and sdis which they have passed on to their customers in the form of an interest loan reduction averaging 200 basis points, loan repayment moratoriums of three to twelve months, and new loans to businesses in sectors that are at the forefront of the fight against the pandemic. 13. the bank of ghana ’ s measures recognised the key role of smaller financial institutions in extending access to financial services to small businesses and lowincome households, several of whom had lost their businesses or jobs, making these financial institutions vulnerable given the heightened credit risk they bore. these measures have helped somewhat to reduce the burden on these institutions and their clients many of whom are female and young entrepreneurs. we have also seen a significant increase in the use of digital financial services during this pandemic, thanks to some of the measures we instituted. the government has also resorted to the use digital means of cash transfers to women and other groups under the livelihood empowerment against poverty programme using the biometric e - | 1 |
nevertheless believe it could be an effective way for capital markets union to contribute to consistent pricing of risk across countries. for it will help ensure a homogeneous, but risk - consistent transmission of monetary policy decisions. 10. but capital markets union can deliver on more than just that. it can also greatly increase the efficacy of monetary policy. common to all monetary policy decisions is that their transmission to the real economy is sluggish and can sometimes be incomplete. for example, the extent to which banks are able to lower lending rates following a rate cut depends on many factors beyond the control of monetary policymakers. one can think of the level of competition in the banking sector, or the health of bank balance sheets. a successful capital markets union will open up entirely new channels for the transmission of monetary policy to the real economy, making central bankers much less dependent on a single sector for the transmission of its policy decisions. in that sense, central banks can diversify the channels through which they can influence the economy, adding to its effectiveness. 11. note that economic agents can benefit from capital markets union in a very similar way. households and firms can diversify their dependency on financing, if alternative sources of finance are in abundance, making themselves less vulnerable to risks stemming from a single sector. a well - diversified financial structure increases the resilience of the balance sheets of households and corporations to shocks. and the resilience of the economy as a whole. and when an economy is better able to cope with external shocks, monetary policy will not get distracted from pursuing its primary remit : delivering price stability. 12. the latter is even more relevant for monetary policy in a monetary union. structural differences between national economies imply that the euro area economy is prone to asymmetric shocks. private sector risk - sharing across countries can greatly enhance a smooth transmission of such shocks. this is what capital markets union can accomplish, for an increase in the cross - border holdings of financial instruments will enhance risk - sharing across the euro area, thus improving the functioning of the monetary union. 13. however, capital markets union is no silver bullet. clearly, its introduction does not absolve us from pursuing prudent policies in other policy areas, too. moreover, it will take time before we can reap the full benefits of capital markets union. but there can be no doubt that it will prove an important complement to banking union in enhancing the functioning of our monetary union. 14. at the same time, capital markets union will | and you destroy the economy. this is not some kind of a flower power, tree hugging exercise. this is core economics. even if i couldn't care less about the planet, i would say exactly the same thing. " in other words : financial institutions need to speed up their own transition to a tri - dimensional decision framework for investment and lending decisions. a framework that is not defined by the traditional risks and returns, but by risk, return and impact. 1 / 4 bis - central bankers'speeches what does that entail? the world bank defines impact investing as an approach that aims to contribute to achieving measurable positive social and environmental impacts. an approach that looks to the future instead of to the past. impact investing and lending creates a significant opportunity to mobilise capital into investments that target measurable positive social, economic, or environmental impact alongside financial returns. i consider it important that financial institutions start making conscious decisions to invest in, or lend to, counterparties that have the capacity to generate measurable positive impact, in whatever form. i know, adopting this impact framework can be scary : financial institutions have a tendency towards herd behaviour and feel a substantial'first - mover disadvantage '. but if we move towards this framework, this mindset, together, the impact will not only be bigger, but we will also find safety in numbers. and let's be honest : it is not only our own decision to make. it is what investors, clients and partners demand. maybe we tend to see them as the pawns, whereas profit is king in the financial sector. however, as anatoly karpov said : " pawns not only create the sketch for the whole painting, they are also the soil, the foundation of any position. " so, if we base our position on the esg mindset, if we incorporate impact investments and loans into our portfolios, we will not only create proper and prudent risk management, but we will also paint a sustainable future. how can financial institutions make this work? by making choices. first choice : tailoring the operational primary processes – like investment processes and customer acceptance, credit judgement and revision – towards impact investments. that means that impact needs to be part of the parameters for decisions about investments, next to risk and return. that can be scary ; it means daring to move away from the broad market benchmark and choosing a smaller portfolio of impact - oriented companies. and we have to make clear what | 0.5 |
cent to 18 per cent between the two reference periods and that in the industry remained unchanged at 20 per cent. this has to be seen as both a weakness and an opportunity. we know that food prices have recorded an unprecedented increase in recent times. hence, there are immense opportunities arising from increased prices and resultant increase in production. at the same time, food security has to be ensured in order to avoid adverse consequences of increased food prices and also undue declines in stocks. given these limitations, the obvious strategy is to increase productivity. accordingly, attempts need to be made to concentrate on land, water, agricultural methods, seeds, harvesting, credit to agriculture, transport, harvesting storage, stable prices, value addition etc. to raise productivity in agriculture. if the growth is constrained by limited expansion in agriculture, can ’ t we focus more on the industry sector? of course, we can. unlike the agriculture, which is constrained with limited land availability, industry does not have capacity or demand limitations. even the nonavailability of raw materials or essential inputs or the domestic demand for the output no longer does inhibit industrial growth in view of globalization of trade and services and the advancements in information and communication technology. although the importance of the agriculture sector in sri lanka is reducing, the share of industry has been improving. by end 2007, the share of industry remained at around 30 per cent of gdp compared to 20 per cent in 1950. however, there are still risks and weaknesses in industry sector as well. the higher reliance of imported raw material, increased cost of economic infrastructure, higher wages per unit of output, overall increase in cost structure, intense global competition and possible abolition of various concessions certainly tells us there is an urgent need to improve productivity in the industry sector as well. the demand for the country's industrial goods will always depend on its comparative and competitive advantages. this requires local industries to raise productivity and efficiency in production so as to successfully compete with the rival producers in other parts of the world. since sri lanka does not have an unlimited natural resource base it would be difficult to enhance growth through industry or agriculture alone. as mentioned above, services sector is important for both industry and agriculture sector performance. hence, we need to focus more on services sector. however, the focus should be placed on a “ more productive ” services sector. although we always stress the importance of improving productivity in agriculture and industry sectors, a similar significance should be assigned to the services sector as well. despite the growing weight in | because you don ’ t want to miss the party. your children are in the back seat, giddy with excitement about seeing their grandmother. so you decide to go a little faster. you accelerate. after some time passes, you still think you are some distance from your exit. the children are now fidgeting in the back seat, and you don ’ t want to be late, so you decide to step on the gas a little more. now, you are speeding, hoping to get to your destination sooner. eventually, though, as you are flying down the highway, you finally catch a glimpse of the exit through the fog and rain, only now you are going too fast to safely navigate the off ramp. you are faced with two very unattractive options. one option is to slam on the brakes to make the exit. this strategy risks causing a multicar accident, as your abrupt efforts to slow down surprises drivers behind you who had expected you to continue at high speed. the result is an accident, perhaps injuries to innocent people, and maybe a severe traffic jam, diverting or delaying many others. the second option is to continue down the road to the next exit, turn around, and then backtrack to the right exit. this strategy means that you are late, you miss the party, you disappoint everyone, you pay extra for tolls and gas, and you incur numerous other costs in the process. monetary policy is sometimes criticized for such “ go - stop ” policies. policymakers step on the accelerator aggressively, only to slam on the brakes in order to change course. such an bis central bankers ’ speeches approach to policy can be highly destabilizing, creating added volatility for financial markets and the economy. i would add that constant acceleration only makes these risks even more hazardous. slamming on the brakes or abruptly changing course could disrupt the economy. failing to slow down and exit at the right time risks excessive inflation, which then has to be controlled. it also risks the misallocation of resources and capital, and perhaps even credit bubbles or other distortions that could pose problems for the economy. thus, in my mind, such an accelerationist approach to monetary policy is risky and the potential costs may be quite high. it is an approach most often driven by an excessive focus on the short run and perhaps some hubris that we will be able to successfully avert the risks such a strategy poses for the economy over the longer run. | 0 |
that growth in financial services must also serve to enhance economic opportunity for all. since the establishment of the financial inclusion framework in 2011, major inroads have been made in widening the accessibility to financial services in malaysia. agent banking has been a key strategy to improve access, particularly in the rural areas. 92 % of our population has some form of access to financing. moving forward, expanding public access to financial services will remain important for the remaining 8 % of the bis central bankers ’ speeches unbanked population in malaysia. there will also be greater emphasis on the quality of services provided. the social impact of greater financial inclusion is significant as it helps improve people ’ s lives. in this respect, banks have a critical role to play to make it easier for people to save, make payments and obtain affordable loans to improve standards of living and build more resilient communities. it would be a remiss to talk about the future of banking without embracing this very fundamental role of banks. as our economy becomes even more financialised, it is important that banks strike a balance between legitimate profit - seeking goals, and their responsibility to provide the public with full and fair access to financial services. some banks today are still falling short of expectations to offer basic banking services to the people who only need such services. we have observed poor communications by the front - line staff of such banks on the basic banking products which must be offered by all banks. in some cases, prohibitive conditions are attached to the opening of basic banking accounts in clear violation of bank negara malaysia ’ s requirements. this must change. in offering basic banking services, banks should also leverage on technological advancement that can support inclusive finance initiatives. these include adopting more innovative delivery channels, leveraging on big data to reach a wider community and to offer suitable products that are priced affordably. concluding remarks the world as we know it is set to change dramatically just as it had over the last few decades, except that future changes will happen at a much more rapid pace, and in sectors where we least expect it. the ability of banks to adapt will be critical to its relevance. more likely than not, banks that are agile and have absolute clarity on their value proposition for their customer, society and wider economy, will be the ones that will endure. banking as we know today will no doubt change in form as the future takes shape. what is more important that the core purpose of banking remains intact – that is to provide reliable passage for resources to move | central bankers and international economists to explain these phenomena – also by giving technocratic speeches that aren ’ t much fun to listen to. and as we ’ re still at the beginning of this conference, i ’ ll try to concentrate on the very fundamentals. in economic terms, we have to deal with asymmetries – imbalances that exist for a longer time or that build up slowly over time. there may be differences in economic development, but we should not abstract from differences in infrastructure, institutions, and political and economic philosophies. all of those differences across borders are quite common. you may be thinking of specific regional disparities among african countries right now. but also in the euro area, “ convergence ” was a key word from day one. even today, although almost all 1 / 5 bis central bankers'speeches member states in the euro area are experiencing an economic upturn by now, economic cycles are not synchronous. and unemployment rates are highly divergent, standing at over 22 percent in greece and below 7 percent in ireland. so even 25 years after we initiated a far - reaching treaty of european integration, and after 18 years of sharing a common currency, we are not marching in step. those asymmetries and structural differences between neighbouring countries are not necessarily a bad thing. but in a monetary union, dissimilar developments have extensive implications for two important challenges : first and well - known to everyone here in this room, given its construction, a monetary union is more prone to imbalances because there is no longer a national currency with a floating exchange rate as a means of countering imbalances and regional economic shocks. however cruel a sudden revaluation may be for some parts of an open economy, it is very useful as an automatic response to crises. without nominal exchange rate flexibility, economies need to adjust through adjustments of the real exchange rate which is much more painful in practice. as a second challenge, in a monetary union the community may ultimately bear the consequences for imbalances that have emerged on the level of sovereign member states. this has been an unequivocal lesson from the crisis in the euro area. to describe how asymmetries became imbalances, let me briefly recap that large capital flow imbalances had built up for several reasons in the run - up to the crisis. then, suddenly, a mistrust overburdened regional financing, the economy, and especially fiscal cushion | 0 |
that the evolution of these new, complex instruments has been a negative development. indeed, these instruments have allowed the separation of different types of risk, such as credit and market risk. this has promoted better risk - management practices, and has allowed different types of risk to be borne by those best able to do so. securitization has encouraged innovation and enhanced the ability of the banking sector to originate new loans while remaining well capitalized. the final point to make in terms of the causes of this summer's turbulence has to do with how these complex securities are valued. trading of these securities in the secondary market is rare and, if trading does occur, it takes place in the over - the - counter market. as such, prices for these securities are not very transparent. most of these highly structured securities are valued on a " marked - to - model " basis, meaning that statistical models are used to provide values. but the models typically provide only estimates of values, and these estimates can vary widely if there are changes in the assumptions on which they are based. indeed, many of the models assume that the assets underlying these securities can be readily traded in a liquid secondary market. in august, it became clear that this assumption would not always hold. so, we can now see many of the factors that made credit markets vulnerable to this summer's dislocations. the re - pricing of risk i mentioned earlier was, in fact, under way before august. by late spring, the spreads on lower - rated corporate bonds had begun to widen to levels that were closer to historical averages. as we moved into summer, however, we saw rising delinquency rates and higher probabilities of default on u. s. subprime mortgages. and so, there were rising expectations of losses for holders of securities backed by these mortgages. but because of the complexity and opacity of some of these securities, it was extremely difficult for investors to determine, with confidence, both the creditworthiness of the assets backing a particular security and the market value of the security itself. in these circumstances, uncertainty led to contagion and dislocations in money markets more generally, even those markets that have nothing to do with u. s. subprime mortgages. market liquidity, which was recently thought to be too abundant, became scarce. some investors found that the assets that they assumed were liquid were, in fact, frozen. even the market for overnight | stephen s poloz : engaging canadians – a # banknoteable process remarks by mr stephen s poloz, governor of the bank of canada, at the canadian museum of history, gatineau, quebec, 8 december 2016. * * * distinguished guests, welcome. welcome everyone. what a great day. a historic day. i would like to give a warm thanks to the young people who came this morning to take part in this event. i am very proud to be here with the minister of finance and the minister of status of women to announce who will be the canadian woman who will appear on one of our bank notes. the bank of canada is responsible for the design, production and distribution of canadian bank notes. and on bank notes, we can celebrate the diversity of canada ’ s culture and society. as governor of the bank, and along with carolyn wilkins, our senior deputy governor, i have long believed that it was time for a woman, in addition to her majesty, to be on one of canada ’ s bank notes. and we also heard from canadians who told us that it was long overdue. so i was very pleased when the minister asked the bank to move forward in our search to find the iconic woman for our bank notes. we started by asking canadians. and let me tell you. they told us. the response was amazing. within two days we received more than 10, 000 nominations. it became clear that this search for an iconic woman was engaging canadians in a very personal way. some people looked within their own profession : engineers googled women engineers. some of my economist colleagues searched for economists, computer scientists and statisticians. some people looked at their alma maters — notable women of queens, or mount allison or the university of british columbia. other people looked geographically, finding women who represented their part of the country. teachers used the nomination process as a way to teach children about canada ’ s history. school kids told us who they thought should be on the money. with every mouse click or turn of a book ’ s page, with every kitchen table discussion or classroom debate, canadians learned more about the women who built canada. we received more than 26, 300 submissions, resulting in 461 eligible candidates. then we turned it over to an independent advisory council. this advisory council, made up of eminent canadian academic, sport, cultural and thought leaders, carefully went through all the nominations. after much research and deliberation, they narrowed down the list of | 0.5 |
financial system ’ s resilience to shocks and its contribution to the needs of a growing economy, the bank of ghana, in collaboration with some selected audit firms, carried out a diagnostic assessment of the quality of financial exposures in the form of loans and advances as well as investments of twenty eight ( 28 ) ghanaian banks in 2015. the exercise revealed some vulnerability with respect to loan losses within the banking system which require capital injection by some banks. the bulk of these losses were due to funding to the utility companies and bulk oil distribution companies ( bdcs ). currently, the government is finalizing plans to clear all arrears due to bdcs and utility companies to restore their viability. the implementation of the plans would improve the capital levels of banks that were affected by the exercise and place them on a sound footing. also, the bank of ghana is developing a recapitalization and liquidity plan to strengthen the banking industry and make it more resilient and robust. as part of the plan, the bank will be conducting an update of the aqr of all banks to effectively determine the current provisioning and capital needs of each bank. banks that are found to be significantly undercapitalized would be required to inject capital within a stipulated time frame and improve upon their risk management practices. the exercise will be repeated on regular basis to ensure that all banks have adequate provision for loan losses and the required amount of capital to match their levels of business. this will ensure the safety and soundness of our banking system. mr. chairman, ladies and gentlemen, you may recall that in march 2014, bank of ghana launched a strategic payment systems roadmap for ghana to accelerate the transformation of the payment system landscape from cash - dominance to cash - lite. the key bis central bankers ’ speeches strategy for executing this agenda is the establishment of an integrated and interoperable electronic national payment system infrastructure. a national payment system of this nature will avert the development of fragmented payment systems and ensure efficient use of liquidity within the financial system. currently, there is interoperability within the payment cards subsector, evidenced by the “ gh - link ” switch on one hand ; and interoperability among international card schemes such as visa and mastercard on the other hand. however, the mobile money subsector, which has experienced phenomenal growth in recent years, and also holds the key to financial inclusion is not interoperable. this situation poses a serious | enabling regulatory regime for digital payments. 11. for all intents and purposes, the act seeks to promote innovation in the design and delivery of payment products and services by widening the scope of the payments industry to fintechs and engendering competition. it is expected that fintechs ’ innovations will deliver products that meet the needs of all stakeholders, whether banked or unbanked and underserved, to attract them into the digital payment space. also, a proportionate regulatory regime has been adopted to promote fairness in regulation and accommodate different payment service providers. 12. the quest for cashless payments is gradually shifting consumer interfaces from the manual environment to cyber space. alongside this transition, there has also been an increased spate of complex cyber security threats which is posing risks to the cashless agenda. the bank of ghana has therefore issued a cyber - security directive for compliance by banks and payment service providers to build a robust and resilient digital ecosystem. to further accelerate the digitisation process, stakeholders must work collectively to promote merchant acceptance of digitised financial products and services, with particular emphasis on lowertier merchants, such as small and micro - enterprises. 13. the next key area is enhancing public confidence. despite the successes achieved so far, some consumers still lack awareness and confidence in electronic payments. in this direction, the various stakeholders are undertaking continued consumer education and financial literacy to build confidence and help in fraud reduction. ghipss and stakeholders in the payment industry are also building a fund to support consumer education. also, on a regular basis, payment service providers are educating the public on how to avoid scams in the use of the newly deployed payment products and services. 14. the bank of ghana is fully committed to the cash - lite agenda which ties in with the government of ghana ’ s digital economy agenda. so far, we have seen the introduction of the biometric national identification system and the digital addressing system which are all supportive of our quest to drive digitised financial transactions. as the central bank, we will continue to work with all stakeholders to ensure the successful implementation of these initiatives. of course, there will be challenges, but with firm commitment, we will eventually reduce the dominance of cash in transactions and improve the efficiency and security of payments for a more inclusive society. 15. to conclude, let me note that the future of banking services is digitisation and it brings opportunities as well as challenges. we can harness digitisation to promote transactional efficiency in the delivery of financial | 0.5 |
well communicated and understood. if we are unsuccessful in this respect, our reputation may be impaired. independence, transparency and good decisions are intertwined. independence is a precondition for keeping promises. keeping promises was the topic of my lecture here two years ago. 38 we must also communicate and explain interest rate decisions to the public so that they have confidence that we are discharging our duties properly. transparency is a precondition for accountability and that was the topic of my lecture here last year. 39 today i have been speaking about how we can arrive at decisions that are good ones. adequate institutional arrangements, high - quality professionals and appropriate routines are important elements for doing just that. hans rasmus astrup died in 1898, twelve years after this building was completed. astrup ’ s two daughters sold the house to the norwegian academy of science and letters a few years after their father ’ s passing. they gave the academy a gift of 106, 000 kroner to go towards buying the house. the remaining funds were raised from donations. 40 was the decision to build this stately residence a good one? yes, given the outcome, it must be said to have been a very good decision indeed. ever since astrup ’ s time, drammensveien 78 has been a venue for interdisciplinary discussions. the benefits of learning across disciplines are well illustrated by the success of olympiatoppen. olympiatoppen serves as a venue for different sports. where coaches and leaders have traditionally focused on international developments in their own disciplines, olympiatoppen also gives them an opportunity to learn from one another ’ s experiences, across disciplines. many believe that this is part of the reason for norway ’ s numerous olympic medals in recent decades. 41 see norges bank occasional paper no. 39 ( 2009 ). the lecture “ on transparency ”, the commentaries by inge lorange backer, andreas føllesdal and bernt aardal and aanund hylland ’ s summary of the debate are published in norges bank occasional paper no. 41 ( 2010 ). see helsvig ( 2007 ), pp. 19 – 20. see the article “ særnorsk oppskrift for ol - gull ” [ uniquely norwegian recipe for olympic gold ], 10 february 2010, available at ( in norwegian ). for 150 years the norwegian academy of science and letters, by fostering contact across academic disciplines, has functioned as a kind | the fund contribute to both curbing the appreciation of the krone and maintaining its stability. at the end of 2005, the market value of the pension fund ’ s portfolio was roughly 73 per cent of gdp. as shown in the chart, the value of the fund is rising rapidly and may continue to do so in the years ahead. the fund is now approaching the nominal value of one year ’ s gdp and may reach two in the course of the next decade. on the other hand, norway, like many other countries, is facing substantial fiscal challenges. financing the large pension payments that will have to be disbursed in the coming years will be very demanding. final remarks to sum up, norway has a market economy and a large government sector. the way in which economic policy is oriented today reflects the knowledge gained and the lessons learned. we know from experience that fiscal policy alone cannot ensure a high level of employment. the structure of the labour market and wage formation are probably of greater importance. the direct regulation of credit, interest rates and capital movements collapsed and was phased out in the 1980s. price regulation no longer plays a role as a macroeconomic instrument. the scope of business policy has become more general. the most important contribution monetary policy can make to sound economic developments in the long term is low and stable inflation. low and stable inflation has contributed to solid growth in the global economy in recent years. thank you for your attention. | 0.5 |
eva srejber : sweden and european integration speech by ms eva srejber, deputy governor of sveriges riksbank, at the ibc euroforum : nordic banking, stockholm, 3 june 2002. * * * let me begin at once by stating the limits i intend to set for this subject in my speech : i intend to focus on financial integration within the eu and to discuss how companies and individuals can benefit from the advantages created by integration in this field. my starting point is, thus, that greater integration in the financial area mainly brings advantages, but there is cause to seek to analyse the forces behind such a development. as different public rules and regulations play an important role for developments in the financial sector, there is also reason to discuss a number of questions of a policy nature that are already on the agenda for a strengthened co - operation within the eu. this is largely a matter of achieving a balance between providing scope for product development and efficiency in the production of financial services in europe, and creating the right conditions for stability and predictability in the financial system. from white paper to financial action plan ten years ago, 1992, was the final date for realising the common market in the eu on the basis of the programme in the white paper presented by the european commission in 1985. in this paper the commission described a total of almost 300 different directives that should be adopted in order to realise full mobility for goods, services, capital and persons within the european community. twentyfour of these directives concerned financial activities, including the liberalisation of capital movements. almost all of these directives also came to be decided within the set time period, and a number of favourable conditions were created for bringing about more vigorous competition between the different eu member states. a lot has also happened in this field and contributed to strengthening developments within the eu with regard to both supply and demand for financial services. the most important driving force behind this development relates to the general internationalisation process, the new communication technology and the deregulation of parts of the government rules and regulations. when the euro was later introduced as the single currency in twelve eu member states, it provided the ‘ finishing touch ’ that abolished uncertainty over exchange rate developments in a large part of europe. at the same time, there is some disappointment that it has not been possible to create a market completely without borders for all types of financial activities within the eu even more quickly, and that some obstacles still remain. these obstacles are partly linked | to gain from completely harmonised services. the principles that form the basis of the eu ’ s regulatory framework for the financial sector are to a great extent based on this general orientation. the directives generally establish criteria of minimum harmonisation in order to enable financial operators to be active throughout the entire union. on this basis, authorisation and supervision should in principle be performed by the authorities within one member state, normally the home country of the institution in question. this “ licence ” to conduct financial operations should thus be recognised by the authorities in the other member states and financial institutions should be able to operate there from their establishments in their respective home country. in the same way, the ec directives on securities markets have led to some minimum harmonisation of the conditions for trade in financial instruments, e. g. what the issue prospectuses should contain and how insider trading could be limited. limitations in practice the problem is that it is difficult to apply this model for rules and regulations fully when there are many different national peculiarities which are hard to do away with. this has therefore provided some scope for the authorities also in the host countries to apply supplementary provisions, which have in practice impeded cross - border competition. such provisions are often attributed to some form of general good, which can be hard to define - and for which it is even harder to disclose a hidden protectionist background. another problem with the legislative work within the eu is that it has been so difficult to continuously modernise the rules and regulations and adapt them to new market conditions. the legislators have in several cases been one step behind the market, which has meant on the one hand that new products and operations may not have been encompassed by the new freedom of movement on the single market, and on the other hand that the protection the legislation aims to provide has been undermined. this problem came under particular focus last year, with regard to the securities markets within the eu, and a committee of wise men headed by former emi head alexandre lamfalussy proposed a simplified procedure for the entire legislation process. as you know, directives are adopted by the council of ministers and the european parliament in a co - decision procedure, which is in itself a complex process and even more so when the directives include detailed provisions on what is to be regulated. a more efficient method would be to limit the directives to fundamental principles and to delegate the detailed design and further development to a special committee. furthermore, by involving the national supervisory authorities closer in the legislation | 1 |
technological progress. they are what make the “ lump of labour ” a fallacy. which of these two effects – displacement or compensation – wins out? ultimately, this is an empirical question and we have several hundreds of years of empirical evidence as a testbed. perhaps unusually, these historical data tell a remarkably consistent story. • since 1750, there has been a steady and continuous stream of labour - saving technologies which have boosted economy - wide productivity, as measured by output per unit of labour inputs ( chart 9 ). on average since 1750, growth in uk labour productivity has been around 1. 1 % per year. that means the productivity of our economies has improved by around a third each generation, a massive leap forward. • this improvement in labour productivity has not, over the medium term, caused any reduction in employment. in the uk, the employment rate today as a proportion of the total population is around 50 %, very similar to levels in the early 19th century ( chart 10 ). over time, the employment share has fluctuated around a stationary average. the same is true in other countries. • the effects of technology have been felt, at least to some degree, in hours worked, as keynes predicted back in the 1930s. in the uk, the average working week has fallen from 50 hours a century ago to around 30 hours today ( chart 11 ). nonetheless, this fall - off has fallen well short of keynes ’ prediction of a 15 - hour week. the “ leisure classes ” are no more numerous today than a century ago. • shifts in population – through changes in birth / death rates or through immigration – have also had no obvious impact on employment. the relationship between population growth and the employment share is, if anything, positive ( chart 12 ). this, too, is evidence of the compensation effects of population growth – higher output and demand – outweighing any displacement effects in the jobs market. • as technology has boosted productivity and incomes, its fruits have been harvested by workers, typically in the form of higher wages. since 1750, the upwards march of productivity has largely been matched by the upwards march of real wages ( chart 13 ). since the industrial revolution, the former has risen on average by 1. 1 % per year, the latter by 0. 9 % per year. bis central bankers ’ speeches • the same pattern was evident prior to the industrial revolution. then, the absence of technological progress led to productivity flat - lining. the real incomes of workers similarly flat | the metropolitan areas into the lead banks scheme. about 700 financial literacy centres have been set up by banks. there are rural self - employment training institutes ( r - seti ), working towards capacity building for taking up self employment ventures. rbi ’ s policy initiatives to foster financial inclusion 12. let me now turn to some of the supporting policy initiatives that rbi has taken to further the financial inclusion in the country. ( a ) reach ( i ) branch expansion in rural areas branch authorisation has been relaxed to the extent that banks do not require prior permission to open branches in centres with population less than 1 lakh, which is subject to reporting. to further step up the opening of branches in rural areas, banks have been mandated to open at least 25 per cent of their new branches in unbanked rural centres. in the annual policy statement for 2013 – 14, banks have been advised to consider frontloading ( prioritizing ) the opening of branches in unbanked rural centres over a three year cycle co - terminus with their fips. this is expected to facilitate the branch expansion in unbanked rural centres. ( ii ) agent banking – business correspondent / business facilitator model in january 2006, the reserve bank permitted banks to utilise the services of intermediaries in providing banking services through the use of business facilitators and business correspondents. the bc model allows banks to do “ cash in – cash out ” transactions at a location much closer to the rural population, thus addressing the last mile problem. ( iii ) combination of branch and bc structure to deliver financial inclusion the idea is to have a combination of physical branch network and bcs for extending financial inclusion, especially in geographically dispersed areas. to ensure increased banking penetration and control over operations of bcs, banks have been advised to establish low cost branches in the form of intermediate brick and mortar structures in rural centres between the present base branch and bc locations, so as to provide support to a cluster of bcs ( about 8 – 10 bcs ) at a reasonable distance of about 3 – 4 kilometers. bis central bankers ’ speeches ( b ) access relaxed kyc norms know your customer ( kyc ) requirements have been simplified to such an extent that small accounts can be opened with self certification in the presence of bank officials. rbi has allowed “ aadhaar ” to be used as one of the eligible documents for meeting the kyc requirement for opening a bank account. roadmap for banking services in un | 0 |
the next level. the future of islamic finance in kenya and in the region remains bright. on its part, the central bank will continue to pursue policies that create an enabling environment that will eventually culminate in kenya establishing itself as a regional financial hub as envisaged in vision 2030. with these few remarks, i want to wish first community bank ltd as well as the first community bank capital ( investment bank ) the best in their future endeavours. the islamic finance picture is thus complete. thank you bis central bankers ’ speeches | joachim wuermeling : banking regulation and the benefits of international cooperation - basel iii and beyond speech by prof joachim wuermeling, member of the executive board of the deutsche bundesbank, at the konrad adenauer foundation, washington dc, 7 february 2019. * * * ladies and gentlemen, welcome to the “ gold room ” of the konrad adenauer foundation. i am honoured to welcome you all – your attendance today surely makes this lunch a golden opportunity to exchange ideas and perspectives on the future of transatlantic and international cooperation. we are probably all having quite difficult conversations in our jurisdictions at the moment about what transatlantic cooperation – and what international cooperation – can do to achieve a prosperous economy over the coming years and decades. how can cooperation support the goals of prosperity, stability and progress? my personal view is this : our prosperity hinges heavily on the interdependencies of our economies. that ‘ s what makes cooperative frameworks that create reliability and trust so important. take banking regulation as an example — here we have a fairly successful track record of international cooperation : the basel committee of banking supervision is a semi - formal network of supervisors from currently 28 jurisdictions. since 1974, regulators in the committee have been developing international minimum standards and guidelines to harmonise the supervision of internationally active banks. even though its standards are only non - binding agreements, these are typically implemented in more than 100 countries. during its 45 years of international cooperation, the basel committee has achieved a lot : it ensures a clear - cut separation of work and cooperation between home and host supervisors, so that the activity of international banks cannot fall through the cracks. it fosters the continuous exchange between supervisors and thereby helps build mutual trust. the basel minimum standards reduce the opportunity for regulatory arbitrage. and in the process, they reduce the likelihood of a regulatory race to the bottom. i like to think of basel as an example of the value of international cooperation. and as such, the basel committee was crucial as a forum to make sure that regulatory reforms after the financial crisis were developed in international accord. the final pieces of this international reform effort were achieved with the committee finalising the basel iii standard. the basel iii package, which includes reforms developed between 2009 and 2019, will make internationally active banks safer in the future. and yet i would like to bring one sobering fact to your attention : since the basel committee started its work, financial crises have not become fewer but more frequent. how can that be? one reason is regulatory | 0 |
growth. first, favorable demographics ( slide 3 ). total population increased at an annual rate of + 1 % during this period and the relative youth of the working - age population supported both production and consumption. at the beginning of the economic boom period, the farming population reached approximately 40 % of the total population and the migration of surplus labor from the rural areas to the cities enabled the rapid growth of a high productivity manufacturing sector. second, the use of competitive forces. it is sometimes pointed out that the government ’ s industrial policy or so - called “ japan incorporated ” was the key factor behind japan ’ s economic miracle. i believe such public sector influence is overstated. when we look at the the conference was held on may 5th and 6th under the theme, “ monetary policy under resource mobility ”. please refer to, http : / / www. suomenpankki. fi / en / tutkimus / konferenssit / tulevat _ konferenssit / pages / bof200 _ 2011. aspx bis central bankers ’ speeches history of japan ’ s leading firms, it is not rare to find cases where they entered into new areas dissenting against the government ’ s industrial policy or cases where they did not receive any favorable treatment. there are also examples where industries and firms which were wellprotected gradually lost their vibrancy. strong competition supported japan ’ s high - growth period by stimulating entrepreneurship and promoting technological innovation which enabled japanese firms to catch - up with those in advanced economies. third, the benefits of global free trade. when one looks at the contribution of individual components to gdp growth, domestic demand is by far the main factor ( slide 4 ). however, this does not refute the important role that the overseas economy played. japan produced large amounts of producer and consumer goods for the expanding global market, such as steel, electronic appliances and automobiles. the foreign exchange obtained through exports was used to import raw materials necessary to support domestic economic development. the basic condition which made such a growth model possible was the continued growth of the world economy and the maintenance of the global free trade system. the bubble and its collapse japan ’ s high - growth period ended in the early 1970s and the pace of growth gradually slowed. however, during the 70s and 80s, japan still maintained a relatively high - growth rate when compared with other major advanced economies ( slide 5 ). favorable demographics and strong global competitiveness were the basic components which continued to | emerging economies based on such an understanding of japan ’ s growth pattern, i would next like to conduct a simple comparison of the high growth that china and india are currently undergoing with japan ’ s past experience ( slide 8 ). china ’ s rapid growth started at the beginning of the 1990s and the pace of growth for the first 15 years is almost exactly the same as japan. the difference is that china has continued to grow on average at a pace above + 10 %. with regard to india, the growth rate is slightly lower than that of current china, or japan during its boom period. this is perhaps because india has yet to enter the population bonus stage ( slide 9 ). during a high - growth period, the supply of labor from rural areas plays a key role. when we compare the urban population rate of japan and china, china ’ s current level is roughly similar to japan ’ s level in the 1960s. looking at the car ownership rate as a reflection of a consumption boom due to strong household income growth, once again china ’ s level is similar to that of japan in the 1960s. when seen from this simple comparison, i believe that the chinese economy will continue its high growth for some time. with regard to india, the population bonus period will arrive around 2015, so its growth rate may accelerate further3. however, as japan ’ s experience shows, when income levels increase together with strong economic growth, each society faces various new challenges. a smooth transition from high growth to stable growth is quite a challenge. from the perspective of a country which has been facing these challenges for some time, i would like to share with you some of the lessons we have learned. preventing bubbles the first challenge is preventing the emergence of bubbles. when an economy experiences strong growth over an extended period, society often becomes over - confident. this seems to be human nature. japan ’ s bubble during the latter half of the 1980s, was the result of a complex interaction among multiple factors. however, the fundamental reason was the overconfidence which cloaked the entire country and the ensuing dramatically aggressive economic behavior. at that time, japan ’ s growth rate was higher than other advanced economies and the inflation rate was quite subdued. japan was the perfect model student ( slide 10 ). it may sound ridiculous, but according to an estimate released at that time, the aggregate value of land in central tokyo was equivalent to that of the entire united states. financial supervision was also insufficient. lending to real estate, construction | 1 |
gaston reinesch : how to achieve stronger growth in the eu? opening remarks by mr gaston reinesch, governor of the central bank of luxembourg, at the eurofi financial forum 2015, luxembourg, 9 september 2015. * * * ladies and gentlemen, distinguished guests, at the outset, i would like to thank eurofi and its president jacques de larosiere for inviting me to make the opening remarks to this afternoon ’ s debates on “ how to achieve stronger growth in the european union ”, a highly topical subject, to say the least. i will focus on the euro area and structure my remarks in two parts. first, i will touch upon the economic outlook in the euro area. i will do so in light of the european central bank ’ s ( ecb ) staff euro - area macroeconomic projections, which have been published last week, referred to hereafter as the “ staff projections ”. second, i will proceed with a broad overview of the issues and challenges of longer term growth in the euro - area and put forward some avenues for reflection and discussion. the information available from the staff projections indicate a continued though somewhat weaker economic recovery and a slower increase in inflation rates compared with previous expectations. as far as inflation is concerned, the staff projections foresee an annual harmonized index of consumer price inflation ( hicp ) of 0. 1 % in 2015, 1. 1 % in 2016 and 1. 7 % in 2017. 1 in comparison with the june projections, 2 the outlook for inflation has been revised down, largely owing to lower oil prices and, to a much lesser extent, a slower closing of the negative output gap. furthermore, taking account of the most recent developments in oil prices and recent exchange rates, there are downside risks to the september staff inflation projections. concerning the economic situation, recovery is expected to continue, albeit at a somewhat weaker pace than earlier expected, reflecting in particular the slowdown in emerging market economies, which is weighting on global growth and foreign demand for euro area exports. domestic demand should be further supported by the monetary policy measures of the ecb and their favorable impact on financial conditions as well as by the progress made in fiscal consolidation. moreover, the decline in oil prices should provide support for household real disposable income and corporate profitability and, thereby, enhance private consumption and investment. overall, this assessment is broadly reflected in the staff projections which foresee an annual real gdp growth of 1. 4 % in 2015, | . in response, we have taken a fresh look at our approach to banking regulation and supervision. in particular, we are developing our capacity to respond to banking crises in ways that serve the interests of new zealand. this includes policies that aim to ensure that foreign - owned systemically important banks can be run legally and operationally from new zealand on a stand - alone basis if and when needed. we are also working to ensure that there is as much coordination and cooperation as is possible between regulatory authorities both here and abroad during times of financial stress. “ we also have a brief to monitor the wider financial system for emerging signs of stress. the publication of our first regular financial stability report ( pdf 888kb ) is another step in raising awareness and debate around financial stability issues. “ banking policy should be part of a safeguard against rare, but costly, financial crises. we can think of it as a form of insurance : if the potential loss from an unforeseen event rises, it is appropriate to add a little more insurance cover. we believe that recent policy developments provide this extra cover, in ways that are consistent with our duty to promote the soundness and efficiency of the financial system. ” | 0 |
##n ( 1997 ) and bernanke and others ( 1999 ). the following anecdote provides a measure of the extent to which some policymakers were pleasantly surprised by their central bank's success in keeping inflation in line with its objective. the governor of the bank of england must write an open letter to the chancellor of the exchequer when inflation deviates from the official target by more than 1 percentage point. about a year after the bank of england was granted operational independence, the bank's chief economist wrote that " [ even ] if inflation shocks were to disappear entirely, the continued presence of demand shocks would imply that [ open letters ] would still be triggered more than 40 percent of the time " ( bean, 1998 ). a decade later, inflation has remained within 1 percentage point of the target in all but a single month, or less than 1 percent of the time. shocks. nonetheless, these inflation deviations have been relatively small and transitory by historical standards. most important, there is little evidence of a systematic upward bias in inflation, which would arise if the central bank were attempting to stimulate output beyond what would be consistent with maintaining low and stable inflation. i also want to emphasize that this improvement in inflation performance has not been at the expense of higher employment and output fluctuations ; indeed, the variability of output and employment fluctuations has generally declined in those economies where the central bank has maintained an explicit inflation objective. 25 inflation expectations. economies with explicit numerical inflation objectives have ( fortunately ) not been alone in enjoying relatively low and stable inflation over the past couple of decades ; indeed, in some cases, inflation was already low and stable prior to the adoption of the explicit objective. it is thus legitimate to investigate whether the establishment of an explicit inflation objective has had other measurable effects, particularly with regard to the anchoring of long - run inflation expectations. 26 chart 2 presents realized inflation along with a survey - based measure of mean inflation expectations at the two - year - ahead and six - to - ten - year - ahead horizons. the evidence supports the view that medium - to long - term expectations have become well anchored around the official objectives. first, survey - based measures of long - term inflation expectations have converged toward the official inflation objective in all countries. this fact is consistent with central banks making credible, long - term commitments to pursuing their objectives, even in countries where the objective must be renewed on a regular basis. moreover, surveys of professional forecasters in each of these economies reveal that | be followed consistently over time because the short - run gains of deviating from the plan are too tempting, then that plan is said to be time - inconsistent. in such a setting, the time - consistent policy is to reoptimize mishkin ( 2007c ) provides extensive discussion of the modern science of monetary policy and its implications for the design and communication of the policy framework. i would like to thank spencer dale, christopher erceg, etienne gagnon, linda kole, andrew levin, and ricardo nunes for assistance and helpful comments in preparing this speech. this change in views occurred as a result of the so - called rational expectations revolution, which was launched by a series of remarkable papers by nobel prize - winner robert lucas ( 1972, 1973, 1976 ). the time - inconsistency problem was first outlined in papers by kydland and prescott ( 1977 ) and calvo ( 1978 ). every period, whereas the preferable alternative would be to establish a firm commitment to the optimal long - run plan. to take a common example that illustrates the time - inconsistency problem, someone may make a new year ’ s resolution about starting a diet. at some point thereafter, however, it becomes hard to resist having a little bit of rocky road ice cream, and then a bit more, and pretty soon the weight begins to pile back on. the time - inconsistency problem arises in the context of monetary policy, because there is a temptation to give a short - run boost to economic output and employment by pursuing a course of policy that is more expansionary than firms or workers had initially expected. 5 nevertheless, if the economy is already at full employment, then this boost is merely transitory : as economic activity rises above its sustainable level, wages and prices begin to rise, and the private sector's inflation expectations start to pick up. of course, the central bank must eventually remove the policy stimulus to avoid a continuous upward spiral of inflation. at that point, economic activity drops back to a sustainable level. however, inflation settles in at a permanently higher rate because prospects of future monetary expansions become embedded in expectations, and hence in wage and price adjustments, and the higher average inflation rate generates undesirable economic distortions. 6 thus, failing to address the time - inconsistency problem poses the risk of ending up with a higher average inflation rate, with detrimental long - run consequences for economic efficiency and the general standard of | 1 |
end of the 1980s, more than 200 banks were failing annually, and there were more than 1, 000 other problem banks. this experience provided important lessons and forced supervisors and bankers, alike, to reconsider the way they approached their jobs. for their part, bankers recognized the need to build their capital and reserves, strengthen their internal controls, and improve practices for identifying, underwriting and managing risk. supervisors were also reminded of the need to remain vigilant and of the high costs that bank failures can bring, not only to the insurance fund but to local communities as well. the fdic improvement act of 1991 emphasized that point, requiring frequent examinations and prompt regulatory actions when serious problems emerge. beyond these largely domestic, institutional events, banks and businesses throughout the world were dealing in the 1980s and 1990s with new technologies that were leading to a multitude of new and increasingly complex financial products that changed the nature of banking and financial markets. these technologies have brought many benefits that facilitate more efficient markets and, in turn, greater international trade and economic growth. they may also, however, have raised macro - stability concerns by concentrating the growing volume and complexity of certain activities within a small number of truly global institutions. it is essential that these largest firms adequately manage the related risks of these activities and that they remain adequately supervised. for it is these institutions that have the potential to disrupt worldwide payment systems and contribute most to systemic risk. in addition to the formal supervisory oversight exerted by regulators, concerns may be eased somewhat by the strong counterparty discipline being brought to bear world wide on banks and other financial institutions dealing in these new products. the scrutiny among counterparties in the global market place has contributed to improvements in capital positions and in overall risk management practices. in many ways, u. s. banks have been in the vanguard in applying technological advances to their products, distribution systems, and management processes, with such applications and innovations as atms, home banking, securitizations and credit derivatives. such efforts, combined with greater attention to pricing their services and measuring their risks, have had material effects on the increased strength and profitability that our banks have seen. within the united states, our banking system has also experienced a dramatic consolidation in the number of banking institutions, with the number of independent commercial banking organizations declining from 12, 400 in 1980 to 7, 400 in june of this year. 1 that structural change has also contributed to industry earnings by providing banks with greater opportunities to reduce costs. the challenge | but what does all of this have to do with you? importantly, your being here at the graduate school of banking today means that you have embraced high - road business models for your banks. we need bankers like you to remind us of the positive role that you and your institutions play and how you contribute to the revival of a financial system that serves the goal of common and widespread prosperity. the path that we collectively travel is influenced by the fact that we live in a society populated by institutions with radically different business models : the low - road models can be incredibly large and complex or they can be small and predatory. because there are costs associated with financial regulation, i am advocating that we understand the public benefits that the financial activity dictated by the model is intended to deliver. is this our regulatory fate, to be weighed down as a society with the costs and burdens of regulating the complexity of our financial sector while promoting the public benefit of traditional community banking at the same time? i will not be able to supply you an answer in the next two minutes, but i will give you one small part of an answer. and that part is you. you are an essential ingredient for bringing innovation to real banking. innovation comes in many forms, of course. to give one example, technology is revolutionizing banking, and that does not apply only to the largest banks. depending on how old you are, you may take the ubiquity of technology for granted. but when i reflect on what i ’ ve seen and how different my teenagers ’ world is than the one that i grew up in, i can tell you that the pace of technological development in my own lifetime has been breathtaking. at the risk of dating myself, we have moved from a time when we still wrote our college term papers on typewriters to a time when the processing power of the phones in our pockets and purses is making even desktop computers increasingly irrelevant. ( by the way, if you ’ re wondering what a typewriter is, you can look it up on your smartphone. ) not surprisingly, banks have taken advantage of this trend and developed tools and systems to enhance both customer service and internal operations. think about your own banks and how you interface with your customers. a number of customers may still prefer the personal touch of coming into the branch, but i ’ m also willing to bet that an increasing number of your bis central bankers ’ speeches customers expect to be able do business electronically when it is convenient for them, not | 0.5 |
. the changing face of the banking sector aided by technological innovations can be seen from various developments in the recent past. the most noteworthy has been the usage of the atm technology. atms started as substitutes for bank branches allowing their customers to withdraw cash anytime and to extend their services wherever it would not be viable to operate a physical branch. the delivery channel revolution can be said to have begun with the atm. the phenomenal success of atms had made the banking sector develop more innovative delivery channels to build on cost and service efficiencies. as a consequence, banks have begun to introduce tele - banking, call centres, internet banking and mobile banking. 6. tele - banking is a good medium for customers to make routine queries and also an efficient tool for banks to cut down on their manpower resources. the call centre is another channel that captured the imagination of banks as well as customers. at these centres, enormous amount of information is at the fingertips of trained customer service representatives. a call centre not only cuts down on costs but also improves customer satisfaction. moreover, it facilitates 24x7 working and offers the “ human touch ” that customers seek. mobile banking can be regarded as “ the delivery channel of the future ”. this is because it offers portability and convenience to the user. it is just like having a bank in the pocket. 7. it would not have been possible for banks to give the full benefits of tele - banking, mobile banking, internet banking, card banking ( multiple delivery channels ) to all its customers without an appropriate banking solution. centralised cbs has been one such development which has revolutionised the banking sector. cbs can be defined as a solution that enables banks to offer a multitude of customer - centric services on a 24x7 basis from a single location, supporting retail as well as corporate banking activities, as well as all possible delivery channels existing and proposed. the centralisation thus makes a “ one - stop ” shop for financial services a reality. using cbs, customers can access their accounts from any branch, anywhere, irrespective of where they have physically opened their accounts. 8. cbs has now stabilised in the banking sector. most branches of commercial banks, including the rrbs, are being progressively brought into the core - banking fold. so far, 79. 4 per cent of the total number of public sector bank branches has adopted cbs. with this remarkable progress in the adoption of the cbs technology, let us pose a few | h r khan : banking, electronic payments and road ahead special address by shri h r khan, deputy governor of the reserve bank of india, at the ficci - iba ( federation of indian chambers of commerce & industry – indian banks ’ association ) conference on “ global banking : paradigm shift ”, mumbai, 25 august 2011. * * * the speaker gratefully acknowledges the assistance provided by shri. g. srinivas, general manager and shri. saswat mahapatra, asst. general manager in the preparation of this address. distinguished ladies and gentlemen i am glad to be in your midst today to share my thoughts on “ banking, electronic payments and the road ahead ”. in fact the subject of my address very well fits the theme of the conference “ global banking : paradigm shift ” and its emphasis on productivity excellence. i am sure the experts whom you would have heard and interacted with over the last two days would have shared their thoughts on the changes and challenges that banking in india and globally is undergoing and has undergone over these last few momentous years, leading as it were to a paradigm shift in the way banks are doing their business and retaining and increasing their customer base. the basic underlying current that runs through this changing landscape is the ever increasing reliance on technology to cater to the needs of customers and process vast number of transactions including payment transactions. in fact as you all are aware, payment and settlement systems form the backbone of any economy. they are the conduits or the arteries for conducting trade, commerce and other forms of economic activities including remittances in any country. an efficient payments system can be envisaged as the lubricant which speeds up the liquidity flow in the economy, thereby creating the necessary impetus and momentum for economic growth. the payments process is a vital aspect of financial intermediation ; it enables the creation and transfer of liquidity among different economic agents. a smooth, well functioning and regulated payments system thus not only ensures efficient utilisation of scarce resources but also eliminates systemic risks. the payments and settlement system is, therefore, a crucial component of the financial infrastructure of any country and more so of a country like ours. the spectacular growth in financial transactions in the country has necessitated certain radical changes in the payments and settlement system, whether it be in the area of wholesale payments or retail payments. while the changes in the wholesale payments are devoted to providing an efficient channel for transmission of monetary policy signals, and for the smooth functioning | 0 |
varied conditions that can make our policies more effective in fostering prosperity. now let me turn to these concomitant conditions for prosperity outside of the fed's mandate, which nevertheless should be carefully studied. many of them are straightforward, like housing, transportation, and childcare. even as remote work has increased, many jobs remain in person and on site. if people cannot live near work, either because of the cost or because jobs are located in nonresidential areas, they must commute. commuting depends on public or personal transportation - which in turn relies on infrastructure, such as roads and highways. and time spent commuting affects childcare decisions. caring responsibilities overall - for children or for other relatives - can keep people out of the workforce, and the onus falls disproportionately on women. this was particularly evident during the pandemic, and particularly true for black and hispanic mothers. 3 financial participation is also clearly connected to prosperity. being unbanked means less financial security. less access to credit means a smaller, or even nonexistent, safety net, but it also means less opportunity, be that buying a house to build capital, funding education, or starting a business. but there are other, less obvious - or even less quantifiable - issues. beyond location, a home provides both basic needs, such as shelter, and invaluable benefits, such as a sense of personal safety and dignity. it is a refuge in which our minds and bodies can 2 / 3 bis - central bankers'speeches recuperate and regenerate so we are prepared to participate in all aspects of life, including the next day's work. the costs of living in disadvantaged areas or of dealing with financial hardship can be seen in all areas of life. higher stress, the frequent necessity of working more than one job, the absence of benefits, and the time and money spent commuting - all these exact a financial and psychological toll. there is a fundamental aspect of our humanity, which is to live a more fulfilling existence - to enjoy the richness of life. in an economy that works for all, we should not live to work, but work to live. these are the factors that will allow people to thrive. of course, policies that can address these important issues are not made by fed policymakers. but the research agenda we are discussing today helps us to understand better those aspects of well - being that allow | thank each and every one here present especially, the board and management staff and customers for your important contributions that brought tropical bank to where it is today. last but not least, your excellency, i would like to inform the general public that the east african cross boarder payment system ( eaps ) which is an initiative of the east african central banks went live on monday 25 november 2013 and is now operational in three countries namely ; kenya, tanzania and uganda. rwanda and burundi are expected to join the integrated regional payment system at a later date when ready. eaps is a multi currency system in which payments are effected using any of the currencies of the eac partner states. it will make cross boarder payments easier and facilitate safe and efficient transfer of monetary value within the region. eaps will also be vital in promoting regional trade and enhancing economic integration. with these remarks, allow me once again to extend my heartfelt congratulations to tropical bank limited on their 40th anniversary and wish them many more fruitful years of banking operations in uganda. i thank you. bis central bankers ’ speeches | 0 |
many positive emotions, there is sometimes envy, spite, bickering, lack of understanding. again, how typical are all these emotions for broader families. as a result, issues can arise between us. but that feeling of closeness in my eyes remains and should remain. it is a feeling i firmly believe we might share. i don ’ t want to get too sentimental, but it is clear that our centuries - long common and shared history is no mere accident and that without exactly this similarity and closeness maybe our shared history could never have been so long in the first place. again, this does not mean that we do not have our differences. yes, we are still not equally wealthy, for example. our elites have different opinions on many issues. logically, we have different historical national wounds and pains. but again, this changes nothing in our mental – and not just geographical – closeness. ladies and gentlemen, we are in vienna, and my favourite czech philosopher vilem flusser once said that vienna and prague are just two halves of one, single city. i very much agree. perhaps this is ultimately why czechs feel good in austria : they feel very much at home. therefore allow me right here my last point : if you are looking for anecdotal evidence of the closeness i am talking about, here is one anecdote i like to give here in austria. because we have friends here at the central bank, it is good to realise that the governor of the austrian central bank is named nowotny, his vice - governor and my dear friend is named duchatczek, and the head of the local financial markets authority is called pribyl. all these are typical czech names. meanwhile, the head of the czech national bank goes by the name of singer, his deputy is a certain mr hampl, and our executive directors include a mr schmidt and a mr bauer. in other words, there is some truth in the idea that we are close. i believe this is something we can build upon. i am very much looking forward to discussing with you. vielen dank fur ihre aufmerksamkeit. bis central bankers ’ speeches | also in politics. moreover however, there is a similar attitude to work. it was jack stack, the former head of erste group ’ s czech subsidiary ceska sporitelna, who made me realise this. he once remarked that it was almost unbelievable how czechs and austrians as employees produce very similar outputs and results when given the same tasks to perform. for example, argued stack, they like to deliver something they regard as perfect straight away, and they do not like it when their boss finds fault with what they deliver and firmly believe is perfect from the very beginning. they are essentially very disciplined, and that is the gospel truth. as an american, mr stack had an unbiased view and a great eye and feel for this sort of thing. and he was in many aspects right and revealed what was hidden to many of us. i can confirm that these similarities between czechs and austrians are particularly visible in central european and international teams. i have been reminded of them on many occasions. the last time was fairly recently, when we were negotiating the new position of our countries in the mighty international monetary fund with colleagues and friends from the austrian central bank. this year we achieved an incredible outcome : austria, the czech republic and hungary will have the right to appoint an executive director – one of the 24 executive directors in the imf – each country for a fixed term. as a group of central european countries we will therefore have the same representation as far larger and more populous bis central bankers ’ speeches countries. when the agreement was officially signed at the hofburg palace here in vienna this summer, with the austrian president in attendance, i was reminded that it would perhaps have been impossible to achieve such an outcome on such a delicate and sensitive issue without this foremost mental closeness and some similarity of thought. however over the top it might seem to some, we are indeed very close mentally as well as geographically – perhaps more so than we would care to admit and more than we would like to admit, i should add. so, if you want to know a bit about the future of our economic, civic and other relationships and want to know how the other country is going to respond / react, all you need to do is look in the mirror. as really, you look at your neighbour in the czech republic or austria, you will see something of yourself. our relationships are sometimes like those within a broad family. needless to say, we don ’ t always get along swimmingly. besides | 1 |
developments in overseas economic activity and prices ; developments in the situation surrounding ukraine and in commodity prices ; and the course of covid - 19 at home and abroad and its impact. in this situation, it is necessary to pay due attention to developments in financial and foreign exchange markets and their impact on japan's economic activity and prices. meanwhile, japan's 1 / 2 bis - central bankers'speeches financial system has maintained stability on the whole. although attention is warranted on, for example, the impact of the tightening of global financial conditions, the financial system is likely to remain highly robust on the whole, mainly because financial institutions have sufficient capital bases. regarding financial risks from a longer - term perspective, while there is a possibility that prolonged downward pressure on financial institutions'profits may lead to a gradual pullback in financial intermediation, the vulnerability of the financial system could increase, mainly due to the search for yield behavior. although these risks are judged as not significant at this point, it is necessary to pay close attention to future developments. ii. conduct of monetary policy next, i will explain the bank's conduct of monetary policy. japan's economy is on its way to recovery from a downturn caused by covid - 19 and uncertainties for the economy have been extremely high. on the price front, the year - on - year rate of increase in the cpi is projected to decelerate to a level below 2 percent from fiscal 2023. given such developments in economic activity and prices, the bank will continue with monetary easing, aiming to firmly support japan's economy and thereby achieve the price stability target of 2 percent in a sustainable and stable manner, accompanied by wage increases. thank you. 2 / 2 bis - central bankers'speeches | haruhiko kuroda : the bank of japan's semiannual report on currency and monetary control statement by mr haruhiko kuroda, governor of the bank of japan, before the committee on financial affairs, house of representatives, tokyo, 18 november 2022. * * * introduction the bank of japan submits to the diet its semiannual report on currency and monetary control every june and december. i am pleased to have this opportunity today to talk about recent economic and financial developments and about the bank's conduct of monetary policy. i. economic and financial developments i will first explain recent economic and financial developments. japan's economy, despite being affected by factors such as high commodity prices, has picked up as the resumption of economic activity has progressed while public health has been protected from the novel coronavirus ( covid - 19 ). overseas economies have recovered moderately on the whole, but slowdowns have been observed, mainly in advanced economies. exports and industrial production have increased as a trend, with the effects of supply - side constraints waning. corporate profits have been at high levels on the whole, and business sentiment has been more or less unchanged. in this situation, business fixed investment has picked up, although weakness has been seen in some industries. the employment and income situation has improved moderately on the whole. private consumption has increased moderately, despite being affected by covid - 19. with regard to the outlook, japan's economy is likely to recover, with the impact of covid - 19 and supply - side constraints waning and with support from accommodative financial conditions and the government's economic measures, although it is expected to be under downward pressure stemming from high commodity prices and the slowdowns in overseas economies. the year - on - year rate of increase in the consumer price index ( cpi ) for all items excluding fresh food has accelerated due to rises in prices of such items as energy, food, and durable goods. regarding the outlook, it is expected to decelerate from the beginning of calendar year 2023 toward the middle of fiscal 2023 because the contribution of such price rises to this cpi is likely to wane. thereafter, it is projected to accelerate again moderately on the 2 back of improvement in the output gap and rises in medium - to long - term inflation expectations and in wage growth. concerning risks to the outlook, there have been extremely high uncertainties for japan's economy, including the following : | 1 |
fraziali ismail : closing ceremony of the project greenback 2. 0 kota kinabalu welcoming remarks by mr fraziali ismail, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the closing ceremony of the project greenback 2. 0 kota kinabalu, kuala lumpur, 14 february 2020. * * * before i begin, i would like to convey my deepest condolences to the family members and friends of those who were involved in the boat crash incident near pulau tanjung aru, yesterday. let us pray for the safety of the victims as well as the search and rescue team. ladies and gentlemen, after we concluded project greenback in johor bahru more than two years ago, bank negara malaysia together with the world bank sat down to choose the second “ remittance champion city ”. among others, we considered ipoh, butterworth and kota kinabalu. we discussed long and hard, and weighed our options. our assessment suggested that ipoh and butterworth would have presented us with a rather similar case study to johor bahru. this is in view of the similar profile of the target groups who are largely made up of urban migrants, therefore exhibiting similar remittance behaviors. the odd for success would have been easier and kinder to us. but our intention has never been about replicating our experience in johor bahru. kota kinabalu offers a much more exciting proposition. this is despite our full cognisance of the challenges ahead of us, such as geographical barriers and connectivity issue. the more we thought about it, the more we were adamant to take this ‘ road less travelled ’, premised on a very clear objective which was to test how digitalisation and technology could be leveraged as a driver for inclusive financial services. our work under project greenback 2. 0 were not limited to the city of kota kinabalu alone. we covered keningau, inanam, tenom, kunak, tawau. some of these areas are remote, and admittedly, only a few of these i have visited myself. our work also brings us to this beautiful city of sandakan, where we gather this evening. it is my great pleasure to extend a warm welcome to all of you to the closing ceremony of the project greenback 2. 0 kota kinabalu. our utmost appreciation goes to our guest of honor, yang berhormat dato ’ | encik adnan zaylani mohamad zahid : prevention of corruption in project management opening remarks by mr encik adnan zaylani mohamad zahid, assistant governor of the central bank of malaysia ( bank negara malaysia ), at the malaysian anti - corruption commission ( macc ) talk entitled " prevention of corruption in project management ", kuala lumpur, 3 april 2017. * * * it is my great honour and pleasure to welcome officers from the malaysian anti - corruption commission ( macc ), particularly the speaker for today, assistant commissioner mr mohan munusamy. a warm welcome is also extended to the project teams comprising the steering committees, contractors and consultants. my appreciation also goes to all my fellow bank staff who are here today. in more recent times, the bank and macc have collaborated on a number of fronts. the recent strategic cooperation between the bank and macc, together with lhdn to combat financial crime, particularly corruption, signifies our commitment to work together in this area. from the bank ’ s perspective, this demonstrates our effort to instil integrity for and beyond our regulatees in the financial market. integrity is taken very seriously at the bank where we continually and consciously maintain the highest standards, given that we enforce these standards on our regulatees in our supervisory capacity. we proactively manage integrity hazards and corruption risks and tackle those risks pre - emptively. corruption is not simply a crime on its own. its consequences can be far - reaching in terms of economic losses and irreparable reputation damage. thus, we must actively keep abreast of the management of integrity risks. as an institution, we have been blessed to have had pioneers who upheld the highest standards of excellence in our corporate conduct. the late tun ismail ali, the first malaysian governor from 1962 to 1980 was well known as a person of the highest integrity. i can recall his younger brother relating an episode in this regard. an aspiring architect at that time, he was told by the late tun ismail, not to ever set foot in the bank while he was the governor. uncompromising and unyielding, we certainly should strive to assimilate tun ’ s values and standards. indeed, we are fortunate that his successors have continued his trademark standard of integrity, to the extent that it is deeply ingrained in our corporate dna today. the bank does not tolerate any wrongdoing which may tarnish its reputation, given that our solid | 0.5 |
have an appropriate level of insurance and reach retirement age with comfortable pension plans. they won ’ t pay more interest than they need to when borrowing, or settle for less than they should when saving. people with basic financial awareness would understand risk return trade - off and take better investment decisions, thereby being less vulnerable to frauds and dubious schemes. financial education can help reduce levels of debt, poverty, repossessions, stress, illness and even crime. in sum, financial education improves the quality of people ’ s lives and financial affairs and provides them peace of mind, by instilling in them a sense of confidence and security about matters of money. for the macro economy …. 6. from a macro perspective also, financial literacy / education has important implications. financial literacy, together with financial inclusion and consumer protection form a triad which, collectively, has an important bearing on financial stability. the three legs of the triad have strong inter - linkages, with each element having a vital bearing on the others. the absence of any one would make it difficult to attain the remaining goals. financial literacy aids financial inclusion initiatives as it creates awareness about the benefits of connecting with the formal financial system and hence, creates demand for financial products. financial literacy supports consumer protection as it helps consumers better understand the features and risks inherent in financial products, thereby reducing the risk of mis - selling. it also generates awareness and willingness to approach the grievance redressal system available, in case of disputes. 7. at a macroeconomic level, the cost of financial illiteracy is significant and is manifested through scourges such as unemployment, poverty, high personal indebtedness and financial exploitation through mis - selling. it results in avoidable leakages and wastages, which any resource - scarce country can ill - afford. the savings habit, which can be inculcated through financial education, can help channelize household savings into productive activities, thereby supporting economic growth. the increased demand for financial services, created as an outcome of financial education efforts, can help bring depth and diversification to the financial markets. how are we doing in india? 8. in india, financial education has been identified as a policy priority and a massive effort involving the government, various financial sector regulators, financial institutions and civil society is underway. the financial stability and development council ( fsdc ), which is bis central bankers ’ speeches chaired by the union finance minister, is mandated, inter alia to focus on spread | stefan ingves : the housing market, the banks and household debt speech by mr stefan ingves, governor of the sveriges riksbank, to the riksdag committee on finance, stockholm, 1 march 2011. * * * the origins and the course of the financial crisis can be described in slightly different ways and in more or less detail. i will not provide any detailed account here – i have already done so on more than one occasion, not least here before the riksdag committee on finance. an essential component of the crisis was the build - up of credit and house price bubbles over a number years in a number of countries. when these bubbles burst, the financial system was rocked to its foundations, and governments and central banks around the world were forced to take exceptional measures to stabilise the situation. the decades prior to the crisis were marked by extensive deregulation of the financial markets. there was a strong belief that the financial sector was to a large extent selfregulating, and that it was able to resolve most problems on its own through market incentives. this belief was seriously undermined during the crisis. there is now considerable international agreement that the market ’ s ability to “ manage itself ” was overestimated, and that regulations need to be stricter and supervision tightened. of course, what one wants to achieve is to reduce the risk of future financial crises. although more and stricter regulations may be linked to a certain cost, for instance, in the form of higher interest rate margins, studies indicate that this is more than counterbalanced in the long run by more favourable economic development. 1 i would like to point out that i am not talking about a return to the strictly regulated credit and finance markets we had before – deregulation has of course had some positive effects and meant that the economy in many ways functions better. but i think that most people will agree that the financial sector needs a tighter rein than it has had for the past fifteen, twenty years. tighter regulations and supervision planned reform work is already under way on an international level. the basel iii rules, which in brief entail the banks having to hold more and better capital and larger liquidity buffers, are one example of this. in the supervisory field, the eu has established a special body, the european systemic risk board, which is to identify risks in the financial system as a whole and to provide warnings and recommendations to the countries and authorities concerned. sweden of course supports | 0 |
##ures in place, the deficit would be around 3 per cent of gdp in both years. for budgetary policy to support economic activity effectively, it must preserve confidence in the improvement of the public accounts and the reduction of the ratio of debt to gdp. the volume of public sector securities to be placed annually on the market is still massive : almost €340 billion just for the rollover of securities maturing in 2019, on top of the roughly €50 billion expected to be needed to finance the deficit. financial market conditions remain tense. since last spring ’ s peak, share prices have come down by 12 per cent in the euro area and by 17 per cent in italy. in the same period, private bond yields have risen by 40 and 100 basis points respectively ( to 1. 6 and 2. 5 per cent ). italy ’ s divergence from the euro - area average has been most evident in the banking sector, where stock market indices have fallen by almost 40 per cent on average compared with 30 per cent in the euro area and bond yields have almost doubled, reaching 2. 4 per cent, against an average increase of 0. 3 percentage points in the euro area as a whole. the higher borrowing costs borne by italy ’ s banks have up to now been transmitted to interest rates on loans to a lesser extent than in the past, thanks to the stronger balance sheets of credit institutions and the rebalancing of their liabilities towards financial instruments that are less vulnerable to changes in market interest rates. signs of a moderate tightening in credit access conditions are nevertheless beginning to emerge from business surveys. last week the ecb ’ s governing council expressed concern about the increased downside risks surrounding the euro - area growth outlook, which could affect inflation developments over the medium term. the reduction in consumer price inflation, to 1. 4 per cent in january, primarily reflects the slowdown of the energy component but at 1. 1 per cent core inflation is still struggling to recover. the transmission of the increase in wages to prices has been slowed by the weakness of economic activity in recent months, which has translated into lower profit margins for firms. the council will continue to pursue the price stability objective – commonly defined as a rate of inflation below, but close to, 2 per cent in the medium term – with tenacity and patience. significant monetary stimulus will be guaranteed by low key interest rates, the large volumes of securities in central banks ’ portfolios and the reinvestment of principal payments from maturing | , the value of the securities in banks ’ portfolios stood at about €330 billion, just under 10 per cent of total assets ; it remains below the peak of €400 billion registered at the beginning of 2015. the purchases, which were concentrated in may and june, occurred in parallel with the rise in yields, at a time of weak credit demand. banks ’ investments help to stabilize government bond prices in periods of heightened tension and can enable subsequent capital gains if prices recover ; however, they expose intermediaries to the risks associated with further drops in prices. the share of securities classified in the portfolio valued at amortized cost, whose temporary changes in value do not affect capital, rose from 18 to 49 per cent on average between the end of 2017 and november 2018 ; it reached 61 per cent for the less significant banks. this increase helps attenuate the impact of fluctuations in the value of government bonds. the decrease from 4. 2 to 3. 6 years in the residual maturity of the securities classified in fair - valued portfolios goes in the same direction. the expansion in economic activity and orderly conditions on the sovereign debt market facilitates, together with renewed investor confidence, a gradual decline in the stock of government securities held in banks ’ balance sheets, as shown by the significant reduction in exposures between the beginning of 2015 and the end of 2017. the global financial crisis, the sovereign debt crisis and the attendant double - dip recession led to a significant restructuring of italian banks ’ liabilities. there has been a sharp reduction in market funding ; risk premiums have increased owing to factors specific to the banking sector and to the changes in the conditions of the public finances. since 2011, the decrease in interbank funding has been accompanied by a considerable increase in recourse to central bank refinancing. over the last few years, in the four targeted longer - term refinancing operations carried out between june 2016 and march 2017, the eurosystem allocated about €240 billion to italian banks of the €740 billion destined for euro - area banks. these operations have helped to sustain the disbursement of loans to households and firms and to lower the cost. from 2011 to today, net bond issuance on the international markets, mostly by large banks, has been negative overall, at - €47 billion ; the share of bonds in total funding has gone down from 11. 5 to 9. 5 per cent. the recent resurfacing of tensions in the government | 1 |
move in the coming months from a one - to - one type engagement in our chatroom, to a many - to - many type engagement where banks, stored value facility ( svf ) operators, technology specialists and the regulator come together to tackle aml pain points. this will initially target one or two challenges, but will aim to build momentum and turn the successes into mainstream aml solutions that contribute to effectiveness and efficiency. 22. but that perhaps is still not enough. new technology comes at the right time not only for the regulatees, but also for regulators. with the advice from technology experts, we will embark upon a study to enhance the timely retrieval and transmission of aml / cft related information and data from banks and svf operators in a digitalised and efficient way, as opposed to the old - fashioned way of regulatory returns and surveys. at the same time, we will also explore data analytics tools for processing the data collected in order to generate useful analyses for furthering our capability to understand and assess the ml / tf risks at the sectoral level, as well as to provide feedback to individual regulatees where appropriate. these will hopefully lead to an evolution and re - shaping of regulatory interface between the hkma and market practitioners to enhance aml / cft surveillance capability of all. regtech for prudential risk management and compliance 23. another area of focus is on regtech for prudential risk management and compliance. the often - analytical nature of prudential risk management has created room for technology to im 4 / 4 bis central bankers'speeches | policy. therefore, the fiscal stance becomes the de facto policy thrust. one important thing that we should avoid is for the two polices pulling in opposing direction. if i were given the policy choice, i would put more weight on safeguarding macroeconomic stability now. why? this stability will certainly deliver us a much better growth potential in the next three years and beyond. but without stability, growth will be at best, uncertain and at worse, virtually impossible. hence, there is really no conflict between stability and growth in the long run. i would therefore like to see government resist any further expansion in the fiscal deficit beyond what is currently projected. in fact, i expect that the consolidation of the debt position is very high on the government agenda. once we know that we can immediately protect our balance of payments and consolidate debt in the medium term, we should then look at the possibility of introducing growth oriented measures. the mix of government expenditure plays a pivotal role in this area. debt creation should only be available for capital formation and not operating expenditure. we all know that this is easier said than done. the reality of the situation is that government operating expenditure is generally inflexible downwards. perhaps i can also invite the panel to suggest ways of addressing this difficult issue. in addition, selected incentives can spurn growth in many of our industries particularly the emerging ones. what then of monetary policy? the reserve bank has made our future intention clear early last year when we announced an increase in official interest rate. however, even with this tightening, interest rates are still very low by historical standards and competitive against our neighbours australia and new zealand. in no way can one therefore regard current interest rates as impeding investment and growth. monetary policy remains accommodative. to date, we continue to see strong growth in domestic credit. we think that this will soften somewhat in the next two years. we are monitoring the situation carefully and monetary policy will remain on a tightening bias for the foreseeable future. 7 / 8 with such a mix of fiscal and monetary policy, we can protect our fundamentals and at the same time allow the private sector to lead growth. interest rates will remain competitive. investor confidence should continue to rise. the reforms will make our investment dollar go further and higher productivity will generate more growth. i am convinced that such a package can make fiji to grow higher than the 2 percent that we are projecting now and closer to the 8 percent national growth target. concluding remarks ladies and | 0 |
to higher interest rates and funding costs, there have not been signs of a further sharp contraction in credit from the stress earlier this year that would slow economic activity. though loan balance growth has slowed, banks have continued to increase lending to households and businesses. given the strong economic data and still elevated inflation, i supported the fomc's decision in july to further increase the target range for the federal funds rate. i also expect that additional rate increases will likely be needed to get inflation on a path down to the fomc's 2 percent target. 1 / 2 bis - central bankers'speeches the recent lower inflation reading was positive, but i will be looking for consistent evidence that inflation is on a meaningful path down toward our 2 percent goal as i consider further rate increases and how long the federal funds rate will need to remain at a restrictive level. i will also be watching for signs of slowing in consumer spending and signs that labor market conditions are loosening. it's important to reiterate that monetary policy is not on a preset course. my colleagues and i will make our decisions based on the incoming data and its implications for the economic outlook. we should remain willing to raise the federal funds rate at a future meeting if the incoming data indicate that progress on inflation has stalled. returning inflation to our 2 percent goal is necessary to achieve a sustainably strong labor market and economy. 1 the views expressed here are my own and not necessarily those of my colleagues on the federal open market committee or the board of governors. 2 / 2 bis - central bankers'speeches | the recovery from the crisis has been much less robust than we had hoped. from recent comprehensive revisions of government economic data, we have learned that the recession was even deeper and the recovery weaker than we had previously thought ; indeed, aggregate output in the united states still has not returned to the level that it had attained before the crisis. importantly, economic growth over the past two years has, for the most part, been at rates insufficient to achieve sustained reductions in the unemployment rate, which has recently been fluctuating a bit above 9 percent. the pattern of sluggish economic growth was particularly evident in the first half of this year, with real gross domestic product ( gdp ) estimated to have increased at an annual rate of less than 1 percent, on average, in the first and second quarters. some of this weakness can be attributed to temporary factors, including the strains put on consumer and business budgets by the run - ups earlier this year in the prices of oil and other commodities and the effects of the disaster in japan on global supply chains and production. accordingly, with commodity prices coming off their highs and manufacturers'problems with supply chains well along bis central bankers ’ speeches toward resolution, growth in the second half looks likely to pick up. however, the incoming data suggest that other, more persistent factors also have been holding back the recovery. consequently, as noted in its statement following the august meeting, the federal open market committee ( fomc ) now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the june meeting, with greater downside risks to the economic outlook. one striking aspect of the recovery is the unusual weakness in household spending. after contracting very sharply during the recession, consumer spending expanded moderately through 2010, only to decelerate in the first half of 2011. the temporary factors i mentioned earlier – the rise in commodity prices, which has hurt households ’ purchasing power, and the disruption in manufacturing following the japanese disaster, which reduced auto availability and hence sales – are partial explanations for this deceleration. but households are struggling with other important headwinds as well, including the persistently high level of unemployment, slow gains in wages for those who remain employed, falling house prices, and debt burdens that remain high for many, notwithstanding that households, in the aggregate, have been saving more and borrowing less. even taking into account the many financial pressures they face, households seem exceptionally cautious. indeed, readings on consumer confidence have fallen substantially in recent months | 0.5 |
, the pboc is accountable to the state council and the branches of the pboc are accountable to the headquarters. as mentioned earlier, although hong kong has been subject to a severe ordeal during the financial turmoil, the pboc and other mainland government departments have not interfered in hong kong ’ s monetary affairs. furthermore, our autonomy in the management of hong kong ’ s foreign reserves is an important element in the mutual independence between the two monetary authorities. 13. while maintaining a mutually independent relationship, the two monetary authorities will continue to maintain and strengthen further the existing sound co - operation between the two places. both parties have held several regular and ad hoc discussions about monetary management, crossborder supervision of financial institutions and linkages between payment and settlement systems, and the achievements in these fields have been many. the mutual trust between the hkma and the pboc has contributed to exchanges and co - operation between the two places in relation to monetary affairs. ( c ) financial business between the mainland and hong kong are treated as international financial affairs and are conducted in accordance with the rules and practices of international financial activities. 14. all financial transactions between the two places after the handover have been conducted according to the rules and practices of international financial activities. claims and liabilities between banks and companies from the mainland and those in hong kong are regarded as external claims and liabilities. investment by hong kong companies in the mainland is regarded as foreign investment. when raising funds in hong kong, mainland entities are treated as other international and local market participants. mainland companies listed in hong kong are required to abide by security laws of hong kong and are regulated by the relevant regulatory authorities in hong kong. disputes relating to financial transactions are handled in accordance with international practice. where china ’ s arbitration law and other relevant laws and regulations are applicable according to the terms of a contract, the provisions relating to arbitration involving foreign parties are applied. ( d ) the hksar maintains its existing system of currency issuance and management. the hong kong dollar and the renminbi continue to circulate as legal tender in hong kong and the mainland respectively. the hong kong dollar is treated as a foreign currency in the mainland. likewise, the renminbi is treated as a foreign currency in hong kong. 15. the basic law has provided for the legal status of the hong kong dollar. the renminbi is still not yet freely convertible. however, even if it becomes freely convertible, it will only be one of | eddie yue : keynote address - hong kong fintech week 2024 keynote address by mr eddie yue, chief executive of the hong kong monetary authority, at the hong kong fintech week 2024, hong kong, 28 october 2024. * * * good morning everyone. welcome to the 9th hong kong fintech week, an annual event where vision, inspiration and innovation come together to shape the future of fintech. it's wonderful to welcome so many old and new friends today to discuss this exciting topic. this year's theme is " illuminating new pathways in fintech ". it captures where we are right now - at a critical juncture on our fintech journey. we are seeing an unprecedented acceleration in financial development, fuelled by cutting - edge technologies. having arrived at this point after marking a number of significant milestones along the way, it's perhaps time to take stock and ask ourselves " what's on the horizon for fintech? " what we have learned from innovation and fintech before i delve into that question, let's revisit our overarching vision, which is to nurture a vibrant fintech ecosystem. like instruments in an orchestra, so do individual players in the fintech ecosystem, whether they are agile start - ups or established institutions, each have their own parts to play. but let's be honest, a vibrant fintech ecosystem cannot be built overnight. technology is continuously disrupting everything, including our financial markets. for many of us, embracing change isn't always easy, and sometimes the process of driving innovation may even feel uncomfortable and disorienting. but change is often also a good opportunity to reflect on how we can innovate to better serve the greater good. our fintech 2025 strategy is a powerful testament to our commitment to innovation. over the last few years, we have driven some positive transformations in our fintech ecosystem, and i would like to take the next few minutes to share three lessons we have learned along the way. first, innovation is not an end in itself, but a means to solve real - world problems. whether it's faster payments or better banking access for smes, technology is a means to help transform everyday experience and bring benefits to the real economy. one area we've been focusing on is enhancing cross - border payments. the link between our faster payment system ( fps ) and thailand's promptpay is one example, providing consumers with a seam | 0.5 |
probably played some role in these productivity gains. but probably more important, i suspect, were longer - term, structural changes arising from the boom in capital spending and the revolution in information technology. let me turn to the evidence on this point. technology change and productivity growth bob solow - - the mit economist who won the nobel prize in economics for his work on the theory of economic growth - - once quipped that you can see computers everywhere except in the productivity statistics. a few years ago that situation began to change, and we now have strong evidence that the faster productivity growth our economy has experienced is, in fact, due partly to newer technologies. research by federal reserve board economists steve oliner and dan sichel sheds some light on the sources of this faster productivity growth. the high ( and rising ) levels of business investment raised the amount of capital per worker and thereby boosted productivity. about 1 / 2 percentage point of the increase in productivity growth over the 1995 - 99 period can be attributed to this so - called “ capital deepening, ” most of which reflected greater spending by businesses on computers, software, and communications equipment. another 1 / 2 percentage point of the pickup in productivity growth reflected technological innovations in the actual production of computer hardware and semiconductors as well as better management - - perhaps assisted by these high - tech investments - - of the nation ’ s capital and labor resources. oliner and sichel estimate that the consolidated influences of high - tech investments account for about two - thirds of the acceleration in productivity since 1995. this research supports the view that fundamental changes are under way in our economy. what ’ s so special about this capital? that trend productivity has picked up and that high - tech investments are the source of the acceleration are important facts, but by now they are not new observations. perhaps at this stage it would be useful to explore in greater detail this positive “ shock ” to the ability of our economy to produce goods and services. what is so special about computers and other information technologies that they can have such a strong influence on our economy? let me highlight three special characteristics of high - tech equipment. first, computers and communications equipment depreciate at a very rapid pace. the current best estimate is that computers probably depreciate about 30 percent annually, although that estimate might be low, while other equipment probably depreciates at a rate of less than 15 percent annually. therefore, computers are retired, on average, after three years, and the useful | tale also requires an assessment of the economy ’ s productive potential - both its level and its rate of growth. unfortunately, potential supply cannot be observed directly, and inferring its behavior from variables that can be observed is a daunting task. but the task is essential nonetheless : changes in potential supply have been among the most important influences on the behavior of the economy over the past ten years. i should note that the course of aggregate demand is not independent of the course of potential aggregate supply. both economic theory and empirical evidence suggest that households and businesses make decisions about spending with an eye to future incomes and sales, so that a rosier long - term outlook tends to raise demand today. thus, as the fomc notes frequently in its statements, robust underlying growth in productivity is providing ongoing support to economic activity. nevertheless, owing to the restraints that i spoke of earlier, demand has fallen well short of potential supply during the past several years, as can be seen in the elevated unemployment rate, the depressed rate of capacity utilization, and the decline in inflation. certainly, potential supply appears to have increased at an extraordinary rate in recent years, even compared with the accelerated pace of the late 1990s. between 1973 and 1995, labor productivity in the nonfarm business sector increased at an annual average rate of 1 - 1 / 2 percent ; between 1995 and 2000, productivity climbed 2 - 1 / 2 percent per year ; and since 2000, productivity has jumped more than 4 percent per year on average. understanding the reasons for this surge is critical to judging the likely path of productivity and potential supply going forward. some of the step - up in productivity growth since 2000 probably reflects cyclical influences or factors that may offer only one - time improvements in the production process. for example, businesses ’ ability to find efficiencies on such a large scale in recent years probably stems in part from learning how to take better advantage of the large amount of capital equipment and new technology that they acquired in the late 1990s. moreover, in the past few years businesses have displayed unusual caution in their decisions not only about investment in capital goods but also about hiring. as firms have focused on controlling costs in an uncertain environment, they have naturally tried to avoid taking on new workers and have tried instead to extract the greatest possible output from their existing workforces. to the extent that these processes have revealed inefficiencies in production, they have raised the level of productivity on a permanent basis ; however, they are unlikely | 0.5 |
had joined the project starting from real income levels below those of the main economies of the area. however, this process went hand in hand with the accumulation of imbalances at the domestic and european levels. the deep integration of european capital markets – one of the most remarkable features of the monetary union – resulted in a large availability of financing to those economies whose prospects were perceived as brighter. in this process, spain has become a sort of case study. in fact, the underlying fundamentals of the spanish economy were not as solid as they seemed : product and labour markets suffered from structural rigidities and the expansionary cycle was underpinned by an intense increase in credit and an overexpansion in housing, even taking into account the increasing demand generated by immigration and tourism. between 1999 and 2007, the weight of housing investment in spanish gdp doubled to above 12 %, one of the highest on record among advanced economies. to a significant extent the financing of this housing boom came from core european countries, intermediated by their financial institutions, and resulted in a rapidly increasing external indebtedness of our private sector. bis central bankers ’ speeches the corresponding widening current account deficit was not only a signal of robust internal demand ; it also reflected a gradual, but substantial, loss of competitiveness. the large increase in employment – 5, 5 millions between 1999 and 2007 ( a 37 % increase ) many of them immigrants – generated in the construction and other labour intensive sectors, interacted with the dysfunctions of the labour market, leading to very low productivity gains and increases in relative labour costs, also in the more competitive sectors of our economy. additionally, the housing boom and the economic expansion gave rise to an extraordinary increase in public revenues, providing for a significant increase in government expenditure. in fact, public accounts kept improving, so that fiscal surpluses, of around 2 % of gdp, were achieved in the years previous to the crisis. but the temporary nature of those revenues and the underlying fragility of the fiscal situation became evident when the housing sector started to adjust. as a result of this adjustment and the depth of the crisis, the surpluses have turned into large and persistent deficits, reaching – 11 % in 2009, a shift of more than 13 percentage points of gdp in just two years. could this build - up of imbalances have been avoided or mitigated? with hindsight, no doubt it could, but the economic and policy incentives were not there at the right time. | miguel fernandez ordonez : financial integration and stability in europe opening remarks by mr miguel fernandez ordonez, governor of the bank of spain, at the conference on " financial integration and stability in europe ", organised by the bank of spain, the european central bank and the center for financial studies, madrid, 30 november 2006. * * * good morning ladies and gentleman. first of all, allow me to welcome you. we are really delighted to host this conference at the banco de espana in madrid. some of you are perhaps too young to remember, but it was here in madrid, in 1989, that the european council decided to embark on the first stage of economic and monetary union, as envisaged in the delors report which was the catalyst for the emu process. i would like to start my intervention today with a quote from the delors report ; a quote that refers to financial integration. simplifying, it said the following : the objective of a single financial area, in which all monetary and financial instruments circulate freely, and banking, securities and insurance services are offered uniformly throughout the area, would be fully implemented through the approval and enforcement of the necessary community directives. you can appreciate the appealing simplicity of its definition of an integrated financial market : one where all monetary and financial instruments circulate freely, and where banking, securities and insurance services are offered uniformly. nevertheless, the word “ uniform ” might sound a little strange to us today, when we prefer to use softer terms such as “ convergence ”. but of course mr delors was not thinking about uniformity of the services themselves, but rather about the need to ensure that they could be offered and accessed on an equal basis across the eu. but what it is remarkable is that mr delors was referring to the steps that should be taken in stage one of emu. he expected the integrated financial market to be in place at the beginning of the emu process, before going to the subsequent stages. almost seventeen years have passed since stage one was launched. and we entered stage three almost eight years ago. emu has proved to be a successful reality, but the single financial area as defined in the delors report has not yet been fully achieved. of course, there has been impressive progress in some areas, for instance, the european money markets. and there has been good progress in others, like corporate bond markets and government bond markets. in some fields, however, we are a long way from | 0.5 |
cannot be measured only by numbers, such as gdp and productivity. also from such a perspective, unless smes get vitalized, japan will not be vitalized. the bank will steadily support firms ’ activities through taking appropriate policy action if necessary in the powerful monetary easing stance. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches | and federal reserve board, statistical release z. 1,'financial accounts of the united states.'figure 2 banks'cet1 risk - based capital ratio ratio q4 quarterly u. s. g - sibs large non – g - sibs other bhcs note : the data are seasonally adjusted by federal reserve board staff. the sample consists of domestic bank holding companies ( bhcs ) and intermediate holding companies ( ihcs ) with a substantial u. s. commercial banking presence. u. s. g - sibs are u. s. global systemically important banks. large non - g - sibs are bhcs and ihcs with greater than $ 100 billion in total assets that are not g - sibs. cet1 stands for common equity tier 1 capital, which is the numerator of the cet1 ratio. before 2014 : q1 ( advanced - approaches bhcs ) or before 2015 : q1 ( non - advanced - approaches bhcs ), the numerator of the cet1 ratio is approximated by tier 1 common capital. the denominator is risk - weighted assets. the shaded bars indicate periods of business recession as defined by the national bureau of economic research : march 2001 - november 2001, december 2007 - june 2009, and february 2020 - april 2020. source : federal reserve board, form fr y - 9c, consolidated financial statements for holding companies. may 07, 2024 figure 3 uninsured deposits percent of assets quarterly q4 u. s. g - sibs large non - gsibs regional note : uninsured deposits are reported by banks with total assets above $ 1 billion. for smaller banks, uninsured deposits are estimated based on the amount in large deposit accounts, excluding the first $ 250, 000 in each of those accounts. u. s. g - sibs are u. s. global systemically important banks. large non - g - sibs are bank holding companies and intermediate holding companies with greater than $ 100 billion in total assets that are not g - sibs. regional are banks with between $ 10 billion and $ 100 billion in total assets. source : federal reserve board staff calculations based on federal reserve board, form fr y - 9c, consolidated financial statements for holding companies and federal financial institutions examination council, call report form ffiec 031, consolidated reports of condition and income ( call report ). figure 4 commercial real estate loans | 0 |
the lone star state in 2013 : bis central bankers ’ speeches in terms of number of jobs created, the leading sectors in texas last year were trade, transportation and utilities ( accounting for 73, 700 ), professional and business services ( 44, 600 ), leisure and hospitality ( 42, 300 ), educational and health services ( 33, 500 ), construction ( 26, 800 ), government ( 19, 700 ) and financial activities ( 18, 100 ). this year through july, texas employment has already increased by 238, 200 jobs, a 3. 6 percent annualized growth pace. over the 12 months ending this july, texas added just shy of 400, 000 jobs – more jobs than any other state. clearly, texas employment is growing at an impressive clip. another misperception is that all of these jobs created in texas are low - paying jobs. wrong. we have been creating jobs in every income quartile, unlike the rest of the country. this graph, recently updated, covers the 13 - year period from 2000 to 2013. it charts job creation by wage quartile in texas and in the nation ex - texas. as you can see, texas has had healthy growth in every income quartile, while, without texas, the united states has actually seen job destruction, on net, in the two middle - income quartiles. ( this fact deeply concerns me because middle - income groups are the backbone of america. ) bis central bankers ’ speeches u. s. economy is on the mend the reality, mr. ambassador, is that texas is part of the united states and, all told, our economy is on the mend from the frightful shock of the financial and economic implosion of 2007 – 09. this is the dashboard that we at the dallas fed use to track our national economy : bis central bankers ’ speeches the federal reserve is mandated by the laws of the united states to manage monetary policy to achieve full employment while maintaining price stability and “ moderate interest rates ” over time. 1 a “ hindu goddess ” as you can see from this graphic, unemployment has declined to 6. 2 percent, and the dynamics of the labor market are improving. at the federal open market committee, where we set monetary policy for the nation, we have been working to better understand these employment dynamics. this is no easy task. bill gross, one of our country ’ s preeminent bond managers, made a rather pungent comment about our efforts. | hire new workers or build a new plant until i have been shown what will come out of this agreement. ” bis central bankers ’ speeches moreover, you might now say to yourself, “ i understand from the federal reserve that i don ’ t have to worry about the cost of borrowing for another two years. given that i don ’ t know how i am going to be hit by whatever new initiatives the congress will come up with, but i do know that credit will remain cheap through the next election, what incentive do i have to invest and expand now? why shouldn ’ t i wait until the sky is clear? ” based on past behavior of fiscal policy makers, businesses understandably regard the debt ceiling agreement and the political outcome of negotiations between congress and the president with the suspicion akin to how the british humorist p. g. wodehouse regarded his aunts : “ it is no use telling me there are bad aunts and good aunts, ” he wrote. “ at the core they are all alike. sooner or later, out pops the cloven hoof. ” 2 it will be devilishly difficult for businesses to commit to adding significantly to their head count or to meaningful capital expansion in the united states until clarity is achieved on the particulars of how congress will bend the curve of deficit and debt expansion and the “ cloven hooves ” are revealed. no amount of monetary accommodation can substitute for that needed clarity. in fact, it can only make it worse if business comes to suspect that the central bank is laying the groundwork for eventually inflating our way out of our fiscal predicament rather than staying above the political fray – thus creating another tranche of uncertainty. in the interest of full disclosure, i should add that i was also concerned that just by tweaking the language the way the committee did, our action might be interpreted as encouraging the view that there is an fomc so - called “ bernanke put ” that would be too easily activated in response to a reversal in the financial markets. for those of you unfamiliar with the expression “ bernanke put, ” or more generally, a “ central bank put, ” this term refers to the concept that a central bank will allow the stock market to rise significantly without tightening monetary policy, but will ease monetary policy whenever there is a stock market “ correction. ” given the extent of the drop in the stock market leading up to and following standard & poor ’ s downgrade of u. s. | 0.5 |
statement surrounding this and earlier monetary policy decisions are available on the ecb website. [ 6 ] see ahn et al., 2017, kaplan et al., 2018, auclert, 2019 and kopiec, 2019 for examples of implications for policy effectiveness. slacalek et al., ( 2020 ) also discuss the sensitivity of household exposure to interest rate changes and labour income fluctuations on the transmission of monetary policy. [ 7 ] arrigoni s., boyd l., and mcindoe - calder t., ( 2022 ). household economic resilience. quarterly bulletin 4 – signed article. central bank of ireland. [ 8 ] hfcs data collected by the central statistics office in the second half of 2020. ©2022 central bank of ireland | kazumasa iwata : the conduct of monetary policy under the new framework excerpts of a speech by mr kazumasa iwata, deputy governor of the bank of japan, at a meeting with business leaders, akita, 8 june 2006. * * * the conduct of monetary policy the bank of japan terminated the quantitative easing policy in early march 2006, and is in the process of reducing the outstanding balance of current accounts held by financial institutions at the bank. the outstanding balance, which was at around 30 to 35 trillion yen at the time of the termination, is currently at around 12 trillion yen. some market participants take the view that the pace of reduction may be too fast, and speculate that this may reflect the bank's intention to raise the target for interest rates at an early date. market participants expect the bank to raise the target for interest rates at some point during fiscal 2006, and this expectation has been factored into current market rates. the bank, however, noted when the quantitative easing policy was terminated that it would take a few months before the outstanding balance declined to a level near the reserve requirement. the bank's money market operations have been in line with this policy statement, and the bank has not been accelerating the pace of reduction in order to raise the target for interest rates at an early date. it has been some time since money market transactions were conducted under normal market conditions, so that some rates have risen due to trading friction. nevertheless, on the whole the bank's reduction of the outstanding balance has been carried out in a stable manner. new framework of monetary policy and policy implementation the conduct of monetary policy is now based on the new framework announced in march this year and on the findings from examining the risks affecting the economic outlook that are described in the outlook for economic activity and prices ( hereafter the outlook report ). under the quantitative easing policy, monetary policy was conducted with an emphasis on the underlying trend of the core consumer price index ( cpi ). to be more specific, with the overnight call rate at virtually zero percent, the bank made a commitment to maintain the quantitative easing policy until the year - on - year rate of change in the core cpi registered zero percent or higher on a sustainable basis in order to affect market expectations of the future path of interest rates. 1 this effect is referred to as the policy duration effect. the effectiveness of the quantitative easing policy has been the focus of much debate and criticism. i believe, however, | 0 |
bank, at the 5th sa tomorrow investor conference, new york, 9 november 2017. see especially p. 5 : “ bringing inflation to the midpoint and ultimately anchoring expectations there, instead of at 6 %, is one of the sarb ’ s most important medium - term strategic goals. ” flagship forecasting model, the quarterly projection model, which included an explicit 4. 5 % objective and projected a path for the policy rate that would deliver on that goal. the new strategy worked. over the next few years, we achieved lower inflation, and we also secured broad stakeholder understanding of our revised objective. between 2017 and 2019, we recorded many more mentions of our 4. 5 % objective, for instance from experts and journalists, in analyst reports and news articles. 18 no longer did anyone have to write scholarly papers to estimate our implicit target19 ; we communicated exactly what it was. and inflation slowed. in 2016, annual inflation was 6. 3 %. that fell to 5. 3 % in 2017, 4. 6 % in 2018 and 4. 1 % in 2019. by the time covid - 19 hit, the latest monthly inflation print we had in hand was 4. 5 %, exactly. 20 inflation expectations also declined significantly, from near the top of the target range to around the middle. for instance, at the start of 2017, two - year ahead survey expectations were at 6 %. 21 at the beginning of 2020, that measure was down to 4. 8 %, and by the end of the year it was 4. 5 %. we were clear that we wanted inflation at 4. 5 % − and we delivered. this experience demonstrated some lessons that remain important today. these are lessons about the costs of lower inflation, about structural factors like high administered prices, and about the role of monetary policy in shaping trend inflation. i ’ ll start with the influence of monetary policy over inflation. if you go and ask people what causes inflation, you often get answers about food or oil prices, and other such supply - side factors. yet all countries face these shocks. nonetheless, different countries have different inflation rates over time, sometimes very different rates. it is easy to understand moves in inflation caused by something like the petrol price. but over longer periods, such as 10 years, these factors mainly create volatility, https : / / www. resbank. co. za / en / home / publications / publication - detail - pages / speeches / speeches - by | is difficult to test counterfactuals. we cannot go back in time and conduct an experiment where we kept on aiming for the top of our target range rather than the middle. we do, however, have a study where two economists constructed a counterfactual model. 25 their work compares actual outcomes with how the economy was likely to proceed without the 4. 5 % change. the results make for interesting reading. perhaps the most striking is, they find no reduction in aggregate demand during the move to 4. 5 %. growth in gross domestic product ( gdp ) is in line with the counterfactual. unemployment is generally unaffected. credit extension is higher. their conclusion is that there was little or no cost to getting inflation to 4. 5 %. and the explanation they provide is that the sarb ’ s commitment to 4. 5 % was heard and understood. inflation was not forced down by a recession ; it was managed lower by clear and credible communication. this conclusion lines up with another study, by sarb economists, of sacrifice ratios in south africa. 26 a sacrifice ratio is the cost of reducing inflation, measured as the amount of gdp growth lost for each percentage point of lower inflation. for the period where we moved inflation to 4. 5 %, this study finds a negative sacrifice ratio, which means there was no cost. the authors also find that disinflation costs have generally been low in south africa. this is, once again, contrary to the popular intuition that lower inflation is achieved by slower growth and higher unemployment. and once again, the key seems to be the sarb ’ s credibility and communication. if the public understands and believes the central bank ’ s objectives, disinflation can be achieved with little or no pain. ladies and gentlemen, let me conclude with a summary of the lessons learnt, which should be informing our current conversations. e pirozhkova and n viegi, ‘ change of the sarb ’ s preferred inflation target in 2017 : the conditional forecast story ’, sarb occasional bulletin of economic notes no. 2401, april 2024. https : / / www. resbank. co. za / content / dam / sarb / publications / occasional - bulletin - of - economicnotes / 2024 / change - of - the - sarbs - preferred - inflation - target - in - 2017 - the - conditional - forecast - story - april2024 - 01. pdf c loewald, k ma | 1 |
the reserves held by banks and thus in the narrowest definition of the money supply, the monetary base. 1 however, banks are choosing to leave the great bulk of their excess reserves idle, in most cases on deposit with the fed. consequently, the rates of growth of broader monetary aggregates, such as m1 and m2, have been much lower than that of the monetary base. 2 at this point, with global economic activity weak and commodity prices at low levels, we see little risk of unacceptably high inflation in the near term ; indeed, we expect inflation to be quite low for some time. however, at some point, when credit markets and the economy have begun to recover, the federal reserve will have to moderate growth in the money supply and begin to raise the federal funds rate. to reduce policy accommodation, the fed will have to unwind some of its credit - easing programs and allow its balance sheet to shrink. to some extent, this unwinding will happen automatically, as improvements in credit markets should reduce the need to use fed facilities. indeed, where possible, we have tried to set lending rates and other terms at levels that are likely to be increasingly unattractive to borrowers as financial conditions normalize. in addition, some programs – those authorized under the federal reserve's socalled 13 ( 3 ) authority, which requires a finding that conditions in financial markets are " unusual and exigent " – will, by law, have to be phased out once credit market conditions substantially normalize. however, the principal factor determining the timing and pace of that process will be the federal reserve's assessment of the condition of credit markets and the prospects for the economy. a significant shrinking of the balance sheet can be accomplished relatively quickly, as a substantial portion of the assets that the federal reserve holds – including loans to financial institutions, temporary central bank liquidity swaps, and purchases of commercial paper – are short - term in nature and can simply be allowed to run off as the various programs and facilities are scaled back or shut down. as the size of the balance sheet and the quantity of excess reserves in the system decline, the federal reserve will be able to return to its traditional means of making monetary policy – namely, by setting a target for the federal funds rate. importantly, the management of the federal reserve's balance sheet and the conduct of monetary policy in the future will be made easier by the recent congressional action to give the fed the authority to pay interest | each other. a ccp faces market or credit risk only in the event that one of its members defaults and its required initial margin or other pre - funded financial resources are insufficient to cover any adverse price swings that occur during the period between the time of default and the time that the ccp is able to liquidate the defaulting party ’ s positions. however, like most other financial intermediaries, ccps do face liquidity risks. their business model is based on timely payments and the ability to quickly convert either the underlying assets being cleared or non - cash collateral into cash. for this reason, ccps should carefully consider liquidity when launching new products and only offer clearing of products that can be sold quickly, even in times of stress. liquidity problems can occur in central clearing even if all counterparties have the financial resources to meet their obligations, if they are unable to convert those resources into cash quickly enough. the amount of liquidity risk that ccps face can sometimes dwarf the amount of credit or market risk they face. this is particularly true for the clearing of cash securities such as treasuries. in that case, the securities being cleared are extremely safe and likely to rise in value in times of stress. but in contrast to most cleared derivatives, the cash payments involved are very large because counterparties exchange cash for the delivery of the security on a gross basis. i will look at these risks from two perspectives, first in terms of the payments that ccps must make, and then in terms of the payments they expect to receive. payment flows from ccps in the case of a member ’ s default, a ccp must be equipped to make the cash payments owed to non - defaulting counterparties when due. this requirement can be met as long as there is sufficient margin, mutualized resources such as the guarantee fund, or the ccp ’ s own resources held in cash and in the required currency. but if those funds are held in securities, then the ccp will need to convert them to cash, either by entering into a repurchase agreement, or using them as collateral to draw on a line of credit. and if the ccp holds either cash or securities denominated in a currency different from the one in which payment must be made, it will need to either engage in a spot fx transaction or in an fx swap. principle seven of the pfmi addresses these liquidity risks, calling for all ccps to meet a “ cover | 0.5 |
average. 20 the earlier liberalisation of capital flows and easing of restrictions on foreign investment played an important role in facilitating the rise in investment in the 1990s. given new zealand ’ s historically low savings rate, it seems unlikely that the surge in investment could have been funded from domestic sources. see brook, collins and smith ( 1998 ). 21 fidora, schmitz and tcheng ( 2017 ) examined 138 episodes of sizeable nfl reductions across advanced and emerging economies to identify the factors underlying those reductions that were sustained over the medium term. the authors conclude that sustained reduction in nfl is more likely for advanced economies when a current account surplus and strong real gdp growth are experienced. 22 fiscal strategy report, published 25 may 2017. the government intends to be within the 10 - 15 percent of gdp band by 2025. 23 labour and greens party budget responsibility rules in government after the 2017 election, accessed at http : / / www. labour. org. nz / budgetresponsibility. ref # 7076865 v2. 1 the business sector has been providing a small boost to the current account in recent years mostly through an increase in saving as a share of gdp. business investment relative to gdp has remained broadly stable. while this dynamic has contributed to the narrowing of new zealand ’ s current account deficit, it may not necessarily be a desirable feature over the longer term. lower business investment as a share of the economy would likely lead to a deterioration in the capital stock and lower growth in productivity. over the long term, such a development would lower potential gdp growth and could result in a higher nfl - gdp ratio as actual gdp growth slowed. a key source of risk surrounding the outlook for new zealand ’ s nfl – and the economy and financial system more widely – is the saving and investment behaviour of households. real household consumption has been less responsive to housing wealth since the mid - 2000s, and household consumption was weaker than the bank anticipated in recent years, particularly on a per capita basis. 24 however, household spending has been much stronger in the past few quarters, and recent downwards revisions to household saving estimates25 have led to a widening of the household sector ’ s saving - investment gap ( as seen in figure 10 ). much of the investment undertaken by the household sector is in the form of new house builds and renovations to existing homes. 26 if the housing demands associated with population pressure and existing shortages cannot be met by increased household sector or domestic saving more broadly, it will be reflected in | , for example, compliance with data protection laws and regulations. the assessment of whether to involve cloud services as part of preparedness solutions should probably be done on a case - by - case basis for the services and scenarios. the usefulness of cloud data may also depend on whether the data can be utilised for providing services to users. finding a balance between preparedness based on regulation and voluntary arrangements is also important. on the one hand, regulation enables a level playing field for all parties. on the other hand, regulation might be seen only as an enforcing factor that could hinder voluntary close cooperation and preparedness solutions in the market. this may apply especially to potential common or uniform preparedness solutions in the nordic countries. finally, let me conclude my remarks by referring to cbdcs as a potential future way to increase the resilience of our retail payment landscape. the ecb governing council should decide next month on moving to the next phase of the preparations for a digital euro. if we are to introduce a new retail payment method in europe, we need to design it so that it truly brings us new rails that are operationally separated from existing ones. moreover, i believe it is necessary to take resilience issues on board right from the beginning of the project. with careful planning, a digital euro could become a key feature of a secure, resilient and efficient european retail payment landscape. it could also become a major part of our preparedness in the future. thank you. 6 / 6 bis - central bankers'speeches | 0 |
more generally the risk of erosion in the value of the asset. a smooth functioning of the financial system requires that this problem is adequately addressed. 5. derivatives play an important role in addressing the risk inherent in financial transactions. a derivative has traditionally been defined as a contract whose value derives from and is dependent on the value of an underlying asset, such as, a commodity, currency, or security. the concepts of various derivatives have been known since antiquity – the oftcited anecdote of the sixth century bc philosopher thales buying options on olive pressing mills is too well known to recount here. various forms of derivatives – mostly forwards and futures – have traded off and on in the seventeenth and eighteenth centuries, for example, forwards on tulips and futures in the yodoya rice market in japan. the major milestones in the history of derivatives are the establishment of the chicago board of trade ( cbot ) ( 1848 ), establishment of the chicago produce exchange ( 1874 ), which was converted to chicago mercantile exchange ( cme ) ( 1919 ) and the formation of futures clearing houses ( 1925 ). i may mention in passing that notwithstanding the increasing activity in the commodities derivatives markets, there were always apprehensions about the impact of derivatives trading on the cash market which led to frequent bans on commodity derivatives. 6. the history of derivatives on financial securities is rather short. following the breakdown of the bretton - woods, which led to floating exchange rates, the cme introduced the first currency futures in 1972. in 1975 cbot created the first interest rate futures contract to which cme responded with treasury bill futures contract in 1975. in 1977, cbot created the first treasury bond futures contract. in 1982, kansas city board of trade launched the first stock index futures followed by the cgot ’ s futures contract on s & p 500 index in the same year. in 1983, the chicago board of exchange ( cboe ) introduced an option on an index of stocks. 7. during the 1990 ’ s, there was huge outcries over a series of debacles over derivative trading with market participants reporting large losses. the cases of proctor & gamble ( swaps ), showa shell ( forwards ) metallgeselschaft ( futures ), allied irish bank, barrings bank ( options ) & orange country ( swaps ) have become standard case studies in the academic curriculum. the discourse that followed sometimes blamed the products and often the entities trading these products. the markets continued | that without this moral hazard behaviour induced by the harmonisation of the dgs rules the impacts on the system would not have been so pronounced. or take another example. the regulatory debate on financial benchmarks in the world ( and within the eu ) influences sometimes adversely the willingness of banks to contribute to the benchmarks also in the markets where no improper behaviour of contributors has been proven or even detected so far. so it is great to harmonise and to coordinate. but you always have to bear in mind that you should not harmonise and coordinate towards rules that are riskier than the previous uncoordinated rules were on average. the third constraint is the one claudio borio of the bis calls the “ time inconsistency of financial stability policies ”. he says : “ policies that are too timid in leaning against financial booms but that are then too aggressive and persistent in leaning against financial busts may end up leaving the authorities with no further ammunition over successive financial and business cycles ” 1 yes, this is the case in many countries, including the czech republic now we have reached the zero lower bound. so, to put it more bluntly : the problem also might be that we central bankers are sometimes more procyclical and less symmetric in our thinking than we should be. and the fourth constraint is our own disbelief in the power of monetary policy. our experience – even in a small open economy – is that autonomous monetary policy can be very much of help, if not key, in stabilising the general macro - environment compared to the situation where monetary policy is just being passively accepted from abroad. and i say that despite the fact that inflation stabilisation in the current circumstances is a necessary but not sufficient condition for long - term financial stability. as the debate today shows, what this sufficient condition for long - term financial stability is, is not entirely clear and remains to be determined. but i would tend to believe that if there is any way forward in the area of financial stability, monetary policy will have to play an absolutely key role – a bigger role than many now think or admit. thank you. borio, c. : monetary policy and financial stability : what role in prevention and recovery?, bis working paper no. 440, january 2014 bis central bankers ’ speeches | 0 |
emerging economies. finally, i ’ ll explore some of the policy implications. 2. key concepts in global liquidity the landau report of the cgfs has pointed out that global liquidity has two separate, but interdependent, components. the first component can be labelled as “ official liquidity ”, and can be defined as “ the funding that is unconditionally available to settle claims through monetary authorities ” 2. official liquidity can be generated through various instruments. central banks can create it in their domestic currency through regular monetary operations or see borio and zhu, 2008, “ capital regulation, risk - taking and monetary policy : a missing link in the transmission mechanism? ”, bis wp no. 268. cgfs paper no 45 : “ global liquidity – concept, measurement and policy implications ”, basel, 2011. bis central bankers ’ speeches through emergency liquidity assistance. in addition, authorities can provide official liquidity in foreign currency by selling foreign exchange reserves and through swap lines between central banks. the other component is private ( or private sector ) liquidity. private liquidity is created to a large degree through cross - border operations of banks and other financial institutions, and increasingly within the shadow banking system. in normal times, private liquidity dominates official liquidity. but private liquidity is highly procyclical and highly endogenous to the conditions that prevail in the global financial system. the inherent endogeneity of private liquidity means that it can easily evaporate in times of financial stress. the pro - cyclicality is documented via the strong interaction of private liquidity and the global risk appetite of financial institutions. indeed, the global risk appetite is one of the main determinants of the multiplier that links levels of overall liquidity to levels of official liquidity. consequently, while only central banks can create official liquidity ( the imf can only mobilise it and reallocate it across countries ), for global liquidity cycles to emerge there is no need for new injections of official liquidity. what is needed is that private or official investors reallocate existing liquidity to other market segments. and when viewed in this light, the true driver of liquidity is the underlying set of factors that allows this portfolio reallocation to take place. let me explain. 3. relationship between liquidity and recent crises a glance at the history of global capital flows over the last 20 years suggests that the | ##d economic climate, and upswings in asset prices to unsustainable levels. this resulted in the “ great recession ” and the corresponding fall in global economic activity. the ensuing sovereign debt crisis in the euro area can be seen – at least to some extent – through the lens of global liquidity and its cycles. in an environment of abundant liquidity and high risk appetite, sovereign yields in the euro area converged at very low levels. government bond spreads did not reflect differences in macroeconomic fundamentals. this distorted incentives, both in the public and the private sectors. sovereigns over - borrowed and put off necessary reforms. in some member states it was the private sector that took on excessive debt, fuelling unsustainable real estate bubbles which, when they burst, pulled the banking system down and then affected public finances. in other words, abundant liquidity undermined market discipline, which could otherwise have become an important pillar of macroeconomic and fiscal discipline in the euro area. 4. shortage of safe assets and global liquidity there is also a striking link between the global liquidity cycle and the shortage of safe assets in the global economy. let me elaborate. financial crises, but also economic downturns in general, trigger a rise in global risk aversion. this in turn induces a flight to safety by global investors, resulting in an excess global demand for safe assets. as an illustration, think of the current nominal yield on some short - term sovereign debt, which is close to zero and has even turned negative in some constituencies. the consequent shortage of safe assets globally, however, is a significant impediment to the functioning of the global financial system. how can we, as policy - makers, address this recurrent problem? first, emerging market economies should develop an efficient financial system and sound legal, regulatory and macroeconomic policy frameworks in order to create safe, globally accepted financial assets. second, the euro area needs to regain its role as a global supplier of safe assets. some investors have doubted whether the sovereign debt issued by some euro area countries can be considered as risk - free. however, by restoring fiscal discipline, euro area sovereign debt will be viewed once again as risk - free. we have made significant progress in the last couple of years, with the establishment of the efsf, the launching of the esm, the approval of the six - pack legislation and of the fiscal compact. third, the unused resources of the international | 1 |
, “ a positive theory of monetary policy in a natural rate model ”, journal of political economy 91, 589 – 610. dagens industri ( 2011 ), “ nu okar pressen pa riksbanken – bubbelfragan splittrar cheferna ” ( “ pressure on the riksbank increases – the bubble issue divides the board ” ), 2011 - 02 - 04. eklund, klas, and lars e. o. svensson ( 2010 ), “ duellen : rantehojning – nu eller avvakta? ” ( “ the duel : rate increase – now or later? ” ), stock magazine, 3 / 2010, unga aktiesparare, september 2010. financial times ( 2011a ), “ lex : nordea ”, 2011 - 02 - 07. financial times ( 2011b ), “ lex : stockholm syndrome ”, 2011 - 01 - 31. ministery of finance ( 2011 ), “ ny prognos visar pa hogre tillvaxt och lagre arbetsloshet ” ( “ new forecast shows higher growth and lower unemployment ” ), press release 2011 - 03 - 03. forslund, anders ( 2008 ), “ den svenska jamviktsarbetslosheten – en oversikt ” ( “ the swedish equilibrium unemployment rate – an overview ” ), report to the swedish fiscal policy council, 2008 / 4, www. finanspolitiskaradet. se. frisen, hakan ( 2010 ), “ ingves andrar den penningpolitiska spelplanen ” ( “ ingves changes the monetary policy game ” ), veckans tanke, 2010 - 05 - 27, seb. giavazzi, francesco, and frederic s. mishkin ( 2006 ), an evaluation of swedish monetary policy between 1995 and 2005, riksdagstryckeriet 2006 / 07 : rfr1. kydland, finn e., and eward c. prescott ( 1977 ), “ rules rather than discretion : the inconsistency of optimal plans ”, journal of political economy 85, 473 – 491. bis central bankers ’ speeches mishkin, frederic s. ( 2010 ), “ monetary policy strategy : lessons from the crisis ” paper presented at the ecb central banking conference, frankfurt, 2010 - 11 - 18 – 2010 - 11 - 19. qvi | as 0. 4 percentage points higher per year during 2003 - 2008 if the government ’ s target to halve sick leave is achieved. this means that the number of hours worked will increase by 0. 8 instead of 0. 4 per cent a year. public finances would then be improved by sek 45 billion, which could be used for reforms - or for repayments on the central government debt and thus create increased scope for future borrowing. if immigrants participated in the working force to the same extent as swedes, it would provide a further contribution to the number of hours worked of 0. 1 percentage points a year. monetary policy and wage formation the labour supply thus comprises a problem both in the long term and closer to hand. if this cannot be resolved through structural measures that increase the labour supply - e. g. through less sick leave being taken, increased working hours per employee or by labour force immigration - the riksbank may be forced to subdue demand in the economy by raising the interest rate. the labour market ’ s ability to manage wage formation will be tested as early as next year, when actual growth is supposed to be in line with potential growth. of course, we do not believe that resource utilisation will put any great pressure on prices and wages so soon, but as economic activity strengthens, greater demands will be made on social partners to show restraint. the municipal workers ’ union ’ s demand for relative wage changes could also entail a problem in terms of potential contagion effects. wage costs are expected to increase this year by just over 4. 5 per cent, which is higher than the swedish economy can manage in a longer perspective. if the social partners do not succeed in accommodating the municipal workers ’ union ’ s wage demands, there is a risk of increased inflation. another challenge for wage formation is the government ’ s employment target, which entails 80 per cent of the working population having a job. achieving this requires reforms to increase the labour supply. moderate wage demands could hasten the adaptation to the higher rate of employment. the explanation for this is that in a small, open economy like sweden, the profit share of the value added is determined by international conditions and the prevailing production technology. in the short term, the labour market situation and negotiating strength can affect the relative profit shares and wage shares in the economy, but in the long term a high rate of wage increase will only lead to lower employment and production without affecting real wages and profit | 0.5 |
innovation fosters faster dissemination of information and its more rapid incorporation into financial market prices. this is of course particularly true for monetary policy decisions and can therefore increase the effectiveness of monetary policy via the interest rate channel. second, financial innovation contributes to an increased holding of financial assets by lowering transaction costs and facilitating arbitrage, hedging, funding and investment strategies. third, financial innovation often relies on greater leverage, increasing the effect of interest rate moves by the central bank. however, in times of combination of financial stress and adverse supply shocks, such as we are now facing, the risk of destabilising highly - leveraged financial institutions of potential systemic importance could complicate the task of the monetary policymaker wishing to raise the policy rate in a timely manner so as to prevent inflationary risks from materialising. besides, when conditions are less benign than usual, the transmission process along the interest rate curve may become non - linear : a striking feature of this summer ’ s events was the surge in short - term money market spreads in the euro area as well as in the united states and the united kingdom. wider and variable spreads between term funding rates, of which many bank loans are priced off, and policy rates are worrying in as much as they may reduce the efficiency of interest rate moves when needed. that said, as this situation stems from a sharp reduction in term liquidity due to a general fear of withdrawal among providers of liquidity, e. g. money market funds, its unwinding requires an appropriate provision of central bank liquidity to the short - term interbank markets but not necessarily a change in the policy stance. in contrast to the enhancement of the interest rate channel, at least in normal times, financial innovation is traditionally expected to have weakened significantly the so - called bank lending channel. financial innovation gives firms broader access to securities markets and, as such, makes them less dependent on bank funding. similarly, banks may be more able to issue debt securities and less dependent on the constraint of funding themselves with secured deposits. moreover, securitisation by banks was expected to alleviate their liquidity constraints and thus to further weaken the credit channel. indeed, previous research has generally found that banks have used credit market innovations such as loan sales and securitisation to diversify credit risk exposures and increase lending. however, recent research has highlighted the potential for bank capital regulation and market discipline to shape a bank capital channel of monetary transmission. viewed as an extension of the | innovation and interdependencies, but also that of climate threats and inequality, and all with a worrying weakening, the world over, in public governance. a low price of time is as much a threat as an opportunity : a threat if we give in, in the short term, to the ease of abundant liquidity and allow financial instability to grow ; an opportunity if we use low rates collectively to invest in the future, from the ecological transition to education. you can count on our determination to act on the monetary side. but the battle is broader – it is our political challenge, collectively, as europeans – and it is longer term : it will be the challenge of your generation. i hope each and every one of you can contribute successfully to the fight. thank you for your attention. references : i i would like to thank chahinez benmissi, jean boissinot, adrian penalver, berengere rudelle and giulia sestieri for their help in preparing this speech. ii for a general discussion of the topic, see garnier o., lhuissier s., and penalver a., “ taux d ’ interet bas, quelle responsabilite de la politique monetaire? “, risques no. 120, december 2019. iii wicksell k., interest and prices, 1898. iv rachel l. ; smith t., “ are low real interest rates here to stay? ”, international journal of central banking, september 2017. v excluding energy and food. vi see notably : panel on “ behavioral economics and economic policy in the past and future ” federal reserve bank of boston conference : “ implications of behavioral economics for economic policy ” boston, massachusetts, speech by janet l. yellen, president and ceo, federal reserve bank of san francisco. https : / / www. frbsf. org / our - district / files / 0928. pdf or duca i ; kenny g. ; reuter a., “ how do inflation expectations impact consumer behaviour? ”, ecb paper, august 2016. vii international monetary fund, word economic and market developments, gita gopinath, october 2019. viii see notably rostagno et al. ( 2019 ), a tale of two decades : the ecb ’ s monetary policy at 20 ; hartmann and smets ( 2018 ). ix de pastor r., “ smes and vses in france | 0.5 |
resolution powers were needed for the majority of ccps to generate sufficient resources to cover non - default losses in certain scenarios. see cpmi, fsb and iosco ( 2022 ), “ central counterparty financial resources for recovery and resolution ”, march. 11. bank for international settlements ’ committee on payments and market infrastructures ( 2022 ), “ cpmi and iosco publish a discussion paper on ccps ’ practices for addressing non - default losses ”, press release, 4 august. 12. in the last few years there have been several instances where large ad hoc increases of margin requirements created significant financial problems for clearing members and end users. although these problems could be managed in the end, it did require strong public intervention. 13. basel committee on banking supervision, committee on payments and market infrastructures and board of the international organization of securities commissions ( 2022 ), “ review of margining practices ”, september. | to the perception that my counterparty can fail because of lack of capital. we can do little about that. bis central bankers ’ speeches then there ’ s another dimension to this that has to do with the premia that are being charged on sovereign states borrowings. these premia have to, as i said, with default, with liquidity, but they also have to do more and more with convertibility, with the risk of convertibility. now to the extent that these premia do not have to do with factors inherent to my counterparty – they come into our mandate. they come within our remit. to the extent that the size of these sovereign premia hampers the functioning of the monetary policy transmission channel, they come within our mandate. so we have to cope with this financial fragmentation addressing these issues. i think i will stop here ; i think my assessment was candid and frank enough. thank you. bis central bankers ’ speeches | 0.5 |
policy in 2022 is about more than just policy interest rates : the balance sheet of the eurosystem will also be examined. to mitigate the risk of deflation or another financial crisis during the pandemic, the ecb purchased bonds on a broad scale and provided loans to banks under favourable conditions in recent years. with monetary policy being tightened, these instruments are also being adjusted. conditions for tltro loans were recently tightened, and in december we will discuss the scale - down of the bond portfolio that we plan to start next year. at the same time, the ecb can use the transmission protection instrument ( tpi ) to prevent disruption to the smooth transmission of its policies in the euro area. the ecb governing council can activate the tpi and temporarily resume bond purchases if it identifies disorderly market conditions while fiscal policy still meets all agreed conditions. there has thus far been no need to deploy the instrument. how does this affect dnb's balance sheet and profitability? monetary tightening will lead to expected losses for dnb ( as explained in my letter to the minister of finance on dnb's capital position, dated 9 september 2022 ). we will absorb losses by drawing on our buffers and our provision for financial risks. it is worth noting in this regard that central banks outside the euro area, even those with a different monetary strategy, are also expecting significant losses due to current market developments. dnb's loss should be seen in broader perspective. making a profit or loss is inherent to the conduct of our tasks as a central bank. the expected losses stem from monetary measures that have produced major public benefits. for example, our shareholder, the dutch state, benefited from savings on interest payments estimated at eur 28 billion between 2015 and 2021, which is significantly more than the profit distributions that are expected to fall by the wayside in the coming years. impact of rising interest rates on debts the effects of monetary tightening are visible in sharply higher bond yields and mortgage lending rates, which leads to higher financing rates for households and businesses. the relatively high level of household debt in the netherlands is a vulnerability. financial risks may materialise if outstanding debts need to be refinanced or if house prices fall. there are clear signs of a turnaround in the housing market. some cooling in the overheated market is desirable, but a fall in house prices could have negative macroeconomic effects as consumption declines. the financial position of homeowners is healthier | thomas m hoenig : back to the business of banking speech by mr thomas m hoenig, president of the federal reserve bank of kansas city, at the 29th annual monetary and trade conference, global interdependence center and drexel university lebow college of business, philadelphia, pennsylvania, 24 may 2011. * * * introduction today ’ s meeting and sessions are about financial reform, and i congratulate the organizers of this conference for keeping this important topic in the mainstream of discussion. much remains to be done around reform if we are to ensure a more stable financial system. topics today will focus on housing, the dodd - frank act, governmentsponsored enterprises ( gses ), the safety net and other reform efforts that necessarily follow the recent financial crisis that has so devastated our national economy. understandably, major financial interests are lobbying to change and mitigate the impact of dodd - frank or influence the reform efforts that will affect the gses. one reform effort, for example, that is especially difficult for some interests to accept is the volcker rule. this rule will restrict banking organizations from engaging in proprietary trading activities and involvement with hedge and private equity funds. it will affect the largest institutions most directly, confining their risk profile and limiting the advantages of leverage that currently drive behavior among these firms. how it is implemented will influence not only the behavior of these firms in the future but the discussion of other reform efforts yet to be undertaken. i strongly support the volcker rule and suggest it should be implemented with resolve and should be strengthened in its reach and impact. over the next few minutes, i want to outline my reasons for this position. supporting my remarks this morning is a more extensive white paper prepared with colleagues at the federal reserve bank of kansas city. this paper is posted on our bank ’ s website, www. kansascityfed. org. a brief history a fundamental characteristic of the united states is that its citizens have an enormous suspicion and distrust of concentrated power – political or financial. for nearly 200 years, state and federal laws placed limits on bank activities and resource concentration, resulting in a relatively open u. s. banking system that has served the country well. in fact, some of the largest institutions in this country started small : the bank of new york, for example, was founded, in part, by alexander hamilton, and the mellon bank was founded by a farm boy who built his own financial empire. thousands of banks, from small community | 0 |
, despite this, we still see labour market conditions tightening further. surveying a range of indicators reveals mixed evidence as to the extent of current overheating pressures. investment in the real economy remains well below its previous peak. 9 overall credit growth is subdued as households continue to reduce their debts. the modified current account of the balance of payments – an important indicator of imbalance – recorded a small surplus in the most recent data. 10 while these measures are not indicative of significant overheating pressures currently, past episodes demonstrate that the position can change quickly. as the economy moves closer to full employment, there is a need to guard against the risk that economic conditions give rise to 4 / 8 bis central bankers'speeches overheating dynamics. to date, the tightening of the labour market has not been accompanied by significant evidence of strong wage or price pressures. however, further increases in aggregate demand may lead to overheating in the economy. financial system resilience and macroprudential policy so, we find ourselves in the interesting position of considering a potential slowdown in the international environment and the uk leaving the eu. and at the same time, also worrying about potential overheating from a domestic perspective. the potential for a wide range of future outcomes, and associated uncertainty, is indeed challenging. to guard against these risks, we need to build resilience. resilience in households, resilience in businesses, resilience in the public finances and resilience in the financial system. this is important to withstand future downturns. if buffers are built up during the good times, policy can react during a downturn. counter - cyclical policy therefore offers a way to moderate the effects of downturns, supporting demand in the economy when necessary. however, the ability to implement counter - cyclical policy relies crucially on taking advantage of positive growth periods to build the buffers. given our continued strong growth right now, reducing ireland ’ s high debt to safer levels should remain a priority – both in order to protect the public finances in the face of risks and to lay the foundations for sustainable future growth. ireland ’ s debt - to - gni11 ratio remains elevated and above 100 per cent. reducing the debt burden is vital to future - proofing the economy to weather possible shocks. the unpredictability of corporate tax revenues in recent years points to the dangers of relying on what might prove to be a partly transitory surge in revenues to fund lasting | and outlook given i have the opportunity to speak to the iiea and given the timeliness of this speech following the announcement of yesterday ’ s monetary policy measures, i will begin by focusing on the euro 1 / 8 bis central bankers'speeches area and global economic outlook. just yesterday, i returned from a meeting of the governing council of the european central bank. a key concern of the council was uncertainty. specifically, the persistence of uncertainties related to geopolitical factors and the threat of protectionism appear to be leaving marks on economic sentiment. on account of this, the risks surrounding the euro area growth outlook are still tilted to the downside. incoming data have continued to be weak, in particular in the manufacturing sector, reflecting the slowdown in external demand compounded by some country and sector - specific factors. the impact of these factors is turning out to be somewhat longer - lasting, which suggests that the near - term growth outlook will be weaker than previously anticipated. this assessment is broadly reflected in the march 2019 ecb staff macroeconomic projections for the euro area. these projections foresee annual real gdp increasing by 1. 1 % in 2019, 1. 6 % in 2020 and 1. 5 % in 2021. compared with the december 2018 eurosystem staff macroeconomic projections, the outlook for real gdp growth has been revised down substantially in 2019 and slightly in 2020. ireland ’ s trade and financial openness is a fundamental structural characteristic of the economy. this is most evident from the familiar multinational brands headquartered here. the irish economy is highly integrated with the international economy, both in terms of trade and with global financial markets, and particularly with regard to cross - border capital flows. over recent decades, ireland has benefited very positively from developments in the global economy and the move toward high value, low volume trade. this has provided many benefits in terms of revenue and employment. for example, multinationals are estimated to account for 22 per cent of total employment. 3 however, this means structural shocks emanating from abroad can have an important bearing on the performance of the economy. these can include changes in global trade or international taxation regimes. indeed, the structure of ireland ’ s economy means that it can even be affected by idiosyncratic shocks facing individual sectors or firms operating here. whilst providing many positives, this openness therefore also increases the propensity – and sensitivity – of the irish economy to global shocks – be they structural shocks i just described, or cyclical – driven by | 1 |
jean - claude trichet : a stability - oriented monetary policy as a necessary condition for long term growth speech by mr jean - claude trichet, president of the european central bank, at the unice competitiveness day, brussels, 9 december 2004. * * * ladies and gentlemen, it is a pleasure for me today to address such a distinguished audience, which best represents the european entrepreneurial capacity and dynamism. today i would like to discuss first the general role of policy institutions in a developed market economy. i shall then dwell more specifically on how the conduct of monetary and fiscal policy in the euro area contributes to foster high and sustainable output growth and job creation. finally, i shall stress the importance of structural reforms in labour and product markets in ensuring that our economy is endowed with the degree of flexibility that is needed for firms and workers to be able to withstand successfully the challenges that the contemporaneous, highly interrelated world economy poses to us. the determinants of sustainable long term growth the determination of the factors that increase the individuals ’ standard of living is the main issue that scholars have analysed since economics was born as a modern science more than 250 years ago. the evolution of the economic theory has greatly furthered and deepened our understanding of this issue. nevertheless, one core conclusion remains today as important as it was in the late eighteenth century : the amount of goods and services produced in any given economy grows at its highest possible rate when the rules of market economies are applied. we have learned that this prescription cannot possibly be translated into a pure laissez - faire doctrine, because when the production and the exchange of goods and services is carried out without a proper legal and institutional framework the potential of the economy would not be fully exploited. for this reason, societies need to equip themselves with the right framework, which enhances the collective welfare by clearly defining and ensuring property rights and ensuring the efficient supply of public goods. this means in particular that economic policy must ensure that individuals have the necessary incentive to earn their income by working and producing goods and services which other individuals need. it also means that enterprises must take their decisions on the basis of market signals without relying on subsidies or being protected from competition. this will foster the accumulation of human and physical capital and a high level of employment, which are the determinants of long term growth. to fulfil this objective, economic policy must create and maintain a “ stable ” macroeconomic environment, ensure an appropriate | zealand is consistent with this conditional coordination approach. in the monetary policy targets agreement we have financial stability as a secondary objective. this means that the monetary authorities need to think hard if an ocr decision might have adverse effects for financial stability. similarly, in the macro - prudential mou it is required that macro - prudential initiatives have regard to their potential impact on monetary policy. there remain many aspects of policy co - ordinations where we need to deepen our understanding. these include : • the quantitative effects of macro - prudential policy on macro - economic outcomes and their implications for monetary policy. • the scale and timing of spill - over effects between the ocr and our four macroprudential tools. • how best to coordinate ocr and macro - prudential policy decisions at different points of the economic and financial cycles, particularly when the two cycles are out of sync and the policies are not complementary. this is an active area of the academic literature and a priority area for our own research. i look forward to the insights that this work will give us for our future monetary and macroprudential policy decisions. references beau, d, l clerc and b mojon ( 2012 ) “ macro - prudential policy and the conduct of monetary policy ”, banque de france working paper, 390. borio, c and p lowe ( 2003 ), “ borio, c. and p. lowe ( 2002 ), “ asset prices, financial and monetary stability : exploring the nexus ”, bis working paper, 114. borio, c and h zhu ( 2008 ) “ capital regulation, risk - taking and monetary policy : a missing link in the transmission mechanism? ” bis working paper, 268. drehmann, m and juselius m ( 2012 ), “ do debt service costs affect macro - economic and financial stability? ”, bis quarterly review, september 2012. kohn ( 2013 ), “ the interactions of macro - prudential and monetary policies : a view from the bank of england ’ s financial policy committee, speech given to the oxford institute for economic policy, http : / / www. bankofengland. co. uk / publications / documents / speeches / 2013 / speech692. pdf. reserve bank of new zealand ( 2013 ), “ regulatory impact assessment : restrictions on highlvr residential mortgage lending ”, http : / / rbnz. govt. nz / financial _ stability / macro - pr | 0 |
edward lloyd ’ s coffeehouse began covering maritime risks, the industry has helped others absorb the effects of damaging events. in doing so insurers have helped people progress and businesses boom. of course, as we at dnb know all too well : those who deal within an industry based on trust and reliability must themselves show outstanding behavior. in other words : insurers must adhere to the highest of principles. • and luckily many of them do and more than that! i can give you several impressive examples of insurers stepping in to help rebuild and reimburse damages, even beyond what was promised. • take for instance a lloyd ’ s member named cuthbert heath : in 1906 a massive earthquake destroyed much of san francisco. bis central bankers ’ speeches heath insisted on paying not just for earthquake damage but also for what was destroyed by the fires that raged thereafter for three days. he instructed his san franciscan agent to pay all policyholders in full, irrespective of the terms of their policies. the agent followed his orders and the insured were promptly paid. • more recently and closer to our home : just days after the tragic event of the downing of flight mh17 in july of this year – in which 298 passengers lost their lives, 198 of whom were dutch citizens – dutch insurers collectively announced they would pay out all damages to policyholders, even if certain terms of their policies would prohibit this. • and to give you a few more examples of the industry helping people to get back on their feet : – it paid out damages after cyclone sandy flooded large parts of new york city ; – it paid policyholder claims when floods and bushfires destroyed lives and properties in australia ; – and it helped people and businesses in japan recover from the destruction caused by the 2011 tsunami. • in doing so in all of these cases, the industry helped those in need and also cemented its reputation as a solid and reliable industry. this promptness to deliver gives people the means to carry on and businesses the confidence to start over. • as for the future, it will be interesting to see how the insurance industry deals with new and emerging risks such as climate change, but also cyber - crime and reputational damage. or how the advent of selfdriving cars will affect their business model. • iais ’ s role in in this cannot be overstated, as it sets standards for supervisors for the development and maintenance of fair, solid and safe insurance markets. • i am confident that this | conference will provide excellent platforms for insurers, regulators and supervisors to exchange ideas on these subjects and more, and to enhance our understanding of the key issues of the day. • this morning his excellency jeroen dijsselbloem, the minister of finance of the netherlands and president of the eurogroup, will be sharing with us his ideas on the subject of insurance and financial matters. i am very grateful for his making time, in what must be a very busy schedule, in order to speak to us today. • in closing i would like to thank everyone who contributed to making this year ’ s event possible, and i wish you all a successful and productive conference. and of course a pleasant stay with us in amsterdam. • thank you. • i will now give the floor to mr. peter braumuller, chairman of the iais, who will take you through the programme of the next two days. bis central bankers ’ speeches | 1 |
after a gradual winding - down of our net asset purchases. accordingly, at its last monetary policy meeting the governing council confirmed that it continues to expect the key ecb interest rates to remain at their present levels at least through the summer of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2 % over the medium term. the governing council also decided to reduce the monthly pace of the net purchases under the asset purchase programme ( app ) to €15 billion from october until the end of december 2018 and anticipated that, subject to incoming data confirming our medium - term inflation outlook, net purchases will then end. finally, the governing council also confirmed its intention to reinvest the principal payments from maturing securities purchased under the app for an extended period of time after the end of our net asset purchases, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. significant monetary policy stimulus is still needed to support the further build - up of domestic price pressures and headline inflation developments over the medium term. this support will continue to be provided by the net asset purchases until the end of the year, by the sizeable stock of acquired assets and the associated reinvestments, and by our enhanced forward guidance on the key ecb interest rates. in any event, the governing council stands ready to 1 / 3 bis central bankers'speeches adjust all of its instruments as appropriate to ensure that inflation continues to move towards the governing council ’ s inflation aim in a sustained manner. the financial health of the euro area banking sector has continued to improve. although showing a slight decrease from 14. 6 % at the end of 2017, the aggregate common equity tier 1 ratio of euro area significant institutions stood at 14. 1 % at the end of the first quarter of 2018. banks have made progress in reducing their stocks of non - performing loans ( npls ). in the first quarter of 2018, the npl ratio for euro area significant institutions dropped further, to 4. 8 %, compared with 5. 9 % a year earlier. however, euro area banks ’ profitability remains subdued. the average return on equity of euro area significant institutions declined to 6. 6 % in the first quarter of 2018, from 7. 1 % a year earlier. in this context, eu and national authorities are still following up on a comprehensive action plan for dealing with legacy asset quality issues | by implication, the quality of the information derived from the existing body of monetary statistics. nonetheless, three points can and should be made on the basis of our experience since last august : first, the close analysis of the monetary data derived from the mfi balance sheet has proved crucial in understanding the nature of the turmoil and the challenges it poses for monetary policy. it has both served to maintain a focus on the longer - term inflationary trends that are fundamental to effective monetary policy making, while also deepening our understanding of financial conditions and their cyclical implications. second, the turmoil has identified a number of lacunae in the statistical basis for the analysis – for example, regarding the extent of credit risk transfer from bank balance sheets – that need to be addressed. third, from the outset of monetary union, the ecb has maintained both the necessary staff expertise and the required statistical base for a thorough monetary analysis. maintaining such continuity is required if the monetary analysis is to be insightful when – as is certainly the case now – monetary and financial factors are at the heart of the policy discussion. these are important lessons to be drawn from the ecb experience. concluding remarks sceptics have often questioned the information content of monetary data and thus criticised the role played by monetary analysis in the ecb ’ s monetary policy strategy. often such critiques are based on only a casual knowledge of the euro area data. based on the ecb experience, the ability to extract policy - relevant information from the monetary data depends on two elements : first, high quality data must be available. second, high quality analysis of the data is required on an ongoing basis. it is apparent that a self - reinforcing virtuous cycle can be created, whereby better data serve better analysis, which in turn identifies necessary improvements to the data. the continuous nature of the process underpinning this virtuous cycle is crucial : once halted, even a successful monetary analysis may prove hard to restart. maintaining continuous improvement in the data and the analysis is central to our agenda to “ enhance the monetary analysis ”. by the same token, the potential for a destructive vicious cycle also exists. poor quality data breeds poor analysis. attempts to improve monetary statistics thus yield lower returns, and investment in such improvements diminishes. the resulting deterioration in the quality of the data in turn leads to a further deterioration in the impact of the analysis, thereby feeding the vicious spiral. based on the anglo - saxon experience with financial innovation, many | 0.5 |
gradually waning, even well before the introduction of the euro. in italy, potential growth declined from an average estimated at around 2. 5 % in the early 1990s, to 1. 5 % by 1999. the decline continued afterwards, and is now estimated by the imf and other institutions to be close to zero. so how can we reverse this trend? raising potential growth is principally about lifting the labour supply ( the amount of hours people work in the economy ) and productivity ( how much people produce per hour worked ). see my introductory remarks at the economic and monetary affairs committee of the european parliament, brussels, 23 march 2015, http : / / www. ecb. europa. eu / press / key / date / 2015 / html / sp150323 _ 1. en. html. bis central bankers ’ speeches given our ageing population, however, we can only expect limited gains on the labour side. we therefore have to focus our efforts on making our economies more productive. for most countries in europe, and for italy in particular, productivity growth rates have been very modest. between 2000 and 2013 productivity 2 in the euro area grew cumulatively by 9. 5 %, by barely 1. 3 % in italy and by 26. 1 % in the us. total factor productivity 3, which assesses the efficiency of the use of inputs to productive processes, has only grown by 1. 1 % in the euro area. in italy it has fallen by 7. 7 % and in the us it has risen by 10. 5 %. productivity can be raised through the emergence of new firms using more efficient technologies and by the reallocation of resources among already existing firms. the benefits of technological progress often appear over the longer term because the efficient use of a new technology often takes a long time to learn, while the reallocation of resources can lift productivity over a shorter time horizon, given that it implies a shifting of resources within already active firms. if we want to raise productivity quickly, the key factor is reallocation. firm - level analyses in the euro area suggest that there is much scope for improvement here. 4 within individual countries there are a few highly productive firms and many which have low productivity. it is essential to act so that those high - productivity firms can grow, so that they can benefit from an adequate flow of capital them and so that the people have the skills needed to be able to work there. to achieve each of those three goals – growth, | few would deny that where european institutions have been invested with executive power, they have used it well. competition policy has been effective with both large companies and large countries. monetary policy has achieved a high degree of policy credibility. and for the ssm it is perhaps too early to judge, though i am certain we would not have had such a rigorous clean - up of our banking sector without it. if we look at the rules - based approach, however, it is difficult to reach such a positive conclusion. the fiscal rules have repeatedly been broken and trust between countries has been strained. and for economic policies rules - based approaches – such as the macroeconomic imbalance procedure – have so far not attracted much ownership from national policy - makers. so in my view the conclusion from recent experience is clear : if we agree that further institutional convergence is needed in the structural domain, then our long - term goal must be to move from a rules - based system to one based on stronger european institutions. 9 i must stress however that to make such a step, we first have to respect and follow the rules we have now. if we look at monetary policy as an example, we did not begin by creating a new institution. this would have been impossible. we had a series of rules - based systems – the “ snake ”, the european monetary system, the exchange rate mechanism – the experience of which led us to create the single currency and the european central bank. these various stages were however essential, because they gradually built trust between countries and led to a convergence of views about how best to conduct monetary policy. so there is no question today that the rules can be ignored because institutions would be better. on the contrary, it is only by following our rules that we can establish the mutual trust on which future institutions can be built. it is essential that the european parliament makes this process its own and imbues it with democratic legitimacy. 5. conclusion the way forward for the euro area that i have described today may seem simple, but it isn ’ t. it requires vision and perseverance. all those involved have to play their part in a sustained economic recovery. see my speech at sz finance day 2015, frankfurt http : / / www. ecb. europa. eu / press / key / date / 2015 / html / sp150316. en. html. am main, march 2015, bis central bankers ’ speeches but i also recognise that, in the process, we must not lose | 1 |
svein gjedrem : monetary policy - the importance of credibility and confidence address by mr svein gjedrem, governor of the norges bank, at the annual national meeting of the association of economists, held in gausdal on 25 january 2001. * * * introduction the primary responsibility of monetary policy is to contribute to nominal stability. nominal stability creates a more favourable operating environment for economic activity, and the prices of goods and services will be better conveyors of information. consequently, changes in the distribution of income and wealth as a result of variable price inflation are avoided. nominal stability is important to developments in the real economy, and is the most valuable contribution monetary policy can make to economic growth. using this as a starting point, i would like to speak today of the importance of confidence and credibility with regard to monetary policy. i will also evaluate the monetary policy that has been conducted for the last couple of years in relation to the guidelines for monetary policy and our interpretation of them. expectations and confidence expectations regarding the future play a large part in all economic activities. enterprises make decisions on production volume, investments, hiring and prices on the basis of expectations concerning future demand, prices and costs. households make purchases on the basis of their expectations with regard to future income, wealth, prices and job security. chart 1 illustrates a possible relationship between households'assessment of prospects for the future and their consumption. trade unions base their wage negotiations on expectations regarding price inflation and developments in employment over the next few years. expectations play an important part in financial markets. equity prices and exchange rates may fluctuate widely as a result of changes in the expectations of market participants. because expectations are of such importance to economic planning and decisions, it is essential that there is confidence in the nominal anchor. this makes it possible to achieve nominal stability with smaller disturbances in the real economy and lower unemployment. although nominal stability is a prerequisite for sound developments in the real economy over time, conflicts may develop in the short term. such conflicts may occur if there are disturbances on the production or supply side of the economy which give rise to higher price and cost inflation that does not actually reflect increased pressures in the economy. examples of such disturbances are cost - push shocks resulting from negotiations, or weaker productivity growth. when disturbances of this type occur on the supply side of the economy, there may be a trade - off between fluctuations in nominal prices and wages and fluctuations in production and employment. a trade - off of this kind | thus seem as if we are placing more weight on the output gap in the beginning of the period than at the end of the period. this suggests that the reference path in inflation report 3 / 06 is not consistent with a discretionary policy, where you make the best out of the situation in each period. such a strategy would have involved a higher interest rate in order to provide a better balance between inflation and output towards the end of the projection period. rather, it seems that the reference path has elements of commitment. let us therefore assume that we follow the response pattern we have committed ourselves to earlier. in the literature, one such strategy is referred to as commitment under a timeless perspective. 5 it is possible to calculate, within the confines of our models, an optimal interest rate path based on such a strategy. see for example woodford, m. ( 1999 ) “ commentary : how should monetary policy be conducted in an era of price stability? ”, paper presented at the jackson hole conference, see http : / / www. columbia. edu / % 7emw2230 / jhole. pdf. in this example, we have been able to reconstruct ( approximately ) the reference path in inflation report 3 / 06 by minimising a loss function under commitment in a timeless perspective. to reconstruct the reference path, the weight on the output gap in the loss function, lambda, has been set at 0. 3. we also had to place a weight on changes in the interest rate in the loss function. this weight, which penalises large changes in the interest rate, can be defended based on considerations regarding robustness and financial stability. what is the outcome if we depart from our established response pattern? the chart illustrates what might happen if the central bank reoptimises today, but promise never to do so again. in the model, this will result in a marked rise in interest rates today. but such an approach has been criticised in the literature. if the central bank departs from its response pattern today, it is easy to believe that it will do the same in the future. it may therefore be difficult to gain credibility for such a policy. even if it may feel tempting, it is important to be aware of the costs associated with departing from an established response pattern. it will then be more demanding to influence private - sector expectations. frequent reoptimisations will in practice undermine the benefit of commitment and lead to a discretionary policy. the | 0.5 |
gent sejko : statement - press conference with imf mission chief statement by mr gent sejko, governor of the bank of albania, at the joint press conference with the international monetary fund ( imf ) mission chief for albania minister of finance and economy, tirana, 10 october 2022. * * * dear media representatives, in the last two weeks, the bank of albania and the albanian government have been engaged in intensive discussions with the imf mission, which visited albania in the framework of the regular article iv consultations. discussion focused on current challenges for the albanian economy, as well as structural reforms that would enable a faster and more sustainable development of the country in the long term. allow me - first and foremost - to extend my thanks to the imf mission for the open share of views in addition to the fruitful and transparent discussions. overall, the bank of albania and the imf share similar opinions on the developmental challenges that lie ahead. the swift upsurge of prices in the global markets following the unprovoked military aggression of russia over ukraine, have triggered serious economic and social challenges for the economies and citizens of all countries around the world, including albania. inflation hit 8 % in august, increasing at a rapid pace and having a broad base. based on our judgement, we have previously stressed out that the high inflation is the main threat on the macroeconomic stability and both the stable and long - term growth of albania. this inflation corrodes the households'purchasing power, increases the uncertainty for the future in every cell of the economy, heightens the volatility of financial markets, and damages the long - term perspective of development. therefore, the primary focus of economic policies should be the undertaking of coordinated measures to mitigate the cost borne by inflation, and control and return it to its target, in the shortest time period and with the lowest cost possible. against this backdrop, the bank of albania has embarked on the gradual normalisation of the monetary policy. this normalisation is undertaken in parallel with all the other central banks, across the region and around the world, which are facing the same high inflation phenomenon. it engenders a progressive raise of the key interest rate, by slowly changing the nature of the monetary policy stance from the current position, which has been stimulating, towards a more neutral position, which provides a more sustainable support for the long - term growth of albania. during the discussions of the past two weeks, we have gladly observed | the albanian authorities have engaged in comprehensive reforms of the property rights, of the tax regime, of the electricity sector, of the general infrastructure, and remain engaged in the fight against informality. the most recent measure in this regard is a banking sector regulation that aims to put an end to the practice of lending through uncertified company balance sheets. further, to enhance efficiency and tackle corruption and informality, a determined drive to improve the functioning of the public administration, which broadly speaking encompasses also the judicial system reform, has been undertaken. in order to increase economic stability and to improve financial resilience, we have initiated a wide ranging set of reforms. to that end, the government has improved its public finance management procedures, has adopted a fiscal responsibility framework, and has undertaken measures to reduce debt. the bank of albania has strived to model itself after the ecb. its professionalism has increased while its independence, transparency and credibility have all improved. through a joint effort of institutional stakeholders, we have 2 / 3 bis central bankers'speeches managed to reform the financial supervisory authority and enhance the role of the deposit insurance authority. together with the albanian government, we have implemented a comprehensive npl resolution strategy, which has already brought encouraging results, we have approved a bank resolution law and we have jointly designed a de - euroization strategy, aimed at tackling financial vulnerabilities, improving the transmission mechanism and intensifying the use of the domestic currency. we have also established a new interinstitutional financial stability advisory group, vested with coordination powers on systemically - important stability – related issues. in order to further develop financial markets, the albanian authorities have accelerated the development of capital markets, through the establishment of the albanian stock exchange, the licensing and functioning of several investment and asset management funds, the encouragement of the on - going consolidation in the bank and non - bank financial institutions, the tax encouragement of private pension schemes, the on - going efforts to improve the functioning of secondary markets for government papers, etc. however, i am convinced the sharing regional experience would result in an additional impetus to the process. furthermore, regional solutions can be sought to common problems. this brings me to my last point. improving regional cooperation coordination and cooperation cannot run standalone in an ever integrated and intertwined world. the same concept applies to our region, where policy initiatives, aimed at achieving a common objective, should be implemented jointly. let me highlight a few potential cooperation areas : first, | 0 |
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