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. the importance of the euro area and its economic policies is fully recognized at the international level, as is evidenced by the rapid integration of ecb representatives in the various fora responsible for international policy co - ordination. the challenge will be to use this new influence and power wisely, and to withstand the temptation to distract from unpleasant domestic economic policy requirements through misplaced activism at the international level. the economic impact of emu on the euro area 2. this leads me to the second area, the economic impact of emu on the euro area and the interplay between the eurosystem β s monetary policy and the other areas of economic policy. in the short run, emu means substantial costs - one only has to think of all the activities related to the changeover weekend at the start of this year and the forthcoming replacement of banknotes and coins. at the macro level, there were also the unpleasant short - term effects of disinflation and fiscal consolidation required in many member states to qualify for participation in the monetary union. note, however, that these measures would in any case have been necessary, with or without emu. furthermore, i should like to emphasize that these short - term efforts are a necessary - and profitable investment into europe β s political and economic future. the benefits of sound fiscal and monetary policies are already today reflected in the historically low level of inflation throughout the union, in low interest rates and in stable exchange rates. all these factors are, in the long run, conducive to growth and employment. the stabilizing impact of emu was to be felt well ahead of its inception. just think of the virtual absence of negative spill - over effects from the international emerging market crises on eu financial and exchange markets. contrary to the early 1990s, the eu is now generally recognized as a safe - haven of stability, steadiness and economic reliability. the strong convergence, observed in the run - up to emu, of short and long - term interest rates to the levels of the most stable eu currencies has contributed to monetary conditions favorable for growth and employment. real interest rates in the euro area are now considerably below their average levels observed over the past decade. while the benefits of emu are quite obvious even in the short run, the real dividends from monetary union are yet to come. the positive β shock β that emu implies for our economies β productive capacity will propel european long - term growth, allowing higher real growth and | joined the european union, participation in the erm ii will be a relevant option for them until their economies will be ready to join the monetary union on a sustainable basis. the built - in flexibility of the erm ii could be very helpful. it allows for a gradual reduction in the fluctuation margins. in the meantime, many of the rules of emu, like the prohibition of government financing by the central bank, the independence of central banks from any political interference or the clear stability - oriented mandate of the central bank, can serve as benchmarks for the ceec countries. i am well aware that considerable progress has already been made on this path in several countries but some work still remains to be done. emu can work as a catalyst in this respect, speeding up the necessary political decisions within ceecs and helping the respective central banks. a crucial point on the path towards eu and emu - membership is the development of a β stability culture β, i. e. the wide - ranging consensus within a country that the principal and most important task of monetary policy is to ensure price stability - a necessary condition for sustainable growth and hence for the catching - up process. this primacy of stability has to be recognized and accepted by all relevant political forces, which in turn calls for the respective central banks to do a lot of explaining and convincing - a process that has to start as early as possible. without such a consensus, a successful integration into the union, and even more so into the euro area, cannot or at least is very difficult to be achieved. therefore, this β convergence of minds β is just as important as the other formal convergence criteria. thus, membership in the euro area will be a rather long - term perspective for the transition countries as the successful and sustainable adoption of a single currency will require more preparation than the fulfillment of the well - known ( nominal ) convergence criteria. it will be in the interest of the accession countries themselves to join monetary union well prepared. ladies and gentlemen, let me summarize by extracting three key messages : first, emu took off very well. both on the european and national levels, the relevant authorities and the private sector did their homework in the preparatory work. the eurosystem and its monetary policy are well on track. the euro area β s important role in the world economy is reflected in the recognition shown by various international fora. rules for sound national fiscal policies are in place. nevertheless there are important challenges : governments | 1 |
integration in asia. this should be viewed positively, not only towards the unwinding of the global imbalances, but also because this has the potential to contribute towards global growth. the banking sector in asean and the greater asian region will have an important role in facilitating this trend. islamic banking in particular, which is a form of financial intermediation that is directly linked to trade and investment flows, has significant potential to facilitate this process. islamic finance requires all financial transactions to be supported by an underlying economic activity. there is now a renewed focus in the global community on generating real economic activity, generating jobs and generating overall financial stability. following the developments that have led to the current global financial crisis, there is a greater recognition for the need to reduce the decoupling of the expansion of financial transactions and the growth of the real economy. this is in fact a fundamental requirement in islamic finance thereby resulting in a close link between financial and real flows. in malaysia, the islamic banking sector continues to progress, recording double digit growth over the recent 8 years with an average annual growth rate of 20 % in terms of assets. as at the end of 2008, islamic banking has increased its share of assets in the banking sector to 17. 4 %. the assets share of the takaful industry grew at 23 % per annum in the recent five years, with family and general takaful capturing 11 % and 7 % respectively, of the overall insurance sector. the mifc initiative has focused on promoting malaysia as an international islamic financial hub, in particular in sukuk origination, foreign currency business, takaful, research and talent development. there has been a growing number of mifc players with diverse business activities that range from international islamic banking business in foreign currency to islamic fund and wealth management, takaful and sukuk origination. the global sukuk market has expanded by an annual growth rate of 40 %. despite a slowdown in the sukuk issuance in 2008, there was still an estimated usd20 billion issuance taking place, with malaysia remaining as the main issuer in the global market. the prospect of islamic finance continues to remain positive despite the more challenging international environment. the global financial crisis has resulted in heightened calls for more transparent forms of banking that are subject to stricter governance and risk management practices. there are also greater demands for increased regulation. following the financial reform that may take place, the world may see a banking system that is significantly different | muhammad bin ibrahim : central bank collaboration in asia β facilitating the use of local currencies for settlement of trade and investments remarks by mr muhammad bin ibrahim, governor of the central bank of malaysia ( bank negara malaysia ), at the signing ceremony of the memoranda of understanding between bank indonesia and bank negara malaysia and bank indonesia and the bank of thailand, bangkok, 23 december 2016. * * * my delegation and i are pleased to join governor veerathai and governor agus here in bangkok today to mark the collaboration between our central banks to facilitate the use of local currencies for settlements of trade and investments. our economies face common challenges in managing the risks from heightened volatility in the global financial markets. we can expect continued episodes of volatility to occur in the periods ahead, driven by a combination of policy uncertainties, negative sentiment and speculative activity. the arrangements signed today are part of our continuous efforts to provide the institutional and policy framework to promote orderly financial market conditions and support the efficient management of financial risks. in particular, these arrangements will enable exporters and importers in our countries to better manage foreign exchange risks by using local currencies to settle trade and investment activities. in addition to improving cost efficiencies for businesses, the increased demand for local currency financial products will also contribute towards deepening the region β s financial markets. this is important to further strengthen conditions for regional financial stability. when bank negara malaysia and the bank of thailand first operationalized this arrangement between our central banks in march 2016, we saw the potential and benefits for local currencies to play a more important role in enhancing regional trade linkages. the expansion of the arrangement today to include our close trade partner, indonesia, underscores this potential. the signing of this mou between bank indonesia and bank negara malaysia represents another important milestone in the move to strengthen the relationship between malaysia and indonesia. following the conclusion of the asean banking integration framework, we are confident financial institutions in both countries will be able to collaborate towards realizing the objective of facilitating greater cross - border trade and investments. both thailand and indonesia share important links with malaysia, forged through a long history of trade and investment activities, and close cooperation between our central banks. this occasion reflects how far we have come in this process. the cooperation arrangements between our central banks have now expanded to include clearly defined protocols and operational frameworks in a broad range of areas, including financial market development, supervision, surveillance, | 0.5 |
christian noyer : the role of inflation - indexed bonds in the process of setting monetary policy : a central banker β s perspective speech by mr christian noyer, governor of the bank of france, at the morgan stanley seminar on indexed bonds, paris, 9 june 2004. * * * ladies and gentlemen, [ dear friends ], it is a great pleasure for me to address you here in the context of the first β seminaire de paris β on inflation - linked securities organised by morgan stanley. today, i will focus more specifically on β the role of inflation - indexed bonds in the process of setting monetary policy β from a central banker β s perspective, based on my own experience as the former vice - president of the ecb and the current governor of the banque de france. throughout my presentation, i will occasionally refer to the monetary policy strategy framework implemented by the eurosystem in which asset prices, in particular inflation - indexed government bonds, can play a role in the context of our economic analysis. having said this, i will neither elaborate further on the ecb β s framework nor comment on the last governing council β s monetary policy decision. price indexation of financial contracts is not a new phenomenon. according to robert shiller1, the world β s first known inflation - indexed bonds were issued by the commonwealth of massachusetts in 1780 during the revolutionary war. these bonds, the so - called β depreciation notes β, were issued to us soldiers as deferred compensation for their services. they were mainly designed to deal with severe wartime inflation. although the bonds were successful, the concept of indexed bonds was set aside until the 20th century. finland introduced indexed bonds in 1945, sweden in 1952, iceland and israel in 1955. since then, indexed bonds have usually appeared in countries experiencing very high rates of inflation, such as brazil in 19642, chile ( 1966 ), colombia ( 1967 ), argentina ( 1972 ) or even the uk in 1975, with the issuance of so - called β granny bonds β, i. e. non - marketable indexed - linked savings retirement certificates. later on, in 1981, the uk issued a marketable instrument - the index - linked giltin a context of rapidly increasing prices. in all of these cases, the issuance of inflation - indexed debt instruments by the government was aimed at developing long - term capital markets and improving the credibility of anti - inflationary policies. as regards this last point, such a rationale is, however | ##s. our monetary policy must now be guided by confidence and patience : confidence that we are making steady progress in bringing inflation down towards 2 % by 2025 ; and patience that interest rates will remain stable at their current level for the time still needed to pass them on in full. page 2 of 12 1. 1 enhanced profitability and solvency there can be no doubt that european banks are generally benefiting from higher key interest rates, although there is a certain time lag for french banks due to their business model. the predominantly fixed interest rates on their assets ( 97 % of outstanding housing loans are granted at fixed rates ), and on regulated savings on the liabilities side, mean that financial conditions take longer to adapt in france. an automatic catch - up is expected over the next few quarters, as french banks continue to renew their assets and liabilities. this time lag has been attenuated by the decision to stabilise the interest rate on livret a passbook accounts, which was kept at 3 % on 1 august and should remain stable at this level until at least 1 february 2025. this is a very favourable decision for bank interest rate margins ; the counterparty, i should recall, is the accelerated growth in popular savings passbook accounts ( leps ), which were held by as many as 10. 3 million savers in september 2023, a number which should climb to over 12. 5 million next summer. this stabilisation of interest rates on the livret a passbook account is also intended to ensure the sound financing for the french economy β i'll come back to this point later. the financial results of the french banking sector have remained very robust : the 2023 half - year on half - year pre - tax earnings of the six largest banking groups grew by 2. 5 % to stand at eur 21. 7 billion and net banking income ( nbi ) has been trending upwards since early 2022. consequently, french banks'solvency ratio has improved once again, rising to 15. 6 % at 30 june 2023, compared with 15. 1 % at the end of 2022, well above minimum regulatory requirements. the results published by the four main french banking groups in the third quarter of 2023 ii point to a more mixed performance, with french retail banking revenues sometimes impaired by interest rate hedging strategies that can prove costly in the current interest rate environment. iii page 3 of 12 the rise in interest rates is also | 0.5 |
lucas papademos : some reflections on the stability and growth pact speech by mr lucas papademos, vice - president of the ecb, at the annual dinner of the institute of chartered accountants in ireland, dublin, 5 april 2004. * * * mr president, ladies and gentlemen, i understand that in addressing you this evening i am following in the footsteps of very distinguished speakers, including both the current and the previous presidents of the irish republic. this is both an honour and a daunting task for a central banker such as myself. unlike many heads of state, central bankers are not, in general, renowned for their great oratory. but i will do my best not to disappoint. and i feel reassured by the audience tonight. central bankers and accountants have certain things in common. we both spend a considerable part of our time looking at, counting and assessing numbers. central bankers like counting numbers. but we don β t like to have to count too far. for example, with regard to inflation, at the ecb we like to count only up to two, that is β two percent β. actually, β below but close to two percent β is our stated preference. if we are measuring the size of euro area countries β budget deficits, we really don β t like to have to count much at all. and, in fact, my colleagues and i can get quite irritable if we have to count above three percent. this is because the maastricht treaty and the stability and growth pact say that we should not have to do so, or at least not very often. and if an occasion should arise when we do have to count above three percent, then a procedure is foreseen to ensure that this state of affairs does not last for too long. unfortunately, we have been doing a lot of counting above three percent recently. and last november, the ministers of economy and finance in the ecofin council decided that the procedure designed to correct this state of affairs could be put on hold for the time being. my colleagues and i in the governing council of the ecb have made clear our concern about the ecofin council β s decision last november. and our concern has increased in the light of information that has recently become available indicating that public finances in a number of eu member states have deteriorated since then. mr president, in your letter inviting me here this evening, you mentioned that the banking and wider business community is also concerned and that you | our disposal. but it would be confusing to highlight individual instruments now because the use of a given instrument depends on the situation. for example, we would react with completely different means if the money markets were to stall than if there were a setback in the economic situation. but the ecb has already pumped so much cheap money into the system and it is still not getting through to the markets. yes, it is. it is getting through to the markets very well. it is just that it is still the case that too little is getting through to the real economy. could negative deposit rates be an instrument that would help here? i do not want to speculate about individual instruments. any instrument may be used if the situation demands, including the one you mention. in several months β time, the ecb will take over supervision of large euro area banks. will we no longer see banking crises after that? since the outbreak of the financial crisis, banking regulation has made huge progress all over the world. in europe, approximately half a trillion euros of additional capital has flowed into the banking sector in the past three years alone, half of it from private sources. but i would never say that these improvements mean that there will be no more crises. nobody knows where the next crisis will come from. it is therefore important to make the financial system as a whole even more resilient. but are there not simply too many banks in europe? that is very hard to say. the ecb β s asset quality review of the banks that is currently being conducted pursues one goal in particular : we want to shed more light on bank balance sheets and therefore indirectly also on that issue. the markets and investors should know what state europe β s banks are really in. we want full transparency. only through transparency will investors be ready to provide additional capital for banks. bis central bankers β speeches yet this means that the ecb β s audit of the banks could itself become a systemic risk. if the ecb were to notice very large capital shortfalls or a large number of banks that are not capable of surviving, this would potentially trigger a new banking crisis. i see it completely differently. if there are problems in europe β s banking sector, they are there, regardless of whether we uncover them or not. in the financial system in general, light is always better than darkness. only by uncovering weaknesses in the banking sector can measures be taken to correct them, be it through recapitalisation, restructuring | 0.5 |
i hope we will have a better insight in risk management area and a fruitful discussion to enhance our understanding and more importantly to increase confidence in implementing it. thank you. | not tolerate inflation move beyond the upper bound of the target range. bank indonesia will also strengthen policy coordination with the government to manage domestic demand. 24. but again, as i mentioned before about lesson from 2013 experience, a sound macroeconomic policy is not sufficient to sustain economic growth. it is imperative to augment it with structural reform. we have to address our reliance on the export of primary commodities given the boom of commodity prices is over. at the same time, efforts should be made to address our heavy reliance on energy and food imports. bis central bankers β speeches 25. in the financial sector, financial market reform is also imperative. we, in bank indonesia, with close collaboration with ojk, have committed to boost financial market deepening initiatives. this includes elements such as well - functioning securities and money market, seamless payment system, and well developed long - term financing. a nation in transition ladies and gentlemen, 26. the year of 2014 is rather special. with the general election at our doorstep, maintaining macroeconomic stability is a key. macroeconomic stability, in our view, is the element of continuity for the indonesian economy in transition. in this regard, i would like reiterate our commitment to maintain the stability of our economy. 27. i would also like to emphasize here the remarkable progress in the nation β s journey to democracy. less than two decades ago, if we recall, there was an imminent risk of β balkanisation β following a devastating financial crisis and an abrupt regime change. but now we are viewed as a strong and stable democracy, supported by institutional reforms in both private and public spheres. 28. with more than 500 elected offices throughout the archipelago, election and peaceful transition of power actually occur almost every day in this country. i am confident that the upcoming parliament and presidential elections will be no different. and it will be a testament to the strength of our democracy and its ability to support economic development. closing ladies and gentlemen, 29. before concluding this remark, i would like to remind us that fitch rating is the first rating agency to award investment grade to indonesia after losing the credential due to 97 / 98 financial crisis. we believe that such decision was taken after an elaborate assessment on the country β s economic and financial data. and as we all have witnessed in 2013, it turned out to be an accurate assessment. indonesia β s economy is indeed resilient and is able to withstand challenges that may have come to its way. 30. i am confident | 0.5 |
david dodge : a sound pension system β handling risk appropriately remarks by mr david dodge, governor of the bank of canada, to the conference board of canada 2007 pensions summit, toronto, 10 may 2007. * * * good afternoon. i'm happy to be here to talk about the importance of canada's pension system. it goes without saying that a sound system of private pensions is important from the perspective of pensioners who rely on a given plan for their retirement income. for firms, a pension plan can help to attract and retain staff, and so the business community also counts on a sound pension system. and as a central banker, i know that a sound pension system is important from the perspective of economic and financial market efficiency. given the significance of our pension system, policy - makers in canada need to keep working on improving its operation. ultimately, it is crucial for all canadians that our pension system function as well as possible. but what is it that makes a system of private pensions function well, or not? as i see it, a key to answering this question is understanding how pension plans deal with risk, in all of its many forms. so today, i want to spend some time discussing private pensions and risk, and suggest what needs to be done to make sure that those who have to bear risk also have the right incentives to deal with it in the most appropriate manner. 1 i will focus on who is best placed to bear risk, and on how risk management can be better supported. risks and challenges let me start with a fundamental question : why do people save for their old age? essentially, people save during their working years so they can retire at some point and not suffer a precipitous drop in income and living standards. economists might put it somewhat less elegantly, saying that people save in order to smooth their lifetime consumption. in the absence of any kind of pension system, individuals, businesses, and society as a whole would all face a number of challenges and risks. i want to spend a few minutes talking about the challenges and risks from these three perspectives, beginning with individuals. first, individuals without a pension plan would have their personal savings as their only source of retirement income, aside from income from the publicly funded canada pension plan / quebec pension plan and the old age security / guaranteed income supplement. and so, individuals would naturally be exceedingly cautious with their investments, particularly as they approached retirement age. in short, individuals without pensions would likely be too risk - | good start. otc derivatives infrastructure second, otc derivatives infrastructure. earlier, i spoke of global regulatory reforms driving a revolution in the derivatives market. this has brought about new market infrastructure developments, and singapore has made significant strides in two key areas. the first area is clearing. β’ sgx asiaclear, asia β s first otc clearing facility, was established as early as 2006. β’ as counterparty to both buyers and sellers, asiaclear mitigates counterparty credit risk in otc transactions. β’ asiaclear β s value to the trading community extends to record and statement services, position netting, and cost savings for customers posting margins. β’ today, sgx asiaclear is the region β s leading multi - asset otc clearing house, with volumes exceeding 300 billion us dollars to - date. the second area is trade reporting. β’ just in december 2012, the depository trust & clearing corporation β s ( dtcc ) global trade repository established its asia - pacific global data centre in singapore. β’ the singapore location is part of its global trio of data centres, designed to support dtcc β s global trade repository services around the clock. β’ dtcc β s initiative will fill a key post - trade market infrastructure gap in singapore and the asia pacific region. β’ the industry will benefit from reduced connectivity costs and the greater convenience of reporting to a singapore - based infrastructure. these developments not only align us with global regulatory reforms, they allow us to strengthen our role as a derivatives and risk management hub in asia. offshore rmb the third area of opportunity that plays to singapore β s pan - asian strength is offshore rmb business. the rmb β s role in facilitating intra - regional trade and investment will only grow in the coming years. singapore is in a strong position to facilitate greater rmb - denominated trade and investment in the asean region. we are deepening liquidity, establishing key infrastructure, and working with industry to expand the range of rmb products and services in singapore. bis central bankers β speeches β’ in february this year, the industrial and commercial bank of china β s singapore branch was designated singapore β s rmb clearing bank. β’ just five days ago, mas and the people β s bank of china signed an enhanced bilateral currency swap agreement. this will enable mas to provide rmb liquidity to banks in singapore where needed. deep talent pool the fourth and final pillar supporting singapore β s financial centre is our deep talent pool. over the | 0 |
framework that was built in response to the needs of the financial sector and beyond ; one that has proven its value in pilot tests ; and one that, in the meantime, has received encouraging reactions from the ecb. i therefore want to call upon everyone here today to start using art β in whatever form suits you. to start using this state of the art framework to learn about the state of your cybersecurity, and hence, to take an improved stance in our joint fight against cyber threats. and don't shy away from spreading the word β the art we are talking about today, is not one for the few, it is one for the many. 3 / 4 bis - central bankers'speeches dear cisos, it is heart - warming to see so many of you here, today β from the financial sector, the healthcare sector, the telecom sector, and the dutch government. each one of you plays a vital role in our society β a role that becomes even more vital, the more connected we become, whether you share software, service providers, or cyber risks. maybe we'll reconvene in the future, and then there will be cake. and candles. and cards. and hopefully we will be celebrating the success of art, the success of a common cause : our fight against cyberthreats. we're not there yet, but i am confident we will get there β stronger and more resilient than ever. together, we'll protect our organisations, our people and our society. and today marks another step forward. and that alone is very much reason to celebrate. so let's celebrate! thank you. 4 / 4 bis - central bankers'speeches | in order to return to sound fiscal positions are credible, respecting fully the provisions of the stability and growth pact. this is essential to maintain the public's trust in the sustainability of public finances, which is important both for the economy to recover and for supporting long - term growth. countries subject to the excessive deficit procedure need to comply strictly with the ecofin council recommendations for correcting their deficits. many countries will need to specify further credible consolidation measures for 2010 and beyond. full and consistent implementation of the eu's legal provisions for sound fiscal policies is a prerequisite for the maintenance of their credibility as one of the pillars of the institutional framework of economic and monetary union. turning to structural reforms, the governing council welcomes the commitment of the spring european council to make full use of the renewed lisbon strategy for growth and jobs in the current situation. the updated recommendations for the euro area countries call for an accelerated implementation of reforms to support the economy, facilitate necessary adjustments and ensure a high level of growth potential. it remains essential that government support measures do not distort competition or delay necessary structural adjustment processes and that governments remain firmly committed to avoiding protectionism. we are now at your disposal for questions. | 0 |
our monetary policy measures, other policy areas must contribute decisively. given continued high structural unemployment and low potential output growth in the euro area, the ongoing cyclical recovery should be supported by effective structural policies. in particular, in order to increase investment, boost job creation and raise productivity, both the implementation of product and labour market reforms and actions to bis central bankers β speeches improve the business environment for firms need to gain momentum in several countries. a swift and effective implementation of these reforms, in an environment of accommodative monetary policy, will not only lead to higher sustainable economic growth in the euro area but will also raise expectations of permanently higher incomes. fiscal policies should support the economic recovery while remaining in compliance with the stability and growth pact. full and consistent implementation of the pact is key for confidence in our fiscal framework. we are now at your disposal for questions. bis central bankers β speeches | another look? you see i figured that stress tests for banks were part and parcel of your job as ecb banking supervisor. but if we turn the tables, are there any stress tests for the supervisor? there aren β t any, are there? 4 / 7 bis central bankers'speeches oh yes there are! every stress test for the bank is also a stress test for the supervisor. ok, but i β ve nonetheless prepared a few very special stress cards for you in order to test your personal stress resilience. please go ahead and read out the first card. it reads : β your office manager calls in sick. β do you find that stressful? yes, in the first instance. but then i would simply put their calls through to me and get on with it. so you would really do that? yes, of course i would. i β m a woman. i β m well able to multitask. the next stress card. it reads : β someone hacks into your work computer which stores important sensitive bank data. β how would you react? i think that β s actually impossible. we have an extremely good security system at the ecb. you want to know how i would react? that would surely be a stress factor, wouldn β t it. confidential data? yes, of course. but our it experts would deal with it, and our colleague from communications would probably step in too and would then speak to you. it has never once happened to me, by the way. next card. it reads : β you need to fly to an important meeting, but the pilots go out on strike unexpectedly. β that has actually happened to me. that can happen occasionally and then you ask... you take that in your stride? yes, exactly, i would then return to the office and ask my staff to arrange a conference call. that is easily done these days. a video conference or something like that? yes, that β s right. we β ve one more card, if you β d like to take it? yes! it reads : β you need to get to an executive board meeting at the ecb but you β re surrounded by a group of blockupy demonstrators as you enter the building. β is your heart racing? well, i assume that the demonstrators pose no threat to life and limb, they simply want to make their views known, don β t they? yes. well, i β m in my element if i | 0 |
ali hashim : current state of the maldives β economy and outlook remarks by mr ali hashim, governor of the maldives monetary authority, at the press conference, male, 22 august 2021. * * * a very good afternoon! let me first and foremost, warmly welcome you to the maldives monetary authority and thank you sincerely for accepting our invitation by being here today. it always gives me great pleasure to engage and interact with the hard - working journalists of the maldivian press and media community. i would like to take this opportunity to say a few words about the current state of the economy, our outlook going forward, and the work being undertaken by the mma to ensure that the economic recovery stays on track. as we all know, the maldives is one of the most affected economies due to the covid - 19 pandemic, with an estimated gdp contraction of 32 % in 2020. nearly all major economic sectors, including tourism, construction, transport, communication, and the trade sector recorded negative growth numbers due to the dampening effects of the lockdown and concurrent border closure during the 2nd quarter of 2020. the bank intervened at the beginning of the crisis, actively providing liquidity support to the banking sector to mitigate adverse economic impacts. with the strong tourism sector recovery in recent months, the foreign exchange ( fx ) liquidity position of the banking sector has since improved. in order to ensure an adequate fx buffer, we have established and continue to maintain bilateral liquidity arrangements with other central banks. despite the very trying and challenging circumstances we faced in 2020, the maldives is also among the quickest to rebound from the crisis. the tourism sector, which accounts for an estimated 26 % of real output, has significantly exceeded expectations when compared to initial forecasts for the first half of 2021. this recovery is expected to continue over the medium - term and support the recovery of other economic sectors. other important sectors of the economy continue to rebound as well. the quarterly national accounts for the 1st quarter of 2021, indicates a quarterly gdp growth rate of 34. 4 % compared to the preceding 4th quarter of 2020. most major economic sectors registered positive growth numbers. while we anticipate a slight dampening in the growth prospects for the 2nd quarter of 2021 due to the second lockdown and travel restrictions imposed earlier this year, the revival of economic activity in general and the tourism sector in particular since then, gives us cause for optimism for 2021 as a whole. july 2021 was a particularly good month for tourism with | , shoddy infrastructure, or poor transparency. the more successful policymakers are in ensuring that liquidity generation is robust, the more efficient we can be with respect to the amount of capital required to protect against that risk. against this backdrop, the g - 20 β s priorities should become clearer. in particular, the g - 20 is pursuing three main strategies to reduce systemic risk : improving the resiliency of financial institutions ; enhancing the robustness of financial markets ; and, reducing the interconnectedness between institutions and between institutions and markets. all are necessary, as the measures are mutually reinforcing. allow me to expand. improving the resiliency of financial institutions creating more resilient institutions requires more and better capital, improved balance sheet liquidity, and enhanced risk management. the crisis clearly underscored the need to better for example, in mark - to - market accounting, illiquidity discounts can be quickly translated into accounting losses that can impair the reported capital position of a financial institution. j. selody, β the nature of systemic risk, β forthcoming, in managing risk in the financial system, edited by j. r. labrosse, r, olivares - caminal and d. singh. ( cheltenham : edward elgar, 2011 ). capture counterparty exposures, market risk, and a host of contingent claims. the so - called basel iii proposals address many of these issues. 4 the most important elements are to : create global standards for liquidity of sufficient rigour to allow our financial firms to withstand future volatility in the global financial system. raise substantially the quantity, quality, consistency, and transparency of the tier 1 capital base. it is essential that this is true loss - bearing capital, which means that it must be predominantly tangible common equity. introduce a leverage ratio as a complement to the basel ii risk - based framework. the leverage ratio should be simple to calculate and non - binding in normal states. in effect, it is a safety harness that is designed to protect against risks that regulators think are low but which, in fact, are not. introduce a capital buffer above the minimum capital requirement in order to ensure that banks and supervisors take prompt corrective action before bank capital levels fall below the minimum. it would appear reasonable that this buffer should be large enough to absorb the losses of the last crisis. it could also vary over time so that it is at its maximum in periods when credit is growing rapidly and system | 0 |
inflation change materially, the conditional commitment would change. the only constant is that the bank will consistently set monetary policy appropriately in order to achieve the inflation target. conclusion to conclude, one lesson should be clear : policy matters. aggressive policies arrested the economic free fall triggered by the financial crisis. policy action is driving the initial recovery. policy - makers will have to act deftly to maintain stimulus long enough for private demand to take up the burden of growth, but not too long to undermine confidence in and the sustainability of that growth. even once that feat is accomplished, the aftermath of the crisis will make considerable demands on structural policies in all countries, including canada. recent events were a watershed. a powerful and sustained restructuring of the global economy has begun. canada is entering this period with many strengths, but the efforts required of us will be historic. our businesses will need to develop new markets as the traditional advantage of relatively open access to u. s. markets becomes less valuable. the bank of canada will continue to review, reflect, and report on the broader global forces i have outlined today. as i have reaffirmed, our principal contribution will be to consistently achieve our inflation target, so canadians can plan and invest with confidence. | required close contact with people - mainly in the services sector - were shut down. that disproportionately affected youth, women and low - wage workers. the closure of schools and daycare centres also hit women harder, and they experienced a larger decline in both hours worked and their participation rate. never before has so much of the economy been shut down, so suddenly and for so long. but thanks to new vaccines and exceptional fiscal and monetary policies, the recovery was the fastest ever. by august, four months after the employment lows of april, nearly two - thirds of canadian job losses were recouped. but with repeated waves of the virus hitting the economy, it took more than another year for employment to get back to its pre - pandemic level. still, that pace of recovery is unheard of, far faster than in past recessions. what was behind the rapid recovery? part of it was because the recession came from an unprecedented event - the pandemic - driven shutdown of large parts of the economyand not from imbalances or structural problems in the economy. that meant that when the economy reopened, employment could be restored quickly. we expected a rapid rebound in employment with reopening, but we were concerned too many people would 2 / 5 bis - central bankers'speeches be left behind. we are still learning about the longer - term effects of the pandemic, but the scarring we were worried about wasn't as pervasive as we had feared. economic growth came roaring back quickly, and workers did not remain on the sidelines for long. the coordinated policy response of governments and central banks around the world played an important role in supporting the recovery. in canada, fiscal policies were designed to help keep workers attached to their employers and businesses afloat even with little money coming in. that limited damage to the labour market. our monetary policy actions complemented these fiscal policies. we cut policy interest rates and introduced quantitative easing to reduce borrowing costs. this supported spending and demand and helped restore employment. the reopening of schools and child care centres was as essential for parents as it was for children. as schools returned to in - class teaching, mothers came back to work, and the labour market participation of women bounced back to where it was before covid19 hit. by october 2021, canadian employment was above its pre - pandemic level, but the recovery was still uneven. sectors such as professional services, public administration and | 0.5 |
. the improved cyclical position and the significant reduction in the risk premium and interest rates on public debt have a major direct positive effect on public finances, in contrast to the adverse pressure wielded by these variables in recent years. the adjustment in public finances undertaken by the spanish economy is three - pronged : the gradual reduction in the budget deficit in line with the targets set, the strengthening of the fiscal governance framework and the reform of the pensions system. in light of the budgetary exercise under way, compliance with the fiscal commitments acquired at the european and national level should be the cornerstone of our budgetary policy. fulfilment of these objectives will allow us to build on the gains in credibility already attained and to turn around the upward trend in the public debt / gdp ratio. both goals are prerequisites for a durable economic recovery. bis central bankers β speeches one of the main changes to the institutional framework of spanish fiscal policy has been the creation and start - up of the autoridad independiente de responsabilidad fiscal ( independent authority for fiscal responsibility β iafr ). the iafr will be playing a most prominent role throughout the budgetary cycle, monitoring compliance with the principle of budgetary stability in the general government sector, in accordance with the provisions of article 135 of our constitution and with european regulations. in this way spain is moving to enhance its economic governance, joining those eu countries β practically all of them β that have this type of agency. the iafr, adhering to the principles of independence, transparency and accountability, will contribute to improving control over fiscal policy and to introducing greater budgetary discipline in all tiers of general government, in line with the law on budgetary stability and financial sustainability approved in 2012. more specifically, and focusing on the budget for this year, the iafr has recently published a report on macroeconomic forecasts ( informe sobre las previsiones macroeconomicas ), endorsing the government β s macroeconomic projections that underpin the draft state budget and analysing the consistency of the projections made in previous years. furthermore, by 15 october, the iafr is to publish its report on the draft budget ( informe sobre el propio proyecto de presupuestos ), in which it will assess its suitability with a view to meeting the objectives of stability, debt and the rule that ties spending to economic growth. as regards the sustainability of public finances in the | ran for much of q2, whereby a notable increase in the decline in gdp and in employment in this period is to be expected. the latest banco de espana macroeconomic projections, published in june against a background of unusually high uncertainty, posted estimates of quarter - on - quarter declines in activity in a range between - 16 % and - 21. 8 %. and the information since available tends to confirm that the decline in economic activity in q2 as a whole will have been in this range. that said, an improving path could be seen throughout q2, in tandem with the ongoing gradual reopening of the economy. at present, then, we are witnessing an incipient recovery in the economy, which, however, is still incomplete, uncertain and uneven. the correlation of this economic activity during q2 with the intensity of the restrictions on people β s movement in force at each point in time was very high. thus, some indicators that measure people β s movements hit record lows in the first two weeks of april, with declines of around 80 % in motorway traffic and fuel consumption, and of over 90 % in the case of airport traffic. this was reflected in the high - frequency indicators of economic activity in the weeks in which the lockdown was stricter ; then, for example, we saw reductions in electricity consumption by firms and in consumer spending paid using cards of approximately 30 % and 60 %, respectively. for april as a whole, there was an unprecedented event in the time series when some variables fell practically to zero. this was the case of new car registrations and international tourist inflows, the latter variable obviously being closely related to the restrictions on personal movement. since early may, and to a greater extent in june, the progressively staggered and regionbased easing of the lockdown measures prompted a gradual recovery in the mobility indicators and, in tandem, in economic activity indicators. this was particularly so in the final stretch of the lockdown - easing process when trips between provinces in different regions and the arrival of foreign tourists from the schengen area were once again permitted. however, it is worth noting the role that voluntary limitations on movement probably continue to play. these mean that movement is still some way off full normalisation, especially as regards international movements, which are so important for a country such as spain where, as you know, the significance of tourism within the productive structure is so high. in late june, the volume of air traffic was still 65 % down | 0.5 |
rasheed mohammed al maraj : global regulation and offshore centres β onshore vs offshore address by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the gcc private banking conference, manama, 7 march 2012. * * * your excellencies, distinguished guests, ladies and gentlemen : it is a great pleasure and a privilege to be addressing this conference. over the course of the day speakers and delegates will debate and reflect upon many aspects of the private banking environment, and i have no doubt that the initiatives which will be identified here will provide interesting and useful ideas. my speech today will concentrate on the importance of regulation to the financial industry in general, and the private banking environment in particular. i shall explore what the cbb has done, explain why that has been beneficial to our stakeholders, and provide an insight into our priorities in the coming period. the cbb has a proud regulatory history. our framework has been moulded over many years, and it has served our stakeholders well in times of local, regional, and international turbulence. it provides clear leadership and direction to licensees, and it is designed to provide investors with a detailed understanding of the way in which the cbb expects banks and financial institutions to discharge their responsibilities. this is due, at least in part, to our philosophy of β constant improvement β. as such a great deal of our work is pro - active, and all of our work is designed to mitigate risk in a controlled manner whilst accepting that risk is an inherent ingredient in the financial industry. we consult with practitioners and the various other stakeholders in the financial sector to understand their needs and desires, and we strive to be responsive to those needs. a fundamental premise of our approach is that we make considerable efforts to ensure that our licensees understand the importance of, and implement and comply with, recognized international best practice in their field. but not everything is local. global capital flows are critical for bahrain. we are a small nation ; we have an open economy and we do not impose complex capital controls. we welcome ethical investment from any source, and we recognize that inward capital flows benefit the wider economy. in keeping with those goals, the cbb has introduced a number of improvements to our regulations during the recent past, many of which have had an impact on the wealth management industry, either directly or indirectly. for example the role of corporate governance has been enhanced, and the cbb was a key player in the | investors seek to exploit the new opportunities created by the improved environment. households seek to raise consumption in anticipation of higher future incomes and wealth. such efforts rely on the financial sector : finance provides the necessary bridge between opportunities and expectations today, and higher productivity, output and incomes tomorrow. 4 how do financial intermediaries manage these inter - temporal flows in such an uncertain environment? the challenge of doing so is compounded by changes to the financial sector itself. technological advances or regulatory changes in the real economy are also likely to have direct implications for banks and financial markets. financial innovation abounds in such a situation. financial regulators are faced with new instruments and processes to police. in this context, financial market participants face both a favourable macroeconomic environment β stronger economic growth and relatively benign price developments β and many new, and apparently profitable, opportunities at the firm level. the question arises of whether such circumstances prompt them to lapse into euphoria : to take on more risk ; to expand balance sheets more rapidly ; to increase leverage ; and to bid up asset prices. 5 of course, the underlying shock to fundamentals is in many cases favourable and offers the prospect of greater prosperity. but the danger exists that financial imbalances may emerge in such a situation. such imbalances both increase the vulnerability of the financial sector and the broader economy to future economic shocks and may create unsustainable positions in financial institutions that will eventually unravel of their own accord. in principle, economic fundamentals impose a limit on such euphoria and imbalances, thereby introducing self - equilibrating forces for the economy. but assessing such fundamentals is notoriously difficult β for policy - makers and the private sector alike β all the more so because the evolution of fundamentals themselves can be influenced by the pervasive euphoric state of financial markets. in this context, levels of leverage, liquidity or asset prices completely outside historical norms can be justified on the basis of a four - word refrain, recently used by carmen reinhart and ken rogoff for the title of their book : β this time is different β. 6 but, as reinhart and rogoff demonstrate, experience over several centuries reveals that the self - sustaining booms induced by this sequence of events are ultimately unsustainable. they culminate in financial crash, with severe consequences for both the financial sector and the stability of the real economy. this time is not so different after all. see : | 0 |
deepak mohanty : investment and its financing β what causes private investment to remain relatively low in asia? welcome remarks by mr deepak mohanty, executive director of the reserve bank of india, at the asia - europe meeting ( asem ) conference on β investment and its financing : what causes private investment to remain relatively low in asia? β, mumbai, 16 december 2010. * * * 1. mr. peter bekx, director, european commission. mr. subir gokarn, deputy governor. mr. moreno bertoldi, head of unit, european commission. ms. valerie rouxellaxton, head of sector, european commission. distinguished representatives from the asem member countries. esteemed colleagues of central banks, representatives from multilateral organisations, think - tanks and academia, distinguished experts and friends. i am really privileged to have this pleasant opportunity of welcoming you all on the occasion of asem conference on behalf of the reserve bank of india and on my own behalf. i understand that this is the first asem conference of european commission in india. i thank the european commission for this opportunity. 2. i am indeed honoured to welcome you all to this lovely city of mumbai. as some of you may be aware, mumbai has a unique place in indian history and commerce. mumbai, built on seven islands, was the first british indian possession. mumbai came as a part of the royal dowry in 1661 to king charles ii of england on his marriage to the portuguese princess. it was later leased to the east india company for Β£10. today you can β t get even a square inch of land in mumbai for that price. today mumbai is one of most expensive cities in the world. mumbai is the business capital of india and handles major share of india β s commerce. it houses the headquarters of many major banks, financial institutions, insurance companies and stock exchanges. mumbai β s nature as the most eclectic and cosmopolitan indian city is symbolized in the presence of bollywood within the city, the centre of the globally - influential hindi film and tv industries. the city has valiantly faced many setbacks and kept up its vibrancy. that is what mumbai is! be that as it may, i am sure, you will get an opportunity during your stay to go around the city and experience for yourself the brisk life of mumbai. the marine drive which is just opposite this hotel is popularly known as queen β s necklace which you could see from the rooftop where we will have our dinner | tonight. i must also add that the weather is very pleasant at this time. 3. now let me turn to today β s event. the asia - europe meeting, generally known as asem, is the embodiment of asia - eu collaborative involvement in the endeavour of enhancing growth opportunities in both these regions. the forum of asem provides a platform for useful dialogue at various levels between asia and europe on almost all issues of relevance ranging between finance, education, culture, climate, information technology and governance. the asem conference series which focus on topical issues provide useful inputs into asem dialogues. the asem conferences before, whether on finance or growth or terrorism, have brought in insights into the issues aiding policy making both in europe and asia. 4. the theme of the present conference β β investment and its financing : what causes private investment to remain relatively low in asia β is topical and could not have come at a better time. it is particularly very important because of two main reasons. first, as we emerge from the financial storm of the last couple of years, investment has the key role to restore potential output to sustain aggregate demand. second, investment growth in the emerging economies of asia can play a pivotal role in the multi - speed recovery of the global economy characterized by protracted rehabilitation of over - extended balance sheets in the advanced economies. 5. this platform, in my view, should be seen as a great opportunity to the academicians as well as policymakers of both asia and europe not only to learn from each other β s experiences but also to develop a vision for the realisation of faster and smoother growth trajectory. after every crisis, market agents, regulators, journalists and academics generally believe and persuade themselves that this time it is different. but it never is. there is a lot to learn from the past experiences of the crisis and the forum like asem conference can be immensely beneficial in sharing them. 6. let me now take this opportunity to discuss briefly about the format of the conference. we will cover the conference theme in five sessions and a panel discussion. we begin with the keynote address by our deputy governor dr. subir gokarn followed by the technical sessions and discussions. 7. the first session will deal with what drives investment in asia. the second session will delve deep into the issues related to investment and productivity growth in asia. the third session will deal with credit growth and financial stability in the asian countries. the fourth and the last session of today will | 1 |
eds ) ( 2018 ), conference, reserve bank of australia, sydney. available at < https : / / www. rba. gov. au / publications / confs / 2018 / >. central bank frameworks : evolution or revolution? proceedings of a Β© reserve bank of australia, 2001 β 2019. all rights reserved. the reserve bank of australia acknowledges the aboriginal and torres strait islander peoples of australia as the traditional custodians of this land, and recognises their continuing connection to country. we pay our respects to their elders, past, present and emerging. https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 07 - 25. html 14 / 14 | scammers. the public is advised to frequently check the amaran scam facebook page by bank negara malaysia, as well as cyber crime alert and semak mule by pdrm for the latest updates. recognising the need to intensify the awareness on financial scams, i would like to congratulate the banking industry for coming together to undertake the national scam awareness campaign. throughout this campaign, the public can expect to see more prominent scam awareness advertisements, messages and prompts on banks'own channels as well as mainstream and social media. i understand there will also be community outreach programmes to educate the public. as digital finance becomes increasingly pervasive, and as new threats emerge, the effort to educate the public must be sustained well into the future. we cannot rest on our laurels. i would like to reiterate that the fight against financial scams is one fought on multiple fronts. we are only stronger if we work together and play our part in order to safeguard the security and integrity of our country's financial system. 2 / 2 bis - central bankers'speeches | 0 |
costs. taking this further, it may be possible, in time, for government to dispense with agencies'transactions accounts and the associated daily sweep, allowing agencies to draw their daily spending requirements directly from the government's core accounts at the reserve bank. this could offer savings by avoiding fees currently applied on existing transaction accounts as well as increase administrative efficiency. finally, the ability to send more complete remittance information with a payment could reduce costs for australian businesses making payments to the government by including remittance information within the payment message rather than sending the information via a separate channel. it could also reduce the amount of back office work required by government agencies in trying to align payments with relevant information. open banking the government announced in may that it accepted the recommendations of a review into the design, operating model and regulatory framework for open banking in australia, and will implement them in stages over the next few years. [ 3 ] like npp, open banking represents a significant advance in banking arrangements, giving consumers of banking and financial services the right to access and https : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 08 - 23. html 5 / 7 23 / 08 / 2018 the reserve bank's government banking business | speeches | rba share their banking data with third parties, including other payment service providers. the changes will increase competition for services. the reserve bank, as a banking service provider, will be participating in the open banking arrangements and is already considering ways by which our customers, along with third parties, can access their own banking data, consistent with the recommendations in the review. it is, of course, a decision for government agencies as to how they will utilise open banking. as with any new service offering, the reserve bank is consulting its customers with regard to the potential advantages for their business. at the very least, government agencies may use open access arrangements to centralise the collection of their banking data, particularly where they hold accounts at more than one financial institution. this would help to streamline the flow of their banking data to their financial management systems and provide better reporting for analytical purposes. whatever the case, the reserve bank, as a service provider, intends to play a role as a holder of data that government agencies can access from services currently provided by the reserve bank and as a receiver of data from commercial providers of banking services to government agencies. this would reduce reporting and analysis costs for the government as well | be trade spillovers from the weaker us economy to the developing world and to other developed countries in due course, even though there is not a lot of evidence of such an effect in the data we have as yet. the spillovers will not just be from the us either. the fact that the euro area appears to be slowing a bit, with the uk also expected to slow before long, means that the core industrial countries as a group may, over the period ahead, impart noticeably less impetus to global growth than they have in recent years. how big a difference that will ultimately make we cannot know for sure, given the apparent increased internal dynamism of much of the emerging world, and given that we do not know what policy responses those countries may make. but the bigger question is the extent to which a range of countries also experience the same shock as the us. it is in answering this question that we need to consider the financial events of the past year or so. the essential elements are well known by an audience in this city. over some years, the availability of credit increased in many countries. in the us in particular this phenomenon saw a large extension of credit into the sub prime space in the housing market. this was all aided by the securitisation process and the search for yield, which had its genesis in the high saving rates in other parts of the world. while most of these sub prime borrowers have in fact been servicing their loans quite adequately, flaws in the process saw standards slip towards the end of this cycle. as the problems came to light, pressure came to bear on various entities. institutions with exposure to sub prime mortgage assets, holders and intending issuers of structured products in general, sivs, conduits and other intermediaries that relied on wholesale funding were all tested. core banking institutions that sponsored off balance sheet entities very quickly found funding pressures transferred back to them. doubts over asset quality, uncertainty over funding and generally reduced appetite for risk suddenly erupted last august into a scramble for liquidity. these pressures have been seen in most of the developed economies, though they have been most acute in the us, the uk, the euro area and canada. for at least some of the g7 economies, then, these events would appear to have the characteristic of a common shock, in the form of a rise in the market cost of finance and, in some cases, perhaps, the possibility of a wider withdrawal of credit. even though it was american borrow | 0.5 |
sabine mauderer : gender economics speech by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the g7 cebadi diversity, equality and inclusion summit 2022, frankfurt am main, 4 november 2022. * * * 1 introduction dear central banking colleagues, dear guests, a very warm welcome from me, too. i am very proud that the bundesbank is hosting this year's central bank - hr diversity, equality and inclusion summit. it goes without saying that diversity matters for any institution. and for central banks in particular, as they act on behalf of the wider public. i would like to start today's talk by showing you a photograph of the ecb's governing council. this photo was taken during an informal gathering at a country house hotel outside frankfurt about three years ago. let's take a look. here you can see a group of mostly middle - aged, white european men sitting around a large table. there is also one woman at the table, president lagarde. so, what can we deduce from this? first, decisions are taken by a group. that is positive by itself, because ideally the decision - making process should reflect the different values and perceptions of all members. however, the group appears to lack diversity. true, a person's outer appearance can be deceptive. it does not necessarily tell you anything about his or her value set or perceptions. nevertheless, it is widely acknowledged that diverse teams β - be it in terms of gender, ethnicity or thought β produce a wider range of opinions, leading to better and more robust results. it is also widely acknowledged that a more diverse decision - making body better reflects the blend of values and perceptions of a democratic society. 2 main part what i would like to show you today is that values and perceptions can influence precisely those economic indicators that dominate our decision - making. i will elaborate this point with two examples, starting with the concept of gross domestic product, or gdp. how do we measure economic activities? how do we value them? and what does that tell us about our value structure? as a second example, i would like to show you that humans differ in the way they perceive changes in price developments. 2. 1 gdp 1 / 3 bis - central bankers'speeches undoubtedly, gdp is one of the most prominent economic indicators. it measures most of a country's output 1 of goods and services over a certain period. | is the case of german hypo real estate, which failed in 2009. third, taking banking supervision from the national to the european level will add a degree of separation between supervisors and the banks they supervise. this will prevent supervisors from treating their banks with kid - gloves out of national interest. nevertheless, we can expect european banking supervision to draw upon the experience and resources of national supervisors. supervision itself will take place in so - called joint supervisory teams. these teams are headed by ecb staff but are composed of national supervisors. to sum up : there is a lot we can expect from european banking supervision, and now it has to deliver. in this regard, we should remember one thing : european banking supervision is an bis central bankers β speeches immensely complex operation that has been put together in a very short time. thus, it would probably be unrealistic to expect everything to run smoothly from day one. it will certainly take some time before every detail is sorted out deep down in the engine room of actual banking supervision. nevertheless, i am confident that we will get there and that our expectations will be fulfilled. 3. the single resolution mechanism β the necessary second step but we should not let unrealistic expectations become the roots of complacency and, consequently, disappointment. european banking supervision is not the holy grail of financial stability. it certainly contributes to making banks more stable, but it is no panacea. thus, we have to supplement it with other measures. let me elaborate on one point in that regard. banking supervision cannot prevent individual banks from failing β not at the national level and not at the european level. is this a problem? not at all : the possibility of failure is an essential element of a market economy. nevertheless, banks are special in that respect. just remember the 15th of september 2008, when the failure of a single investment bank pushed the financial system to the brink of collapse. the lesson is that the failure of very large or interconnected banks can lead to a systemic crisis. thus, these banks are perceived as being β too big to fail β : when push comes to shove, the government might be compelled to step in to prevent disaster. consequently, β too big to fail β banks operate with an implicit and cost - free insurance. apart from the costs this insurance imposes on taxpayers, it most definitely sets the wrong incentives for the risk - conscious behaviour of banks. thus, solving the β too big to fail β problem is paramount for making | 0.5 |
been $ 564 billion. a reasonable hypothesis is that the congress would, in fact, have responded by taking actions to pare the deficit. in that case, the end result would have been lowered government dissaving and correspondingly higher national saving. a simple reshuffling from the unified accounts to the lockboxes would not have, in itself, added to government savings ; but higher taxes or lower spending would have accomplished that important objective. the major attraction of personal or private accounts is that they can be constructed to be truly segregated from the unified budget and, therefore, are more likely to induce the federal government to take those actions that would reduce public dissaving and raise national saving. but it is important to recognize that many varieties of private accounts exist, with significantly different economic consequences. some types of accounts are virtually indistinguishable from the current social security system, and the congress would be unlikely to view them as truly off - budget. other types of accounts actually do transfer funds into the private sector as unencumbered private assets. the congress is much more likely to view the transfer of funds to these latter types of accounts as raising the deficit and would then react by taking measures to lower it. * * * failure to address the imbalances between our promises to future retirees and our ability to meet those promises would have severe consequences for the economy. the most recent projections by the office of management and budget show that spending on social security, medicare, and medicaid will rise from about 8 percent of gdp today to about 13 percent by 2030. 3 under existing tax rates and reasonable assumptions about other spending, these projections make clear that the federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever - growing interest payments that augment deficits in future years. but most important, deficits as a percentage of gdp in these simulations rise without limit. unless the trend is reversed, at some point these deficits would cause the economy to stagnate or worse. closing the gap solely with rising tax rates would be problematic ; higher tax rates rarely achieve a comparable rise in tax receipts, and the level of required taxation could in itself severely inhibit economic growth. in light of these sobering projections, i believe that a thorough review of our commitments - and at least some adjustment in those commitments - is urgently needed. the necessary adjustments will become ever more difficult and larger the longer we delay. | . increases in compensation might be offset by higher labor productivity or absorbed by a narrowing of firms'profit margins rather than passed on to consumers in the form of higher prices ; in these circumstances, gains in nominal compensation would translate into gains in real compensation as well. underlying productivity trends appear favorable, and the markup of prices over unit labor costs is high by historical standards, so such an outcome is certainly possible. moreover, if activity expands over the next year or so at the moderate pace anticipated by the fomc, pressures in both labor and product markets should ease modestly. that said, the possibility remains that tightness in product markets could allow firms to pass higher labor costs through to prices, adding to inflation and effectively nullifying the purchasing power of at least some portion of the increase in labor compensation. thus, the high level of resource utilization remains an important upside risk to continued progress on inflation. another significant factor influencing medium - term trends in inflation is the public's expectations of inflation. these expectations have an important bearing on whether transitory influences on prices, such as those created by changes in energy costs, become embedded in wage and price decisions and so leave a lasting imprint on the rate of inflation. it is encouraging that inflation expectations appear to have remained contained. the projections of the members of the board of governors and the presidents of the federal reserve banks are for inflation to continue to ebb over this year and next. in particular, the central tendency of those forecasts is for core inflation β as measured by the price index for personal consumption expenditures excluding food and energy β to be 2 to 2 - 1 / 4 percent this year and to edge lower, to 1 - 3 / 4 to 2 percent, next year. but as i noted earlier, the fomc has continued to view the risk that inflation will not moderate as expected as the predominant policy concern. monetary policy affects spending and inflation with long and variable lags. consequently, policy decisions must be based on an assessment of medium - term economic prospects. at the same time, because economic forecasting is an uncertain enterprise, policymakers must be prepared to respond flexibly to developments in the economy when those developments lead to a re - assessment of the outlook. the dependence of monetary policy actions on a broad range of incoming information complicates the public's attempts to understand and anticipate policy decisions. clear communication by the central bank about the economic outlook, the risks to that outlook, and its monetary policy strategy | 0 |
meetings and perhaps even hold on - the - spot conciliation meetings for complaint redressal. ultimately, responsible borrowing facilitated by financial literacy and responsible lending by financial institutions are essential for consumer protection and financial stability. summing - up 30. financial inclusion primarily represents access to a bank account backed by deposit insurance, access to affordable credit and the payments system. the indian experience demonstrates that financial inclusion can work within the framework of mainstream banking within a sound regulatory framework. regulations have been used to facilitate financial inclusion without subventions or compromising on prudential and financial integrity norms. regulations have been proportional to the risks. innovative solutions like shg bank linkage, branchless banking have been adopted after careful assessment of risks to the banks as also to customers. the preference has been to restrict deposit taking to banks and non - bank financial companies are encouraged to focus on innovative approaches to lending under a lighter regulatory framework, with additional regulations for systemically important nbfcs entities. non - banking non - financial players are encouraged to be partners and agents of banks rather than principal providers of financial services. fair and transparent code of conduct enforced through an effective grievance redressal system and facilitated by financial literacy and education are the cornerstones for ensuring consumer protection which is an overarching objective of financial regulation in the context of financial inclusion thank you. | india. as part of the celebrations, several outreach activities were undertaken at remote unbanked areas. during these visits, we were often asked by the people about β fly by night β operators who had vanished with their life savings. the distress to people and the damage to public confidence caused by such unscrupulous operators are something that no regulator can ignore. sound and reliable deposit taking entities, backed by deposit insurance for small deposits, accessible to all are, therefore, essential for financial inclusion. it is not possible to have sound and reliable deposit taking entities and a deposit insurance system without financial regulation. hence, in my mind, there is no doubt that financial regulation and financial inclusion work together β the former is a must for the latter. 6. another reason why there is convergence between financial regulation and financial inclusion is that if financial intermediaries have to deliver affordable services they need to take advantage of technology and economies of scale β this requires them to grow to some optimal size. such growth is not possible without capital. investors and lenders are comfortable with providing more funds only if such entities are regulated. this was our experience with micro finance institutions ( mfis ) wanting to be registered as non - banking financial companies with rbi, but wanted us to reduce the minimum capital requirement below what we had prescribed for non banking financial companies in general. we allowed them to register, on fulfilling the prescribed norms, without lowering the minimum capital requirement. the dramatic growth of mfis in the recent period on account of support by lenders and investors owes in no small measure to their being registered with rbi as non banking financial companies ( nbfcs ). 7. more recently, in the context of the global crisis, it is observed that undue reliance on borrowed funds can be a source of risk and a more stable retail base of deposits is good for both the bottom line and resilience. similarly, a diversified asset portfolio lends to less volatility in earnings. thus financial inclusion which can promote such a retail and diversified portfolio β in assets and liabilities β also promotes financial stability. regulatory interventions for facilitating financial inclusion 8. in this section, i would like to highlight the various regulatory measures taken by the rbi to facilitate financial inclusion. the key message here is that the regulatory approach has not compromised with prudential norms for deposit taking entities. we are of the firm view that only sound and strong institutions can deliver financial inclusion. within the overall traditional prudential framework, what we have | 1 |
outbreaks be avoided as social - distancing measures lapse? how long will it take for confidence to return and normal spending to resume? and what will be the scope and timing of new therapies, testing, or a vaccine? the answers to these questions will go a long way toward setting the timing and pace of the economic recovery. since the answers are currently unknowable, policies will need to be ready to address a range of possible outcomes. the overall policy response to date has provided a measure of relief and stability, and will provide some support to the recovery when it comes. but the coronavirus crisis raises longer - term concerns as well. the record shows that deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy. 3 avoidable household and business insolvencies can weigh on growth for years to come. long stretches of unemployment can damage or end workers β careers as their skills lose value and professional networks dry up, and leave families in greater debt. 4 the loss of thousands of small - and medium - sized businesses across the country would destroy the life β s work and family legacy of many business and community leaders and limit the strength of the recovery when it comes. these businesses are a principal source of job creation β something we will sorely need as people seek to return to work. a prolonged recession and weak recovery could also discourage business investment and expansion, further limiting the resurgence of jobs as well as the growth of capital stock and the pace of technological advancement. the result could be an extended period of low productivity growth and stagnant incomes. we ought to do what we can to avoid these outcomes, and that may require additional policy measures. at the fed, we will continue to use our tools to their fullest until the crisis has passed and the economic recovery is well under way. recall that the fed has lending powers, not spending powers. a loan from a fed facility can provide a bridge across temporary interruptions to liquidity, and those loans will help many borrowers get through the current crisis. but the recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems. additional fiscal support could be costly, but worth it if it helps avoid long - term economic damage and leaves us with a stronger recovery. this tradeoff is one for our elected representatives, who wield powers of taxation and spending. thank you. i look forward to our discussion. references blanchard | mark carney : bank note launch remarks by mr mark carney, governor of the bank of canada and chairman of the financial stability board, at the launch of the new 50 dollar bank note, quebec city, quebec, 26 march 2012. * * * hello and welcome. it is a pleasure to be here to announce the launch of the new 50 dollar bank note. this bank note features a symbol of canadian innovation and scientific excellence : the canadian coast guard icebreaker and research vessel, the amundsen. today is also a celebration of the 50th anniversary of the coast guard. so we find ourselves in an ideal location, in quebec, a city with a rich maritime heritage. icebreakers are an important part of the coast guard β s fleet, and it is entirely fitting to feature one on our currency. these new 50 dollar polymer bank notes, the second of our frontiers series, will become available in banks throughout the country as of today. this series of bank notes is called β frontiers β for two reasons. first, each bank note includes images that represent canada β s exploits and achievements, particularly those in the sciences, technology or exploration. the image on this note is an example of expanding the frontiers of knowledge and understanding of the arctic. the bank notes themselves have crossed a technological frontier. there is simply no other currency like it. these new notes feature a unique combination of transparent elements, holographic images, and other security features. they are the result of innovative technology and canadian ingenuity, including research by the bank of canada and excellent collaboration among physicists, chemists, engineers and other experts in the bank note industry. thanks to greatly enhanced security features and efforts undertaken by police forces, especially the surete du quebec and the rcmp, as well as the support of financial institutions and retailers, counterfeiting rates have been reduced by 90 per cent since 2004. issuing this new series of bank notes enables us to continue to stay ahead of counterfeiters. in addition to impressive security features to combat counterfeiting, these notes will last longer than those made from paper β at least two - and - a - half times longer β and will therefore be more economical and have a smaller environmental footprint. when they are eventually withdrawn from circulation, they will be recycled into other products here in canada. safer, cheaper, and greener : indeed, these new bank notes are a 21st century achievement of which all canadians should be proud and in which they can have full confidence. this | 0 |
for the eurosystem's monetary policy. indeed, it was emphasized that some growth dispersion within monetary union is inevitable and even desirable. related to this, i am personally fully convinced that individual euro area countries can cope with asymmetric shocks that are inevitable fact of life in a monetary union. indeed, before finland joined emu, there was much skepticism about its suitability for a country whose economy, in particular its export structure, was very different from the rest of the euro area. after more than eight years in the monetary union, many of the feared asymmetric shocks have been realized ( e. g., volatile swings in the telecom sector and significant weakening of the u. s. dollar ) but the finnish economy has performed well, both in terms of growth and price stability. turning back to the case of africa, it seems that the combination of heterogeneity ( both cultural and economical ), the larger number of initial participants and the proliferation of overlapping integration initiatives implies special challenges for devising clear and credible decision - making structures to support integration process. at the same time, these initial conditions imply that such structures are indispensable for successful broadening and deepening of economic integration. against this background, the importance of strengthening domestic and supranational institutions by clarifying their decision - making and by making them more transparent and accountable was regarded as essential. conclusion finally, i would like to thank all the participants, especially our speaker and discussants. i think that we had a frank and meaningful discussion of the challenges facing both eu and africa. i think that we all benefited and learned from this discussion that has offered many different perspectives to issues of common interest. it seems to me that, notwithstanding formidable challenges and many potential pitfalls, the outlook for greater integration in the both regions is fundamentally positive. with these remarks, i like to conclude and wish my african colleagues success in their challenging road toward further economic integration in africa. | improved their profitability and capitalization, thanks to their growing net interest income. more generally, financial systems throughout the world have remained remarkably resilient in the last few years β despite being hit by the pandemic, the spike in inflation, rapid interest rate increases and the deposit runs in regional american banks. the strengthened resilience is a testament to the profound regulatory and supervisory reforms after the global financial crisis, as well as to the better readiness of policymakers to take bold, timely and exceptional policy actions in times of crisis. we expect that the systemic risks and vulnerabilities in finlandΒ΄s real estate market will start to ease this year, assuming that interest rates fall and the economy starts to recover as projected. 2 / 5 bis - central bankers'speeches as we β the bank of finland β stated in our annual financial stability assessment, published in may, we are fully aware that the deterioration in the international security environment exposes finnish and other western financial systems to shocks and widespread disruptions. for instance, there is a heightened risk that the financial market infrastructure and financial institutions could face more frequent and severe cyberattacks and hybrid interference. in response to this, finnish financial institutions have improved their continuity planning and contingency preparations. the national emergency account system established in finland two years ago, in turn, ensures that critical banking and daily payment services would be available to the public even in times of severe disruption. the short - term economic outlook for the euro area and finland is now somewhat brighter than projected just a while ago. however, our long term growth prospects look rather weak, unless we can manage to find new sources of growth. that goes for all of europe, too. as documented by ian goldin and others, the growth rate of labour productivity in the oecd economies between the 1970s and the 1990s was around 2 %. in the current century, it has fallen to 1 %. the gap between europe and the us has been widening, especially since the pandemic. the discrepancy between post - pandemic developments in productivity is, however, exaggerated if we only look at productivity per person. this is because the pandemic caused a very large adjustment in the number of people employed in the united states, while in europe, thanks to different job retention schemes, jobs were preserved β but hours worked fell abruptly. in other words, average hours worked decreased dramatically in europe, but much less in the us. consequently, productivity per person looks | 0.5 |
: achievement and maintenance of macroeconomic stability, especially price and financial stability ; in addition, meeting the pre - requisites for the monetary union and creation of key institutions responsible for implementation of the eamu roadmap ; establishment of an efficient payment mechanism ; and, through macro - prudential regulation of the financial system. your excellency, ladies and gentlemen, the recent financial crisis has shown that although financial integration improves access to financial markets and the opportunities for risk diversification, it may also increase the scope for financial contagion effect across countries. in this regard, eac central banks must ensure that financial stability arrangements keep pace with the degree of financial integration ; strengthen supervisory capacity and financial sector resilience ; and, ensure adequacy of capital and liquidity buffers. ladies and gentlemen, financial stability requires a concerted effort by key stakeholders. it is therefore important for eac central banks to strengthen synergies with other financial sector players. but also we have seen the benefits of innovations in the financial sector for inclusive growth and reducing cost of doing business. to conclude, your excellency, ladies and gentlemen, i once again want to reiterate that the benefits of regional integration outweigh the challenges and that eac countries can overcome the challenges. the central banks in the region have a role to play in the transformation of the eac economies. consequently, the eac central banks have put their best foot forward to support the integration agenda during the 10 year transition window to the establishment of the eac central bank. to accomplish this, the eac central banks will harmonize their macroeconomic frameworks and policies and enhance internal capacities within the region. thank you, your excellency, thank you, ladies and gentlemen. bis central bankers β speeches | economic management and better coordination and bargaining position in international institutions. increased convertibility of regional currencies and subsequently, creation of a single currency area will also minimize exchange rate uncertainty and eliminate volatile swings in the exchange rate, reduce transaction costs and lower interest rates and inflation. in addition, creation of larger markets in the eac region will enable members to leverage their relative comparative advantages into one unified block of economic activity capable of offering more goods and services on the international market than its competitors. furthermore, bridging infrastructure gaps through joint regional infrastructure projects that target key regional transport corridors will support trade and investment in the region. finally, integration will allow for free movement of goods and labour skills within the region in response to market demand. bis central bankers β speeches however, regional integration comes with some challenges. we have learnt from eu the pitfalls of regional integration : firstly, integration of economies could lead to loss of national sovereignty. to illustrate this, eac partner states may have to give up some of their sovereignty to supra - national institutions to be created such as the east african central bank ( eacb ), east african assembly, the commission on financial services, among others. secondly, partner states may no longer be able to enact policies to meet their specific needs and interests if such policies are in conflict with regional initiatives. for instance, use of fiscal or monetary policy to pursue a specific country development agenda. thirdly, it may be difficult for national governments to create and implement policies based on their own particular needs. in this regard, fiscal rules could limit a country β s ability to increase public debt to finance critical infrastructure projects or social safety nets. but one of the demonstrated challenges is the problem associated with the sovereign debt crisis in the euro zone. dissimilarities in current debt levels and structure also pose a threat. finally, the distribution of benefits and costs may be unequal due to different levels of development, as eu has demonstrated. therefore, the involvement of stakeholders is crucial for the success of regional integration initiatives. your excellency, ladies and gentlemen, despite the challenges, experience has shown that the benefits from regional integration outweigh costs. regional integration can promote peace, economic progress, structural change and growth with lasting benefits for the eac region. central banks have a role to play to make these benefits a reality and improve the livelihoods of the east african people. central banks will be required to contribute to the development and prosperity of the eac region through | 1 |
risk parameter estimates than those in qis4. recall that there have already been three rounds of u. s. public comments on the basel ii consultative papers between 1999 and 2004 ; an advance notice of proposed rulemaking ( anpr ) in 2003 ; and numerous agency discussions with congressional committees, banking groups, and individual banks. all have resulted in significant modifications to the proposal. once published, the npr and the supervisory guidance will once more elicit comments that could result in further revisions. particularly given its delayed issuance, the npr must solicit feedback from core and potential opt - in banks as to whether the current timeline for implementing basel ii in this country needs to be delayed or can be retained. looking forward, i agree with my colleagues at this table that it is prudent to delay the npr in order to see what we can learn from further review of qis4 data, recognizing at the outset that final answers will not be forthcoming because the requisite databases and risk - management systems are not yet in place. i hope that we can return to the npr before midyear, present it to the office of management and budget for its review, as our occ and ots colleagues must do, and release the npr in the fall. with such a schedule, one might hope that the parallel running period, currently scheduled for 2007, need not be delayed. but, as i noted earlier, it is important for the agencies to get feedback on this issue during the npr comment period. the views of banking organizations will provide critical insights into the feasibility of the scheduled 2008 start date for the transition run. once we have the views of the banking organizations, the agencies will be in a better position to reach a consensus on the timeline. basel ii has the potential to be an important supervisory step forward. the basel i framework is being arbitraged aggressively and provides us with less and less reliable measures on which to base a regulatory capital requirement for our largest and most complex banking organizations. moreover, banks have spent tens of millions of dollars preparing for the u. s. implementation of basel ii and have contracts for further investment. they are awaiting the npr, the guidance, and the final rules. their global competitors are proceeding, and u. s. banks will be eager to avoid being placed at a competitive disadvantage. i might add that, as supervisors, we believe that the core risk - measurement and risk - management improvements contained in basel ii are appropriate, regardless of how the future accord is | . interests in the complex and dynamic basel negotiation process. the u. s. banking agencies need to preserve our current flexibility to respond to basel issues if we are to develop a set of capital rules that are useful and productive for u. s. banks and thrifts. moreover, it is possible that the agencies are more likely to implement effectively an agreement that they helped shape than they would be one that was imposed on them and for which they did not understand fully the rationale. while we urge the congress not to move forward on this bill, we look forward to keeping congress fully informed as the basel process continues. i will be pleased to answer your questions. | 1 |
two - year reference period the bulgarian lev did not exhibit any deviation from its central rate due to its currency board arrangement, while the croatian kuna displayed a low degree of volatility and traded close to its central rate. third, all countries, with the exception of croatia, need to adjust their legal framework to comply with the requirements under union law. they must address issues relating to central bank independence and the prohibition on monetary financing. moreover, let me reiterate what i said here in 2020 when i presented our previous ecb convergence report. in the interest of the euro area as a whole and of each euro area accession country, convergence has to be reached on a lasting basis, and not just at a given point in time. this requires ongoing attention, also through our economic governance mechanisms and sound financial sector supervision. in order to achieve a high level of sustainable convergence, our convergence report emphasises the need for lasting policy adjustments in many of the countries under review. specifically, we emphasise that the next generation eu ( ngeu ) package represents a unique opportunity to accelerate the process of euro area convergence, with swift and effective implementation being crucial for its success. the state of economic and legal convergence in croatia let me now focus on croatia, which is the only country that fulfils all economic and legal requirements for adopting the euro and has expressed the wish to do so on 1 january 2023. with regard to price stability, the 12 - month average rate of hicp inflation in croatia was 4. 7 %, which is below the reference value of 4. 9 %. in terms of fiscal sustainability, croatia β s general government budget balance was just below the 3 % deficit reference value in 2021, while its debt ratio was above the 60 % reference value but on a downward trajectory. since the inclusion of the croatian kuna in erm ii, its deviations from the agreed central rate have been significantly smaller than the standard fluctuation band of erm ii. long - term interest rates stood at 0. 8 % on average and thus remained below the 2. 6 % reference value for the interest rate convergence criterion. from a legal perspective, croatian law is compatible with the treaties and the statute of the european system of central banks and of the european central bank. what is key is the amendment to the law on croatia β s central bank, which prohibits the croatian government from seeking to influence the members of its decision - making bodies. with the entry into force of the close cooperation | the elements that could potentially counter the boom - bust tendencies. let me give two examples of what is being done : β’ as regard prudential supervision, i would only mention the fantastic work which has been achieved by the basel committee under the leadership of bill mcdonough, the president of the federal reserve bank of new york, in the field of banking supervision. i trust that the new accord will permit a better and more appropriate handling of this extremely important domain as regards financial stability. i am also happy that the concept of β dynamic provisioning β, which is anticyclical by nature, has been recognised by the basel committee as a useful concept. β’ as regards accounting standards, it seems to me that we should also inject in the present meditations in the us, in europe and at a global level the concern for financial stability. let us beware of changes that would increase the procyclicality of accounting rules. let us favour changes that would simultaneously help fair accounting and diminish procyclicality. in that regard, it seems important to me to design accounting practices which would try to take into account of the time horizon of institutions and market participants. otherwise, we would take the risk of driving all financial institutions and market participants to shorten their time horizon down to a day - to - day basis. this could be a recipe to favour inappropriate market functioning and foster herd instinct in time of excessive volatility. 2. the need for an enhanced framework for crisis prevention and management i do not need to remind you of the long list of financial crises emerging market economies have gone through in the last two decades. against this background, the international community must, on the one hand, enhance crisis prevention and, on the other hand, design and implement better procedures for crisis resolution. 2. 1. authorities must reflect, in conjunction with the financial industry, on building up a suitable system of surveillance and crisis prevention. the objective of strengthening crisis prevention is shared by the private sector and by official community given the magnitude of potential losses ; indeed, in some cases, restructuring costs for banking crises have reached more than 40 % of gdp. building on international standards and codes is instrumental in establishing an appropriate institutional, supervisory and regulatory framework in the financial sectors of all market economies. the value of international standards is now widely recognised, insofar as they contribute to spreading international best practices and codes of good conduct, very closely linked to the globalisation process and the expansion of | 0 |
be done by an eu member state that is not yet member of the euro area. from the central bank perspective this involves : ( i ) a sound banking sector ; ( ii ) fiscal consolidation ; and ( iii ) structural reforms. good progress has been made in bulgaria with regard to the first two areas. a comprehensive asset quality review in 2016 helped restore confidence in the banking sector. bank lending is recovering, the overall profit is near historical highs and a process of market - based consolidation in the sector is underway, including a recent deal with a strategic investor from the euro area. furthermore, the public finances of bulgaria remain sound and the successful fiscal consolidation is illustrated by the budget surplus last year and the third lowest government debt to gdp ratio in the eu. as for the structural reform agenda, much more remains to be done in order to resolve remaining issues and help attract increased capital flows from the eu. 1 / 2 bis central bankers'speeches we at the central bank have already planned the next steps, which will build on recent progress. among other things, we plan to further strengthen our banking supervision, develop the crisis management framework for the banking sector, and reduce the level of nonperforming loans. to conclude, decisive actions are required at both the eu and national levels to address the current saving - investment mismatches within the eu. while expending the available toolkit is important, priority should be given to resolving the remaining underlying issues with regard to banking and financial integration, real convergence, and quality of project management. 2 / 2 bis central bankers'speeches | dimitar radev : addressing underlying issues of cross - border investment in the eu publication by mr dimitar radev, governor of the bulgarian national bank, in " views the eurofi magazine ". the magazine were disseminated during the eurofi high level seminar 2017 before ecofin, malta, 5 - 7 april 2017. * * * we are witnessing a downward shift in cross - border investment in the eu, while the eu current account moved to positive territory in recent years. the savings - investment mismatches, therefore, are at the heart of the conundrum we face in developing the cross - border investment in the eu. several initiatives to address this issue have been launched, including the investment plan for europe, and the european long - term investment fund. a large - scale new initiative is the establishment of the capital markets union intended to further enhance the mobilization of capital and its channeling to companies and infrastructure projects offering new opportunities for savers and investors across the eu. a few other initiatives are under consideration, including the creation of a european savings investment fund. however, the results of all initiatives have been mixed so far, and cross - border investment is stagnating. before moving forward we need to better understand the underlying factors behind recent developments. the current initiatives look technically sound, but the lack of sufficient progress in their implementation reveals a number of remaining underlying issues. these include : ( i ) the unfinished agenda with regard to banking and financial integration ; ( ii ) slow progress in real convergence ; and ( iii ) limited availability of adequate infrastructure and innovation projects. priority actions should, therefore, focus on addressing the underlying issues, and efforts at further expanding the already established toolkit come next. this would require bold steps at both the eu and national levels to regain confidence in the future of eu integration. at the eu level, there are institutional issues to be addressed concerning the future of the integration process. the five scenarios recently proposed by commission president jeanclaude juncker shed light on the possible patterns of integration between the eu members. however, there remains a potential conflict between the prospects of β multiple - speed β developments and advancing real convergence between the euro area and the rest of the eu. the eu needs to move promptly on this issue, in order to address uncertainties. the national authorities, at their end, should promote financial stability and fiscal solvency, and address structural weaknesses and bottlenecks. the experience of bulgaria may be indicative of what can | 1 |
lucas papademos : adoption of the euro by cyprus and malta speech by mr lucas papademos, vice - president of the european central bank, at the euro festivities marking the decision of the eu council on the adoption of the euro by cyprus and malta, brussels, 10 july 2007. * * * in less than six months from now, the euro will be part of the everyday life as the new currency of the people of cyprus and malta. this is an essential and practical consequence of the decision taken by the ecofin council today. it is a momentous decision in the history of both countries. and it is the culmination point of a process of economic adjustment and technical preparations. on behalf of the entire governing council of the european central bank, i would like to warmly congratulate all those involved in this process, and the people of cyprus and malta, on this accomplishment! the enlargement of the euro area to include these two countries is a significant and joyful event, not just for them, but also for all of us who are already part of the european monetary union. we at the ecb and the eurosystem are particularly pleased to welcome two new members in our central banking β team β. the central banks of cyprus and malta will become members of the eurosystem. and the governor of the central bank of cyprus, athanasios orphanides, and the governor of the central bank of malta, michael c. bonello will become members of the governing council of the ecb. the two governors, together with the other 19 members of the ecb β s governing council, will thus participate fully in the decision - making concerning the single monetary policy. we are looking forward to benefit from their experience and expertise in our deliberations. together, we will continue to analyse carefully the economic situation and outlook in the euro area and to do what is necessary to fulfil our mandate : to maintain price stability in the euro area as a whole, to the benefit of soon 15 countries and 319 million europeans. i am sure that the people of cyprus and malta are looking forward to the changeover to the euro. they rightly expect that it will take place smoothly and that they are informed about their new banknotes and coins. a smooth changeover to the euro will enhance their trust in the safety and integrity of their new currency. to this end, the ecb, in close co - operation with the central bank of cyprus and the central | european trade route β from paris to russia via frankfurt and leipzig β and for centuries has attracted people from all over the continent to its famous trade fairs. in the middle ages, as many as 40, 000 people would come here to exchange their wares β a number that exceeded the total population of β francofurtia β at that time. frankfurt has for centuries been a truly european financial centre, too. the development of the frankfurt borse in the late 16th century, for example, was a joint effort between locals and traders from the low countries and italy. 1 today, around four out of five 1 / 4 bis central bankers'speeches banks located in frankfurt are from other countries. and frankfurt has often been a european leader in the arts and design. a century ago, this was the home of the β neue frankfurt β programme β led by the mayor ludwig landmann and the city planner ernst may β which gave frankfurt a worldwide reputation as a centre of the avant - garde in urban planning and architecture. and as part of that programme, the famous β frankfurter kuche β was designed by margarete schutte - lihotzky, an innovation that would go on to be used all over the western world. so it is no wonder that frankfurt is now called the β europastadt β. it is the city of the euro and the home of the ecb. it is still the crossroads of our continent, housing the busiest cargo airport in europe and the world β s largest trade fair. and it is a truly international place : almost 30 % of people living in frankfurt are non - germans and another 25 % are germans with a migratory background. in other words, frankfurt has succeeded by being dynamic internally, but open externally ; by being proud of its history and traditions, but welcoming of new people and ideas. it is a model of how european cooperation can make us stronger β and it is no surprise that, thanks to your generosity and openness, i have felt immediately at home here. in recognition of that, i truly intend β as president of the ecb β for my institution to reflect the spirit of this community and to play an active part in it. we will be open, transparent and accessible. we will try to talk in a language that everyone can understand. and we will listen, too, and hear people β s concerns. one of my priorities as president of the european central bank is to strengthen the bond between the bank and the people of europe : you, and | 0.5 |
banking, as well as in banking supervision, will increase. i β m convinced that diversity in management positions is an intelligent idea to pursue. 2 / 2 bis central bankers'speeches | long period of time with regard to the reinvestments, as we cannot exclude the possibility that we will reach our inflation objective earlier than expected or that there will be an increase in negative side effects from our expansionary monetary policy. is quantitative easing ( qe ) a tool the ecb could use again in the future, as some current and former governing council members have suggested? 1 / 2 bis central bankers'speeches in the context of a monetary union with many different sovereigns and no fiscal, genuine economic and political union, qe should not be part of the normal policy toolbox. it should be a tool of last resort, to be used only when there is a clear risk of deflation. with a long - lasting, very accommodative monetary policy, side effects and risks emerge. and while pursuing price stability is the main objective, we also have to keep in mind the costs β and not only the benefits β of our monetary policy measures. what danger does the row between rome and brussels over the italian budget present for the country β s banking system? as a banking supervisor it β s not our task to comment on political discussions or decisions with regard to the budgets and fiscal stances of individual countries. banks have to acknowledge changes and risks in the macroeconomic environment they operate in. and if these changes are relevant, we as supervisors adapt our assessment of banks β risk profiles, too. overall, the italian banking system has become more resilient and banks are better equipped to deal with uncertainties than they were before. what do you see as the top priority for banking supervision in the coming months and years, in italy and elsewhere? among other topics, there is still further work to do on non - performing loans. they will keep us busy for the coming years. the cleaning up of banks β balance sheets should be pushed through as quickly as possible. this is not specific to italy. all banks should do their utmost to improve their resilience in sunny times when the economic cycle is on the upside. not all banks have done all of the work we would like them to do. some are well under way, and some still need to do much more. some observers are disappointed that a male candidate β italy β s andrea enria β will take over as head of ecb banking supervision from daniele nouy next year, rather than irishwoman sharon donnery. how did you feel about the news? i hope that our ratio of women in central | 1 |
is already a reality. this underlines the need for standards to be evolved, based on international benchmarks, but adapted to the local requirements. such benchmarks could also be quite useful in securing compliance with the know your customer ( kyc ) and anti money laundering ( aml ) norms, monitoring of intricate cross - country financial flows as also the operational efficiency of each system in a country. let me now dwell a little on certain facets of effective payment and settlement systems. the introduction of the real time gross settlement ( rtgs ) system by many countries has not only resulted in compliance with the core principles for systemically important payment systems enumerated by the bis, basle but has also paved the way for risk - free, credit push - based fund transfers settled on a real time basis and in the central bank money. however, the liquidity requirements for the rtgs are relatively high. hence, the options are being weighed as to whether the liquidity requirements can be tackled by the banks in a cost - effective manner without losing the benefits of the rtgs. a judicious mix of netting coupled with the rtgs, or a guaranteed net settlement are some of the measures which would obviate the risks involved in the deferred net settlement systems ( dns ). while the rtgs holds great promise, it is possible that the technological as well as institutional aspects may result in considerable problems during the phase of transition. our experience with rtgs shows that there are immense benefits but its popularity itself can give rise to some operational issues when the system is stabilising. recently, delays in closing the books by the end of the day have been reported. i am informed that several experts are working on the system to resolve the problems. we are according highest priority to tackle these operational issues that have cropped up in the recent past. i take this opportunity to endorse what shri narayana murthy, chairman and chief mentor, infosys said while speaking at this forum. he said : " according to the rbi, there are about 48, 000 public sector bank branches in the country, of which over 63 per cent are in semi - urban and rural areas. though over 70 per cent of the branches have attained 100 per cent computerisation, real time gross settlement ( rtgs ) is available only in 23, 500, while the national electronic funds transfer covers less than 5, 000 branches. hence, integrating semiurban and rural areas into the electronic | these include : the appointment of a chief operating officer, enhancing the communications function, encouraging the culture of debate within the bank, strengthening the role of research, and continuing to invest in leadership and management capabilities. these recommendations make sense and have our support. we will now develop an implementation plan under the leadership of a small team of experienced people. to conclude, i would like to again thank the review panel for their work. it is not often that central banks are reviewed, so it is important the job is done well and thoughtfully, and that the process is constructive. this is exactly what has been done here. it also 2 / 3 bis - central bankers'speeches makes sense, as the panel recommends, for regular reviews to be conducted every five years. as the panel notes, the review has been about strengthening a well - functioning institution and ensuring the bank is in a good position to meet the challenges of the future. monetary policy has become more complex, as have the bank's operations in the banking and payments areas. the recommended changes in this review will help us do our job in this changing world and are consistent with our internal staff values, including serving the public interest and achieving excellence. i look forward to working with the government, the parliament, the board and the bank's staff on how we can best live up to those important values. i am happy to answer your questions. 3 / 3 bis - central bankers'speeches | 0 |
rafael buenaventura : implementation of bsp rules on the transport of currencies keynote address by mr rafael buenaventura, governor of bangko sentral ng pilipinas ( central bank of the philippines ), at the bsp strategic planning conference, manila, at the signing of the memorandum of agreement for the effective implementation of bsp rules on physical cross - border transport of currencies, manila, 17 january 2005. * * * good afternoon, friends, ladies and gentlemen. i would like to thank the agencies represented here for their full cooperation in the preparation of the memorandum of agreement ( moa ) for the effective implementation of bsp rules on the physical cross - border transport of currencies, which will be signed today. we know that, each agency has more than enough work in its hands, and therefore, it is not easy to define and accept additional responsibilities, as would be the case in this moa. i also want to thank the following signatories to this moa who have taken time off from their busy schedules for this signing ceremony : 1. bureau of customs commissioner george m. jereos, 2. manila international airport authority general manager alfonso g. cusi, 3. philippine national police director general edgar b. aglipay, 4. bureau of immigration commissioner alipio f. fernandez 5. air transportation office executive director helen n. camua, and 6. philippine ports authority general manager oscar m. sevilla. of course, i am also a signatory under two hats, as bsp governor and as chairman of the anti - money laundering council. this moa seeks to ensure the effective implementation of bsp rules on the physical cross - border transport of foreign currencies and the philippine peso ( php ). bsp circular no. 308 dated 15 november 2001, as amended, requires any person who brings in or out of the philippines in excess of us $ 10, 000 or its equivalent to declare the same in writing using the prescribed foreign currency declaration form. other countries such as the united states, south korea, and malaysia broadly require similar customs procedures in the transport of foreign currency. the circular was issued as part of a package of measures to help curb money laundering activities. as early as june 2000, the bsp has adopted anti - money laundering measures to be at par with international practices. the monitoring of the cross - border transport of currencies is covered under the 9th special recommendation of the financial action task force ( | fabio panetta : interview with tg1 interview by mr fabio panetta, member of the executive board of the european central bank, with tg1, conducted by mr gennaro pellino on 19 march 2020. * * * only a week ago, one sentence suggested we were looking at an abrupt change of direction. what has changed in a week? i don β t think it β s particularly useful to dwell on one sentence β especially one which president lagarde herself quickly corrected. i believe that our actions and our policies are clearly demonstrated by our decision yesterday, namely our strong determination to provide support to the italian and the european economy. we made available β¬1, 100 billion, a vast sum, to support the financial markets. the famous spread has declined significantly today. this measure comes on top of the package we agreed last week, when we made available β¬3, 000 billion to the banks, at very low cost, at very low lending rates, but only on the condition that banks use that funding to finance the real economy, households, firms and government efforts to deal with the public health emergency and support the european and the italian economy. what does the ecb want to achieve now with this new liquidity issuance? the coronavirus pandemic will reduce economic growth in italy and europe by some percentage points. our actions aim to prevent the hardships and struggles that european citizens and households are currently enduring from being compounded by the economic difficulty that could result from a recession. we have taken decisive action to prevent such developments and president lagarde has stated that there are no limits to the action we will take to ensure that the european economy is able to continue on a path of growth. what can european citizens expect now from europe and the european union? italian and european citizens can expect what they are entitled to, namely strong, decisive, unified and coordinated action by national governments and european institutions, including the european central bank, to alleviate the hardships and economic difficulties that they will inevitably face as a result of the pandemic. we will be in the front line of this action. president lagarde has stated that the european central bank will continue to act decisively until the emergency related to the coronavirus has been overcome. 1 / 1 bis central bankers'speeches | 0 |
benoit coeure : monetary policy and banking supervision speech by mr benoit coeure, member of the executive board of the european central bank, at the symposium on β central banking β where are we headed? β, in honor of stefan gerlach β s contributions to the institute for monetary and financial stability ( imfs ), organized by the imfs and the house of finance, frankfurt am main, 7 february 2013. * * * i wish to thank philipp hartmann for his key contribution to this speech. i remain solely responsible for the opinions contained herein. the history of central banks and the european banking union when we look at the history of central banks, contributing to financial stability was one of their roles in most countries, although to varying degrees. 1 even when central banks were assigned a relatively narrow mandate, such as that of inflation targeting in recent years, they often played a decisive part as soon as financial instability struck. in particular, their ability to act as lender of last resort in the financial system and to manage liquidity in the interbank market typically made them a key player in crisis management. even in normal times, the central role of bank deposits in the stock of money makes monetary stability dependent on the soundness of the banking sector. in sum, in the late tommaso padoa - schioppa β s words, financial stability has been part of the β genetic code β of central banks. 2 there have been many cases of lender - of - last - resort interventions by central banks during the present crisis. for example, when we compare the total emergency liquidity assistance ( ela ) that euro area national central banks granted to individual credit institutions last summer with the overall amount of liquidity provided at the same time by the eurosystem, we can see that the total ela amounts to almost one - seventh. just to quote an example from here in germany : the bundesbank granted β¬35 billion of emergency liquidity assistance to the ailing bank hypo real estate. 3 more generally, the experience of the last five years has underlined the importance of central banks in financial stability, a task which they have historically performed. but central banks were not always and everywhere tasked with financial supervision, which aims to prevent crises from happening in the first place. for example, before the present crisis the institutions responsible for banking supervision differed from country to country. 4 in fact, in the late 1990s there was a trend for financial supervision to be placed | it has proven its effectiveness in resolving difficult matters in a swift and efficient manner, keeping in mind the common goal of ensuring the timely and successful launch of t2s. in the past few weeks the commitment of those forming the t2s governance structure has become apparent once more. you might have heard some rumours that the t2s platform was not stable enough to go live. however, the reality is that the platform has been declared stable and ready to go live both by the t2s board in charge of steering the project and by the central securities depositories in the steering body ( the t2s csd steering group ). we are conscious that t2s will have an immense impact on the financial market and it is of key importance for us that the migration goes smoothly. after assessing the status of the platform β its stability and readiness for production mode β i can assure you that it is ready for the migration and launch this coming weekend. however, going live requires more than just the eurosystem being ready ; we also need the migrating communities to be ready. the first t2s migration wave was to include five securities depositories and their communities : bank of greece securities settlement system ( bogs ), depozitarul central ( romania ), malta stock exchange, monte titoli ( italy ) and six sis ( switzerland ). four out of those five markets, namely greece, malta, romania and switzerland, have confirmed their readiness to migrate as scheduled on 22 june 2015. as far as the italian market is concerned, a solution has been put forward which has eased the strong discomfort that has recently been signalled by the italian banks regarding migration on 22 june 2015. following a formal request by monte titoli, the italian securities depository, it and its community will be given an extended period of testing and will migrate only on 31 august bis central bankers β speeches 2015. this solution will not only help the italian market, but will also ensure that difficulties in one market cannot spill over to other markets and have implications for the financial market as a whole. this proposal has been discussed within the governance structure and is supported by the remaining securities depositories joining t2s. a detailed activity plan is now being developed for the migration of the italian market on 31 august 2015 and the possible impact on the scheduled activities for the subsequent migration waves is being assessed. this solution for the migration of the italian market is due to be approved by the ecb β s governing council tomorrow. harmon | 0.5 |
are no longer so much under the bis central bankers β speeches influence of this phenomenon. the latest data on the increased saving in denars, compared to saving in euros, point to this conclusion. the expectation that the stable exchange rate level will be maintained simultaneously indicates that the difference between real interest rates in denars and real interest rates in euros continues to decrease gradually, certainly without any of them remaining on negative territory for a longer time. the national bank will continue not to hesitate to intervene in the foreign exchange market and increase the interest rate on the main instrument which represents an operational signal. through these policies the national bank confirms its capacity and institutional determination. market participants recognize this successful defense of the exchange rate in the past fifteen years, although in a short run any change may cause, through the transmission effects, only temporary increase of the nominal, and thus of real interest rates in the economy. a logical consequence of all this is that a possible reflation in the eurozone means that the republic of macedonia will not become an isolated island doomed to disinflation and, vice versa, that if the euro continues to prove effective in delivering low inflation in the eurozone, in the republic of macedonia internal depreciation will be the preferred course of adjustment. the differences between inflation rates in the republic of macedonia and the eurozone will remain temporary and limited. in fact, this marks the success of the stable exchange rate as an intermediate target of the monetary policy which consists of the aforementioned difference of 0. 2 percentage points between the inflation in the republic of macedonia and the inflation in the eurozone. in the long run, this enables economic agents to have more definite expectations about the general price level and denotes support to the economic environment. in such monetary policy setting it should be noted that the national bank, as a public institution, constantly needs to cooperate with the government without undermining the autonomy of any of these two institutions. from the perspective of the national bank, this means that the government is trying to anticipate the policies that we implement to maintain the level of the exchange rate and it takes them into consideration when adopting the budget. it is clear that the national bank and the government may adopt essentially good decisions in their respective spheres of action if they cooperate even during the discussions which precede the decisions. the cooperation with the government would also be in terms of creating conditions for the social dialogue to take into account the challenge we face in conducting the monetary policy. this actually means that the inflationary | the fintech, and increasingly adopted by banks, consumers and merchants nowadays have a wide range of payment products to choose from. innovation developments, such as instant payments, payment initiation services, person - to - person mobile payments and contactless proximity payments have the digitization process accompanied by innovative solutions in their essence. the payment innovations and digitization process also have an impact on the transformation of payment market infrastructures. these developments, however, have raised various issues related to the requirements for bank openness, customer security, transparency and trust in the payment services market as well as consumer rights protection. consequently, the regulators have to adopt appropriate legislative framework that supports digitalization, innovation and competition, but also take care of security and protection. in this context, it can be noticed that the european union is a global leader in this domain. by revising the payment services directive ( psd2 ), the european union enables stronger competition and 1 / 3 bis central bankers'speeches innovation by allowing entrance of fintech payment service providers that will eventually lead to greater choice and better prices for consumers, it will fosters cyber resilience of the payment service providers as well as enhance protection of payment services users. in this way, the european union created a sound legal framework for digitalized payments landscape that enhances the integration of the single payment. at the same time, it sets an example for other countries around the world how to support digitalization trends by balancing between innovation and competition, on the one hand, and security and protection, on the other hand. the new regulatory framework implies that banks will no longer only be competing against banks, but everyone offering financial services, i. e. the customers will be able to create a set of providers of different financial services instead of relining on one bank for all services. the belief that nonbank fintech companies will play a significant role in the future financial landscape is well established if we look at investments in fintech industry. the cumulative investments globally have more than ten - doubled the last five years and are estimated to exceed $ 150bn the next 3 - 5 years. this, in addition to changed customer expectation and increased digitalisation, may be the reason why today we are witnessing a trend of stronger cooperation between banks and fintechs, including in the area of innovation labs. the new technologies, such as blockchain and distributed ledger technology, though young and still - evolving, show the potential of restructuring financial industry, even encouraging discussions for cashless society | 0.5 |
bonds can attract various types of private sector actors if key contractual terms are appropriately set. to attract investors with different expected returns, risk profiles, investment horizons and objectives, the investor base should be expanded. for example, we can aim for a higher level of participation by institutional and private equity investors as well as philanthropic capital. second, highlight best practices and principles to scale up blended finance for climate adaptation and mitigation. these include factors like : an appropriate institutional, legal and policy framework, and regulatory clarity ; a robust climate information architecture for investment and performance risk assessment, comprising reliable and comparable climate data, internationally interoperable taxonomies, and climate disclosures ; and some form of common finance reporting standards that can be used to measure, monitor, verify, and assess impact. third, identify demonstrative projects that showcase good mechanisms available to scale blended finance. our scan of such projects has surfaced some preliminary observations on the key mechanisms to scale blended finance ; standardised documentation to streamline due diligence and project preparation processes and to lower origination costs ; effective currency hedging solutions to address local currency risks ; pooling of investors at the fund or facility level and taking a portfolio rather than individual project approach ; and leveraging on the significant catalytic effect of grants in the upstream project preparation phase. we will study these observations further and present them in detail in the handbook. we must take an ecosystem approach to resolve the climate crisis. getting to netzero requires the real economy and the financial sector to move in lockstep. this requires applying the collective knowledge and resources of governments, central banks, and financial regulators and financial institutions, corporates and individuals. in a small way, this third edition of the green swan conference contributes to this collective effort. let us harness our strengths and coordinate our action across the ecosystem. thank you, and i wish you all a fruitful conference. 5 / 5 bis - central bankers'speeches | are exploring the extent to which financial institutions'transition plans should be considered within the supervisory toolkit and overall prudential framework. while most financial institutions'transition plans have a climate focus, they have different nuances in objectives, ranging from climate risk mitigation to reducing financed emissions to supporting the real economy's transition to net - zero. but there are some common elements to all transition plans which are relevant to supervisors for assessing safety and soundness. the ngfs has completed a stock - take of supervisory frameworks with respect to financial institutions'transition plans. we are sharing the results of the stock - take with the basel committee on banking supervision and the financial stability board, to facilitate greater coordination in the development of transition planning standards. we will publish a report on key findings and next steps that will provide a basis for further work on the role of transition plans in greening the financial system. the next phase of the ngfs'work will develop guidance on transition planning to cater to different supervisors'mandates, toolkits, and prudential frameworks. recognising that there is a spectrum of supervisory mandates, such guidance will be based on a building block approach to aid financial regulators with varying approaches in their review of financial institutions'transition plans or planning process. scaling blended finance to move the needle on global emissions, we need to facilitate the decarbonisation of emerging markets and developing economies. emerging markets and developing economies account for more than half of global greenhouse gas emissions. they are still heavily dependent on fossil fuels for their economic development and energy needs. their energy needs are expected to grow significantly in the coming years alongside economic growth and development. it is not right to hold back their economic growth. rather, we need transition finance to help decouple growth from emissions β through cleaner energy, greater energy efficiency, more electrification, and production processes with a lower carbon footprint. but emerging economies and developing countries face several challenges in mobilising the transition financing necessary for decarbonisation. first, they have fiscal constraints. public debt remains the main source of funding for transition in these economies. but there are tight limits to how much debt these governments can sustainably raise, especially in foreign currencies. 3 / 5 bis - central bankers'speeches second, they have limited access to private capital. they lack depth in their domestic capital markets ; they lack large corporations, and a broad investor base. third, many of their transition projects are only marginally bankable | 1 |
only a symptom of the underlying problem. in fact, there is a deeper dimension which i will refer to as a second dimension of the crisis, the β crisis of the social contract β. the latter reflects a fundamental misalignment between the economic status that industrial countries have grown accustomed to and the material conditions that are affordable without a profound shift in economic policies. but in engineering such a shift, a third dimension comes to the fore, namely a crisis of the institutional architecture. as regards this third dimension, i will focus on the european context where policy - makers have to conduct a fundamental overhaul of emu simultaneously with their acute crisis fighting efforts. i will argue that these different crisis dimensions reinforce each other and pose particular challenges for policy - makers, both in designing appropriate policy responses and in communicating them. i will also argue that, in contrast to the former two crisis dimensions, which affect all mature economies, the third dimension is the most specific to the european context. see jay c. shambaugh, β the euro β s three crises β, brookings papers on economic activity, spring 2012, or the special report of the german council of economic experts, β after the euro area summit : time to implement long - term solutions β, july 2012. bis central bankers β speeches three dimensions of the crisis debt deleveraging the global deleveraging process will feature prominently in tomorrow β s conference programme, so i will restrict myself to a stylised account of the most salient features only. its roots can be found in the pre - crisis period, when economic activity markedly exceeded the sustainable long - term trend. this excess, which was observable in virtually all major industrialised countries, was fuelled by an aggressive accumulation of debt in various sectors of the economy, driven by, inter alia : unchecked financial innovation ; the absence of binding and consistent macro - and micro - prudential policies that could prevent escalating stability risks ; and a failure of financial markets to appropriately sanction failed public policies and unsound business models. as a consequence, ever more consumption was financed by borrowing against future incomes. but instead of systematically reflecting this inter - temporal shift of consumption opportunities in higher real borrowing costs, credit conditions were largely unaffected. mispricing of credit can be protracted, but it exposes the credit market to sudden reversals of sentiment. this occurred when a number of shocks, initially fairly confined to the us financial sector, spread sustainability fears | to enhance supervisory convergence and cooperation, initiative and commitment on the part of the banking groups themselves is indispensable for making progress in the future. i would just recall in this context as an example that adequate group - wide tools and procedures for risk management and the effective dissemination of relevant information within a group are basic prerequisites for streamlined supervisory action. the experience of the cebs consultative panel and public consultations characterised by an active involvement of market participants indicates that there is a strong will on the part of the industry to contribute to the success of the supervisory efforts. conclusions let me briefly conclude. the cebs has made significant progress so far and this has been acknowledged and appreciated by all interested parties, including the ecb and the eurosystem. the work of the cebs has laid the foundation for a supervisory framework in the eu which should be able to promote on the one hand further banking and financial integration and at the same time maintain its effectiveness in pursuing financial stability in a more integrated financial system. the full success of the framework established by the cebs should not be taken for granted. it will depend on the continuous improvement of several factors including further possible progress in the decision - making process of the cebs, a sustained high degree of commitment on the part its members and the necessary constructive role of market participants. thank you very much for your attention. | 0.5 |
explains the gains in competitiveness recently attained by the spanish economy. turning to prices, the annual report pays particular attention to the factors underpinning the recent disinflationary phase in spain. the analysis concludes that, beyond the influence the prolonged weakness of spending and the fall in oil prices may have had, there has been greater responsiveness by prices to changes in the economic situation, which might be attributed, at least in part, to the reforms in certain markets and services. retaining this greater degree of flexibility in price - and wage - setting is vital so that, in the face of adverse shocks, adjustments may be made through relative prices and not at the expense of economic activity and employment, as has traditionally occurred in the spanish economy in recent recessions. there has likewise been a notably sharp correction of the external imbalance, with external surpluses being attained in the past three years, albeit of a smaller amount in 2014. nonetheless, the correction of the international investment position ( iip ), a debtor position equivalent to 93. 5 % of gdp at the close of 2014, is proving very gradual, which denotes the need to maintain the gains in competitiveness achieved, so as to improve the current account balance and reduce our still - high level of external debt. the role of external conditioning factors let me now refer to the external conditioning factors in the recovery of the spanish economy. the world economy lost momentum in 2014, particularly so in the euro area. euro area growth was very weak in the second and third quarters of the year and only thereafter did it begin to show somewhat greater strength. on this occasion, moreover, germany and france β the area β s two biggest economies and two of our biggest trading partners β were also affected. the latest ecb projections point to a moderate recovery, whereby the area β s gdp is expected to grow 1. 5 % this year and 1. 9 % in 2016. these are, then, clearly lower rates than those projected for our economy. other external developments have provided a boost to activity. i have already mentioned the fall in oil prices. unquestionably, though, the most durable positive external impulses stemmed from the ecb β s monetary policy and the start - up of the banking union. bis central bankers β speeches throughout last year and in 2015 to date, the ecb has continued to deepen its expansionary monetary policy stance. once again, it has combined conventional measures, cutting official interest rates and placing the deposit facility | banking sector, is expected to amount to β¬55 billion in 2024. in the national arena, the recently approved legislation on the recovery and resolution of credit institutions and investment services firms distinguishes between pre - emptive resolution functions, which correspond to the banco de espana in the case of credit institutions and to the national securities market commission ( cnmv ) in that of investment services firms, and enforcement resolution functions, attributable to the fund for the orderly restructuring of the banking sector ( frob ), which sits moreover on the srm board, with the banco de espana having observer status. performance of credit institutions in 2014 before concluding, i shall review the recent performance of spanish credit institutions. the year 2014 saw an improvement in financial conditions and a recovery in activity and employment. lending to the resident private sector in spain continued to shrink in 2014, in line with the need for the deleveraging of the spanish economy ; that said, the rate of decline of lending eased ( from 8. 3 % in 2013 to 6. 4 % in 2014 ). at firms not engaging in construction and real estate activities, credit fell much less, shifting from a negative rate of 9 % in 2013 to a still - negative rate of 1. 5 % in 2014. the figures available for 2015 suggest that the year will conclude with credit running at a rate of change very close to zero or in positive territory for the first time since 2009. one key aspect in 2014 was the fact that non - performing loans ( npls ) to the resident private sector fell both in absolute terms ( by more than β¬24 billion ) and in terms of the npl ratio, which declined by almost 1 pp to 12. 9 %. in 2015 to date, this trend is holding, as npls have fallen to 12. 3 %. resident private - sector refinanced exposures have fallen by 4. 5 % and account for 14 % of the total, a proportion still highly influenced by forborne exposures to real estate development and construction companies. it is also worth pointing out that households and non - financial corporations are changing the composition of their savings in response to the very low interest rate environment, meaning that bank deposits have declined while units in investment funds have increased significantly. bis central bankers β speeches spanish banks β attributed profits in 2014 increased by close to 34 %, continuing the recovery initiated in 2013. despite the backdrop of declining credit and low interest rates, net interest income rose by almost 5 % owing to | 1 |
a flow on of international forces. they were not mainly a result of local factors. but it is appropriate, in our judgment, to foster confidence to the extent we can during periods of global stress such as we have been experiencing. despite those actions, a financial system such as ours cannot be entirely insulated from these global events and, inevitably, the australian financial system has been affected to some extent. the rise in the wholesale cost of term funding has meant that many non bank and some bank lenders have had to slow the growth of their businesses. the closure, more or less, of securitisation markets for the time being also has made life much more difficult for those lenders which relied heavily on that avenue of funding. capital market raisings are much more difficult for some corporates as well, and many of these entities are turning to their bankers. by and large, the major banking institutions have been able to provide support for sound borrowers, and have stepped into the gap left by the withdrawal of funding from the capital markets. they have been able to do this because of their own balance sheet strength, something which is clear from the analysis in the bank β s recently released financial stability review. while some of their customers have been excluded from capital markets of late, banks have themselves been able to access segments of the capital markets in sufficient quantity to keep their balance sheets expanding. this has come at a time when wholesale funding costs have been rising by more than the official cash rate, and that has been passed on to end borrowers, while conditions on lending for some borrowers have tightened in response to higher perceived risk. but this outcome is preferable to the alternative of lending drying up. at present, the international environment remains very difficult. the us economy is experiencing very subdued conditions, as the weakness that had for some time been confined to the housing sector has spread to other areas over recent months. losses incurred by major international financial institutions associated with previous risky lending have continued to come to light, even during this week. valuing certain classes of assets remains very difficult and some quite sound assets appear to be priced currently at less than their likely underlying value. a process of deleveraging is continuing among hedge funds and other complex financial vehicles, as the retreat from risk by their lenders forces a winding in of positions. while all this has been occurring, participants in financial markets have understandably remained very nervous, and day to day volatility in a range of markets has been much | of the economy by region, those differences, if anything, narrowed during 2007. unemployment rates in the big south eastern states, for example, were at generational lows on the most recent reading. the pace of demand growth in 2007 well and truly exceeded any plausible estimate of the rate of growth of the economy β s supply potential. under these demand conditions, inflation increased. having apparently moderated a little late in 2006 and early 2007, it began to show higher readings around the middle of 2007 and by the end of the year had reached about 3Β½ per cent in underlying terms. measured by the cpi, the year ended inflation rate was 3 per cent, but as is well understood, the next figure is likely to be around 4 per cent. faced with this combination β very strong demand growth in what was already a pretty fully employed economy, and inflation moving higher β the reserve bank board, when discharging its monetary policy duties, could draw no other conclusion than that growth in demand needed to slow. the board had tightened monetary policy on three occasions during 2006. it then stayed its hand for a period in the first half of 2007, as inflation results available at that time suggested some moderation. but as the trends of 2007 and the likely risk they posed to longer run performance emerged, the board tightened policy further during the second half of the year and in the early months of this year. the cash rate was raised on a total of four occasions, with the aim of achieving a moderation in demand, which is an obvious necessary condition for reducing inflation over time. in reaching these decisions, the board naturally took careful account of the unfolding events in global financial markets. i will not recount the details of those events again now β i and many others have talked at length about them before. i am sure we will return to them in question time. as a daily participant in financial markets, the reserve bank was in a position to observe developments very closely. our senior officers have been in frequent contact with all the significant financial institutions operating in australian markets, with our colleagues at apra and other regulatory agencies, and with our counterparts abroad. the rba board spent considerable time at its meetings examining market developments and considering their possible implications. the rba responded to the unusual demand for liquidity on a number of occasions, and made early changes to its practices for open market operations to accommodate dealing in a wider range of assets and over longer terms. these market pressures were, and remain, overwhelmingly | 1 |
is the most important lever. ensuring an adequate carbon pricing system is a task for elected governments, not for central banks. clearly, timely action is of the essence here. timely action would allow for a stepwise approach. it would prevent disruptive measures as well as policy errors as a result of time pressure. 3 the merits of transparency and disclosure of climate - related risks β a focal point of the ngfs agenda key insight number two is that the ο¬nancial system can drive real economic transformation through transparency and disclosure of climate - related risks. financial institutions must be put in a position in which they adequately price and manage climate - related risks. a solid foundation is needed as a ο¬rst step : a classiο¬cation system, a common β green β language for all parties involved. helping them to understand whether an economic activity is environmentally sustainable. the eu taxonomy is a concrete example of a common β green β language. it could provide orientation for others to follow suit β even if it is not a perfect solution. adequate information on climate - related risks is a key requirement for making well - informed investment decisions. reporting companies can beneο¬t directly from providing high - quality disclosure of climate - related risks. increased awareness and more informed strategic planning will help companies to manage ο¬nancial risks, particularly in the transition period to net zero. for ο¬nancial institutions, an in - depth understanding of climate - related ο¬nancial risks should be an integral part of their risk management systems. for example, a bank granting a loan must be able to determine β’ a company β s carbon footprint, β’ what proportion of revenues it generates from sustainable activities, and β’ how much it invests in sustainable business models. https : / / www. bundesbank. de / en / press / speeches / climate - risk - the - merits - of - transparency - and - the - role - of - central - banks - 851634 2 / 4 24 / 11 / 2020 climate risk β the merits of transparency and the role of central banks | deutsche bundesbank financial risks cannot always be avoided, but they must be managed, disclosed and be subject to adequate pricing. with the right information, risks can even turn into opportunities on our transition pathway to a more sustainable economy. 4 what central banks can do to encourage climate - related risk disclosure now, what can central banks do to encourage climate - related risk disclosure aside from their roles in prudential supervision and ο¬nancial stability? the starting | . in addition, the construction boom witnessed in other euro - area countries also came to an abrupt end during the crisis, with the result that the ratio for the euro area excluding germany has now returned to levels close to the german ratio. this effectively disproves claims that the german private sector is investing too little, be it by historical or international standards. in any case, it is not possible to increase private investment by decree. when it comes to private investment decisions, expectations pertaining to growth and income are of pivotal importance. against this backdrop, many commentators point to public investment, which can be directly influenced by the government. with regard to public investment, germany lags well behind the rest of the euro area. however, this fact alone does not justify assertions that the state should invest more. even so, public net investment has been negative for some time now, and there indeed seems to be room for improvement. infrastructure weaknesses can inhibit growth considerably and there are certainly regional shortcomings in germany. while a good public infrastructure is important, it does not require higher debt. nevertheless, germany has a good infrastructure on the whole. according to the global competiveness ranking of the world economic forum, only six countries have a better infrastructure ( the us is ranked 12th ). the medium - term growth prospects of the german economy also depend, of course, on an improved economic outlook in the other euro - area countries. this brings me to the second part of my speech : the future of the monetary union. 3. the euro area β structural reforms needed when the euro - area crisis began five years ago, many people referred to it as the β euro crisis β. however, it was not a currency crisis but a cocktail consisting of a debt crisis, a banking crisis and a balance of payments crisis. while the underlying problems differ slightly between individual countries, the key to overcoming the crisis lies with the affected countries themselves. in the years following the introduction of the euro, fiscal and economic policies in some member states failed to meet the requirements of a monetary union. these countries bis central bankers β speeches experienced strong capital inflows. unfortunately, the lion β s share of this capital flowed into private or public consumption or into an oversized housing sector. on the back of heavily exaggerated growth expectations, a decrease in competitiveness owing to generous wage settlements and insufficient financial regulation, sizable imbalances accumulated which then contributed to the crisis. hence, to resolve the crisis it is the countries themselves that | 0.5 |
, 8 january 2020. [ 4 ] kortum, s. and lerner, j. ( 2000 ), β assessing the contribution of venture capital to innovation β, rand journal of economics, 31 ( 4 ), pp. 674 β 692. [ 5 ] samila, s. and sorenson, o. ( 2011 ), β venture capital, entrepreneurship, and economic growth β, review of economics and statistics, 93 ( 1 ), pp. 338 β 349. [ 6 ] popov, a. and roosenboom, p. ( 2013 ), β venture capital and new business creation β, journal of banking & finance, 37 ( 12 ), pp. 4695 β 4710. [ 7 ] popov, a. ( 2014 ), β venture capital and industry structure : evidence from local us markets β, review of finance, 18 ( 3 ), pp. 1059 β 1096. [ 8 ] see financial literacy around the world : insights from the standard & poor β s ratings services global financial literacy survey. [ 9 ] see eurostat r & d expenditure. [ 10 ] see chart 1. 2 in the key messages of ecb ( 2020 ), β financial integration and structure in the euro area β, frankfurt am main. [ 11 ] de vries, c. e. and hoffmann, i. ( 2019 ), β great expectations : the new european commission, its ambition and european public opinion β. eupinions 2019 / 2. [ 12 ] de haas, r., and popov, a. a. ( 2019 ), β finance and carbon emissions β, working paper series, no 2318, ecb, september. [ 13 ] the eu is already the largest international market for green bonds : eu entities account for around 46 % of global issuance and around 42 % of the global market is denominated in euro. source : dealogic data and ecb calculations. european central bank directorate general communications sonnemannstrasse 20, 60314 frankfurt am main, germany tel. : + 49 69 1344 7455, e - mail : media @ ecb. europa. eu website : www. ecb. europa. eu reproduction is permitted provided that the source is acknowledged. media contacts copyright 2020, european central bank | their path to becoming industrial leaders. in europe, the development of risk capital markets is being held back by a number of factors and frictions on both the demand and the supply side. for example, cultural barriers to risk taking, such as the stigma of entrepreneurial failure, are rather high ; there is a lack of easily available and harmonised information on firms ; debt investment enjoys a tax advantage over equity investment ; pension products and systems are generally averse to risk capital ; and financial literacy β as well as public investment in fundamental science and market - oriented research and development as a share of gdp [ 9 ] β is lower than in many peer economies. what can the cmu do to stimulate the development of risk capital markets in europe? reforms to this end include reducing the tax advantage of debt, increasing financial literacy, enhancing pension savings and incentivising adequate equity investment by pension funds, and reorienting eu private investment programmes towards more equity investment in high - tech firms and sectors. some wider and more longterm public policy choices include significantly stepped up funding for life sciences and technology, as well as introducing product and labour market reforms. by improving the quality of the commercial projects that require funding, such policies will benefit the development of not only private, but also of public equity markets. the new bi - annual report β financial integration and structure in the euro area β published today shows that the level of private equity in europe is not low, unlike that of public equity listed on exchanges. in fact, financing through unlisted equity accounts for a larger share of overall financing in the euro area than in the united states or japan. however, european private equity markets are comparatively less dynamic in the sense that they fail to provide young and innovative firms with sufficient funding or adequate help in expanding. cmu and the sustainable finance agenda to most people in europe, the need for deep and liquid capital markets might not seem the most pressing issue. the latest survey data show that people are more concerned about other topics : climate change and digitalisation. nonetheless, i am convinced that the cmu has an important role to play here and its advancement should be seen in tandem with the eu β s efforts to support the transition to a carbon - neutral economy. the cmu and sustainable finance are two mutually reinforcing initiatives and we could benefit from considerable synergies by making progress on both fronts. on the one hand, the development of the cmu could support the eu β s drive towards a greene | 1 |
remarks at the banking standards board panel β worthy of trust? law, ethics and culture in banking β mark carney, governor of the bank of england bank of england conference centre 21 march 2017 all speeches are available online at www. bankofengland. co. uk / speeches it is a pleasure to host this banking standards board event β worthy of trust? law, ethics and culture in banking β and to join this distinguished panel. over the past decade, banking has suffered twin crises of solvency and legitimacy. the first is being addressed by comprehensive reforms. as a consequence, large banks are now stronger, more liquid, and more focused. this immense progress has been overshadowed by a crisis of legitimacy. a series of scandals ranging from mis - selling to manipulation have undermined trust in banking, the financial system, and, to some degree, markets themselves. multiple factors contributed to a tide of ethical drift. market standards were poorly understood, often ignored and lacked teeth. too many participants neither felt responsible for the system nor recognised the full impact of their actions. bad behaviour went unchecked, proliferated and eventually became the norm. the economic consequences have been enormous. global banks β misconduct costs have now reached over $ 320 billion β capital that could otherwise have supported up to $ 5 trillion of lending to households and businesses. but there is a bigger cost. an industry the scale and importance of finance needs social capital as well as economic capital. it requires the consent of society in order to operate, innovate and grow. repeated episodes of misconduct have called the social licence of finance into question. in a system where trust is fundamental it ought to be of grave concern that only 20 % of uk citizens now think that banks are well - run, down from 90 % in the late 1980s. for example, their capital requirements have increased 10 - fold. and in response these banks have raised over $ 1. 5 trillion of capital in recent years. there are multiple root causes : ( i ) market structures presented opportunities for abuse and were vulnerable to conflicts of interest and collusion ; ( ii ) systems of internal governance and controls were incapable of asserting the interests of firms β and society β over those of staff ; ( iii ) compensation packages rewarded short - term returns and ignored long - term value creation and good conduct ; ( iv ) and dearth of personal accountability. for misconduct costs see bcg report, β global risk 2017 : staying the course in banking, march 2017 http : / / www | known to those who consider hiring them. the fsb is now considering whether to adopt such an approach more broadly. the uk β s fair and effective markets review ( femr ) recommended that the eu β s market abuse regulation should be extended to cover every major fixed income and currency market, that criminal sanctions be updated, and maximum prison terms extended. see : http : / / www. bankofengland. co. uk / markets / pages / fmreview. aspx the pra has introduced requirements for regulated firms to provide employment references to one another in a mandatory template when hiring senior managers. this includes information on an individual β s conduct record, and their fitness and propriety. all speeches are available online at www. bankofengland. co. uk / speeches this is all constructive but insufficient. that β s why we have emphasised measures to ensure firms and their employees take responsibility β individually and collectively β for their own conduct. these range from securing compliance with minimum standards to a common and dynamic understanding of good practice that is widely understood and collectively enforced. uk authorities have used their convening powers to encourage market participants to establish standards of market practice that are well understood, widely followed and, crucially, that keep pace with market developments. this is what the banking standards board is doing by promoting higher standards of conduct and competence across the uk banking system. it β s why the global ficc market standards board ( fmsb ) is establishing readily understood standards for their markets. and it β s why the fx committees will launch in may the first globally consistent code of conduct for fx markets. but codes are of little use if nobody reads, follows, or enforces them. this is where the uk β s senior managers regime comes in. senior managers regime the smr addresses the common refrain of senior management that they weren β t aware that misconduct was taking place in their firms. the smr sets a series of requirements for the most senior decision - makers of banks, building societies and major investment firms. the smr re - establishes the link between seniority and accountability. senior managers are now held accountable if they fail to take reasonable steps ( including training or proper oversight ) to prevent or stop regulatory breaches in their areas of responsibility. and the smr prescribes responsibilities β typically to the chair and ceo respectively β for developing and embedding a firm β s culture. under the related certification regime, firms must also annually assess and certi | 1 |
had caused the transmission of policy stimulus to the broader economy to be too slow and uncertain. the unconventional tools were designed to act both on the quasi - risk - free yield curve and on bank lending margins. by β yield curve β i mean the term structure that we observe in the money market for overnight indexed interest rate swaps, as well as the curves in the markets for the national sovereign debts, which traditionally constitute an important benchmark for pricing credit to the entire economy. due to this benchmark function, the level and shape of the yield curve are crucial determinants of prices of a whole range of longer - term financial assets, including those most closely tied to economic activity, such as bank lending rates, corporate bonds and mortgages. our policy to influence intermediate and long - term yields has been instrumental in bringing the whole structure of credit conditions for households and companies to the accommodative levels necessary to arrest disinflation and strengthen the recovery. as a complement to the impact of our measures on yield curves, our targeted longer - term refinancing operations ( β tltros β ) were specifically designed to compress bank lending rates β 1 / 6 bis central bankers'speeches a key intermediate objective of the policy toolkit, given the important role that bank credit plays in financing the euro area economy. through a number of mechanisms, the tltros have successfully bid down the level of bank lending rates on loans to households and companies while preserving banks β overall margins. 1 this toolkit has formed the backbone of ecb monetary policy for almost three years. at the same time, the package had to be adjusted at times in response to the evolving situation. in particular, such adjustments became necessary to counteract the sequence of external shocks that, between summer 2015 and summer 2016, have created headwinds for the euro area economy, thereby slowing down the firming of its recovery. the governing council responded to the marked weakening in the euro area macroeconomic outlook which materialised towards the end of 2015, in a deteriorating global economic environment with persistently elevated financial market volatility, by announcing in march 2016 an extension of the minimum time horizon over which it would conduct the app combined with a further reduction in the deposit facility rate ( dfr ). moreover, it reactivated the tltros to prevent the market turmoil that prevailed at that time from undermining the progress that had previously materialised with regard to bank intermediation. as bank lending conditions normalised | expectation that the ecb β s key interest rates will remain β at their present levels for an extended period of time β β should be calibrated in a way to anchor the short - to - medium maturities of the yield curve β those portions most sensitive to short - term interest rate expectations and, therefore, to forward guidance β around levels that are sufficiently steady and low. in this respect, a mildly negative dfr has proved to be particularly powerful in controlling and anchoring these maturities, which are key to pricing bank credit in the euro area. the notion that zero was not the effective lower bound has exerted additional flattening pressure on the short - to - intermediate maturities of the yield curve, those to which banks tend to index loans with adjustable interest rates. this has amplified the reach - out potential of the stimulus relative to a situation in which our policy rates had been reduced to levels no lower than zero. 2 the app applies further pressure on longer - term interest rates along the curve, mainly by compressing the term premium. why does the app influence the term premium? the mechanism operates principally by extracting duration risk from the market. markets see duration risk as a potential source of portfolio losses, so they want to hedge against it, and the compensation for hedging is precisely what we call the term premium. if this premium is high, it makes long - term borrowing more expensive than short - term borrowing. if, at times of disinflation and weak growth, long - term borrowing is to be made more affordable so as to promote investment and durable consumption, then the central bank can try to absorb part of the duration risk that otherwise would have to be held by private investors. this can be done by purchasing long - dated bonds, as the ecb did under its app. with less long - dated bonds to hold in the aggregate, private investors have more balance sheet capacity to hedge against the amount of duration risk that remain in the market, and more risk - bearing power to re - deploy funds to other investments, including the acquisition and financing of productive capital. as a consequence, the 3 / 6 bis central bankers'speeches desired compensation for hedging will decrease, which will drive down the term premium and the whole yield curve. this same mechanism will spur propagation. duration extraction is the catalyst for the portfolio rebalancing channel, which is the chief mechanism by which easing through quantitative interventions propagates through the entire economy. in practice, | 1 |
. from 1950 to 1970, more women entered the workforce, but many did not plan to work for the long term, and their investment in education and training was often limited. 4 by the mid - 1970s, barriers that limited opportunities for women in many workplaces began to fall, and by 1990 the education gap between men and women narrowed significantly. women β s participation steadily increased from there until the gains leveled off in the 1990s, but then rose again from 2015 to 2020, just before the pandemic. the narrowing of educational attainment for men and women had a lot to do with the narrowing of participation rates over the decades, and today women are more likely than men to hold a bachelor β s degree. even so, before the pandemic, overall participation remained lower for women than men regardless of education level. see claudia golden ( 2021 ), career & family : women β s century - long journey toward equity ( princeton, nj : princeton university press ). see claudia goldin ( 2006 ), β the quiet revolution that transformed women β s employment, education, and family, β american economic review, vol. 96 ( 2 ), pp. 1 β 21. - 4the response to the covid - 19 pandemic caused the most abrupt decline in employment in the history of this nation. 5 the lockdowns and other government restrictions on businesses severely limited work, education, and travel. in february 2020, over 60 percent of working - age people had a job or were looking for work, but by april it was closer to half that amount. the pandemic hit all sectors of the economy, but the toll was especially heavy on in - person, close - contact service industries β restaurants, hotels, airline travel, and retail businesses other than big box stores, grocery stores and pharmacies. these in - person service - industry jobs were considered more conducive to spreading covid - 19, they were more affected by government - mandated shutdowns and social distancing, and teleworking was generally not possible. unlike any previous recession, the downturn in employment fell more heavily on women than men. the unemployment rates for men and women were essentially the same before the pandemic but ended up much higher for women. 6 that was very different from past recessions. for example, after the recession following the housing crisis, unemployment for prime working age men rose to 11 percent, compared to only 9 percent for prime age women. | 7 the women β s labor force participation rate is another way to measure their presence in the workforce. women have made significant progress in closing the gap with men since the 1960s, including in the five years before the pandemic, but that gap in just two months, the unemployment rate rose from 3. 5 percent to 14. 7 percent. while unemployment was higher during the great depression of the 1930s, it never rose this quickly. unemployment rose to 16. 1 percent for women but only 13. 5 percent for men in april 2020. the u. s. department of labor define prime age workers as those 25 - 54. - 5reopened after the onset of covid - 19. 8 the number of both prime working age men and women in the labor force plunged, but the drop was half a million larger for women. from what we know now, there appear to be two main reasons why the pandemic downturn affected women more than men. first, even after the dramatic employment gains over the past 50 years, women are still most often the primary caregivers to children and other family members. they shouldered most of the childcare burden from the covid school closures. second, a higher proportion of women worked in and continue to be employed in positions in the high - contact service sectors that were hit hardest by the pandemic. caregiving burdens in the united states have always fallen more heavily on women. in the 20 years before the pandemic, roughly one - fourth of prime - age women with children didn β t participate in the workforce. an even larger share of women with children under five were primarily engaged in childcare. many women with children tend to cycle in and out of employment based on their family β s childcare demands. women are significantly affected by the summer childcare burdens of families with children. each year between may and july, when schools close for the summer, the employment - to - population ratio for prime age women declines by more than a percentage point and then rebounds when schools reopen in the fall. that difference is one - third of the total drop that prime - age women experienced following a very bad recession, the one following the housing crisis. 9 part of the reason women closed the participation gap with prime working age men after 1965 is that participation by this cohort of men gradually declined. major reasons for this decline in prime age male participation likely were increasing trade, globalization, and technological changes that reduced the number of | 1 |
the highest degree of professionalism and a strong sense of responsibility. it is no mere formality that i express, personally and on behalf of the governing board, a profound appreciation of their dedication. bis central bankers β speeches the monetary policy response to the risks of deflation notwithstanding signs of strengthening in the first quarter of this year, the euro - area economy remains exposed to global risks. trade continues to soften, and uncertainty persists regarding the ability of china and other emerging countries to avoid a sharp slowdown of their economies. in the euro area, domestic demand needs to consolidate further in order to counter the slackness of foreign demand. concerns about the prospects for the european banking system continue to afflict the markets, heightened by uncertainty concerning the macroeconomic outlook, the regulatory stance, and the as yet incomplete configuration of banking union. in some countries, the problems of the economy and public finance are interwoven with those of political instability ; in many, hostility to the european project is gaining traction. a negative outcome of the referendum on the united kingdom remaining in the european union could engender profound instability. for monetary policy, the main challenge remains the persistence of excessively low inflation, which turned negative in the first few months of this year. this phenomenon is not limited to the euro area. in large part it stems from the fall in oil prices, but it also depends, to a significant extent, on internal dynamics : the margins of unused plant capacity and available labour are wider than in other advanced economies. as i have recalled on several occasions in recent years, like excessively high inflation, an overly subdued price dynamic is also harmful for economic and financial stability, especially when public and private debt are high and growth is weak. resolute action is being taken to dispel the risk of a prolonged detachment of inflation expectations from the level consistent with the central bank β s objective. in the euro area, the responsiveness of longer - term expectations to the fall in short - term expectations, which is very modest under normal circumstances, remains pronounced, albeit less so than between the end of 2014 and the start of last year. we have acted with determination to encourage the return to price stability ; as reiterated by the governing council of the ecb at its last monetary policy meeting, in furtherance of this objective we will continue if necessary to deploy all the instruments made available to us in our mandate. official interest rates have been reduced repeatedly, bringing the eurosystem β s deposit facility | ##lli, β relationship and transaction lending in a crisis, β the review of financial studies, 29 ( 2016 ), 2643 β 2676. level, this aim is being pursued by implementing the capital markets union project : enriching the types of financing available to non - financial corporations, broadening the portfolio choices of investors, enhancing the efficiency of financial intermediation, removing barriers to cross - border investment, and increasing funding options for smes and infrastructure. in italy, a number of additional initiatives with similar goals have been taken in recent years, such as minibond issues, debt funds, tax incentives for venture capital and allowances for corporate equity. yet in italy, as well as in many other european countries, the role played by the financial markets and non - bank financial institutions is still limited. this is why i am looking forward to discussing these issues with our eminent experts. designed by the printing and publishing division of the bank of italy | 0.5 |
andreas dombret : beyond the financial crisis β dealing with systemic risk dinner speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the workshop β beyond the financial crisis : systemic risk, spillovers and regulation β, organised by the deutsche bundesbank and technische universitat dresden, dresden, 28 october 2010. * 1. * * strengthening resilience ladies and gentlemen, i warmly welcome you to this dinner on the occasion of the workshop, jointly organised by the technische universitat dresden and the deutsche bundesbank. this has been a busy day full of research results and models. i would now like to complement this view with some remarks focusing on the policy dimension of systemic risk. over the last months, the international community has already decided to improve the regulatory and supervisory framework for the international financial system in several key points. the recent agreement on tighter capital standards ( basel iii ) represents a particularly decisive step forward in the envisaged re - form agenda. the new rules will probably be finally ratified at the forthcoming g20 summit of heads of state and government in seoul. bank capital will have to be stronger and higher in future, which will reduce the likelihood of individual institutions failing. larger risk buffers in the form of additional capital are not enough, however. more attention needs also to be paid to the β big picture β, the system as a whole. if the crisis has taught us one serious lesson, it is that the tightly networked international financial system can cause events which start out as isolated shocks to rapidly go global and unleash systemic effects. such systemic risks can originate in any part of the financial system : channels of potential contagion exist both within financial sectors and markets and across sectors and components. feedback loops between the financial sector and the real economy can also give rise to systemic risk. the system as a whole can also encounter difficulties if, owing to interdependencies, the rational conduct of market participants at the individual level were to lead to market dislocations in the aggregate. i draw three direct conclusions from the foregoing, which are related to one another and should be main elements of the policy response to the crisis. first, we need to find a suitable way of dealing with systemically important institutions. second, the traditional microprudential supervision needs to be supplemented with a macroprudential β or systemically oriented β component. third, we must | ##cive to keeping economic growth at a pace, which is consistent with the potential output growth, determined by the structural features of the polish economy. the fact that inflation and core inflation has stayed below the previous forecasts for a relatively long period may be an indication that the impact of the factors which may slow down the returning of inflation to the target in relation to that accounted for in the projection is stronger than previously assumed. factors which could potentially accelerate the return of inflation back to the target include a higher wage growth than assumed in the projection, provided it would not be accompanied by national bank of poland β financial stability review report β, warsaw, september 2005 national bank of poland β financial system development in poland 2004 β, warsaw, november 2005 h. koskenkyla, ed. β finnish financial markets 2002 β, bank of finland, 2003 monetary policy committee statement, 26 april 2006 sufficiently fast increase of productivity, further oil price hikes or a deterioration of the public finance situation in relation to that envisaged in the convergence programme. the council maintains its belief that the most favourable scenario for poland would be to implement an economic strategy focused on creating conditions which would ensure the introduction of the euro at the earliest possible date, which would be conducive to a higher long - term economic growth. β, end quote. public finances prospects this brings me to the developments in public finances. the fiscal outlook over the medium - term future would be broadly positive, if it were not for substantial risks, mainly political, surrounding the deficit path. in 2005, poland recorded an esa β 95 deficit of 2. 5 % of gdp. this corresponds to a deficit of 4. 4 % of gdp with the pension funds classified outside the general government sector, which will be the binding methodology from next year onwards and which is therefore the relevant methodology for assessing poland β s future compliance with the european fiscal rules. this implies that poland is 1. 4 percentage points away from meeting the maastricht fiscal criteria. it is not a demanding medium - term consolidation target for an economy with an expected real gdp growth of close to 5 percent, providing a very good environment to reduce the ratio of public spending to gdp. it is worth noting that germany may achieve consolidation of this magnitude over the 2006 - 2008 period, without such a favorable growth environment. however, the convergence programme 15 presented by the government in january of this year, does not foresee fulfilment of the deficit criterion in the programme horizon ; in | 0 |
act as contrarian investors in times of market stress. conclusions these works and debates matter not only in countries where the non - bank financial sector is large. in a globally interconnected financial system, countries with small non - bank financial sectors are often the most vulnerable to these risks. in light of the rapid expansion of asset management activities, the authorities need to be provided with instruments to prevent or mitigate consequent systemic risks, especially for situations where the measures available to asset managers alone would not be sufficient. managers of individual funds have a mandate to act in the best interests of their own investors and may not be in a position to act in the interest of financial stability. supervisors of individual funds may not have the information or means necessary to properly assess different funds β contribution to systemic risk. thus, a macroprudential approach to the supervision of non - bank financial intermediation should be developed. different authorities need to work together for a better understanding of the risk of fire sales, spillovers to other financial counterparties and disruptions in credit intermediation, and to design and test potential tools to prevent and mitigate systemic risk. designed and printed by the printing and publishing division of the bank of italy | . small and medium - sized institutions prove largely resilient to a simultaneous rise in the three types of risk. 2 / 4 bis central bankers'speeches thus the stress test scenario presents a mixed picture overall. on the whole, german banks and savings banks are robust and in good shape. but this should not blind us to the major challenges and the associated need for adjustments that banks face. elevated interest rate risk and the low level of risk provisioning increase vulnerability to shocks. i would therefore call on banks to focus their risk management operations primarily on the issues of maturity transformation and interest rate risk. 5. brexit will represent a challenge let me round out my remarks by discussing a challenge faced by all of us and which is having a particular impact on institutions. in all likelihood, the united kingdom will be leaving the european union on 29 march 2019. in that respect, no press conference on financial stability can avoid the topic of brexit. i will therefore address this topic in the remainder of my remarks. the negotiations β progress has tended to be on the sluggish side, creating considerable uncertainty for everyone : citizens, companies and not least the financial sector. in the 16 months that remain, the brexit - related restructuring has to be completed in order to ensure the uninterrupted continuation of customer relationships between economic areas. in this connection, i urgently advise all financial market participants to begin reorganising their operations as soon as possible, and to implement this process rigorously. this means, in particular, that all those banks seeking to continue to do business in germany or in other eu countries once the uk leaves the eu should, if they have not yet done so, file applications for licences as fast as possible. solutions also need to be found with regard to how existing contractual relationships will be continued seamlessly after brexit. for those institutions which change their contracts proactively hoping for their customers β tacit approval, legal risks could ensue, at least concerning retail customers. time will ultimately be the decisive factor. for the uk to achieve the smoothest possible exit from the eu, meticulous preparation by the banking industry is not the only thing that will be necessary. the preparations β or rather, the lack thereof β in the real sector give me cause for concern. companies should put their own access to financial services on a solid footing, and vulnerabilities that the uk leaving the eu will create for their own business models need to | 0 |
how they can be measured and managed, will be discussed. i'm very tempted to remain with you for your discussions, but sadly i have my own job to do, which makes it impossible for me to stay. but i wish you, padraic, and everyone here an enjoyable and interesting couple of days in what has become the best tradition of this very special event. | the 11 in that context it β s worth noting that our new objective is to facilitate growth and competitiveness, subject to alignment with international standards. 12 implementing basel 3. 1 in the uk β speech by phil evans | bank of england 13 the debate was so colourful it was even referenced in a tv debate between then - prime ministerial candidates rishi sunak and liz truss β surely a first for prudential regulation of insurers! 14 in general, there is a strong complementarity between our new secondary objective, and our long - standing secondary objective to facilitate competition in the banking and insurance sectors. bank of england administrative aspects of the senior managers regime and are considering an approach to indexing thresholds in our regime in order to avoid β prudential drag β in which fixed thresholds become more biting over time as the economy grows. and it β s not just policy - making that is changing. we β re on a mission to make our regulation as efficient as possible, by removing unnecessary frictions and inefficiencies so that we can achieve our objectives with minimal costs to the real economy. in particular : we β ve improved the speed and efficiency of regulatory processes, with the timeliness of authorisation of new senior managers now running consistently at very close to 100 % ; we β re revamping our rule - book to make it easier to navigate ; and we are reviewing the banking data we collect with the aim of streamlining reporting, ensuring we get the data we need, but no more than we need, at the lowest cost to firms. now reasonable people can debate whether we are doing enough, too much, the right or the wrong things to advance the new objective given to us by parliament. unreasonable people are also welcome to debate those points, and i β m sure they will. but if you want to argue that the pra is simply not doing much on competitiveness and growth, you are just straightforwardly wrong. busting myths but while i β m focused on actions, i β m also aware that perceptions matter. we should be held to account for our support for growth and competitiveness, and so it β s important that people can see what we are doing. part of that is about explaining what we β re doing, but another part is busting some persistent myths about our work. the first myth is that prudential regulation is fundamentally at odds with risk - taking. i β ve heard many versions of this in my 8 years in | 0.5 |
the iia will open a new chapter of successful cooperation between our two institutions. in this context let me also welcome your positive vote on ms nouy β s nomination. following her final appointment by the council, she will become your main interlocutor on all matters related to the ssm as of january 1st. i would like to also address an issue which, i know, is as much a concern to you as it is to me : the gender balance at the ecb. today, 17 % of our management positions are filled by female staff. it is clearly not enough. this is why the executive board decided this summer to introduce gender targets aiming at 35 % women in management positions by 2019. and this is not an empty promise. the ecb has started to implement a diversity action plan that will help us attaining those targets. let me now share my thoughts on the process of completing emu. taking stock of the progress made towards a genuine emu as this legislature comes to the end of its term, it is an opportune time to reflect on what we have achieved in such a short space of time. not so long ago the euro area was facing an uncertain future. in the meantime, doubts about the integrity of the single currency have dissipated. notably, a roadmap for a genuine emu has been outlined encompassing four pillars : banking union, fiscal union, economic union and ultimately political union. through a concerted legislative effort the euro area, and the eu as a whole, has been put on a more stable footing. your institution has made a decisive contribution to this effort. the establishment of the single supervisory mechanism ( ssm ) represents probably the most significant change to the eu since the establishment of the single currency and i am happy to report the internal preparations are well underway. i strongly welcome the political agreement on the bank recovery and resolution directive you have reached with the council yesterday night. swift agreement on the other key component of banking union β the single resolution mechanism β is of paramount importance. i trust you will succeed in adopting the relevant legislation before your term comes to an end. these institutions are essential to implement the β single rulebook β in the years to come. looking ahead we will have a stronger set of rules bis central bankers β speeches for capital and liquidity. we will also have a new toolbox for the resolution of financial institutions. and we will have stronger national deposit guarantee schemes. banking union however is not a panacea for eliminating financial | market fragmentation and fully stabilising emu. it is a necessary, but not sufficient condition to break the banksovereign nexus and restore sustainable economic growth. equal borrowing conditions can only be ensured through the joint implementation of other measures. this not only includes continued fiscal consolidation and implementation of structural reforms, but also progress on the other β unions β. only then can we say we have created a genuine emu. let us seize the opportunity of the next ep elections to have an open public debate on the further steps needed to strengthen the architecture of emu. thank you for your attention. bis central bankers β speeches | 1 |
disastrous consequences for sids in economic and fiscal terms, most of which are largely dependent on international trade, external finance and few key sectors, often tourism. in 2020, it was estimated that gdp of sids dropped by 6. 9 per cent versus 4. 8 per cent in all other developing countries. in mauritius, we equally witnessed a major gdp contraction of around 15 per cent in 2020, one of the highest in the world i must say. ladies and gentlemen, against such precarious macroeconomic backdrop, we all agree that an effective implementation of the sdgs is key to our development to achieve a more equitable and sustainable future for all. however, as most of you here may be aware, the unctad reported that in 2022, sids collectively received around usd 8 billion, representing 0. 6 per cent of global fdi flows and a 39 per cent increase from 2021. while this is certainly a step in the right direction, it is still inadequate and disproportionately distributed as the top five sids recipients received around 85 per cent of the inflows. the top five recipients were dominican republic, bahamas, maldives, jamaica and timor - leste. among the five african sids, mauritius saw its fdi flows grow by 48 per cent from 2021 to reach usd 625 million in 2022. climate funds were set up by developed nations to assist less - developed countries. while these amounted to usd 35 billion, it is estimated that only some usd 11 billion has been actually disbursed, with the share flowing to sids being even less significant. sids are on the frontline of the climate emergency, bearing the brunt of more frequent and intense extreme weather events, increasing temperatures and sea level rise, all of which threaten people's livelihood and food security, with important ripples on economic and financial stability. these figures are disconcerting but more importantly, they emphasise the urgency of the work ahead of us for removing potential obstacles to mobilise adequate sdg finance. allow me to illustrate with the case of mauritius : to meet its climate obligations by 2030 under the 2015 paris agreement alone, mauritius requires funding estimated at usd 6. 5 billion, 35 per cent of which would be funded by the government and domestic private sector while the remaining 65percent or usd 4. 3 billion would have to be financed externally by 2030. this results in a yearly financing requirement of around usd 700 million, which is no small | . - consumer spending would also be negatively affected, reflecting concerns over future job losses and income prospects. - at least for an initial period, it is likely that there would be disruption at ports and airports if infrastructure is unable to cope with the new arrangements. given the deep supply chain linkages between ireland and the uk, reflected in the reliance on the uk for imports of intermediate goods used in production by irish firms, and also given the scale of food and consumer goods imports from the uk, there would be implications for firms through disruption to their production processes and for households through the price and availability of consumer goods. - exports would fall due to an immediate and large reduction in demand from the uk and the fall in sterling, with some sectors being further affected by any imposition of tariffs and non - tariff barriers. - those sectors β as i discussed β which are more reliant on trade with the uk or which are more vulnerable to the imposition of tariff and non - tariff barriers, such as agriculture, food and smaller scale manufacturing, are likely to be more adversely affected. these effects are also likely to be focused on rural areas and, in particular, the border regions. so, there are a variety of ways that the departure of the uk can adversely affect the irish economy and contribute to a material slowdown in growth. however, it is important to note that in this scenario, our modelling work still suggests that there would be growth in output this year and next. quantifying the impact of a disorderly uk exit through these channels is extremely uncertain but the insight to be taken from this result is that some of the structural elements of the irish economy also have a role to play as the process moves forward. structural factors include the diversified nature of production in many sectors. while some sectors are heavily reliant on the 6 / 8 bis central bankers'speeches uk as an export market, for others, the uk is an important market but nonetheless not the only one. the current status of the public finances are also relevant. there is scope to run a countercyclical fiscal deficit through the operation of automatic stabilisers on tax revenues and transfer payments in the event of a severe downturn. moreover, there is some scope for temporary investment to support trade routes after the uk β s departure and temporarily help hard - hit sectors adjust to new realities. of course, while the uk leaving the eu is the most clear current downside risk to the irish economy, there are others | 0 |
at recent international meetings : the exit strategy. this strategy sets a course for progressively reversing the policy measures that were implemented in recent months, i. e. the interest rate levels and non - standard instruments. let me make it quite clear : this is not β yet β the time to implement the exit strategy. we clearly stated our view last week that the level of interest rate is appropriate, and we decided to conduct another one - year refinancing operation at the mro rate ( 1 % ) with full allotment. but it β s critical to have a well thought - out exit strategy, because markets have to realise that the current policy is temporary and will be reversed when it is no longer appropriate, in particular when risks to price stability re - emerge and conditions in financial markets have improved. as far as the euro area is concerned, the primary goal of monetary policy remains on friday 4 september 2009, three, six and 12 month rates in the us ( libor ) stood at 0. 31 %, 0. 71 % and 1. 29 %. the corresponding rates in the euro area ( euribor ) were 0. 80 %, 1. 07 % and 1. 28 %. price stability ; and the ecb will do whatever is needed to carry out its mandate. inflation expectations over the medium term have to remain well anchored. this is essential to ensure that long - term interest rates remain low, thereby supporting the economic recovery. having an exit strategy is thus an act of responsibility for a central bank. drawing up an exit strategy entails two questions above all : how? and when? i won β t touch upon the how β the instruments β as both chairman bernanke and president trichet have examined this particular question recently. 2 instead, i will address the issue of the when from an analytical point of view. the concrete implementation will depend on many imponderables, not least the prospects for economic recovery and for the stabilisation of financial markets β and those prospects are fraught with uncertainty. i intend to discuss a few issues that β in my view β central banks will have to consider when taking the decision to exit. this will show how complex and difficult that decision is going to be. my analysis does not pretend to be exhaustive, but in my view the following five issues demand our full attention. one issue is reversibility. once the decision has been taken, we can β t easily go back on it. this | aim to provide any insight into specific monetary policy decisions over the next few months. my purpose was to explain parts of the analytical framework in which central banks will have to operate, on this and that side of the atlantic. just like the entry, the exit will also call for close interaction between the monetary authorities. this might not necessarily mean coordinated action or similar measures, given the different situations. however, the challenges ahead are quite similar. ultimately, if we want to avoid β being too late β or β being too early β, the only solution is to β be right on time β. and this is what we are committed to doing. | 1 |
past. indeed, new zealand households have been consuming more than their income for many years. the household saving rate has been negative since the early 1990s, and strongly negative since 2002. why have new zealand households been able to run down their saving rate to the point of substantial dissaving? the answers echo the reasons identified in the previous section : lower note the weight of construction costs in the cpi basket was reduced from 9 percent to 4. 7 percent in the 2006 cpi review. see the reserve bank β s submission to the fec inquiry into the future monetary policy framework. interest rates which have enabled households to service a higher level of debt ; financial innovation which has eased credit constraints ; and generally buoyant employment conditions. 17 in terms of household balance sheets however, net wealth ( the difference between assets and liabilities ) has increased, despite the negative saving rate. this is because the revaluation on the asset side ( the gain in house prices ) has outweighed the increased borrowing secured on housing ( the increase in household liabilities ). new zealand households are not alone in consuming more than they earn. both in australia and the us household saving rates are negative ( figure 8 ). household savings rates in other advanced economies are also falling, but are not yet negative. however, at - 14. 6 percent, new zealand is clearly an outlier. the decline in household saving also accounts for a large part of the decline in total national saving ( household + corporate + government savings ) across the advanced economies. 18 fig 8 : household saving rates ( percent of disposable income ). source : oecd ; statistics nz. to what extent is this ability to consume more out of income and the associated decline in the national saving rate sustainable? in one sense lower national saving implies lower standards of living in the future. at the moment, our national saving is lower than current investment, and the shortfall is funded by borrowing from overseas. 19 this situation is unlikely to persist indefinitely as the budget constraints on households will at some point start another factor that could be influencing new zealand household β s savings decision is the fact that government savings is strongly positive β household β s may feel they do not have to save as much for their future if the government is doing it for them. advanced economies in general are currently saving too little relative to their current levels of investment. the flip side of this macroeconomic imbalance is that emerging market and developing economies are saving too much relative to their | term economic growth prospects beyond our stable inflation contributions. undoubtedly we are in new low inflation and interest rate territory collectively. colleagues were interested to hear about each others β experiences and our recent decision to cut the official cash rate by 50 basis points β as were most new zealanders. first, the interest rate lever is blunt. it is not personalised. savers ( investors ) and consumers are treated equally, and are often the same person doing various activities. we make our interest rate decision to best bring about prosperity and wellbeing of all new zealanders in the long - term. this decision is repeated frequently β aimed at the same inflation and employment goal β as circumstances change. 1 / 2 bis central bankers'speeches our recent ocr cut reflected an expected decline in trading partner growth, lower nz inflation expectations, and a global swing to lower interest rates. it also reflected the ongoing funk global and domestic business confidence is in. geopolitical uncertainty is paralysing decision making in major business centres β trade tensions, brexit, hong kong, north korea and so on β have all meant investment is lower than normal. the nz waka is tied off to the global β risk free β interest rate wharf. when the global rate declines, we need more rope β or face a rising exchange rate and tighter financial conditions than needed. second, how you respond to lower interest rates is personal. lower interest rates stimulate investment ( funding costs are lower as are expected hurdle rates of return ). income derived from passive savings in the bank is lower β prompting more active investment decisions. asset prices rise as the present value of their future earnings rises. and spending β both government and the public β becomes more affordable, at least until consumer prices start to rise again. and a lower than otherwise nz dollar will promote export earnings. so how you feel about low nominal interest rates personally comes down to which of the activities you may be involved in. the central bank can only focus on the long - term wellbeing of all. there are different outcomes for different people. home owners may feel wealthier, those outside of this asset market would be facing a higher price to buy but at more affordable servicing costs. savers in low risk deposits will need to invest more actively β and so on. finally, a key concern amongst my international colleagues is that central banks are being tasked with more and more challenges β and public expectations continue to rise also. the discussion was clear. monetary policy ( the domain of central banks | 0.5 |
sustainable growth over the medium and long term. the government β s continued thrust on capital expenditure is creating additional capacity and nurturing the much - awaited revival in the corporate investment 2 estimated at 1. 429 billion in the latest world population report 2023. 3 68 % of the total population belongs to 14 - 68 years. cycle. 4 the indian economy has also made rapid gains in openness and has gradually integrated with the global economy over the years. consequently, it is getting increasingly exposed to the vagaries of global headwinds. it is, however, pertinent to note that india β s growth in the last few years is mainly driven by robust domestic demand, especially private consumption and investment, amidst the global slowdown 5. looking ahead, we expect real gdp to grow by 6. 5 per cent during 2023 - 24. in all likelihood, india will remain among the fastest growing large economies in 2023. regulatory and supervisory initiatives 12. in the last few years, we have put in place a stronger and more robust regulatory and supervisory framework. this has served us well in withstanding the scourge of the pandemic and the global financial market turmoil after the outbreak of geo - political hostilities. our approach to regulation and supervision has been essentially premised on three pillars. 13. first, our focus in recent years has been to strengthen governance and assurance functions within our regulated entities β banks and non - bank financial companies ( nbfcs ). the emphasis has been on building an environment of trust, transparency and accountability in the financial sector. some of our regulatory measures include implementation of ( i ) liquidity coverage ratio ( lcr ) and net stable funding ratio ( nsfr ) ; ( ii ) governance guidelines for commercial 4 public investment multiplier on private investment and real gdp is found well over unity at 1. 2 and 1. 7, respectively, over a three - year period ( monetary policy report, april 2023 ). 5 global factors explain only 17 - 18 per cent of the variability in india β s gdp growth, reflecting dominance of domestic growth drivers ( monetary policy report, april 2023 ). banks ; ( iii ) scale - based regulatory ( sbr ) framework for non - banking financial companies ( nbfcs ), among others. the capital and liquidity requirements are uniformly applied to all scheduled commercial banks ( scbs ), irrespective of their asset size and exposure. 6 latest supervisory data indicates that all the banks | the general public : promise or false hope? national bureau of economic research ; working paper 30277, july undertake prompt and pre - emptive actions. the unequivocal reassurance communicated to the public and other stakeholders through these statements along with our timely measures eased financial conditions considerably while unfreezing markets and reviving trading activity. 20. effective forward guidance reinforced the impact of our conventional and non - conventional monetary policy actions during the pandemic. as noted earlier, our forward guidance on continuing with accommodative monetary policy amidst transient inflationary shocks was highly effective. our asset purchase programme β g - sec acquisition programme ( g - sap ) β provided an upfront commitment to a specific amount of open market purchase of government securities. this measure anchored interest rate expectations and facilitated monetary transmission. 21. recalibrating the policy path after the pandemic presented its own set of communication challenges. reversal of certain open - ended policies required careful and nuanced communication to align market expectations with our assessment. illustratively, the governor β s policy statement of february 2021 addressed the fears of reversal of monetary policy which were building up due to resumption of liquidity absorption through vrrr operations in january 2021. this was done by explicitly explaining the rationale for the reintroduction of vrrr auctions. similarly, liquidity rebalancing was set in motion in august 2021 through periodic upscaling of the 14 - day main vrrr auction, with the explanation that liquidity conditions need to β evolve in sync with the macroeconomic developments to preserve financial stability β. 22. the assurance given to the markets, the people and all other stakeholders through statements like β we will continue to think and act out of the box, planning for the worst and hoping for the best ( june 2021 ) ; β the reserve bank remains in β whatever it takes β mode, with a readiness to deploy all its policy levers - monetary, prudential or regulatory β ( august 2021 ) demonstrated the central bank β s commitment to remain steadfast in safeguarding trust and confidence in the domestic financial system. 23. in the subsequent tightening phase which commenced in april - may, 2022, the scale and nature of communication has been appropriately fine - tuned and calibrated, so as to ensure successful transmission of policy rate hikes. 24. we also recognise that communication has to be balanced β too much of it may confuse the market while too little may keep | 1 |
org. | 7. the share funded by cmbs ( the orange line ) increased from almost nothing in 1990 to almost 30 percent in 2008. in an accounting sense, most of this increase in funding from the capital markets came at the expense of direct holdings of whole loans by insurance companies ( the dashed green line ) and other intermediaries ( the black line ), whose funding shares fell by half between 2000 and 2008. in contrast, depositories'share of commercial mortgages outstanding ( the purple line ) held steady from 1990 through 2007. in 2008, the decrease in the commercial mortgages funded by cmbs β the downtick of the orange line at the end of the sample β was offset by an increase in commercial mortgages funded by depositories β the uptick of the purple line. these data suggest that depositories increased their share of commercial mortgages as securitization markets stalled in 2008. again, banks and other depositories served an important safety - valve function for the commercial mortgage market. in figure 8, federal reserve flow of funds data are used to construct market shares of all financial intermediation provided by four major classes of institutions : banks, thrifts, insurance companies, and " other financial intermediaries, " which range from finance companies to the entities that issue abs. 9 in 1950, banks'share of financial intermediation ( the red line ) was about 50 percent ; it declined and then rose to about 48 percent in the mid1970s, then it trended down to about 33 percent at the turn of the century. from the fourth quarter of 2007 to the fourth quarter of 2008, this measure of total financial intermediation grew by about 5 percent. at the same time, the banking system's share increased from 32. 8 percent to 33. 4 percent β a 0. 6 percentage point increase in market share. thrifts and insurance companies β represented by the blue solid and green dashed lines, respectively β had declines in their market shares in the fourth quarter of 2008. in figure 9, the shares for banks and thrifts are combined so that there is a depositories'share of this measure of u. s. financial intermediation ( the purple line ). comparing the purple line for the depositories'share with the black line for other financial intermediaries'share, it is bank's ability to hedge against marketwide liquidity shocks as they did last fall has been documented in the academic banking literature ; see | 0 |
daviΓ° oddsson : review of recent economic and financial developments in iceland address by mr daviΓ° oddsson, chairman of the board of governors of the central bank of iceland, at the bank's annual meeting, reykjavik, 30 march 2007. * * * chairman of the board of governors, prime minister, ministers of government, ladies and gentlemen : on behalf of the board of governors i welcome you all to this, the 46th annual meeting of the central bank of iceland. at the bank β s last annual meeting it was announced that the government of iceland and the central bank had been in consultation on the need to boost the bank β s foreign reserves substantially and also to improve its capital position. their motivation for doing so was not, however, that either position had weakened, nor that the bank no longer met the benchmarks for capital and foreign reserves. for a long time the minimum foreign reserve has been set at an amount equivalent to three - months β imports, and this level has always been ensured. however, the major changes β which could even be called revolutionary β that have taken place in iceland β s financial sector over a relatively few years prompted the board of governors to regard it as prudent to take other factors into account, such as the size and scope of the financial sector. as far as the capital position is concerned, it can be said that clear guidelines are to be found in recent legislation on the central bank. the clause in the law dealing with the transfer to the treasury makes some for provision for whether the bank β s capital has reached a specified minimum relative to the size of the domestic credit system. the central bank act states that an amount equal to two - thirds of the central bank β s profit shall be paid annually to the treasury. however, the bank pays only one - third of its profit to the treasury if its capital is equivalent to less than of 2. 25 % of the amount of lending and domestic securities in the credit system. at present the bank β s capital is still a long way short of this legal reference level, and its annual profit will not suffice to strengthen it markedly anyway. growth has not only soared in the icelandic credit system, but on an increasing scale each year has also been associated with foreign markets, where credit institutions β activities have expanded enormously. these changes also give grounds for considering other terms of reference for foreign reserves than import levels alone. as the prime minister stated in his speech earlier, the government responded positively to | ingimundur fridriksson : turbulence in iceland's financial markets in 2006 keynote address by mr ingimundur fridriksson, governor of the central bank of iceland, at the ubs conference β annual reserve management seminar for sovereign institutions β, thun, switzerland, 4 june 2007. * * * where is iceland? what is it? why do we want to know about it? in the first half of 2006, hardly a day passed without iceland and icelandic banks being mentioned in newspapers and financial journals around the world. although attention is often welcome, this was not necessarily true of all the discussion about iceland and its banks a year ago. the coverage was highly critical, in some ways rightly so but in other ways not. when i was asked to address this conference, the turbulence in the icelandic financial markets in the first half of 2006 was doubtless fresh in the organisers β minds. so i was asked to discuss that episode and how the central bank of iceland monitored it and responded. as well as covering this topic i shall add some comments on recent developments and prevailing conditions. but first a few facts and a brief description of the background are needed. iceland is an advanced industrial economy with one of the highest national incomes per capita in the world. through membership of the european economic area, iceland is part of the european single market and has the same financial infrastructure as in the european union. the icelandic economy has witnessed huge changes in recent years following the deregulation of cross - border capital movements in the 1990s and market liberalisation. in the 1990s, the central bank of iceland adhered to a fixed exchange - rate regime with tolerance limits, which was supposed to provide an anchor for the core policy of keeping inflation under control. the arrangement was successful then and for much of that decade inflation in iceland was close to or below the oecd average. over time it became increasingly clear that a fixed exchange rate was incompatible with full deregulation of capital movements. bearing this in mind and because a floating exchange rate would arguably suit the icelandic economy better, the tolerance limits were extended in phases from 2. 25 % at the beginning of the 1990s to 9 % early in 2000. in the course of the 1990s, an episode of overheating began. it originated in a massive increase in foreign investment in the aluminium sector but gradually became driven by private consumption. inflationary pressures amplified and the current account deficit widened sharply to 10 % of gdp in 2000. market expectations | 0.5 |
##maker may be comfortable with that. but in reality there is no unique answer that encapsulates the collective judgement of the mpc. in the bank β s experience, mpc members find it more important to focus on distinguishing between the different broad orders of magnitude of future events, and are less interested in debating whether something will happen 49 times out of 100 or 52 times. one answer to this tension is to describe the problem in words. but that carries its own difficulties. an alternative is to design a graphical device which prevents the illusion of spurious precision. simple graphical changes to the chart such as [ slide 18 ] emphasise that the mpc β s view is not best expressed by a precise numerical for the probability. but a downside of this sort of representation is that it does not readily permit comparisons between successive forecasts. instead, a further alternative that the mpc is considering is to present this as a β probability ribbon β [ slide 19 ]. this shows a range estimate of the probability that inflation will exceed target, defined by the edges of the relevant band of the fan chart. in doing so it preserves the broad impression of the committee β s overall view, yet filters out the artificial accuracy. for instance, the committee thought that the chance that inflation would be 2 % or higher in 2011q1 was between 15 % and 20 %. we can once again use the february forecast to highlight a few of the key messages that the mpc wanted to communicate. in the early part of the forecast period, the probability of inflation being above the target is very high. this is because the data for inflation are well above target at present, and also because the fan chart here is relatively narrow. but the projection for inflation falls over the forecast period. this implies a fall in the probability of inflation being above target. towards the final part of the projection, the probability of inflation being above the target rises back to being broadly one half. this chart emphasises that, in spite of the most likely outcome for inflation being below target, the nature of the distribution of risks implies that the probability of exceeding the target is about one in two. we can also combine the usual top - down fan chart with the information in the cross - sectional densities to produce a 3d fan chart [ slide 20 ]. the particular advantage of this chart is that it shows how the overall density changes over time. for instance, when the distribution is very narrow, such as at the start of the forecast period | , the probability density at the centre of the fan is higher, simply because the mpc is more confident about its central forecast here. overall, however, both from the point of view of how policy is determined, as well as how it is communicated, it is the broad distribution that matters. 8. conclusions self - confidence is infectious. it can also be dangerous. how often have we drawn false comfort from the apparent confidence of a professional advisor promising certain success only to be disappointed by subsequent performance? uncertainty pervades almost all public policy questions. economics and many other disciplines are united by a common need to grapple with complex systems. as the crisis of the autumn of 2008 showed, such systems can sometimes be subject to abrupt changes, the precise timing of which cannot easily be identified in advance. but policy - makers are often expected to anticipate the unpredictable. how can they retain the trust of the public while being open about the true degree of uncertainty? or, to put it another way, what is the appropriate bedside manner for policymakers when dealing with complex uncertain problems in a public debate? we have explained how the bank of england tries to deal with some of those challenges in the context of monetary policy. we are sure we have much to learn, and our efforts to improve communication will continue for a long time to come. references anderson, r and may, r ( 1991 ), β infectious diseases of humans : dynamics and control. β oxford university press. arrow, k ( 1995 ), interview with β the region β magazine, available http : / / www. minneapolisfed. org / publications _ papers / pub _ display. cfm? id = 3675. at asch, s e ( 1951 ), β effects of group pressure upon the modification and distortion of judgment β. in guetzkow, h ( ed. ) β groups, leadership and men β pittsburgh, pa : carnegie press. banerjee, a ( 1992 ), β a simple model of herd behaviour. β quarterly journal of economics, 107 ( 3 ), 797 β 817. bar - eli, m, azer, o, ritov, i, keidar - levin, y, schein, g ( 2007 ) β action bias among elite soccer goalkeepers : the case of penalty kicks β, journal of economic psychology, vol 28 no 5, pp 606 β 621. bikhchandani, s. hirshleifer, d. and | 1 |
are restricting its economic potential. this is also a reason why the oecd estimates japan β s annual potential growth at only just over 1 %. the situation is compounded by the precarious state of public finances with the government debt level at almost 170 % of gdp. in the case of the emerging economies in east asia, what matters is not the adjustment of existing structures, but rather the creation of new ones. the asian countries must overcome the prevailing bilateralism to be able to benefit from the international division of labour more than has been the case thus far. this includes establishing an institutional framework for their regional cooperation. china β s political and economic development will depend largely on how the country deals with its growing internal imbalances, for example, the tensions between urban and rural areas to name just one. in china, the most pressing reform project is the creation of a well - functioning financial system able to channel national savings towards efficient uses and as an important step towards more exchange rate flexibility. furthermore, it is necessary to create a social security system for which the state - owned enterprises have hitherto been responsible as well as a framework for a market - oriented fiscal and monetary policy. v in europe the process of structural reforms has to continue. europe has problems. the most pressing problems include high unemployment, a lack of economic flexibility and an ageing population. however, one should not overlook the fact that more than 10 million jobs have been created since 1997. that is two million more than in the us. there has also been a maturing awareness of the need for reform. reforms have now been introduced in the labour markets and social security systems. following the accession of 10 new members to the european union last year, we now have a large single market which unites the purchasing power of 450 million citizens. however, in view of its possibilities, the euro area β s growth potential is low. the oecd estimates it to be about 2 % per year ; by comparison, the us growth potential is estimated at over 3 %. these growth differentials are to a large extent attributable to different rates of population growth. even so, i am optimistic. with increasingly flexible economies, greater efforts in r + d, greater willingness to be innovative and for longer working hours, europe is on the way to becoming an economically more dynamic region over time. not to forget : the eu is an extraordinary success in terms of stabilising the continent politically. despite occasional setbacks, | jurgen stark : the changing global economic structure - a view from europe speech by dr jurgen stark, vice president of the deutsche bundesbank, at the american council on germany, new york, 14 april 2005. * * * it is both a pleasure and an honour to speak to you here today. my remarks will focus on the changing global economic structure. what has changed since the early 1990s? an increasing proportion of economic activity is marketdetermined. within a period of only 15 years, major centrally planned economies have turned into market economies and several previously strongly regulated emerging market economies have implemented radical reforms. all of this has stimulated very strong and ongoing growth dynamics. consolidated and internationalised competitive conditions have ensued from this process, thus continuously placing adjustment requirements on all economies. this challenge is being accompanied in many, predominantly advanced economies by demographic changes which require additional efforts. i under realistic assumptions the us, but in particular also asia, will remain the centres of gravity of the global economy in the next years. however, without changes in the conduct of economic policy this would also mean that the existing global current account imbalances would become even more pronounced. this could result in an increasing risk of sudden exchange rate and financial markets movements. moreover, enormous challenges add to the vulnerabilities connected with the current global imbalances. the changes in the global economic structures in the wake of globalisation are particularly important : 1. production processes can be regionally fragmented to a greater extent than ever before. 2. the number of tradable goods has risen sharply - many services have become tradable. 3. the financial markets are closely integrated on a global scale. 4. economic policies, but also tax systems and regulations, are competing with one another internationally for capital investment and savings. the number of countries affected by today β s globalisation processes is far larger than the number involved in earlier phases. this applies particularly to the involvement of emerging markets and developing countries in the global economic integration processes. the shares which these countries have in the world β s goods markets, direct investment flows and portfolio inflows have expanded considerably. ii the increasing integration of above all large emerging economies into the global economy means that the volume of world trade and global growth prospects will continue to rise. the so - called bric countries - brazil, russia, india and china - are arousing particular interest in this respect, with the two large asian countries - china and india - assuming a prominent role. while china | 1 |
no, such an unshakeable causal relationship between wage increases and inflation does not exist. it can just as easily be the case that stronger demand can allow companies to increase their prices. this increases their profits and margins, which in turn provides scope for them to raise wages. the interplay between prices, wages and activity in the economy β and of course a number of other variables, not least productivity β is complex. there are quite a few studies that have examined the links between wage increases and future inflation and whether wage increases tend to precede or lag behind inflation. not unexpectedly, the findings vary somewhat, but a fairly common finding seems to be that wage increases are not particularly informative when it comes to forecasting inflation. 7 the fact that wage increases have been modest for a while need not therefore signify that inflation will fall in the period ahead. personally, i believe that both inflation and long - term inflation expectations will remain close to 2 per cent going forward, even if monetary policy is made slightly less expansionary. 7 see for instance peneva and rudd ( 2017 ). 14 with inflation on target β new challenges so allow me to summarise. i think this survey presents three important economic policy challenges. an important starting - point is that inflation is on target. it has now been around the target of 2 per cent in outcomes and expectations for some time. target attainment is good. occasional monthly variations by the odd tenth of a percentage point around the 2 per cent mark must not determine monetary policy, as i see it. and given that inflation is on target, there is scope for considering other important macroeconomic variables. the first challenge is that for several years there has been no correlation between unemployment and vacancies on the one hand and wage increases on the other. unemployment has fallen but wage increases have remained steady at around 2 per cent as an annual rate. inflation has indeed climbed back to target without any help from wage increases, which shows that inflation does not necessarily have to be wage - driven. but there is still reason to ask oneself how permanent the subdued wage increases are. the second challenge has to do with unemployment. the key question is : has unemployment bottomed out? or can it fall further with an expansionary monetary policy? my assessment is that it will not be possible to bring unemployment down much further with monetary policy alone. in my view, the increasing demand for labour that we are currently witnessing is more likely to lead to increased labour supply than | between unemployment and wage increases in british data for the period 1861 β 1957. high unemployment tended therefore to be associated with low wage increases and vice versa, as in figure 1. when many people compete for jobs, demand for higher wage increases falls while a shortage of labour leads to greater wage increases. 2 wage increase figure 1. the phillips curve unemployment subsequently, the phillips curve concept was broadened to accommodate slightly different, though similar, correlations. in 1960, two american economists, paul samuelson and robert solow, both awarded the prize in economic sciences in memory of alfred nobel, reformulated the curve in terms of unemployment and inflation rather than unemployment and wage increases. as there is a close relationship between unemployment and output, the phillips curve was also often formulated in terms of the correlation between inflation and output β or, as it is commonly expressed nowadays, resource utilisation. but it is basically the same thing we want to identify, namely a correlation between economic activity and the rate of increase in prices and wages. for a time, the phillips curve was interpreted as economic policy - makers being able to choose a combination of inflation and unemployment. this was thought to be possible if the aim was a more permanent reduction in unemployment and there was a willingness to accept higher inflation in return. but about ten years after the launch of the phillips curve, milton friedman and edmund phelps, nobel laureates in economics themselves, each lay the foundations for the so - called β expectations - augmented phillips curve β. in brief, this implies that there is a short - term negative correlation between inflation and unemployment, but no long - term relationship. in other words, it is not possible to choose a certain combination of inflation and unemployment and then expect it to last. the reasoning behind this can be illustrated using figure 2. 3 inflation figure 2. the expectations - augmented phillips curve long run phillips curve d b e c a unemployment the short - term correlation basically depends on the fact that higher inflation is often unexpected inflation. an expansionary policy can lead to lower unemployment and higher inflation ; we move from a to b. but gradually, agents in the economy realise that inflation has risen and demand higher wage increases as compensation. in other words, the higher inflation is incorporated in the expectations and becomes the norm, and the higher wage increases cause unemployment to rise. the short - term correlation shifts upwards and we move from b to c. we are then back to the same unemployment as when we started, but with higher inflation. if | 1 |
to be guided by a code of conduct which stipulates the core values and responsibilities of the profession. the code of conduct is usually developed by the profession to guide and to prevent exploitative behaviour and to preserve the integrity of the profession. the code sets a framework for meeting standards and provides disciplinary guidelines for unprofessional behaviour. however, it must be understood that codes of conduct are not only meant to serve as a disciplinary guidebook but also outline ideal ethical standards. in order to be effective, codes of conduct should be understood and used by all professionals in their day to day activities. it is therefore pertinent for the civil service to develop appropriate codes of conduct that meet the expectations of the public. it is the duty of government to ensure that the civil service is aware of this code of conduct and its values. in advanced countries such as japan, italy and singapore the importance of the code of conduct is strongly upheld at all levels of the public service. this has contributed to a strong, independent and impartial civil service, whatever their political persuasions, that is able to serve different governments in line with the requirements of the code of conduct. in order to enhance professionalism in both public and private sectors, it is key that professions demonstrate high ethical standards and values. i therefore urge all of us professionals gathered here today to take ethics seriously in order to enhance efficient delivery of services to our people. a robust and strong level of ethics can be achieved by providing ethics training and sensitisation as a component of continuous professional development. although qualified professionals may be competent in their fields, it is vital to test their ethical knowledge. equally there is need to promote integrity at all levels of civil service. ladies and gentlemen, our country needs professionals with high levels of social and moral awareness so that all of us are aware of the moral obligations and potential impact of our thinking, decisions and actions. we need to be good role models for others in behaviour, attitude and relationships. let us endeavour to act in a way that is professional and that retains the confidence of the public at all times. i thank you for your attention. | people may not be conscious of the functions of the systems when they operate smoothly and efficiently. however, once a problem arises, great difficulties are encountered. the means of payment used by firms and households vary from cash - that is, banknotes and coins - to checks and bills, funds transfers between bank accounts, and credit cards. when payment is made by cash, settlement is final there and then. however, when payment is made by other means such as checks or bills, the mere handing over of the checks and bills will not complete the settlement of the transaction. when a check is drawn, for example, settlement is final only when the check is collected and the stated amount of money is transferred from the deposit money in the bank account of the payer to the bank account of the payee. if such transfers are not effected between accounts for some reason, for example, there are insufficient funds in the payer β s account, the transaction will remain unsettled. when the payer and the payee hold accounts at different banks, interbank settlement is needed, and settlement will be completed only after the corresponding debit and credit entries are made to the current accounts held by each bank with the bank of japan. although various means of payment are available to firms and households, settlement is ultimately made either by a handing over of cash issued by the bank of japan or by a transfer of funds between bank accounts using deposit money, which are liabilities of private financial institutions. β money β in a modern society therefore comprises cash and deposit money, and is reliant on the confidence of the public that bank deposits can be converted into cash at any time. when a large number of relatively small - value payments, such as those using checks and bills, need to be settled between banks, they are not settled one at a time between the accounts held by the banks at the bank of japan. rather, payment instruments such as checks and bills are collected and exchanged at clearing houses, where the credit and debit positions of each bank are calculated, and then the net positions are settled between the boj accounts. this calculation process is called clearing, and is operated by private institutions. specifically, there are three major private clearing systems in japan : the bill and check - clearing system ; the zengin data telecommunications system ( zengin system ) for funds transfers between bank accounts and for credit card payments ; and the foreign exchange yen clearing system for yen payments arising from foreign exchange and euro - yen transactions | 0 |
##ial impact on gold prices. on the supply side, mine production during the first 5 years was almost flat, while in the latter half of the decade, it gradually went up. official sector sales recorded substantial increases and amounted to about 450 to 500 tonnes in the year 2000. addition to supply from hedging ranged from a low of 100 to a high of 500 tonnes each year. mining, official sector sales and leasing together have provided reasonable liquidity to the market. as regards demand, data indicates that up to 1995, annual demand on account of jewellery fabrication was of the order of 2, 600 tonnes which zoomed by about 30 per cent in 1997, and in the last 3 years, it averaged 3, 150 tonnes. the most important factor on both the supply and demand sides was that mine production and demand for jewellery fabrication remained flat during 1988 - 2000 on an average at 2, 550 and 3, 250 tonnes, respectively. yet, there has been abundant liquidity. flat demand and declining prices in addition to institutional developments, may have had much to do with the changed attitude of central bankers, particularly in europe. the official sector sales, which amounted to 130 tonnes in 1994, progressively went up and recorded 470 tonnes in 2, 000. more importantly, the official sector leasing, which was just below 1, 000 tonnes in 1991 went up to about 4, 800 tonnes, adding to liquidity in more than ample measure with some impact on the prices. low inflation and soft interest rates in the recent years have brought about a greater sensitivity among central banks regarding returns on their portfolios. the steady decline in gold prices in recent years against the background of low inflation raised doubts in some quarters, on the importance of gold as a safe haven investment and hedge against inflation. some central banks have resorted to off loading substantial quantities of gold, which they held as reserves. another significant development of the 1990s was the spurt in central bank lending of the precious metal. central banks are lending their idle stocks with a view to enhancing returns on reserves, which is bringing in good liquidity to the market to bridge the gap between supply and demand. a notable development in this regard is the signing of the washington agreement by some central banks in september 1999, which has placed an effective cap on such operations of central banks. as a result of the clear trend that emerged in recent years of increased amount of central banks β sales as well as lending, the official sector β s holdings as a percentage of total above | hallmarking has not gained the desired importance. the low quality of gold jewellery being sold in the country and the resultant losses being incurred by the consumers are being recognized now. recent surveys conducted by the bureau of indian standards ( bis ) jointly with central consumer protection council in 5 major cities reveal that more than 80 per cent of the jewellery being sold in the market was of lower purity than claimed and charged for. in some cases, the gold articles sold were 38. 6 per cent short in purity in monetary terms. the low purity results in a loss of around 16 per cent to gold jewellery. in the recent past, rbi has been actively pursuing the issue of upgrading the quality of trade and products through a system of assaying and hallmarking with government of india and bis. the major objectives of introducing a proper assaying and hallmarking system in the country are enabling consumer protection, developing export competitiveness of the gold jewellery industry, introducing gold based financial products, which will help in mopping up the vast dormant gold resources with the domestic sector and developing india into a leading gold market centre in the world. ministry of commerce had held meetings with the trade representatives in 1997. based on the views emerging out of these consultations, bis formulated a scheme of hall marking in 1998, as a voluntary certification scheme, with a combination of quality certification and bis laboratory recognition schemes. the bis - recognised laboratories would affix / stamp / hall mark jewellery manufactured by bis certified jewellers and bis in turn would maintain the required surveillance. as a culmination of further efforts by all concerned, bis launched the scheme of hallmarking in april 2000 under the bis act, 1986. under the scheme, 12 firms of jewellers have been certified as assaying and hallmarking centres so far. consumer awareness campaign highlighting the advantages of going in for hallmarking jewellery is being conducted by bis. the government of india announced the gold deposit scheme in 1999 and rbi issued guidelines to the banks intending to launch the scheme in october 1999. five banks have launched their schemes under the guidelines and the quantum of gold mobilised so far has been about 7 tonnes. unfortunately, the scheme has not evoked the expected response. a number of reasons can be cited for the low response, prominent among them being depositors β losing the making charges spent on jewellery ( as the banks would convert them into primary form before accepting as deposits ), the low caratage of jewellery, low rate of return on deposit ( as seen by the deposit | 1 |
delisle worrell : debating social science issues in the caribbean opening remarks by dr delisle worrell, governor of the central bank of barbados, at the 2016 annual review seminar, bridgetown, 26 july 2016. * * * a warm welcome to the 2016 annual review seminar ( ars ). this conference plays a vital role in the intellectual life of barbados and the caribbean, and it has hugely greater potential to contribute to the global policy debate in years to come. over the years we have seen the ars mature as an incubator for the development of the skills of caribbean economists, especially those in the early years of their career. this event began as an opportunity for central bank economists to share their research, and invite comment, and it continues to be a catalyst for our ongoing work. our seminar is timed to fall at a time when we have interns visiting with us, and we always fit them into our programme. in addition, we issue a global call for papers, and as always we delight in the presence of those of you have come from further afield to join us today. the ars complements the annual monetary studies conference ( amsc ) and the annual salises conference, making for a trio of opportunities to debate social science issues in the caribbean. i see an exciting future for the ars as we go forward, based on the research underway at the central bank of barbados ( cbb ), on policy options in what we are calling the small very open economies ( svoe ). we see an opportunity here to exploit an unfulfilled niche in the global market for ideas. forty years ago the university of the west indies and caribbean economists pioneered research in the economic problems of small size. the late william demas, second president of the caribbean development bank ( cdb ), brought size into the mainstream economic debate with his book the economics of development in small countries, and the new world group of social scientists produced a wealth of deeply researched studies on the challenges and circumstances of small open economies. we understood then that one size cannot fit all, and that the strategies that canada and the united states employ to grow and prosper cannot be borrowed, lock, stock and barrel, and applied to tiny economies like barbados. but that is what we have come to nowadays. whether you are brazil or belize, canada or cayman, mexico or maldives, the international monetary fund ( imf ) insists that your best mix of economic adjustment measures is an independent central bank with an inflation | cleviston haynes : driving change toward the new economy address by mr cleviston haynes, governor of the central bank of barbados, at the opening of the 2019 week of excellence, bridgetown, 25 february 2019. * * * good morning and welcome to the courtney blackman grande salle. when i spoke at this event a year ago, i drew attention to the difficult circumstances in which the barbados economy found itself, the need for urgent decisive action by government and the critical supportive role of the private sector and labour in meeting the challenges ahead. we can all agree that much has happened since that time. the newly elected political administration quickly adopted the barbados economic recovery and transformation plan, with the endorsement of the international monetary fund. the social partners have been actively engaged in helping to develop a programme that achieves its objectives while mitigating the potential adverse effects on the most vulnerable. already, we are seeing encouraging signs. our public finances have been reordered to the extent that we are on target to achieve a primary surplus of 3. 3 % of gdp for fy 2018 / 19. tax refund payments have resumed and the central government is now making payments on a timely basis. the implementation of the domestic debt restructuring has facilitated a reduction in the debt ratio which is now targeted to fall to 60 percent by 2033. our demonstrated commitment to adjustment and structural reforms has garnered the support of the idb and the cdb and our gross international reserves now exceed the benchmark of 12 weeks of import cover. confidence, so necessary for investment and growth, is returning. however, we cannot relax as a sustainable path requires us to build on these successes and implement reforms including those needed to strengthen the financial management of public enterprises, improve the quality of service delivery within the public sector and enhance tax administration. these reforms when fully implemented will be closely, no doubt, aligned with your theme of β driving change toward the new economy β. the new economy is knowledge - based and services and technology driven. it promotes innovation and creativity. it is fast paced and customer - focused. the new economy is competitive and it calls for and requires resilience. it is characterised by volatility, uncertainty, complexity and ambiguity. it reminds us that change is constant. as a small open economy, we have transitioned from agriculture to one led by tourism and international business. as demonstrated last year when government altered its corporate tax structure to address external challenges in the international business sector, we have to be prepared | 0.5 |
haruhiko kuroda : sustainable finance - entering a new phase of implementation remarks by mr haruhiko kuroda, governor of the bank of japan, at the paris europlace tokyo international financial forum 2022, tokyo, 15 november 2022. * * * introduction it is a great pleasure to be invited to the paris europlace tokyo international financial forum. paris europlace brings together a wide range of participants in the financial sector, and it has contributed greatly to the development of financial services and financial markets. the influence of paris europlace is not limited to france and europe ; it is actively engaged in communication on a global basis. at today's forum, i believe you had very meaningful and lively discussions among financial professionals from japan and france. i understand that this is the 25th edition of the paris europlace tokyo international financial forum, and it is my great pleasure and privilege to have the opportunity to speak at such a memorable occasion. in relation to " france - japan : new developments in sustainable finance, " one of the themes of this forum, i would like to share my views on recent initiatives in sustainable finance to address climate change, while also touching on the progress made in japan. i. role of finance in addressing climate change climate change is a global issue that will have long - term and far - reaching implications both for society and for economic activity. given its " negative externalities, " all entities - individuals, firms, and governments - - have to take responsible actions beyond their individual interests. to address climate change, we need a multi - pronged approach across a wide range of fields. in particular, sustainable finance has a crucial role to play in our efforts to address climate change and steadily achieve decarbonization in society as a whole. this is because finance functions as an intermediary, bringing all these various social agents and entities together through services and markets. at last year's forum i talked about three essential elements for finance to successfully fulfill this role, that is, ( 1 ) making the financial system more resilient against climaterelated risks, ( 2 ) mobilizing financial resources to facilitate a smooth transition to net zero, and ( 3 ) making the most use of market functions with enhanced disclosure. looking back over the past year, i feel that financial institutions and financial markets around the world, as well as related policy bodies, have made great progress in various initiatives that promote these three elements, despite increased geopol | and credit quality may deteriorate. not in one's own bank, but among competitors. the banks face the major task of incorporating the new international accounting standards and the forthcoming capital - adequacy rules β basel ii. this requires considerable resources. it is also an important task requiring each bank to assess its need for buffers against bad times. other parts of the financial sector have also devoted many resources to new legislation and its implementation. the european commission has now indicated that all major legislation is in place in the financial area. now we need to make the single market for financial services work. the imf is assessing the entire financial system in denmark as part of its financial sector assessment program β fsap. let us take this as a good opportunity for a service check. it is good to take a fresh look at whether we have an optimum structure in relation to international standards. the imf has just concluded a two - week visit to denmark. i would like to thank the members of the danish bankers association and a large number of the other players in the financial system for their efforts in connection with this visit. fsap is a long process and there is still considerable work ahead in the coming months. the imf's final assessment of denmark and its recommendations are expected to be presented in mid - 2006. bodil ( nyboe andersen ) has asked me to extent her gratitude for your fine cooperation β not only over the past year, but over many years. i hope this fine cooperation will continue in the years to come. | 0 |
of board members, senior management are in sync with value demonstration in actions. the board β s oversight over compliance function should not be limited to framing policies, and its periodic review. a bank β s compliance policy will not be effective unless the board of directors promotes values of honesty and integrity throughout the organisation. the board should also formulate and maintain a quality assurance and improvement program that covers all aspects of the compliance function. accountability β the bank β s senior management is responsible for effective adherence to the compliance policy of the bank by the management and staff ; and to for ensuring that compliance risk is minimised. culture of owning the responsibility individually and collectively by board ; clear demarcation of accountability of senior management, functional head and operational head ; role of business unit as first line of defence and role of internal audit as third level of defence in facilitating robust compliance culture are all important. communication : clarity and transparency should be promoted by making a distinction between general standards for all staff members and rules that only apply to specific groups of staff. an effective compliance culture requires continuous communication of expectations on risk and compliance and practices across the bank ; compliance awareness channels for existing and new board members, senior management and employees ; process for containing conduct risk and whistle - blower mechanism. incentive structure : an adequate incentive structure should be in - built in the bank β s decision making systems and processes to achieve the desired compliance culture. ex ante and forward looking : compliance is distinct from other assurance functions viz., risk management and internal audit. the focus of the compliance function should be preventive compliance. by definition, preventive compliance would assess the activities of the bank before hand and prevent non - compliant activities / transactions from being carried out. compliance should be an ex ante activity and forward looking. compliance organsiation, authority and resources : a bank should organise its compliance function and set priorities for managing its compliance risk in a way that is consistent with its own risk management strategy and structures. for instance, some banks may wish to organise their compliance function within their operational risk function, as there is a close relationship between compliance risk and certain aspects of operational risk. others may prefer to have separate compliance and operational risk functions, but establish mechanisms requiring close cooperation between the two functions on compliance matters. regardless of how the compliance function is organised within a bank, it should have sufficient authority, stature, independence, resources and access to the board. its responsibilities should be clearly specified, and its activities should be subject to periodic and | the housing loan to gdp ratio would grow sharply in the coming years. size of housing financial systems as a share of gdp in a cross - country perspective [ warnock, veronica cacdac and francis e. warnock ( 2008 ) ] suggest that the emerging market economies generally have a smaller housing financial system averaging to 10 per cent of gdp with the largest being between 20 β 30 per cent of gdp and developed countries accounting for around 55 per cent of gdp. during 2001 β 05, mortgage debt ( housing finance ) to gdp ratio for india was lower at 4. 9 per cent than other developed countries usa ( 67. 4 per cent ), uk ( 66. 6 per cent ), japan ( 35. 7 per cent ), france ( 24. 1 per cent ) and korea ( 20. 8 per cent ), and asian emerging economies like china ( 10. 0 per cent ), malaysia ( 28. 3 per cent ), philippines ( 6. 8 per cent ), taiwan ( 26. 0 per cent ) and thailand ( 15. 5 per cent ). 17. an educated young population gives a head start in today β s knowledge economy. in india, they form the backbone of the country β s booming service sector. according to a nasscom study, the number of students enrolled for tertiary education in india is close to 10 million. while banks are now regularly extending education loan for courses in india and some banks are also contemplating extending education loans for courses aboard, this is indicative of the growth potential of education loans in india. section 3 : gennext banking life cycle wise products and services available under one roof the indian banks have identified the growth potential of the gen next and are already providing schemes especially keeping in mind the requirements and preferences of the younger generation. as mentioned in the earlier section, the banking sector can help in reaping the β population dividend β by providing life cycle wise products and services under one roof. let me elaborate on this. the gennext banks would be offering products and services right from birth till death. the relationship would start with birth when a savings account could be opened. i recall pnb β s scheme where soon after birth when devotees visited golden temple, an account was opened for the newly born. then as the child grows, appropriate products and services would be offered at the right time. during infancy, small health and life insurance services could be offered. other features could include recurring deposit and fund transfer from parents to kids account. | 0.5 |
serious about achieving its 2 percent inflation objective on a sustained basis. for instance, see james h. stock and mark w. watson ( 2007 ), β why has u. s. inflation become harder to forecast? β journal of money, credit and banking, vol. 39 ( february ), pp. 3 β 33. their model allows the responsiveness of underlying inflation to actual inflation to vary over time and suggests that responsiveness β the β gain β β has been lower in recent years than in the 1970s and 1980s. see the federal open market committee β s september 2018 sep, an addendum to the minutes of the september 25 β 26, 2018, fomc meeting, in board of governors of the federal reserve system ( 2018 ), β minutes of the federal open market committee, september 25 β 26, 2018, β press release, october 17, https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20181017a. htm. for discussions with respect to disinflation, see antulio n. bomfim and glenn d. rudebusch ( 2000 ), β opportunistic and deliberate disinflation under imperfect credibility, β journal of money, credit and banking, vol. 32 ( pt. 1, november ), pp. 707 β 21 ; and athanasios orphanides and david w. wilcox ( 2002 ), β the opportunistic approach to disinflation, β international finance, vol. 5 ( spring ), pp. 47 β 71. - 12 conclusion in today β s new normal, it is important to achieve inflation and inflation expectations around our 2 percent target on a sustained basis while guarding against financial imbalances through active use of countercyclical tools. we want to be mindful of the risk of financial imbalances that could amplify any shock and help tip the economy into recession, which the federal reserve has less conventional space to address in today β s low interest rate environment. in my view, it is therefore wise to proceed cautiously, helping to sustain the expansion and further gains in employment and with appropriate regulatory safeguards that reduce the risk of dangerous financial imbalances. | may be implemented more efficiently if private sector companies, with specialist expertise, invest in, and manage the project and bear the risks that the project will not be completed on time and within budget. these are important advantages, not least because project implementation capacity is weak in uganda and some other countries in the region. however, it is a misperception that ppps reduce the fiscal burden on the government over the long term ; instead they usually only extend the time frame over which the fiscal costs are incurred. ppps in many countries have bis central bankers β speeches also entailed substantial quasi fiscal liabilities because of implicit or explicit public guarantees given to private investors. ppps should be one of the options considered by governments for developing infrastructure but they should not be seen as a panacea for a shortage of budgetary resources. thank you very much for listening. bis central bankers β speeches | 0 |
well as the highly accommodative financing conditions which have been passed through to lower borrowing costs for euro area firms. the resilience of the recovery reflects the strength of domestic demand which in turn, is being supported by the very favourable financing conditions stemming from the monetary policy measures introduced since june 2014 ( see chart 1 ). 1 / 7 bis central bankers'speeches source : bloomberg, ecb, ecb calculations. 1 ecb staff counterfactual simulations indicate that absent our measures, gdp - weighted euro area 10 - year government bond yields would, at present, be about 154 basis points higher and lending rates to nfcs about 68 basis points higher. ecb staff estimates indicate that our measures are contributing to an increase in euro area gdp of around 1. 7 %, cumulatively over the period 2016 β 2019 ( see chart 2 ) β well above monetary policy β s contribution to the two previous euro area recoveries in 2003q2 - 2006q4 and 2009q3 - 2011q3. 2 / 7 bis central bankers'speeches 3 / 7 bis central bankers'speeches sources : ecb computations, sapi task force, september 2017 mpe, bmes. 2 looking ahead, the latest ecb staff projections continue to expect domestic demand to remain the key driver of euro area growth. annual real gdp is projected to increase by 2. 2 % in 2017, 1. 8 % in 2018 and 1. 7 % in 2019. the risks to the growth outlook are broadly balanced. according to the latest imf weo projections, euro area real gdp is expected to grow by 2. 1 % in 2017 before moderating to 1. 9 % in 2018 and 1. 7 % in 2019, which is in line with the ecb projections. there are reasons to believe that the strengthening of economic activity, which so far has been significantly supported by accommodative monetary policy, will progressively be supported by more structural factors. euro area governments have undertaken substantial policy actions and reforms to redress pre - crisis related macroeconomic imbalances and increase economic resilience. 3 for instance, euro area countries which had previously experienced large current account deficits are now in surplus. moreover, both ecb staff and imf estimates indicate that the largest driver of this adjustment is non - cyclical in nature, which implies a higher likelihood of sustainability as the recovery continues. additionally, business cycle synchronisation across euro area countries has increased in recent years | of some statistics, for instance those on integrated accounts, reduce our ability to use them in real time. challenges for communication under stress as i mentioned earlier, implementing monetary policy under stress poses special challenges for communication. indeed, following deviations from the standard practices and the setting in motion of a learning process, central banks must re - establish a β reputational equilibrium β with their counterparts. in fact, the reason why in normal times the martingale property delivers interest rates close to the policy rate is to a large extent because market participants have learned to form, over a long period of time, correct expectations about the central bank β s liquidity policy. and, at the same time, market reactions to its open market operations are somewhat predictable for the central bank. however, once the usual pattern of liquidity provision is broken, it is difficult for the market to converge quickly to a new behavioural equilibrium since an adequate level of confidence and knowledge needs to be first restored on both sides. through communication and renewed predictability in its liquidity policy, a central bank can though succeed in restoring such equilibrium. let me now move to two β less operational β challenges that we have faced in the communication of our interventions during the present turmoil : ( 1 ) the β moral hazard β critique ; and ( 2 ) the need to underscore the distinction between liquidity management and monetary policy. the moral hazard critique some observers have recently criticised recent measures by central banks, including those taken by the ecb, on the grounds of moral hazard considerations. according to these critics, by reacting to the financial market tensions, central banks may contribute to β bailing - out β those who have triggered the tensions through excessive risk taking. it is true in my view that moral hazard issues need to be taken into account very seriously when central banks decide on measures to support the financial system in a situation of market turmoil. of course, any such support policy, if anticipated, will be taken into account when banks establish their risk management frameworks for β tail β events. still, one cannot generally conclude from this that central banks should not re - act and support the system in the case of severe tensions. to rigorously analyse moral hazard issues relating to financial crisis management by central banks, one first needs to distinguish between different but interrelated types of policy interventions. the reason for this is that the possible effects on incentives of different measures can be very diverse. however, this differentiation has often been missed when criticising central | 0.5 |
would not properly take account of home country supervisory structures or regulatory practices. foreign banks have expressed similar concerns about u. s. regulatory initiatives in the past. at the federal reserve, we have found that our open and transparent regulatory process is crucial in helping us to understand how our proposals affect foreign banks and where problems arise, and gives us useful information for evaluating the merits of particular complaints. we have at times proposed regulations on which foreign banks and their governments, including the european commission, filed adverse comments. these comments helped us to reevaluate our regulations and to determine whether our supervisory and regulatory objectives could be achieved in a different way, consistent with the principle of national treatment. with respect to the implementation of the fsap in the european union, the european union has an obligation to ensure that the rules adopted are consistent with the principle of national treatment. it is our expectation that the european commission and the member states will seek to do so. federal reserve staff has met with commission staff to discuss a number of matters, including the application of the financial conglomerates directives to u. s. banking organizations. the federal reserve is committed to continuing the dialogue with the commission on matters of mutual interest, both bilaterally and as part of financial markets discussions led by the treasury department. we understand that the commission has begun to engage in industry consultation as part of the rule writing process and we endorse a process that allows all affected institutions, including those that are foreign - based, to participate actively in the process. the fsap has a far reaching agenda. i will comment briefly on three issues of particular interest to u. s. banking organizations. with respect to the conglomerates directive, we understand that the impetus for the directive came from the joint forum β s principles for the supervision of financial conglomerates. the three parent bodies of the joint forum ( the basel committee, iosco and the iais ) were concerned that, although individual financial companies within a group might be subject to prudential supervision, the consolidated financial group might not be subject to appropriate oversight. this in turn could lead to relationships or transactions that could pose financial risk to the regulated parts of the group. the joint forum β s principles were developed to help assure that there are no material gaps in supervisors β understanding of inter - affiliate relationships within a financial group that could ultimately result in financial instability. we understand that the eu financial conglomerates directive is concerned with this same issue. in the united states, u. s | operations or financial condition. ongoing communication is recognized as critical for effective supervision. home and host countries β interests are both furthered by dialogue and strong supervisory relationships. regular contact with commission staff goes back to the 1980s when the eu considered and adopted its second banking directive, aimed at promoting the internal market by establishing the so - called β european passport β for banks chartered in the eu. under the passport, a bank chartered in one eu country is entitled to establish branches in any other eu country under the authority and supervision of its home country rules. since that time, several u. s. banks have taken advantage of this early eu regulation by establishing a local bank in a european member state, which then used the β passport β to establish branches in other eu member countries. european subsidiaries of u. s. banks are able to take advantage of the passport under the principle of β national treatment. β national treatment generally means that a country provides parity of treatment between domestic and foreign - owned firms, resulting in equality of competitive opportunity. national treatment has long been the prevailing practice with respect to foreign banks operating in the united states and this practice was incorporated into statute in 1978 with the enactment of the international banking act ( iba ). this principle has also been incorporated in various trade agreements to which the united states is a party, such as the north american free trade agreement ( nafta ) and the general agreement on trade in services ( gats ). the eu member states are also subscribers to the gats and consequently to the national treatment principle it contains. implementing national treatment can be difficult precisely because one country is trying to adapt its own legal and regulatory structure to a foreign firm that is incorporated in a different home country environment. this is a challenge the federal reserve has faced over the years as we seek to apply u. s. laws that were adopted for a system of bank holding companies to foreign banks that generally do not have a bank holding company structure. the united states also requires that a foreign bank be subject to comprehensive consolidated supervision by its home country supervisor before it can buy a bank in this country. under this law, the federal reserve must evaluate supervision systems that are different from our own and yet ensure that we are fairly applying the principle of national treatment. u. s. private sector firms may be concerned about new regulatory and supervisory initiatives in the eu because such proposals may require changes in existing operations and / or reporting standards. there may also be a concern that initiatives designed for european firms or industries | 1 |
no significant upside pressures on inflation, even if policy rates remain at low levels for a long period. however, as depicted in the slide, inflation is likely to display a significant increase over the next two months due to tax hikes and strong base effects ( figure 34 ). moreover, the annual inflation rate may post a limited increase in the second quarter of 2010, due to the low base effect generated by the consumer price index in the first half of 2009, when the downside effects of the global crisis on prices became more pronounced. accordingly, even if inflation remains above the target for some time, parallel to the gradual phasing out impact of the tax hikes, inflation is expected to trend downwards, stabilizing at around 5 percent over the medium term. as you may have noticed, i have frequently referred to the base effect today. the reason for this is that the base effect will influence the course of annual inflation throughout 2010 to a large extent. you will find our detailed explanatory evaluations regarding the base effect and its effects on 2010 inflation outlook in a box under the third chapter of the inflation report to be posted on our website shortly. i strongly recommend that you read these evaluations carefully. the fact that inflation is expected to stay at elevated levels for some time due to tax adjustments and strong base effects highlights the importance of expectations management. in this respect, with the awareness of these temporary factors, it is critical that economic agents focus on the medium - term inflation trend, and therefore, take inflation targets as a benchmark for their pricing plans and contracts. i would like to emphasize once more that any new data or information regarding the inflation outlook may lead to a change in the monetary policy stance. therefore, assumptions regarding future policy rates underlying the inflation forecast should not be perceived as a commitment on behalf of the cbt. 4. risks distinguished members of the press, in the last part of my presentation, i would like to talk about the risks with respect to the inflation outlook in the upcoming period and provide some information pertaining to the probable monetary policy strategy should these risks materialize. the outlook for the domestic economy and the risks thereto has been largely shaped by global developments in line with the intensification of the global crisis as of the last quarter of 2008. given the important role of trade and global financial channels in the contraction of domestic economic activity during 2009, we believe that global developments would continue to be the main determinant of the outlook for domestic activity | ##ussetts, mit press, pp. 231 β 83. kohn, donald l. 2007. financial stability : preventing and managing crises. speech by the vice chairman of the board of governors of the federal reserve system at the exchequer club luncheon. washington dc, 21 february, 2007. morris, stephen and hyun song shin. 2004. coordination risk and the price of debt. european economic review. elsevier, vol. 48 ( 1 ), pp. 133 β 153, february. rajan, raguhuram g. 2005. has financial development made the world riskier? nber working papers. no. 11728. national bureau of economics research, inc. taylor, john b. 1993. discretion versus policy rules in practice. carnegie - rochester conference series on public policy 39, pp. 195 β 214. bis central bankers β speeches taylor, john b. 2009. the financial crisis and the policy responses : an empirical analysis of what went wrong. nber working paper 14631, national bureau of economic research, cambridge, ma, january 2009. bis central bankers β speeches | 0 |
bank of japan β s february report of recent economic and financial developments1 bank of japan, 12 february 2002. * the bank β s view * * japan β s economy continues to deteriorate. with regard to final demand, net exports ( real exports minus real imports ) tend to decrease at a slower pace since the decline in exports is moderating. meanwhile, business fixed investment continues to decrease and private consumption is also weakening. moreover, housing investment remains sluggish and public investment is on a downward trend. amid this weak final demand, inventory adjustment is progressing in many industries including electronic parts as a result of the large production cutbacks to date. reflecting this development, the rate of decline in industrial production is contracting. however, firms maintain their stance on reducing personnel expenses under strong excessiveness in employment. hence, the severity of employment and income conditions of households is rather intensifying, with unemployment continuing to rise and winter bonuses having decreased distinctly. turning to the outlook, with regard to exporting conditions, the synchronized inventory adjustment in it - related goods worldwide is coming to an end. as a consequence, there seem to be signs that exports and production of the east asian economies have stopped declining. moreover, the yen has been depreciating recently. under these conditions, exports are expected to stop decreasing and to turn up toward the middle of this year. however, exports will recover only modestly, while the recovery in overseas economies is weak and final demand for it - related goods worldwide remains stagnant for the time being. as regards the u. s. economy, there are increasing number of indicators suggesting that the economy will hit the bottom, but there still remain many uncertain factors. therefore, including this aspect, developments in overseas economies continue to require close scrutiny. meanwhile, with respect to domestic demand, business fixed investment is expected to follow a downtrend reflecting the fall in corporate profits. private consumption is also likely to be weak mainly due to worsening employment and income conditions. thus, while domestic private demand generally weakens, government spending is basically projected to follow a downward trend. consequently, it may take quite a while for economic activity as a whole to stop declining, even though the decrease in industrial production may move toward cessation against the background of the improvement in exporting conditions and progress in inventory adjustment. overall, japan β s economy will continue to deteriorate, but the pace is expected to moderate gradually with the downward pressure from exports and inventories aba | β, journal of banking & finance, no 55, pp. 361 - 79. 2. see ssm supervisory statement on governance and risk appetite, ecb, june 2016. 3. joint esma and eba guidelines on the assessment of the suitability of members of the management body and key function holders under directive 2013 / 36 / eu and directive 2014 / 65 / eu ( 2021 ). 4. see crd, recital 60, article 88 ( 2 ) and article 91 ( 10 ) of the directive 2013 / 36 / eu of the european parliament and of the council of 26 june 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending directive 2002 / 87 / ec and repealing directives 2006 / 48 / ec and 2006 / 49 / ec ( oj l 176, 27. 6. 2013, p. 338 ) ; crr, article 435 ( c ) of the regulation ( eu ) no 575 / 2013 of the european parliament and of the council of 26 june 2013 on prudential requirements for credit institutions and investment firms and amending regulation ( eu ) no 648 / 2012 ; and joint esma and eba guidelines on suitability, article 435 ( 2 ) ( c ) of the regulation ( eu ) no 575 / 2013 of the european parliament and of the council of 26 june 2013 on prudential requirements for credit institutions and investment firms and amending regulation ( eu ) no 648 / 2012. | 0 |
. that role might be aided by a revival of a market in trade credit. 15 banks will always be levered because their core monetary service revolves around transaction - account deposits, which are debt liabilities. and, on the other side of the balance sheet, they will always have somewhat risky asset portfolios because being a monetary institution makes them an efficient supplier of short - term finance to households, firms and the rest of the financial system. but they can do all that only if they are healthy and prosperous : only sound banks can make a credible promise to repay or lend money on demand. the fragility in banks β balance sheets is why they are regulated. today, i have sketched the outline of a capital accord for the future. an accord that would go beyond reducing the probability of failure, by also addressing the need to cope with distressed banks, ensuring that resolution can be orderly. taking the tax - deductibility of debt interest as a given, the banking authorities can make it beneficial to society as a whole, not just to private interests, by requiring that a minimum level of term bond finance be part of the capital structure. that would provide gone - concern loss - absorbency for new improved resolution regimes to draw on. a still richer accord might include instruments that aid recovery by converting into equity in the face of meaningful but not life - threatening losses. this approach moves away from seeing runnable short - term wholesale debt as a source of discipline on banks, to instead seeing longer - term bonds as providing a mass de manoeuvre for recapitalising distressed banks. not all forms of leverage are the same. but no static regime can ever be enough. if they were, crises would not recur. that is why the new macroprudential authorities, such as the bank of england β s fpc, will be able temporarily to adjust capital requirements when circumstances warrant. i have stressed that it is oversimplistic to think of macroprudential interventions to improve capital adequacy as always inevitably leading to higher funding costs and tighter credit conditions. it will depend upon the prevailing circumstances : whether the banks started out with solid balance sheets, what the market knows and thinks. the fpc will need to be transparent in order to build understanding of its actions. i worry about the withering away of a market for bankers β acceptances ; claims by one company on another, but guaranteed by one or more banks, and historically eligible for discount at central | driven by a reduction in trading volume, but it is the result of a robust growth of the denominator, debt outstanding. 3. liquidity during times of stress market participants further express concern about the potential for market liquidity to become less resilient during times of stress, when it is needed the most. however, evidence on this front is difficult to gather. some argue that market liquidity is resilient because financial markets appear to have functioned fairly well during recent episodes of high market volatility, such as following the brexit vote or earlier this year, when oil prices were low and stock market volatility was high. others argue that it is not. according to a recent study, the cost of trading distressed corporate bonds appears to be higher now than in the recent past. 5 specifically, the authors find that, before the crisis, the cost of a $ 1 million bond transaction increased about 0. 7 percent following a downgrade, but - - after the volcker rule - - the cost following a downgrade rose 2. 4 percent. see bao, o β hara, and zhou ( 2016 ). - 4this analysis, however, is limited to episodes of distressed borrowers rather than a systemwide stress. 4. flash events in addition, recent flash events - - such as the sharp movement in treasury prices on october 15, 2014 ; the rapid rise and decline of the euro - dollar exchange rate on march 18, 2015 ; 6 and the swing in sterling on october 7, 2016 - - have led some to assert that market liquidity has become less resilient. researchers at the federal reserve bank of new york have argued that spikes in volatility and sudden declines in liquidity have become more frequent in both treasury and equity markets. 7 the commodity futures trading commission also points out that flash events are more common now. 8 market participants suggest that the rapid growth in high - frequency trading in equity, foreign exchange, and u. s. treasury markets, along with broader concerns about less resilient liquidity, potentially explains these flash events. nevertheless, a report on the october 15, 2014 event by the staff of the treasury department, federal reserve, and market regulatory agencies found no single factor that caused the sharp swing in prices. 9 a broader review of the evidence 1. trading costs are low even though flash events appear to be more common, it is certainly too soon to declare that a broad reduction in market liquidity has occurred. figure | 0 |
2021 / rbb2021 - 84 - 02. pdf 7 the reserve bank of new zealand. ( 2023, october 10 ). overview of the climate stress test. retrieved from https : / / www. rbnz. govt. nz / financial - stability / stress - testing - regulatedentities / climate - stress - test reserve bank of new zealand. ( 2023 ). 11 / 2023 financial stability report. retrieved from https : / / www. rbnz. govt. nz / - / media / project / sites / rbnz / files / publications / financial - stabilityreports / 2023 / nov - 2023 / fsr - nov - 23. pdf 9 climate - related risks | kaunihera kaiwhakarite ahumoni - council of financial regulators ( cofr. govt. nz ) council of financial regulators. ( n. d. ). climate - related risks. retrieved from https : / / www. cofr. govt. nz / priority - themes / climate - related - risks. html 3 no longer tomorrow β s problem : how the reserve bank is working with its stakeholders to respond to climate change ref # 20681799 v3. 43 we are also including climate change as a topic in our scheduled supervisory engagements with management and boards, as well as standalone meetings with technical experts from the banks, non - bank deposit takers and insurers that we prudentially supervise. in doing so we discuss the responsibilities, oversight and implementation of entities β climate strategies and risk management, and the practical steps they are taking toward preparing climaterelated disclosures and transition plans. our domestic and international collaborations leading through collaboration, locally β¦ it takes collaboration for our financial system to better account for risks and develop resilience in the face of climate challenges over the long term. alongside our domestic collaborations through cofr we are also working with new zealand scientists and researchers to help identify data gaps and enhance our understanding of the mechanics of climate - related risks. we, and our prudentially regulated entities, are also collaborating more with maori. iwi, and maori more broadly, have distinct challenges, opportunities, and aspirations in the transition to a low emissions economy. iwi are already leading the charge in some cases to develop climate solutions. for example, ngati porou, ngati tuwharetoa, and te arawa have taken up collective group insurance policies for marae, lowering their costs through risk | mr mboweni discusses e - money and its impact on the central bank β s operations address by mr tito mboweni, governor of the south african reserve bank, at the sun microsystems conference 1999, held in vodaworld, midrand on 11 october 1999. * 1. * * introduction electronic commerce, or e - commerce, is the catch - all phrase for many advances in technology centered on the internet and heralds fundamental changes for the world economy. the expansion of the internet on a global basis, has made it an ideal means to conduct commerce. in south africa, as in the rest of the world, the internet is being used more and more to advertise and sell goods and services. the internet has brought about a need not only for micro payments, e. g. a small payment of perhaps only a few cents for viewing a specific piece of information, but also growing interest in developing more reliable and secure methods of payment for large commercial transactions. e - commerce and, perhaps more important from the reserve bank β s point of view, electronic money will probably have significant implications for most persons and institutions. this evening, i would like to concentrate only on two aspects, namely a comparison between electronic payment methods and the current conventional payment instruments, such as currency and credit cards, and the possible effect that e - money may have on the operations of the reserve bank. 2. the development of e - commerce the internet, and its application to e - commerce is turning many industries inside out. some firms have tried to only partially adopt the new e - commerce technologies, but are increasingly realising the importance of making e - commerce a seamless, integral part of their business plans. south africa has begun to reach the stage where the previous wholesale financial markets structures are beginning to change as the internet spreads through them. retail investors, empowered by the web, are fast becoming much more proactive. certain financial institutions face the prospect of traditional revenue streams contracting or disappearing altogether as the internet brings transparency and efficiency to once closed areas. the financial world is taking e - commerce seriously, but no one knows exactly how or how quickly these new technologies will change the business landscape. however, one thing is certain β e - commerce will speed up the process of globalisation and will lay bare the weaknesses in any institution. central banks worldwide are considering their positions with regard to electronic commerce, internet banking and electronic money applications. there are a number of electronic money products which are either in the process of | 0 |
##ous shocks that push inflation away from target. so even if the variance of inflation shocks is constant, the variance of inflation itself will be an endogenous function of monetary policy. another related channel through which monetary policy can influence the variance of inflation is by changing the equilibrium persistence of inflation deviations from target. in the textbook cgg model ( 1999 ), augmented with a hybrid phillips curve that features an inertial backward - looking component, the equilibrium persistence of inflation is an endogenous function of the monetary policy rule such that the more aggressively the central bank leans against exogenous shocks that push inflation away from target, the less persistent are inflation deviations from target in equilibrium. in the simple case in which equilibrium inflation is a first - order autoregressive process ( as it is in the cgg this view has also long been shared by fellow monetary policymakers. see, for example, bernanke ( 2007b ) and powell ( 2018 ). - 6model under optimal policy ), the equilibrium unconditional variance of inflation is monotonic in inflation persistence for any given constant variance of inflation shocks. of course, non - monetary factors may also have contributed to a lower variance of inflation. for example, the variance of underlying exogenous shocks to aggregate supply and demand may have fortuitously and coincidentally fallen in tandem with the adoption of inflation targeting in many countries. i will now turn to a third factor behind the decline in global bond yields, the decline in term premiums that is estimated to have occurred in many countries over the past 20 years. most studies find that term premiums have fallen substantially in major economies over the past 20 years, and that in the united states term premiums may have been negative for some time. decomposing the factors that drive equilibrium term premiums is an active area of academic research, and i will not attempt to summarize or synthesize this vast literature. 8 but i would like to emphasize what seems to me to be three contributors to the decline in the term premium in the united states and perhaps in other countries as well. 9 first, the decline in inflation volatility has almost certainly been important in driving the term premium on nominal bonds lower. the real ex - post payoff from holding a nominal bond to maturity is directly exposed to price - level risk, and thus, all else being equal, a decline in inflation volatility makes the real purchasing power of the bond β s payoff | 2019a ). - 15 two days present cutting - edge research on the effect and measurement of risk and uncertainty and volatility, with a special focus on monetary policy and market behavior. as someone on the front lines, i look forward to learning from your insights and encourage your rich discussion over the next few days and your continued work on how to make my job easier! thank you, and good luck! - 16 references adam, klaus, and roberto m. billi ( 2007 ). β discretionary monetary policy and the zero lower bound on nominal interest rates, β journal of monetary economics, vol. 54 ( april ), pp. 728 β 52. bansal, ravi, and ivan shaliastovich ( 2013 ). β a long - run risks explanation of predictability puzzles in bond and currency markets, β review of financial studies, vol. 26 ( january ), pp. 1 β 33. bekaert, geert, eric engstrom, and steven r. grenadier ( 2010 ). β stock and bond returns with moody investors, β journal of empirical finance, vol. 17 ( december ), pp. 867 β 94. bernanke, ben s. ( 2007a ). β federal reserve communications, β speech delivered at the cato institute 25th annual monetary conference, washington, november 14, https : / / www. federalreserve. gov / newsevents / speech / bernanke20071114a. htm. β β β ( 2007b ). β inflation expectations and inflation forecasting, β speech delivered at the monetary economics workshop of the national bureau of economic research summer institute, cambridge, mass., july 10, https : / / www. federalreserve. gov / newsevents / speech / bernanke20070710a. htm. board of governors of the federal reserve system ( 2019a ). β minutes of the federal open market committee, july 30 β 31, 2019, β press release, august 21, https : / / www. federalreserve. gov / newsevents / pressreleases / monetary20190821a. htm. β β β ( 2019b ). β minutes of the federal open market committee, september 17 β 18, 2019, β press release, october 9, https : / / www. federalreserve. gov / newsevents / pressreleases / monetary2019 | 1 |
, capital for trading book exposures was distressingly inadequate. in response, the committee finalised last year a series of enhancements to the trading book rules. these higher capital requirements capture the credit risk of complex trading and derivative activities and require banks to calculate a stressed value - at - risk. the crisis also exposed weaknesses in banks β risk management and measurement of securitisation and off - balance - sheet exposures. this shortcoming resulted in large, unexpected losses. the committee β s july 2009 enhancements included new rules to strengthen the treatment for certain securitisations in pillar 1 by introducing higher risk weights for resecuritisation exposures. counterparty credit risk is another key risk for which the regulatory capital improvement is needed. the december enhancements proposed by the committee are meant to strengthen the resilience of individual banking institutions and reduce the risk that shocks are transmitted from one institution to the next through the derivatives and financing channel. raising the quality of the capital base the committee β s efforts to improve risk coverage are a crucial element of the capital adequacy equation but this is only half the story. the other half relates to the quality of the capital base backing banks β risk exposures. the committee has proposed a series of measures that would overhaul the definition of capital. this is the second objective of our reform programme and it is set out broadly along two lines. first, the level and the share of the highest quality capital in tier 1, namely, common equity and retained earnings, will rise substantially. during the crisis, losses came directly out of retained earnings but because of other forms of financial instruments in the capital base, some banks maintained deceptively high tier 1 capital ratios. moreover, in the case of many banks, non - common tier 1 capital instruments ultimately had to be converted into common equity before confidence was restored. second, and just as important, our proposal introduces a rigorous set of deductions and exclusions from common equity to arrive at a more transparent, meaningful definition of capital and to restore the credibility of the tier 1 capital base. leverage ratio as a backstop to the risk based requirement a third objective is the introduction of a leverage ratio to backstop the risk - based system. at the micro, firm - specific level, many firms were too aggressive in gaming the system. the risks that built up in the trading book with inadequate regulatory or economic capital were a case in point. many firms engaged in hedging strategies where the risk | nout wellink : the role of financial imbalances in the setting of monetary policy β lessons from the current crisis introductory speech by dr nout wellink, president of the netherlands bank and chairman of the basel committee on banking supervision, at the workshop on β the role of financial imbalances in the setting of monetary policy. lessons from the current crisis β, amsterdam, 23 june 2008. * * * the recent financial turmoil has highlighted once again that the role of financial imbalances is a major challenge for central banks focusing on price stability. most of the analyses of the causes of the financial turbulence that i have read stress the role of new financial developments, which make this event special. but the recent crisis is just one of a series of episodes over the past 30 years when the paths of asset prices β most notably equities and housing β were a highly distorting factor that ex post turned out to have disruptive macroeconomic effects. the aim of this workshop is to further our understanding of the role of monetary policy in addressing financial imbalances. the speakers in the panel that will follow my remarks will discuss whether monetary policy should be actively used to prevent the build up of financial imbalances, and what the optimal monetary policy response should be when financial imbalances do occur. this debate hinges on the question of whether we can ex ante identify imbalances that are building up. in my remarks, i will address this issue based on my experience as policy maker. in my view, there are several, interrelated ingredients of an accumulating imbalance : the first is low real long - term interest rates relative to a natural rate of interest, particularly in a context of a robust economy characterised by high productivity growth, strong economic growth and low inflation. it is well known that the natural rate of interest is difficult to estimate β just think about the challenge of assessing changes in productivity growth. but i think that a comparison with a historical average of past actual rates can give an idea of whether interest rates are out of line. low interest rates underpin the second ingredient, which the recent financial turmoil has brought to everyone β s attention β strong credit growth. the current intellectual debate highlights how standard macroeconomic theories in the lucasian tradition β based on optimizing agents with rational expectations, complete markets and fully flexible prices β have a hard time assigning credit a relevant role. economists are therefore increasingly turning for insights to the theories of minsky or kindle | 0.5 |
among which, provincial fiscal departments shall assume 10 percent of the losses while the other 70 percent is to be assumed by low level fiscal departments. by this arrangement, banks, provincial and local fiscal authorities could share risks effectively. besides, credit extension efficiency is improved with banks directly involved in credit approval. 2. introduce the experience of combining job training with micro credits, support laid - off workers to start - up business of their own. to improve laid - off workers β ability to start - up their own businesses, most cities have launched job training program. based on such practice, the people β s bank of china and the ministry of labor and social security jointly promoted the application of β job training plus micro credits β model in 100 cities, which is to provide qualified trainees on a selective basis with credit guarantee, lower counter guarantee threshold and encourage micro credit extensions by financial institutions. combing job training with micro credits should become a standard way for commercial banks to extend micro credit in the future, including not only fiscal subsidized loans, but also many other commercial micro credits to promote labor market development. all branches ( operations offices ) and sub - branches of the people β s bank of china in the capital cities of each province should directly supervise this task in two or three cities joining the pilot program and strengthen relevant researches. commercial banks should also explore further in this regard and spread successful experiences nationwide. 3. strengthen credit support for small enterprises to absorb more job - seekers small enterprises are the main sources for employment. due to both historical and personal reasons, many laid - off workers even subject to job training still cannot start up their own businesses and thus seek to be reemployed through job application. therefore, government has issued various policies to support small enterprises to absorb laid - off workers. in accordance with no. 51 bank document, small labor - intensive enterprises, which absorb laid - off workers by over 30 percent of the total number of current employees and sign employment contract for above one year, will enjoy three preferences in receiving micro - credit : first, 50 percent of the interest rate set by the people β s bank of china will be subsidized by the fiscal authorities with the central and local fiscal departments each contributing half of the subsidy fund ; second, 10 percent of bank β s micro loan losses will be covered evenly by the central and local fiscal departments ; third, local fiscal departments pay issuing commercial banks 0. 5 percent of commission fees. total micro credits extended to each small | their own business and most of them still need to be absorbed by enterprises, in addition to micro credit extension, we should strengthen credit support to small and medium sized enterprises, in particular small labor - intensive enterprises which can absorb many laid - off workers. according to our investigation and feedbacks from relevant parties, the following problems exist in implementation of micro credit policy : first, lack of policy publicity and many local governments did not understand or misunderstood the policy ; second, in some places complicated credit approval procedures and high guarantee requirements hindered borrowing ; third, lack of proper projects and high credit management cost discouraged lending activity ; and fourth, in some places, lack of coordination among different departments resulted in low efficiency. on march 18th, given the emerged problems in reemployment efforts and experiences from different regions, the people β s bank of china, the ministry of finance and the ministry of labor and social security jointly issued the circular on promoting micro credit to unemployed laid - off workers ( bank document 2004 no. 51 ) to adjust and improve relevant policies. promoting the implementation of micro credit policy relies on the following five aspects : 1. improve risk - sharing and compensatory mechanism for micro credit ; effectively streamline loan guarantee and approval procedures. the core issue of enlarging micro credit extension is to ensure risk compensation. at the beginning, various guarantee funds were set up by local fiscal departments and managed by guarantee institutions to share micro credit risks. but in practices, many guarantee institutions require laid - off workers to provide counter guarantee. the purpose of guarantee fund is to disseminate micro credit risks and possible losses incurred by start - up businesses, with proper counter guarantee, a laid - off worker could borrow directly from a bank without resort to the guarantee fund. the reason they go to guarantee fund is just because of their high risk profile. in some places, counter guarantee requirements restrained substantially micro credit extension. no. 51 bank document clarifies risk - sharing principles. if some regions have already chosen guarantee institutions, counter guarantee cannot exceed 30 percent of the total credit extension ; furthermore, with strengthened credit management system, each region should abolish counter guarantee requirement gradually. for regions that have not chosen guarantee institutions, their fiscal departments can deposit guarantee funds into banks which can extend micro credits to the laid - off workers independently. in the event the extend loans went sour, 20 percent of the resulted losses should be borne by the issuing bank and the other 80 percent be absorbed by the guarantee funds, | 1 |
are now able to buy more german exports again, which, for german companies, is partly making up for the decline in trade with china. but it is a slow process because the crisis was more severe than anything we β d had since the second world war. bild : and when will interest rates rise again? draghi : it β s quite simple : when the economy is growing more strongly again and inflation rises closer to our objective. low interest rates today will lead to higher rates tomorrow. bild : does the ecb β s policy of cheap money not make it far too easy for euro area countries like italy and france, for example, to shirk necessary but unpopular reforms? draghi : no. the majority of governments are acting, albeit too slowly for my personal taste. all of them would be well advised to do more. but that is not primarily dependent on the ecb and its policies. most countries started to implement reforms when the level of interest rates was already very low. furthermore, reforms of judicial systems, electoral laws or labour laws, for example, don β t have much to do with interest rates. so i don β t find the argument convincing that we have to keep up the pressure. it is also not our task. it would not be democratic for a central bank to dictate to elected governments what they have to do. bild : mr draghi, in your first interview with bild four years ago, we spoke a lot about greece. the country has still not got back on its feet, even though it has received hundreds of billions in emergency loans. when will the madness end? draghi : clearly, last year was an economic setback for greece. now everyone is aware that there can be no growth without reforms. and what the country and its people need above all is growth. greece has implemented many reforms in the past few months and is committed to the path of reform. bild : is the euro a part of the solution for greece, or a part of the problem? draghi : greece β s challenges have little to do with the euro. it would have to implement reforms in any case. in the euro area, greece can do that with the support of its partners. but one thing must be clear : who belongs in the euro area and who does not is not for the ecb to decide. that is a matter for the member states. bild : they are now more fractious than ever. is that | assets is close to 2 %. bild : so, are the german savers themselves to blame? draghi : no. but there are alternatives when investing savings. in the united states savers had to face seven years of zero interest rates. the financial system β banks and insurers β nevertheless still worked. money was invested in a variety of ways which in the end enabled a decent return. bild : of all people, german finance minister wolfgang schauble, who has supported you for years, is now among your strongest critics, saying your policies are damaging savers and thereby strengthening populist parties. does that get to you? draghi : i don β t take anything personally in my job. a polite and constructive debate is actually welcome and helps us to explain our policies. bild : really? draghi : yes. but one thing is clear : the ecb obeys the law, not the politicians. or, as one of my predecessors put it, it is normal for politicians to comment on our actions. but it would be abnormal if we listened to them. bis central bankers β speeches bild : does such criticism from the finance minister or from the german vice chancellor threaten the independence of the ecb? draghi : no. but any perception that the ecb β s independence is under attack can unsettle businesses and consumers. they might then postpone investment and spending decisions that would be good for jobs and growth. that might force the central bank to do more to achieve price stability. bild : has the strength of the criticism from germany also got something to do with the fact that you are an italian, and what do you think of demands that the next president of the ecb must be a german? draghi : there is really nobody in the world who is interested in the fact that i am an italian apart from the german media. and what difference would it make if a non - italian were now in office? none at all. he or she would pursue the same course as we do now. all other large central banks in the world are pursuing similar policies. bild : but it is precisely this policy of cheap money that is not working β¦ draghi : wrong β our policy is working, but we must be patient ; investor confidence has not yet been fully restored. for two years, the economy in the euro area has been growing month by month, banks are lending and unemployment is steadily falling. meanwhile, euro area countries | 1 |
financial crisis. for they have not yet been completely overcome. our attention remains focused on two asset classes : commercial real estate and structured securities. bis central bankers β speeches it is particularly in the international commercial real estate markets that pressure could resurge, especially as a lot of commercial real estate is up for refinancing. the major german banks with an international focus have a current commercial real estate portfolio of β¬274 billion. half of this portfolio is accounted for by foreign business : 13 % by the united states and 7 % by the united kingdom. these banks are still holding a considerable volume β β¬150 billion as at the end of june β of exposure to structured products ( chart 4 ). β¬67 billion of this relates to residential mortgagebacked securities ( rmbs ) and β¬16 billion to commercial mortgage - backed securities ( cmbs ), whereas around β¬33 billion is in collateralised debt obligations ( cdos ). the portfolios of structured securities, however, have declined by β¬55 billion from last year β some β¬20 billion owing to maturities and redemptions, but also around β¬21 billion due to transfers to resolution agencies. the low - interest rate environment is still impacting on our financial system behind the scenes, entailing sizeable medium - term risks. this was discussed at length in last year β s financial stability review. however, risks contained in banks β balance sheet structure, such as overleveraging or excessive maturity transformation, are not so much at the current focus of our attention. our main worry at the moment relates to imbalances in a very short - termoriented financial system that can divert funds quickly between asset classes and thus contribute to market volatility. over the course of the year, this has become apparent particularly in the asset classes emerging market economies and commodities ( chart 5 ). part ii ( sabine lautenschlager ) germany β s financial system facing challenges germany β s banks are better equipped to tackle the crisis today than in 2008. the key drivers are : higher capital levels, stable earnings thus far and stabler funding through increased customer deposits. contrary to fears held in 2008 and 2009, german banks have lived up to their responsibility as financial intermediaries. there has not been a credit crunch in germany, nor do we see any signs at present of one occurring. one of the interesting details of the in - depth analysis is the medium - term comparison between the spring of 2008 and the summer of | β s policymakers have taken measures to counter the crisis of confidence plaguing europe β s banking system. i shall say more about that later on. however, the negatives form a longer list. heading this list is the sovereign debt crisis, along with its widening and its contagion effects. developments in the financial markets should also be mentioned here. current tensions, such as impaired funding liquidity and market liquidity, but also new structural risks such as exchange - traded funds ( etfs ) and high frequency trading ( hft ), are at the centre of attention. let us now take a closer look at these negatives. the current setting : high sovereign debt is the biggest risk the sovereign debt crisis has widened and worsened. after greece and ireland in 2010, portugal was forced to accept financial assistance from the international community in may bis central bankers β speeches of this year. in the summer, the two large euro - area countries spain and italy were sucked into the sovereign debt crisis. the high levels of sovereign debt have generated massive contagion effects within the banking sector. the first casualties were the banking systems of the troika programme countries β greece, ireland and portugal. their access to the money and capital markets is meanwhile very limited. however, large european banks with an international focus are now likewise threatened with contagion. for example, the severe reactions in the equity markets and cds markets have hit the financial sector particularly hard ( chart 1 ). the bundesbank believes that the german financial system β s exposure to greece, ireland and portugal is, on the whole, manageable β not least because german banks have been doing better since 2009. as at end - june 2011, german banks β exposure to all greek debtors β by this i mean the public sector, the financial sector, corporates and households β totalled just under β¬28 billion, while german insurers β outstanding claims on greece totalled around β¬2 billion ( chart 2 ). balance sheet exposure to all borrowers from the two other troika programme countries β ireland and portugal β stands at β¬63 billion for german banks and a little over β¬10 billion for german insurance companies. exposure to borrowers in the major euro - area countries italy and spain is larger. german banks β exposure to the italian government sector is β¬42 billion, and that of german insurers β¬9 billion. exposure to the government sector of spain is β¬23 billion for german banks and nearly β¬6 | 1 |
t t mboweni : the state of the south african economy remarks by mr t t mboweni, governor of the south african reserve bank, at the annual dinner in honour of the ambassadors and high commissioners to the republic of south africa, pretoria, 7 december 2004. * * * your excellency, the dean of the diplomatic corps your excellencies, ambassadors and high commissioners your excellency, the chief of state protocol your excellencies, heads of international organisations represented in the republic of south africa deputy governors of the south african reserve bank senior management of the south african reserve bank and their spouses / partners media representatives ladies and gentlemen welcome once again to this annual dinner in honour of the ambassadors and high commissioners accredited to the republic of south africa. my colleagues and i always look forward with bated breath to this evening at the end of every year. this dinner represents for us the highlight of every year as we gather with you to break bread and discuss issues of common interest and relevance to our various countries. 2004 has indeed been a momentous year for the global economy. one of the distinguishing features of this year has been the oil price. when i joined the central bank in 1998, the north sea brent crude oil price was $ 9 per barrel. since then, the oil price has shot up quite considerably. the price of north sea brent crude oil is now around $ 38 per barrel and indications are that it might not come down to the opec target levels of $ 22 - $ 28 per barrel in the near future. the futures price also indicates that the oil price will stay near the $ 40 per barrel level. the behaviour of the oil prices has changed the global economic outlook in a real way. estimates by the international monetary fund researchers is that if the oil price averages $ 37 per barrel in 2004, global growth will slow down by some Β½ percentage point, inflation for the advanced countries will increase by about 0. 3 percentage point and the trade balance of advanced countries will deteriorate by some 0. 3 per cent of gross domestic product. the estimates for south africa are that economic growth might decline by some 0. 6 percentage point, inflation will increase by some 1. 6 percentage point and the trade balance will worsen by some 1. 4 per cent of gross domestic product. clearly there is cause for concern all - round. at the core of these oil price developments seems to be concerns about supply constraints. these arise, in part, as a result of supply | of investment grade. on 30 november, the south african sub - index narrowed further to 92 basis points over us treasuries. the spreads of south africa β s us - dollar denominated bonds maturing in 2009 and 2012 narrowed to 102 and 72 basis points over us treasuries respectively between 14 october and 30 november 2004. the 10 - year us dollar global bond issued in may this year similarly tightened from 195 basis points over us treasuries at its launch in may to currently around 103 basis points. a ratings upgrade by moody β s would put south africa on the same scale as thailand whose ten - year us - dollar denominated bond spread is currently trading around 52 basis points over us treasuries. this suggests that south africa β s ten - year us dollar denominated bond, which is currently at 85 basis points above us treasuries, could rally further. another clear indication of south africa β s improving creditworthiness can also be seen in increasingly narrower margins paid on our international syndicated loans. whereas in 2001 we were paying 85 basis points p. a. over libor for a three - year loan, by 2003 the margin had come down to 67. 5 basis points p. a., and earlier this year we were able to improve the terms further and negotiate a margin of 47. 5 basis points p. a. over libor. 4 / 5 the relations between south africa and so many countries in the rest of the global village, evidenced by the number of embassies and high commissions stationed in south africa, bears testimony to this confidence. my colleagues and the senior management staff at your tables will hopefully clarify and amplify some of the remarks i have made during this evening. meanwhile, welcome once again and thank you for accepting our invitation to this annual dinner in honour of ambassadors and high commissioners posted to the republic of south africa. your friendship is not taken for granted, it is highly valued. thank you very much. 5 / 5 | 1 |
one value that strikes me as having been at least as important as any other has been the federal reserve β s willingness, during its finest hours, to stand up to political pressure and make tough but necessary decisions. the fight against inflation during paul and alan's times in office was critical for the nation β s longer - term prosperity, and it required perseverance in the face of heavy criticism. i keep in my office one of the 2 - by - 4s mailed to the fed during paul β s tenure, which communicates some distinctly unfavorable views of high interest rates and their effects. more recently, of course, the federal reserve took controversial but necessary measures to arrest what was arguably the worst financial crisis in american history, helping to avert what likely would have been a much more severe economic downturn than the great recession we did experience. we have been able to respond nimbly to economic emergencies and make difficult choices in part because of our institutional structure β including long terms for members of the board of governors and diverse regional representation in our policymaking committee β and because of the willingness of policymakers, past and present, to do whatever was needed in the longer - run interest of the economy. as an institution, the federal reserve must continue to be willing to make tough decisions, based on objective, empirical analysis and without regard to political pressure. bis central bankers β speeches but, finally, we must also recognize that the fed β s ability to make and implement such decisions ultimately depends on the public β s understanding and acceptance of our actions. for this reason, we must continue to emphasize two other essential values β transparency and accountability. we must do all that we can to explain our actions and to show how they serve the public interest. that β s why we must welcome communication, broadly defined. of course, we will continue to talk to economists and market participants, but that is not enough. ultimately, the legitimacy of our policies rests on the understanding and support of the broader american public, whose interests we are working to serve. the ability of this institution to support a healthy economy β an economy with high levels of employment, low inflation, and a stable financial system β will require our continued efforts to engage in twoway communication β explaining our actions and, importantly, listening to what our fellow citizens have to say. let me end by thanking the organizers of this event and, in particular, all of the past and present policymakers in attendance for helping us mark this | centennial milestone in such a memorable fashion. bis central bankers β speeches | 1 |
investment trusts ( reits ) are also using shariah - compliant structures for their financing needs. 16. we were honoured to host the 5th islamic financial services board annual summit in may. at this summit, mas issued a consolidated set of guidelines to provide greater clarity and certainty on how our banking regulations apply to islamic banking. islamic finance was also featured when the paris europlace international financial forum was held in singapore in october. we will continue to work with fellow regulators and the private sector to fine - tune our regulatory approach and to develop the infrastructure and talent to facilitate the growth of islamic finance in singapore. 17. as i mentioned earlier, bringing leaders in finance and business together to understand the developments in each region provides a valuable platform for collaboration. i am therefore pleased that mega events has decided to bring the first annual wibc asian summit ( asia wibc 2010 ) to singapore. islamic finance will provide an increasingly important bridge in the growing connectivity between the middle east and asia. singapore is pleased to help catalyse deeper relations between these two high - growth regions. asia wibc will provide a unique platform for industry players from more established centres of islamic finance to share their experiences. i look forward to welcoming all of you to the inaugural asia wibc in singapore next june. conclusion 18. in conclusion, the global economy is recovering gradually, though there remain many risks ahead. emerging economies are expected to grow well, but we need to tackle the many structural challenges. governments need to undertake structural reforms. the financial sector needs to facilitate the flow of funds into growth areas, and islamic finance will play an important role. by working closely to deepen risk management, and to enhance the ground knowledge in each region, we can contribute to sustainable growth. on this note, i wish you another very successful conference in bahrain. | disorderly failure. this requirement would not break brand new regulatory ground, since it would really be a modification of existing tier 2 gone - concern capital concepts, and would complement the requirement for minimum equity levels included in basel iii. as implied in my identification of short - term funding vulnerabilities as a priority area, the best way forward here is considerably less easy to specify. short - term initiatives on money market funds and triparty repo are both possible and desirable. in truth, though, because money market funds are largely american and, to a somewhat lesser extent, european, the united states and the european union together have the ability to address the global run risks associated with these products. i think we also have the responsibility to do so, but not necessarily in identical ways. accordingly, i would hope that both the united states and the european union would each take effective action to counter the run risk, tailored as appropriate to their regulatory environments, and then explain those actions at iosco and the fsb, where their efficacy can be reviewed. similarly, since the settlement process for triparty repo that remains of concern is centered at two institutions, both of which are regulated american banks, the united states can take effective action without need of an international agreement as to broader initiatives, proposals to require minimum haircuts for all securities financing transactions have been tentatively discussed in the fsb. this is certainly a ripe subject for discussion, insofar as securities financing transactions facilitate leverage, enable maturity transformation, and produce the kind of interconnectedness that can spawn runs and contagion. at present, no set of generally applicable prudential standards governs these activities. even within regulated firms, microprudential risk - weighted capital standards have little effect, since they are calibrated against credit risk and most such transactions are short - term and fully ( or over ) collateralized. thus requirements that would attach to instruments and transactions, as opposed to firms that happen to be prudentially regulated for other reasons, have considerable attraction. on the other hand, universal haircut requirements are the type of regulatory innovation that i suggested earlier was best developed internationally following some experience within financially significant countries. one may, for example, have significant concern about some of the unintended consequences that would ensue. my instinct, then, is that the analysis of this idea should continue within the fsb and, one hopes, in other venues both in and out of the official sector. there | 0 |
cautious in assessing the risks in a banking system merely on the basis of the size of its balance sheets. for example, imagine that nordea moved its head office from stockholm to helsinki, suddenly becoming a finnish bank. this would take sweden below the european average ( figure 6, right - hand diagram ). would the level of risk in the swedish banking system then have decreased considerably? i don β t think so. the risks in a large banking system have many other dimensions than just balance sheet total in relation to gdp. large banking systems can be associated with low risks and small banking systems can be associated with high risks. one important dimension of the risk is determined by the ability of the countries in which the banks are active to cooperate in a crisis, and the subsequent division of burdens. this issue deserves a lecture all of its own, so i will spend no more time on it today. another dimension is that of funding, particularly how much funding is borrowed outside the countries in which the banks operate. and this is the aspect to which i would now like to return. bis central bankers β speeches what matters are how the banks borrow and how they use this money of course, not all borrowing in foreign currency is a cause for concern β on the contrary. in many cases, it forms a natural part of traditional banking operations. and neither is it particularly remarkable to borrow in one currency and then exchange this for another on the market. but one of our experiences from the crisis is that it does make a difference both how you borrow and how you use this money. let me start with how borrowing is conducted. put simply, it could be said that the swedish banks borrow over the short term in dollars and over the long term in euros ( see figure 7 ). the market for short - term borrowing is very large in the united states and, both before and after the crisis, the swedish banks have been able to obtain significant volumes of funding on this market at favourable conditions. this market deals in maturities of less than one year, but the overwhelming portion of trading deals with securities with maturities of three months or less. money market funds continue to be major investors. more long - term borrowing is largely conducted in euros through the issuance of covered bonds. pension funds and insurance companies are the main investors here. 2 obviously, the risks of a bank entering into an acute liquidity crisis become smaller as borrowing becomes more long - term. consequently, the new regulations in basel iii require a greater proportion | a case, customers would have to be referred to other banks. of course, at least major customers generally also have contact with us banks, which never encounter acute liquidity shortages, as they can turn directly to the federal reserve in the event of a crisis. so they have access to a lender of last resort which can create dollars. this is exactly what the swedish banks lack. now, naturally it hurts for a bank to refer good customers to a competitor, but if you don β t have any dollars, then you don β t have any dollars. it β s all a question of what risks the bank is willing to take. another way of minimising the risk is for the riksbank to maintain a foreign currency reserve that the banks can have access to in a crisis, as it does at present. the riksbank has several reasons for maintaining a reserve in foreign currency, but one important argument for its current size is precisely the need to be ready to lend to the banks6. the riksbank β s foreign exchange reserve is currently equivalent to about sek 300 billion. it is, of course, difficult to say exactly how large the foreign exchange reserve would have to be to assist the banks with liquidity in a crisis situation. the amount could be either larger or smaller, but let β s assume that two - thirds of the reserve, that is sek 200 billion, is available for this purpose. what does it cost to maintain a foreign currency reserve like this? and who should reasonably pay this β insurance premium β? let us examine the cost first. one way of looking at the matter is that sweden, as a nation, has borrowed sek 200 billion more than we otherwise would have needed, and the cost for this, quite simply, is the average interest rate on the government debt. but this would be to disregard the fact that the riksbank can actually invest the money we have borrowed via the swedish national debt office in interest - bearing assets, let alone that choices are limited as the assets must have extremely good liquidity, that is to say that cash must be available at very short notice. if we assume that the difference between the deposit rate and the lending rate is about forty basis points, the annual cost for borrowing sek 200 billion would thus be about sek 800 million. is this a lot or a little? this can be discussed, but, last year, the four major banks had a combined balance sheet total of sek 11 | 1 |
cpi inflation has been inside the target range since february 2010, with the outlook being generally favourable, although developments around wage settlements and administered price increases continue to pose upside risks. the low interest rate environment prevailing in advanced economies has resulted in a consistent search for yield, and as a consequence, south africa, like other emerging markets, has attracted significant capital inflows. since the beginning of the year, nonresidents have purchased over r75 billion worth of domestic bonds and equities. the rand exchange rate has been somewhat volatile and in the past two months the rand / dollar exchange rate fluctuated between r8. 10 and r7. 18. after declining from 45 per cent in october 2008 to 13 per cent in april 2010, historical volatility of the rand increased briefly to 18 per cent in may 2010, but has since eased from these levels. much of the underlying volatility can be ascribed to changes in global risk aversion related to events in europe in particular, with significant volatility experienced in the usd / eur exchange rate. however, it is worth pointing out that the volatility in the exchange rate of the rand has been in line with the volatility observed in respect of currencies of other emerging market and developed countries. it is generally accepted that currency volatility and excessive appreciation unrelated to economic fundamentals can have an undesirable effect on the domestic economy, through adverse impacts on both the export and import - oriented sectors. while the bank is cognisant that an over - valued exchange rate over an extended period can be very costly to the economy, it also needs to be recognised that the open nature of our economy makes us more susceptible to all kinds of spillovers from the global economy and financial markets, making any attempts to seek to control the exchange rate at a particular level not feasible. not having or not seeking any particular target for the exchange rate, however, does not imply that reasonable and responsible steps cannot be taken to manage abrupt adjustments. as we have said on numerous occasions, any actions would have to be consistent with the inflation target. while the rand exchange rate is a critical variable, we need to take a more holistic view to ensure that the overall policy mix is designed and implemented in such a way that policies are complementary in order to raise economy - wide productivity, growth and employment while keeping inflation in check. 5. new challenges for central banks? over the past two decades, central banks in advanced | β s β manias, panics and crashes β 12 but one would be hard pressed to predict from reading such β classics β the importance of novations of a derivative trade or additional collateral calls from a clearing bank to an investment bank for its tri - party book. yet these were just the kinds of detailed market developments, often associated with the plumbing of financial systems that economists at the new york fed were hearing at the afternoon meetings from new york fed staff interacting with market participants in real time as the crisis progressed. however, since financial crises are almost impossible to fit into the standard framework of efficient markets, it was only after the near failure of bear stearns that we as economists were more able to piece a more accurate story together. one can find a clear and comprehensive description of these issues in darrell duffie β s book, β how big banks fail. β 13 see tobias adrian, paolo colla, and hyun song shin ( 2011 ), β which financial frictions? parsing the evidence from the financial crisis of 2007 β 09 β federal reserve bank of new york staff reports no. 528 ( new york : federal reserve bank of new york, december ). for example, see alp simsek ( forthcoming ), β belief disagreements and collateral constraints β econometrica. for example, see fischer black ( 1986 ), β noise β journal of finance, vol. 41 ( july ), pp. 529 β 543. charles p. kindleberger ( 1978 ), manias, panics, and crashes : a history of financial crises, ( new york : basic books, inc. ). darrel duffie ( 2010 ), how big banks fail and what to do about it, ( princeton : princeton university press ). bis central bankers β speeches my experiences as a central banker directly observing and trying to think of ways to counteract the panic that took hold of global financial markets in september 2008 also underscore that published statistics and market prices may at best tell part of the story of developments in financial markets and how they might be affecting the economy as a whole. these experiences highlight the need of policymakers for real time market intelligence and having staffs with operational experience and a solid grasp of market functioning to develop appropriate policy responses. 14 recall that in just over four weeks following the failure of lehman brothers the global financial system experienced a panic of unprecedented speed and destructive power. observing the panic up close was a sobering lesson about how quickly a complex financial | 0 |
of payment systems technology, principally the use of mobile phone as a banking channel and payment device. the pervasive availability and use of mobile phone around the globe and familiarity amongst its users makes it a very cost - effective distribution channel to improve accessibility to financial services to the unbanked and underserved segment of the population. this is further complemented by the proliferation of payment cards, particularly electronic money, which enables banking and payment services to be conducted without a bank account or visits to traditional bank branches. according to data from the consultative group to assist the poor, or cgap, there will be more than 120 mobile money schemes in developing countries by the end of 2009, more than double the number in 2008. cgap estimates that by 2012 some 1. 7 billion people will have mobile phones but no bank account, and 20 percent will be using mobile money. a key challenge, to implement a commercially viable and workable mobile banking solution, especially where population density is low, is to achieve a critical mass of users required to reap economies of scale to keep transaction cost low. this is even more relevant if the aim is also to promote financial inclusion as financial services would have to be offered at affordable costs. thus, a requirement for an open and interoperable mobile platform that facilitates the participation of many service providers and that offers a broad range of services is critical in developing a sustainable and efficient solution for both providers and users. the other type of branchless banking is the use of non - bank financial service providers, also referred to as business correspondents in certain jurisdictions. this approach combines mobile banking solutions with person - to - person contact, except that the customer is not engaging with a bank, but rather with a supermarket counter staff, grocery shop owner, post office or village headman. the elements of trust, know your customer and value - added advisory services can be more effectively met using this approach, without the corresponding high investment cost of establishing physical banking branches. today's forum provides an excellent opportunity for all of us here to exchange ideas and experiences in these areas. policy and regulatory concerns pertaining to branchless banking let me now turn to my second point, which is about the policy concerns of regulators in relation to branchless banking services. the first concern is related to the need to continuously balance between prudential controls and allowing innovation to flourish within the financial sector. to site a recent well known example, the events in the us sub - prime markets and derivative products | marzunisham omar : future of work in east asia - jobs and technology opening speech by mr marzunisham omar, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the " future of work in east asia : jobs and technology " workshop, organised by the asian institute of chartered bankers, kuala lumpur, 11 november 2024. * * * when we talk about ai, machine learning, and automation, it is natural to focus on what these innovations can offer. yet, many policymakers face a delicate challenge in managing the impact of technological advancements on jobs, and therefore, livelihoods. on this, let me touch on three points. first, technological advancement is a constant feature of our modern economy, and the pace of technological change will, in my opinion, accelerate. it took around 20 years for the internet to reach more than 80 % household adoption in the united states. 1 but it only took 8 years for smartphone usage to achieve the same. now, improvements in large language models are felt annually, if not sooner. while each new wave of technological advancement brought major shifts in the types of jobs available, the net impact has been more and better jobs. our living standards have also improved dramatically. deloitte's 2014 study of occupational census data in england and wales dating back to 1871 found that technological advancement led to the decline of'muscle power jobs '. but it also found an increase in'caring professionals'jobs such as health and teaching professionals. however, there are valid concerns that today's technological progress is different. ai and quantum computing are allowing for unprecedented innovations in fields from communications to cybersecurity. while past innovations displaced jobs defined by routine tasks such as assembly line work, today's potential disruptions extend to cognitive and non - routine tasks. the imf estimates that almost 40 % of global employment is exposed to ai. 2 it suggests that even'skilled'jobs will need to adapt to new technologies. we cannot even rule out that one day genai might take over the jobs of many of us in this room. this brings me to my second point : in the face of such rapid change, we can choose how we respond to it. at this stage of our economic development, malaysia has so much more to achieve. as such, we can neither afford to be fearful of technological progress, nor can we be passive by - standers in face of the technology revolution. malaysia's has historically experienced | 0.5 |
( sdgs ) as part of our commitment to the g20 process. the reserve bank has been conducting several surveys to provide forward - looking inputs for policy purposes. in this context, professor rao β s guidance will be extremely valuable ; moreover, he has had a long - standing relationship with the bank in the technical advisory committee on surveys. we are also eager to listen to professor iyer on random connection models that help in reducing dimensions, compressing information and designing efficient algorithms in the era of big data. i am also happy to learn that experts such as dr. subrata sarkar, dr. d. v. s. sastry, shri d. k. joshi and dr. bornali bhandari will discuss the research work done and the future research agenda with young researchers in the afternoon session. their expertise would immensely help our young professionals in setting their own goals. 2 / 3 bis central bankers'speeches 9. i wish all participants the very best for today β s conference. i hope your deliberations will keep burning the flame of knowledge that illuminates human endeavour. thank you! 3 / 3 bis central bankers'speeches | bis innovation summit β 22 march 2022 central banks in a dlt world speech by francois villeroy de galhau, governor of the banque de france press contact : mark deen ( mark. deen @ banque - france. fr ) page 1 sur 3 ladies and gentlemen, it is a great pleasure and honour to give this opening speech of the second bis innovation summit, which illustrates central banks β commitment in new technologies, notably through the bis innovation hub. since their creation almost fifteen years ago, distributed - ledger technologies ( dlts ) have evolved and opened up new possibilities, building alternative circuits and removing intermediaries, supporting new solutions and use cases. are these disruptions as powerful as those brought by the invention of internet three decades ago? it may be too early to tell, but dlts are expanding at a fast pace, and have the potential to bring about far - reaching changes. the invention of bitcoin, the first crypto - asset, stemmed from the desire to build a new β currency β β i emphasise the quotation marks here β, outside the remit of states and central banks. that was back in 2008, and what we have observed since then is that the use of bitcoin as a means of payment remains very marginal, because it does not feature any of the fundamental characteristics of currency. nor is it a store of value, but rather a speculative asset, somewhat similar to the dutch tulip bulbs from the 17th century. the most disruptive feature of bitcoin was its underlying technology, which has since then been offered in different versions of dlt underlying various types of assets and uses. second - generation crypto - assets now embed smart contracts that have led to the development of new services and products, the last being nfts ( non - fungible tokens ). among second generation crypto - assets, so - called stablecoins or backed - assets try to reduce their volatility by anchoring themselves to fiat currencies and sovereign assets. still, they create fragmentation, and are fraught with regulatory and operational uncertainties. here too there are historical precedents : free banking in the 18th and 19th centuries, when each private bank issued its own banknotes. it had major drawbacks, such as credit risk embedded in settlement assets. the introduction of central bank money as a common and safe settlement asset was a major breakthrough and since then has become the rule β in the best interest of all | 0 |
furthermore, we will considerably expand our repo basket by including selected foreign currency securities. this step which is primarily motivated by our intention to transact also with counterparties abroad obviously produces a useful sideeffect on collateral availability over year - end. it is our clear commitment to provide liquidity sufficient to smooth market developments before and at the transition. of course, all banks, especially those which do not engage in repo transactions, can avail themselves of significantly increased lombard limits just for the year - end, if they wish so. as regards the distribution and the available stock of banknotes, we have made the necessary provisions. after having put a new banknote series into circulation recently, our inventories are more abundant than they would have to be even in a worst - case scenario. final remarks let me conclude by making two final remarks. firstly, the need for successful active and reactive communication can hardly be overestimated. the millennium has an almost magical fascination which may stimulate crisis fantasies and is perfectly capable of triggering herd effects. we must counter this by creating credible transparency and reacting to any possible alarming rumours swiftly and in a co - ordinated fashion. this is one of the tasks of the swiss staff 2000 which involves the bankers β association, the important providers of services like clearing, settlement and the exchange, banking supervision and the central bank. it seems indispensable that the authorities play an important part both in active and reactive communication. and, secondly, we must diligently carry on our preparatory work, continuously and openly report on the progress made, as well as adjusting the allocation of resources in accordance with the risks involved. at the same time, we must bear in mind that we will be faced with unexpected friction and bottlenecks. while it is true that the millennium transition poses a veritable challenge, i am fully convinced that it is manageable and that we will rise to the occasion. let us all build on the positive relationship between our ongoing efforts to improve our readiness including a whole variety of contingency plans and the chance to eventually enjoy the pleasure of having been wrong and unnecessarily pessimistic in providing for all kinds of gloomy scenarios. | mr gehrig focuses on special structural characteristics involved in solving the year 2000 problem for the financial sector in switzerland speech by prof bruno gehrig, a member of the governing board of the swiss national bank, at the global 2000 coordinating group meeting in montreux on 30 april 1999. i am most delighted to be your luncheon speaker today and thank you for your invitation. i am sure that montreux provides you with a highly stimulating environment for today β s global 2000 meeting. as you are no doubt aware, you are leading the way in tackling the year 2000 issue. i would like to thank you for your extremely important and valuable commitment, and i am certain that i also speak on behalf of my colleagues from other central banks, bank supervisors and - even more importantly countless customers in the financial industry. on the threshold of the third millennium we are indeed confronted with most complex and - in many regards - unique challenges. in terms of methodology, i believe it is essential to realise that we are dealing with complex network problems which cannot be solved on the basis of the behaviour patterns of market and competition we are all familiar with. in this context, external or third - party effects are in fact so significant that remarkable collective effort is necessary in order to minimise potential damages resulting from malfunctions. this applies both to the preparatory work and the challenge to overcome frictions which - in spite of our best efforts - will be unavoidable. public institutions and private companies are equally called upon to engage in a high level of cooperation and coordination beyond competition, even if, and especially where no individual business case can be made. the scope of preparations for the year 2000 is unprecedented in many dimensions. i cannot think of any other project which requires a similar degree of cooperation and coordination within and across organisations, industries, sectors and countries. features of the swiss case even though preparations are generally making good progress in switzerland, the country β s readiness chart exposes areas in which efforts will have to be strengthened. as far as the financial sector is concerned, which will be the focus of my remarks, there are some special structural characteristics involved in solving the year 2000 problem. our financial centre is the home of some large global players in the banking and insurance sectors as well as the place where numerous cross - border customer relationships are concentrated. we are, therefore, exceptionally vulnerable to international shocks. on the other hand, this also means that we must take on more responsibility with regard to the risk of | 1 |
bank. the point is not to claim there is an optimal supervisory structure that fits any country β s circumstances. rather, it is to note that a system such as the one we have in france has proved very useful in allowing for an in - depth knowledge of the banking sector and the various financial institutions. it also allowed for very swift and timely exchanges of information, and, as a result, allowed us at the central bank to quickly pass sensitive judgments, not least on the usefulness of injecting liquidity. second, the crisis also revealed that, as far as supervisory infrastructure is concerned, simple, robust and pragmatic plans have shown their efficiency. thirdly, the crisis stressed the need for supervisory structures to adapt to their environment. this is very true for europe. i guess it is also true for other countries and regions. let me just say that, while adjusting our institutions and tools to changes in financial systems, we should be pragmatic and completely in tune with reality rather than based on a theoretical scheme or vision. let me conclude by stressing one point. we are going through very challenging times, in some respect even unprecedented times. economic and financial forces are at play and recent events are the consequences of such forces. that said, we should not completely disregard the importance of what robert shiller terms β attention cascade β. for him, a cascade is the situation in which economic events and problems become the subject of more and more talks and stories, until they become the dominant public thinking. we, as policy makers, have a very critical role to play to try and ensure that such qualitative β attention cascades β remain aligned with facts and reality. today, policy making is also about confidence building and financial education. thank you very much ladies and gentlemen. | funds. this is a significant shift. needless to say, restoring liquidity remains a pressing priority. inter - bank markets have recently shown modest signs of improvements. yet, there is still some way to go. to this end, central banks have mobilized considerable ammunition. a process underway for over a year has culminated in the central banks having adjusted their operational frameworks in various areas. the maturity and currency of their facilities have been expanded. the range of eligible counterparties has been broadened. the tender procedures have been modified with a view to ensure unlimited amounts of central bank money. the list of collateral for refinancing has been widened. enhanced international coordination between the monetary authorities is ensuring that their actions are part of a consistent overall strategy. these measures are highly exceptional. as such, they should greatly contribute to restoring confidence and a smooth functioning of money markets. governments have moved aggressively to support banks'solvency and resilience. since the paris declaration by euro area member - countries, europe, under the leadership of france, is acting according to what i consider a sound and consistent action plan. i won β t enter into the details. just bear in mind the three following elements. first, authorities are extending guarantees to banks β refinancing so that they can, in turn, properly finance the economy. second, very significant reforms of accounting rules are now being implemented. basically, these reforms allow banks to transfer instruments previously marked to market value to portfolios where that will no longer be the case. they also provide for greater flexibility in marking to market value assets whose market has shut down. third, and lastly, governments have confirmed their willingness, when warranted, to step in and support banks β capital. what about france β s actions? the government and parliament very quickly put meat on the bones of the european principles. a new bill has been passed, which provides for two things. first, it sets up a eur 320 billion funding vehicle to guarantee banks β medium - term refinancing ( i. e. up to five years ). this vehicle is strictly supervised by the french government and the banque de france. the guarantee is granted for a fee, so that the beneficiaries pay costs corresponding to normal market conditions. second, the law also creates a state - owned company empowered with eur 40 billion and entitled to subscribe to banks β subordinated debt issues or preferred shares. as you know, six banks have expressed that they will | 1 |
consumption3 or a limited transaction throughput when settling a large number of transactions. 4 so, yes β the technology underlying crypto - assets is different from the technology used in traditional finance. and yes β this technology holds the promise of potential improvements. but, the economics underlying the crypto eco - system are actually not so 2 / 5 bis - central bankers'speeches different from traditional finance. so no - " it won't be so different this time ". as always, too little supervision and regulation will attract malicious actors, purporting to offer reliable services. at present many crypto markets are characterised by pseudonymity and high levels of information asymmetry. which means that it is often impossible to know ex ante which actors have bad intentions. or indeed, which platforms are at risk of the type of overreach that the bank of amsterdam was tempted into. recent crypto - market developments have highlighted once more the age - old lesson that trust is built in drops and lost in buckets. as always, the financial innovation of the day will undergo the same public scrutiny as the bank of amsterdam faced three centuries ago. whether with regards to reserve backing, governance, transparency or other issues. and after carefully scrutinizing the current crypto eco - system, the financial stability board ( fsb ) sees legitimate reasons for concern. 5 as one of the guardians of financial stability, we believe the rapid growth of these markets in the presence of structural vulnerabilities and incomplete regulation and supervision, mean crypto - asset markets could soon reach a point where they represent a threat to the stability of the global financial system. especially given the large and continued institutional interest from traditional financial parties. i think the mere fact that we β crypto - native companies, regulators and traditional institutions β are all together here today, shows crypto cannot simply be considered a fad. the fsb's concerns are underscored by the fact that many crypto activities are not in compliance with existing regulation or take place outside of the regulatory perimeter ; that existing crypto - asset regulation differs across jurisdictions ; and that monitoring of financial stability risks is challenging given limited regulatory reporting and public disclosure. so, enhanced regulatory action is definitely required. let me touch upon three elements that are important for the way forward. first, the fsb is well - aware that the cross - border nature of crypto - assets poses an obvious challenge for national supervisors. inherently cross - border activities, like | over national payment systems, central banks guard against systemic risks that could be transmitted via these systems. there are therefore clear synergies between financial stability and other tasks. central to these synergies is the wealth of knowledge on the financial system through the central bankΒ΄s active presence in financial markets. again, the structural differences in financial systems across the euro area mean that the financial stability task is more appropriately located at the national level, although communication and co - ordination across borders are increasingly important. whereas all national central banks have a financial stability task, not all have direct competence in the field of prudential supervision. the choice to delegate the supervisory task to the central bank is, of course, based on national circumstances and preferences. however, the important synergies between the financial stability and supervisory tasks should not be ignored. i will come back to this issue when i discuss the supervisory arrangements in the netherlands. in general, it is important to stress that on both a national and european level the national central banks remain involved in discussions on prudential supervision. this is essential for the proper execution of their financial stability task and, as such, enables the system to contribute to the smooth conduct of supervisory policies. recent developments in europe regarding supervision recently, the perception of increased cross sector and cross border financial integration has resulted in demands for enhancing the supervisory structure in europe. i fully subscribe to the ambitions to speed up the regulatory process of supervision in europe. moreover, the convergence of supervisory practices would serve a level playing field in european financial markets. last year, a european committee under chairmanship of mr brouwer β director at the dutch central bank β made several recommendations on this point. as i explained, the involvement of national central banks will continue to offer welcome expertise in assessing the supervisory needs and challenges of financial integration. concerning topics directly related to financial stability and systemic risks, the national central banks will be at the frontline of european discussions, together with their counterparts from the ministries of finance. however, i would warn against the suggestion of introducing a single european supervisor. it is a misconception to expect that a top down approach to the design of supervision in europe would promote financial integration. clearly, that would simply ignore the structural differences on the national level. indeed, the practice of emu has shown that a critical mass in integration is needed before institutional convergence ( i. e. the introduction of the euro ) can work as a catalyst. likewise, i would warn against the suggestion that | 0.5 |
louis kasekende : improving financial literacy in uganda remarks by dr louis kasekende, deputy governor of the bank of uganda, at the financial literacy information sharing group ( flisg ) meeting, 9 december 2015. * * * governor emeritus, leo kibirango, dr. dirk steinwand, head of agriculture and rural finance programme at giz ( germany international cooperation ), members of the financial literacy information sharing group ( flisg ) ; mr. fagil mandy, management and staff of the bank of uganda present ; distinguished guests ; ladies and gentlemen. i welcome you all to the annual financial literacy information sharing group meeting. i thank you all for the work that you have accomplished in the last twelve months, to enhance the knowledge, attitudes, and skills of ugandans in as far as access and use of financial products and services is concerned. in a special way, i recognize the contribution of our colleagues and partners from the germany international cooperation towards the financial inclusion programmes and, more broadly financial markets development in uganda. bank of uganda, as an institution that took the lead in the development and implementation of the strategy for financial literacy in uganda, is proud of the achievements we have jointly achieved in the last one year. nonetheless, there is still a lot that needs to be done and let me highlight just a few of the challenges for your contemplation. first ; we need to ask ourselves why the β loan sharks β popularly known as β money lenders β sustain their business in this country charging very high interest rates, inspite of the many financial institutions including saccos that are charging relatively lower interest rates. i presume that part of the answer lies in an information - asymmetry problem that needs to be addressed. second ; as part of our financial literacy drive and initiative, we have witnessed many savings and investment groups / clubs formed. the task now is to enhance our tactics in delivering financial literacy messages to facilitate the graduation of these largely informal savings and investment groupings into formal establishments with linkages to the productive / real sector of the economy. how can financial literacy support these entities to maintain the crucially important element of mutual trust among members, adopt proper management and accounting procedures, appropriate corporate governance practices, and avoid the pitfalls that fell to similar institutions in the past? third ; beyond any regulatory constraints that might exist, how can we adapt financial literacy messages to improve on the access of our small medium enterprises ( smes ) to capital markets to | to adapt the programme to further strengthen quality assurance, respond to the challenges, and safeguard against any β mis - education β of consumers. i urge members to continue using the website and trainers manual as the primary source of information in their training. it is important that our starting point in educating consumers is the same. when in doubt, please always refer to the financial literacy strategy that was launched in august 2013 by the honorable minister of finance, planning and economic development ( mofped ). on our part, we reiterate our commitment both in terms of financial and human resources to further bolster the financial and economic education agenda in uganda. we are also working closely with the requisite ministries, departments and agencies of government to ensure that the diversity and quality of institutions providing financial services expands, and that they are well regulated. to that end, i trust that once the amendments to the financial institutions act and the regulations for the tier - four institutions that are being considered are passed into law, we shall have more ugandans served and probably more efficiently. as i conclude my remarks, i once again thank the members present here today for the tremendous work thus far. however, we must not rest on our laurels as a lot remains to be done. i thank you all and wish you good deliberations in the meeting. it is now my pleasure to declare the financial literacy information sharing group ( flisg ) meeting open. bank of uganda statistics department. bis central bankers β speeches | 1 |
β in its broadest sense as it relates to these risk measurement and management processes is essential to the effectiveness of these processes. finally, i want to raise some issues around accounting and disclosure of risk. if there is a single theme to my remarks today, it is simply this : keep improving, refining, and innovating in risk management. although basel ii is a remarkable achievement, and the subject of this conference, don β t let your best practices be limited by what basel ii does or requires. indeed, one of the more desirable aspects of basel ii is that it anticipates that it can evolve with best industry practices without creating a new framework. the designers have not intended to build a straitjacket, and the policymakers have insisted on this characteristic, which my colleague vice chairman ferguson has referred to as basel ii β s β evergreen β aspect. enterprise - wide risk management within financial institutions, the better and greater focus on risk measurement has helped to bridge the gap between the perspective of the traditional credit risk officer and that of the β quant. β this is no small accomplishment, and a significant advance in credit culture. if you will pardon my use of stereotypes, historically the credit risk officer has been the fellow who always says β no β because it is the conservative thing to do, while the financial modeller has been the proponent of active - trading strategies that fulfil the promise of a data - mined efficient frontier that has been estimated to several decimal places of precision. the logic of risk and return in a competitive marketplace, as measured by return on economic capital that is founded in empirical analysis, has provided both sides with a common language and set of standards. it is not unusual anymore to hear chief credit officers describe their appetite for risk in terms of risk - adjusted return on capital ( raroc ) or monitor current spreads on credit default swaps to look for market signals on borrower credit quality. with better credit cultures and improved tools, institutions can also measure and evaluate more objectively the results of their business strategies and use that information to enhance future performance. they can decide how much risk to take, rather than letting their risk profile be the consequence of other decisions. the evolution of interest rate risk management in the united states is a great illustration of how an enterprise - wide approach can help institutions customize products that better serve customers, set prices to reflect risk exposures and attain profit targets, and ensure that corporate earnings contributions are met. thirty years ago, bankers | cross β border, mainly ), cbdcs, cybersecurity from a financial stability perspective, and big data and digital economy. on the other hand, the techlab β s objective is to implement in an experimental stage disruptive technologies that impacts cross - cutting processes within the cbc, such as cryptocurrencies, big data, artificial intelligence, and the page 2 of 11 central bank of chile september 2019 like. currently we are experimenting with blockchain and machine learning techniques. anyway, the techlab was started only three months ago and we are also exploring initiatives with other technologies such as apis. let us talk a little bit more about the technology that brings us together, blockchain. this technology has several use cases for a central bank : ( i ) central bank digital currencies ; ( ii ) financial market infrastructures such as largevalue payment systems and trade repositories, or more generally regtech or suptech implementations ; ( iii ) issuance and lifecycle of financial instruments ; and ( iv ) opportunities of optimization of back office processes, such as settlement of operations and reconciliation. notwithstanding the potential this technology has, there are some yellow flags that need to be addressed : a. dlt technology is still on an early stage and there might be unidentified drawbacks. smart contracts that can build on top of this technology make it significantly more powerful, but there is little experience on how this works in practice. b. borderless technologies raise concerns in regulatory compliance across regions. coordination and information sharing may be especially relevant. c. proof of work ( pow ) consensus protocol is slow and needs intensive use of energy. other consensus protocols have limited use at this point : proof of stake or proof of authority. page 3 of 11 central bank of chile september 2019 d. regulatory gaps may arise : identifying theses gaps is a central point in the exploration of the technology. therefore, we need to understand this technology in order to embrace its benefits and mitigate the risks that some use cases may involve. with that in mind, we started a project in collaboration with our local central securities depository ( csd ). this project explores the feasibility of issuing bonds in a blockchain platform, and managing the whole life cycle of the bonds in this platform. hence, settlement of primary auctions and corporate actions are done in blockchain. first, we discussed a conceptual model that would be a better fit to our regulatory framework. secondly, two | 0 |
the 2019 financial inclusion survey showed that 71 % or an estimated 51 million remain unreached by the formal financial system. with these realities and other significant developments transforming the country β s financial inclusion landscape, our vision and strategy must evolve to reflect new exigencies, demands, and opportunities. the nsfi 2022 β 2028 signifies our greater collective commitment and aspiration for a more financially included and empowered citizenry. it takes a deliberate stance to address the significant disparities in financial inclusion levels across demographics and segments. the nsfi 2022 β 2028 emphasizes financial inclusion to enhance consumer welfare and features financial resilience as a centerpiece of our renewed vision. it outlines a strategic governance framework, through which a broader set of stakeholders can be tapped as a driving force of the 1 / 2 bis central bankers'speeches strategy β s implementation and, thus, truly foster a whole - of - nation approach. by articulating concrete desired outcomes, priorities, performance indicators, and targets, this landmark document will not only serve as a financial inclusion blueprint for the next six years, but also as powerful tool for communicating our bold commitment to the financial inclusion agenda. at this point, i would like to thank and commend my fellow fisc members and our stakeholders for your recognition of financial inclusion as an essential component of our country β s development master plan. your contributions have truly been invaluable to the development of the nsfi 2022 β 2028. the effective implementation of the nsfi 2022 β 2028 will, of course, rely on everyone β s unwavering dedication and zeal. we must work to ensure all filipinos can thrive and prosper in an ever - evolving landscape. this is also why we chose the social media hashtag # kabilangako, to send a clear message that no one will be left behind. finally, today β s launch merely heralds the continuation of our financial inclusion journey, one that is to be pursued with even greater purpose : to open opportunities for every filipino to become both the beneficiaries and foundations of growth and prosperity. we look forward to being with you on this journey. thank you again for joining us on this momentous occasion as we unveil the nsfi 2022 β 2028. maraming salamat at mabuhay! # 2 / 2 bis central bankers'speeches | of the policy. the conclusion : inflation didn β t change much, so the policy isn β t working. however, what is rational and essential is to examine what would have happened had the policy not been adopted in the first place. using several models, ecb staff estimated that, without our policies, inflation would have been a third of a percent negative in 2015 and would have stayed significantly negative throughout 2016, which would mean that we would have been in permanent deflation since last year. this is a significant result. recall that the final outcome was affected by the unexpected decline in the price of oil by 30 % from september to december. we estimate that two thirds of one percent of the registered growth in the past two years was due to our monetary policy. however, what we achieved in fostering internal demand was undone by the subsequent decrease of net exports in a decelerating world economy. these developments did not make our policy less effective, only ex - post insufficient for the desired outcome. bis central bankers β speeches naturally, all policies have limits. in the case of the instruments we are now using, this is particularly true of negative interest rates on our deposit facility. the reasons are more fundamental than just the effect on banks 1. despite negative rates throughout last year, the net interest income ( nii ) of euro area banks increased in percentage of assets, and their return on equity went up from 3. 5 % in 2014 to 5. 7 % in 2015 β which corresponds to a real return as inflation was zero. our policies also produced capital gains for banks, as securities β prices went up ( and yields down ), and impairment costs came down as the recovery reduced the amount of npls. more broadly, negative deposit facility rates have contributed to negative rates in the money market, reducing funding costs for banks. the whole yield curve has been lowered, which is the sole objective of using this particular monetary policy instrument. to normalise inflation in the euro area we urgently need higher growth that can reduce negative output and unemployment gaps, using all really available policies. if not monetary policy, then what? see cecchetti & schoenholtz ( 2016 ) how low can they go? bis central bankers β speeches | 0 |
2019. 7 however, given the accelerated pace of digitalisation, we need to do more, and at scale. we are now experimenting an artificial intelligence ( ai ) platform with 13 fi partners to automate the process of identifying adjacencies in jobs and skills, so that more workers can benefit from reskilling and pivot into suitable roles. we hope to share more about the platform early next year. creating opportunities our second priority is to expand opportunities for those aspiring to enter or reenter the financial sector workforce. 9. the national jobs council has been set up to mobilise tripartite partners β resources to create opportunities amidst the weak labour hiring conditions. i am pleased to note that the financial sector is one of the top contributing sectors to 2 / 6 bis central bankers'speeches the jobs and traineeships programmes, offering a wide range of opportunities, including in technology and innovation, retail and corporate banking. close to 60 fis have offered about 1, 300 sgunited traineeship positions for fresh and recent graduates in this challenging job market. as of end july 2020, 50 fis have committed to hiring 900 singaporeans over the next 3 years to be groomed for future leadership and specialist roles under structured talent development programmes supported by mas. the number of traineeship positions available in the second run of the attach - and - train technology in finance immersion programme has tripled, allowing 220 mid careers to be attached to and trained at fis to gain experience in key technology areas in financial services. 10. i thank the financial institutions which have joined us today, and hope to strengthen and expand this partnership with mas and our tripartite partners to create more job opportunities for singaporeans. creating the opportunities is only part of the task ahead. we need to bring together individual fis β contributions into a collective whole and help with job matching, so that opportunities can be more easily accessed. 11. ibf, as the integrated service provider for jobs and skills in the financial sector, will play the role of such a β match - maker β. the virtual career fair today, is one example, with 16 employers participating to provide a range of resources and opportunities for job seekers. over the next 12 to 18 months, ibf will progressively hold more career fairs to help job seekers source for and navigate the landscape. outside of career fairs, job seekers can also approach ibf careers connect for career advisory and matching to suitable opportunities in financial services. another example would be the singapore fintech association jobs | portal which was launched on 20 july. to date, it lists over 500 job opportunities in the fintech sector. at the same time, we need to upskill our workforce to deepen financial capabilities and acquire future - enabled skills so as to take on the opportunities created. 12. major fis, including standard chartered bank and aia, have stepped up on training for employees to deepen expertise and acquire new skills across domains, including business planning, compliance, wealth management and tech. we should not let up on training. we may not emerge from covid - 19 soon, and should take this period of slower growth to help our people and businesses build longer - term capabilities. to encourage continued and in fact intensified training, mas, in april this year, raised the level of ibf course fee subsidies for all locals from 50 % - 70 % to 90 %. ibf further provides a 5 % course fee credit, bringing the total course fee support to 95 %. in addition, we introduced the training allowance grant to alleviate the burden of manpower costs on fis, so that they can retain and upskill their employees. ibf has been bringing onstream more online courses, so that training can continue even with the safe management measures. the number of such courses has increased from about 400 to over 600 within the span of three months. as a result of these efforts, training participation has increased at least 75 % year - onyear, to 11, 000 in q2 2020. as the ibf credit and training allowance support will expire on 31 dec 2020, we are looking into extending these measures into next year, so as to provide longer term certainty and support for business and 3 / 6 bis central bankers'speeches workers. i would like to highlight in particular, the need to expand and deepen the singapore workforce β s capabilities in technology areas. 13. the demand for digital services is becoming stronger. this is why financial institutions continue to invest in digitalisation even with the current strong head - winds. more than 400 financial institutions and fintech firms have applied for the digital acceleration grant launched in april 2020, to strengthen their operational resilience, improve process efficiency, manage risks better and serve customers better. our efforts to grow the tech pipeline has yielded good results. however, demand continues to outstrip the local talent supply and fis have responded to the tech talent crunch by tripling the number of traineeship positions available in the second run of the attach - and - train technology in finance | 1 |
one key element for the diffusion of innovations is the availability of adequate human capital, especially in view of the markedly knowledge - intensive nature of the current innovation process. a highly skilled and well - trained workforce is not just a productivity driver per se. it is a necessary condition both for the adoption of new technologies in the first place, and for the effective unfolding of their effects on firms β productivity. β’ supporting investment in human capital is therefore another crucial policy aim. the education system needs to provide students with a continuously updated set of skills ; to make them alert and adaptable to knowledge - based innovation ; and to enable them, ultimately, to make the most of the fast changing demands of the labour market. designing an effective education system, including lifelong learning opportunities, and providing the right incentives to teachers and students alike, should also therefore be very much on everybody β s agenda. designed by the printing and publishing division of the bank of italy | navigate the early stages. their development can be supported by policies, such as tax breaks ; one must acknowledge, however, that here policy can do little, at least directly, if firms continue to have little appetite for such services. β’ reallocation inevitably also depends on the process of creative destruction that pushes unviable firms out of the market. sound insolvency regimes are required to ensure fast, effective and fair liquidation and reorganisation procedures, thus preventing assets from becoming trapped in unproductive uses. this is a difficult issue, as in many societies financial default is traditionally associated with social stigma and a sense of personal failure. the length and wastefulness of bankruptcy procedures is also an issue in some jurisdictions ; italy is a well - known example. minimising the trauma and cost of bankruptcy for both debtors and creditors should be the key priority for any insolvency law reform. in an ideal world, default would be synonymous, not with failure, but with a fresh start and a clean slate. β’ labour market institutions are also central to ensuring that the reallocation of labour resources can happen in a reasonably smooth way, while protecting workers from socially unacceptable insecurity. societal values may differ somewhat in this respect across the world ; we europeans pride ourselves on a model that offers a high degree of social protection. this need not be a brake on labour reallocation, however, if protection is properly designed. the key is finding the right mix between protecting workers and protecting existing jobs. in societies that treasure social protection, effectively and reliably ensuring the welfare of workers that lose their jobs, while preserving the incentives for them to search for new job opportunities, is an essential precondition for allowing the labour market to adapt. β’ while some reallocation across firms and industries is necessary for increasing productivity economy - wide, the diffusion of innovation among existing firms is also extremely important. in many cases, it can be less disruptive, painful and polarising than reallocation. β’ fast technological progress, especially if coupled with network externalities, can easily generate winner - takes - all dynamics, which in turn may further increase productivity gaps across firms and raise difficult competition issues. laggards may be discouraged from investing in r & d, since they lose the hope of competing with the top performers ; leaders may divert resources from innovation to unproductive uses, such as defensive strategies for maintaining their rent. under the right conditions, diffusion can mitigate such effects. β’ | 1 |
self - reliant β in using the channels. though, the banks may have strategies for increasing the usages of alternate channels, successful adoption would depend to a large extent on the line managers dealing with customers. are they motivated enough to promote alternate channels? how do we incentivize the branches that initiate the customers to electronic banking? 22. question 5 : outsourcing or abdicating β are banks treading the thin line? it is but natural for banks to outsource their some of their activities especially their it related activities. however outsourcing brings in its wake, several risks and thus it is imperative for any bank outsourcing its activities to ensure effective management of these risks. do the banks have adequate controls over the outsourced activities and outsourcing entities? i heard of an incident where the administrative password of a critical application server of a bank was with the vendor not with the system administrator of the bank. delegating is what we ask someone to do on our behalf ; while abdicating is what we do as escapism, camouflaging lack of skill sets. 23. one related question is over - dependence on certain it systems ( including operating systems and databases ) resulting in concentration of risk in certain components / vendors which are spread across the banking sector. what could be done to redress this? bis central bankers β speeches 24. question 6 : are banks properly leveraging technology for inclusive banking? the challenge in financial inclusion is reducing the gap between demand and supply of financial services. delivery of banking services is not always feasible in rural areas with cost effective distribution being a challenge. can the technology help in meeting this distribution gap? everybody is pinning hope of mobile technology for financial inclusion. is it an exciting possibility or a meaningless dream? it is definitely an exciting possibility. the mobile banking in india is gradually making in - roads. however, the success of mobile banking would depend on how the banks and the mobile service providers co - operate and collaborate to deliver the financial services to the unbanked. further, it would depend on banks how they can leverage the technology to improve business, whether it β s through mobility, low - cost atm rollouts, or revenue sharing models and service management. 25. question 7 : time for wake up call for banks? the world payments report 20126 puts india as the 13th largest non - cash payments market in the world, with non - cash volumes have been growing about 10 % a year | ##af3812d1985b911e0d29a0da8a5043. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice chart 4 how the alf will work19 we β ve come a long way since eddie george β s speech almost 20 years ago. but one thing that remains more important to us than ever is working with you. the liquidity facility i β ve described here today is in no small part a product of close and committed co - operation between the bank, industry bodies and the private sector. it β s a real step forward, but it β s only one step. through continued engagement and focused effort, together we can build a more innovative, diverse and inclusive marketplace : one which really can meet the needs of every part of our society. thank you in the first instance, ( 1 ) the bank prefunds the alf with an interest - free loan, which is used ( 2 ) to purchase eligible sukuk and ( 3 ) any hedges required to insulate the fund from fx risk. islamic banks then ( 4 ) place deposits in the alf, the principal value of which is guaranteed by the bank to ensure the facility is hqla - compliant. in the event the aggregate value of participating bank deposits do not reach the aggregate value of the fund, the bank will step in as co - depositor for the residual amount. the rate of return on the deposit ( 6 ) is based on the rate of return on the portfolio backing it, net of hedging and other operational costs ; and on maturity the return from the fund is paid over to participating banks, and the principal amount is returned or rolled over. all speeches are available online at www. bankofengland. co. uk / news / speeches and @ boe _ pressoffice | 0 |
intend to discuss all 43 of its recommendations in this speech, but that i would only like to highlight a few which hold particular relevance for this audience. the first is the development of a general code of conduct for financial market participants that would be pre - empted by the formation of a financial markets standards group. this group, led by senior market professionals, would provide a forum to discuss compliance issues and to resolve conflicts in standards of market practise. another recommendation is that the necessary data to carry out cross - market 5 see http : / / www. resbank. co. za / lists / news % 20and % 20publications / attachments / 8743 / 2018 % 20fmr % 200 7. pdf page 7 of 9 monitoring and surveillance could be collated via trade repositories, aiding both market discipline and transparency. regulation covering conflicts of interest and market abuse will also be considered. and in addition to our review of benchmark interest rates, regulators may also investigate ways to expand the repurchase market and encourage technological innovation to aid the competitive landscape. a final version of the review is being deliberated and will be handed over to the financial markets implementation committee comprising representatives from the nt, fsca and sarb, to give effect to the recommendations. finally, of specific interest to the audience here tonight, may be the progress that the sarb has made in accommodating collateral substitution in its operations. changes to our systems will allow banks to replace or substitute assets used as collateral in the main repurchase auction, in line with international best practice. in particular, the sarb will be transitioning the current master repurchase agreements into the global master repurchase agreement ( gmra ) to allow for this substitution. system changes are in progress, and full functionality for market participants is anticipated around midmay. once the gmras have been signed, our counterparties will be able to substitute collateral posted at the sarb. collateral substitution is expected to ease some of the demand for high - quality liquid assets through a more efficient use of such assets. more information on these and other initiatives is contained in the fmd newsletter6, accessible on the sarb website, with some printed copies available here as well. concluding remarks let me conclude by once again extending, on behalf of fmd and the sarb, our appreciation to all market participants for your continued support and cooperation, which has aided the orderly functioning of our markets. a | reasons for these impediments to inclusion. when we examine barriers that individual consumers face in becoming financially included, we uncover trustworthiness and reputation. a federal reserve analysis of the most recent survey of consumer finances suggests that the primary reason individuals do not have a transaction account is a simple dislike of dealing with financial institutions. 10 if that dislike emanates from the reputation of the particular bank, or the reputation of the banking industry as a whole, policymakers and financial institutions will not be able to enhance financial inclusion without addressing the reputational context. reputation and innovation i β d like to imagine how the public β s sense of well - being might be enhanced by their interactions with financial institutions. if we paid attention to the experiences of consumers as they interact with various segments of the financial marketplace, what could we learn? if we see rigidities or imperfections in that interactive experience, what innovation might we imagine that would not only reduce reputational risk but create something new and potentially advantageous? technological innovation was the subject of a recent award ceremony in san francisco. the winners were companies with names like soundcloud, github, makerbot, techmeme, and snapchat, all of which presumably do amazing things, although i don β t understand exactly what. 11 but, evidently, the real buzz at the ceremony was over something much more mundane that i for one have no problem understanding. that buzz was around a pedestrian item β a new and improved coffee cup lid. 12 this lid, called foamaroma, reportedly provides exactly the right set of openings to maximize aroma and recyclability, while minimizing the effects of coffee spurting out too fast. the point here is that the innovator noticed something simple that others had not : many coffee shop employees don β t drink their coffee from cups with plastic lids like their customers do, so there was a market need that had not been recognized and then addressed. here i am not just talking about the mixed miracle of mobile banking and mobile payments or being able to take a picture of a check with a smart phone and it appearing in my checking account. that β s a topic that is amazing in its own right and worthy of a separate speech. i am talking about encouraging banks to pay attention to the banking experiences of their customers and finding process improvements or service elements that may lead to something seemingly mundane but valuable nonetheless. see federal deposit insurance corporation ( 2012 ), 2011 fdic national survey of unbank | 0 |
is to be followed by invitation of and consideration of inputs and feedback from relevant public and private sector organizations to enhance the sense of involvement and to build confidence. such a participative and consultative approach is advocated to secure a convergence of viewpoints and, hence, favorable public disposition towards the necessity of change. in sum, the process in india is an exercise that aims at understanding and comprehending various standards and codes in terms of rationale, technical complexities, institutional and legal requirements and the immediacy and relevance at the present stage of development and institutional structure. second, it is intended to result in getting a fair view of the country β s status with reference to standards. third, this would enable getting an idea about the necessary steps required to move closer to the adherence of standards and codes. fourthly, it would sensitise the regulatory authorities, agencies and institutions about the priority areas of action. conclusion in conclusion, i would like to quote andrew crockett from a recent imf - world bank jointly sponsored conference on international standards and codes ( march 2001 ) : " therefore, although setting high - quality standards is generally acknowledged to be a good thing, more work needs to be done on finding the best way to get there. " thank you. | 23. 05. 2018 β strengthening the economic governance of the euro : short - term priorities and the long - term view β high level seminar. banco de espana luis m. linde governor ladies and gentlemen, let me first extend a warm welcome to you all to the banco de espana. thank you for joining us today in this seminar that addresses the pressing and very important topic of the economic governance of the euro : short - term priorities and the long - term view. i would like to thank the panelists who have been so kind to accept our invitation ; we are very pleased to have among us a long list of distinguished participants that would certainly throw much welcomed light on the discussion. the timing of this conference is particularly relevant. after years of low growth, europe is now experiencing a robust recovery which opens up a window of opportunity to make progress in the governance reform agenda before the next economic downturn unfolds. supported by expansionary monetary policy, real gdp in the euro area has expanded for 19 quarters in a row. stronger price dynamics are yet to materialize, but we are confident that if we are prudent, patient and persistent, our monetary policy measures will be effective in achieving the medium - term goals. price stability is a necessary but not a sufficient condition for achieving sustained and balanced growth. in fact, one important lesson we can draw from the first twenty years of the emu is the need to improve the area β s resilience to large macroeconomic shocks and to increase its stabilization capacity. in this context, we currently find ourselves at a crossroads in what refers to the pace of the governance reform agenda. despite evident progress since the peak of the crisis, the building of a more cohesive monetary union, as proposed in the van rompuy β s report of june 2012 ( the so - called four presidents β report ) and in the juncker β s report of june 2015 ( the so - called five presidents β report ), is, we all know that, a very difficult task. as a matter of fact, there has been no significant step forward since the establishment of the single resolution fund in june 2014. recently, several initiatives have attempted to re - launch the debate on the future of euro area β s governance, including, in december 2017, the european commission β s report on β further steps towards completing europe's economic and monetary union : a roadmap β, or, in january of the present year, the center for economic policy research | 0 |
industry, which can aspire to promote solvency and innovation in the operation of all societies. the societies, which are now operating do not compete with each other as they have been set up to serve specific interest groups. they have therefore the opportunity within them to talk to each other and to be able to resolve very simple administrative matters, which could be commonly faced by them. i have come across different societies, which have turned to the regulator for solutions to very similar questions and situations. while these societies are not discouraged to do so, it would be preferable that they first share their experiences and problems amongst themselves to find solutions. there is potential for the movement to grow and offer the services the members need. corporate governance and the requirement to ensure β fit and proper β persons hold the positions on the board and management cannot be emphasized enough. it should be a challenge for every society, and more importantly every member, to ensure that credible people get to hold those responsible positions. as part of enforcing good corporate governance, the bpng established the industry code of conduct thus requiring all directors and management to sign up before assuming responsibilities. furthermore the bank instituted β fit and proper β requirements to ensure all directors undergo these tests before taking up their roles. as part of this initiative they need to undergo certain training courses conducted by the federation of savings and loans societies and bpng. good corporate governance is the key to enhancing strong reporting system, efficient internal controls and risk management systems. good governance is synonymous to an effective compliance culture. this should be the dream of all societies to achieve. we need to move from the dreaming stage, to the belonging stage and finally to the achieving stage. i hope the federation β s strategic planning workshop would deal with and address the issues i have raised. it is important that we all work together to ensure that the savings and loan industry achieve its full potential for the benefit of its members. with these remarks, i would like to thank the organisers of the credit union day celebrations. i now declare the strategic planning workshop of the federation of savings and loan societies limited open. thank you! | paul a acquah : workshop on the general data dissemination systems ( gdds ) opening address by dr paul a acquah, governor of the bank of ghana, at the workshop on the general data dissemination systems ( gdds ), accra, 17 august 2005. * * * mr. chairman, distinguished stakeholders, ladies and gentlemen, i deem it an honour and at the same time necessary to be part of this important workshop and i appreciate the opportunity to give the opening address. you would agree with me that the appetite for statistics and other information on the economy has increased considerably in this country and that users have become more resourceful in the analysis and use of data. this growing interest has been motivated by a desire to make assessments of how far we are from our national objectives, be they on growth, inflation, income distribution and incidence of extreme poverty or how distant or close we are to the millennium development goals. all this requires a robust and responsive statistical system to monitor developments and to allow policy changes to meet changing demands. mr. chairman, statistics do not only serve national purposes but they have global implications and it is a significant development that ghana has become part of the gdds platform. the gdds requires a good set of principles for routine data dissemination. adherence to its guidelines should enhance the usefulness of the data and provide users with valuable information to plan their work and programs. it also serves as a yardstick by which ghana can judge its performance in the field of statistics. one important outcome of the gdds platform is the collaboration with other statistical providers, and the fostering of a network among institutions. ghana β s adherence to the gdds should ultimately lead us to a strengthened statistical system. i am very sure we all agree on the usefulness of data and there would be no need to run you through that. however, we should acknowledge that good statistics as collected according to agreed international best practices, using appropriate methods for data collection, processing and dissemination are crucial as a tool for national development. accurate and timely data would allow us to formulate sound policies, effectively compare our progress over time and space and also set benchmarks for measuring progress in the future. ladies and gentlemen, it is however of paramount importance that the data generation process is thoroughly understood so that the appropriate interpretations could be made. economic statistics are often only an approximation of the underlying reality they are attempting to measure. even where the data can be perfectly measured there is often disc | 0 |
progress in tackling a number of important problems arising from the 1997 crisis, and some of these are bearing fruit. on financial institutions, overall financial position of the thai banking industry has improved markedly. a number of banks are now showing profits while interest spread has improved to 1. 57 by the third quarter. commercial bank external debt has also declined substantially. more than 78 % of bank β s existing foreign liabilities have been new borrowings incurred after july 1997. this shows that thai banks have no difficulties in raising funds abroad. all banks are expected to meet full 100 % loss provision requirement by end of the year as required by the bank of thailand. in the last three years some b890 billion has been raised as new bank capital, raising the bis capital - adequacy ratio to 11. 95 % for the industry. this is relatively high by the minimum standard, and will allow thai banks to meet any provision in the future, as well as supporting credit expansion. non - performing loans, which peaked at 47. 7 % of total credit, have now been reduced to 22. 5 % of total credit at end - october. a total of b1. 1 trillion of npl have been restructured, while a further b1 trillion of npl is either in, or is in the process of being submitted to court, with resolutions that need to be accelerated. the remaining portion, b600 billion, of un - restructured debt consists mainly of loans to small and medium enterprises ( smes ), as well as consumer and mortgage loans. to speed up the restructuring of the last portion, especially the smes, the bank of thailand has set up a scheme of debt restructuring and new lending for smes with npl problems but have viable business prospects. this scheme is made possible through a credit guarantee by the small industry credit insurance corp. when the scheme was first introduced, there were some minor problems relating to the requirement for additional personal guarantee. this issue has now been resolved. it is hoped that the scheme will help smes in returning to a state of normalcy. in addition, the bank of thailand has encouraged financial institutions to separate their non - performing assets either to be sold or transferred to asset management companies. in all, 14 asset management companies have been approved, and approximately b579 billion worth of assets have been transferred as of end - october. with all these measures in place, we expect further progress in the resolution of the npl problem next year. with | are critical to the stability of the financial system. in particular, we are taking a more β macroprudential β approach, one that goes beyond supervisors β traditional focus on the health of individual institutions and scrutinizes the interrelationships among firms and markets to better anticipate sources of financial contagion. to do that, we are expanding our use of the kind of simultaneous and comparative cross - firm examinations that we used to such good effect in the scap. the federal reserve β s ability to draw on a range of disciplines β using economists, market experts, accountants, and lawyers, in addition to bank examiners β was essential to the success of the scap, and a multidisciplinary approach will be a central feature of our supervision in the future. for example, we are complementing our traditional onsite examinations with enhanced off - site surveillance programs, under which multidisciplinary teams will combine supervisory information, firmspecific data analysis, and market - based indicators to identify problems that may affect one or more banking institutions. although regulators can do a great deal on their own to improve financial oversight, the congress also must act to fix gaps and weaknesses in the structure of the regulatory system and, in so doing, address the very serious problem posed by firms perceived as β too big to fail β. no firm, by virtue of its size and complexity, should be permitted to hold the financial system, the economy, or the american taxpayer hostage. to eliminate that possibility, a number of steps are required. first, all systemically important financial institutions, not only banks, should be subject to strong and comprehensive supervision on a consolidated, or firmwide, basis. such institutions should be subject to tougher capital, liquidity, and risk - management requirements than other firms β both to reduce their chance of failing and to remove their incentive to grow simply in order to be perceived as too big to fail. neither aig, an insurance company, nor bear stearns, an investment firm, was subject to strong consolidated supervision. the federal reserve, as the regulator of bank holding companies, already supervises many of the largest and most complex institutions in the world. that experience, together with our broad knowledge of the financial markets, makes us well suited to serve as the consolidated supervisor for systemically important nonbank institutions as well. in addition, our involvement in supervision is critical for ensuring that we have the necessary expertise, information, and authorities | 0 |
as on geopolitical, exchange rate and energy price developments. we acknowledge that the staff projections are conditional on the full implementation of all our monetary policy measures in place. we also take into account that the degree of forecast uncertainty tends to increase with the length of the projection horizon. turning to the monetary analysis, recent data confirm the increase in underlying growth in broad money ( m3 ). the annual growth rate of m3 increased to 5. 3 % in april 2015, up from 4. 6 % in march. annual growth in m3 continues to be supported by its most liquid components, with the narrow monetary aggregate m1 growing at an annual rate of 10. 5 % in april. loan dynamics gradually improved further. the annual rate of change of loans to nonfinancial corporations ( adjusted for loan sales and securitisation ) was β 0. 1 % in april, after β 0. 2 % in march, continuing its gradual recovery from a trough of β 3. 2 % in february 2014. despite these improvements, the dynamics of loans to non - financial corporations remain subdued. they continue to reflect the lagged relationship with the business cycle, credit risk, credit supply factors, and the ongoing adjustment of financial and non - financial sector balance sheets. the annual growth rate of loans to households ( adjusted for loan sales and securitisation ) increased further to 1. 3 % in april 2015, after 1. 1 % in march. the monetary policy measures we have put in place will support further improvements both in borrowing costs for firms and households and in credit flows across the euro area. to sum up, a cross - check of the outcome of the economic analysis with the signals coming from the monetary analysis confirms the need to maintain a steady monetary policy course, firmly implementing the governing council β s monetary policy decisions. the full implementation of all our monetary policy measures will provide the necessary support to the economic recovery in the euro area and lead to a sustained return of inflation rates towards levels below, but close to, 2 % in the medium term. monetary policy is focused on maintaining price stability over the medium term and its accommodative stance contributes to supporting economic activity. however, in order to reap the full benefits from our monetary policy measures, other policy areas must contribute decisively. given continued high structural unemployment and low potential output growth in the euro area, the ongoing cyclical recovery should be supported by effective structural policies. in particular, in order to increase investment, boost job creation and | as well as by the progress made with fiscal consolidation and structural reforms. moreover, the low level of the price of oil should continue to support households β real disposable income and corporate profitability and, therefore, private consumption and investment. furthermore, demand for euro area exports should benefit from improvements in price competitiveness. however, economic growth in the euro area is likely to continue to be dampened by the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms. this assessment is also broadly reflected in the june 2015 eurosystem staff macroeconomic projections for the euro area, which foresee annual real gdp increasing by 1. 5 % in 2015, 1. 9 % in 2016 and 2. 0 % in 2017. compared with the march 2015 ecb staff macroeconomic projections, the projections for real gdp growth over the projection horizon remain virtually unchanged. while remaining on the downside, the risks surrounding the economic outlook for the euro area have become more balanced on account of our monetary policy decisions and oil price and exchange rate developments. bis central bankers β speeches inflation bottomed out at the beginning of the year. according to eurostat β s flash estimate, euro area annual hicp inflation was 0. 3 % in may 2015, up from 0. 0 % in april and compared with β 0. 6 % in january. on the basis of the information available and current oil futures prices, annual hicp inflation is expected to remain low in the months ahead and to rise towards the end of the year, also on account of base effects associated with the fall in oil prices in late 2014. supported by the expected economic recovery, the impact of the lower euro exchange rate and the assumption embedded in oil futures markets of somewhat higher oil prices in the years ahead, inflation rates are expected to pick up further during 2016 and 2017. this assessment is also broadly reflected in the june 2015 eurosystem staff macroeconomic projections for the euro area, which foresee annual hicp inflation at 0. 3 % in 2015, 1. 5 % in 2016 and 1. 8 % in 2017. in comparison with the march 2015 ecb staff macroeconomic projections, the inflation projections have been revised upwards for 2015 and remain unchanged for 2016 and 2017. the governing council will continue to monitor closely the risks to the outlook for price developments over the medium term. in this context, we will focus in particular on the passthrough of our monetary policy measures, as well | 1 |
from all of our efforts suggest that we look to be on track in meeting our primary goals. that is, not to introduce large changes in the aggregate amount of capital currently held in the banking system while at the same time to provide tangible incentives for banks to adopt the most advanced and sophisticated approaches to capital adequacy. as we near completion of the new accord, i am reminded that the tremendous progress we have made is a reflection of the steadfast commitment that so many have put forth to see the revision process through to its completion. the success of the new accord will be directly attributable to the enormous support and assistance provided by both bankers and supervisors. yet a chinese proverb reminds us that, " on a journey of one hundred miles, ninety is but halfway. " i suppose the last miles of any marathon are the toughest to finish. the wisdom of that proverb is borne out by the critical nature of the tasks ahead of us to complete, and then to implement, the new capital framework. adopting the new accord will be a challenging but also an exciting undertaking for us all. the potential benefits are many - including improving the management of risk, enhancing transparency and promoting greater financial stability. in short, this new framework will make all of us - bankers, supervisors and others - better at what we do. thank you very much. | auditors to prevent cozy relationships undermining the integrity of the audit. a periodic change of the firm might have led to more serious questioning of the accounts. further, some us firms have announced plans to include, as an expense, the cost of executive stock options. the changes aim to more accurately describe the revenues and costs associated with companies β primary business. and standard and poor β s has introduced new benchmarks for reporting corporate earnings. these are all positive examples of participants working together to enforce the spirit of the rules under which financial markets operate. what has been done recently in switzerland to improve the transparency of swiss financial markets? some efforts have already started some time ago. most notably, the swiss exchange and the swiss business federation β economiesuisse β co - ordinated their efforts to develop two sets of rules which became effective on july 1, 2002 : the β swiss code of best practice β and the β directive concerning information on corporate governance β. this will hopefully lift the standards for corporate governance and improve the level of transparency for the publicly traded firms in switzerland. we have also seen political initiatives aiming at more transparency in remunerations. business uncertainty it would be shortsighted to believe that the recent stock market reaction has only been the result of misconduct and the lack of corporate governance. the world economy is still digesting the consequences from the deep retrenchment in capital spending, which started in 2000 in the high - tech and the telecommunications sectors. the investment climate was further muted by the terrorist attacks of last september, hitting hard other sectors such as air travel, tourism, and insurance. in short, there is considerable uncertainty surrounding the adjustment of investment spending and the dim prospects of corporate earnings. while the worldwide weakness in business investment lies at the very heart of our present problems, at the same time the most recent signals from abroad reveal that new potential risks have emerged. the most recent economic indicators from the united states show that domestic demand is growing less strongly than anticipated. the confidence indices registered a decline for the months june and july. the labor market has recently shown increasing signs of weakness ; both in terms of employment and hours worked. these recent developments weigh heavily against household spending, which has been considered the lifeline of the u. s. economy. the fear is that many households are stretched, adding fears to the strength of household consumption and the resilience of the u. s. economy to withstand further shocks. u. s. households on average have low levels | 0 |
test of the fed β s supervision of large banks. in these remarks, i will first sketch out how changes in regulation, risk management, the economy, and overall financial stability have prompted alterations to stress tests over the past decade. much of that change has enhanced transparency, which is a founding principle for stress tests. i will then suggest some ways in which the effectiveness of stress testing can be further enhanced with greater transparency. ten years ago, in may of 2009, the fed and the treasury department released the first stress test results under the supervisory capital assessment program ( scap ). at that moment, the u. s. economy was in free fall. the united states had lost an astonishing three million jobs in the previous four months. one significant reason for these losses was that many businesses were severely constrained in their access to funding and found it impossible to predict when that access might improve. the goal of the first test was urgent and simple : to restore confidence in the 19 large banks that then accounted for two - thirds of the assets in the banking system. in fact, simply announcing in march that there would be tests helped stabilize bank finances. that improvement continued after the results in may outlined the quite feasible steps for raising additional capital that the banks would need to take, and did take, to be able to continue lending if adverse conditions continued. challenging conditions did continue, but the stress tests and other actions taken in the first half of 2009 marked a turning point. the recovery from the great recession began in july, as the financial system came back to life, and then steadily strengthened. the principles that made that first test so effective were independence and transparency. for the first time, an independent authority, the federal reserve, would seek to independently assess risks. 1 just as important, the details of that assessment would be shared with the public, an extent of transparency that until then wasn β t characteristic of bank supervision but would become the hallmark of the regulatory framework erected in response to the crisis. the first tests relied heavily on banks β internal risk models, but they still represented a huge step in independence in providing the public with an assessment of the health and resiliency of large banks. transparency facilitated both market discipline and accountability. the information provided to the public under the scap stress test reinforced the entire enterprise of estimating the capital shortfall faced by major banks. it held the banks accountable for information on their capital adequacy and required them to fill the capital hole. the next big step for | randal k quarles : stress testing - a decade of continuity and change speech by mr randal k quarles, vice chair for supervision of the board of governors of the federal reserve system, at " stress testing : a discussion and review ", a research conference sponsored by the federal reserve bank of boston, boston, massachusetts, 9 july 2019. * * * thank you eric, and thank you to everyone at the boston fed and throughout the system who have contributed to this conference. this gathering comes a few weeks after the announcement of this year β s stress test results, so let me begin by recounting the highlights of those results. they show that our financial system remains resilient and that capital planning by banks continues to improve. the largest and most complex banks were tested against a severe hypothetical recession and retained strong capital levels, well above their minimum requirements. they demonstrated the ability to withstand a severe and lasting economic downturn and still be able to lend to households and businesses. additionally, most firms are now meeting the high expectations we have set to make sure capital planning takes into account their specific risks and vulnerabilities. this is an improvement from last year. overall, these results are good news that confirm our financial system is significantly stronger than before the crisis. now let me turn to the purpose of this conference, which is to sharpen our understanding of the experience gained from stress testing and apply these lessons to think about the future. and let me begin by acknowledging that β notwithstanding our openness to learning from the collective experience of all of us in this room β the future of stress testing will, in a number of important ways, necessarily resemble the past. for example, we β re still going to have them. over the course of the last 18 months, i have heard overwhelmingly β from academics, from think tanks of every stripe, from banks of every size, from regulatory colleagues both domestic and foreign β that stress tests should continue to be a key element of the federal reserve β s supervision of systemically important banks and a key aspect of the fed β s efforts to promote financial stability. stress tests should be regular, rigorous, and dynamic. and the banks β performance on these tests will continue to be the most risk sensitive and consequential assessment of the affected banks β capital requirements. transparency around the stress testing process and results was a fundamental principle of the first stress test and every one that has followed, and it will remain a primary goal. stress tests | 1 |
anand sinha : striking a balance β credit penetration and npa management β role of information sharing address by mr anand sinha, deputy governor of the reserve bank of india, at the fourth annual credit information conference, mumbai, 7 march 2012. * * * inputs provided by mr manoj sharma, smt rachna dikshit and smt jayanthi n are gratefully acknowledged. mr. nair, chairman, credit information bureau ( india ) limited ( cibil ) and cmd, union bank of india ; mr. mallya, cmd, bank of baroda ; mr. siddharth mehta, president and ceo, transunion ; mr. thukral, md, cibil and other distinguished guests. it is indeed an honour for me to address you all here during the fourth annual credit information conference. banking is a risky business. banks, or more generally the credit institutions, in their role as intermediaries take upon themselves significant credit risks, while interposing between lenders ( depositors ) and borrowers. credit risk is, by far, the largest risk faced by banks. the risk transformation, where they become borrowers to lenders and lenders to borrowers, leads to warehousing of risks in credit institutions. in fact, this risk transformation offered by credit intermediaries is the cornerstone of credit intermediation which facilitates pooling of savings for being lent for various economic activities. in credit markets, the lenders β knowledge of a borrower β s likelihood to repay ( risk profile ) is imprecise and has to be estimated based on available information. borrowers, obviously, would have superior information than lenders about their own past actions and future intentions although it is the lender who bears the negative consequences of the risk. moreover, borrowers have incentive to misrepresent their risk profile. in any case, lenders cannot rely solely on the information provided by the applicant but must evaluate borrowers β claims even when borrowers are truthful. this entails significant cost and time. such information asymmetry has consequences for lending as it results in misallocation of credit. let me explain. before the advent of credit information models, traditional neoclassical economics assumed that markets were β informationally efficient β. this implied that one cannot consistently achieve returns in excess of the average market returns on a risk adjusted basis, given the information available. more recent work by stiglitz and others has shown that only | manages large private pools of capital, there is a need to have additional capital requirements to take care of reputation, concentration and other risks not captured in the traditional framework. this is the reason why we are looking at bringing out guidance on banks managing large private pools of capital. derivatives β risks in leveraged and complex structures 10. one of the important needs of a growing and increasingly globalizing economy is for businesses to be able to focus on their main business and have efficient ways of hedging forex and interest rate risks. over more than a decade, new products in the derivatives market have been gradually introduced, to begin with mostly in otc markets and more recently on the exchanges. while many corporates and businesses have used these products for hedging, the aggressive marketing of these, especially leveraged products, and their use by businesses to ostensibly lower the cost of funding or cost of hedging have led to grief to many β banks and businesses alike. the lessons from this experience underline the need for both banks and customers to understand such products and the associated risks especially in those with leveraged and complex structures, having proper risk management policies, accounting standards and disclosures with adequate guidance to users and auditors alike for appropriate valuation and mtm practices. lending to the millions 11. a major challenge of the next decade is going to be financing the millions in the unorganized sector, self - employed in the micro and small business sector, the small and marginal farmers as also oral share - croppers in the agricultural sector ; other challenges include financing affordable housing and education needs of low income households. these households and businesses do not maintain proper books of account, have irregular cash flows and hardly any documents of property or other collateral. drawing these households into the formal banking system through opening of bank accounts is only one and albeit a very first step. the number of borrowers who had borrowed rs. 25, 000 and below from the banking system rose from 36. 8 million 2004 to 39. 2 million in 2009 β an increase of just 2. 4 million over five years. the number of borrowers who borrowed less than rs. 2, 00, 000 increased from 61. 9 million in 2004 to 95. 8 million in 2009 β although there is an increase of nearly 34 million, a vast majority of the population still remain unserved. if the coverage of those borrowing less than rs. 2, 00, 000 has to increase to at least 50 per cent of the adult population in | 0 |
, and to limit the requirement of basel ii to only a small number of banking institutions that fit the definition of large, complex, and internationally active. it is also important to recognize that basel ii is a complete capital framework consisting of three pillars. while much of the focus to date has been on the calculation of minimum regulatory capital in pillar i, it should be remembered that pillar 2, which provides for supervisory oversight of an institution β s overall capital adequacy, and pillar 3, which requires enhanced transparency via disclosure, are also important parts of this new framework. let me assure you that we at the federal reserve would not be pursuing basel ii if we thought that it would in any way undermine the strong capital base that u. s. institutions now have. as a central bank and a supervisor of banks, bank holdings companies, and financial holding companies, the federal reserve is committed to ensuring that the basel ii framework delivers a strong and risk - sensitive base of capital for our largest and most complex banking institutions. that is why we supported moving ahead with the npr, which includes modifications to address concerns identified in the fourth quantitative impact study, known as qis4, and additional safeguards to ensure strong capital levels during the transition to basel ii. we will remain vigilant in monitoring and assessing basel ii β s impact on individual and aggregate minimum regulatory capital levels on an ongoing basis. as an extra degree of precaution, the u. s. banking agencies also decided to delay for a year the start of the parallel - run period. starting with the parallel run, and both during and after the transition to basel ii, the federal reserve will rely upon ongoing, detailed analyses to evaluate the results of the new framework to ensure prudent levels of capital. basel ii represents a major shift in how we think about regulatory capital, especially as we will implement it in the united states. it is complex, reflecting the complexity of risk measurement and management for the largest, most complex banking institutions, and the banking institutions and the supervisors will need to have ongoing dialogue and work diligently to make sure it is working as we expect it to. but we believe it is a powerful approach to making regulatory capital more risk - sensitive. to be quite clear, the federal reserve believes that strong capital is critical to the health of our banking system, and we believe that basel ii will help us continue to ensure that u. s. banks maintain capital levels that serve as an appropriate cushion against their risk - | services themselves. i certainly recognize and appreciate these challenges. but before a bank begins to engage in or offer crypto - asset - related services, it must seriously and carefully consider the risks involved β both to the bank and its customers. the recent turmoil in the digital - asset industry only underscores that point. federal reserve staff is working to articulate supervisory expectations for banks on a variety of digital asset - related activities, including custody of crypto - assets facilitation of customer purchases and sales of crypto - assets loans collateralized by crypto - assets, and issuance and distribution of stablecoins by banking organizations. we understand that everyone involved in this space is seeking clarity. one of the most important tools that we have as a regulator is the ability to clearly articulate our supervisory expectations. it is also our most direct path to encouraging and supporting responsible innovation. earlier this week, we released supervisory guidance addressing banks that are engaging in or seeking to engage in crypto - asset related activities. 3 this guidance will provide banks with additional information about the risks of crypto activities and remind them to ensure that the activities are legal, and they should have adequate systems, risk management, and controls in place to conduct the activities in a safe and sound manner consistent with applicable law. critically, one important element of this release is that firms should contact their supervisors about these types of activities and expect that supervisory staff will provide timely feedback, as appropriate. 2 / 4 bis central bankers'speeches based on my conversations with bankers across the country, i believe that providing the rules of the road β highlighting the risks we are most concerned about and laying out our expectations for how those risks should be managed β is invaluable for banks considering whether and how to innovate. artificial intelligence the federal reserve is taking a similar approach with respect to banks'use of ai. last year, the fed joined with four other financial agencies to issue a request for information and comment on financial institutions'use of artificial intelligence, including machine learning. 4 as noted in that document, banks are using ai in a variety of ways, including fraud monitoring, personalization of customer services, credit decisions, risk management, and textual analysis. these applications of ai can, to varying degrees, involve risk - management challenges around issues such as explainability, data governance, cybersecurity, third - party risk management, and consumer compliance. the banking agencies received over 100 responses to the request for information. those responses | 0 |
emmanuel tumusiime - mutebile : endorsing price stability and financial sector soundness in the ugandan economy remarks by mr emmanuel tumusiime - mutebile, governor of the bank of uganda, at the official opening of the standard chartered bank, bugolobi village mall branch, bugolobi, 12 february 2016. * * * members of the board of directors of standard chartered bank uganda, chief executive officer, regional head, retail banking for africa and middle east, senior management and staff of standard chartered bank, invited guests, ladies and gentlemen. it is an honour to be invited to officiate as guest of honour at the official opening of this new branch of standard chartered bank at the village mall in bugolobi. the wisdom behind the opening of a new stanchart branch in bugolobi is self - evident. this prime location and its immediate neighbourhood, is not only home this outstanding mall, but also hosts a number of small and medium sized enterprises. here you find a university, government departments, industrial establishments, a market, health service providers, major retailers, schools, hotels, restaurants ; not to mention the large number of residents. the bustling local economy here will thank you for bringing banking services closer. the opening of this new bank branch is a very strong endorsement of the stability of uganda β s financial sector. it indicates that the prospects for the sector as well as the economy as a whole remain good. indeed, only last month, standard and poor β s ratings services affirmed its β b / b β long and short term foreign and local currency sovereign credit ratings on the republic of uganda ; with a stable outlook. i am reminded of the words of alan greenspan β a former head of the central bank of the united states of america β who described β price stability β, in the perspective of central bankers as, β when economic agents no longer take account of the prospective change in the general price level in their economic decision - making β. as you are aware, in their latest press release, the uganda bureau of statistics reported that both annual and monthly inflation declined from december 2015 to january 2016. on an annual basis, overall inflation declined to 7. 6 percent in january 2016 from 8. 4 percent in the previous month. over the same period, core inflation reduced to 7. 1 percent from 7. 6 percent. similarly, overall monthly inflation declined to 0. 1 percent in january from 0. 2 percent previously. what is more | , our latest financial stability soundness indicators for the period ended december 2015, indicate that uganda β s banking sector continues to be resilient and financially sound. the supportive financial infrastructure also remains safe and efficient. the banking sector registered a strong asset and capital base with the capital adequacy ratio of 18. 6 percent as of december 2015, far higher than the statutory minimum of 8 percent. the sector β s asset quality remains good with the ratio of non - performing loans to total loans recorded at 5. 3 percent during the period under review. bis central bankers β speeches just like the bustling economic activity of the bugolobi area established the right context for a new stanchart branch here ; the timing of this branch opening is a resounding endorsement of the durability of price stability and financial sector soundness in the ugandan economy. it is the synergetic combination of forward - looking and pre - emptive monetary policy, through our inflation targeting lite monetary policy framework, together with risk - based regulation and supervision of banks as well as macroprudential financial stability management that have enabled the bank of uganda to foster the evident price and financial sector stability. in this effort, we acknowledge the supportive fiscal environment that has been established through implementation of the public finance management act. the institutional framework exists, to ensure long - term macroeconomic stability in uganda. the public has good grounds to have confidence in the economy ; just like standard chartered is demonstrating by expanding its branch network today. this is the sort of stability that alan greenspan advocated. with these few remarks, let me conclude by congratulating the shareholders, board of directors, management, and staff of standard chartered bank uganda for opening a branch in this village mall of bugolobi. i encourage you to use your growing branch network as well as technological innovation to boost financial inclusion and take advantage of the imminent introduction of bancassurance, agency banking, and islamic finance. it is now my honour to officially open the bugolobi branch of standard chartered at the village mall. i wish you great success at this new location. thank you for listening to me. bis central bankers β speeches | 1 |
yi gang : speech at bank of thailand - bank for international settlements conference speech by mr yi gang, governor of the people's bank of china, at the bank of thailand - bank for international settlements conference " central banking amidst shifting ground ", bangkok, 2 december 2022. * * * distinguished governor sethaput suthiwartnarueput, general manager agustan carstens, president christine lagarde, governor philip lowe, governor perry warjiyo, professor raghu rajan, good morning! on behalf of the people's bank of china, i would like to extend my sincere congratulations to the bank of thailand on its 80th anniversary. it gives me great pleasure to speak at this conference. i would like to take this opportunity to say something about growth and inflation. i recall that about one or two years ago, we were still debating whether the inflationary pressure was transitory or entrenched. since the beginning of this year, however, most advanced economies started tightening monetary policies. many central banks are hiking interest rates aggressively at a much faster pace than previous tightening cycles. and also, many emerging markets and low - income countries have seen pressures of local currency depreciation, capital outflows and inflation at the same time. meanwhile, indicators such as mortgage rates and pmis throughout the world show that the likelihood of a slowdown or a recession sometime next year is on the rise. central banks are faced with a delicate balancing act of fighting inflation and keeping the economy growing at the same time. as for china, our cpi right now is about 2 %. this is particularly due to a bumper harvest in grain and stable energy prices. our gas and oil prices follow global trends. our electricity prices have basically been stable since the beginning of the year. looking for next year, the inflation forecast is in the moderate range. china's growth rate, however, is right now somewhat slower than expected due to covid and other factors. our third quarter growth rate is 3. 9 % on a year - on - year basis. but as you see, we have a pretty accommodative monetary policy in place to help with economic recovery and maximize employment. and our focus is growth right now. we recently cut the required reserve ratio ( rrr ) by 25 basis points, and also led the market interest rates lower a little bit. on top of its aggregate dimension, our monetary policy also has a structural side that is providing much needed support to | , investigative and independent media. thirdly, the judiciary, despite its many weaknesses given where we come from, is independent and is making its contribution towards the respect for the law by all of us. issues are being attended to as far as the transformation of the judiciary both in terms of form and content is concerned. progress in this regard is promising as the government and the judiciary are hard at work to achieve this historically fundamental objective. the respect for the judiciary really demands that the authorities must not keep their eyes off the transformation ball. but whatever the outcomes of this process, the end result must be to protect and enhance the independence and respect for the judiciary. fourthly, we have in south africa policies and laws that respect, protect and understand the fundamental role of private property rights in the economic development of our society. those who a couple of years ago doubted the positive role of private property in society and its role in the economy are slowly coming to the conclusion that people β s rights in private property are prerequisites for promoting investment and certainty that one β s investment today can be protected by law, with the courts available to enforce it and thus confident to grow businesses whether industrial or agricultural. there are still many countries on our continent which should still need to improve private property rights in order to give surety and confidence to investors. fifthly, there is in this land of hope and opportunity a vibrant culture and entertainment industry which is vital in any society. music, dance, theatre, museums and other places to visit and enjoy. we are even beginning to see the entry by black dancers into the ballet schools and companies. even i, coming all the way from rural limpopo, now appreciate la traviata! so it is not just about soccer and rugby. sixthly, this is a normalising society where challenging issues are looked straight in the eye, in particular race, gender and the development of a black business class. finally, the population expects and demands to be heard at every turn. expectations are justifiably high for housing, clean water, good public schools, good health services, good roads and streets, including traffic lights that work, safety and security, employment opportunities, the fairness of the justice system and the rest. there is demand for delivery everywhere. the public authorities and private companies are kept in check all the time. our society is moving ahead indeed. of course with demands for socio - economic needs also come responsibility to care and look after that which has been | 0 |
caribbean β s growth strategy. these are the eccb debt, growth and development task force, the world bank β s caribbean growth forum, and the imf β s group on small states. we need champions. the uwi is one such regional champion and well positioned to drive the knowledge and innovation - based model of growth which principal sankat spoke about in his welcoming remarks. trinidad and tobago is another such champion, over the last two years, we have been actively championing the case for small states in the halls of international financial community. we are now seeing a new awakening and awareness of this issue from global policymakers, especially at the imf and the g - 20 presidency. second, we need to consider developing a regional approach to sovereign debt restructuring. with the exception of guyana and haiti, all other caribbean countries are considered either not poor enough and / or not severely indebted enough to access traditional international debt restructuring and relief mechanisms such as the enhanced heavily indebted poor country ( hipc ) initiative and the multilateral debt relief initiative ( mdri ). this leaves fiscal consolidation as the only option. however, the degree of fiscal austerity necessary to stabilize and eventually reduce the caribbean β s public debt overhang is neither socially nor politically feasible. while a few caribbean economies have engaged in ad hoc sovereign debt restructuring operations, sometimes more than once, these have not yielded lasting gains. further work is needed to assess under what conditions innovative, debt - based instruments can generate additional regional resources for growth and development. third, we need to seriously consider tapping into the wealth of the caribbean β s very own large, highly educated diaspora. the minimum size of the caribbean diaspora is estimated at around 3. 5 million people, or more than one - fifth of the region β s population, whose annual savings amount to over 15 per cent of the region β s gdp. the caribbean β s diaspora pool therefore represents a potential alternative source of long - term funding. diaspora bonds are viable instruments which enable the region to borrow from its diaspora community. for diaspora investors, these bonds offer the opportunity to help their country of origin while also providing an investment opportunity. finally, we need to consider a regional approach to managing risks arising from financial integration in the caribbean. growing cross - border linkages requires central banks and other regulators to strengthen arrangements for crisis management, develop mechanisms for early coordinated intervention in cross - border institutions, and review adequacy of deposit insurance schemes. in closing, ladies and | 3 - 4 % 15 - that is not where we are today. as you can see, we are certainly willing to reflect critically on monetary policy. but let me add that we also need to prioritise. we have been suffering from a recession provoked chiefly by a collapse in confidence, driven by serious policy uncertainty. we have been downgraded by all the major ratings agencies, and we are barely clinging to investment grade status for our rand - denominated debt. the ratings agencies tell us that the major policy pillar that supports the south african investment case is our monetary policy framework. why then, in this environment, would you want to make the discussion about changing the monetary policy framework? as a matter of science, there are no settled questions and more research is always appropriate. as a matter of policy, this focus seems misguided. central bank accountability what about accountability? our fundamental purpose, as with the other parts of south africa [UNK] s system of government, comes from the constitution. our job is to figure out a monetary policy framework that delivers on this mandate. in line with many other countries, we use an inflation target. we identify the precise inflation target after consultation with national treasury. this is as transparent to the public as it can be. no one can give the sarb secret instructions. our mission is in plain view, and the evidence for judging us is independently produced and for details, see β box 4, south african inflation : an international perspective [UNK] in the monetary policy review, published by the sarb in october 2016, available at http : / / www. resbank. co. za / lists / news % 20and % 20publications / attachments / 7504 / mproctober2016. p df. page 12 of 17 publicly available, in the form of the consumer price index published by statistics south africa. of course, this is not the only way in which the sarb is held accountable. our other roles and powers, such as bank supervision and financial stability, are assigned to us by laws passed by parliament and signed by the president. we submit our annual report to parliament. furthermore, the governor and the deputy governors are appointed by the president following consultation with the minister of finance and the sarb [UNK] s board of directors. 16 this system is designed to create the space for the sarb to make good decisions while maintaining democratic accountability. if you believe that the sarb is so independent that it can ignore the | 0 |
a central bank can and cannot do in order to get japan's economy back on track. in exploring the boundary between what a central bank can and cannot do, we have tried to find the right boundary by not being shackled by precedents, thinking hard, and acting with courage. even after short - term interest rates reached virtually zero percent, we adopted a new framework of quantitative easing and have been providing ample liquidity. this was unprecedented in the central bank history. in addition, we also came up with an extremely unusual measure for a central bank last fall, namely the direct purchase of the shareholdings of banks in the interests of financial system stability. i am nevertheless aware that voices have been heard calling for further efforts on the part of the bank of japan for revitalizing japan's economy. and, let me assure you here that we are committed to making the most of our wisdom and courage to further explore what we are able to do and to carry it out. thank you for your attention. | the april 2018 outlook report, the real gdp growth rate is projected to be 1. 6 percent for fiscal 2018, and 0. 8 percent each for fiscal 2019 and 2020. let me explain the outlook in detail by major component. first, business fixed investment is likely to continue increasing. this is because, in a situation where extremely stimulative financial conditions are maintained, fixed investment will be positively affected by an improvement in corporate profits, the materialization of the effects of projects conducted under the fiscal investment and loan program as well as the effects of investment - enhancing tax incentives, and a moderate improvement in growth expectations. specifically, an increase is likely to be seen in investment such as, ( 1 ) that intended for domestic capacity expansion in line with the economic expansion ; ( 2 ) that related to the 2020 olympic games and urban redevelopment projects ; ( 3 ) that aiming at improving efficiency and saving labor in order to deal with, for example, the labor shortage ; and ( 4 ) in research and development for growth areas. private consumption is expected to follow a moderate increasing trend, due mainly to an increase in employee income as well as replacement demand for durable goods, and housing investment is expected to remain more or less flat. exports will likely continue their increasing trend for the time being, as those of capital goods and it - related goods, in which japan has a comparative advantage, are likely to be firm. thereafter, they are expected to continue their moderate increasing trend, due mainly to the improvement in overseas economies. industrial production will likely continue to increase firmly for the time being, and thereafter is projected to continue on a moderate increasing trend. the year - on - year rate of change in the cpi ( all items less fresh food ) is likely to increase toward 2 percent. this is because, although upward pressure of energy prices is likely to wane moderately, firms are likely to gradually shift their stance toward raising wages and prices with the improvement in the output gap, and inflation expectations are expected to gradually rise. looking at the medians of the policy board members'forecasts in the april 2018 outlook report, the year - on - year rate of change in the cpi ( all items less fresh food ) is projected to be 1. 3 percent for fiscal 2018 and - - on a basis excluding the effects of the scheduled consumption tax hike - - 1. 8 percent each for fiscal 2019 and 2020. developments in prices since the release of the april 2018 outlook report have been slightly weak relative to what had | 0.5 |
rational self - interest given the borrower β s situation, since a distress sale or foreclosure at current market prices would generally yield larger losses. earned principal reduction investment firms that purchase delinquent mortgages routinely reduce principal in order to maximize value on these loans. it would make sense for fannie and freddie to do this as well in order to minimize loss of value on the delinquent loans they guarantee. however, i am uncomfortable with the notion that β underwater β borrowers who owe more on their mortgages than their homes are worth should have to go delinquent before they have a chance of securing a reduction in their mortgage debt. i believe we should also develop a program for earned principal reduction for borrowers who are underwater but keep on making their mortgage payments. such a program would strengthen the incentives for mortgage holders who are underwater to continue to stay current on their loans, and reduce the likely number of defaults and reo sales. negative equity is one of the most significant predictors of mortgage default across all types of mortgage products, including when you control for credit scores and level of income documentation. while recent underwater borrowers have not been defaulting at a rapid pace, they are also not prepaying, implying that underwater mortgages remain β at risk β for a prolonged period of time to any adverse shock to the borrower. it is admittedly challenging to predict how underwater borrowers will ultimately perform and this performance will be sensitive to the path of home prices. nonetheless, analysis by my staff that looks at likely borrower behavior over an extended time horizon suggests that without a significant turnaround in home prices and employment, a substantial proportion of those loans that are deeply underwater will ultimately default β absent an earned principal reduction program. one option developed by my staff is for fannie mae and freddie mac to give underwater borrowers on loans that they have guaranteed the right to pay off the loan at below par in the future under certain circumstances, including that the borrowers have continued to make timely payments. for instance, the borrower could be given an open - ended option to pay off the loan at an ltv of 125 percent, and the right to pay off the loan at an ltv of 95 percent after three years of timely payments. the borrower would be protected from further declines in home prices, but in return would give up a portion of any upside from future capital gains on the home via a shared appreciation agreement. note that under this arrangement some of | timothy f geithner : us monetary policy in the global financial environment remarks by mr timothy f geithner, president and chief executive officer of the federal reserve bank of new york, at the japan society corporate luncheon, new york city, 9 march 2006. i would like to thank margaret mcconnell of the bank β s research and statistics group for valuable contributions to this speech. * * * we are in the midst of another wave of global economic and financial integration. this movement toward greater openness and the associated rise in capital mobility offers the prospect of substantial economic gains for the u. s. and the global economy. stronger real and financial linkages across nations have the potential to significantly raise the prospects for long - run world growth. the ensuing development of the market sector in emerging market and developing economies offers probably the most powerful means available for raising income growth and living standards in a very large share of the world β s population. these changes, and the complementary advances in technology, offer the prospect of more productive and stable real economies. the increase in the ties between national financial systems, the greater sophistication of financial markets and financial market instruments and the increase in capital flows across borders, allow risks to be shared more broadly and capital to flow to where the returns are highest, also contributing to stronger and more stable future economic growth. this process of integration has, of course, a range of implications for policymakers. many of these implications are positive, for the benefits of integration over time are powerful and compelling for all economies. in important ways, economic integration may have made the principal job of central banks easier, by contributing to productivity growth and reducing some sources of inflation pressure, at least during the transition when a large share of the working age population of the world is being brought into the market. but the process of change in how economies and financial markets interact also complicates the task of central banks. our understanding of the how these changes affect our capacity to forecast economic activity and inflation and our ability to assess how monetary policy affects the economy almost certainly lags the changes underway. in my remarks today, i will talk about some of the implications of these challenges for the conduct of monetary policy. i will focus on two features of what is happening in the world economy and financial markets today that are among the most interesting and consequential of the many questions we face today in thinking about the changes in the world economy and the task of central banking. these are, first, | 0.5 |
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