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affected by the massive depreciation of the korean won. but they have held broadly steady since this march. this can be put down to the stable movements of the exchange rate and international raw material prices, along with the depressed domestic demand. turning to the current account, we have seen a swing from a deficit of 8 billion dollars in 1997 to a large surplus of some 31 billion dollars for the first three quarters of this year. much of this improvement, though, must be attributed to the sharp reduction in imports, brought about by the subdued domestic demand, which has more than offset the effect of the decline in exports. foreign exchange and financial markets now let us move on to the foreign exchange and financial markets. helped by the large surplus on the current account and the conversion of most of the outstanding short - term foreign debt of financial institutions to long - term obligations, the foreign exchange market has stabilized substantially. usable foreign exchange reserves rose to 45 billion dollars at the end of this october, which was above the year - end target level of 41 billion dollars agreed as a conditionality element of the imf β s standby arrangements. since mid - march, the exchange rate has regained stability, moving in a range of some 1, 300 to 1, 400 won per us dollar. total foreign debt, as defined by the imf standard, has also been reduced by 4 billion dollars since the end of last year. it stood at 151 billion dollars at the end of this august, thanks largely to the considerable contraction in the foreign liabilities of the financial and private sectors. moreover, the environment for the rollover of outstanding borrowings by korean financial institutions has become markedly more favorable in the international financial markets. fresh foreign borrowings, though, are still not so easy. in step with the improved foreign exchange market conditions, the bank of korea has steadily reduced its market intervention rate from a high of around the 35 per cent level in december 1997 to its current 7 per cent. this has brought about a matching decline in market interest rates, particularly since it cut its repo rate by 1 per centage point on september 30. the overnight call rate is running at a level of 7 per cent and the long - term interest rate in terms of yields on corporate bonds is at the 10 per cent level, both lower than prior to the outbreak of the currency crisis. turning to money supply, the bank of korea has essentially maintained a stable monetary policy stance. but, when necessary, it has been prepared to | to put more emphasis on lending performance to small and medium enterprises. iv - concluding remarks the korean economy is now placed in an extremely difficult situation, where previous experience and received wisdom provide little guidance. however, all economic actors fully realize that in order to tackle the problems which led to the crisis, there is no alternative other than swift and intensive structural adjustment. and we are now resolutely and patiently fitting the blocks carefully together to build a sound new economy. the bank of korea will do its utmost to support this structural adjustment, while maintaining monetary stability. of course, to some foreigners, korea β s structural adjustment may appear inadequate or incomplete in some aspects. but may i ask you as informed commentators on the korean economy to have confidence in our resolute determination to carry out thoroughgoing structural adjustment. your counsel and advice in this process will be greatly appreciated. | 1 |
once again fallen significantly, which will further dampen the inflation outlook for a time. however, lower oil prices will stimulate growth globally, and this will influence economic developments in switzerland positively. swiss franc exchange rate movements also impact inflation and the economic situation. the snb remains committed to its mandate of ensuring medium - term price stability while taking account of economic developments. in concluding, let me emphasise that the snb will continue to take account of the exchange rate situation in formulating its monetary policy in future. if necessary, it will therefore remain active in the foreign exchange market to influence monetary conditions. thank you very much for your attention. i will now be happy to answer your questions. bis central bankers β speeches | news conference embargo 14 december 2023, 10. 00 am introductory remarks by the governing board thomas jordan, martin schlegel and thomas moser chairman of the governing board / vice chairman of the governing board / alternate member of the governing board swiss national bank berne, 14 december 2023 Β© swiss national bank page 1 / 6 berne, 14 december 2023 thomas jordan, martin schlegel and thomas moser news conference ladies and gentlemen as chairman of the governing board, it is my pleasure to welcome you to the news conference of the swiss national bank. i would also like to welcome all those who are joining us today online. after our introductory remarks, we will take questions from journalists as usual. questions can also be asked by telephone. monetary policy decision i will begin with our monetary policy decision. we have decided to leave the snb policy rate unchanged at 1. 75 %. banks β sight deposits held at the snb are remunerated at the snb policy rate up to a certain threshold, and at 1. 25 % above this threshold. we are also willing to be active in the foreign exchange market as necessary. inflationary pressure has decreased slightly over the past quarter. however, uncertainty remains high. we will therefore continue to monitor the development of inflation closely. we will adjust our monetary policy if necessary to ensure inflation remains within the range consistent with price stability over the medium term. inflation forecast allow me to address the development of inflation. inflation stood at 1. 4 % in november, and was thus somewhat lower than in the previous months. the slight decrease was above all attributable to lower inflation on goods and tourism services. however, inflation is likely to increase again somewhat in the coming months due to higher electricity prices and rents, as well as the rise in vat. our new conditional inflation forecast is below that of september. in the short term, this is due to the recent lower - than - expected inflation. in the medium term, reduced inflationary pressure from abroad and somewhat weaker second - round effects are resulting in a downward revision. over the entire forecast horizon, the inflation forecast is within the range of price stability ( cf. chart ). the forecast puts average annual inflation at 2. 1 % for 2023, 1. 9 % for 2024 and 1. 6 % for 2025 ( cf. table ). our forecast is based on the assumption that the snb policy rate is 1. 75 % over the entire | 0.5 |
with paybox plus mandate has risen to 48 per cent ( a rise of 11 basis points in ten years ), especially among advanced economies. the shares of loss minimisers3 and risk minimisers4 have remained broadly unchanged. iv. coverage it may be apposite at this juncture to set out some stylised facts about deposit insurance coverage in india and how they compare with the global experience as recently profiled by the iadi5. in india, deposit insurance is mandatory for all banks, including foreign banks. currently, 1, 997 banks are covered, comprising 140 commercial banks and 1, 857 cooperative banks, which are small financial institutions owned and controlled by their members and are community - focused in their operations. according to the iadi's latest deposit insurance survey6, this is the largest number of deposit - taking institutions covered by deposit insurance in the world, second only to the us. the current insurance coverage limit is inr 500, 000 ( approximately us $ 6000 ) per depositor in a bank. expressed as a multiple of nominal gdp per capita, this works out to 2. 9 times as against the global median of 3. 3, but it compares favourably with medians for paybox and risk minimiser dis. on a by - account basis, the coverage ratio in india at 97. 9 per cent is in line with the global median and a little below the latter β 44. 2 per cent as against 47 per cent globally β in terms of value of deposits. v. funding 2 / 5 bis - central bankers'speeches funding for deposit insurance in india is in line with the global central tendency under which 96 per cent of dis are funded by levying premiums on member institutions ( 64 per cent of pre - tax accretion to the fund ). in addition, about 35 per cent of the accretion to the deposit insurance fund ( dif ) came from investment income in fiscal 2022 - 2023. unlike the growing practice worldwide of nearly half of deposit insurers levying differential premiums incorporating additional risk measures β up from 30 per cent in 2010 β a flat rate premium of 0. 12 per cent per annum is levied in india which has been revised from time to time, keeping in view the adequacy of the corporation's dif. the size of the fund, measured by its ratio to insured deposits, at 2. 02 per cent is comparable with the global | in india in a cross - country setting let me begin by providing a brief historical context for the establishment of the dicgc. the idea of deposit insurance was shaped by intermittent bank failures between 1948 and 1960. a deposit insurance act was promulgated by parliament in 1961 to set up the deposit insurance corporation ( dic ), a wholly owned subsidiary of the reserve bank of india ( rbi ), the country's central bank. it was merged with the credit guarantee corporation of india and renamed as the deposit insurance and credit guarantee corporation ( dicgc ) on july 15, 1978 with the mandate of " insurance of 1 / 5 bis - central bankers'speeches deposits and guaranteeing of credit facilities and for other matters connected therewith or incidental thereto ". iii. mandate from its very inception, therefore, the corporation was envisaged as a paybox plus1 institution. the credit guarantee function was discontinued in april 2003 and deposit insurance became and remains the principal function of the corporation. the resolution function resides with the rbi as the regulator of the financial sector. currently, the paybox plus mandate is restricted to the provision of financial support in case of the mergers. more recently, however, this mandate has been strengthened with amendments to the dicgc act in august 2021 which provides for up - front payouts within stipulated timelines. this provision is unique among deposit insurers. the corporation is now liable to make payment to depositors of a bank facing solvency stress up to the deposit insurance limit within 90 days of the bank being placed under regulatory directions that restrict it from discharging its liabilities, i. e., even before liquidation and amalgamation. the insured bank has to submit the depositors list within 45 days. the corporation has to get the genuineness and authenticity of the claims verified within 30 days and pay the depositors who have submitted their willingness to receive the same within the next 15 days. in case the rbi finds it expedient to bring a scheme of amalgamation / compromise or arrangement / reconstruction, the liability of the corporation will get extended by a further period of 90 days. globally too, the mandates of dis have expanded significantly, with the share of paybox 2 entities shrinking. by 2023, it was down to 17 per cent. increasingly, dis have been vested with additional responsibilities, including for financing and resolution, in recognition of their crucial role as participants in the national financial safety net. consequently, the share of dis | 1 |
important changes to our policy statement that upgraded our forward guidance about the future path of the federal funds rate, and that also provided unprecedented information about our policy reaction function. we indicated that, with inflation running persistently below 2 percent, our policy will aim to achieve inflation outcomes that keep inflation expectations well anchored at our 2 percent longer - run goal. we said that we expect to maintain an accommodative stance of monetary policy until these outcomes β as well as our maximum - employment mandate β are achieved, and also that we expect it will be appropriate to maintain the current 0 to 1 / 4 percent target range for the federal funds rate until labor market conditions have reached levels consistent with the committee β s assessments of maximum employment, until inflation has risen to 2 percent, and until inflation is on track to moderately exceed 2 percent for some time. we also stated that the federal reserve will, over coming months, continue to increase our holdings of treasury securities and agency mortgage - backed securities at least at the current pace to - 4sustain smooth market functioning and help foster accommodative financial conditions, thereby supporting the flow of credit to households and businesses. banking initiatives in recent months, the federal reserve has announced several initiatives to support the efforts of our nation β s banks to sustain the flow of credit to households and firms during these challenging times. along with the other federal banking agencies, we have encouraged banks to work constructively with borrowers who have been affected by covid - 19 β offering a customer a responsible loan modification can be a safe and sound banking practice and can help facilitate the economic recovery. 3 turning to some issues of particular importance to small banks, we have provided temporary regulatory relief on the community bank leverage ratio, on regulatory reporting deadlines, and on appraisal requirements. we have also streamlined our bank examinations for small banks. these actions are providing banks with additional time and resources to adjust their operations to prioritize the financial needs of their customers and communities, and to play the vital role of lending to small businesses through the ppp. with regard to actions taken that are relevant for larger institutions, we have adapted our stress - testing framework to better identify the potential effects of the pandemic on the capital positions of our banks. in june, we released the annual stresstest results and an additional sensitivity analysis that explored vulnerabilities of banks to the downside risks to the economy arising from the pandemic. 4 at the same time, to for loan | eli m remolona : welcome message - 2nd digital financial inclusion awards welcome message by mr eli m remolona, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), for the second digital financial inclusion awards ( dfia ) aβ¬ β awarding ceremony, manila, 24 october 2023. * * * citi philippines ceo paul favila ; chairperson of the microfinance council of the philippines gilbert maramba ; founder of card mri aries alip ; fellow members of the national selection committee ; advocates for digital financial inclusion ; our outstanding digital microentrepreneurs and microfinance institutions, special guests, good afternoon and welcome to the bangko sentral ng pilipinas. today, we honor five microfinance institutions and 20 microentrepreneurs under the second digital financial inclusion awards. they have embraced the transformative power of digital technologies to grow their operations and serve their clients. the digital solutions they adopted ranged from e - commerce, social media marketing, and use of ewallets. i can tell you, the national selection committee had a really tough time choosing the finalists. so rich was the pool of nominees. we applaud all the nominees for investing time and resources in digitalization. the bsp values this digital financial inclusion awards. it supports and promotes both microfinance institutions and microentrepreneurs who successfully adopted digitaiization to boost efficiencies and scale up customer services. their initiatives are aligned with the bsp's digital payments transformation roadmap and our national strategy for financial inclusion. under this roadmap, our goal is to convert 50 percent of the total volume of retail payments into digital form and to onboard 70 percent of filipino adults to the formal financial system. so how are we doing? well, the share of digital payment transactions reached 42 percent in 2022 ; account ownership was 56 percent in 2021 ; and 65 percent in 2022. we are gaining ground, but there is still so much more to do. ladies and gentlemen. microenterprises and microfinance improve the lives of so many filipinos, more so when they are digitalized. today's awardees prove this. they are good role models that inspire and inform. i therefore thank our partners from citi, from mcpi and the members of our national selection committee for supporting digital financial inclusion. to our awardees, we thank | 0 |
so many different ways, through good times and bad, to secure the city β s position as the pre - eminent global financial market place. and that, of course, my lord mayor includes the holders of your high office over so many years - and it includes the city corporation. we at the bank have enjoyed tremendous moral and practical - not to mention gastronomical - support in all our efforts to promote the reputation and prosperity of the city, and i hope that you may feel that we have been equally supportive of initiatives that you have taken to the same end. from my perspective it β s been a very warm and constructive relationship which i have no doubt will continue. you, gavyn, have certainly contributed to that relationship during your period in office and i am grateful to you for that. but more than that you have maintained the finest traditions of the mayoralty in the lead that you have given to the city. you have taken on an exhausting - and in this case i really mean exhausting - program - both at home and around the world in promotion of our interests and you have still found time, with the lady mayoress, to entertain us right royally this evening. we are all most grateful to you. so to you all - as i make the transition from who β s who? to who β s he? - i say thank you and farewell until we meet again - as i very much hope we will if ever vanessa and i manage to tear ourselves away from cornwall. i invite you all to rise and to join me in a toast of good health and prosperity to β the lord mayor and the lady mayoress β. | to surplus. perhaps as important, the scale of the differences has grown with more countries running surpluses or deficits of over 5 % of gdp. oil and other commodity inflation is part of the story, of course, but that does not account for the large current surpluses in most of east asia. here strong manufacturing growth resulting from higher labour productivity has not been matched by higher domestic spending so savings have grown ahead of even dramatic investment growth. a deliberate policy of fostering export industrial growth has slowed the rise of exchange rates that would reduce these imbalances. as a result the build - up in eme foreign assets have been held mainly as central bank reserves especially in asian countries ( chart 3 ). in total the foreign assets now held by eme central banks and governments is about $ 7 trillion dollars, which compares with only $ 60 billion gross foreign assets held by the uk government. many emerging economies concluded after the asian crisis a decade ago that they needed bigger liquid reserves in traditional government debt to defend themselves against volatility in financial markets even when that carried the likelihood of a negative return ( taking account of expected exchange the kuwait investment office is the in - house investment arm of the kuwait investment authority ( formerly known as the kuwait investment board ) and was established by sheikh abdullah al - salem al - sabah on 23 february 1953. edmund hillary and tenzing norgay reached the summit on 29 may 1953. these figures include the nics. excluding nics the estimated surplus is $ 596 billion ( 1. 1 % ). latest data show that current account deficits were 5 % of gdp or above not only in the united states but also in spain, greece, portugal, australia, new zealand, uk and iceland. rate movements ). but when the reserves outstripped the levels needed for that purpose, it was natural to look to increase the returns on investment by widening the range of investments. 5 and in the next few years, these current account surpluses are likely to remain high and the build up of foreign assets by governments in oil exporting and asian countries is likely to continue. according to the imf β s forecasts, the combined current account surplus of china and oil - exporting countries will be around $ 800 billion over the next 3 years. and the imf estimates that sovereign wealth fund assets could grow to $ 6 - 10 trillion within the next 5 years. the impact of swfs on financial markets these are huge numbers and swfs have become prominent | 0.5 |
financial stability board ( fsb. org ) or financial stability in focus : the fpc β s approach to assessing risks in marketbased finance | bank of england ; for an assessment of the implications of qt on market functioning see quantitative tightening : the story so far β speech by dave ramsden | bank of england ; for details on the iawg see collaboration toward increased resilience of the treasury market - federal reserve bank of new york ( newyorkfed. org ) ; and for discussions of the central bank toolkit see preventing and responding to dysfunction in core markets - dallasfed. org and a journey of 1000 bank of england circumstances, there are limits to the extent that banks can rely on private markets to monetise non - reserves hqla in a stress. figure 12 : bank of england facilities and daily volumes in selected sterling markets source : bank of england, mifid ii. repo and unsecured daily volumes are for overnight maturity transactions only. there is however another way for banks to monetise their assets, and that is by using central bank liquidity facilities. huge advances have been made in this area since the gfc. 16 as figure 12 shows, uk banks have built up the capacity to borrow over £½ trillion of reserves from us against a range of prepositioned, mostly less liquid, collateral β and they can borrow a great deal more than this against more liquid collateral, including hqla, if the underlying markets freeze. that collateral can be used across most of the bank β s lending facilities, including the weekly index linked term repo facility, the discount window facility, and the contingent term repo facility. we are definitively β open for business. β miles begins with a single step : filling gaps in the central bank liquidity toolkit - speech by andrew hauser | bank of england. 16 for a recent summary see report on the bank's official market operations 2022 β 23 | bank of england. bank of england on the face of it, an aggregate borrowing capacity of £½ trillion is enough to meet most of the outflows in figure 7. so shouldn β t we be considering a radically different setup in which the stock of reserves is relatively small in normal times, but expands rapidly and at scale when needed, via usage of the bank β s facilities? there are three main obstacles to that being a complete answer : - first, while many banks have strong pre - positioning and test usage regularly, some do | the central bank. moreover, the report will also contain signals of likely policy changes in the future along with a general evaluation of the factors influencing inflation and an indepth discussion of general macroeconomic developments. along with the inflation report, summaries of the committee meetings will also be an important tool of communication policy. distinguished guests, as final words, i would like to mention that the inflation targeting regime is not an end in terms of monetary policy, but on the contrary, a component of an uninterrupted β evolution β process. so far, we have tried to strengthen the economy with the help of fiscal discipline and ongoing structural reforms. i believe the independence of the central bank and the enhanced transparency and accountability will be the main tools to cope with challenges as they were in the previous period. i want to conclude by repeating my warm welcome to you all. i hope that you enjoy both the conference and your stay in istanbul. thank you very much. | 0 |
for release on delivery 1 : 15 p. m. est ( 12 : 15 p. m. cst ) january 19, 2023 staying the course to bring inflation down remarks by lael brainard vice chair board of governors of the federal reserve system at the university of chicago booth school of business chicago, illinois january 19, 2023 inflation has declined in recent months, which is important for american households, businesses, and consumers. inflation is high, and it will take time and resolve to get it back down to 2 percent. we are determined to stay the course. 1 financial conditions have tightened considerably over the last year as the federal reserve and foreign central banks have tightened policy. real yields have risen significantly across the curve over the past year : 2 - year yields on treasury inflationprotected securities ( tips ) have risen more than 4 - 1 / 2 percentage points to 2. 1 percent, and 10 - year tips yields have risen more than 2 - 1 / 4 percentage points to 1. 2 percent. short - term real interest rates have moved into decidedly positive territory. 2 mortgage rates have doubled. 3 inflation has been declining over the past several months against a backdrop of moderate growth. yesterday β s industrial production index points to a significant weakening in the manufacturing sector, and the retail sales report points to a further moderation in consumer spending. looking forward, weaker readings on real income, wealth, and sentiment, along with indicators of spending on services, such as the ism services index, point to subdued growth in 2023. 4 real disposable personal income declined, on net, at an annual rate of 4. 1 percent in the first three quarters of 2022, i am grateful to kurt lewis for his assistance on these remarks. these views are my own and do not necessarily reflect those of the federal reserve board or the federal open market committee. for instance, the expected 3 - month t - bill rate is currently 4. 7 percent, 1. 5 percentage points above the 3 - month 3. 2 percent median projection of the 2023 : q1 annualized total pce ( personal consumption expenditures ) inflation rate in the january blue chip survey. in addition, over the course of the past year, investment - and speculative - grade corporate bond spreads over treasury securities have widened by roughly 50 basis points and 100 basis points, respectively ; broad equity prices have declined by 17 percent ; and the trade - weighted dollar has appreciated by about 4 percent on net. the federal | - persistence. and, of course, the reemergence of additional shocks to commodities and intermediate inputs is possible. for a discussion of supply shocks and monetary policy in the context of recent events, see lael brainard ( 2022 ), β what can we learn from the pandemic and the war about supply shocks, inflation, and monetary policy? β summary of remarks delivered as part of a panel at the bank for international settlements annual meeting on june 24, basel, switzerland, https : / / www. federalreserve. gov / newsevents / speech / brainard20221128a. htm. for a description of one path to such an outcome, see andrew figura and chris waller ( 2022 ), β what does the beveridge curve tell us about the likelihood of a soft landing? β feds notes ( washington : board of governors of the federal reserve system, july 29 ), https : / / doi. org / 10. 17016 / 2380 - 7172. 3190. - 9nonetheless, substantial uncertainty remains. further shocks associated with the war and the pandemic are possible. while there has been some improvement in the outlook for activity and inflation in europe, there is uncertainty about the implications of china β s exit from zero covid for global demand and inflation, especially in commodities. turning to the implications for policy, my colleagues and i are committed to restoring price stability. the fomc moved policy into restrictive territory at a rapid pace and subsequently downshifted the pace of increases in the target range at its most recent meeting. this will enable us to assess more data as we move the policy rate closer to a sufficiently restrictive level, taking into account the risks around our dual - mandate goals. in parallel, balance sheet runoff is continuing. even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time to make sure inflation returns to 2 percent on a sustained basis. | 1 |
monetary policy, with the proceeds of the bonds sterilized in a blocked account at the central bank on behalf of government. notwithstanding the gradual pace of recovery, demand for imports of goods and services is quite robust, prompting the central bank to intervene consistently in the foreign exchange market. nonetheless, the country β s gross official reserves remain strong at us $ 9. 4 billion at the end of june 2013, or more than 10 months of import cover. economic outlook ladies and gentlemen, the recent up - turn in domestic economic activity, particularly in the non - energy sector, indicates that economic sentiment is gradually improving and becoming more widespread. bis central bankers β speeches perhaps the most fundamental downside risk to the country β s improving economic outlook relates to the actions of the two largest gas producers ( bptt and bgtt ), who are expected to continue major maintenance operations with significant shutdowns scheduled around september 2013. this is a high probability, high impact event. failure on the part of both the ministry of energy and energy affairs and these two energy companies to reach agreement on minimizing the very sharp supply disruptions in energy output would throw off track the economy β s current growth mode, resulting in close to zero growth or even contraction for the year as a whole. for its part, the central bank has been advancing a financial program of regulatory reform designed to ensure that a crisis on the scale of clico never happens again. i am adamant that marauders at the gate can never again breach the regulatory walls of our fortress at great cost to our citizens and to our economy. we are placing top priority on a successful passage of the insurance bill 2013, which was recently referred to a joint select committee of parliament. the bill introduces best practices in the areas of corporate governance, risk management, consolidated supervision and consumer protection to the insurance industry. among the measures brought by the bill will be the strengthening of the powers of the inspector of financial institutions of the central bank, which is legally empowered to oversee the operations of the insurance industry and also intervene in the sector where it becomes necessary. while challenges remain, a final resolution to clico β s failure seems to be on the horizon. such a development should positively impact economic confidence. with firmly anchored inflation expectations, the central bank is giving more weight to an accommodative monetary stance until a firm economic turnaround is established. however, should the outlook for inflation, growth, or financial stability change, we will take appropriate action. we | group β s assets. in this model, the flow of deposits and policyholders β funds, through rollovers and new business, masked the limited profitability of many of cl financial β s investments. then came the recent international crisis, methanol prices ( a major source of dividends ) declined ; real estate values plummeted and in a climate of uncertainty, the rate of roll - overs and new deposits slowed markedly. this led to liquidity and perhaps solvency problems, the real impact of which is now being assessed. i would want to suggest that the clico / cib crisis represents a case of β systemic failure β from which we all can take invaluable lessons. clearly we need to upgrade our legislation as a matter of urgency. it is hoped that the recent international financial crisis as well as the recent stresses in both the credit union and the insurance industry would convince industry participants of the need for modern legislation to cope with a modern financial sector. two, directors and management need to take seriously their fiduciary obligation to protect depositors β / policyholders β funds. independent directors have a special obligation to provide checks and balances and play a β whistle - blowing role β, if necessary. three, external auditors must also recognize their fiduciary responsibilities and must be held accountable. the self - regulatory bodies must set and enforce the highest auditing standards. that β s the legacy of enron and world com. four, as regulator we need to continue to upgrade our skills and quickly achieve the level of competence in the insurance and credit union regulations as we have achieved in bank regulation. of course, we have been in bank regulation for close to fifty years whilst we have only recently been doing insurance. the clico / cib crisis is a major setback for the financial sector in the region. we have been able to contain the contagion but the challenge of strengthening market confidence and ensuring that the cost to taxpayers remains minimal in the medium term is ongoing. the clico / cib collapse should be a lesson that serves to strengthen our financial system for the next several years. | 0.5 |
. csef, working paper no. 577. 2 celerier c. and matray a. ( 2019 ). " bank - branch supply, financial inclusion, and wealth accumulation ". the review of financial studies, 32 ( 12 ) : 4767 β 4809, 04. bachas p., gertler p., higgins s., and seira e. ( 2021 ), " how debit cards enable the poor to save more ", the journal of finance, 76 ( 4 ) : 1913 β 1957. 3 demirguc - kunt a., klapper l., singer d., and ansar s. ( 2022 ). " financial inclusion, digital payments, and resilience in the age of covid - 19 ", the world bank group. 4 brunnermeier m. k., limodio n., and spadavecchia l. ( 2023 ), " mobile money, interoperability, and financial inclusion ", nber working paper series, ( 31696 ), september 2023. maze r., and gratz s. ( 2024 ), " fast growth and slow policy : a decade of digital credit in kenya ", oxford review of economic policy, 40, 82 - 103. gubbins, p. and heyer a. ( 2022 ), " the state of financial health in kenya : trends, drivers, and implications ", fsd kenya. 5 cantu c., frost j., goel t., and prenio j., " from financial inclusion to financial health ", bis bulletin no. 85. 6 bianco, m., marconi, d., romagnoli a., and stacchini, m. ( 2022 ) " challenges for financial inclusion : the role for financial education and new direction ", banca d'italia, questioni di economia e finanza ( occasional papers ), no. 723. 3 / 3 bis - central bankers'speeches | bis central bankers'speeches | 0 |
taxes introduced with the finance law for 2008 and the anti - crisis decree of last november ( more than β¬6 billion in total ). net of these items, there was a significant fall in corporate income tax. it should be noted that whereas the receipts from the oneoff taxes have basically run their course, the contraction in corporate income tax points to a fall in receipts from the second payment on account at the end of the year. 2. fiscal policy β s response to the crisis countries have responded to the severity of the crisis with discretionary policies to sustain the economy the severity of the crisis has created a vast consensus at international level on the need to accompany automatic stabilizers and monetary policy with discretionary countercyclical budgetary policy interventions. in italy, however, the high level of the public debt limits the scope for increasing the deficit. it remains possible to act through changes in the composition of the budget. it needs to be stressed that the sensitivity of the yields on public debt securities to the conditions of the public finances ( deficit and debt ) tends to increase in periods of turbulence on the financial markets : the yield differential between ten - year italian and german government securities widened in the second half of 2008 to more than 150 basis points and is still very considerable, of the order of 100 basis points. in the future, various factors will tend to increase the average cost of the public debt : the substantial recourse to the market by governments to fund measures for supporting the economy, the recovery of economic activity, and fears of a rise in inflation. in italy, the use of the budget for anti - cyclical purposes has aimed above all, including via administrative channels, to speed up the employment of resources already allocated and direct them in order to support aggregate demand and mitigate the social costs of the recession. the interventions the response to the crisis has consisted primarily in three decree laws, which together appropriated β¬25 billion of resources for the three years 2009 - 11 ( of which β¬17 billion funded by increasing revenue ), and in the draft mid - year budget revision. budgetary action came on top of measures aimed at guaranteeing the stability of the financial system and alleviating firms β liquidity problems. in november 2008 a first package was approved. in addition to several tax reliefs for firms, the package introduced transfer payments to low - income households ( known as the family bonus, which supplemented the social card scheme launched during the previous summer ) ; automatic income stabilizers were strengthened for the two | documents of the budget cycle must provide. the following are especially important for planning purposes : the information needed to construct the budget on an unchanged policies basis, the data on planned revenue and expenditure, and the economic policy objectives set for the subsectors of general government. in the last ten years the targets for the public finances have frequently been missed and the objective of budgetary balance has been repeatedly postponed. this has entailed heavy costs in the management of the present crisis and reduced the scope for budgetary policy action. strengthening the rules and procedures of the budget is therefore of great importance. fiscal federalism must contribute to curbing expenditure the implementation of fiscal federalism offers an opportunity to make the management of public resources more efficient and to rationalize expenditure, while bearing in mind the principle of solidarity. the increase in the proportion of local taxes in the financing of local government expenditure in place of central government transfers and the strengthening of fiscal autonomy by allowing changes to tax rates and bases create a closer link between expenditure and revenue decisions and can lead to greater efficiency. a crucial element of the enabling law passed by parliament in april is the replacement of the historical cost criterion by that of standard costs and funding requirements for the allocation of resources to local authorities. the calculation of these indicators is subject to technical difficulties that are accentuated by the lack of harmonized budgets at the different levels of government and the large territorial disparities between the levels and quality of public expenditure. the prompt approval of the so - called local government code is also of crucial importance for the implementation of the enabling law on fiscal federalism. the plan for achieving expenditure savings by rationalizing and simplifying the different levels of government, so as to exploit economies of scale and avoid useless overlapping, appears highly commendable. the local government code will specify the division of the functions performed by municipalities and provinces, including the identification of those to be considered fundamental for ensuring fiscal equality, reorganize the network of intermediate local authorities ( e. g. mountain communities and consortia of municipalities ), rationalize the provinces, reorganize the peripheral offices of the ministries, streamline municipal and provincial councils, and rewrite the domestic stability pact. a significant increase in the average effective retirement age is desirable in the medium term a significant increase in the average effective retirement age is required. given the sharp rise in life expectancy, a lengthening of working lives is important in order to match the need to curb public expenditure with the need to | 1 |
##ised towards addressing contemporary issues facing the ummah. from ending poverty and hunger to promoting responsible production and consumption ; providing affordable housing ; better healthcare and education β shariah deliberations on islamic finance matters should reflect on the evolving needs of the economy and society. shariah scholars are constantly challenged to have a thorough and sound understanding of other fields of expertise such as economics, law, psychology and technology to formulate well - rounded and pragmatic ijtihad. with shariah scholars at the forefront of multi - disciplinary knowledge, the shariah fraternity can play a more prominent role in the global call for action for the financial sector to better respond to the contemporary challenges facing our world today. closer engagement with wider stakeholders, be it the financial industry, regulatory authorities, central banks and the public sector, has never been more pressing than before. it is the way forward. it is the way to ensure that the islamic finance industry continues to be able to deliver on the intended objectives of shariah. 1 / 2 bis central bankers'speeches transparency of shariah rule - making my second point relates to the importance of transparency of shariah reasoning and credibility of shariah rulings. this will encourage a deeper understanding of shariah requirements and outcomes beyond a compliance mindset. pronouncing a clear and comprehensive hukum is certainly not easy ; shariah deliberations would need to be anchored to a comprehensive and robust decision making approach that captures holistic considerations including legal, risk, accounting, operations and also stakeholder implications. it is equally important that shariah rulings are well - understood by everyone. this calls for an effective communication strategy to advocate the intended outcomes of each rulings and the underlying reasons for each decisions. platform such as this gathering β offers all of us the opportunity to learn and exchange views from each other β s experiences. best practices in shariah methodology and governance can be shared and deliberated to elevate the quality of rulings and stature of shariah advisory authorities globally. connectivity among centralised shariah advisory authorities the final point is on increasing connectivity among centralised shariah advisory authorities to promote mutual respect and knowledge - sharing. islam has flourished with a strong foundation of knowledge, wisdom and tolerance among its scholars. differences in ideas and open discourses to assess the veracity of knowledge β have always been practiced in many islamic societies. while achieving consensus is ideal β full appreciation of differences | always push for a whole life plan as it may result in under insurance. it needs to place more emphasis on a pure protection plan like a simple term assurance which is a more cost - effective way of addressing the protection needs of singaporeans. the insurance adviser plays a critical role here. he or she is the first line of contact with the consumers and wields the greatest influence over what they purchase. he should sell what is appropriate to the protection needs of the customer and not maximise his or his company β s returns. he should always place the interests of his clients above his own. and it is the responsibility of every insurer to ensure that its advisers are properly trained and incentivised. this is especially important for customers from lower - income households where there are competing demands for limited income. otherwise, getting adequate insurance protection will be relegated to a lower priority in a working adult β s life, hence exposing his dependants to risks of the breadwinner β s premature death. 15. the insurance industry should also find ways to reach out to more singaporeans who are either uninsured or underinsured, and be prepared to go beyond the tied agency distribution model. i am pleased to note that over the years, the insurance industry has diversified its distribution channels to include banc assurance and direct sales. i urge the industry to do more, such as working with more employers and associations to offer group term insurance to cover the lives of their employees or their members. though group term insurance does not offer guaranteed renewability like individual term assurance policies, it nonetheless helps to supplement the shortfall in insurance coverage at an affordable rate. 16. given its social mandate and objectives, income should take the lead to address the shortfall in insurance protection. here, i must add that when my insurer notified me, upon my reaching 65, that my term assurance has lapsed, i heaved a sigh of relief that it expired before me! i treated the premium paid as an expense. 17. mas will also play its part in helping consumers make informed decisions when purchasing insurance. it will be working with the industry to enhance transparency in the disclosure of bundled insurance products such as the whole life plan. currently it is unclear how much of the premium paid for a bundled insurance product goes towards providing protection, how much to savings and what the return on the investment is. this will help consumers make a better decision in planning his protection and financial needs. conclusion 18. as you have declared publicly in | 0 |
4, 200 billion. that is β believe it or not β 2Β½ times denmark's gross domestic product. that was what it took to rescue the banking sector and the danes'deposits. we don't want to end up in that situation again! the financial crisis showed that regulation is all - important if we are to have a robust financial sector. but also that regulation has a built - in paradox : in a world without regulation, trust is generally low. so a bank must be extremely strong if customers are to have confidence in it. page 5 of 9 in a world with regulation, trust in the financial system is high. and individual banks may be weak and just free - wheel. for many people β including myself β the financial crisis made it very clear that we had created a system where the banks reap the gains in good times. but when things go wrong, society and the tax - payers are left to foot the bill. in other words : in good times we have capitalism. in bad times β socialism. surely, there is something wrong. if a craftsman or an industrial enterprise is imprudent, the firm will close. owners and creditors will have to pay for the mismanagement and gambles. that is how it should be! also for banks! that is why danmarks nationalbank wants regulation that will allow banks to fail without passing the bill to society and its citizens. and we are moving in that direction. tax - payers should not pay for the banks'spirit of adventure. and for society it is of paramount importance that the financial system functions. that it is possible to borrow. that it is possible to save. that the value of money can be trusted. also during a banking crisis. * * * ultimately it is about making people feel secure. it is not about us who are sitting here in the banking hall today. but about all those outside this room. all those who are at work or at home β or who have gone on holiday. and who may not even know that danmarks nationalbank is 200 years old today. it was certainly a surprise to some of the people in the video shots we just saw. and that is okay β although we have actually done quite a lot to advertise this anniversary. a wish that was also expressed in the video. page 6 of 9 but basically, money and banks should simply function. ordinary people should not have to worry about that. you might say that when we do our work | prosperous. denmark is a small country. we do not have large deposits of raw materials. our wealth was created by exploiting the opportunities the world offers. via international trade. free flows of capital. inspiration from other countries. but we cannot just assume that the door to the world will always be open. in these years, some people want to slam that door. some want to shut off trade with other countries. shut down partnerships. shut out the world. that will not benefit small countries. it will never benefit denmark. over the last 200 years, we have become far more prosperous. in terms of real wages, we are 17 times as rich as we were 200 years ago. we have greater opportunities. this is because we are an open country. page 8 of 9 denmark may be surrounded by water, but we are not an island that is isolated from the rest of the world. we should appreciate the opportunities the world offers us. but we should also be aware that the stable monetary system which we may regard as a law of nature can by no means be taken for granted. we live in an age when fake news and distrust are flourishing. so one of the most important future tasks is to protect danmarks nationalbank's credibility. that requires continued political determination. for who are the greatest losers if the world becomes more closed? if stability is jeopardised? if trust is lacking? the answer is ordinary people, who can no longer trust the value of the money they have earned. that is why danmarks nationalbank should always be a little concerned. even in optimistic times β especially in optimistic times β as this is when we must prepare for the day when dark clouds appear on the horizon. a secure currency for the danes. that has been our aim for 200 years. from the napoleonic wars until today. in that respect danmarks nationalbank is banker to all of denmark. thank you for joining us in celebrating our first 200 years. together we must defend openness. trust. and security and stability. thank you. page 9 of 9 | 1 |
caleb m fundanga : recent economic developments in zambia speech by dr caleb m fundanga, governor of the bank of zambia, on the occasion of the monthly meeting with chief executive officers of commercial banks, bank of zambia, lusaka, 2 april 2004. * 1. * * recent economic developments introduction this brief reviews monetary, economic and financial sector developments during february 2004. monetary developments β’ during february 2004 monetary policy was focused on reducing monthly overall inflation rate to 1. 6 %. net strong revenue inflows complemented with primary auctions of government securities helped to maintain an appropriate level of liquidity. inflation β’ monthly overall inflation slowed down by 1. 5 percentage points to 1. 1 % in february 2004 from 2. 6 % in january. this was 0. 5 percentage points lower than the projection of 1. 6 % for february 2004. the decrease in the monthly overall inflation rate was attributed to the slow down in food and non - food inflation rates to 0. 9 % and 1. 4 % in the month under review from 2. 3 % and 2. 9 % in january 2004, respectively. β’ the slow down in food inflation was attributed to continued ample supply of food items in the market while the drop in non - food inflation was largely due to price declines in rental and fuel prices as well as in prices of transport and communications, recreational and educational services. β’ the annual overall inflation rate fell to 16. 8 % in february 2004 from 17. 4 % in january 2004. this was 0. 2 percentage points below the end - february 2004 inflation projection of 17. 0 %. the annual overall inflation at 16. 8 % was also 6. 1 percentage points below the end - february 2003 inflation outturn of 22. 9 %. broad money β’ preliminary data indicate that broad money ( m3 ) 1 growth slowed down to 1. 4 % ( 8. 4 % in december 2003 ) to k4, 530. 7 billion in january 2004 from k4, 467. 9 billion in december 2003. this growth was 1. 0 percentage points lower than the 2. 4 % recorded during the corresponding period in 2003, but was 0. 4 percentage points above the programmed money supply growth of 1. 0 % for the month. β’ the growth in broad money during the period under review was largely on account of the increase in net foreign assets of the banking system, which increased by 2. 9 % to k2, 364. 9 billion. β’ year - on - | would remain within the projected ceiling and thereby contribute to the anticipated drop in inflation. in view of these expectations, the bank of zambia will continue to implement appropriate monetary policy aimed at containing the growth in reserve money and broad money within the projections. as part of the outlook, there are two important events that will be forthcoming. these are : the upcoming imf mission β’ we wish to inform you that the imf mission will be in the country during mid - april to assess progress made against the staff monitored programme ( smp ) with a view to consider zambia β s return to a prgf. it is therefore, our hope that nothing will be done in the market to reverse the many successes that we have achieved thus far because we all need the programme which will not only lead to the country reaching the much anticipated completion point under the enhanced hipc initiative, but also bring along other benefits, such as, increased supply of foreign exchange in the economy. the country assistance strategy ( cas ) β’ in addition, a country assistance strategy ( cas ) for zambia was recently approved by the world bank board. here too a lot of praise was given to our achievements but with caution as more work needs to be done in our economic programme. the approval of cas for zambia means that some substantial funding will be released beginning soon and will spread over a relatively stretched period. this will help ease the situation given the resource constraints that the country is facing, especially to fund capital and related projects. | 1 |
in the field of retail payments, the degree of the eurosystem β s central banks β operational involvement varies across countries. most central banks provide payment services to public institutions. some central banks also offer processing facilities to commercial banks by participating in private retail payment systems and / or operating an own retail payment system. the completion of the sepa project calls for a specific effort of those central banks that are significantly involved in retail payment operations. they should lead by example, notably by supplying the new european payment instruments to their clients and by ensuring that the retail payment system they operate complies with the interoperability principle enshrined in the sepa project. 2. 2. acting as a facilitator of market and regulatory evolutions turning to the involvement of the eurosystem in payment systems issues as a facilitator of market and regulatory evolutions, it is fair to say that this mode of action has been mainly used in the field of retail payments to support the sepa project. the sepa project was launched in 2002 by the european banking community under the aegis of the eurosystem and the european commission. the banking industry has taken on the responsibility of delivering the sepa products, in particular the specifications of the new european instruments. the european commission, which grants a great importance to the sepa project in so far as the latter contributes to the achievement of the common market and the completion of the lisbon agenda, has elaborated a legal framework for payment services in the european union. it made public, in december 2005, a directive proposal that should be adopted at the european level before being transposed in national laws by 2008. since 1999, the eurosystem β s central banks have been actively promoting, at european and national levels, the establishment of a sepa. they proposed a vision which is now shared by all stakeholders, contributed to a constructive review of the banking community β s deliverables and cooperated with the european commission to address legal and regulatory impediments. while the design phase of the sepa project is almost completed, the next challenge is to ensure that migration towards the sepa is well - organised and delivered. because the starting point in each country is different, migration plans to the sepa will primarily have to be organised locally. this should naturally lead to a further involvement of the eurosystem β s central banks at national level, at least to help co - ordinating the efforts of the wide range of stakeholders. | the founders of the euro had seen the problem and put in place the growth and stability pact. the principles were sound. the framework was adequate. the implementation has been extremely weak. bluntly speaking, peer pressure failed to ensure consistent and rigorous respect of the principles which had been agreed upon. it was, and remains necessary to make a β quantum leap β in economic governance. what did we do? the governments are now trying to address those deficiencies. significant progress has been made over the past year. at the national level, all member states have embarked upon credible public finance consolidation plans that are already bearing fruit. at the eu level, a new framework has been agreed upon. the first pillar is a strengthening of the sgp with a much stronger preventive arm. surveillance over budgetary policies has been reinforced with a more effective prevention / correction of excessive deficits. government debt levels are being better taken into account and sanctions will become more automatic. ideally those european disciplines should be now completed by the adoption, in each member states, of strong national fiscal rules. the second pillar is a new process to monitor competitiveness and, in particular, unit production costs. lastly, member states have agreed on a new euro area framework for crisis management. experience has shown the need to provide temporary financial support to ea member states facing impaired access to market financing, as you know, a new facility, the efsf, was created in may 2010 for a three year period. it has been used to support and finance the greek and irish programs. although nominally set at 440bn its effective lending capacity was in fact limited to 250bn, an amount which may have been insufficient to instill confidence in the markets. last march, an agreement was reached to raise that capacity to an effective 440 bn. member states also agreed on a permanent crisis management framework due to be implemented in 2013 and mainly based on a european stability mechanism ( esm ) with an effective lending capacity of eur 500 bn. that mechanism will have the possibility of bis central bankers β speeches exceptional interventions in sovereign debt primary markets. identical and standardized collective action clauses ( cacs ) will be included in all new euro area government securities, with maturity above one year, from july 2013. their basis will be consistent with the cacs that are common in new york and english laws. significantly, all those mechanisms associate the imf and the european commission β in consultation β with the ecb to avoid relying only on peer pressure between members states and ensure | 0.5 |
looking back on the modest scale of the damage and the remarkable effectiveness of the countermeasures adopted, the conclusion was drawn that the evolution of that crisis had confirmed both the advent of the great moderation and the merits of good policy. however, as already observed, there was much debate then, and there still is today, about whether monetary policy should not pay more attention to financial and real asset price trends and to the pro - cyclical growth of credit and leverage, and in some instances respond decisively to seemingly β excessive β movements. aside from the difficulty of defining what excessive means in practice, it is certainly useful to examine the factors that determine particularly large swings in these prices, just as it is necessary to shed light on the factors that tend to threaten financial stability and disproportionately amplify cyclical fluctuations. many of these factors probably originate not so much in behaviour as in rules and incentives existing in the markets. in the case, for example, of the mortgage loans that triggered the current crisis due to excessive borrowing, two factors surely played a crucial role : ( 1 ) the assumption that the continuous rise in house prices would lower the amount of debt in relation to the value of the underlying asset over time, and ( 2 ) the possibility of obtaining mortgages with loan - to - value ratios of 100 per cent and more. in these cases, and as has long been acknowledged ( for example, with reference to the sharp rise in house prices in the united kingdom recorded in the early 2000s ), it is obvious that it is necessary to resort not so much to monetary policy but to prudential instruments, with limits on the value of collateral that can be used in taking out a loan. the question is why steps of this kind were not taken, quite apart from the failure to use monetary policy ( naturally as a possible second - best instrument ). in the same way, it is legitimate to wonder whether confidence in the ability of financial markets to regulate themselves was not excessive. what role was played, in particular, by the waiving of stricter supervision in many sectors of financial intermediation? this, even disregarding the strength of lobbies and instances of excessive proximity between the supervisors and the supervised. in any event, it is clear that the consequences of a change of trend in the perception and concentration of risks were seriously underestimated, notwithstanding the many analyses and signals that had become available in recent years. excessive deregulation of the financial sphere | presupposes an agreed set of benchmarks and bis central bankers β speeches rules in all the relevant fields. individual economies should not only continue to β keep their own house in order β β which is probably at this point a still necessary, but insufficient condition. they must also be induced to take more fully into account the global effects of their own policies, whose mutual consistency needs to be ensured. to achieve this objective we need a decisive improvement in the governance of the international monetary system, addressing those problems that have hindered its proper functioning. the central issue is, in my view, the need for a more effective process of multilateral surveillance over national economic policies. some steps forward are being taken. the β legitimacy deficit β of international bodies has been at least in part addressed with the agreement on the imf quota reform at the seoul summit of november 2010 ; the very same leadership role taken by the g20 in international economic affairs is a recognition of the need to increase legitimacy and representation. the imf has been given more resources and more incisive monitoring power, for example by making fsaps compulsory for all systemically relevant members over a 5 - year cycle, and is enhancing its traditional machinery for surveillance ( bilateral and multilateral ). in parallel the g20 is proceeding with its own peer review process ( the framework for strong, sustainable, and balanced growth ) to identify objectives for the global economy and the policies needed to achieve them. the evaluation of the mutual consistency of such policies is the goal of the β mutual assessment process β ( map ). the map requires an assessment of the nature and the root causes of impediments to the adjustment of persistently large imbalances and indicative guidelines, composed of a range of indicators, to facilitate a timely identification of imbalances that require preventive and corrective action. this is an essential and, at the same time, a very demanding task. as agreed by the g20, there must be a shift to a more balanced global pattern of demand. some progress in this direction is being made, but important challenges remain. emerging market countries of systemic relevance ought to prioritize structural reforms and greater exchange rate flexibility to strengthen domestic demand ; further fiscal consolidation is necessary in advanced countries, based on growth - friendly measures ; finally, all g20 members should implement product and labour market reforms to boost their potential output. it is also to be welcomed that both the imf and the g20 under the french presidency have started | 0.5 |
, a necessary condition is that its financial system must be deep and wide. and its financial institutions must function as intermediaries to allocate funds effectively and efficiently. in the past, asean relied on external source of funding, mainly from developed countries. at present, however, new polar source of funding has shifted towards asia as well as asean. having well - developed financial system would enable asean to better recycle its surplus capital among its members. for decades, asean has used its banking system to manage resource allocation. banking system worked fine in the past. however, in new and volatile financial environments, asean needs to have both strong banking system as well as well - developed capital and bond markets to better service consumers β and businesses β financing needs. having welldeveloped capital markets can allow financial risks in the economy to be spread out, shared, and more efficiently managed. and, the efficient allocation of financial resources would, in turn, allow asean to have better access to capital and for its goods and services to flow in greater quantity. at the centre of building strong asean finance is ensuring its continued systemic stability and ongoing market developments. in this regard, asean central banks have a clear role in safeguarding price stability and financial institutions stability. on price stability, let me just say that asean generally has a good track record of keeping inflation low. as for financial stability, the framework of policy has moved toward risk - based supervision, and to an adherence to international standards. indeed, many asean countries have significantly advanced efforts in implementing basel ii and fsap, which have fostered a stronger and more balanced financial system with greater transparency. maintaining financial stability also means that asean must be able to withstand the ebbs and flows of foreign capital. but, as small open economies, keeping balances over any length of time is easier said than done. for asean, avoiding capital account crises will become increasingly more important because the more asean trade with each other, the more closely linked our economies are. hence, the more contagion there will be, and the faster and wider will crises spread. fortunately, we have already seen a region - wide move toward a more flexible exchange rate regime, with a disciplined framework in the conduct of monetary and fiscal policies. financial policy becomes more flexible, yet proactive, in dealing with changes in the market conditions and practices. when necessary, a traditional fiscal - monetary policy mix has been augmented by appropriate prudential measures of financial institutions, especially to preem | the associated innovations. still, a number of issues are pending. customer privacy is the most salient one, but there are more challenges : on the demand side, on the supply side and with the regulators. the rest of my talk is organized along this triplet : demand, supply and regulation. i do not have definite answers to all pressing questions related to psd2. what i β ll try to do, is give you a concise impression of issues that need further attention in the near future. 2. psd2 and the demand side : consumers and retailers β’ let β s start with some basics. what is psd2? psd2 is the legal framework for retail payments in the european union. the radical new element of psd2 is attractive for some, and frightening for others. that is : a bank is obliged to give so - called service providers online access to the account of a customer β¦ if β and only if β the customer consents. this is an important proviso. the service providers exist in two types : the ones that initiate payments and the ones that extract and exploit information from bank accounts. such data β on all kinds of transactions β contain commercial value. the collected information can also be redirected to the bank customer as a housekeeping book. both types of service providers will be regulated under psd2. β’ what is the intrinsic demand for innovative payment services? the novelty of psd2 is primarily concerned with payments connected with e - commerce. two facts. first, those payments are still a small portion of the market. right now, only 2 percent of total payments in the netherlands. second, there are already several ways to pay online : through credit cards, by paypal and, in the netherlands, through ideal. what else would you need to become a happy payer? i hasten to say that this question may be rather silly. the story goes that henry ford once sighed : β if i had asked my customers what they wanted, they would have said β¦ faster horses β. paying online in the netherlands is quite easy, also compared to other countries. moreover, already next year, the ideal of 24 / 7 instant payments will be realized for mobile and internet payments. but judging from the excitement in the industry, plenty of new p2p applications are likely to be within reach. β’ what are retailers interested in, as for payment methods? reach, user convenience, conversion time and β last but not least β | 0 |
of water and electricity. this task is now being fulfilled by the bureau of telecommunications and post ( bt & p ). bis central bankers β speeches ladies and gentlemen, i would like to turn now to the best practices that have evolved during the last several years. for effectively regulating the water and energy infrastructure services some form of regulation is needed. best practices in recent years point at the creation of autonomous and independent institutions. this is only possible if there is a political commitment to facilitate this development as the regulatory decision making powers are transferred from the government ( minister ) to an independent regulator, sourced out through a regulatory contract or to an expert panel. the commitment of the government should be shaped in a constitutional and legislative framework. the aim of establishing an independent regulatory board is to encourage efficient, low - cost, reliable service provision, to ensure financial viability and to facilitate new investments. furthermore, it will insulate tariff setting from political opportunism and make decisions more transparent and predictable. one of the constraints of setting up independent regulatory agencies is the institutional capacity. it is often difficult to find a competent institution and staff. in this and next sheet, i will give an overview of the status of energy policies in selected caribbean countries. a number of caribbean islands already have depoliticized the decision making process and instituted regulators. bis central bankers β speeches in barbados β we often mirror ourselves against this caribbean island β a regulatory body exists since the middle of last century. from 1955 till 2001 the public utilities board was responsible for regulation. on january 2nd, 2001, the fair trading commission was established with a much broader mandate than its predecessor. its duties include among other things : determining principles, rates and standards of service for regulated service providers ; monitoring general business conduct ; investigating possible breaches of the acts that it administers ; educating and informing businesses and consumers about the requirements of these acts ; and taking enforcement action when needed. ladies and gentlemen, choosing a regulatory framework for curacao β s energy and water sector is not an easy task. however, we can draw upon international best practices and the experiences of our neighboring caribbean islands to help us making the right decisions. we must keep in mind though that best practices do not mean that we should simply apply these concepts to our environment. we have to adapt them to our own specific circumstances. thank you for your attention. bis central bankers β speeches | be used by the supervised institutions to identify and report unusual transactions to the financial intelligence unit ( mot ). our commitment to deter and detect money laundering and terrorist financing amongst supervised institutions, has also been recognized and highlighted by the imf. in its final report issued in february 2004 on the former netherlands antilles, the imf concluded on page 7 of its report that : ( quote ) β overall the legal and institutional framework for financial supervision meets high standards. it is comprehensive, effective, and to a great extent in line with international standards. the central bank β s staff is highly capable, well trained and dedicated, β¦ β¦.. to perform its functions β ( end quote ). nonetheless, the central bank realized the importance of not becoming complacent. the bank has continued to intensify its efforts by taking the necessary measures to further strengthen its supervisory regime by continuously upgrade the aml & cft requirements in line with international standards. you will certainly hear more about these efforts during your visit. bis central bankers β speeches to conclude, i would to say that significant progress has been made in our jurisdiction over the past years in the fight against money laundering and terrorist financing. it is therefore imperative for the market participants to continue to work closely with us and other competent authorities to combat money laundering and terrorist financing. the central bank is in that respect striving to constantly promote a compliance framework that ensures the soundness and stability of our financial sector and to promote an effective compliance environment that not only deter problems, but also detect problems at an early stage. we are committed to continue to promote an aml & cft regime that is dynamic and constantly adapting to international standards. we wish you all the best with your assessment and want you to know that our staff is available to provide you with any information you need concerning our activities and to answer any inquiry you may have. once again thank you for your support and your commitment to combating money laundering and terrorist financing in the caribbean region. bis central bankers β speeches | 0.5 |
face high costs for their remittances when using traditional methods based on a structure of correspondent entities. an alternative option that is being used, although because of its nature is not possible to have detailed information, are remittances based on cryptoassets. while these remittances may be faster and even cheaper, they are outside of the regulatory perimeter and thus their customers are exposed to several risks ( counterparty, liquidity, operational ). the cross - border use of cbdc would reap the benefits of crypto - based methods, without their risks. certainly, this would require coordination between the central banks involved. a wholesale cbdc may have several benefits β’ cross - border use of a cbdc may be explored as a more efficient alternative for remittances β’ remittances using a structure of correspondent institutions are expensive and usually take time to settle. on the other hand, crypto - based alternative may be more efficient, but they are unregulated and have risks. β’ the cross - border use of cbdc would reap the benefits of crypto - based methods, without their risks. it certainly would require coordination between the central banks involved. on the other hand, some concerns have still not been fully addressed : a. development and management costs of a cbdc, specially a retail cbdc that is available for a large number of people, can be substantial. technical capacity is still not mature enough, and risks of cyberattacks are exacerbated. b. the level of anonymity that the cbdc should have is still a matter of discussion. in digital networks it can be easy to identify anonymous users due to their links to non - anonymous nodes, such as large companies. the public is already frightened by how much sensitive individual information is stored ( nsa, uber, google, facebook β¦ ), it is possible that a cbdc could create anonymity concerns. page 8 of 11 central bank of chile september 2019 c. some of these concerns end up in a discussion about which is the optimum design features : anonymous or pseudo - anonymous? interest bearing? guaranteed convertibility of bank deposits into cbdcs? d. finally, there are some additional risks to take into account : reputational risk if cbdc is not widely adopted by the public, or if privately issued currencies gain more traction ; financial exclusion of the β nontech β persons? even though many cbdc experiences are from developed economies | number of direct and indirect effects on domestic demand, other sectors β activity, the labor market, imports of capital goods and the current account deficit. in the medium term, as these projects mature and the full expansion of the capital stock is completed, the level of imports will be reduced, output and exports will rise, and the growth rate of consumption will stabilize together with personal income. the way the current account deficit is being financed is also important to underscore. earlier episodes of balance of payments crises have typically been associated with high debt and liquidity and currency mismatches, which leave economies vulnerable to abrupt deterioration of international financial conditions. in chile, the present current account deficit is being financed mainly by fdi flows, associated with reinvested earnings and new investments, thus providing more strength to the capital account. despite these factors, we need to remain vigilant because an economic scenario like the present one can favor the incubation of future risks. domestically, a scenario of very dynamic final sales and personal income, low unemployment and high utilization of installed capacity, bis central bankers β speeches can exacerbate the response of domestic demand and further expand the current account deficit. abroad, the present abundance of international funding as a result of expansionary monetary policies in developed economies may facilitate the financing of the external deficit and push asset prices up, at the expense of incubating vulnerabilities for the future. all this means that we must be particularly alert to prevent financial vulnerabilities from incubating, since these situations can lead to higher leverage of households, firms and financial intermediaries, as well as currency and liquidity mismatches. in this regard, one reassuring element is that in recent months there has been a moderation in household indebtedness, which in any case has remained in line with the income trajectory. it is also important to continue to monitor the evolution of key financial prices and their interaction with lending. this is a task that is not confined only to the central bank, but is for all economic and financial policy makers. beyond these risks, in the scenario we consider today to be the most likely, the chilean economy will expand at a pace that is consistent with its trends. inflation will gradually return to 3 % as specific temporary factors that have influenced recent indicators dissipate. let me describe this scenario and the risks identified in some detail. macroeconomic scenario since the last monetary policy report, the chilean economy has continued to show high | 0.5 |
timothy lane : financing commodities markets remarks by mr timothy lane, deputy governor of the bank of canada, to the cfa society of calgary, calgary, alberta, 25 september 2012. * * * introduction good afternoon. i want to thank the cfa society of calgary for inviting me to speak to you today. i would like to take this opportunity to share some thoughts on the role of the financial system in our natural resource economy. in particular, i would like to focus on the changing relationship between the financial system and commodities markets. natural resources are of central importance to canada β s economy and financial system, and nowhere is that more apparent than here in calgary. the development of these natural resources has been powering much of calgary β s β and canada β s β recent economic growth. natural resource industries β including farming, forestry, mining, oil and gas extraction and related industries β are a key element of the canadian economy, accounting for roughly one fifth of our gross domestic product. 1 that share is roughly twice the share of natural resource industries in the united states economy and higher than in most other advanced economies. 2 resources are an even more important feature of canada β s international trade, accounting for roughly half of our exports. we all have a strong stake, therefore, in ensuring that these resources are developed wisely and sustainably for the benefit of all canadians. doing that requires several elements : an appropriate policy environment, flexible labour markets and a reliable transportation network. it also requires a sound and efficient financial system that meets the needs of the resource economy. the financial system is connected to resource development in two main ways. first, it channels the financing needed to develop those resources. canada β s equity markets in particular are heavily weighted toward resources : the tsx venture exchange is one of the world β s primary listing destinations for resource firms, and even the toronto stock exchange is sometimes referred to as β the world β s mining exchange. β bank lending and other financing flows also play an important part. many of you are directly involved in some aspect of this financing. second, the financial system is linked with the commodities markets. here, i mean the intricate web of global markets in which commodities are bought and sold, prices determined, and the producers and end - users of commodities hedge against unexpected movements in those prices. these markets are very important in determining the returns that canadian producers earn for their output, as well as the risks they face. in my remarks today, i would like to address this second aspect : | in the system. it may get further help from easing commodity prices and growth returning in some parts of the globe. our concern on restructuring is more around the fairness of the process. it should address the problem, not merely postpone it. hence, rbi has set out clear guidelines that a second round of restructuring would lead to automatic classification of the asset as non - performing and call for a higher provisioning requirement. ii ) capital adequacy of banks 15. there have been numerous discussions on the need and ability of the indian banks to raise additional capital to support their business, going forward. i would not say that the concerns raised in this regard are entirely misplaced, especially for the public sector banks. the need to shore up capital adequacy would arise on account of pulls from several directions. these include need for higher provisioning requirements due to deterioration in asset quality, phased implementation of basel iii capital norms, capital required to cover additional risk areas under the risk based supervision framework as also the need to expand the business and meet the likelihood of higher credit demand going forward. let me tell you that at present, the capital position of indian banks is comfortable with all of them meeting the extant regulatory requirement comfortably. the capital to risk weighted assets ratio ( crar ) for indian banks under basel iii as at end march 2014 stood at a comfortable level of bis central bankers β speeches 12. 9 per cent. while the ratio for the psbs was lower at around 11. 38 per cent, the ratio in case of private sector and the foreign banks was in excess of 16 per cent. going ahead, the capital position of the banks, especially the psbs, is likely to come under some strain, both in terms of quantity and quality. to meet minimum capital requirements, capital buffers, domestically systemically important banks ( dsibs ) surcharge and impact of increased stressed assets, the government β s contribution to the equity up to march 31, 2019, would have to be to the tune of two lakh forty thousand crore rupees at the existing level of its shareholding in respective public sector banks. this requirement is independent of the risk based capital requirements which the banks might need under the rbs process. it is, however, important to note that this requirement may come down if, going forward, the asset quality improves on account of higher growth and consequently, higher internal retention. notwithstanding the room available to the banks to meet the basel iii timeline, the banks have | 0 |
media and research - speeches the philippines : gearing up for greater heights date : may 29, 2022 occasion : bbva investor roundtable discussion speaker : bsp governor benjamin e. diokno good day, everyone. thank you to bbva for giving us the opportunity to update you on the philippine economy. allow me to highlight our connection with spain. over the years, spain has been an important ally, contributing to our trade growth. spain and the rest of the european union support our initiatives, particularly the build, build, build program, which i will be talking in detail. the philippines has successfully managed the covid - 19 health crisis on the back of strong fundamentals built through decades of structural reforms and sound macroeconomic management. after the pandemic - driven recession in 2020, the economy grew by 5. 7 percent last year and 8. 3 percent in the first quarter this year. we attribute this to much - relaxed mobility and activity restrictions as the country was able to manage the spread of covid - 19. growth in the first quarter was broad - based. on the supply side, all sectors expanded, driven by industry at 10. 4 percent, followed by services at 8. 6 percent. on the expenditure side, growth was driven by 10. 1 - percent increase in private consumption, a stark reversal of 4. 8 - percent contraction in the same quarter a year ago. investments and external trade performed well, too. its latest robust performance has made the philippines the fastest growing economy in the region. the employment picture is close to pre - pandemic level. from a peak of 17. 6 percent in april 2020, unemployment rate was down to just 5. 8 percent in march this year. foreign direct investments reached an all - time high last year. in the first two months of the year, fdis grew by 8. 0 percent to usd1. 7 billion. manufacturing activity has strongly rebounded, with the purchasing managers β index at 54. 3 in april, the highest in four years. all these came on the back of a whole - of - government approach to pandemic recovery. in tandem with the national government β s efforts, the bangko sentral ng pilipinas implemented its own array of covid - response measures. in sum, the central bank has injected over php2. 2 trillion, or approximately us $ 41. 9 billion into the financial system. this is equivalent to about 11. 3 percent of gdp. even | the service area branch managers were asked to have an ongoing dialogue and rapport with the ngos and the shgs of the area for effecting linkage. banks were also advised that shgs, registered or unregistered, which engaged in promoting the saving habits among their members, would be eligible to open savings bank accounts with banks irrespective of their availment of credit facilities from banks. it was also decided that flexibility allowed to banks in respect of margins, security norms, etc., as part of the pilot project for savings - linked loans to shgs would continue. further it was decided that nabard would continue to provide refinance to banks under the linkage project at the rates stipulated by nabard. it was also decided that banks may charge interest on the finance provided to the groups / ngos for on - lending to shgs at the rates indicated by the nabard from time to time. further, the shgs were to be free to decide on the interest rate to be charged to their members, provided the rate of interest was not excessive. while close coordination between the nabard and the rbi characterised the growth of the microcredit movement till 1999, the government of india took an active interest in the subject as evidenced by the successive announcements in the budget speeches of finance ministers since 1999. however, the announcements related essentially to shg programme, except in the budget speech of 2005 where there was a separate and distinct reference to mfis, with a mention of a suitable legislation, though the thrust remains to be the linkage with the banks for providing financial intermediation. the budget speech states : β at present, micro finance institutions ( mfis ) obtain finance from banks according to guidelines issued by the rbi. mfis seek to provide small scale credit and other financial services to low income households and small informal businesses. government intends to promote mfis in a big way. the way forward, i believe, is to identify mfis, classify and rate such institutions and empower them to intermediate between the lending banks and the beneficiaries. commercial banks may appoint mfis as β banking correspondents β to provide transaction services on their behalf. since mfis require infusion of new capital, i propose to re - designate the existing rs. 100 crore micro finance development fund as the β micro finance development and equity fund β, and increase the corpus to rs. 200 crore. the fund will be managed by a board consisting | 0 |
side of the atlantic, the top 1 % of banks hold less than 50 % of excess liquidity. and on the right - hand side you can see that the ten largest banks in the euro area hold just a little more than a quarter of excess liquidity, compared with almost 70 % in the united states. at face value, the euro area β s more even distribution of liquidity suggests that it may be less likely to experience an episode of high interest rate volatility. but there are two features β one of them specific to the euro area β that warrant caution. the distribution of excess liquidity and the two - tier system the first feature relates to the distribution of excess liquidity within and across euro area jurisdictions. on the left - hand side of my next slide you can see that banks β excess liquidity is often much less evenly distributed than at the country level. in italy, for example, the top ten banks together hold 80 % of excess reserves β a concentration level that is, in fact, higher than in the united states. in france, the top 10 banks hold 70 %. on the right - hand side you can see that excess liquidity holdings in the euro area are also highly concentrated in just a few countries. such concentration levels are, in principle, of little concern to policymakers in the presence of a deep and active money market across the euro area β that is, as long as banks with excess liquidity holdings are willing and able to smooth liquidity shortages elsewhere in the system. if there is fragmentation, however, then temporary spikes in interest rates are also possible in the euro area, despite the remarkable excess liquidity levels we are currently seeing. in other words, in the euro area, compared to the united states, it is fragmentation rather than concentration that may make liquidity supply less elastic. the recent introduction of a two - tier reserve remuneration scheme for the excess reserves of euro area banks provides an interesting showcase for just how fragmented our money markets remain today. the scheme allows banks to deposit a pre - determined quantity of excess liquidity β their exemption allowances β at a rate higher than the deposit facility rate. to see the effect of the scheme on money markets, it is important to recall that exemption allowances are allocated as a multiple of banks β reserve requirements. this allocation scheme has led to some banks receiving allowances that are higher than their excess liquidity holdings. specifically, ecb staff calculations suggest that around one - third of exempt | set of responsibilities for which the ssm will draw extensively upon the expertise of national supervisors. the basis for ssm activity will be, as for any other supervisor in the eu, the single rulebook. but this is at a very high level. embedded will be the ecb supervisory manual to install a single supervisory approach with sufficient granularity to overcome a fragmented regulation. at the moment it appears that the ecb will directly supervise approximately 130 banks that are found to be β significant β according to the criteria laid down in the ssm regulation. 5 this is less than 5 % of all active euro area banks which are our counterparts in monetary operations. nevertheless, these cover around 85 % of the total banking assets. what about all the other banks? would it be realistic β or even desirable β for the ecb to supervise 6, 000 additional credit institutions? given also the wealth of expertise at the national level, and the advantages stemming from proximity in supervision, the answer is clearly β no β. an efficient decentralisation of supervisory activities within the ssm will bring about effective decision - making. but does a β two - tier system β imply different treatment? no. the difference between the two groups of banks will concern only the degree of centralisation of supervisory action within the ssm. the β singleness of the ssm β is ensured by applying the same common supervisory approach to all banks : β’ first, the supervisory manual will be binding for all banks under ssm supervision, although some alleviated reporting might be envisageable for less significant institutions. see mersch, y. ( 2013 ), β a regime change in supervision and resolution β, speech at european supervisor education ( ese ) conference, frankfurt, 26 september 2013. the methodology was devised by the ecb. included are at least ( i ) those banks having a total value of assets of more than β¬30 billion, ( ii ) those banks representing more than 20 % of domestic gdp ( unless less than β¬5 billion in assets ), ( iii ) the three most significant banks in each country and ( iv ) those banks receiving direct assistance from the efsf / esm. furthermore, the ecb can, at any time, decide to exercise direct supervision of any other bank if considered necessary. bis central bankers β speeches β’ second, the national supervisory authorities will have to comply with ecb regulations, guidelines or general instructions ; β’ third, the ecb will have access to all data of all | 0.5 |
the law to enhance the independence of the mpc. 11. it was also a decisive stride towards improving governance at the bank. i wanted more transparency and accountability at the level of the mpc and instigated a major review after it had been in operation for four years. the review resulted in two major changes, firstly in the composition of the mpc and, secondly, in the publication of the minutes of the meeting, including the voting patterns of individual members. 12. the establishment of the mpc with its enhanced transparency and accountability made monetary policy gain increasing credibility in the eyes of the public. we complemented our action by developing clear lines of communication with economic agents and adopted an open - door policy to respond to the concerns of the various economic stakeholders including real sector operators, academia, opinion leaders, and consumer associations. i held regular bis central bankers β speeches public consultations through press conferences and public addresses. today, inflation expectations are well - anchored and it has become much easier to interpret and understand monetary policy decisions. the bank has been successful in disinflating the economy and has brought down the inflation rate to less than 4 per cent in 2012 from 10. 9 per cent in april 2007. 13. exchange rate policy many of you will recall that the value of the rupee was in free fall in the years preceding my nomination as governor of the bank of mauritius in 2007, paving the way for a one - way bet against the currency and fuelling unsustainable over - borrowing in rupees. it was clear to me that this would plague the economy with speculative transactions and constrain our move to the next stage of development. exchange rate stability was the necessary condition that we had to satisfy if we were to stand any chance to succeed in realising the vision of our political leadership to build mauritius into a vibrant international financial centre of repute. 14. my stance was to favour a stable currency, given our euro - biased exports and dollar - biased imports and the high exchange - rate volatility witnessed in the international forex market during the global financial crisis. a stable currency would remove foreign exchange risk, thus providing some element of certainty in doing business for both importers and exporters. to pursue this stable exchange rate policy, the bank continued with its methods of adjustment and fine - tuning but never shied away from doing what we assessed was right under the varying circumstances faced by the economy. more recently, the bank has attuned its policy to mit | r basant roi : regulatory and supervisory infrastructure in mauritius address by mr r basant roi, governor of the bank of mauritius, at the annual meeting of the offshore group of banking supervisors, pointe aux piments, 22 july 2003. * * * honourable minister of economic development, financial services and corporate affairs mr colin powell, chairman of offshore group of banking supervisors distinguished guests ladies and gentlemen good morning i am delighted to welcome you to the annual meeting of the offshore group of banking supervisors in mauritius. it is my privilege to welcome mr colin powell who has been the chairman of the ogbs since 1981. i am pleased to note that a seminar on the new capital accord and corporate governance was held yesterday with the collaboration of the financial stability institute. mauritius is a member of the offshore group of banking supervisors as from the time offshore banking activities started here. i wish to stress right at the outset that the bank of mauritius has been pursuing a selective licensing policy with a view to bringing into our jurisdiction players of international repute. the maintenance of a clean international image has always been an overriding consideration. of late there has been mounting demand for tighter surveillance of offshore centres to guard against money laundering and international financial instability. more than ever it is necessary to enhance supervisory co - operation between banking supervisors in offshore financial centres through the implementation of international standards for cross - border banking supervision. the globalisation of financial services companies, coupled with the development in information technology have greatly facilitated movements of funds from one jurisdiction to another. often funds are moved by a β simple click of the mouse. β it is imperative for all jurisdictions to observe acceptable standards of banking supervision. the efforts made in one jurisdiction to combat money laundering can be nullified by the deficiencies and lax regulations existing in other jurisdictions. we fully appreciate the role of the financial action task force ( fatf ) that carried out evaluations of anti - money laundering regimes in different countries. naming and shaming non - cooperative countries does seem to produce the desired results. i wish to express my appreciation of the customer due diligence ( cdd ) document - a joint product of the basel committee on banking supervision and the offshore group of banking supervisors. while the document recognises the cross - border implications of financial transactions, it also favours exchange of information pertaining to customer adoption policies and procedures of financial institutions. the essence of the customer due diligence paper has been included in the revised version of the guidance notes on aml / cft. the bank of | 0.5 |
supervisory authorities during the crisis. however, we may want to examine today if there is a need to further intensify this multilateral cooperation, both in normal circumstances and in times of crisis. first, several ways to strengthen the links between authorities in normal times have already been explored and sometimes tried out in practice. future priorities for further developing financial supervision in the european union have been set out and several instruments to reinforce cooperation between authorities have been identified. at present, we need to further work on the implementation of these measures and to monitor their efficiency. secondly, with regard to potential improvements in the crisis management framework, let me first note that several observers had predicted that the shortcomings in our system would be striking in a crisis situation. similarly, the functioning of our crisis management framework has been tested in crisis simulation exercises on several occasions over the last years and many suggestions have been made to improve it. the crisis that we have been dealing with over the last few months, together with the generally satisfactory functioning of our crisis management framework up to now, obviously force us to take a fresh look at the various suggestions that were made to improve the framework before the crisis arose. however, they do not excuse us from keeping a critical eye on our framework. all suggestions relating to improvements in the supervisory and crisis management framework may at the end of the day call for consideration to be given to making some legal changes and re - distributing responsibilities. whatever changes might be needed, they should always ensure that we have a flexible enough crisis management framework to deal with any kind of crisis, especially as each one is different and has elements that can never be anticipated. and it is essential for authorities to keep the right balance between the allocation of responsibilities in the supervisory and the crisis management frameworks. these two key concerns should obviously remain in the back of our minds when we review the lamfalussy process today. concluding remarks to conclude, and before we start assessing the lamfalussy architecture, i would like to remind you what architecture is all about. in an early essay in the first century ad, the roman architect vitruvius defined the essence of his art as being the design of buildings meeting three different criteria. they first need to be durable and so should be strong, solid and based on sound foundations. secondly, buildings need to be functional and convenient for the people using them. thirdly, buildings need to be beautiful, and should raise the spirits of those who are living or working in them. so | , as you can see, architects need a mix of different abilities, a magic combination of art and science. thanks to this combination, architectural works of art have become a cultural symbol of europe over the years, as demonstrated for instance by the illustrations on our bank notes. similarly, a complex, but nonetheless useful, institutional architecture has characterised european integration. assessing this institutional architecture will require the same architectural skills as those originally needed to set it up. therefore, i would like to wish you today an open and constructive discussion combining both scientific method and the visionary perception that characterised some of the most influential european artists. | 1 |
, the lowest for a generation, and never deviated more than one percentage point from that average. unemployment fell from almost 10 % to around 3 % on the claimant count, its lowest level for almost three decades, and has now been virtually unchanged for twenty months, by far its longest period of stability. the terms of trade moved in britain β s favour, raising our national standard of living. and output has risen in every single quarter since the middle of 1992, something that is true of no other g7 economy. why were the 1990s so successful? and can that success continue? four features of our economy lie behind this improved performance. first, the new monetary framework - based on an explicit target for inflation, a high degree of transparency, and, since 1997, independence of the bank of england made it clear to everyone that monetary policy was, and would continue to be, targeted on maintaining low and stable inflation. second, a substantial fiscal consolidation turned a deficit of 8 % of gdp in 1993 into a sustainable position for the public finances based on a set of clear rules for government debt. third, a continuing programme of supply - side reforms, over a period of 20 years, made it possible to reduce unemployment without generating higher inflation. fourth, although the unexpected twists and turns of the world economy did pose real challenges to monetary policy, especially in the latter half of the decade, those shocks tended to average out over time rather than cumulate in either an upward or downward spiral. in other words, the economic surprises alternated between good one year and bad the next, rather than adding up to β one damn thing after another β. in that sense, lady luck smiled on us. of course, we were not alone in enjoying the 1990s. in the united states growth was so rapid that at least two authors wrote books entitled β the roaring nineties β and another chose the title β the fabulous decade β. in contrast, continental europe experienced slow growth and heart - searching over structural reforms. as with much else, our economic performance lay somewhere between the excited exuberance of the united states and the relative disappointment of continental europe. so the uk experienced a non - inflationary consistently expansionary - or β nice β - decade ; a decade in which growth was a little above trend, unemployment fell steadily, and, supported by the improved terms of trade, real take - home pay rose without adding to employers β costs, thus allowing consumption to grow at above trend rates without putting upward pressure on | from rates of around 15 % in surveys conducted in 1994 - but still well above the cost of financial capital. if uncertainty about inflation creates an option value to waiting, then it will reduce investment. and there is growing empirical evidence that inflation is a key explanatory variable for cross - country differences in investment to output ratios. ( ii ) redistribution of wealth between debtors and creditors. unexpected changes in the price level - the standard of value used to define contracts - produce arbitrary redistributions of wealth. as keynes wrote in his powerful advocacy of price stability in a tract on monetary reform, β we leave saving to the private investor. we leave the responsibility for setting production to the business man. these arrangements have great advantages. but they cannot work properly if the money, which they assume as a stable measuring - rod, is undependable. unemployment, the precarious life of the worker, the disappointment of expectation, the sudden loss of savings, the profiteer - all proceed, in large measure, from the instability of the standard of value β. or, as lenin remarked, the best way to destroy capitalism is to debauch the currency. it is arguable as to whether it is high inflation or serious deflation which results in the greater economic damage. in europe in the 1920s hyperinflation undermined economic and social arrangements, as it has done more recently in latin america. but deflation has proved just as unpopular as inflation. in 274 a. d. the roman emperor aurelian tried to restore the integrity of the coinage which had been adulterated by workmen in the mint. aurelian exchanged good money for bad, and ordered the destruction of accounts drawn up in the devalued currency. in the long run the operation restored the value of money. but in the short run it caused hardship. gibbon, in his decline and fall of the roman empire, observed that β a temporary grievance of such a nature can scarcely excite and support a serious civil war β. unfortunately, taking a different and more keynesian view that in the long run we are all dead, the population at the time rose in insurrection. many of them found that they were dead in the short run as well, with seven thousand soldiers and countless civilians perishing during the suppression of the uprising. so let us consider the costs of wealth redistributions arising from unanticipated deflation. such redistributions can lower aggregate demand. why? since | 0.5 |
mary c nkosi : risk based supervision in malawi speech by mrs mary c nkosi, deputy governor of the reserve bank of malawi, at the official launch of risk based supervision, blantyre, 9 january 2009. * * * the general manager, reserve bank of malawi ; the chairman of bankers association of malawi ; board members of various banks ; chief executives of banks and members of management ; external auditors ; representative of the institute of internal auditors ; representative of society of accountants ; the executive directors - supervision of financial institutions ; corporate services and support services, rbm heads of department from reserve bank of malawi ; officers of bank supervision and supervision of non bank financial institutions ; members of the press ; ladies and gentlemen. accept my warm welcome to this epic occasion and moment in the history of both the reserve bank of malawi and the act of supervision and regulation of the banking industry in malawi. the reserve bank of malawi changes its mode of supervision from the traditional camel based approach to risk based supervision ( rbs ). such changes the world over, have always been clearly marked and remembered as major occasions. authorities such as the federal reserve system of the usa and financial services authority of the united kingdom where much literature and practice on the subject may be drawn had to change at one point in order to improve the way supervision is conducted. the reserve bank of malawi views this course in the same vein : change to make improvements in risk management in banks and supervision of the same by the regulators. risk based supervision entails change of culture in one way or the other because certain things, like risk management can only be done that way now. i will emphasise a few changes that are expected of banks in order to yield and realize full benefits of the risk based supervision initiative. firstly, the role of the board has been clarified and expectations heightened to an extent that the board can not be a peripheral figure of banks any more. through the risk management guidelines, the rbm calls for active board oversight in policy and strategy formulation, review and ensuring that management executes its responsibility or is held accountable. secondly, the governance structure should not impede proper risk management and reporting. where this is the case, it should be addressed as a matter of urgency and priority. thirdly, all risks affecting the bank should be addressed by policy, ( not just major and traditional financial risks ) so that no single risk is over looked. some of you will recall that one of the major findings of the rbs survey which | their financial system is stable, as measured by international standards. from a regional perspective, problems in a domestic financial system often spill over to neighbouring countries, especially if the countries in the region are involved in close economic co - operation, which is one of the primary objectives of the southern african development community. it is therefore important that the region as a whole should ensure that their financial systems comply with international best standards, as this would play a large role in facilitating regional integration. regional integration, as we know, holds a number of advantages for participating countries. firstly, the region benefits from the resultant expansion of trade between member states which will be supported by a simultaneous integration of the financial sector. closer trading links between countries in a region also strengthens their capacity to participate in world trade, allowing countries to become more competitive outside the trading block. cross - border payments and settlements will be facilitated by the removal of unnecessary financial obstructions and constraints. secondly, the elimination of geographic constraints will facilitate the extension of services and the movement of people across borders and finally, optimum use will be made of scarce resources. the co - ordination and sharing of limited resources such as skills, technological infrastructure and financial systems will contribute to a higher rate of economic development for the region as a whole. it is also important from an international perspective, where increasing emphasis is being placed on the financial sector in the global economy, that sadc economies meet international expectations as far as possible in such areas as payment, clearing and settlement systems, banking supervision and monetary policy. the role of the central bank the central bank β s core responsibilities in an economy are the maintenance of monetary stability, ensuring financial system stability and the promotion of the efficiency and effectiveness of the financial system. the maintenance of monetary stability ; this role of the central bank involves the formulation and implementation of monetary policy objectives with the overall objective of achieving low inflation and protecting the value of a country β s currency. a strong relationship exists between monetary and broader financial stability in that financial stability is a prerequisite for the effectiveness of monetary policy, and therefore the monetary stability in a country. the maintenance of financial system stability. the central bank performs a pivotal role in ensuring the smooth and efficient functioning of markets and infrastructure such as the payment system in a country. this role of the bank is multidimensional and includes the following : Β· the provision of physical infrastructure, for example real - time gross settlement ( rtgs ) systems ; Β· the operation of such infrastructure ; Β· mitiga | 0.5 |
guidance and infusion of expertise during the conference. third, i wish to welcome and appreciate the efforts of those that will moderate and lead the discussions during the conference. i expect that their preparatory work, effective leadership of sessions, and animated dialogue on the relevant issues will stimulate and contribute to beneficial sharing of expertise and perspectives on both the benefits and challenges of harnessing fintech. to all delegates, local and from outside botswana, i have no doubt that the diversity in this room will surely enrich and add to the value and benefit of the conference in terms of both inputs into the deliberations and implementable takeaways for policy and regulation, as well as ideas for innovation, with respect to business development and service provision. indeed, the idea of the conference is to propagate and entrench, globally, the broad themes of the bali fintech agenda, which you will get to hear about over the next one and half days. for this reason, similar conferences, led by the international monetary fund, are being held in other regions. the cross - participation by policymakers, regulators and private sector practitioners in these conferences also enriches networking and the sharing of ideas ; thus a common view, globally, about the prospects for fintech and, where there are potential systemic and global challenges, inculcate forward - looking preparations for both localised and coordinated, cross - border mitigation approaches. in this regard, i wish to note that, as a practical approach, the sadc region has established a fintech regional monitoring group comprising representatives from the respective central banks. this is intended to build institutional knowledge of fintech developments on an ongoing basis and, therefore, continually provide the sadc committee of central bank governors with a comprehensive picture of existing and emerging technologies, the application and market penetration of these technologies, as well as the attendant risks. we, therefore, look forward to hearing your thoughts on the broad range of areas that are relevant for balancing fintech opportunities and risks. i acknowledge and fully appreciate, in this respect, that the effort by the international monetary fund to lead the integration of fintech into the global development and policy agenda provides for a useful, knowledgeable and accessible partner to support the domestication of this agenda. having said that, i take it you will agree with me that, while policy and regulation can guide and safeguard, at the end of the day, the more impactful and beneficial aspect of fintech should be on private business activity and associated | of all key players in the economy, including government, parastatals and the private sector. i thank you for your kind attention. | 0.5 |
wu ( 2003 ) show empirically that a two - factor model of the term structure can be closely linked to monetary policy the working assumption here is that u. s. monetary policy is conducted β as if β there were a numerical inflation objective, even though there is no explicit agreement on the fomc as to what that objective should be. castelnuovo, efrem, sergio nicoletti - altimari and diego rodriguez palenzuela ( 2003 ). kohn ( 2003 ) notes that the volatility of long - term inflation expectations in the united states has declined and is similar to that of industrial countries, including those that formally target inflation. for example, the model of erceg and levin ( 2003 ) has that implication. some care must be taken when using inflation - indexed bonds to measure inflation expectations, however. these bonds were introduced in the united states relatively recently, and the secondary market remains less liquid that those for other treasury securities. changes in measured inflation compensation drawn from this market may thus sometimes reflect changes in liquidity or risk premiums as well as changes in market expectations of inflation. fundamentals, but only on the assumption that the medium - term inflation expectations held by market participants are time - varying. all the cited findings apply to recent data, as well to earlier observations. the evidence for asymmetric information and adaptive learning, at least in regard to the fed's inflation objective, thus seems quite strong. implications for central bank communication so far i have discussed why central bank communication is important for financial market efficiency and good macroeconomic performance, and i have presented a few pieces of evidence that suggest that asymmetry of information between the federal reserve and the public may be an important phenomenon. what implications does all this have for the communication policies of the fed? in an ideal world, the federal reserve would release to the public a complete specification of its policy rule, relating the fomc's target for the federal funds rate to current and expected economic conditions, as well as its economic models, data, and forecasts. using this information, financial - market participants would be able to forecast future values of the policy rate and efficiently price long - term bonds and other assets. unfortunately, as stressed by poole ( 2003 ) as well as by chairman greenspan ( 2003 ) in his talk at the most recent jackson hole conference, specifying a complete and explicit policy rule, from which the central bank would never deviate under any circumstances, | ben s bernanke : fedspeak speech by mr ben s bernanke, member of the board of governors of the us federal reserve system, at the meetings of the american economic association, san diego, 3 january 2004. the references for the speech can be found on the board of governors of the federal reserve system β s website. * * * there was a time when central bankers did not talk to the public. montagu norman, the governor of the bank of england for a quarter of a century after the first world war and a highly influential figure in his time in central banking circles, was notorious for his reclusiveness, both personal and professional. according to his biographer, norman lived by the maxim, β never explain, never excuse β ( boyle, 1967, p. 217 ). norman was hardly unique. central bankers long believed that a certain β mystique β attached to their activities ; that making monetary policy was an arcane and esoteric art that should be left solely to the initiates ; and that letting the public into the discussion would only usurp the prerogatives of insiders and degrade the effectiveness of policy. in contrast to this tradition of secrecy, central banks around the world have become noticeably more open and transparent over the past fifteen years or so. policymaking committees have adopted various mechanisms to enhance their communication with the public, including more informative policy announcements, post - meeting press conferences, expanded testimony before the legislature, the release of the minutes of policy meetings, and the regular publication of reports on monetary policy and the economy. this increased openness is a welcome development, for many reasons. perhaps most important, as public servants whose policy actions affect the lives of every citizen, central bankers have a basic responsibility to give the public full and compelling explanations of the rationales for those actions. besides satisfying the principle of democratic accountability, a more open policymaking process is also likely to lead to better policy decisions, because engagement with an informed public provides central bankers with useful feedback in the form of outside views and analyses. yet another benefit of full and timely release of information about policy decisions and their rationales is a reduced risk that market - sensitive information will dribble out through inappropriate channels, giving unfair advantage to some financial market participants. admittedly, for many central banks, including the federal reserve, progress toward greater transparency has come in halting steps and not without trepidation. for example, the decision to announce changes in the | 1 |
##prudential instruments to mitigate systemic risk the first pillar of macroprudential policies is a simple one : more buffers, and with that i mean more risk absorbency. less simple is the discussion about what kind of buffers should be set and which policymaker should be implementing them. when considering systemic risk, a distinction between a cyclical dimension and a crosssectional dimension facilitates the selection of instruments to counter those risk characteristics. the cyclical dimension is related to possible excessive risk taking or risk aversion over the financial cycle. in contrast, the cross - sectional dimension relates to the interdependence structure of the financial system : the interconnectedness of institutions, parallel behaviour and / or common exposures that lead to the rapid spreading of risks. in the near future, operational macroprudential instruments to counter systemic risk have to be developed. to reduce the cyclical component of systemic risk, time - varying capital and liquidity requirements are at the forefront. further instruments are under consideration. to bis central bankers β speeches address the cross - sectional dimension of systemic risk, stricter capital surcharges as well as liquidity ratios for systemically important financial institutions are under discussion in order to increase their resilience and to stabilise their funding. with respect to our macroprudential toolkit, we can report first successes. the countercyclical capital buffer is about to be implemented as the first truly macroprudential instrument. it is at the disposal of the national supervisory authorities in order to dampen excessive credit growth in their jurisdiction. a credit boom is often closely connected to the build - up of system - wide risks. little attention has so far been paid to a novelty feature of the buffer, which can be considered as one of the major improvements of basel iii : reciprocity. this means, for instance, if germany were to set a buffer of 1 % on exposures against domestic borrowers, other jurisdictions would have to impose the same buffer on their banks for cross - border claims against german borrowers. the countercyclical buffer is therefore related to the origin of the exposures instead of the origin of the bank. this principle is essential in order to avoid regulatory arbitrage and to counter effectively the build - up of risks in a specific region or sector. strengthening the regulatory framework by ensuring market functioning and market discipline let me now turn to the second pillar. strengthening the regulatory framework β this is more a question | instruments, the german supervisor bafin is the appropriate body. tight coordination between macro - and microprudential policies as well as between the participating institutions needs to be ensured. this should also extend to the ministry of finance as it has the ultimate responsibility for financial policy and is the representative of the taxpayer. macroprudential authorities need to ensure transparency and clear communication of decisions and decision - making processes. transparency and communication in terms of policy strategy, risk assessment and the use of instruments are indispensable in order to make macroprudential policies comprehensible to financial market participants and the general public. systemic risk does not respect national borders. therefore, it is in our best interests to coordinate our actions in order to mitigate systemic risk internationally. the establishment of the european systemic risk board β esrb in short β is the european answer to this international challenge. the task of the esrb is to assess systemic risk, to issue recommendations β and, should the situation worsen β to issue warnings across europe. recently, the scope of the esrb has even broadened : it will assume a coordinating role for macroprudential policies and guard against protectionism in the regulatory framework. in its work, the esrb should draw on the substantial expertise and analytical capabilities of its members to fulfill its mandate. it is my strong belief that national authorities possess the greatest expertise in the analysis of macroprudential risks. according to the principle of subsidiarity, and because the costs of a crisis are borne on a national level, eu member states need the appropriate authority for macroprudential interventions and the calibration of instruments. now, the eu member states must get their macroprudential policies to work. today β s challenges call for a macroprudential policy which is alert and capable. conclusion let me conclude with a very brief outlook. at the current stage, good macroprudential regulation is more about basics such as defining properly the objective, compiling the efficient toolkit and setting up the competent institutions. one day, this part of the job will be done. then, we will enter a new stage in which good macroprudential policy is more related to conduct and to daily routine. from then on, the foreseeable challenges will more or less correspond to the five famous principles of better bis central bankers β speeches regulation, that is : being proportionate, accountable, consistent, transparent and targeted. i am confident that, in the near | 1 |
mr latter gives an overview of the current monetary policy stance of hong kong address by mr tony latter, a deputy chief executive of the hong kong monetary authority, at the clsa investors β forum in hong kong on 17 may 1999. i should like to say a few words about the present stance of monetary policy in hong kong and its relation to the broader state of the economy. hong kong has a fixed exchange rate against the us dollar. the pros and cons continue to be a focus of debate in some quarters, but i don β t intend to dig over that ground yet again today. suffice it to say that over the past fifteen years hong kong has enjoyed, on balance, remarkable prosperity. i happen to think that the visible and trusted monetary discipline of the exchange rate link has been a decisive contributory factor to that prosperity. of course, one cannot deny that there is some association between the strength of the exchange rate and the level of interest rates on the one hand, and the current recession on the other, but i would caution against adopting too short - term a horizon when drawing conclusions, and i would also suggest that some of the adjustment which we have experienced - for example in property prices - was both necessary and somewhat overdue. perhaps i should also add that the hong kong dollar β s stability after the depreciations of other regional currencies in 1997 probably helped to avert what might have been a spiral of further depreciations, which could have caused greater damage in the region and might even have had more painful eventual consequences for hong kong itself than we have in fact suffered. slide 21 shows the path of the real effective exchange rate since mid - 1997. this is the tradeweighted exchange rate adjusted for differences in movements of consumer price indices. it is one of several possible measures - none of them ideal - of external competitiveness. a movement up the page denotes a loss of competitiveness. the steep loss around the time of the asian crisis in late - 1997 has been partly recovered. the setback in the earlier part of this year arose mainly from the strength of the us dollar. but let β s look at this question in a longer - term perspective. slide 3 shows that in the 13Β½ years from the introduction of the linked exchange rate up to mid - 1997 the real rate appreciated on average by 4 % a year ; in the period since then the real appreciation has averaged 4Β½ % a year. on this basis one might say that | we are scarcely off track at all, from what appears to have been a secular trend of real appreciation of the currency. but others might argue that the structural changes of the eighties and nineties which were consistent with an appreciating real rate because of much more rapid productivity gains in the tradable than in the non - tradable sectors, cannot be repeated, so that the assumption of a continuing secular uptrend is invalid. on that view, the net appreciation over the past couple of years may be deemed to have dragged us away from our preferred path. it is hard to judge where the proper balance of these views lies. i recall how, 15 - 20 years ago, the doom merchants were prophesying the end of hong kong β s long run of growth because we were rapidly losing competitiveness in much of manufacturing. presumably they did not slides are not included in this text document. foresee the remarkable extent to which the service sector would develop as an alternative wealth - generating lynchpin of the economy. now, the next generation of doom merchants is prophesying imminent disaster as competitiveness in certain parts of the service sector appears to have been eroded. will they be wrong again? have they failed to appreciate the true workings of the market economy and comparative advantage? do they not realise how difficult it is to foretell exactly how an economy will evolve, even though the evolution is taking place right under our noses? indeed, as we sit here worrying about it, there are people out there who are busy exploiting niches and opportunities which will mould the future structure of the economy. we can try to facilitate that process, or even to guide particular aspects which we reasonably expect to be important ( eg the cyberport ), but there will always be surprises. in any analysis of competitiveness there is inevitably scope for argument about the appropriateness of the statistics one is using. i believe that in the current hong kong conjuncture the popular measures such as the real exchange rate may have been lagging somewhat behind the recovery of competitiveness that may have actually occurred. business decisions are influenced more by marginal prices and expectations of future prices, than by prevailing average prices ; yet the measure of rentals which enters the cpi is typically based on an average of outstanding contracts and not the price at which new contracts are being struck which have over the past year or so fallen much more steeply. thus, when thinking of business decisions, even assuming that residential rentals are a | 1 |
of risk - weighted assets. a healthier banking sector that stands on a sounder foundation would also be very helpful β to say the least β in the context of setting up the single euro area supervisor. this leads me to the second aspect of my remarks tonight : the progress towards banking union. the progress towards banking union recently, the economist was speculating that europe might be β turning away from its promised β banking union β β and contemplated β banking disunion β. banking sectors that act as regional financial hubs require vigilant supervision. this applies especially to cases were potentially β hot β capital flows on the liabilities side are financing a bis central bankers β speeches growing pool of domestic assets. it has to be ensured that undue investment risks are not taken on the basis of fickle capital. many commentators noted that if only banking union had already been in place, developments in cyprus could have gone different. i think they may have a point. after all, why are we establishing banking union? β’ first, it will break the vicious feedback between weak banks and weak sovereigns ; β’ second, it will help restore the proper transmission of monetary policy ; and β’ third, it will improve the incentives for proper supervision and limit the susceptibility to any prospective regulatory capture. in essence, banking union is a means to fully reap the benefits from european financial market integration, while at the same time containing the risks of financial contagion. currently, we can only talk about the banking union project β we do not have such a union yet. this is why, basically, the same questions are asked time and again, both in europe and over here : β’ where do we stand in the process? β’ and are we getting off course? let me share some thoughts on these issues with you. the rather benign market situation over recent weeks and months seemed to have lulled policy - makers in a false sense of complacency. some wonder whether the enthusiasm and ambition for banking union is waning. voices from some countries seem to suggest a backtracking on the idea of direct esm bank recapitalisation. on the single supervisory mechanism ( ssm ), agreement was reached between the european parliament, the council and the european commission in march. some technical details still need to be clarified. once that is achieved, i expect the ssm regulation to be formally adopted by the council and the european parliament, hopefully around the middle of the year. at the ecb | philip r lane : moving from 3. 75 to 3. 50 - explaining the latest rate decision keynote speech by mr philip r lane, member of the executive board of the european central bank, at the european investment bank chief economists'meeting, luxembourg, 16 september 2024. * * * slides accompanying the speech introduction my aim today is to cover two topics. first, i will briefly explain our decision last week to lower the deposit facility rate β the rate through which we steer the monetary policy stance β by 25 basis points. second, i will outline some considerations that will be covered by the 2025 assessment of our monetary policy strategy. the monetary policy decision based on our assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, our confidence in a timely return of inflation to target is supported by declining uncertainty around our projections, including their stability across projection rounds, and by inflation expectations across a range of indicators that remain aligned with a timely convergence to target. 1 the incoming data on wages and profits have been in line with expectations. the baseline scenario of the latest ecb staff projections foresees a demand - led economic recovery that boosts labour productivity, allowing firms to absorb the expected growth in labour costs without denting their profitability too much. this should buffer the cost pressures stemming from higher wages, dampening price increases. most measures of underlying inflation, including those with a high predictive content for future inflation, were stable at levels consistent with a return of inflation to target in a sufficiently timely manner. while domestic inflation is still kept elevated by pay rises, the projected slowdown in wage growth next year is expected to make a major contribution to the final phase of disinflation towards our target. financing conditions for firms and households remain restrictive, as our past policy rate increases continue to work their way through the transmission chain. credit growth remains sluggish amid weak demand. based on this assessment, it is now appropriate to take another step in moderating the degree of monetary policy restriction. the decision to lower the deposit facility rate ( dfr ) by 25 basis points is robust across a wide range of scenarios. at a still clearlyrestrictive level of 3. 5 per cent for the dfr, the realisation of upside shocks to inflation that would call into question the timely return of inflation to target could be addressed by a slower pace of rate reductions in the coming quarters compared with the baseline rate path that is embedded in the projections. at the | 0.5 |
agus d w martowardojo : the future of asia β s finance β financing for development welcoming remarks by mr agus d w martowardojo, governor of bank indonesia, at the joint imf - bank indonesia conference β the future of asia β s finance : financing for development β, jakarta, 2 september 2015. * * * β’ honorable managing director christine lagarde, the co - host of this conference ; β’ honorable minister bambang brodjonegoro, β’ honorable governors, deputy governors, ambassadors, representatives from regional and multilateral institutions, business community, our colleagues from academics, distinguished panelists, β’ ladies and gentlemen, good morning and warm welcome to all of you. 1. it offers me great pleasures to welcome you to this conference jointly co - hosted by bank indonesia and the imf with the topic of β the future of asia β s finance : financing for development. β the topic is indeed crucial considering wide financial gaps still exist in the region. in this regard, searching for an optimum financing would be challenging in the midst of current circumstances. 2. before i share my views on financing issues, allow me to discuss the global economic development. asia β s finance is now facing great challenges. in the near term, we may still confront an episode of heightened capital flows volatilities as consequences of unfavorable global economic condition. sluggish global economic growth continues to depress production and outlook. strong u. s. dollar following partial u. s. recovery and easing in europe and japan have tested some of asia β s economic buffers. weak commodity price has significantly hurt exports of some key regional economies. and more recently, china β s decision to rejuvenate its moderating growth through exchange rate policy has made the risk of external funding intensified. in fact, the increasing, yet again, global financial volatility, in a tune of 2013 global tantrum, is happening as we are sitting here, and it has led to a pull - back in capital flows from some emerging markets, including in asia. 3. while asia has remained broadly resilient to the risks, and it has led global growth for the past thirty years, its role to support global economic recovery seems to be weakening a little bit. a number of emerging market economies in the region are experiencing a declined economic growth and facing increased financial vulnerability, mostly related to capital reversal. 4. asia definitely needs the right policy mix to secure growth and | . when asean economic community is finally established at the end of this year, we should start thinking beyond 2015, and among ultimate objectives of post - 2015 asean financial integration in my opinion should be the creation of the best ecosystem of financing for development in the region. 15. that said, central banks in asia have challenging tasks, i. e., to balance the need to deepen the financial market and to ensure the financial stability. deepening capital markets and fostering financial inclusion would expand investor base and providing alternative financing. financial inclusion should change the face of finance to become more people - centered, supporting investors with more outlets, small and medium enterprises with more funds to tap, and consumers with mortgages and other credits to smooth consumption. however, we should remain cautious as more dynamic capital market may also invite risks related to commitment and composition of capital flows. distinguished guest, ladies and gentlemen, 16. now allow me to provide you with a glimpse on indonesia. the current administration has put great attention on boosting infrastructure investment to facilitate stronger and sustainable growth. the government in particular places priority on strengthening of physical connectivity, primarily in marine connectivity as well as integration between marine and land connectivity such as railway and digital connectivity. improvement in these nodes will profoundly lower the logistical cost, increasing competitiveness, and lead to cost efficiency across the nation. in the next five years, the government aims to build 5, 000 km of railways, 2, 600 km of roads, 49 dams, 24 seaports and power plants with a capacity of 35, 000 megawatts. 17. on the financing side, the government has committed to conduct fuel subsidy reform. the government β s decision to reduce fuel subsidy in 2014 created a fiscal space of approximately us $ 19 billion for infrastructure investment. furthermore, various measures have been undertaken such as providing fiscal incentives for investment with a better - targeted system, providing social safety net for the poor, continuing the financial deepening program to mobilize domestic savings for private and public investment financing, and increasing private sector involvement through enhancing ppp framework and establishing ppp center. yet, with the immense magnitude of financing needed, more initiative is needed to materialize our plan comprehensively. distinguished guest, ladies and gentlemen, 18. as a final note, i would emphasize that today β s conference is very important as it will discuss the key opportunities for asia β s development financing now and in the future. it is also a good avenue for authorities and private sector to share their bis | 1 |
β s important also that small and large countries alike understand each other β s needs. these needs include meeting national sovereignty objectives and adapting bis central bankers β speeches the regulatory response to local conditions, while also meeting the spirit and desired outcomes of the basel iii standards. small open economies differ from their larger counterparts in several respects : β’ their economies are often less diversified and are more vulnerable to external shocks ; β’ a large portion of their banking system may be foreign owned and regulated by home and host supervisors. their shadow banking sector is usually smaller and less developed than in the larger economies ; β’ they tend to have less sophisticated financial market infrastructures, with limited or no opportunities for local central clearing ; β’ credit risk is often concentrated in just a few sectors ; β’ bank balance sheets are less complex, with a predominance of vanilla banking rather than investment banking ; and β’ there can be a shortage of highly - rated liquid assets, especially when governments run budget surpluses or small deficits, and where equity and corporate bond markets are small and lack liquidity. these differences can affect the way small countries choose to implement global standards. when there β s symmetry between financial market practices, small country regulators usually seek to align practices to global standards, so as to minimise the cost for banking groups operating across jurisdictions. when symmetries aren β t apparent, regulators in small economies seek to use the flexibility in global standards to adapt to local conditions. for some small countries, parts of the global standards have limited relevance or relate to low areas of risk, so their adoption may not be a priority. for new zealand, shadow banking comes into this area β it β s a small sector, which we assess to be low risk. in other cases the alignment of global standards is influenced more by home regulator rules or market imperatives. for instance, requirements for central clearing and trade reporting of otc derivatives may be imposed by the home regulator, or by counterparties, independent of any host supervisor requirement. before concluding, let me make a few brief comments about new zealand β s approach. as a financial regulator, the reserve bank of new zealand generally seeks to align with international standards, but uses national discretion to adjust for local conditions as needed. where we make adjustments we seek to achieve regulatory consistency, mindful also that our approach is : β’ to foster market discipline by stressing self discipline by banks in managing risks, and β’ to avoid supervisory practices that might erode market discipline or weaken the incentives for a bank | indefinitely and all of us wanted to believe that. sadly, we can not, or at least there is no evidence yet that we can. the very fast growth of 1993 and 1994 was the result in part of the one - off productivity gains resulting from the micro - economic reforms of the late 1980s and early 1990s, and in a greater part of the economy having available a large number of unemployed and underemployed people, and unutilised industrial capacity, as a result of the recession of 1991 and early 1992. as these people and this capacity were brought back into productive work, the rate of growth of real output jumped well above its sustainable rate. the rate of unemployment fell very sharply from almost 11 percent to just over 6 percent in little more than three years and, while everybody hopes that unemployment falls further, it is clearly impossible to reduce the rate of unemployment by 5 percentage points every three years indefinitely. as i told the members of the auckland chamber last year, economic growth depends primarily not on monetary policy but on real factors - on how fast the labour force is growing, on how skilled the labour force is, on how much capital that labour force has to work with, on the technology embodied in the capital, on the efficiency of the price system in signalling where capital can be most productively invested, on the nature of regulations and restrictions which inhibit the effective working of the price system, and a host of other factors. prices which are, on average, stable assist the pricing system to work effectively, and thereby help to ensure that investment takes place in the most economically sensible places. prices which are, on average, stable tend to encourage saving, and thereby help to finance additional investment. but stable prices won β t make the labour force grow more quickly, or make the labour force more skilled, or improve the technology embodied in the capital equipment which the labour force uses, let alone make public sector enterprises more efficient ; or improve the quality of the education system ; or move resources out of highly protected sectors into those which can be competitive on international markets ; or improve the marketing of commodity exports ; or even give us east - asian - type savings rates. i would argue strongly that price stability has been helpful to the improved performance of the new zealand economy in recent years, but i have never claimed for a moment that price stability has been the sole reason for our better performance, nor that price stability guarantees us strong growth in the future. in addition to our ability to bring back into productive | 0.5 |
business, held in new york, february 28. gertler, mark, and peter karadi ( 2013 ). β monetary policy surprises, credit costs, and economic activity ( pdf ), β working paper, october. gilchrist, simon, david lopez - salido, and egon zakrajsek ( 2014 ). β monetary policy and real borrowing costs at the zero lower bound, β finance and economics discussion series 2014 β 03. washington : board of governors of the federal reserve system, december 2013. gilchrist, simon, and egon zakrajsek ( 2012 ). β credit spreads and business cycle fluctuations, β american economic review, vol. 102 ( june ), pp. 1692 β 1720. greenwood, robin, and samuel g. hanson ( 2013 ). β issuer quality and corporate bond returns, β review of financial studies, vol. 26 ( june ), pp. 1483 β 1525. hanson, samuel g., and jeremy c. stein ( 2012 ). β monetary policy and long - term real rates, β finance and economics discussion series 2012 β 46. washington : board of governors of the federal reserve system, july. kim, don h., and jonathan h. wright ( 2005 ). β an arbitrage - free three - factor term structure model and the recent behavior of long - term yields and distant - horizon forward this is true even of those models that β following in the tradition of bernanke and gertler ( 1989 ) β incorporate some form of financial market friction. typically, the friction is modeled as something that effectively changes the expected cash flows associated with financial intermediation, but not the net - of - default risk premium earned by investors. bis central bankers β speeches rates, β finance and economics discussion series 2005 β 33. washington : board of governors of the federal reserve system, august. kocherlakota, narayana ( 2013 ). β low real interest rates, β speech delivered at the 22nd annual hyman p. minsky conference, levy economics institute of bard college, annandaleon - hudson, n. y., april 18. β β β β ( 2014 ). β discussion of 2014 usmpf monetary policy report, β speech delivered at the u. s. monetary policy forum, a conference sponsored by the initiative on global markets at the university of chicago booth school of business, held in new york, february 28. stein, jeremy c. ( 2013 ). | information or opportunity for consultation, it must bring this deficiency to the attention of the board. sarbanes - oxley act now let's turn to sarbanes - oxley. i am not going to dwell on the specifics of the act. you most likely already know the details of this important piece of legislation including, in particular, the provisions directly affecting attorneys practicing before the securities and exchange commission. what i'd like to focus on is the purpose of the act. at its core, the sarbanes - oxley act is a call to return to the basics 4 / 6 that we have been discussing. simply stated, the current status quo for corporate governance is unacceptable and must improve. this message is applicable to both public and private companies alike and affects everyone within a company, as well as outside professionals hired by the company. as in - house or independent counsel you should fulfill your duties with the competence, integrity, and independence expected of members of the bar and be sure that any material concerns that you have concerning the company's conduct are raised to appropriate levels within the organization. on a broader level, the role for legal counsel, in - house and outside, also is to ensure that the client understands the messages of sarbanes - oxley and that all areas within a company are taking appropriate steps to fulfill their obligations. to accomplish this task, legal professionals must become engaged in the mechanisms of internal controls, ensure that they receive prompt, comprehensive information from management, and have adequate access to the appropriate level of management and the board to be able to offer useful and timely counsel. the role of legal professionals in many recent cases, including the fact patterns i described a little earlier, companies did not take adequate steps to prevent the problem behavior in the first instance, and the companies'accountants, auditors and counsel were not asked to assist, were not able to assist, or were simply not actively engaged in foreseeing, identifying or addressing problems as they developed. as legal representatives to various corporate entities, you are charged with making sure that your clients understand the basic need to put into place strong internal controls, state - of - the art accounting practices, and robust corporate governance systems. you also need to make sure that your clients understand potential corporate and individual liabilities in the event that basic functions are not adequately performed. professionals such as yourselves can do a number of things to participate in effective corporate governance. when a problem rises to the level of a formal enforcement action | 0 |
including foreign strategic investors ). all of these changes will restrict the behaviors of commercial banks to some extent. now commercial banks can afford not to spend too many resources in research on pricing. but with the progress of market - based interest rate reform, pricing will take a large share of commercial banks β resources, and will reflect their core technologies and core competitiveness, consuming a lot of energy and resources. in fact, shibor can play a benchmark. shibor must become a recognized and authoritative interest rate benchmark to replace the benchmark lending and deposit rates set by the central bank. this being achieved, the central bank could gradually retreat from its intervention. simply put, interest rate pricing in fact releases pressure. when clients complain about high interest rate, commercial banks can pass the buck to the central bank because the central bank sets the interest floor. when shibor matures, shibor will become the culprit. such a change though looks simple bears important legitimacy, authoritativeness, and persuasiveness, and can make shibor a recognized and completely authoritative benchmark. what is market - based interest rate? in my understanding, it means deregulation. but if the central bank deregulates deposit rate ceiling and lending rate floor when there is no other reliable benchmark to substitute them, the result could be worse. when is the right timing for deregulation? my answer is when a new benchmark matures. shibor is an important benchmark, on which i have high hopes in the process of making interest rate more marketbased. interest rate floor and ceiling is likely to exist for some period. can the market - based interest rate transformation process start with discount rate linking with shibor? in fact, discount facilities are loans. a breakthrough with discount rate will have far - reaching impact on the market - based interest rate transformation, and provide experiences for future interest rate reform. third, i β d like to move onto the relationship between shibor and product innovation. there are a lot of innovative products based on shibor. hopefully more will emerge. there are also products based on other benchmarks, such as floating rate products based on 1 - year required reserve rate. it is up to product providers as for on which benchmarks they β d like to base their products. but when designing products with a long maturity such as 10 years or 15 years, product issuers shall take into account the uncertainty of the market - based interest rate transformation in the future | and opening policy, the production and transaction activities of enterprises and the banking credit business are under the planned economy. the sole ownership by the state blurred the relationships of interest by different participants of transactions, which not only weakened china β s traditional credit culture, but also influenced the evolvement of china β s traditional credit culture to the modern credit culture. therefore, establishing china β s modern credit culture in line with the development of socialist market economy is of urgent necessity as the reform and opening policy is steadily promoted. the main difference between β modern credit culture β and β china β s traditional credit culture β lies in its unique social, institutional, professional and commercial features. credit is hence no longer solely based on the assessment of individuals of the borrower who they know personally but also on assessment of others that the borrower has no direct contact at all, is no longer solely based on ethics but also on legal and institutional rules, is no longer solely based on information obtained from face - toface contacts but also on the analysis and judgment of a specialized third - party, and no longer is limited to the use of borrower and lender, but also acquires the nature of public goods. these features of modern credit culture develop it into a huge industry and hence have a far - reaching impact on the social and economic life. the chinese government is fully aware of the importance of establishment of china β s modern credit culture. the third plenum of the 16th central committee of cpc has put forward clearly that β efforts shall be made to establish and improve the social credit system, in a bid to form the social credit system supported by ethics, based on property rights and safeguarded by laws, which constitutes necessary conditions for constructing the modern market system β and that β efforts shall also be made to speed up construction of the corporate and personal credit service system in accordance with the direction of improving laws and rules, operating by franchise, commercial management and specialized services. β corporate and personal credit is the foundation and core for social credit. premier wen jiabao has emphasized on several occasions that efforts shall be made to speed up the construction of unified national basic database for corporate and personal credit reporting, to step up credit reporting legislation, to promote development of credit reporting sector, to actively develop specialized credit reporting agencies, to open the credit reporting market step by step by setting priorities, to establish gradually the system of punishment against default on credit, to standardize operation of credit reporting agencies and to strengthen supervision and management of the credit | 0.5 |
in both the february 2020 and 2021 outgoing rotation groups. earnings are weekly and were compared with all members of the outgoing rotation group in february 2020. 2 see the federal reserve banks'small business credit survey : 2021 report on employer firms ( pdf ) fielded in september β october 2020. 3 see the frbs'small business credit survey in note 2 as well as small business credit survey : 2021 report on firms owned by people of color ( pdf ) released on april 15, 2021. 4 data comparisons are for the period between february 2020 and march 2021. 3 / 3 bis central bankers'speeches | president β s trade threats will be negotiated down in the end. but if the situation escalates and markets start to believe a serious trade war is 25 / 26 bis central bankers'speeches imminent, us stock prices could fall further, hurting the us economy, even if president trump ultimately doesn β t follow through with his plans. conclusion the us president β s decision to impose higher trade tariffs represents a significant change in us trade strategy. it has caused widespread fears that a trade war might go unchecked, but markets seem to hope that further escalation will be avoided. the heightened risk of a transatlantic trade war, as a result of rising protectionism, is mainly us driven and it is up to president trump to show his willingness to compromise and up to china to keep taking actions to address us grievances. it would be a collective policy failure if the multilateral trade system were to collapse. as discussed earlier, this multilateral global order is already undergoing a major transition with the emergence of strong regional poles. in light of the evidence provided above, i hope that my maintained hypothesis has convinced you that we are not facing an end of globalisation, but a new kind of globalisation with new regional poles or centres emerging already. in any event, the rivalry between the 20th century β s superpower, the united states, and the 21st century β s emerging superpower, china, both economically and politically, will shape the post - globalisation era and decide the future of the entire world. thank you very much for your attention! 26 / 26 bis central bankers'speeches | 0 |
ensuring investment opportunities with rewarding returns that are also predictable, while at the same time protecting the savings from inflation erosion. retirement benefits schemes thus thrive well in stable financial systems and where these benefits can be invested for gain and also develop the financial market. retirement benefits schemes benefit from central bank in both scores : stable, predictable low inflation ; stable, well - functioning financial sector. the law mandates the central bank to play two overriding roles. i would therefore like to say a word or two on how the central bank in pursuit of the two overriding goals would be beneficial to the retirement benefits schemes. let me start with inflation. the central bank is committed to pursue effective monetary policy that is consistent with the development agenda of the country and the development of an appropriate financial sector in which you play a role. in particular, the commitment is to a prudent monetary policy that keeps a tight lid on inflation. this should help retirement benefits maintain the value of benefits. this is a commitment which the central bank will sustain and thus make a meaningful contribution to the economy and to retirement benefits schemes. this environment allows you decide where to invest your funds and assures you that whatever payoffs you make to beneficiaries, they are not eroded by inflation and are mediated efficiently by the financial sector. to ensure financial sector stability, the central bank provides prudential guidelines and other regulations to guide the operations of the banks and micro finance institutions to provide proper functioning and orderly exit. the bank is also charged with the responsibility to promote an efficient and effective payment, clearing and settlement system. this facilitates the proper working of the financial sector and stable payments systems. note : effective monetary policy requires an efficient financial sector. this has been identified as a sector to lead the way in the vision 2030. i also anticipate that the financial sector will require to develop innovative products to tap into these savings provided by your schemes. i have observed the development of fund managers in the market in the last 5 years has been tremendous β a positive development. i am therefore looking forward to a good working relationship with the industry as we strive to achieve the nation β s overall development goals. thank you. | functioning of the monetary policy transmission mechanism. the securities markets programme is a temporary measure to stabilise market conditions, it is not a vehicle to provide monetary financing to insolvent governments, which would breach treaty provisions. our bond purchases have so far been very small. outright holdings of government bonds in the context of the securities markets programme currently amount to just 3. 8 % of the eurosystem β s total assets. in addition, the interventions are fully sterilised by conducting liquidity - absorbing operations so that overall liquidity conditions and the stance of monetary policy remain unaffected. it is certainly true that with this non - standard measure, the ecb has entered a terrain in which it should not stay longer than absolutely necessary. it is up to euro area governments to address the root causes of the current problems, to develop and implement credible plans to put their public finances on a sustainable footing and thereby restore orderly conditions in sovereign debt markets. in this regard, let me point out that the state of the public finances in the euro area differs across countries. moreover, today β s fiscal imbalances have different causes in different countries. before the crisis, some euro area member states, such as greece and portugal, never managed to balance their books, even in good times. others, such as ireland and spain, did achieve seemingly healthy budget surpluses in good times. but they failed to perceive the extent to which tax revenues were vulnerable to an unwinding of economic imbalances and allowed spending to grow at an unsustainable pace. looking back, it is obvious that the existing eu fiscal framework has not been fully implemented. many countries have violated the rules. peer pressure has not worked. in addition, the reform of the stability and growth pact ( sgp ) in 2005 has weakened the fiscal framework substantially. there has been a lack of enforcement of fiscal discipline at the eu level and insufficient national incentives to comply with the eu rules. against this background, the european council has mandated a task force led by the president of the european council, herman van rompuy, to consider ways to strengthen the bis central bankers β speeches surveillance of budgetary policies and make corrective measures more effective. the task force was also asked to consider an improved surveillance of competitiveness developments and the correction of imbalances as well as the design of an appropriate framework for crisis management. in october 2010, the van rompuy task force presented its final report to the european council, which endorsed its | 0 |
850120 7 / 11 11 / 5 / 2020 too close for comfort? the relationship between monetary and fiscal policy | deutsche bundesbank here, the concept of makeup strategies comes into play. speciο¬cally, under average inο¬ation targeting ( ait ), monetary policy responds to deviations of the average inο¬ation rate from its target, with the average calculated over a certain window that extends into the past. that means, if the rate of inο¬ation has been running below the target, this deviation has to be offset later by rates above the target. inο¬ation expectations would accordingly rise over the short term, and ( ceteris paribus ) the real interest rate would fall. thus, makeup strategies could provide some stabilisation gains, especially when policy rates are close to the effective lower bound. the ait concept appears to offer a tailor - made solution for the current situation. but a monetary policy strategy should be designed for the longer term and ο¬t a variety of economic situations. and, in this regard, ait raises some questions. if inο¬ation had at some time been moving above the target for a number of years, the central bank would have to push inο¬ation not only down to the target but even notably lower, into a range that the central bank currently regards as dangerous. thus, central banks could forgo that and handle ait asymmetrically. this shows that a past - dependent monetary policy can encounter time inconsistency problems. there might be situations in which there are strong incentives to depart from the strategy. and that would come with a price tag : the strategy β s credibility could suffer. added to that, the effectiveness of a makeup strategy hinges on the extent to which people understand it and form their expectations accordingly. [ 21 ] that is asking a lot of market participants, but even more of households and ο¬rms. studies suggest that central banks have had limited success in managing households β and ο¬rms β expectations to date. [ 22 ] but these inο¬ation expectations matter when it comes to pricing on the goods markets : when households make decisions about their purchases, when companies set the prices of their products or when employers and trade unions negotiate wages. as you can see, there are various open points that we have to discuss in depth in our review. for me, it is important that we have a strategy which doesn β t just produce good results in economic models but also works in | economics have made impressive progress over the past few decades β but unfortunately more in parallel than in cooperation with each other. it is only recently that research has switched to focusing more strongly on the interactions between the financial sector and the real economy. talking of progress : the ongoing refinement of statistical - econometric methods and their application in economic research have brought to light significant insights. nevertheless, the crisis has aroused some doubts about the triumphal progress of mathematics in the economic sciences. by contrast, economic historians, who were already thought to be in something of a backwater, are now attracting more attention again. having said that, modern economic historians do indeed also make use of methods of empirical economic research, but look back further into the past than is customary. the book β this time is different β by carmen m. reinhart and kenneth s. rogoff is not only one of the best - selling books in the crisis literature ; it has also been a reminder that financial and debt crises have been a constantly recurring phenomenon for centuries. one classic of financial history, β manias, panics and crashes β by charles p. kindleberger, is rediscovered in every crisis. in it, kindleberger shows in numerous episodes that earlier centuries repeatedly witnessed speculative bubbles and exaggerations on asset markets : tulip mania in 17th century holland, for example, or the south sea bubble and the mississippi bubble in the 18th century, which perhaps triggered the first international financial crisis. kindleberger cites one banker who invested in shares of the south sea company in 1720 as saying that, if the rest of the world takes leave of its senses, one must join in to a certain extent. that is very reminiscent of chuck prince, the former ceo of citigroup, who, in 2007, came up with the legendary remark that β as long as the music is playing, you β ve got to get up and dance β. bis central bankers β speeches there β s nothing new under the sun, one might say in summary. 3. do economists have to rethink? 3. 1 financial market regulation yet, the crisis has also called into question a number of economic policy paradigms. first and foremost, the financial and debt crisis has revealed design flaws in the financial and monetary systems. the liberalisation of the financial markets is now viewed much more critically than before the crisis. confidence in the efficiency of the markets has been severely shaken by the financial crisis and many financial market products have failed to | 0.5 |
coverage ratio ratio ratio * leveraged asx - listed non - financial corporates. interest coverage ratio calculated as ebitda / interest expenses. sources : morningstar ; rba. tighter financial conditions are likely to have had a stronger effect on businesses with higher pre - existing leverage and generally weaker balance sheets, as well as smaller businesses which do not have access to wholesale funding markets. indicators of business financial stress generally remain low, although many businesses are experiencing challenging conditions and the share of businesses entering insolvency has increased since early 2022 ( graph 11 ). this is particularly so for businesses in the construction and hospitality sectors, although this follows a period of very low insolvencies owing to pandemic - related support measures. most of these firms entering insolvency are small businesses with little debt. [ 12 ] rates of non - performing loans have also increased slightly but remain low by historical standards. graph 11 company insolvencies share of total businesses operating, quarterly % % 0. 15 0. 15 0. 10 0. 10 0. 05 0. 05 0. 00 sources : abs ; asic ; rba. r e s e r v e b a n k o f au s t r a l i a 0. 00 conclusion looking across a range of measures shows that monetary policy tightening has led to restrictive financial conditions. however, the extent of this varies across different sectors and also within sectors. households have been responding to higher interest rates. while households with mortgages are significantly affected, and quite directly, consumption growth is weak for most people. smaller businesses, and businesses with higher leverage, are also facing financial pressures, much more so than many larger businesses. notwithstanding these differences, restrictive financial conditions are helping to slow the growth of demand, thereby bringing the level of demand into better balance with supply. this is contributing to the decline in inflation, which is to the benefit of all australian households and businesses. endnotes [ * ] i thank sue black, shan jayawardhana, dmitry titkov, peter wallis, charlie wenk and ada zhou for their great assistance in helping to prepare this speech. i say β one way to gauge β because the stance of monetary policy is somewhat broader than the current level of the cash rate and incorporates expectations for future cash rates as well as the size and composition of the rba β s balance sheet. however, in normal times, the level of the cash rate relative to the neutral rate is a reasonable | janet yellen : strong foundations - the economic futures of kids and communities welcoming remarks by ms janet l yellen, chair of the board of governors of the federal reserve system, at the 10th biennial federal reserve system community development research conference " strong foundations : the economic futures of kids and communities ", washington dc, 23 march 2017. * * * i would like to welcome all of you and thank you for joining us to discuss a set of topics of considerable importance to our country. this is the federal reserve β s 10th biennial community development research conference, dedicated as always to issues of significance to people and communities around the country. the conference is cosponsored by, and includes substantive contributions from, the community development offices of all 12 federal reserve banks as well as the board of governors. that united effort and level of commitment reflects how consequential we consider these issues to be. this conference is intended to present and highlight rigorous research that i am confident will inform how you think about your own work, whether from the perspective of policymaking, community development practice, or research. our last conference, two years ago, explored various aspects of economic mobility, largely among adults. this year, we gather to discuss β the economic futures of kids and communities, β and, in part, i see this topic as an extension of that earlier conversation about mobility. today and tomorrow, we focus on research about the foundation or building blocks for economic success that are laid even before young people enter the workforce and assume responsibility for their own finances. we will hear from leading experts on a range of issues related to how children, youths, and young adults are shaped in ways that may ultimately affect their ability later to productively contribute to the economy and manage their finances. we can learn from what the data and analysis tell us, and our hope is that making use of this information will lead to more effective programs and policies and thus better outcomes. considerable evidence shows that growing up poor makes it harder to succeed as an adult, and new research by the fed likewise shows the strong connection between the typical experiences of poverty in childhood and economic challenges later as an adult. the data come from the board β s latest survey of household economics and decisionmaking ( shed ), which will be published later this spring. 1 in the most recent survey, we asked some of the younger respondents β aged 25 to 39 β to think about their childhoods. we asked those young adults whether, during their childhoods, they found themselves worrying | 0 |
so a possible interest rate hike would represent a return to conventional monetary policy terrain. and it is not so much the timing of the interest rate move that matters as the subsequent interest rate path which the fed follows. what would a return to normal policy rate conditions in the united states mean for the euro area and for germany β s banks? since 2013 we have observed that policy divergence between the united states and the euro area has had two knock - on effects. first, the differential between us and euro - area interest rates has widened ; second, the euro exchange rate has dwindled. this trend gained traction early this year when the eurosystem announced the large - scale purchase of government bonds. that increased the spread between us treasuries and german bunds and sent the euro plummeting against the dollar. so german banks need to remember that even if the fed raises its policy rates, the spell of low interest rates in the euro area looks set to continue. remember what i said just a few minutes ago β sitting tight and hoping for the best simply isn β t an option. and as far as possible exchange rate volatility is concerned, banks might theoretically be exposed to currency risk. two factors play a role here. the first is banks β funding gap in dollars. that gap measures the excess of a bank β s us dollar assets over its us dollar liabilities. the bigger this overhang, the more exposed the bank is to exchange rate risk. the second factor is the bis central bankers β speeches mismatch between the maturities of assets and liabilities denominated in us dollars. this maturity mismatch measures both exchange rate risk and interest rate risk. at the onset of the global financial crisis in 2008, both the funding gap and the maturity mismatch of german banks were very large indeed. when the forex markets dried up and german banks got cut off from us dollar funding, the central banks had to step in and lend a helping hand. since then, the ecb, to name but one, has been providing swap facilities, but the take - up now is virtually non - existent. german banks have reduced their vulnerability since those days, slashing their funding gap by downsizing their stock of us dollar assets. what remains substantial, though, is the scale of the maturity mismatch of their us dollar investments. however, the actual risk exposure here is relatively small, because german banks these days are much better hedged against currency risk | lee hsien loong : asean - the way ahead speech by mr lee hsien loong, deputy prime minister of singapore and chairman of the monetary authority of singapore, at the opening ceremony of the asean finance ministers meeting ( afmm ), singapore, 7 april 2004. * * * finance ministers of asean member states the asean secretary - general ladies and gentlemen let me first welcome all of you to singapore for the 8th asean finance ministers meeting. introduction in 1997, asean was hit by its worst - ever economic crisis. the asian financial crisis dealt a severe blow to all of us. one after another, our countries succumbed to the flight of capital and investors. several economies were on the verge of collapse. before we could fully recover from the crisis, we were confronted again with yet another shock, this time a global economic downturn. the september 11 attacks in america followed shortly. more recently, asean was hit by sars and the avian flu. asean has taken quite a few hard punches in the last few years. although we might have been bruised, we are far from being knocked out. asean countries strived to repair the damage, to recapitalise banking systems, to restructure companies in difficulties, and most importantly to restore confidence. despite the setbacks, asean countries continued to embrace globalization. we continued to look outwards, do our best to attract fdi, liberalise trade, and broaden our linkages with the outside world. now most asean economies are on the mend. economic growth has been strong in many countries. exports are growing, and stock markets are up. as a regional grouping, we have continued to integrate our economies while individually pursuing restructuring. asean is now back on its feet, up and running again. the necessity of deeper integration the need to broaden and deepen economic co - operation is a necessity recognised by asean more than ten years ago. in 1992, asean started the asean free trade area ( afta ) to boost intra - asean trade and establish the region as a common area for manufacturing operations. at that time, the catalyst for greater integration was globalisation. competition was getting tougher. europe was consolidating and integrating itself to form the single european market. in north america, the us, canada and mexico were preparing to form the north america free trade area ( nafta ). nafta provided us manufacturers an attractive, low cost manufacturing base in mexico. mexico too expected to benefit from new investments from | 0 |
##sbursement. in germany, for example, savings banks and cooperative banks have their own schemes in place which are designed to prevent institutions from becoming insolvent in the first place. so even the design of a potential european deposit insurance scheme would be a demanding task. my point is, then, that we haven β t got that far yet. let me now, as promised, explain why concrete considerations on the third pillar have to wait until other and more eminent issues have been resolved. essentially, the argument is about looking beyond ideas that may seem promising in a narrow sense β like edis β and acknowledging that the entire architecture first has to be made ready for this change. one has to realise that the actual impact of a reform hinges on the entire system evolving. in other words : we have to take a system - wide view. for the financial system, we have invested a great deal of time and effort in ensuring that market forces work not just in normal times but also in times of downturn and distress. this environment is conducive not only because of its disciplining effects on both debtors and creditors, giving them a clear and credible framework within which to act. it is also a key ingredient of the overarching architecture : because in a market environment, if individual action is not matched by individual liability, the rules can hardly be deemed sustainable. these considerations need to be taken into account in connection with a european deposit insurance scheme. a new insurance can only be in line with market mechanisms if there is a level playing field from the very beginning. specifically, this means that before entering a phase of mutual insurance or risk sharing, we must ensure that the risks that are already known β let β s think of them as legacy risks β are sufficiently contained. otherwise, moral hazard risks are likely to emerge. what are those risks where banks in the euro area are concerned? certainly, as we know today, the piles of non - performing loans need to be reduced significantly. another risk to be levelled concerns the build - up of bail - in - able capital : the resolvability of banks will be heightened once institutions have met their individual target levels. furthermore, national insolvency laws diverge to an extent that has a significant impact on risks to the national banking sector. these risks need to be addressed as well. finally, i would like to spend some time on another major threat that stems from a continuing sovereign - bank nexus β a situation that involves | being more the result of monetary policy mistakes, such as those associated with the great depression, than of supply - side forces such as were so plainly evident half a century earlier. inflation did not really become re - established on a significant scale until the second world war, after which it persisted for most of the remainder of the twentieth century. most recently, the potential problems posed by deflation, particularly in a financially developed world where debt and balance sheets interact, have become apparent, most notably perhaps in japan. all in all, there is perhaps a mixed message from these historical examples. it may be possible to live comfortably with a modest pace of deflation, especially if it reflects benign supply - side influences. nevertheless, monetary policy might usefully be engaged to avert it. c. globalisation and the pervasiveness of the law of one price returning to the factors behind current price trends, there is one aspect of globalisation which may be especially relevant. this is the rapid expansion of the range of globally traded output ( in contrast to efficiency gains within some pre - defined range ), with resultant implications for prices. in the past it was common to observe more rapid domestic inflation in economies enjoying faster productivity growth, as wages rose and the prices of non - tradables accelerated, dragging up the consumer price index. this mechanism, based on an assumed clear analytic distinction between price behaviour of tradables and non - tradables, may still be at work, but surely it is not as powerful as it used to be. the range of tradables is expanding relative to that of non - tradables. while it has long been acknowledged that progressively more goods are becoming tradable because of, for example, advances in freight transportation, the revolution in respect of services may now be more significant. thus, many services which were in the past produced only in the country where they were consumed can nowadays be outsourced offshore or accessed from somewhere else in the world at the click of a mouse - back - office processing, multi - functional call - centre services, legal advice, logistics management, design services for everything from clothes to buildings, and even certain forms of medical consultation or education, to name but a few. moreover, buyers of services increasingly elect to travel elsewhere to consume them. thus the international price elasticity of a wedding ceremony, a game of golf, hospital or health spa treatment, or conference facilities is ever rising. soon there will remain only very few location - | 0 |
ability of the exchange fund to repay this debt. at this time, the exchange fund notes also attract a yield higher than that for us dollar treasury securities of corresponding maturity. interest income from holding the exchange fund notes will be exempt from profits tax and trading in the paper will be exempt from stamp duty. the stock exchange has also offered to lower the brokerage commission on these products. for a community that has always had a keen and very wide participation in the stock market, the convenience of being able to buy and sell the notes on these terms, through the brokers on the exchange, speaks for itself. so much for the advertisement. may i conclude by extending my warmest congratulations to all of those involved in taking forward this important project. i hope that this project will prove to be a success and i look forward to further cooperation in the future with all who have an interest in developing the debt market in hong kong and in the region as a whole. | of the debt market was not the only objective of the programme. since then, we have brought to the market a total supply of paper amounting to about $ 100 billion, with maturities ranging from three months to ten years. we have also developed a robust infrastructure for the debt market that is fully integrated with the real time payment system to achieve real time β delivery versus payment β in the trading of exchange fund paper. but interest in this market at the retail level has been slow to develop. the paper is predominantly held by banks for liquidity purposes and a small part is held by institutional investors. there are a number of reasons behind this lack of retailer interest. first, at least until recently, the real interest rate has been low and sometimes negative, and so the yield of exchange fund paper has not been attractive. second, as issuer, the hong kong monetary authority does not have the capacity to market the paper at the retail level. and, quite understandably, the banks who are recognised dealers and market makers are not keen to market the product for us in view of the possible impact on their deposit base. third, there is no convenient market infrastructure, in terms of both market information and mechanisms for participation, through which retail investors can access that market. they may be other reasons. but to the extent that these three reasons are significant, our plan here to list the longer term paper, what we call the exchange fund notes, on the hong kong stock exchange, and have trades settled through the established securities clearing system of ccass, at a time when there is a significant positive real interest rate, should effectively address them. according to this plan, exchange fund notes will be listed on the hong kong stock exchange on 16 august 1999. on that day, all 57 outstanding issues of exchange fund notes, with a total value of more than $ 34 billion, will be so listed. i very much hope that this joint effort by the hong kong stock exchange, the hong kong securities clearing company and the hkma will successfully stimulate retail interest in our exchange fund notes and, more importantly, retail interest in debt instruments generally. let me now take this opportunity to do a bit of advertising. the exchange fund notes are, of course, issued for the account of the exchange fund. furthermore, all issues of exchange fund paper are fully backed by foreign reserves. for every hk $ 780 worth of exchange fund notes there is us $ 100 held in the exchange fund. investors therefore need have no concerns about the | 1 |
computers, telecommunications, steel, chemicals and machinery, which are midway on the technological development ladder. as an example, about two years ago when i went to china, you could hardly see a locally produced mobile phone. handsets imported from korea were a big hit on the streets at that time. today, however, china has already emerged as the world β s largest producer and exporter of mobile phones. korea β s policy options in dealing with the hollowing - out the hollowing - out of korean manufacturing is taking place so fast and across such a wide spectrum that our firms and government have little time to spare. it has become a critical challenge to the korean economy. will the hollowing - out of manufacturing derail the korean economy, or can we take advantage of it like the u. s. and japan by turning it into an opportunity for a further quantum leap? the answer will depend upon how the korean people react. to embrace this challenge and exploit it as an opportunity to press forward the development of the korean economy, the korean people and its government should commit themselves to four major endeavors. firstly, we must set out to constantly strengthen economic cooperation between south and north on the korean peninsula. this will give us some short - term relief by softening the blow represented by the hollowing - out of manufacturing. south korean firms should relocate their labor - intensive industrial facilities not just in the kaesung industrial complex, which is now being constructed, but throughout the whole of north korea. this will breathe new life into korean enterprises whose competitiveness is now on the wane, and smes in particular. within the kaesung industrial complex, wage levels will be fifty - seven and a half dollars a month, which is lower than those in china. land prices too are very reasonable, and the highest level of corporate tax rate will be only 14 %. so there is a very good case for korean firms to take full advantage of these points by relocating production to north korea rather than to china or vietnam. brisk economic cooperation between north and south is also very important in terms of preparing for national reunification. now many of north korea β s industrial facilities are in a decrepit state. if they were to be exposed to the blast of open competition, there would be no option other than to scrap them entirely. research institutes tell us that if reunification were to take place abruptly under these circumstances, with the coming down of the walls dividing the peninsula, several million north koreans might be forced | of society β s high costs and low efficiency can and will be solved through educational renewal, the reconfiguration of politics, cooperation between labor and management, and restraint from collective egotism. along with this, globalization will be encouraged through moderation of the mood of anti - globalization and animosity to openness that still lingers on in some areas of korean society. i am convinced that once korea has traversed the hollowing - out of manufacturing, it will move on to become a much more mature advanced society. let us suppose that it is indeed able to maintain stable growth at the 5 % level annually, by turning the present changes in its environment into opportunities for enlarging its growth potential. then, about ten years later, the country could look to the β new miracle of the han river β, achieving per capita income of 30, 000 dollars and joining the ranks of the ten largest economies worldwide. mr. president, distinguished members of the asia society, ladies and gentlemen, drawing my remarks to a close, i should like to give my deep thanks to all of you here today for your keen interest in the korean economy. it is my great hope that as true friends of korea you will not hesitate to give your suggestions and advice about the best way forward for the korean economy. thank you for listening so attentively. | 1 |
we do have to appreciate that developments will not wait for us. equally, in the provisions of electric power to our economy, particularly in the more developed centers of the bahamas, we should not be driven by protectionism, but should seek to offer to the bahamas economy the very latest and most developed technology by way of commercial arrangements which allow our consumers to enjoy terms as similar as possible to those available anywhere else. those who would have us believe that this has anything to do with our birthright or national pride are wrong! the best long term interest of bahamians in a globalized environment is served by policies which embrace all opportunities available to us, and which force us to be challenged by the highest standards practiced anywhere. legal services : there is, i think, an increasing realization that the maintenance of a strict legal monopoly in favour of members of the bahamas bar, certainly as it affects the delivery of international financial services, is highly counter - productive. the best that one can say for this anachronism is that it fails to appreciate to what extent legal services have become synonymous with this industry ; some feel that like some of our labour union leaders, legal practitioners who refuse to contemplate any compromise in this regard are simply pursuing naked self interest. if the policy - makers refuse to takeon the bar in a meaningful way on this issue, this is a matter which should be put to the bahamian people to decide. it is simply too important to the future of a potentially more vibrant and dynamic financial services industry to leave it as it currently stands. immigration : there is a view that there needs to be a separation of border protection from immigration issues related to the development of those business sectors which the bahamas most favour if our economy is to compete globally. while, as i suggested earlier, tourism and financial services have probably not been significantly disadvantaged in this regard, especially during the last ten to fifteen years or so, there is room for considerable reform in this area, to provide the flexibility and efficiency which business should enjoy. the bahamas needs to overcome the underlying unwillingness to accept the meaningful and equal participation in our economy by persons from elsewhere. this, i admit, will probably change more quickly, when more bahamians, themselves, venture to invest and pursue business beyond our borders. again, though, if we have to wait for this type of β organic β acceptance to occur before we can reform the way our economy works, we risk missing - out on the positioning phase of this new global | coverage provided by external reserves for b $ currency liabilities has declined. note : the reserves to demand liabilities coverage spiked in 2009 because of the bahamas β share of the special drawing rights allocation that the imf provided to its membership during global financial crisis. source : central bank of the bahamas the central bank had to take this into account in how the 2017 liberalisation measures were framed. 8 | page the question will still come up as to how far the bahamas should go with liberalisation, both for direct investments and portfolio transactions. the extensive work that the imf has done has been to advise that countries should sequence liberalisation at least one step after the upgrade to institutional and policy arrangements has been made, which allow the country to optimally manage the transformed environment. 9 at the extreme, the imf β s view is that a flexible exchange rate would be ideal to allow a country to absorb the effects of large movements in short - term capital. this assumes that a country has well developed and functioning financial markets, and that the regulatory frameworks exist to ensure that financial institutions operate in a sound fashion. adequate fiscal policy tools should also exist to incentivise the right course for the private sector. this would also mean less reliance on administrative measures, in favour of tools that affect a wider cross - section of the markets directly. 10 being able to pre - empt adverse outcomes, which is critical, also means that sufficient capacity must exist to collect timely data to monitor private sector activities. the central bank and policies affecting the banking sector are a subset of the elements in this required stronger framework. indeed there is already progress in on the banking side. our local banking system is sound, with the required regulatory framework, and high frequency reporting requirements to ensure safety and soundness, even if the composition of balance sheet flows were to change or become more fluid. moreover, the central bank is developing expanded frameworks to monitor economy - wide indicators of financial soundness. with modernisation of the government securities market, the bank will also have a more flexible set of tools to manage financial sector liquidity. that β s said, we have to continue to improve data quality and coverage for activities outside of the banking sector. 11 consideration also has to be given to harmonised policies that influence other parts of the financial sector. this means progressing to a legal framework for financial stability that see the liberalization and management of capital flows - an institutional view ( imf, 2012 ). http : / / www. | 0.5 |
name of this booklet is anna & alex take on the banknote forgers. after these introductory remarks it is now a pleasure for me to declare this euro exhibition open. you are kindly invited to come closer to view the exhibition and the children β s booklet. | : islamic fund and wealth management the sukuk market has been an important source of financing for productive investment activities, while for investors it provides potential for diversification into new asset classes. the second pillar in the malaysia islamic financial hub is the islamic fund and wealth management industry. malaysia is centrally located in the asean region that has a population of 570 million. it is also positioned centrally between the major asian economies of india, china, japan and korea. malaysia has always been a highly open economy in trade and investment activities and has been a major recipient of foreign direct investment for more than a hundred years. as a destination for financial investment, the malaysian capital market offers a wide range of world class financial products. more than 85 percent of the listed companies in the equity market are shariah compliant, representing about 60 percent of total market capitalisation. other investment opportunities include in shariah - compliant real estate investment trusts ( reit ), in unit trusts and in the islamic exchange traded fund ( etf ). the capital market intermediaries in malaysia, that is, the investment banks and islamic fund management companies have had a key role in supporting the development of this industry. both retail and wholesale products are being offered in ringgit and non - ringgit currencies. there is also no restriction in investing 100 per cent of the funds abroad. the foreign exchange administration rules now allow for the free mobility of inward and outward movement of funds. pillar 3 : international islamic banking the islamic financial system has also been extensively liberalised to allow for the entry of foreign islamic financial institutions that offer both domestic and international banking business. in addition, the foreign equity ceiling in islamic financial institutions has been raised to a maximum of 49 percent as part of the effort to promote strategic alliances. the islamic banking business in foreign currencies can be conducted by the international currency business units ( icbus ) that may be set up within existing financial institutions and the international islamic banks. such international islamic banks may be established as either a branch or a subsidiary. currently, about 16 percent of total assets in the malaysian banking system is shariah compliant. pillar 4 : international takaful business the fourth pillar is takaful and retakaful business. there are now eight takaful operators, several of which are joint ventures with foreign shareholding that conduct both domestic and international takaful business. in addition, licences have been granted to three reinsurance players to undertake retakaful business in malaysia. several | 0 |
ben s bernanke : the economy and financial markets testimony of mr ben s bernanke, chairman of the board of governors of the us federal reserve system, before the committee on banking, housing, and urban affairs, us senate, washington dc, 14 february 2008. * * * chairman dodd, senator shelby, and other members of the committee, i am pleased to be here to offer my views on financial conditions, the near - term economic outlook, and related issues. as you know, financial markets in the united states and in a number of other industrialized countries have been under considerable strain since late last summer. heightened investor concerns about the credit quality of mortgages, especially subprime mortgages with adjustable interest rates, triggered the financial turmoil. however, other factors, including a broader retrenchment in the willingness of investors to bear risk, difficulties in valuing complex or illiquid financial products, uncertainties about the exposures of major financial institutions to credit losses, and concerns about the weaker outlook for the economy, have also roiled the financial markets in recent months. as the concerns of investors increased, money center banks and other large financial institutions have come under significant pressure to take onto their own balance sheets the assets of some of the off - balance - sheet investment vehicles that they had sponsored. bank balance sheets have swollen further as a consequence of the sharp reduction in investor willingness to buy securitized credits, which has forced banks to retain a substantially higher share of previously committed and new loans in their own portfolios. banks have also reported large losses, reflecting marked declines in the market prices of mortgages and other assets that they hold. recently, deterioration in the financial condition of some bond insurers has led some commercial and investment banks to take further markdowns and has added to strains in the financial markets. the banking system has been highly profitable in recent years and entered this episode with strong capital positions. some institutions have responded to their recent losses by raising additional capital. notwithstanding these positive factors, the unexpected losses and the increased pressure on their balance sheets have prompted banks to become protective of their liquidity and balance sheet capacity and, thus, to become less willing to provide funding to other market participants, including other banks. banks have also become more restrictive in their lending to firms and households. for example, in the latest senior loan officer opinion survey conducted by the federal reserve, banks reported having further tightened their lending standards and terms for a broad range of loan types | over the past three months. more - expensive and less - available credit seems likely to continue to be a source of restraint on economic growth. in part as the result of the developments in financial markets, the outlook for the economy has worsened in recent months, and the downside risks to growth have increased. to date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so. the virtual shutdown of the subprime mortgage market and a widening of spreads on jumbo mortgage loans have further reduced the demand for housing, while foreclosures are adding to the already - elevated inventory of unsold homes. further cuts in homebuilding and in related activities are likely. conditions in the labor market have also softened. payroll employment, after increasing about 95, 000 per month on average in the fourth quarter, declined by an estimated 17, 000 jobs in january. employment in the construction and manufacturing sectors has continued to fall, while the pace of job gains in the services industries has slowed. the softer labor market, together with factors including higher energy prices, lower equity prices, and declining home values, seem likely to weigh on consumer spending in the near term. on the other hand, growth in u. s. exports should continue to provide some offset to the softening in domestic demand, and the recently approved fiscal package should help to support household and business spending during the second half of this year and into the first part of next year. on the inflation front, a key development over the past year has been the steep run - up in the price of oil. last year, food prices also increased exceptionally rapidly by recent standards, and the foreign exchange value of the dollar weakened. all told, over the four quarters of 2007, the price index for personal consumption expenditures ( pce ) increased 3. 4 percent, up from 1. 9 percent during 2006. excluding the prices of food and energy, pce price inflation ran at a 2. 1 percent rate in 2007, down a bit from 2006. to date, inflation expectations appear to have remained reasonably well anchored, but any tendency of inflation expectations to become unmoored or for the fed's inflation - fighting credibility to be eroded could greatly complicate the task of sustaining price stability and reduce the central bank's policy flexibility to counter shortfalls in growth in the future. accordingly, in the months ahead we will be | 1 |
banking and non - banking sectors. we have been taking several steps to strengthen the regulatory and supervisory frameworks in order to increase the resilience of the banking system. new guidelines have been issued for resolution of stressed assets, which will sustain the improvements in credit culture. 16. in the non - banking sector, the reserve bank has recently come out with draft guidelines for a robust liquidity framework for the nbfcs. we are also giving a fresh look at their regulatory and supervisory framework. it is our endeavour to have an optimal level of regulation and supervision so that the nbfc sector is financially resilient and robust. the reserve bank will continue to monitor the activity and performance of this sector with a focus on major entities and their interlinkages with other sectors. the reserve bank will not hesitate to take any required steps to maintain financial stability. 17. we are also taking a number of steps to improve commercial viability of urban co - operative banks ( ucbs ). these steps include proposed establishment of an umbrella organisation and a centralised fraud registry for ucbs and governance reforms at the board level. we are also encouraging voluntary merger and consolidation in the sector to help reduce operating costs, diversify risks and economise on capital. interplay between inflation and growth objectives 18. at the end, let me highlight the role of the reserve bank in the context of the mandate under the reserve bank of india act, 1934 : β to regulate the issue of bank notes and the keeping of reserves with a view to securing monetary stability in india and generally to operate the currency and credit system of the country to its advantage β. this mandate has been interpreted over time as to maintain price stability, financial stability and economic growth with the relative emphasis between these objectives governed by the prevailing macroeconomic conditions. this role of the reserve bank has been restated as per the amendment in the rbi act in may 2016 according to which β the primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth β. therefore it has been our endeavour in the reserve bank to ensure price stability under the flexible inflation targeting regime and simultaneously focus on growth when inflation is under control. 19. in a flexible inflation targeting framework, a delicate balance needs to be maintained between inflation and growth objectives. the relative emphasis on inflation and growth depends on prevailing macroeconomic scenario, inflation and growth outlook and signals emerging from incoming data. post global financial crisis, it has been recognised that price stability may not | scale of its operations on the financial system. our regulatory approach towards nbfc sector has been guided by a combination of activity - based and entity - based regulations to safeguard financial stability and protect customers. we have tried to leverage the strengths of both these approaches to achieve a more comprehensive and flexible regulatory framework. we find this hybrid approach particularly valuable for an everevolving nbfc sector, where innovations and new business models seem to be constantly emerging. entity based regulations have the advantage of providing a comprehensive view of overall risk exposure of a specific financial institution and is better placed to address the systemic risks arising from the interplay of various activities within a single entity to minimise negative externalities. from regulator's perspective, entity - based regulations are generally easier to implement and enforce, as regulations are applied uniformly to a set of entities. however, the flip side is that entity - based regulations may be less precise in targeting specific activities, slower to adapt to changing landscape, and, at times, may potentially impose extra burden on low - risk activities. on the other hand, activity - based regulations allow for more precise targeting of potentially risky financial activities by enabling the regulators to focus on high - risk activities regardless of the type of institution involved. potential down - side is that such an approach could result in a fragmented regulatory landscape, with different rules for various activities, potentially making oversight more complex. at times, systemic risks arising from the combination of multiple activities may remain undetected. it has been advocated that ideally, the principle of same risk, same activity, same regulation should apply, i. e, there should be similar regulation for entities undertaking similar activity to avoid regulatory arbitrage. as the saying goes - if it looks like a duck, quacks like a duck, and acts like a duck, then it probably is a duck - and should be regulated as a duck. however, this approach needs to be calibrated suitably for effective yet non - stifling regulations. instead of following a narrow approach of putting in place the same set of regulations for all financial institutions irrespective of their scale of operations, a nuanced approach may be more suitable for achieving the desired objectives. we have been cognizant of the fact that the nbfcs engage in specialised activities, each carrying its unique risks, and the flexibility inherent in the hybrid model has enabled us to adapt swiftly to the changes in the sector without sacrificing the overarching | 0.5 |
more jobs than the nhs and the armed forces put together. i β d be the last person to underrate the importance of entry level and seasonal jobs ; but you need highly skilled people too. so it β s good news that thousands of people are already on tourism and hospitality related fe and work based courses. your new sector skills council will provide an even sharper focus on defining and meeting your industry β s training needs. nowadays, your industry makes a major contribution to our national income, and to our exports. and it β s not surprising that your fortunes are heavily influenced by the economic climate at home and abroad. the decade of strong growth which you have enjoyed has been underpinned, at the national level, by an unprecedented period of low and stable inflation, and steadily growing output and employment. unemployment has been falling for over a decade and has now reached a thirty year low. and household spending has been growing strongly year in year out since the mid 1990s. what this means is that for many years your customers have been enjoying a very healthy growth in their spending power, in a labour market where jobs have by and large been plentiful. of course, averages never tell the whole story. and hindsight is a wonderful thing. at the time, it didn β t always seem like plain sailing. the stock market crash, the slump in transatlantic traffic after september 11 and, last year, iraq war related fears have represented setbacks, especially for london based businesses. over the past few years, overseas tourism has been affected by the economic slowdown in north america and much of europe and, maybe also, by the strength of the exchange rate. on the other hand, though foot and mouth hit the industry very hard in some parts of the country in 2001, domestic tourism seems to have held up well. and that β s probably because the uk economy has weathered the squalls of the past few years rather better than both the us and the euro area. since 2000, we have grown more strongly than the euro area, and more steadily than the us ; indeed we are alone among major industrial countries in not having experienced a single quarter of falling output for more than a decade. as a result the uk emerged from the slowdown in the world economy with less slack than other economies. that is the key reason why we were the first to start raising interest rates last november, when world activity started to pick up and demand at home accelerated. since then, a number of other countries, | the new regulatory standard for bank capital adequacy and liquidity β commonly termed as basel iii β as examples. g20 leaders, in late 2011, agreed to further strengthen the fsb β s role in order to enable it to keep pace with its growing role in promoting the development and implementation of regulation. accordingly, in june 2012, g20 leaders endorsed the fsb β s recommendations on strengthening its capacity, resources and governance. i strongly support the further development of the fsb because i am convinced that it will further improve the elaboration of international rules and regulations as well as international cooperation in regulation and supervision and help to achieve an international level playing field. bis central bankers β speeches rigorous monitoring of national implementation while rule - making at the international level is a necessary condition for financial stability, it is by no means sufficient. for the rules to be effective, they have to be translated in national laws and regulations in a timely and consistent manner. therefore, we need to strictly monitor implementation, disclose the respective findings, and let peer pressure work its magic. the fsb and international standard - setting bodies have jointly developed a coordination framework for implementation monitoring to ensure consistent implementation of the reform agenda. as another important part of implementation monitoring, the international monetary fund together with the world bank is regularly assessing the adherence of its member countries to international standards. thereby, the fund is promoting international monetary cooperation and exchange rate stability. in response to weaknesses detected during the financial crisis, the fund initiated various reforms with the aim of strengthening its internal governance as well as its analytical capabilities. i highly welcome those reforms which will further improve the fund β s work. to sum up, i regard strengthening existing bodies in the field of global financial regulation and the international monetary system as the right way forward for two main reasons. firstly, it allows building upon the substantial expertise gathered in existing institutions. secondly, jurisdictions are obviously reluctant to further cede national sovereignty to a supra - national level. the enduring debate about the creation of a fiscal union in europe is providing just one vivid example in this regard. accordingly, the creation of a global regulatory authority does not seem to be practical at this point in time. moreover, i regard the current practice of setting rules for the global financial markets as appropriate. in a first step, set the rules at the international level. as a second step, rigorously monitor their translation in national laws and regulations to ensure consistency and a global level playing field. as i have pointed out | 0 |
you well during your deliberations for the rest of the day as we search for new and innovative ways to address the challenges that we collectively face in an effort to make this country of ours truly great, in amplification of the inspiring achievements of teams sa at the london 2012 olympic games, that have made us all proud. i thank you. bis central bankers β speeches | in infrastructure provision is most successful in the transport and energy sectors. the participation of the private sector contributes to effective cost containment through the profit motive, improves efficiency and leads to more sustainable jobs through more prudent skills transfer. in the process complementing the capacity of the state by addressing gaps that are not viable for the state to attend to and taking on development risks. an area in which the private sector can excel, given appropriate incentives, is that of research and development which act as a driver of competitiveness and job creation. many infrastructure investment projects can act as an attractive asset class for private investors due to the predictable nature of returns, thereby providing a low risk investment profile. infrastructure investment projects may provide a means whereby a consistent real return over inflation can be attained through a low volatility investment vehicle. private sector funding is, however, subject to policy certainty so that private investors can be assured that they will be able to realise a return on their investments. to this end, the national development plan proposes that regulatory impact assessments be done on all new regulations, and that an expert panel be appointed to prepare a comprehensive regulatory review for small - and medium - sized firms in an effort to assess whether special conditions are required for such establishments. the implementation of this proposition by the national development plan will create a direct channel for business to assist in the formulation of new regulations. for the establishment of small -, micro - and medium - sized enterprises or smmes, as they are better known, that have a crucial role to play in the creation of sustainable jobs in the economy, a spirit of entrepreneurship within the economy should be cultivated, anew. instead of talking jobs, i also advocate that we should start talking the establishment of smmes and how an environment of support to these enterprises can be created, and also how smmes can best interact with their environment to increase their likely hood of survival and ultimately expansion. it is a common feature across countries to make available large amounts of money in an effort to try and facilitate the growth of smmes. disconcerting though is the fact that limited systematic research or data are available informing the various policies in support of smmes, especially in developing countries. moreover, empirical evidence concerning the relationship between the size of firms and growth has been mixed. recent work on this topic by haltiwanger, jarmin and miranda suggests that so - called β start - ups β and surviving young businesses are most critical for job creation and contribute disproportionately | 1 |
cannot be preserved by the goodwill of one side alone. one cannot overlook the difficulties of the current situation, be blind to growing geopolitical differences or ignore the prospect of an increasingly polarised world. much in this is highly political, therefore beyond the scope of this conversation. concerning economic and financial institutions, one should be both realistic and hopeful. the goal, to quote raghuram rajan, should be to create ( or rather, maintain )'safe spaces in which countries, albeit with different values and systems, can interact regardless of their respective domestic policies or international tensions '. looking ahead, this needs genuine engagement on all sides. 3 / 3 bis - central bankers'speeches | ##ised system. we had a number of public enquiries to guide the process, including the development of a regulatory framework that sought to strike the right balance between prudential regulation and market competition. of course, this is an on - going endeavour and the journey is never ending. a second familiar discussion is that about the exchange rate and the openness of the capital account. in the decades leading up to the 1980s, australia experimented with almost every type of exchange rate regime. we had a peg to the british pound ( 1931 β 1971 ), a peg to the us dollar ( 1971 β 1974 ), a peg to a trade - weighted index ( 1974 β 1976 ) and then a crawling peg against a trade - weighted index ( 1976 β 1983 ). ultimately, none of these proved sustainable. these various regimes were complemented with a range of capital controls, which provided some degree of control over domestic monetary policy. over time, however, people got better at finding ways around these controls and true control over domestic monetary policy proved elusive. while the controls were gradually eased, the highly managed exchange rate regime with a partially open capital account was conducive to neither domestic nor external balance. after we had tried everything else, in the early 1980s we switched to a floating exchange rate and an open capital account. this decision has, perhaps, been more important than any other single decision in promoting stability of the australian economy. it has allowed australia to run its own monetary policy, to tap into the gains that can come from the international flow of capital, and to benefit from the stabilising properties of a flexible exchange rate in a world where there have been very large shocks, including to our terms of trade. a third familiar discussion relates to the need to develop supporting financial infrastructure before liberalisation takes place. those who wanted a slower pace of financial reform in australia would sometimes argue the preconditions were not right β that now was not the time to move ; that banks didn β t have the necessary credit assessment skills ; that the hedging instruments didn β t exist ; and the relevant markets were neither deep nor liquid. what we found, however, was that it was the restrictions themselves that were often preventing this supporting infrastructure from developing. a highly restricted system was simply not conducive to banks building the relevant credit assessment skills, or the development of hedging instruments, or the emergence of deep and liquid markets. when the regulations were lifted, the system began to respond. | 0 |
gent sejko : seventh review of the arrangement with the imf concluded speech by mr gent sejko, governor of the bank of albania, at the joint press conference with the imf mission and the minister of finance, tirana, 22 march 2016. * * * in accordance with the agreed agenda, during the last two weeks, we have held intensive talks with the imf mission, which focused on the review of the arrangement with the imf. also, in the framework of article iv discussions, talks focused on identifying those structural problems that hamper economic development in albania. the review concluded that economic indicators and macro - economic policies have been in line with our projections and commitments, despite the challenges facing the albanian economy during this period. moreover, article iv discussions noted the need for accelerating structural reforms, which should pave the way for faster and steadier development. let me now present a summarized opinion of the bank of albania on the country β s economic performance and the policies we have implemented and should continue to implement in the future. the albanian economy continues to be on a positive development trajectory. economic growth accelerated during 2015, driven by the expansion of investments and improvement of the balance of trade with abroad. private consumption showed signs of recovery in the second half of the year, whereas public consumption remained limited, in accordance with the fiscal consolidation strategy. during this period, economic activity expanded, among others, thanks to the monetary policy and supervisory and regulatory measures by the bank of albania. our accommodative monetary policy stance has contributed to lowering interest rates further down, mitigating liquidity pressures and maintaining the confidence of financial markets in price stability. in parallel, our supervisory and regulatory measures have contributed to reducing non - performing loans and improving the financial soundness of the banking sector. these developments are a prerequisite for sustainable crediting to the economy in the future. inflation remains at low levels, below our target. this performance has reflected the unutilized production capacities in the albanian economy, and the disinflationary tendencies arising from trade exchanges with abroad. in particular, over the first two months of 2016, inflation dropped, descending to 0. 2 % in february. our analyses suggest that it dropped due to external factors, namely the pronounced fall in food and oil prices in global markets. as such, the rapid drop in inflation and its low levels represent a supply shock to the albanian economy, rather than a disinflationary situation, which | only for hospitality, but also an infinite opportunity for cooperation, assistance and devotion. thank you once more. 2 / 2 | 0.5 |
trend ( a ) pre - crisis trend is projected using quarterly growth rates between 1999 and 2007. chart 5 : uk current account ( a ) includes compensation of employees. bis central bankers β speeches chart 6 : sterling eri index : january 2005 = 100 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 chart 7 : survey indicators of capacity utilisation ( a ) sources : bank of england, bcc, cbi, cbi / pwc, ons and bank calculations. ( a ) measures are produced by weighting together surveys from the bank β s agents ( manufacturing and services ), the bcc ( non - services and services ) and the cbi ( manufacturing, financial services, business / consumer services and distributive trades ) using nominal shares in value added. the surveys are adjusted to have a mean of zero and a variance of one over 1999 q1 to 2007 q3. the bcc data are non seasonally adjusted. bis central bankers β speeches chart 8 : cpi inflation projection chart 9 : gdp growth projection bis central bankers β speeches | , though, been associated with a reduction in the fraction of income that is saved. this rose sharply in the aftermath of the collapse of lehman brothers as households responded to the increased uncertainty about income and job prospects by building up extra savings, or reducing their debts, as a precaution. as that uncertainty dissipated and households began to feel more confident about the outlook, so the saving rate fell back ( chart 1 ). there is probably some scope for it to fall a little further, but continued firm consumption growth really depends on us seeing a pickup in household income growth, of which i will say more shortly. there is more scope for housing investment to continue driving growth. housing starts and the level of housing transactions are still respectively around 25 % and 10 % below their averages during the pre - crisis decade ( chart 2 ). but the supply of new housing is not as elastic as one would like, because of planning restrictions and the like. consequently there is a risk that increased demand for housing ends up mainly in higher house prices rather than more houses. in turn, if associated with excessive expansion in mortgage lending, that may create future financial stability risks. for that reason, the bank β s financial policy committee, which is charged with maintaining the overall stability of the financial system, is keeping a beady eye on the housing market. bis central bankers β speeches for the recovery to be both sustained and sustainable, however, we really want to see three things happen. first, business investment needs to pick up the baton in supporting demand growth. second, we need to see a revival in productivity growth, which in turn would sustain both higher real wages and higher profits, thus supporting continued household and business spending growth. finally, though perhaps over a longer time frame, an expansion in net exports is desirable, in order to rebalance the composition of demand and reduce the uk current account deficit. let me say a little about each of these in turn. business investment fell by almost a third in the recession, reflecting the generalised collapse in demand, heightened uncertainty and restricted availability of credit. although those headwinds have eased considerably, business investment in 2013 was still only just over 1 % above its 2010 level. now it is not too surprising that business investment has been slow to pick up. that is typically the case in business cycle recoveries, as businesses will want to use up spare capacity and to be confident that improved business conditions will persist before they undertake capital expenditures that may be costly to reverse. and the | 1 |
mortgages, we should all recognize that the trigger could have come from a wide range of sources. the social and economic costs of the events in the subprime market are concentrated in the united states, while the financial costs are both widely dispersed and β relative to the scale of the system β readily absorbable. in short, as painful as they are to those affected, subprime losses have been important primarily because they have revealed deeper flaws in the financial system. while a number of underlying causes can be identified, i will concentrate on three in particular. the first relates to liquidity. in recent years, market participants were overly confident that liquid markets would continually provide an outlet for new products and represent an ongoing source of funding liquidity for financial institutions. ample market liquidity had its origins in benign macroeconomic conditions, low and relatively stable long - term interest rates, financial indeed, central banks had been discussing the possibility of a repricing of risk for some time. see " developments and trends, " financial system review ( ottawa : bank of canada, june 2004 ) : 4 - 5. innovation, and the broadening list of financial market participants. ultimately sowing the seeds of its own demise, market liquidity fed a supreme confidence in the ability to sell holdings at prices that matched mark - to - model valuations. this overconfidence encouraged the rapid growth of the " originate - to - distribute " credit model. in this model, the borrower often became separated from the end investor by several transactions, as credit risk was repackaged, tiered, securitized, and distributed. many originators and distributors felt confident that long - term credit risk had been transformed into short - term " warehouse " risk prior to distribution and that distribution itself was irrevocable. others knew that they had not fully eliminated these risks, but felt they could get out in time. such confidence was misplaced. risk had not disappeared, it had merely been redistributed, and that distribution was often not final. the current market disruptions represent, in part, the painful process of finding out where that risk ultimately lies. liquidity was also the achilles heel of many asset - backed commercial paper ( abcp ) programs and structured investment vehicles. in many such vehicles, medium - term, illiquid, hard - to - value assets were funded by short - term money market securities at yields only marginally higher than those offered by the most liquid, transparent | rate of rise in the cost of benefits that employers provide to workers has been remarkably subdued over the past few years, although a gradual upward tilt has become evident of late. a variety of factors - - including the strength of the economy and rising equity values, which have reduced the need for payments into unemployment trust funds and pension plans, and the restructuring of the health care sector - - have been working to keep benefit costs in check in this expansion. but, in the medical area at least, the most recent developments suggest that the favorable trend may have run its course. the slowing of price increases for medical services seems to have come to a halt, at least for a time, and, with the cost - saving shift to managed care having been largely completed, the potential for businesses to achieve further savings in that regard appears to be rather limited at this point. there have been a few striking instances this past year of employers boosting outlays for health benefits by substantial amounts. a couple of years ago - - almost at the same time that increases in total hourly compensation began trending up in nominal terms - - evidence of a long - awaited pickup in the growth of labor productivity began to show through more strongly in the data ; and this accelerated increase in output per hour has enabled firms to meet workers β real wage demands while holding the line on price increases. gains in productivity usually vary with the strength of the economy, and the favorable results that we have observed during the past two years or so, when the economy has been growing more rapidly, surely overstate the degree of pickup that can be sustained. but evidence continues to mount that the trend has picked up, even if the extent of that improvement is as yet unclear. signs of a major technological transformation of the economy are all around us, and the benefits are evident not only in high - tech industries but also in production processes that have long been part of our industrial economy. notwithstanding a reasonably optimistic interpretation of the recent productivity numbers, it would not be prudent to assume that rising productivity, by itself, can ensure a non - inflationary future. certainly wage increases, per se, are not inflationary. to be avoided are those that exceed productivity growth, thereby creating pressure for inflationary price increases that can eventually undermine economic growth and employment. because the level of productivity is tied to an important degree to the physical stock of capital, which turns over only gradually, increases in the trend growth of productivity probably also occur rather gradually. by contrast, | 0 |
the euro should enhance the economy β s potential to grow faster. the elimination of exchange rate risk and currency conversion costs should result in increased trade, while the lower interest rate and inflation environment of the euro area should make for reduced business costs and greater macroeconomic stability. combined with the fiscal discipline associated with monetary union, this is expected to translate into higher credit ratings and better investment prospects. from a central banker β s viewpoint, moreover, a key benefit of euro area membership will be the elimination of the costs inherent in managing a small, vulnerable currency like the maltese lira and their replacement by the greater security and credibility afforded by a strong international currency. euro adoption necessary but not sufficient viewed from this perspective, therefore, the euro is but one element in a continuum of changes necessary to enhance the international competitiveness of the maltese economy. the benefits of the single currency will not suffice, especially in the presence of downside risks to global growth such as higher oil prices, a potentially disorderly unwinding of current account imbalances and the rise of protectionism. although the ongoing preoccupation with the level of the external reserves will cease once we join the euro area, moreover, any imbalance between what we buy and sell abroad will continue to cause the depletion of assets or the accumulation of liabilities, and be reflected in the country β s international investment position. any loss of competitiveness, therefore, will still result in slower growth. raising productivity a key challenge in setting out to overcome this challenge, a primary objective should be the correction of existing macroeconomic imbalances. output growth must, therefore, match spending growth more closely, and a key element in bridging that gap is increased productivity. put differently, since we are price takers in the markets that matter, notably those for electronics and tourism, we must have a cost structure that does not discourage investment. domestic inputs, particularly labour, must be competitively priced. and since the cost of labour in malta is relatively high, we must increase the value of output per employee. once again, the only way forward is through productivity growth. in this regard, there is much room for improvement. the level of productivity has remained roughly unchanged since 2001, while it is projected to increase at an annual rate of only 1 % to 2 % in 2007 and 2008. for a country that is highly dependent on exports, this is not good enough when many of our competitors are achieving faster productivity growth. faced with | mr brash gives an address on the building blocks of economic growth speech given by dr donald t brash, governor, reserve bank of new zealand, to the canterbury employers β chamber of commerce, in christchurch on 28 january 2000. introduction and retrospective over the past few years, as this speech has become an established part of my diary, i have used the occasion to address various issues of the day, such as developments with the exchange rate, the balance of payments and the reserve bank β s inflation target. since this is my first public speech of the new millennium, the temptation is to step back much further than usual and attempt to place current economic and monetary policy matters into the context of the past thousand years. instead i want to speak on a subject that is of rather more immediate interest, economic growth. what drives it, what will help us do better, and where does monetary policy fit into the scheme of things? to get ahead of myself for just a minute, there won β t be too much about monetary policy. good monetary policy is important, but even the best monetary policy in the world will not of itself generate growth. but as topical as growth is, history matters when we think about growth. so let me indulge just briefly in a piece of millennium contextualising. in an excellent survey a few weeks ago, the economist magazine1 reviewed humanity β s experience of economic growth over the past 1000 years. that survey observed that the steady rise in living standards that we in the western world now take for granted is, in fact, a fairly recent phenomenon. had i lived at the turn of the last millennium, for example, my life would almost certainly have been β in the famous words of thomas hobbes - β poor, nasty, brutish and short β. my lifestyle would have been essentially unchanged from that of my ancient grandparents and great grandparents. prior to about the middle of the 18th century, economic growth was so slow that it was often imperceptible within the span of a lifetime. the staggering growth of the last two or three centuries has supported a huge increase in population. and, in the west, ours is the first age in which affluence has been enjoyed by more than just a tiny fraction of the population. even the less well - off can have access to things that were scarcely dreamed of by even the wealthiest at the beginning of the twentieth century β things like an electric washing machine, a television, a stereo, a computer | 0 |
lessons from unconventional monetary policy for small open economies and emerging markets * douglas laxton chang yong rhee i feel very honored to be invited to this year β s jackson hole symposium, especially during this time of heightened uncertainty. the paper i β ll be discussing is co - authored with doug laxton. in response to an unprecedented health crisis, not only have central banks in advanced economies re - employed unconventional monetary policies ( ucmps ) that had been used extensively since the global financial crisis, but these unconventional policies can also be found in emerging market and small open economies. with stronger rebound in aggregate demand than aggregate supply, and rising prices, inflation has soared to levels not seen in recent decades. amid these abrupt changes, we were asked to discuss new constraints from the perspectives of emerging market or small open economies. to be more concrete, we would like to explore two questions : 1. what lessons should emerging markets learn from the experiences of deploying unconventional policies in advanced economies? what implications do they have on current and sudden high inflation challenges? 2. should emerging market economies use similar unconventional policies if they face strong deflationary pressure in the future? by unconventional monetary policies, we mean quantitative easing ( qe ), as well as unconventional forward guidance ( ucfg ), which is qualitative, date - based or thresholdbased forward guidance on the future paths of policy. the fed β s β lower - for - longer β expressions such as, β at least through mid - 2015, β or, β at least as long as the unemployment rate remains above 6. 5 %, β are prime examples. this contrasts with * we are grateful to dr. ahrang lee and to dr. bada han at the bank of korea for their substantive contributions and assistance in preparing this paper, and to mr. takuma hisanaga at the mof, japan, for kindly providing the data that decomposes the main drivers of japan β s public debt accumulation. the views in this paper do not necessarily represent the official views of the bank of korea or its monetary policy board. β conventional forward guidance β ( cfg ), which utilizes a comprehensive forecast of macro variables with an endogenous interest rate path that is consistent with the objectives of the central bank. how successful were ucmps in advanced economies? let me first briefly mention how successful unconventional policies were in advanced economies. as you know, major central banks began encountering their effective lower bound in the aftermath of the global financial | some cases defying the taboo of buying government debt in the primary market. such effective uses, however, might have been attributed to a common global shock. abundant global liquidity and the fact that advanced economies themselves were breaking taboos on a much larger scale might have helped emerging economies avoid being penalized by international capital markets for ultra - loose expansionary policies. it is therefore questionable whether the same results would be obtained if emerging markets alone were to face the risk of falling into secular stagnation and if they were to implement similar expansionary fiscal and monetary policies in response. constraints on ucmps in emes a more difficult question is whether emerging economies should use unconventional policies when facing secular stagnation, when global liquidity is not sufficient. the chance of returning to very low inflation and low growth is significant for korea and other asian emerging economies, such as thailand and china, considering their rapid aging and earlier experiences of low inflation. even so, unconventional forward guidance may not be a desirable toolkit for emerging markets with greater uncertainty, exacerbating the inflexibility of unconventional forward guidance to sudden economic changes and the exit problem. in addition, there are several structural factors to consider. for unconventional forward guidance to be successful, the central bank must be able to commit to the announced strategy and make a credible case that it is consistent with achieving the central bank β s objectives. otherwise, the central bank could be subject to aggressive speculative attacks. for example, unconventional policies trying to lower interest rates could lead to excessive depreciation of the local currency if the market perceives the policy as being inconsistent with the macroeconomic fundamentals of the country. concerns about fiscal dominance is another example. the experience of japan since the 1990s well - illustrates that the main driver of public debt explosion has been agingrelated spending, not fiscal spending to boost the economy as is commonly believed. this shows that it is not easy for emerging economies that are experiencing rapid aging, to credibly convince markets of a scenario that temporarily requires a large fiscal stimulus while promising to maintain fiscal sustainability in the long - term. an alternative conventional forward guidance so, if unconventional forward guidance is not desirable, then what are the alternatives? one option could be scenarios - based conventional forward guidance. for example, in summer last year, this framework could have been used to present different scenarios for the two clear narratives regarding inflation : persistent vs transitory. the first scenario would have assumed inflation was more persistent, requiring faster policy normalization | 1 |
actual numbers are shown in table 1, which uses calendar year 1990 as the base and shows the average growth rate up to the most recent quarter ( march quarter 2002 ). note that by using 1990 as the base, we include the early nineties recession for all countries in the average, as well as the later expansion. the exceptions are ireland and luxembourg. table 1 real gdp growth ( annual rate, per cent ) 1990 - current * australia 3. 4 norway 3. 0 united states 3. 0 canada 2. 7 netherlands 2. 6 new zealand 2. 6 portugal 2. 6 spain 2. 6 austria 2. 4 united kingdom 2. 2 denmark 2. 1 belgium 2. 0 finland 1. 9 france 1. 8 germany 1. 6 sweden 1. 6 italy 1. 5 japan 1. 1 switzerland 0. 9 * greece, iceland, ireland and luxembourg not included due to data limitations. part of our stronger growth can be explained by faster population growth, but we also have put in an excellent productivity performance over the decade as well. in the work done by the federal reserve board in the united states and by the oecd in paris, australia is identified as one of the group of countries that has increased its rate of productivity growth ( whether measured by labour or multi - factor productivity ) in the nineties compared with the eighties. chart 1, which is reproduced from the oecd, shows australia is second only to finland in its acceleration in multi - factor productivity. the trends i have mentioned are not confined to the 1990s, although that was clearly our best decade in terms of relative advance. if we look at the broader picture over the past 20 years, australia is still in the very small group of advanced countries to have increased its share of world output. using the imf β s annual database, it is possible to discern some interesting longer - term trends from developments over the past 20 years. this is a useful exercise because it is an antidote to the type of thinking which concentrates on very recent developments, some of which i will cover later. c. gust and j. marquez, β productivity developments abroad β, federal reserve bulletin, october 2000. β the new economy beyond the hype β, oecd, paris, 2001. imf, world economic outlook, database, http : / / www. imf. org / external / pubs / ft / weo / 2002 / 01 / data / index. htm. the two main trends | gave the committee and then present a new set for the period ahead. i will continue that tradition, but we should bear in mind there is a full year of new data available to us so there is more to review. last may, when we had only two of the four quarters of 2000 / 01 available to us, i said we expected year - on - year gdp growth in that year to be about 2 per cent ; in the event, it came in at 1. 9 per cent. my forecast for year - on - year gdp growth in 2001 / 02 was 3 to 3Β½ per cent, and our current forecast ( still with two quarters yet to come ) is 3. 6 per cent. so, even though there have been big swings in the international outlook in the meantime, the last 18 months seem to have turned out much as we expected ( unlike the previous six months where the extent of the housing - induced setback took us largely by surprise ). on the prices front, we still had not seen the gst bulge pass through the system when we met last may. the forecast i presented at the time was that when it had passed through, the rate of inflation measured by the cpi would settle at 2Β½ per cent. in fact, that was β spot on β for the four quarters to the september quarter of 2001, but by the december quarter inflation had risen to 3. 1 per cent, and by the march quarter 2002 it was 2. 9 per cent. so, on average, we slightly underestimated the rise in inflation. for the year ahead, i. e. 2002 / 03, we are forecasting the economy to continue growing at 3Β½ to 4 per cent as it completes the eleventh year of its expansion and enters the twelfth. the outlook for inflation over the same period could best be summarised as remaining near the top of our target range, although we expect it to go down slightly for a time, and then to come back up. this was the view expressed in our quarterly statement on monetary policy released earlier this month. in short, the outlook for economic growth and inflation is such that the economy no longer needs the boost provided by an expansionary stance of monetary policy. we took the first step towards returning monetary policy to a more neutral setting earlier this month, and, unless unforeseen developments intrude, we should continue the process as we go ahead, while all the time carefully examining incoming data, both from here and abroad | 0.5 |
jean - paul redouin : liquidity and transformation speech by mr jean - paul redouin, deputy governor of the bank of france, at the general meeting of the french association of bank treasurers ( aftb ), paris, 30 may 2011. * * * ladies and gentlemen, it is a great pleasure for me to speak at this general meeting of the aftb. i would like to take this opportunity to welcome the successful cooperation that has been established between your association and the banque de france. it is extremely beneficial for us and i believe that you and your institutions also find it valuable. in many respects, bank and market liquidity is a fascinating area because few phenomena have been perceived in such different ways over such a short period of time. indeed, market liquidity became abundant and cheap in the 1980s : financial markets deepened and transaction costs fell. in the 1990s, the growth of derivatives products facilitated the management and transfer of risk. in the following decade and up to 2006, many studies had already focused on excess liquidity. then, during the financial crisis of 2007 β 2008, sources of bank funding suddenly dried up. i would like to highlight some conclusions that can be drawn from this crisis : β first, the crisis reminded us that not only does liquidity have a price and that this price could fluctuate greatly, but above all that liquidity cannot be taken for granted, irrespective of the price that some market participants are willing to pay ; β second, central banks rapidly and efficiently adjusted their operational frameworks to provide liquidity to the financial system, re - establish the normal functioning of the money market and restore confidence. but such measures must naturally remain exceptional, and central banks must be vigilant about the signals and incentives they give to the financial system. β third, due to its magnitude, the crisis has highlighted the risks associated with excessive maturity transformation when long - term assets are funded by short - term liabilities, or even funded overnight. this raises questions regarding both interest rate risk management and liquidity risk management. while these are distinct areas, they have close linkages. it is important not to have a short memory and relegate all this to ancient history. indeed, at present, in an environment of ongoing extremely low interest rates, it is still possible to fund long - term assets at very low cost, with the risk of creating further asset price bubbles. in this respect, the example of the real estate sector seems telling. housing loans | ##slocation when all their peers were receiving like assistance β and much more. moreover the banks have neither had, nor needed, access to this for some time now and the stock of guaranteed liabilities outstanding has fallen by about half from its peak level, as issues mature or are repurchased so our banking system, while not entirely free from blemishes, was nonetheless in pretty good shape overall. banks were able to raise capital privately in the depths of the crisis. the lowest rate of return among any of the major banks over a year during the crisis period was about 10 per cent. the australian government has not needed to take an ownership stake in a financial institution. second, australia had scope for macroeconomic policy stimulus, which was used promptly and decisively. interest rates were lowered aggressively, from a high starting point, lowering bis central bankers β speeches debt servicing burdens at a rapid rate. the fiscal stimulus was one of the larger ones, as a percentage of gdp, among the various countries with which we can make comparisons. the evidence suggests that these macroeconomic measures were effective in sustaining growth. thirdly, the rapid return to growth of the chinese economy saw demand for energy and resources strengthen again after a brief downturn in late 2008 and the first couple of months of 2009. this reversed the fall in australia β s terms of trade, and in fact pushed them to new highs, which led to a resumption of the historic investment build - up that had already begun. it benefited the whole of asia, which staged a very pronounced v - shaped recovery on the back both of the chinese measures and things other countries did themselves. a fourth element that many people add is that the exchange rate fell sharply, which was an expansionary impetus for the economy. but of course the exchange rate was responding endogenously to the various shocks and policy responses, and has since reversed the fall. it was doing what it was supposed to do. perhaps the real point is that the right exchange rate system was implemented nearly 30 years ago, and that it was allowed to work. so australia had these things going for it. was this all just luck? we could not deny that our geography β thought for much of our history to be a handicap because of the distance from european and american markets β combined with our natural resource endowment has provided a basis for the country to ride the boom in asian resource demand. we did not create that, though we still have to muster the capability to take sustained | 0 |
grounds that it does not comply with the principle of individual fiscal responsibility that underpins the maastricht treaty. the main reason for germany β s sluggish potential growth is its declining workforce. if we could travel by time machine to the year 2060, we would arrive in a country in which considerably fewer people live and the share of old people is significantly higher. according to the federal statistical office β s coordinated population projection, one - third of germany β s population will be over 65 in 2060. the implications for economic output are clear. the working - age population will shrink and the total number of hours that can be worked will decrease. this will dampen aggregate output. and in the longer term, demographic change could also have an adverse impact on overall productivity, for example as a result of the rising fiscal costs of the ageing population and a potential drop in innovation. this will also depress per capita income. the three main factors through which these dampening macroeconomic effects might be countered are 1. the number of women in work, 2. the length of the working life and 3. the immigration of skilled workers from abroad. although female labour market participation in germany is well above the oecd average, the share of women in full - time employment is clearly below the average for industrial countries. to raise the number of women in work, germany needs to further reconcile work and family life. key improvements have been made over the last few years, notably by providing more extensive day care for small children and offering more all - day school facilities. not only the state but many enterprises, too, have come to realise that young, well - qualified women return to work more quickly after the birth of a child if they find good day care services for their children. these enterprises have invested in in - house day care centres for this very reason. however, some aspects of germany β s tax, social security and transfer system create less of an incentive to seek gainful employment. non - contributory inclusion in the statutory health insurance scheme and the childcare supplement are two such examples. the political bis central bankers β speeches objectives behind these instruments need to be weighed against the effects they have on employment. moreover, as life expectancy increases, so the statutory retirement age needs to be raised to curb the effects on the pension level as well as non - wage labour costs. this question has been addressed with the progressive increase of the standard retirement age to 67. what we need is a longer | safeguarding the stability of the financial system in the euro area. five euro - area member states were able to count on help from the other member states, provided in the spirit of solidarity, and take out assistance loans in order to gain the time needed to get to the root of their problems. and fourth, as already mentioned, a banking union was resolved, establishing a single supervisory mechanism under the aegis of the ecb and a single resolution mechanism for ailing banks. the measures i have just mentioned have made the monetary union more stable in the long term and, in some cases, have also played a part in preventing the crisis from escalating. however, this very bailout policy pursued by the member states and the eurosystem has brought about a precarious situation : elements of mutual liability were essentially introduced for the crisis - hit countries β debt, while fiscal policy remains a matter for national policymakers. that doesn β t augur well for the future. bis central bankers β speeches liability is a core element of our economic system. that β s something every entrepreneur knows β after all, doing business means picking up the tab if things go wrong. there are essentially two ways of putting control and liability back on a more even keel. either the monetary union is developed into a fiscal union with centralised rights to intervene in fiscal policy at the european level. this would also enable greater mutual liability. or we turn back to the original framework as specified in the maastricht treaty and reinforce the principle of individual national responsibility. which path is the right one to take is a matter for policymakers to decide. i believe that governments and the public at large are currently less than willing to take the step towards a bona fide fiscal union, seeing as this would mean ceding a great deal of national sovereign rights in fiscal policy matters. ladies and gentlemen, it was a long - held belief, above all in germany, that in the long run monetary union would, out of necessity as it were, culminate in political union. addressing the bundestag in november 1991, helmut kohl remarked that β the idea of sustaining economic and monetary union over time without political union is a fallacy β. i believe, however, that monetary union can also function without political union. the maastricht framework, which was adjusted in the light of the crisis, offers a sensible foundation for this in principle. the precondition, however, is that the agreed rules are also | 1 |
amando m tetangco, jr : what lies ahead? speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at security bank β s annual economic forum, makati, 28 february 2014. * * * members of the board and management of security bank, distinguished guests, ladies and gentlemen. what lies ahead? this is a question that unfortunately not too many people ask themselves enough before embarking on an endeavour. some barrel on to action, full speed and then do not ever look back. and yet there are some, like those of you here today, who ask listen and weigh. then those who ask, fall under two categories those who stop and after listening turn back and never move ahead. and then there are those who, having appreciated the consequences of possible actions, move forward nevertheless, while being ready to make adjustments as needed. i hope that those present today, would fall in this second category because it is only from among those in the ranks of β forward movers β that the economy can leap ahead. in the case of the bsp, we do ask this question of β what lies ahead β many, many times, at every turn and even when we have already acted, we ask again. what lies ahead? the bsp surveys the global environment, i am glad that you have a speaker on this topic. we survey domestic conditions, and we consider the general public and those factors that affect overall welfare. what do we see so far? and i will be brief here. β’ we see inflation inching up, but still remaining manageable over the policy horizon. β’ we see credit continuing to go to the productive sectors of the economy, particularly to sectors with strong forward linkages to other sectors β’ we see improvement in the country β s potential output with increased production efficiency. β’ we see our external payments dynamics continuing to be favorable, with ample international reserves, and current account surpluses driven by structural flows including of remittances, bpo revenues, and tourism receipts. β’ we see the banking system remaining well - capitalized and able to withstand significant external shocks that could result from global interest rate normalization. β’ we see ample fiscal headroom for social / economic infrastructure. β’ there is policy space on the monetary side, albeit slightly narrower than last year, but the bottom line is. there is room to maneuver for us to address the | address crisis legacies and macroeconomic imbalances. in addition, member states should improve their capacity to absorb shocks internally. building such a capacity implies removing rigidities in labour, product and services markets. this will support economic adjustment through price flexibility and facilitate a smooth and speedy reallocation of resources. price flexibility allows for the recovery of any loss in competitiveness, and fosters a faster adjustment of relative prices, which, in the absence of exchange rate adjustment, is crucial for the rapid reallocation of production resources to the most dynamic sectors and firms. according to a european commission study, price flexibility and the rapid reallocation of resources require wage flexibility, ease of market entry of new firms, an effective and efficient insolvency framework including a second chance for entrepreneurs, a friendly environment for doing business, a well - functioning justice system, low levels of corruption, the availability of high quality public services and public infrastructure, and a regulatory framework conducive to competition. such reforms, besides increasing the capacity of euro area economies to absorb shocks internally, increase productivity and long - term growth. furthermore, some structural reforms ( for example, cutting red tape ) raise expectations of future income, and thus boost confidence, investment and domestic demand in the short term, supporting the recovery. in addition, policies that raise labour force participation and reduce structural unemployment are essential to boost future growth and employment. these reforms effectively make markets more flexible. but they can also make individuals β lives more uncertain. to this end, it is important to improve social protection β a policy that has come 20 / 23 bis central bankers'speeches to be known as flexicurity. reforms to the institutional setting of emu to improve economic policy coordination, convergence and risk sharing euro area member states should enhance real and cyclical convergence, which requires establishing closer economic policy coordination. improved transparency and predictability in the interpretation and enforcement of fiscal rules ( stability and growth pact ) and ownership and credible implementation of the country specific recommendations are prerequisites for successful policy coordination. furthermore, the adjustment mechanism within emu should be facilitated by ensuring that it works in a symmetric way, i. e. both for countries with sustained external deficits and for those with sustained external surpluses. to this end, the macroeconomic imbalances procedure should be strengthened and foster reforms in countries that have been accumulating large and sustained current account surpluses. crisis stricken countries have improved their external positions on account of both higher exports | 0 |
the public service employees to ensure that their concerns are addressed in an honest and professional manner. public service commissioners must actively ensure that their officers are rewarded for their performance, and benefit from organized trainings that would enhance the officers β abilities. these can be challenging issues, because they will certainly mean securing more finance and changing of procedures. but if public services must compete for the best talents in the market these are necessary changes to tackle as part of their strategies for talent management in the public service. conclusion in conclusion, the challenge faced by pacific public service commissioners in addressing brain - drain and managing the mobility of talented and skilled professionals is made more difficult when affordability is the key barrier. graeme dobel of abc radio australia sums the issue in stating that β a free person with skills is still a free person β. we are dealing with free individuals whose choices to market their skills to bring the maximum benefit to themselves will cause them to leave their public service employment. public service commissioners must therefore be creative in finding solutions for attracting and retaining talented individuals. this means we must have to make some necessary changes in the manner we handle the remuneration packages and working conditions for the skilled and talented professionals we want to attract and retain. thank you for listening and i wish you all success in your conference. references asian development bank, 2008. pacific monitor, www. adb. org / pacific monitor. dobel, g. 2006. β australia confronts its pacific taboo : pacific workers β, pacific economic bulletin, volume 21, no. 3 november 2006, p. 128. goffee r. and jones g. 2007. β leading clever people β, harvard business review, march 2007. world health organization, 2005. β migration of health personnel β, paper ( wpr / icp / ecp / 7. 2 / 001 / ecp ( 11 ) 2005. 4 ) presented at ministers of heath for pacific countries, samoa, 2005. | this additional facility to conduct their banking business. this branch certainly has a modern look and feel about it. i feel as if i am in an bis central bankers β speeches anz branch in sydney or brisbane. anz has certainly raised its standard in terms of its facilities. i know it is not cheap but this is what i mean when i say that solomon islands deserve the best or world class facilities and products and not the β fitim solomon β facilities or products. update on si economy let me provide a brief update on our recent economic performance. at the beginning of this year we projected the solomon islands economy to grow by around 6 percent, slightly lower than last year. based on available data for the last seven months, it appears that growth for 2011 would be the same or even higher than last year. economic performance in the first half of 2011 had been robust with key macroeconomic indicators showing positive outcomes. in the real sector the production of all commodities were strong in the first half of 2011 with copra doubling, palm oil up 14 %, cocoa up 26 %, fish up 17 % and logs up by 50 %. of great interest is log production, with total output up to july reaching 1, 143, 222 cubic meters. at this rate, total log production for 2011 would reach 1. 9 β 2. 0 million cubic meters. gold production has also come on stream and is contributing to the country β s exports and growth. in the external sector, strong commodity prices and production have led to : improvements in the trade account with the june quarter posting a trade surplus, the first since 2006. marked improvement in export receipts, lower import payments, donor and investment inflows contributed to the positive outcome in the external sector. as a result, foreign reserves rose by 24 % to sbd $ 2. 6 billion by last week, or equivalent to over 10 months of import cover. in the monetary sector, money supply ( m3 ) grew by a moderate 3. 0 % as opposed to 0. 8 % growth in the same period last year. at the same time credit growth has been subdued resulting in : a 22 % increase in liquidity since december 2010 despite the central bank absorbing more than $ 200 million of this liquidity from the banking system. in terms of government finances, the country β s fiscal position has improved markedly. with sound fiscal management, revenue collection has increased and expenditure contained within budget allocations. the government had been able to build up its cash reserves. on | 0.5 |
consider a standard measure of problem loans : the ratio of noncurrent and delinquent loans to bank capital and the allowance for loan loss. in the first quarter of 2009, that ratio rose for all loans to 24 percent for the median minnesota bank, double the 25 - year median level of 12 percent. for commercial real estate loans, the problem loan ratio rose to about 9 percent, nine times higher than the 20 - year median of 1 percent. bis central bankers β speeches the problem loan story has changed completely. the ratio for total loans is at 9. 5 percent for the median minnesota bank, right around the 25 - year low. and the ratio for problem commercial real estate loans for the median minnesota bank is at 2 percent and rapidly returning to pre - crisis levels. these same general patterns hold for the nation β s banks. the low earnings and negative loan growth for the median minnesota bank have also improved, but not yet to pre - crisis levels. return on average assets, a standard measure of profitability, has been holding very steady for the past several years at just below 1 percent. this is clearly better than the trough of 0. 5 percent during the crisis. but the 20 - year median is 1. 15 percent. currently, the return on average assets of the median minnesota bank is at 0. 94 percent, which is at the 19th percentile for the past 20 years. year - over - year net loan growth for the minnesota median bank is at 4. 6 percent. again, this is much better than the β 4. 7 percent crisis trough ; indeed, negative growth persisted through the end of 2012. but the 25 - year median is nearly 6 percent for minnesota banks, while 4. 6 percent is at the 39th percentile. the nation β s banks show similar general patterns. so, yes, there has been recovery in important ways for community banks in the state. but other important measures continue to lag historical norms more than five years after crisis depths. this weaker - than - hoped - for performance is one factor raising concerns for community banks about the additional supervision and regulation burden that faces them post - crisis. i β d like to turn to those concerns now. post - financial crisis supervision and regulation of community banks low earnings levels have many potential sources. let me mention three. first, on the revenue side, weak loan growth naturally leads to more competition for available loans and drives down returns. second, if banks can β t make more loans, | narayana kocherlakota : on the objectives of monetary policy speech by mr narayana kocherlakota, president of the federal reserve bank of minneapolis, to the economic club of marquette county, marquette, michigan, 22 september 2014. * * * thanks to david fettig, terry fitzgerald and sam schulhofer - wohl for their assistance with these remarks. introduction thank you for that generous introduction, and thank you for the invitation to join you here today. this is my second trip to marquette since becoming president of the federal reserve bank of minneapolis five years ago, and i β m glad to be back. i β m planning to spend most of my time today talking about the objectives of monetary policy. as you will hear, the fomc has made great progress in formulating, and communicating, the objectives of monetary policy to the public. i will discuss some of that progress and then move on to some ideas about how the committee can make further improvements along these lines. i look forward to your questions, as well β i always learn a lot from q & a sessions. before i start, though, i must remind you that the views i express today are my own and not necessarily those of my federal reserve colleagues. federal reserve system basics let me begin with some basics about the federal reserve system. i like to tell people that the fed is a uniquely american institution. what do i mean by that? well, relative to its counterparts around the world, the u. s. central bank is highly decentralized. the federal reserve bank of minneapolis is one of 12 regional reserve banks that, along with the board of governors in washington, d. c., make up the federal reserve system. our bank represents the ninth of the 12 federal reserve districts and includes montana, the dakotas, minnesota, northwestern wisconsin and the upper peninsula of michigan. eight times per year, the federal open market committee β the fomc β meets to make monetary policy. all 12 presidents of the regional federal reserve banks β including me β and the governors of the federal reserve board contribute to these deliberations. however, the committee itself consists only of the governors, the president of the federal reserve bank of new york and a rotating group of four other presidents. i β m one of those four presidents this year. in this way, the structure of the fomc mirrors the federalist structure of our government, because representatives from different regions of the country β the various presidents β | 0.5 |
speech higher policy rate will curb inflation introductory statement by governor ida wolden bache at press conference following announcement of the policy rate and publication of monetary policy report 3 / 22 chart 1 policy rate raised norges bank β s monetary policy and financial stability committee decided to raise the policy rate from 1. 75 % to 2. 25 % at its meeting on 21 september. the policy rate will most likely be raised further in november. norges bank β s task is to keep inflation low and stable. the operational target is inflation of close to 2 percent over time. we are also mandated to help keep employment as high as possible and to promote economic stability over time. we are raising the policy rate with the aim of bringing down inflation. price stability is important for the economy to function well. it reduces uncertainty and facilitates planning. those with low incomes and small margins are normally the hardest hit when inflation suddenly surges. the main contribution monetary policy can make to promoting high employment over time is to ensure low and stable inflation. as long as there is confidence that inflation will remain low and stable, the costs of minor deviations from the target of 2 percent are fairly insubstantial. but if households and firms expect inflation to be elevated and high inflation is incorporated into price and wage setting, inflation may take root, and bringing it down again could prove difficult. chart 2 : inflation is high consumer price inflation is now rising rapidly both globally and in norway. inflation in many countries is the highest seen in decades, and central banks in many trading partner countries have responded by raising their policy rates substantially over a short time. in norway, inflation is markedly above our 2 percent target. twelve - month consumer price inflation was 6. 5 percent in august, far higher than we expected before summer. prices for electricity and other energy products have risen to historically high levels. but prices for a range of other goods and services are also rising faster than normal. the consumer price index adjusted for tax changes and excluding energy products - the cpi - ate - was 4. 7 percent higher in august this year than one year earlier. prices for both imported goods and domestically produced goods and services are rising at a fast pace. we project that inflation will remain higher for longer than envisaged in june. the tight labour market has contributed to pushing up wage growth. there are signs of higher electricity prices ahead than anticipated earlier, and we expect firms to pass on some of the cost increase to selling prices. we also believe it will take | with future revenues. the oil fund mechanism shields fiscal policy from such revenue fluctuations in the short term. we have the fiscal space to stimulate overall demand if this should prove necessary again. but we must also remember that, with lower oil prices, the government will over time have less money to spend. fiscal tightening may become necessary further ahead. refraining from increasing petroleum revenue spending further from today β s level is a sensible risk adjustment. the era of rising petroleum revenue spending should for the most part be behind us. the more than 40 - year old white paper about the role of the petroleum industry in norwegian society was both far - sighted and accurate. the restructuring it described has occurred, although the growth in prosperity that followed in its wake was more difficult to predict. the emergence of an advanced oil service industry is an industrial success story. we have extracted large quantities of oil and gas in a period of very high prices. and we have set aside a large proportion of the revenues β for the benefit of future generations. in spite of some mistakes and a fair share of luck along the way, we would have to say that norway β s petroleum wealth has so far been managed well. norway β s oil age is far from over. but activity in the petroleum sector has passed the peak. we must also be prepared for lower returns in the oil industry. in the period ahead, we should keep an important insight in mind : the key to economic progress is the ability to restructure. thank you for your attention. bis central bankers β speeches | 0.5 |
, we can say that the financial system as a whole is restoring its soundness and evolving a forward - looking, more dynamic style of management. to sustain these actions, financial institutions need to upgrade the integrated risk management system, in which various types of complex risks are controlled in a consolidated manner, and construct a framework to deploy capital more efficiently. a draft of the new basel capital accord released at the end of june has adopted a risk - sensitive framework to encourage the upgrading of risk management. in line with this global trend, the bank of japan is working to improve the functioning of financial institutions through on - site examinations and off - site monitoring. price developments while the corporate goods price index, particularly raw materials and intermediate goods, has been rising partly because of higher crude oil prices, the consumer price index ( cpi ) has been on a slight downtrend. a small decline in the cpi is largely due to the unit labor cost reductions in the corporate sector reflecting higher productivity and the restraint on labor costs. thus, the outlook for prices depends on future developments in productivity and wages. three factors underpin the rise in productivity. first, resources are being used more efficiently as a result of the adjustment of excessive capital stock and labor as well as deregulation in a variety of areas, including the labor market. second, progress continues in it and technological innovation. third, as is generally observed during an initial phase of economic recovery, higher utilization of labor and equipment is increasing productivity. while the third factor is cyclical, the first two factors could spur structural changes, raising the potential production capacity of japan β s economy. many countries have experienced a situation in which prices do not necessarily increase in tandem with an upturn in economic activity. economists and central bankers have been exploring a plausible explanation of this discrepancy. from the viewpoint of conducting monetary policy, we are carefully monitoring price developments while keeping in mind the following questions. if the recovery continues, will the growth in productivity slow? or, will such growth continue thanks to deregulation and the progress in it? or, will wages rise along with the growth in productivity? in terms of developments in prices over the shorter term, we should pay attention to the effects of higher crude oil prices on the general price level. crude oil prices have been around record - high levels against the background of a rise in global demand and heightened concern about geopolitical risks. we have seen the impact of higher crude oil prices on the domestic corporate goods price | toshihiko fukui : economic situation in japan and abroad summary of a speech by mr toshihiko fukui, governor of the bank of japan, at a meeting in osaka, 2 september 2004. * * * today i will discuss the economic situation at home and abroad, and the conduct of monetary policy. amid the continued expansion of the world economy, japan β s economy has been on a recovery path since the summer of last year. the recovery has been initially driven in large part by an increase in exports. in addition to the favorable external conditions, the foundation has been laid domestically for a self - sustaining recovery. we should also note that the current recovery has been achieved while prices have been on a declining trend. world economy and japan β s economy let me start with the world economy. the economies of numerous countries including japan have become closely interrelated as globalization has progressed. this is evidenced by the growing prevalence of the international division of production processes. for example, it - related investment has been undertaken all over the world, led by the united states. high - value - added components of itrelated goods are being produced in japan, while processing and assembly have been concentrated in other east asian countries. overseas economies, particularly the united states and china, continue to expand. the u. s. economy has been maintaining expansionary momentum with a steady increase in capital spending and a large jump in corporate profits, despite several weak economic indicators. the federal reserve board raised its target federal funds rate by 25 basis points in june and august, respectively. the east asian economies have been growing steadily, with china likely to continue its high growth. in japan, real gdp growth slowed to an annual rate of 1. 7 percent in the second quarter, following high growth in the two preceding quarters. nevertheless, it is our overall judgment that japan β s economy has been in a recovery process, leading to a return to a sustainable growth path in light of the background i have just described. a rise in exports has raised industrial production and corporate profits, which in turn generates an expansion in business fixed investment. in the labor market, the number of employees has been increasing. japan β s economy is thus expected to continue recovering, gathering stronger momentum. the positive effects of the increases in production and corporate profits on household income are expected to become visible, laying stronger foundations for a gradual recovery in private consumption. corporate sector it is accurate to say that japan β s current recovery is due to the better | 1 |
months. the annual growth rate of m3 in october, at 12. 3 %, is likely to have been influenced by a number of temporary factors, such as the flattening of the yield curve, the financial market turmoil and specific transactions associated with the restructuring of certain banking groups. however, even taking these special factors into account, the underlying rate of monetary expansion remains strong. moreover, the sustained expansion of loans to the domestic private sector, which grew at an annual rate of 11. 2 % in october, points to the continued vigour of underlying monetary dynamics. monetary developments therefore continue to require very careful monitoring, both to detect underlying trends associated with inflationary pressures at longer horizons and to better understand shorter - term dynamics. such monitoring will also provide a more complete picture of the response of the private sector to the increased volatility in financial markets. a broad assessment of underlying trends in money and credit growth is particularly important at present given recent financial market developments. heightened financial volatility may influence the short - term behaviour of money - holders and thereby complicate the extraction of the underlying trend monetary developments. at the same time, monetary and credit data can also offer an important insight into how financial institutions, households and firms have responded to the financial market turmoil. for the time being, however, there is little evidence that the financial market turbulence since early august has strongly influenced the dynamics of broad money and credit aggregates, although specific balance sheet items, such as holdings of money market fund shares / units, may have been affected. indeed, the growth of bank loans to households and non - financial corporations has remained robust in recent months, which may suggest that the supply of credit has not been impaired. further data and analysis will be required to develop a more complete view of the impact of the financial market developments on bank balance sheets, financing conditions and money and credit growth. to sum up, a cross - check of the outcome of the economic analysis with that of the monetary analysis fully confirms the assessment that there are upside risks to price stability over the medium term, in a context of vigorous money and credit growth and against the background of sound economic fundamentals in the euro area. at the same time, the reappraisal of risk in financial markets is still evolving and uncertainty about the potential impact on the real economy has continued. consequently, the governing council will monitor very closely all developments. our monetary policy stands ready to counter upside risks to price stability, as required by our mandate | is likely to moderate only gradually in the course of 2008. hence, the period of temporarily high rates of inflation would be somewhat more protracted than previously expected. the december eurosystem staff projections foresee annual hicp inflation to be between 2. 0 % and 2. 2 % in 2007, but then to rise to between 2. 0 % and 3. 0 % in 2008. for 2009, hicp inflation is projected to lie between 1. 2 % and 2. 4 %. compared with the september 2007 ecb staff projections, the projected ranges for hicp inflation in 2007 and 2008 have shifted upwards. forecasts from international organisations which incorporate recent inflation developments give a broadly similar picture. these projections largely mirror the assumed path of oil and food prices, for which available futures prices suggest a deceleration in the course of next year. on the domestic side, unit labour cost growth is projected to increase over the projection horizon. in this context it is important to emphasise that the staff projections assume that recent oil and food price dynamics and their impact on hicp inflation will not have broadly - based second - round effects on wage - setting behaviour. this is a key assumption. a further key assumption is that growth in profit margins will moderate over the projection horizon. in combination, these two assumptions imply, in the context of the staff projections, a continuation of overall contained domestic cost pressures, which contributes to the moderation in inflation projected in 2009. in the governing council β s view, risks to this medium - term outlook for price developments are fully confirmed to lie on the upside. these risks include the possibility of further rises in oil and agricultural prices, continuing the strong momentum observed in recent months, as well as increases in administered prices and indirect taxes beyond those foreseen thus far. moreover, taking into account the existence of capacity constraints, the favourable momentum of real gdp growth observed over the past few quarters and the positive developments in labour markets, stronger than currently expected wage growth may emerge. furthermore, an increase in pricing power in market segments with low competition could materialise. it is therefore crucial that all parties concerned meet their responsibilities and that second - round effects on wage and price - setting stemming from recent commodity price rises be avoided. to that end, any explicit or de facto indexation of nominal wages to prices should be eliminated. the monetary analysis confirms the prevailing upside risks to price stability at medium to longer - term horizons. money and credit have both continued to grow vigorously in recent | 1 |
deal or a disorderly outcome. 1 / 6 bis central bankers'speeches just a couple of weeks ago, the central bank published our revamped financial stability review3. even if you don β t get through the whole report, i recommend the first couple of pages at least. they highlight what we see as the key risks currently facing the irish economy and financial system. it also addresses how we can build resilience to these risks. a disorderly brexit is one of the main risks on the horizon. as the possibility of a no deal scenario looms ever larger, the uncertainty around the final outcome is already weighing on business and consumer sentiment. within the central bank, we have been working on brexit since before the referendum4. the work has focused on a few main areas : first β understanding the possible effects of brexit, in terms of the risks to the irish economy, to the financial system, and to consumers. since the referendum in june 2016, the main impact thus far has been through the depreciation of sterling against the euro. however, the significant trade and investment links with the uk mean that the irish economy is more exposed to the risks from the uk β s departure than any others, apart from the uk. second ensuring that existing irish financial services firms understand and are planning for the impact that brexit will have on their businesses, so that firms can continue to serve customers after the uk departs the eu. the third important area has been wider contingency planning for the system and taking actions to mitigate the most important and immediate threats to the financial system. ensuring there is no loss of market access for the payment and settlement of equities and exchange traded funds ( etfs ) for example. finally, we have been dealing with the authorisation of firms. of which there were well over 100 applications for either new licenses or extensions to existing ones. these applications vary from large banks to small investment firms or payment institutions. overall, in terms of our wide work on brexit, we have tried to be as transparent as possible. for example, we have published our quarterly reports prepared for the commission of the central bank ( our board ), albeit in redacted format on our website5. a no - deal brexit would likely bring considerable volatility to financial markets, with heightened stress and a potentially large depreciation of sterling6. following the financial crisis, we have been building resilience in | spending is likely to grow more gradually and broadly in line with developments in incomes. the recent ecb staff macroeconomic projections point to a somewhat improved growth outlook for this year and next as compared to the past two years. taking mid - points of the ranges, the projections foresee economic growth of around 2 per cent in both 2006 and 2007, as compared with 1. 4 per cent last year. while it has taken time, slowly the euro area economy is returning towards its trend growth rate. inflation developments having spoken about activity developments, i will now turn to talk about inflation developments and prospects, before moving on to talk about monetary policy. the headline rate of inflation ( hicp ) in the euro area has remained just above 2 per cent in recent years, mainly as a result of the strong increases in energy prices and, to a lesser extent, rises in administered prices and taxes. however, underlying domestic inflationary pressures have been relatively subdued and, overall, the passthrough of past oil price increases to consumer prices has been limited. the subdued growth in domestic demand in recent years helps explain the limited ability of producers to pass - on increases in input costs to consumers. another important factor in this respect has been moderate wage growth, which, in turn, has reflected the subdued nature of labour markets. it was against this background that the governing council was able to keep interest rates unchanged at historically low levels for two and one - half years between june 2003 and december 2005. maintaining price stability β monetary policy decisions why then, you might ask, given this background, has the governing council twice raised interest rates in the past three months? the answer lies in the gradual upward creep of inflation risks. in the course of 2005, inflation projections were progressively revised upwards, mainly, though not exclusively, reflecting stronger than expected increases in oil prices. reflecting this, as the year progressed, upside risks to the maintenance of medium - term price stability were viewed to be gradually increasing. this assessment was reinforced by the evidence of the monetary analysis, which pointed to strong monetary growth, ample liquidity and rapid expansion of credit β especially consumer credit, notably for housing. by the end of 2005, the evidence from both the economic and monetary perspectives was that an adjustment of the very accommodative stance of the ecb β s monetary policy was warranted. therefore, on 1 december last, the governing council decided to increase interest by 25 basis points. with risks to the outlook for inflation remaining on the upside | 0.5 |
immigrant labor supply. although we have seen signs that the labor market is coming into better balance, progress has slowed. recent employment reports continue to show a tight labor market, and the unemployment rate remains below 4 percent, with the number of job openings relative to unemployed workers still above its pre - pandemic level. throughout last year, the average pace of job gains slowed, and 1 / 9 bis - central bankers'speeches the labor force participation rate rose, but in recent months, job growth has rebounded. labor force participation flattened out around last year's peak, which suggests no further improvement in labor supply along this margin, as labor force participation among those aged 55 and older has been persistently low. at its current setting, our monetary policy stance appears to be restrictive, and i will continue to monitor the incoming data to assess whether monetary policy is sufficiently restrictive to bring inflation down to our target. as i've noted recently, my baseline outlook continues to be that inflation will decline further with the policy rate held steady, but i still see a number of upside inflation risks that affect my outlook. first, much of the progress on inflation last year was due to supply - side improvements, including easing of supply chain constraints ; increases in the number of available workers, due in part to immigration ; and lower energy prices. it is unclear whether further supply - side improvements will continue to lower inflation. geopolitical developments could also pose upside risks to inflation, including the risk that spillovers from regional conflicts could disrupt global supply chains, putting additional upward pressure on food, energy, and commodity prices. there is also the risk that the loosening in financial conditions since late last year and additional fiscal stimulus could add momentum to demand, stalling any further progress or even causing inflation to reaccelerate. finally, there is a risk that strong consumer demand for services, increased immigration, and continued labor market tightness could lead to persistently high core services inflation. given the current low inventory of affordable housing, the inflow of new immigrants to some geographic areas could result in upward pressure on rents, as additional housing supply may take time to materialize. wage growth has remained at an elevated rate of about 4 to 5 percent, still higher than the pace consistent with our 2 percent inflation goal given trend productivity growth. in light of these risks, and the general uncertainty regarding the economic outlook, i will continue to watch the data closely as i assess the appropriate path of monetary policy. the frequency and | the points made at that meeting of minds. while it was generally agreed that economic growth is one of the most important challenges facing all countries, it was emphasised that no universal recipe for growth exists since each country faces a different set of constraints. there is more to growth than good macroeconomic policy. to obtain higher growth does not seem to require a large set of very fundamental or deep reforms, but rather a more effective focus on a small set of binding constraints. it is extremely important that appropriate strategies be developed to properly identify such binding constraints. such action requires an institutional setting that allows for a dynamic process where problems are identified, on the one hand, but also effectively addressed, on the other. in doing so not only government failures have to be dealt with, but also market failures, such as large externalities, that require government action. the list of possible binding constraints is virtually endless. some studies have suggested that high levels of taxation discourage growth through their effect on incentives to work, save and innovate. others have pointed to the importance of protecting private property rights if growth is to be dynamic. still others note the importance of human capital, and highlight the role of education as a determinant of economic growth. excessive rules and regulations can stifle economic progress, slowing fixed capital formation, undermining flexibility and discouraging productive enterprise. establishing which of these, and many more candidate constraints, is most relevant and then getting policies right is crucial if trend growth is to be increased. as these examples illustrate, many of the things that impact on the quantity and efficiency of the factors of production are quite broader than monetary policy and the ambit of central bank influence. 1 / 4 as we all know, economic growth might be a necessary but not a sufficient factor in employment creation. what monetary policy can do sound monetary policy can provide a stable platform for sustainable economic and employment growth. this is recognised in national economic policy and in the south african reserve bank act, both of which assign to the bank the objective of achieving and maintaining price stability in the interest of balanced and sustainable economic growth in the republic. high inflation causes numerous well - documented distortions and frictions in the economy. the higher inflation is, the more variable it also tends to be, adding further uncertainty to economic decisionmaking. low inflation enhances predictability and planning, reduces the uncertainty premia built into nominal and real interest rates, and thereby supports sustained and balanced economic growth. the view that a monetary policy | 0 |
looking view, it will be easily apparent that emdcs will need to raise public debt to finance their development and in relative terms their public debt as a proportion of gdp will need to be higher than that of advanced countries. second, the debt sustainability of countries should be evaluated not on some global norms, but with reference to individual country context. to what extent countries will be able to finance the servicing of their debt through higher growth should be built into the evaluation. furthermore, the nature of debt has to be kept in view. for example, in india our public debt is predominantly domestic and therefore india β s potential to influence global systemic imbalances because of public debt is negligible if not nil. 9. the third comment i want to make has to do with how we are interpreting the intent of our leaders which was to focus on persistently large imbalances. the question i would like to raise is whether we should dissipate our energies in the second step by looking at all large imbalances, or focus instead only on large, systemically important imbalances that have significant spillover effects. is it so difficult to identify the latter through a simple statistical exercise such as country imbalances as a proportion of total imbalances or global gdp? this way we can focus our attention on the root causes of persistently large imbalances and impediments to their adjustment as mandated by our leaders? 10. that takes me to my fourth and final comment. a question has arisen whether the framework exercise should be looking at only net imbalances of countries or also at intracountry or intra - regional imbalances, as appropriate. the critical question to my mind is not whether imbalances are internal or external, or gross or net, but whether the concerned imbalance generates, or has the potential to generate, significant external spillovers affecting the wider global economy. 11. in conclusion, let me say that an effective outcome is needed to provide a signal that the g - 20 is not only serious in ensuring strong, sustainable and balanced growth for the world economy going forward, but that it is, and it intends to remain, an effective and relevant institution for addressing current structural problems in a fast evolving global economy. thank you. bis central bankers β speeches | approaches. the question we need to consider is whether there is consistency between the results of the statistical and structural approaches. if not, how do we deal with the divergences? 5. second, in the first stage of the exercise, the criteria applied to the systemically important countries have been more stringent. the screening however has been largely mechanical though, based as it was, mainly on deviations from the mean or median. there has been no analysis, however, to check whether such deviations indeed constitute large and systemic imbalances warranting corrective action. such a mechanical approach, without the application of mind, can lead to anomalies. let me give two illustrations of the type of potential anomalies using india as a case study. 6. large deviations from the mean is the criteria adopted for screening in on the basis of private savings irrespective of whether the country concerned is running a current account deficit or a current account surplus, or its stage of economic development. if, for the sake of argument, such a country was running a current account deficit and adjusted its private savings downwards, it would need to expand its current account deficit and then get screened in by the external imbalance indicators. in india, for example, our growth has been driven by domestic savings. if because of the mutual assessment process ( map ), india was bis central bankers β speeches asked to reduce domestic savings, it will increase our dependence on foreign savings, actually adding to imbalances. this would indeed be paradoxical. 7. the second illustration is the treatment of public debt. instead of deviations from the mean / median, what was attempted was deviations from asymmetric reference values for developed and developing countries, with higher thresholds for developed countries. these thresholds are based on historic averages rather than on current assessments of debt sustainability related to expected or projected growth rates. the adjustment period to stabilize the debt is also very backloaded. the year 2030 is long - term enough, and to paraphrase the immortal words of lord keynes, many of us here may well be dead. one reason why the fiscal balance in advanced countries is so important to the global economy is that by virtue of being reserve currency issuing countries their deficits have large spillover effects. 8. there are two issues here. first, there is no justification for using different debt to gdp ratios for advanced countries and emerging and developing countries ( emdcs ). if we take a forward | 1 |
movements in the exchange rate. as long as these movements are in line with fundamentals, these trends represent structural adjustments that do not move the economy away from equilibrium. on the other hand, short term exchange rate volatility is normal in a fully flexible exchange rate regime. the reaction of central banks should depend on their impact on inflation, which in itself depends on the intensity and duration of such volatility. the stronger the duration and the higher the intensity of the shocks, the bigger would be the expected impact on inflation, the greater the risk of rapid shifts in inflation expectations, and the higher the need for a systematic reaction of monetary policy. 3. exchange rate movements and the bank of albania reaction to them the above mentioned facts have guided our reaction to the recent appreciation of the exchange rate in albania. the trend appreciation started around the second half of 2015, but it gathered considerable pace in 2018. lek appreciated on average by 2. 3 percent against the euro in 2016 and 2017, while it appreciated by around 7 percent during the first half of 2018. our analyses indicate clearly differing explanations for the pre and post 2018 appreciation. the 2016 β 2017 lek appreciation has been largely in line with improving fundamentals in the economy. some of these structural improvements include : declining current account deficits, on account of improved exports ; increased capital inflows, on account of high fdis ; reduced financial market risk premia and increased confidence in our financial institutions. 2 / 3 bis central bankers'speeches on the contrary, the rapid appreciation we experienced in 2018 has been largely a fx market driven phenomenon. news of a sudden and sustained influx of foreign currency induced onesided expectations in the fx market. these expectations were reflected in an accelerated supply of foreign currency and delayed demand for it, generating a vicious cycle of continued appreciation. the bank of albania did not react upon the real appreciation trend of the past two years. while minor miss - alignments were still present, we assessed the trend was largely driven by improving fundaments. thus, it allowed us to focus our monetary policy on achieving our 3 percent inflation target. we also did not react upon the recent financial market driven appreciation, in full consistence with our monetary policy and exchange rate regimes. we expected for the market to self - regulate and contain these shocks. however, this did not prove to be the case and the exchange rate appreciation accelerated. a re - assessment of its implication on price stability indicated this appreciation was not compatible with our price | the pace of change in the size of the portfolio, the albanian banking sector continues to lend. to illustrate my point, only in 2018, the banking sector has granted new loans amounting to around eur 1. 1 billion ( equivalent ) to fund business investments, house purchase and consumption. the second moment pertains to the responsibility and the diligence of the banking sector vis - avis lending. as the administrator of public savings, responsibility and due diligence in lending are non - negotiable conditions. measures undertaken to bolster the short and medium - term development of albania should not run against its financial stability in the long term. yet, in coherence with my observations above, i judge that the banking sector should pay more attention to lending. this judgement is based on two theoretical premises and is enabled by an important precondition. first, a more proactive approach to lending is beneficial for the sustainable and long - term development of the banking industry. low return on assets is one of the problems facing the banking sector in albania, in the region, and beyond. such low rates of return β which in albania are induced also by ample foreign currency liquidity and will continue to be favoured by the reduction trend of the public debt and domestic borrowing by the government β increase the vulnerability of the sector to shocks. against this backdrop, the banking sector should increase its orientation toward lending as an instrument to enhance asset profitability and boost its longterm stability. in the same vein, leaving potential sectors or clients outside the focus will push them to turn to other segments of the financial market. this implies less income for the banking sector not only in the form of less income from lending, but also in the form of less income from other products in the package of services that banks offer to clients. second, a more proactive approach to lending is beneficial for the sustainable and long - term development of the albanian economy. our analyses, based on the available information and the bank lending survey for albania suggest a divergence in the pace of improvement in loan demand and supply. while this divergence does not seem to have, as of yet, a substantial impact on 2 / 5 bis central bankers'speeches lending, if it deepens further it will jeopardise the performance of credit and the pace of economic growth. in this light, i would like to underline that a series of studies, both at home and abroad, emphasise the fact that the albanian economy would | 0.5 |
maucas, which will benefit one and all. last but not least, i thank the bank β s board of directors, my two deputy governors and the staff of the bank for their guidance and hard work. thank you. payment systems have always rested at the heart of the banking and financial system. over time, they have evolved from the traditional narrow channel for transferring funds into a broader integrated network for creating additional forms of value. the establishment of networks and systems for retail payments has acted as a catalyst in supporting financial access in developing countries. 4 / 4 bis central bankers'speeches | ##tes from the bank of mauritius act and the national payment systems act. the bank is mandated to oversee as well as own payment schemes. the perception of collusion or conflict of interest does not arise as the bank will have separate teams for operations and oversight. the bank has always adopted an enabling approach with regard to new technology in order not to stifle innovation. maucas is a testimony of the bank β s commitment towards maintaining an innovative, yet secure, payment system ecosystem. the launch of maucas is not the end in itself. it is the start of a fantastic journey. the bank will go around improving the system and adding new features. the bank intends to establish bilateral ties with switch operators from other countries with a view to bringing down the cost of transactions for trade in goods and services, including for tourism purposes, with these countries. the creation of a payment card for the islands in the region is another project that will contribute to higher trade among these countries. the bank has other projects in the pipeline for the benefit of financial institutions and the public at large. on the regional front, mauritius is already a member and host of the comesa regional payment and settlement system ( repss ). maucas may serve as a regional switch to the participating countries. it can be used for cross border retail payments through mobiles and cards, with settlement being carried out on repss. honourable prime minister, in your 2016 / 17 budget speech, you mentioned that the bank of mauritius will come up with a national payment switch as well as introduce a national payment bill. both have materialised under your guidance and support. testing but interesting times lie ahead as digital transformation brings about fundamental changes in working modes and business models of the financial sector as well as changing 3 / 4 bis central bankers'speeches customer preferences. such openings can be but beneficial to our society and economy. we must not only take advantage of the opportunities but also be alert to manage any accompanying risks. now that the bank is launching maucas, i invite banks and non - bank operators to make extensive use of this platform. the opportunities to develop new payment services are immense. both payment service providers as well as consumers stand to gain from this modern system. operators in fintech can also leverage this platform to launch new products and services. this journey would not have been as fruitful without the support of our partners, banks and other economic stakeholders. i thank all chief executives of banks for their assistance and cooperation to deliver on | 1 |
its structure and strengthen the delivery of its director training program, so that it may better meet the increased demands placed on directors in this current environment. the continual efforts by industry practitioners, investors and regulators to improve corporate governance have enabled singapore to stay ahead of the field. the world economic forum's global competitiveness report 2009, for instance, ranked singapore first in corporate governance standards in asia. lessons from the crisis in the aftermath of crises, corporate governance standards and practices often come under scrutiny. for instance, after the enron / worldcom failures, critics pointed to the lack of independence of auditors and audit committees, and to deficiencies in accounting standards. after the bursting of the dot. com bubble, attention was drawn to the severe conflicts of interest by brokers and analysts. the recent financial crisis has been no different. indeed, reviews by international bodies and national agencies have found that weak corporate governance played a role in this crisis. for instance, the oecd report on " the corporate governance lessons from the financial crisis " 1 noted that " the financial crisis can be, to an important extent, attributed to failures and weaknesses in corporate governance arrangements which did not serve their purpose to safeguard against excessive risk taking in a number of financial services companies. " while many of the corporate governance failures that have been uncovered so far affected financial companies, many of the structural weaknesses may also be common to large and complex listed firms. it is therefore relevant for boards of other companies to reflect on these findings. let me briefly highlight a few common themes. the first relates to the quality and composition of boards. research shows that although having a good balance of directors with a range of skills and experience that are relevant to the business of the firm is an essential foundation for good corporate governance, this was also often the most neglected. a number of reports2 also found weaknesses in the implementation of effective risk management. in many cases, risk was not managed on an enterprise - wide basis and boards were not fully apprised of the level of risk facing the company. overseas regulators are now reviewing the role of boards in providing guidance on the alignment of corporate strategy with risk - appetite, as well as on appropriate internal structures in risk management. not surprisingly, remuneration practices have attracted the most public attention. the alignment of executive and board remuneration with the longer term interests of the company and its shareholders is a widely accepted corporate governance principle. nonetheless, compensation practices that rewarded staff handsomely for short - term gains | christian noyer : central banking β the way forward? opening speech by mr christian noyer, governor of the bank of france and chairman of the board of directors of the bank for international settlements, at the international symposium of the bank of france β central banking : the way forward? β, paris, 7 november 2014. * * * mesdames et messieurs, ladies and gentlemen, [ je vais parler anglais pour remercier la majorite d β etrangers presents ici, une interpretation simultanee etant assuree en francais. ] i am delighted to welcome you to paris for this banque de france symposium. this recurrent event brings together a large number of experts from the world over : not only central bankers β of whom there are more than a hundred in this room, representing all five continents β but also academics, practitioners and members of financial institutions, governments and international organizations alike. this extraordinary mix of participants will surely provide some answers to the open question concerning the future of central banks, as indicated by the title of this symposium, β central banking : the way forward? β central banks have been considered the only game in town. might the very high expectations placed on them backfire in the future? yet, we all know that central bankers do not act in a vacuum when pursuing monetary and financial stability. first, monetary policy interacts with fiscal policy, the legacy of which has resulted in high public debt in many countries after the great recession. this is the topic of our first session chaired by my esteemed colleague, haruhiko kuroda, governor of the bank of japan. second, central banks and financial regulators, which work closely together, have had to adapt to important changes in financial intermediation, especially in the aftermath of the financial crisis. my dear european neighbour, jens weidmann, president of the deutsche bundesbank, will chair the second session dedicated to this question. third, globalization means that cross - border flows have to be taken into account and raises the question of the scope and limits of policy autonomy, not only in smaller open economies, but also in larger ones because of spillovers and the resulting feedback effects. this will be tackled in the third session chaired by my good friend, jacob frenkel, president of both jpm chase international and the g30 board of trustees. last, to wrap up all aspects, what better than a panel on the future of the policy mix, including | 0 |
stability board ( fsb ) recommended strengthening the existing global interest rate benchmarks, in particular the libor. it also called for the development of alternative benchmark rates. the snb is taking an active part in these reform efforts. it is represented on the relevant committees and plays a supportive role by participating in discussions with market participants, as well as with swiss and foreign authorities. reforms have been implemented at international level, particularly as far as the libor is concerned. they focus on standardising the interest rate calculation by the panel banks and making it more transaction - based. however, volume in the market segment underlying the libor remains low. at national level, the main emphasis is on the replacement of the tois fixing. 1 the tois fixing is a panel - based reference interest rate for the unsecured call money market and is used 1 tois stands for tomorrow / next overnight indexed swap. page 3 / 7 berne, 15 december 2016 andrea m. maechler news conference for interest rate derivatives. despite extensive reform efforts, no stable long - term solution has been found. underlying trading volume continues to be very low and other banks are unwilling to report interest rate conditions. for this reason, the tois fixing will be abandoned as of end - 2017. saron, the reference interest rate for secured call money, will be used in its place. saron was launched by the snb in cooperation with six in 2009. we are confident that it will establish itself as a key swiss franc reference rate. further work will be coordinated by a working group comprising financial sector representatives. key information on this topic is publicly available on the snb β s website. 2 2 http : / / www. snb. ch / en / ifor / finmkt / fnmkt _ benchm / id / finmkt _ reformrates page 4 / 7 berne, 15 december 2016 andrea m. maechler news conference slides page 5 / 7 berne, 15 december 2016 andrea m. maechler news conference page 6 / 7 berne, 15 december 2016 andrea m. maechler news conference page 7 / 7 | compared with around 95 % at the end of june. the global rise in yields has led to a reduction in the share of negative - yielding government bonds worldwide from over 30 % at the end of june to around 20 % most recently. although this trend can be seen as a step towards normalisation on the bond markets, it is important to recognise that higher us yields and the associated appreciation of the us dollar could become a burden for some emerging economies. on the foreign exchange market, the swiss franc came under increased upward pressure for a brief period after the brexit vote. this pressure abated again, not least due to the swiss national bank β s willingness to intervene on the market. while the pound sterling continued to lose value over the summer months, other key currencies, including the swiss franc, moved sideways within a narrow range ( cf. chart 3 ). heightened uncertainty in the run - up to the us presidential election was once again reflected in growing demand for safe - haven currencies on the foreign exchange market, leading to slightly higher swiss franc exchange rates. following the us election, the us dollar appreciated on a broad basis. the strengthening of the currency occurred against the backdrop of the rise in us interest rates mentioned earlier. the dollar gained approximately 3 % in trade - weighted terms after the election. the recent developments in the us also had an impact on other currency areas. currencies in emerging economies in particular came under pressure and, as a group, weakened by around 4 % against the us dollar. on a trade - weighted basis, the swiss franc has changed little from its end - june level. nevertheless, swiss franc exchange rates moved in different directions. while appreciating more sharply against the yen than against the euro and pound sterling, the swiss franc weakened against the us dollar and currencies of commodity - exporting countries. overall, the swiss franc is still significantly overvalued. the market environment remains challenging and fraught with global economic and political risks. the snb therefore continues to monitor events on the foreign exchange markets very closely. impact of negative interest on the money and capital markets let me now turn to the impact of negative interest on sight deposits at the snb on the swiss franc money and capital markets. as you know, since the introduction of the negative interest rate in january 2015, key money market rates such as the three - month libor have hovered, as intended, around β 0. | 1 |
john murray : stepping outside β analysing the canadian economy from an international perspective remarks by mr john murray, deputy governor of the bank of canada, presented to the victoria chapters of the certified management accountants, certified general accountants and the financial management institute, victoria, british columbia, 6 march 2014. * * * accompanying charts can be found at the end of the speech. introduction good morning. thank you for the invitation to address your workshop. one of my responsibilities as a deputy governor of the bank of canada is overseeing the bank β s analysis of international economic developments. and before i became a deputy governor, i was chief of the bank β s international department. so over the years, i have had the opportunity to study other economies and the policies of other governments and central banks in some detail. looking at canadian economic issues from an international perspective allows us to ask : how are we the same? how are we different? there is often a benefit to looking outward, examining developments beyond our borders as an aid to diagnosing and addressing suspected policy puzzles and problems at home. at the same time, we must be careful not to assume that what has happened elsewhere will necessarily happen here. canada β s superior economic performance during the financial crisis and through the subsequent recovery, relative to that of most other advanced economies, was due in no small part to the bank of canada β s success in controlling inflation and the credibility that it has earned since 1991, when we adopted our inflation - targeting monetary policy ( chart 1 and chart 2 ). 1 of course, other advantages, such as a resilient financial system and timely fiscal stimulus, also contributed importantly. however, i am not here to boast about our past successes. my purpose today is more immediate, and comes in three parts. i will begin by describing the two major macroeconomic challenges to sustainable economic growth that we are presently facing in canada. next, i will outline three analytic puzzles underlying those challenges, which we need to understand in order to formulate an appropriate monetary policy response. finally, i want to demonstrate how information gleaned from the experiences of other countries can help answer these puzzles and guide the conduct of policy here. two major macroeconomic challenges economic activity in canada has remained significantly below its potential level for some time ( chart 3 ), and the weak rates of inflation that have recently been observed are largely a reflection of this ( chart 4 ). the bank β s first challenge, therefore, is to return inflation to the 2 | stephen s poloz : the way home β reading the economic signs remarks by mr stephen s poloz, governor of the bank of canada, to the greater charlottetown area chamber of commerce, charlottetown, prince edward island, 19 may 2015. * * * introduction good afternoon. it β s always a pleasure to be here in prince edward island. the confederation bridge has simplified the trip since it first opened. if you come to the island by car, you don β t have to navigate the waters of the northumberland strait. according to the canadian encyclopedia, the shallow waters of the strait are susceptible to strong currents, tides and turbulence. even the most skilled sailor can find it challenging to read the winds and waves, and to judge all the cross - currents. if only the canadian economy had a similar bridge. we β ve been on a voyage of rebuilding since the great recession. but the trip has been longer and more complicated than previous recoveries because of all the cross - currents acting on the economy. not only are the headwinds of the global financial crisis still blowing, but now we β re also dealing with lower prices for oil and other key commodities, which previously were a key growth engine for us. the implications for income and investment, and the adjustments they β re causing across sectors and regions, may take years to work themselves out. the drop in oil prices is the most recent setback for the canadian economy, but it β s not the first time we β ve had a shock that β s had different effects from one region to another. that β s what you β d expect in a large country that β s rich in diverse commodities. certainly, people working in the lobster fishery or the mussel and oyster farming sector have seen their share of challenging periods in the past. but companies have adjusted and made quality improvements that are allowing aquaculture and the fishery to strengthen as the u. s. economy recovers. at the same time, p. e. i. β s exports are benefiting from diversification into sectors such as aerospace and biotechnology, as well as expansion into emerging markets, particularly asia. p. e. i. β s experience is an example of the resilience that we β ve seen in the past across canada. we β re expecting to see it again as the economy continues on its way home, toward natural, self - sustaining, and balanced growth at full capacity. what i β d like to do today is talk about how the voyage is | 0.5 |
for a variety of taylor rules and their implication for policy, see the monetary policy report, available on the board's website at https : / / www. federalreserve. gov / monetarypolicy / publications / mpr _ default. htm. i. note : on october 14, 2024, a sentence on page 10 was corrected to say " restrictiveness " : " i think the larger message of the sep is that there is a considerable extent of policy restrictiveness to remove, and if the economy continues in its current sweet spot, this will happen gradually. " 6 / 6 bis - central bankers'speeches | christopher j waller : thoughts on the economy and policy rules at the federal open market committee speech by mr christopher j waller, member of the board of governors of the federal reserve system, at " a 50 year retrospective on the shadow open market committee and its role in monetary policy " conference, sponsored by the hoover institution, stanford university, stanford, california, 14 october 2024. * * * thank you, athanasios, and thank you for the opportunity to be part of this very worthy celebration. 1 in support of the theme of this conference, i do have some thoughts on the shadow open market committee's contributions to the policy debate, in particular its advocacy for policy rules. but before i get to that, i am going to exercise the keynote speaker's freedom to talk about whatever i want. to that end, i want to take a few minutes to offer my views on the economic outlook and its implications for monetary policy. so let me start there, and afterward i will discuss the role that policy rules play in my decision making and in the deliberations of the federal open market committee ( fomc ). in the three weeks or so since the most recent fomc meeting, data we have received has been uneven, as it sometimes has been over the past year. i continue to judge that the u. s. economy is on a solid footing, with employment near the fomc's maximum employment objective and inflation in the vicinity of our target, even though the latest inflation data was disappointing. real gross domestic product ( gdp ) grew at a 2. 2 percent annual rate in the first half of 2024, and i expect it to grow a bit faster in the third quarter. the blue chip consensus of private sector forecasters predicts 2. 3 percent, while the atlanta fed's gdpnow model, based on up - to - the moment data, is predicting real growth of 3. 2 percent. earlier, there were concerns that gdp in the first half of this year was overstating the strength of the economy, since gross domestic income ( gdi ) was estimated to have grown a mere 1. 3 percent in the first half of this year, suggesting a big downward revision to gdp was coming. but revisions received after our most recent fomc meeting showed the opposite - gdi growth was revised up substantially to 3. 2 percent. this change in turn led to an upward revision in the personal saving rate of about 2 percentage points | 1 |
nsl policy. to enforce and further improve the nsl policy is a target clearly specified at the sixth plenary session of the 16th cpc central committee and in this year β s government work report. in the light of nsl policies and measures, further development of local student loans is an important step for the enforcement and improvement of nsl, an important component to establish and strengthen financial support system to students with financial difficulties, and also reflects the trend and future path for development of student loan business. i hope the pbc lanzhou sub - branch can take it as a good opportunity to carry out the work of student loans, further strengthen communication and coordination with the educational and fiscal authorities, enhance research and investigation, sum up experience and lessons in time, improve continuously institutional building and risk prevention mechanisms, so as to establish step by step a systematic and complete policy system of local student loans, and explore a long - lasting system of local student loans, for the benefits of students and families with financial difficulties in gansu province. valuable theoretical explorations and practical experiences should be studied to help relevant government agencies design relevant policies aimed to promote local student loans in the whole country. as a final note, i wish a healthy development of the financial sector in gansu province and greater achievement of student loan work! | provide an opportunity to re - evaluate economic capital at a later time. the financial system should therefore remain sound. many borrowers with foreign - denominated loans are in an extremely difficult position. their anger and disappointment are understandable. it is appropriate to point out, however, that although the method stipulated in the act on interest and indexation is not as beneficial to borrowers with foreign - denominated loans as the continued application of the foreign interest rates set forth in the original loan agreements β which some have demanded β it still improves the position of borrowers considerably, compared to the exchange rate linked loan agreements. implementation according to the act on interest and indexation therefore represents a compromise : it offers borrowers a more advantageous result than under the original loan agreements while protecting both the public interest and the interests of all debtors and taxpayers, who would have to bear the expense if the most extreme demands of some groups were to be met. the main point is, however, that this approach is enshrined in the law, in the opinion of the supervisory bodies concerned, and is necessary in order to preserve financial stability. risk is always present in any nation β s financial system, and it can never be totally eliminated. uncertainty about the interpretation of this supreme court decision represents substantial additional risk. the positive side of the situation is that supervisory bodies, the government, and the legislature can limit this risk to a considerable extent if they respond appropriately. to simplify somewhat, it can be said that the economic programme pursued by the government with the support of the international monetary fund aims to restore trust : trust in the sustainability of public sector finances, trust in the stability of iceland β s financial system, and trust in the stability of the icelandic krona. these three elements of trust are so closely intertwined that if one of them fails, the other two are unlikely to remain intact. the past several months have seen a number of positive developments. the krona has appreciated, broad - based fiscal consolidation plan has been implemented, and the reconstruction of the financial system is proceeding apace. we must not sacrifice these improvements for momentary popularity. consequently, supervisory bodies, governmental authorities, and the legislature must do everything in their power to ensure that these achievements are not squandered. there is good reason to take a closer look at what is at stake. many of the world β s nations are on the brink of a sovereign debt crisis. iceland has been among them but is well on the | 0 |
manufacturing pmi global growth rate ( imf projections ) s. a., di. global economy advanced economies emerging and commodity - exporting economies 6. 0 y / y % chg. 5. 5 5. 0 2020 : + 3. 4 % 4. 5 2018 : + 3. 6 % 4. 0 3. 5 3. 0 2. 5 1. 5 2019 : + 3. 0 % average from 1980 through 2018 : + 3. 5 % 2. 0 projections 1. 0 0. 5 0. 0 cy12 - 0. 5 cy 00 notes : 1. in the left chart, figures for the global economy are the " j. p. morgan global manufacturing pmi. " figures for advanced economies as well as emerging and commodityexporting economies are calculated as the weighted averages of the manufacturing pmi using gdp shares of world total gdp from the imf as weights. advanced economies consist of the united states, the euro area, the united kingdom, and japan. emerging and commodity - exporting economies consist of 17 countries and regions, such as china, south korea, taiwan, russia, and brazil. notes : 2. in the right chart, figures for 2019 and 2020 are the imf's projections as of october 2019. sources : ihs markit ( Β© and database right ihs markit ltd 2019. all rights reserved. ) ; imf, etc. chart 2 i. economic developments world semiconductor shipments s. a., q / q % chg. - 5 - 10 - 15 - 20 - 25 cy 00 note : figures are based on staff estimates using wsts data. chart 3 i. economic developments exports, production, and business sentiment exports and production business conditions di ( tankan ) 115 s. a., 2012 / q1 = 100 di ( " favorable " - " unfavorable " ), % points real exports manufacturing nonmanufacturing production - 5 - 10 - 15 cy 12 - 20 cy 12 sources : ministry of finance ; ministry of economy, trade and industry ; bank of japan. chart 4 i. economic developments business fixed investment business fixed investment plans ( tankan ) y / y % chg. software investment ( tankan ) fy 2005 = 100 all industries construction retailing accommodations, eating & drinking services fy 2019 fy 2018 fy 05 average ( fy 2004 - 2018 ) y / y % chg. r & d expenditure manufacturing transport equipment chemicals - | been high, particularly in straight bonds. growth in monetary aggregates in terms of m2 + cds year - to - year average outstanding has continued at around 3. 0 per cent. 3. looking at individual components of final demand, public - sector investment will be supported by implementation of public works included in the government β s supplementary budget for fiscal 1996 for the time being, but it is expected to follow a declining trend. net exports, on the other hand, are likely to continue to be steady even after the recent large increase. this reflects the robust increase in overseas demand, and the recovery in the price competitiveness of japan β s manufacturing industry supported by the yen β s depreciation until early spring. in these circumstances, corporate profits on the whole are expected to continue improving in fiscal 1997 although with varied strength across sectors. business fixed investment is also expected to continue increasing, mainly reflecting 1 ) increases in corporate profits, 2 ) further progress in capital stock adjustments, and 3 ) the rise in information - related investment. however, because of the remaining balance - sheet adjustment pressures and the absence of leading industries, the increase in business fixed investment is unlikely to gather significant momentum for the time being. the growth in the employees β income has been rising gradually owing to the increase in bonus payments and the moderate recovery in employment growth, reflecting the improvement in the labor market conditions. this shows that the recovery in the business sector has spread to the household sector. thus, recovery in personal consumption is expected to continue after the reaction to the rise in demand ahead of the consumption tax hike subsides in the near future. however, the pace of recovery is likely to be moderate considering the increases in the tax burden, such as the rise in the consumption tax. meanwhile, housing investment, which is in a generally favorable environment including low interest rates, is expected to recover somewhat in the second half of fiscal 1997, although it has recently been weak reflecting the reaction to the surge in demand ahead of the consumption tax hike. 4. with respect to price developments, the downward pressure on domestic prices from the increase in manufactured imports has weakened, as the rise in import penetration rate has paused. on the other hand, the upward pressure on import costs from materials prices has also subsided owing to the decline in crude oil prices since spring 1997 and the appreciation of the yen. thus, import prices are not exerting significant upward nor downward pressure on domestic prices. meanwhile, final demand will continue to recover on the whole, | 0.5 |
their triadic task effectively in the new conditions of time and space. the new context has been created by the market, evolves in response to market forces and basically meets the needs of private interests. it is a creature of the market much more than of public authorities. partly because of this evolution central banks and governments have become much more respectful of market forces, even humble. they are much more conscious that wealth and welfare are created primarily in and by the market. they know that this is a much more powerful beast than its would - be tamer. the effectiveness of both the instruments on which central bankers rely - banking operations and regulatory provisions - have been eroded by the innovation in market practices and the blurring of national frontiers. to some extent this is healthy. market players are not there to serve us, we are here to serve the economy. yet, this downsizing of our role should not be carried too far. there is still a public interest to be promoted that private actions cannot be counted upon to serve. there are still grounds for being proud to serve the public interest and for claiming that central banks should have the means to achieve their ends. the fact that markets are powerful, global and fast - moving, while central bank operations and regulations are national, intrusive and burdensome, does not mean the monetary system can do without a central bank or a bank regulator. 11. basle, the bis, the meetings of the community of central bankers, from the governors down to junior officials, are where our profession has strived, largely successfully, to maintain the upper hand over the reality that calls for its public function. the task is being performed notwithstanding the wide diversity of national laws, traditions, operational practices and institutional constraints. i am a convinced institutionalist, because i believe that without a β rule of law β liberty and peace - the key prerequisites for economic activity - cannot survive for long. and my basic training, as well as much of my professional experience, have been in the european arena, which is a highly institutionalized cooperative system. in international monetary cooperation basle stands at the β soft β end of the spectrum no legal basis, no written terms of reference, no extensive minutes. mostly personal contacts and work based on the key words of banking and central banking : confidence, trust, credibility, confidentiality. 12. although i started to attend bis meetings well before this tower was constructed ( in the old hotel building of the centralbahnstrasse ), | mr. meyer discusses the connection between policy makers and market participants in the united states remarks by mr. laurence h. meyer, a member of the board of governors of the us federal reserve system, before the fixed income summit of psa, the bond market trade association held in washington, d. c. on 12 / 9 / 97. monetary policy and the bond market : complements or substitutes? it is a pleasure to speak this afternoon at the fixed income summit. to some analysts, a meeting of the heads of the top fifty government securities dealers would represent a concentration of influence over the u. s. economy that perhaps even surpasses that of the meeting i will attend on september 30. indeed, some have argued that the activities of traders and investors in the bond market have become a major stabilizing force in the economy, even to the point of making the fomc redundant. this premise suggests an interesting theme for my address this afternoon - - the connection, or maybe more appropriately the symbiosis, between policy makers and market participants. the importance of market mechanisms the federal reserve has been most successful over the years when it has relied on market mechanisms to carry out its policy intent. regulation q, in its fixing of ceilings on deposit rates, distorted incentives and led to sudden and large swings in the pattern of intermediation. selective credit controls, in retrospect, were a blunt instrument that was too unpredictable and extreme to use effectively. and the board of governors has found that reserve requirements, which represent a tax on depositories because our reserves do not bear interest, are best held steady at the lowest level consistent with the efficient implementation of policy. instead, the federal reserve controls its balance sheet to influence a rate quoted by market participants any time that the reserve market is open - - the overnight federal funds rate. in truth, as you all know, movements in that rate have little direct significance, except to reserve managers and those relatively few others concerned with the overnight cost of funds. but how that rate gets transmitted along the term structure to yields on longer maturity instruments has broad significance that ultimately affects everyone in the economy. and that is where market participants come in. policymakers β influence is focused on the current short rate. it is the job of traders and investors to read our intentions from the public record, form their own judgments as to the course of economic activity and inflation that are based on, in addition to monetary policy, current and prospective fiscal policies and demand and | 0 |
perks m ligoya : the challenge of making sound policy choices speech by dr perks m ligoya, governor of the reserve bank of malawi, at the official opening of the financial programming and polices course, lilongwe, 1 march 2010. * * * the director, macroeconomic management programme, mefmi distinguished resource persons mefmi staff course participants ladies and gentlemen it is a great pleasure and honour for me to join you on the occasion of the official opening of this regional course on financial programming and policies. allow me to begin by extending a very warm welcome to you all on behalf of the government and the people of malawi, and also on my own behalf. i wish to extend a warm welcome to the macroeconomic and financial management institute of eastern and southern africa ( mefmi ) staff and resource persons. we in malawi are most delighted to be associated with mefmi and to host one of your capacity building events once again. a special welcome to colleagues from mefmi member states. may your two week stay in malawi be both enjoyable and fruitful. let me acknowledge the presence of our regional resource persons, who have taken time off their busy schedules to assist us in this important event. i am pleased to note that the team wholly comprises experts trained by mefmi under its flagship fellowship development programme. this is an indication that mefmi β s capacity building efforts are now bearing fruit on a sustainable basis. we wish to commend the institute for this achievement. this course, i am informed, is designed for middle to senior level officials from the ministries of finance and economic planning and central banks. these officials provide an important technical input into macroeconomic and financial policies and are sometimes also involved in policy design and implementation. this course aims at enhancing their understanding of the design and implementation of macroeconomic and financial policies. it is most pleasing therefore to see a number of you here representing key economic and financial institutions in our region. may i urge you all to make the most of this rare opportunity. experience from the region shows a general institutional bias in skills among our economists. for example, economists in the ministries of finance tend to have a firm appreciation of fiscal issues but limited understanding of balance of payments and monetary and financial issues. similarly economists in central banks may also be weak in fiscal and national accounting. this, coupled with the weak coordination among key macroeconomic management agencies, often leads to the formulation of inconsistent macroeconomic policies, resulting in poor economic | ##fmi capacity building model and we expect you to be agents of this effort. it is also our expectation that a few months down the line, mefmi will get a positive feedback from your institutions. ladies and gentlemen, i would like to wish you all a fruitful programme. while i expect you to apply yourselves with full dedication to the core business at hand, please also find time to enjoy our malawi hospitality. lilongwe and its environs has quite a lot to offer, and i hope that over the next two weeks those of you visiting malawi for the first time will be able to sample malawi β s social and cultural menu. without further ado, it is now my humble honour and duty to declare this workshop on financial programming and policies officially open. i thank you for your kind attention. | 1 |
the rate of growth of structural productivity remains well above its pace of a decade ago. moreover, although recent short - term business profits have softened considerably, most corporate managers appear not to have altered to any appreciable extent their long - standing optimism about the future returns from using new technology. a recent survey of purchasing managers suggests that the wave of new on - line business - to - business activities is far from cresting. corporate managers more generally, rightly or wrongly, appear to remain remarkably sanguine about the potential for innovations to continue to enhance productivity and profits. at least this is what is gleaned from the projections of equity analysts, who, one must presume, obtain most of their insights from corporate managers. according to one prominent survey, the three - to five - year average earnings projections of more than a thousand analysts, though exhibiting some signs of diminishing in recent months, have generally held firm at a very high level. such expectations, should they persist, bode well for continued strength in capital accumulation and sustained elevated growth of structural productivity over the longer term. the same forces that have been boosting growth in structural productivity seem also to have accelerated the process of cyclical adjustment. extraordinary improvements in business - to - business communication have held unit costs in check, in part by greatly speeding up the flow of information. new technologies for supply - chain management and flexible manufacturing imply that businesses can perceive imbalances in inventories at a very early stage - - virtually in real time - - and can cut production promptly in response to the developing signs of unintended inventory building. our most recent experience with some inventory backup, of course, suggests that surprises can still occur and that this process is still evolving. nonetheless, compared with the past, much progress is evident. a couple of decades ago, inventory data would not have been available to most firms until weeks had elapsed, delaying a response and, hence, eventually requiring even deeper cuts in production. in addition, the foreshortening of lead times on delivery of capital equipment, a result of information and other newer technologies, has engendered a more rapid adjustment of capital goods production to shifts in demand that result from changes in firms'expectations of sales and profitability. a decade ago, extended backlogs on capital equipment meant a more stretched - out process of production adjustments. even consumer spending decisions have become increasingly responsive to changes in the perceived profitability of firms through their effects on the | covid event, primarily how the shock moved through the financial system and which critical vulnerabilities it exposed. i also want to outline further work that the fsb plans to conduct in light of this experience, including a more in - depth assessment of how various segments of the nbfi sector performed. going forward, i expect the nbfi sector to be an ongoing focus of the fsb. the global financial system and economy prior to the shock when covid - 19 emerged early this year, the global financial system was in several ways fundamentally different than it was at the outset of the financial crisis of more than a decade ago. regulatory reforms implemented in response to that crisis, changes in technology, developments in u. s. dollar funding, and, importantly, the growth of nbfi all contributed to a changed landscape. beyond the growth of the nbfi sector, there has also been considerable change within this sector. business models and financial services provided by nbfis have become more diverse. this variation can be seen in new products, services, and financial models. new types of markets β for example, private debt markets β and new forms of intermediation, such as fintech credit, have sprung up. investments by nonbank entities in certain credit products, such as fixed income exchange traded funds and collateralized loan obligations, and participation in some 1 / 5 bis central bankers'speeches credit segments, such as mortgage and consumer finance, has grown. change is also evident in how the sector operates in different jurisdictions. for example, provision of credit by nonbank fintech lenders varies greatly across fsb member jurisdictions. in sum, nonbanks now play a larger and more diverse role in financing the real economy and managing the savings of households and companies. the past decade also saw an evolution in the global u. s. dollar funding landscape. while the u. s. economy forms a smaller percentage of global gross domestic product than in the past, the u. s. dollar still dominates international finance as a funding and investment currency, and its widespread use has given rise to a complex and geographically dispersed network of financial relationships. this means global economic and financial activity is highly dependent on the ability of u. s. dollar funding to flow smoothly and efficiently between users. in contrast to bank intermediation, market - based financing in u. s. dollars has outpaced the growth of the global economy. nonbank institutions β such as insurers, pension | 0.5 |
, macroprudential measures and, in some instances, even capital flow management measures5. these policies also come with their challenges and can have multilateral spillover effects on global economic and financial stability6. policy co - operation is thus an important complementary tool for capital flow management. multilateral co - operation can mitigate the cross - border effects of capital flows management measures and can provide economies with a useful framework for gradual capital flow liberalisation in line with their financial and institutional development. it is precisely in this way that the oecd code of liberalisation of capital movements makes its contribution. through the code, countries are provided guidance on the sequencing of liberalisation and the appropriateness of policy response to shocks. by fostering transparency, dialogue and accountability, adherence to the code ensures non - discriminatory treatment of countries, provides reassurance to markets as to the scope and duration of measures and catalyses policy support for reforms and adjustments. overall, the ever more interconnected international environment makes policy co - operation more necessary. to illustrate this point, i would like to draw on two examples : first, can coordination help moderate volatility in response to specific shocks, especially those emanating from global players? second, can it prevent the emergence of global imbalances? diverging monetary policies one pertinent example of the need for policy co - operation to avert large and volatile capital flows is in dealing with the effect of divergent monetary policies on global financial markets. it is broadly agreed that the impact of us monetary policy can have global repercussions, influencing exchange rates, risk premia and asset prices and causing valuation effects of us dollar - denominated liabilities. thus, changes of stance can be associated with significant capital flows especially to / from emerging market economies. the taper tantrum that affected global financial markets in 2013 is one example7. over the near future, it is widely expected that the us interest rate will be gradually raised, while those in the euro area and other advanced economies remain low. this divergence is likely to impact on global capital flows. uncertainty about the pace is judged to be a source of volatility in financial markets. thus, informal discussions between policy makers, if not closer co - operation, along with clear and coordinated communication and execution of policies, can be a useful tool for dampening volatility and preventing undue financial market turbulence. euro area imbalances my second example which supports the case | ##judging risks. but when a shift in risk appreciation and pricing occurs, the reinsurance industry often separates the run off of old portfolios containing mispriced contracts from the establishment of new vehicles, capitalised separately to take advantage of attractive terms on new business. and for regular insurance, many contracts are annual, so adversely priced business can run off fairly quickly. banking typically works quite differently. banks around the world are carrying portfolios of term loans that are the legacy of the boom years. there is uncertainty β amongst banks β management, shareholders and funders β about the degree of fundamental impairment in those portfolios. new loans are booked to the same balance sheets. and so many banks face a choice between, on the one hand, conserving capital and liquidity to support legacy portfolios ; and, on the other hand, deploying capital and liquidity to write new business on what some see as the attractive terms and conditions now available. the banking system simply is not structured routinely to insulate new business from the legacy of past mistakes ; funding and capital are fungible. this predicament may be exacerbated by other features of the current environment. one is an apparent reluctance on the part of banks to raise fresh capital except where the market thinks that it is beyond doubt that they need to do so. given the feedback from credit conditions to asset prices and the real economy and so potentially to banks β future earnings, it might seem slightly odd for banks internationally to be maintaining distributions to shareholders but tightening credit availability in order to preserve resources. this has to be seen in the wider context. one possible explanation for banks holding back from raising fresh capital is that they may want to avoid giving an adverse signal about themselves. if there is a co - ordination problem, the regulatory authorities internationally should be able to tackle it, allied to ensuring prudent valuations of legacy portfolios. but another possible explanation is that, like some other market participants, bankers may believe that many legacy assets are fundamentally undervalued at present and that the markets for securitised assets will, with time, recover and reopen. on that view, banks are avoiding becoming overcapitalised on a fundamentals ( or forward looking ) basis, and so setting off another expansionary phase in the credit cycle, a little further down the road. the serious puzzle which that underlines is why there is a dearth of buyers for the supposedly undervalued paper. | 0 |
should investigate the many questions it raises β and we have started this work at the banque de france β, and then decide on its own merits. iii. green finance, β a new frontier for the 21st century β let me now turn to green finance. for me, it is β a new frontier for the 21st century β. first and foremost, i would like to pay tribute to the governor of the bank of england, my colleague and friend mark carney, who was a pioneer when he pointed out β the tragedy of the horizon β 2 in 2015. much has already been undertaken since then. we are currently witnessing a growing awareness from central banks, supervisors and 2 / 4 bis central bankers'speeches financial institutions about climate - related risks. clearly, green finance and climate risks management have gone from the β nice to have β to the β must have β, from emotion to reason. in financial institutions, climate change is no longer confined to corporate social responsibility ( csr ) policy. concerning central banks and supervisors, the creation of the network of central banks and supervisors for greening the financial system ( ngfs ) in paris in december 2017 has been a decisive step forward. in 18 months, this coalition of the willing has increased from 8 founding members to almost 50 members and observers from all 5 continents, with the banque de france acting as its permanent secretariat and the active involvement of the bank of england. this momentum has an important meaning : supervisors and central bankers have collectively acknowledged that climate change - related risks are a source of long - term financial risk. in april 2019, the ngfs published its first comprehensive report issuing four recommendations for central banks and supervisors, and two additional recommendations for policy makers. looking down the road, i see three priorities for the near future. first, we will require enhanced disclosures that need to be built on sound taxonomies. the taxonomy framework published by the technical expert group ( teg ) on sustainable finance of the european commission on 18 june is a welcome step. second, we have to better anticipate long - term climate - related risks, through what i call β the video of the risks β. we must push for the development of comprehensive climate stress tests in order to build a forward - looking approach of the impacts of climate risks. third, green finance needs to mature and upgrade its professional standards. the financing needs for the energy transition are huge ; in europe alone, it is estimated that an additional eur 177 billion per year will | of the european securitisation framework could also provide insurers with new solutions for diversifying their strategic asset allocation. there is much more at stake here page 3 of 9 than technical discussions over prudential ratios β it is a matter of strategic importance for europe. the development of equity financing is essential if europe is to catch up in terms of innovation. our continent has the resources β private savings ; it also has the needs β investment in the transformations of the european economy. but, unlike the united states, it does not have sufficient financial intermediation between the two. this is precisely the goal of a genuine savings and investments union, as recommended by the draghi and letta reports. and this union is not just aimed at banks, markets, private equity funds or venture capital funds. it needs to rely on you, insurers, as well. ii. an increasing role in the future 1 ) the transformations under way in our society in a world that is changing more rapidly, new risks are emerging. to what extent can they be covered by insurers, or to what extent are they in fact β insurable β? i β m going to focus here on three challenges. first, the challenge linked to the digital transformation, which has been accelerated by the pandemic. although this transformation is indeed generating opportunities and efficiency gains, it is also making information and operational systems increasingly complex β notably due to fragmentation linked to the growing use of external service providers β and increasingly exposed to sophisticated cyber attacks. the insurance industry needs to maintain greater vigilance over these risks to guarantee its own resilience. the imminent entry into force of the dora regulation is contributing to this. more generally, it is crucial that all firms and citizens can protect themselves against these heightened it / cyber risks. here again, the insurance industry has a predominant role to play, through initiatives to raise awareness, but also by developing cyber insurance. the second very concrete transformation facing the insurance industry is climate change. the biggest direct consequence is an intensification of the physical risks, which translates as a rise in the frequency and cost of insured climate events : we β ve just witnessed this dramatically in mayotte. according to swiss re, natural disasters generated total economic losses of eur 295 billion page 4 of 9 in 2024, an increase of 6 % compared with 2023. i and in the latest edition of its climate scenarios, published in november, the ngfs ii β our network for | 0.5 |
is in fact the starting point for the subsequent questions. the second question is why deflation has continued for a prolonged period. discussions on the severe economic conditions then lead to the third question : are japan β s public finances sustainable? in this context, i am often asked why, despite the deterioration in the fiscal balance, yields on japanese government bonds ( jgbs ) have been stable at low levels. finally, a fourth question i am often asked is whether japan β s economy can really regain its vitality. it is an undeniable fact that japan β s economy faces many challenges. however, i believe that japan β s economy can most definitely regain its vitality. needless to say, we have to work hard to achieve this. obviously, the right prescriptions are also essential. to this end, it is necessary to have an accurate understanding of both the strengths and the weaknesses of japan β s economy. i am looking forward to exchanging views with you on this point later. bis central bankers β speeches ii. the current state of japan β s economy i will start with short - term developments in economic activity in japan. japan β s economy contracted severely following the failure of lehman brothers, but then started to improve around spring 2009. it continued doing so until the summer of 2010, mainly due to the increase in exports and production brought about by faster growth in emerging and commodity - exporting economies as well as policy measures to promote the sale of environment - friendly durable consumer goods. the improvement seems to have paused from the fall of 2010, but recent data suggest that japan β s economy looks like it is about to emerge from that pause. if we compare these short - term developments in japan β s economy with those in other advanced countries, japan is not doing badly. 1 for example, according to the latest projections by the international monetary fund, japan β s economy was expected to grow by 4. 3 percent in 2010, the highest rate of growth among the g - 7 countries ( chart 1 ). moreover, the unemployment rate in japan, although higher than before the failure of lehman brothers, is at 4. 9 percent, which is far below the roughly 10 percent in the united states and the euro area ( chart 2 ). of course, the current level of economic activity is still below that before the global financial crisis and therefore not satisfactory. however, this is a problem common to many advanced economies. with regard to the degree of financial system stability, japan is the most stable | money in recent times. in fact, a fundamental, and achieved, objective of inflation targeting was to obtain a more competitive exchange rate. exchange rate targeting, the implicit policy of the 1990s, kept the rand uncompetitive. it is likely that the act of introducing the inflation - targeting framework helped to attract capital in 2000 because it signalled a move to a much better policy framework, but south africa was starved of capital at the for the panel [UNK] s recommendations, see ricardo hausmann [UNK] s final recommendations of the international panel on growth, available at http : / / www. treasury. gov. za / comm _ media / press / 2008 / final % 20recommendations % 20of % 20the % 20i nternational % 20panel. pdf, especially pages 6 and 12 - 13. see, for instance, luke jordan [UNK] s it β s time to debate the central bank β s mandate, available at https : / / www. dailymaverick. co. za / opinionista / 2017 - 06 - 23 - its - time - to - debate - the - central - banksmandate / #. wvur5rwgoum ( june 2017 ). this point was made at the time by kenneth creamer, in β sa needs an inclusive growth path β, mail & guardian, published on 4 july 2008. page 9 of 17 time. any other policy framework that improved on the previous one would have had the same effect. let me make a broader point about this debate. south africa needs capital to develop. it also needs a reasonably competitive real exchange rate. achieving both is not easy, but the simple solutions occasionally proffered are seriously inadequate. first, they invariably focus on nominal depreciation and not on real depreciation ; the inflationary sideeffects of nominal depreciation are ignored. second, the proposals never say anything about the implications for the fiscus, for interest rates, and for the broader economy of targeting a specific exchange rate level. 13 third, i would like to hear why this effort would be successful in south africa when it has not worked well in other democracies that have tried it. even a cursory review of the asian success stories shows they had a very high savings rate and used financial and wage repression and price controls to achieve real undervaluation. how exactly would these authoritarian approaches to policy be implemented here? at the end of the day, we | 0 |
referring to the difference between market and book value for bonds which are held to maturity. and we should look at how to address the issue that, in times of stress, banks may be hesitant to use instruments in the liquidity buffer that are not marked to market daily for accounting purposes. the turmoil last year also showed how important it is that banks are operationally prepared for liquidity stress. banks need credible and tested contingency funding plans and they must be operationally ready to access central bank liquidity facilities in times of stress. while this may be more of an issue in the us, we should also look at how this can be improved in the eu. then interest rate risk. when banks fail to cover this risk sufficiently, changes in market interest rates can lead to substantial losses and, in extreme cases, even to bank failure. the recent developments at regional banks in the us offer a vivid illustration of this. the events last year underline the importance of regulation for interest rate risk management and the need for prudent assumptions about customer behaviour. capital is also necessary to absorb the uncertainty of customer behaviour. in order to promote global harmonisation, we should explore the inclusion of interest rate risk in the pillar 1 requirements. and last but not least, we need to think about at1. rather than acting to stabilise a bank as a going concern in stress, international experience has shown that at1 absorbs losses only at a very late stage of a bank failure. we saw this in the case of credit suisse in 2023, with the swiss national bank noting that'the at1 features designed for early loss absorption in a going concern were not effective '. in this instance, at1 only absorbed losses when the point of non - viability was imminent and failed to stabilise the entity at an earlier stage of stress. this should encourage regulators to reflect on the role and functioning of at1 instruments in determining the capital position of banks. these are all important things that we have to look into. but first and foremost we have to implement basel iii. and while i know this is primarily a message to regulators and 3 / 4 bis - central bankers'speeches lawmakers, it is also a message to you. because what a strong signal it would be if you as a group would say : don't water down basel iii. don't give us weak rules, give us strong rules. strong rules that apply to all banks wherever they are and whatever their size | view, ought to be determined by the specific circumstances of the individual borrower. if that borrower is really the sovereign, let us be up front about it. if the borrower is really a bank, its capital classification should not be determined simply by its home country. the capital accord should not lend its support to the unfortunately traditional presumption of external creditors that countries need to stand behind all external borrowings by their banks. so, by all means, i am firmly in the camp for adjusting interbank capital charges. but, i doubt that an alignment of risk weights for interbank credit itself would have had much effect on the borrowing and lending behavior we saw in the runup to the asian financial crisis. this is not to say that interbank lending has not been a problem. but the problem may be us. that is, we have created a significant moral hazard by, in effect, making lending banks whole, and even increasing their returns, when the borrowing banks in emerging nations are unable to meet their obligations. when confronted with the reality, no authority has been willing to face the implications of bank defaults on the losses of the lending banks or the implications of the unavailability of new bank credit for the nation in default. but our perfectly rational short - run decisions create the incentive for lending banks to do the same thing again, and again, and again. returns are reasonably high, and risk to them is reasonably low. the issue is clearly the short - run - long - run tradeoff and i do not have much to add to the argument about interbank lending other than that some change in the architecture and process must be made or the cycle will continue ; and that change must involve some genuine risk - taking by the lending banks if we are to reduce, if not eliminate, the moral hazard we have created. conclusion a final word about short - run - long - run tradeoffs. some have argued that both risk - sensitive capital charges and market discipline will be pro - cyclical. the rationale, as i understand it, is that following a peak, as economic conditions deteriorate, evaluations of risk will change, and risk premiums will rise. as more potential borrowers are viewed as riskier, banks will be even less willing to lend so as to avoid facing higher capital charges or higher borrowing costs or less availability in the market. in an improving economy, the opposite occurs. as one of my colleagues states, the problem with market discipline | 0 |
consideration to ensure that they can absorb shocks while the bank is still functioning. banks β leverage will have to be limited in some shape or form. banks also have a responsibility to actively manage their own complexity. in this regard, i think a proposal that is rightly being considered is that of β living wills β. living wills are plans drawn up by banks for an orderly wind - down of operations, in case they are not able to continue operating on a going - concern basis. this would be very beneficial to financial stability in case of a large - scale default. lehman brothers, for instance, was composed of over 3000 legal entities at the time of its demise. better guidance on how the organization could be properly wound down would have made life considerably less stressful for its supervisors, counterparties and administrators, as well as the financial system as a whole. as an aside, the legal profession has a role to play here as well. the number of entities may be one useful proxy for the level of complexity in an organization, but the combined length of all the contracts determining the mutual obligations between these entities surely is another. at the end of the day, one of the key qualities of the legal profession is to make complexity more manageable by providing market participants with clear, unambiguous and concise contracts rather than the opaque, heavily cross referenced and nearly inaccessible piles of paper that one too often encounters in practice. here, as always, more is less, less is more. true craftsmanship produces documentation that even a layman can appreciate and more importantly, understand. by comparison, i think the changes needed in the supervisor β s toolbox have not always received the same amount of attention. these changes are crucial, though, to ensure that supervisors are well - equipped to ensure the resilience of the financial system in a complex world. recent events have again confirmed that in some cases, our options for intervention are limited and can only be exercised at a late stage. for the supervisor to be effective in an increasingly complex and interconnected world, it will need more power to intervene at an earlier point in time. internationally, promising policy has already been implemented in this regard, such as the special resolution regime in the united kingdom. making it work as i see it, banks should welcome all these measures. bigger capital buffers and the existence of living wills enhance the stability of the financial system. so does the existence of a more powerful supervisor with an enhanced toolkit. financial instability in the | returns are likely to be lower. the starting point for calculating the expected rate of return on the portfolio is the real interest rate on high - grade government bonds. in recent years, bond yields in real terms have been close to zero. low bond yields reflect global economic conditions : governments, businesses and households are seeking to save more, while demand for safe investments has increased. substantial asset purchases by central banks are pushing in the same direction. low yields may also reflect modest expectations of economic growth further ahead. historically, equities have yielded higher returns than bonds. we also expect that to be the case ahead. still, it is doubtful that equity prices will continue to rise at the same pace as in recent years. weak or moderate growth in the real economy will feed through to the return on equities. the share allocated to real assets has increased gradually after equities were first introduced in 1998. soon, almost two - thirds of the fund will be invested in real assets. as we gain experience in real estate investing, it may be natural to invest in other types of real assets, or increase the equity allocation further. in the long run, a bond allocation of 20 β 25 percent should suffice to maintain the fund β s needed hedge against fluctuations in equity prices and execute the rebalancing strategy. chart : global investments another of the fund β s characteristics, which in particular has an effect on risk management, is its large size. a main tool to manage the risk faced by the fund is diversification. with a fund of this size, we have ample opportunities to diversify. stocks in different companies in a variety of sectors, loans to governments and corporations, and real estate investments in a number of global cities are all parts of the portfolio. at the end of 2014, the fund had investments in securities from almost 10 000 issuers in 75 countries. the fund is a global investor. prices in financial markets carry information about the risk and return prospects of different assets, and the markets are fairly efficient most of the time. hence, a natural starting point for the allocation across regions is the size of the different financial markets. however, the weights assigned by the fund to different geographical regions are the result of a trade - off between various considerations. the fund is a minority shareholder and dependent on good corporate governance and protection of our rights in legal systems. regulatory conditions in investee countries must be relatively stable, and we must be reasonably sure that our investments are safe. from | 0 |
. the new coupons are lower and maturities are longer, with limited issuance of short - term treasury bills. in addition, several of the new instruments will be redeemed in tranches rather than as bullets, enabling a gradual reduction in the debt stock. an added feature of some of the new securities structures is a natural disaster clause, which takes account of our nation β s vulnerability to natural disasters by affording government the option to defer debt service payments, on the occurrence of a catastrophic weather event. apart from the passage of the debt holder ( approval of debt restructuring ) act 2018, which gives effect to the debt restructuring, there have been consequential amendments to the existing body of legislation governing public debt issuances, namely the local loans, treasury bills and tax certificates and the savings bonds acts. in addition, parliament also passed the dematerialisation of government securities act 2018 to provide for the issuance of statements rather than physical certificates for the new instruments. this change to the issue format, as well as in the nature of the securities, has resulted in the need for the bank to alter its pre - existing software to facilitate ease of issue of statements. the process has taken somewhat longer than originally envisaged, but our staff has been working assiduously with our software providers to manage this transition in an effort to enable the timely issuance of the new statements. i have been advised that, pending any last minute technical glitches, the process for issuing statements in the new format should begin today. an important benefit of the issuance of securities in this book - entry format is the resultant settlement efficiency that can be facilitated. currently, the trading of government securities on the secondary capital market is characterised as thin and one impediment to trading activity is the length of time it takes for securities β transfers, with respect to the registration of ownership. with securities now being issued in a dematerialised, book - entry format, it is envisioned that secondary market activity will be executed more timely and efficiently, compared to what was feasible with physical certificates. the central bank is planning to introduce a web - based interface between its bond registry, the brokers and the barbados stock exchange, whereby brokers will have read - only access to verify the holdings of investors seeking to divest their securities. this will be supported by a messaging facility with the central bank to ensure that the transfer process is effectively completed. at the outset, it is unlikely that there | regard and devise attractive instruments. for any secondary market to operate efficiently, whether in bonds or other securities requires market makers. this has been a long time in coming but i believe that we are close to making this a reality in barbados. there also has to be confidence in financial institutions and financial policies. poorly run companies with weak balances sheets and cash flow profile will not attract investors. moreover, they will cause confidence in well - managed firms to fall. where poor decisions lead to financial losses and collapses in one subsector, because of the high level of financial integration, the consequences can be widespread. the local, regional environments today are significantly different from what existed when we held our last capital markets conference. on the domestic scene the trend towards consolidation in the financial sector has continued. the local stock market index which rose by 26. 4 % in 2004 fell by 6. 8 % in 2006. the performance of the mutual fund component of the market which had been registering annual growth up to 2004 seems to be levelling off and performed below par in 2006. at the regional level many of the strongest well - established and most reputable regional companies have remained robust but some have experienced declines in their share prices during the last two years or so. however, the markets have not shown significant instability and are still relatively vibrant. the international economy however, has been beset by a serious liquidity crisis, instability in stock prices and a weakening in the us economy. it is against this backdrop that we thought it was timely to discuss some of the major issues, which are confronting the financial services industry abroad, and their impact on developments in the caribbean. the world is becoming more global and it is increasingly difficult to completely insulate ourselves from international developments. indeed this seminar comes at an opportune time both from an international perspective and from a national perspective. in the international markets the impact of the subprime problem has led to central bank intervention on an unprecedented scale. the securitization of mortgages and credit generally has served to merge the credit and securities markets and the capital markets to an extent where collateralized obligations are losing value sharply because of difficulties in the credit markets and the burden of stability has fallen on central banks. these movements have had their impact on both the equity and bond markets, so that central bank intervention in us europe and the uk have been related to maintaining stability in the capital markets as much as in the credit markets in a way which was not previously anticipated. the weakness | 0.5 |
position. but increasingly, attention has turned to a second, more fundamental concern. as a range of asset prices fell, banks began to report large losses. uncertainty about the scale and location of losses led to concerns about the adequacy of bank capital and hence the ability of the banking system to finance continued economic expansion. at the end of last year, sentiment in financial markets worsened markedly. so in mid - december, central banks around the world announced a co - ordinated set of actions in money markets. these were designed to boost confidence by demonstrating that we were conscious of the risks of a credit crunch. since those actions, conditions in money markets have eased considerably. the benchmark 3 - month interbank lending rate has fallen by around 75 basis points relative to expected policy rates. but conditions are not yet back to normal and remain fragile. although central banks can and will respond to the consequences of strains in the banking system for their economies, the solution to the underlying problem does not rest with them but with the banks and financial markets themselves. banks must reveal losses promptly, and, most importantly, raise new capital where necessary. but these developments in financial markets and the banking system have started to affect activity in the economy more widely. interest rates charged to both households and companies have risen relative to bank rate, reversing the relative fall in the year or so before last august. and our own survey of credit conditions last month revealed that lenders intend to tighten conditions further this year. this tightening is unlikely to be short - lived. tighter conditions will discourage borrowing to finance spending on residential and commercial property, on business investment and on consumption. the impact on property prices is already clearly visible. commercial property prices have fallen by 12 % since the middle of last year. and, after rising sharply earlier in 2007, house prices stagnated in the final quarter. although there is a considerable stock of equity in owner - occupied housing, with banks tightening the supply of both secured and unsecured credit, consumers will find it more difficult to borrow to finance spending. so in 2008 it is likely that a less buoyant housing market will go hand in hand with slower growth of consumer spending. tighter credit conditions mean that, as a nation, we are likely to save more of our income this year than in the recent past. in the short run, that will slow economic activity, possibly quite sharply. and there is a risk that weaker activity and lower asset prices could result in another round | has blown across the atlantic, and threatens a sharp slowing in output growth. the latter is the rise in energy and food prices, reflecting continued strong growth in asia, that, together with rising import prices, threaten to lift inflation noticeably above target in the coming months. these two winds have stirred up the water through which the uk economy must pass. the westerly gale first hit us in august as developments in the us mortgage market led to turmoil in global financial markets. for some years, banks were able to borrow cheaply in world capital markets to expand their lending. they packaged the resulting loans and sold assets backed by those loans to capital market investors. they were able to do that because some investors had failed to adjust to lower rates of return caused by high savings in emerging economies and low inflation at home. those investors engaged in a β search for yield β by buying risky assets without always understanding fully the risks attached to them. families and businesses had access to more finance at lower cost. that was most obvious in the growth of the us sub - prime mortgage market, where the potential problem of lending to people who could not repay when the interest rate was reset on their floating rate mortgages was becoming only too clear. in the united kingdom too, borrowing and spending growth were strong and inflationary pressures built up. but in august all that changed dramatically. rising default rates in the us mortgage market led investors around the world to question whether they were being adequately compensated for the risks they were bearing on a wide range of assets β not just those associated with sub - prime mortgages. the prices of those assets fell, and markets closed for a range of complex credit instruments. as i said two years ago, β risk premia have become unusually compressed and the expansion of money and credit may have encouraged investors to take on more risk than hitherto without demanding a higher return. it is questionable whether such behaviour can persist β. and, as we have seen, it hasn β t. the re - pricing of risk that is still continuing is not a process that we should try to reverse. adjustment to this has been painful for banks in the major financial centres in two ways. first, with some asset markets closed, banks found funding more difficult. some needed to finance loans they had made but had then expected to package up and sell. others needed to finance off - balance sheet investment vehicles that were no longer able to fund themselves. at the outset of the crisis, banks were concerned to protect their liquidity | 1 |
best pursued in the area of customer interface. in our neighbouring countries sweden, denmark and the united kingdom, the situation is different. there has been broad cooperation in the area of instant payments in those countries. banks have been engaged in developing common solutions β not only in the development phase, but also in the application phase. in all these countries, instant payments are widely used. in sweden and denmark, they are the underlying solution for most mobile payments. the result is faster and cheaper payments. a common solution for instant payments is a step forward for both users and banks. at the same time, banks should think in terms of further development. one ambition should be to bis central bankers β speeches eliminate the risk that arises between banks when the payee receives the funds before bank settlement occurs. international experience shows that this can be done in several ways. a long - term goal should be that payments occur in real time both between users and between banks. this will require adjustments to settlement systems. in the near term, it is also possible to use today β s infrastructure to make payments faster. i have noted that the banking industry is working towards increasing the number of daily net settlements from four to five, and more payments will be settled individually and immediately. considerable work is underway under the aegis of finance norway and the new joint venture company bits, which may lead to faster payments. norges bank, for its part, will explore whether possible adjustments to the bank settlement system could enhance payment efficiency. norges bank will do its utmost. we will seek a dialogue with the financial industry in order to find good solutions. several aspects of mobile payments should be improved mobile payments are becoming increasingly common. new features are the customer interface and additional services tailored to customers β individual needs. the underlying payment chain is largely the same as earlier. so far mobile payments have primarily been used for transfers between private individuals or to charities, clubs and associations. in some cases, the payee receives the funds immediately, while in other cases it may take several days. for purchases in shops, cash and cards are fast and user - friendly payment instruments. this has probably held back the rise of mobile payments in shops, although they are rising there as well. a third area is mobile payments linked to online purchases. services are being developed in all three areas. a look at the conference programme indicates that we will be hearing more about that today. there are still some challenges facing mobile payments. most mobile payments are made using an international payment | jon nicolaisen : digital challenges for the payment system speech by mr jon nicolaisen, deputy governor of norges bank ( central bank of norway ), at the financial industry β s digital services conference, oslo, 9 june 2016. * * * introduction technology advances rapidly, giving rise to opportunities and challenges. norges bank will actively promote efficient solutions for payments and financial transactions. i presume that the participants at this conference have the same goal, so we have common interests in this area. the norwegian banking industry was among the first to adopt digital solutions. the giro systems were integrated and a common debit card system was put into place. the first internet bank giro was available already 20 years ago. internet giro payments and bankaxept card payments in shops are cheap, efficient and widely used. payment system costs in norway have been considerably lower than in most other countries for a long time. common solutions do not impede competition. banks and other operators have their own customer interfaces, services and prices. but underlying that are a common infrastructure and common standards. this provides economies of scale and accessible solutions for customers, regardless of where they hold an account. cooperation has rendered the payment system efficient and robust. new operators and new technology are now entering the payment market. this can, in principle, strengthen competition and improve efficiency. but it is important that the competition is rooted in a robust and cost - efficient common infrastructure. norges bank will actively pursue profitable solutions in the best interest of all the parties concerned. payments should become faster norway β s efficient payment system is a competitive advantage for the norwegian business sector. this is positive, but there is no room for complacency. other countries are catching up and may be ahead of us in some areas, in particular in terms of real time payments and the infrastructure for mobile payments. we have a job to do here. the norwegian banking industry has collectively developed a payment solution where money is immediately received by the payee, so - called instant payments. a common system offers several advantages : the solution is cost - efficient and ensures fast payment services for customers. all banks and their customers can use the solution and it is not owned by an individual private market participant. yet, to date, few banks offer instant payment services. this may be due to technical factors, or because mobile apps need to be more user - friendly. it may also be that the competition among participants to promote their own solutions is ultimately an obstacle to an overall efficient infrastructure. competition is | 1 |
good governance must prevail among management and the company as a whole. the best company directors stand out with their commercial acumen as well as their strong ethical fibre. where sid can play a part sid can play an important part in promoting the professional development of 17. directors by providing thought leadership, building a platform for sharing of best practices, and enhancing training standards for directors. in fact, sid has been doing this for the past years, including collaborating with the singapore management university to launch a formal certification program for directors. 18. sid has also been increasing its outreach both within and outside singapore. these include : training workshops for china - based directors of singapore - listed companies, as well as courses for our small and medium sized enterprises and private companies who are looking to list on the stock market. an example is the risk management & corporate governance programme, conducted with spring singapore. 19. sid can do much more in this respect. sid should be sensitive to the current needs of directors and fine - tune the content of its courses accordingly. in addition, sid can better engage experienced directors, and tap on their expertise through putting together relevant case studies. conclusion 20. ladies and gentlemen, with increasing expectations on directors, companies will come to place a premium on well - trained, ethical directors who look out for the interests of all stakeholders, and are not rubber stamps for management decisions. this presents an opportunity to directors who are proficient and professional. 21. it is in companies β and directors β best interests to β get it right β by having effective and committed directors who pursue good corporate governance practices, as this will result in a premium for shareholders. grooming such directors will help to encourage new ideas, better practices and encourage leadership renewal for company boards. 22. on this note, i would like to end by thanking sid for its efforts in the area of corporate governance. i hope that the discussions arising from this conference will help directors gain a better understanding of how they can carry out their duties more effectively. 23. thank you and have a pleasant day ahead. | for example, directors of bp have been sued by shareholders over the costs associated with the oil spill in the gulf of mexico. directors of aig were also sued for not adequately monitoring the firm β s exposure to the subprime mortgage market. 9. directors should not become defensive or legalistic in face of these challenges. instead, they need to equip themselves with the appropriate skills and knowledge, to enable them to ask the right questions and make the right decisions. apart from experience, training is one important way to equip our directors. current levels of directors β training 10. companies here are gaining awareness of the importance of having well - trained directors, and proactively providing training for them. last year, sid and the singapore exchange, or β sgx β, published the β singapore board of directors survey β. according to the survey, the proportion of companies providing relevant training to non - executive directors increased from 25 % in 2005 to 41 % in 2008. but the survey also showed an increase in the number of directors who received no training. this is a trend that sid should address early. 11. i understand that sid and sgx are currently conducting another similar survey. hopefully, this survey will show more companies providing training for their directors and more directors attending such structured training. areas for focus 12. next, allow me to outline some areas where directors can focus their training efforts on. the sid and sgx survey highlighted that risk management was the most important area for further training. directors have a responsibility to manage the risks of a company. their involvement in risk management extends from heading off cases of egregious fraud, to ensuring that management does not take on excessive risk. 13. directors also need to stay abreast of the latest developments in regulations and best practices. to this effect, companies should put in place continuing training programmes for their directors. 14. mas has recognised the importance of this by proposing new provisions on β continuous development β in the corporate governance regulations and guidelines for locally - incorporated banks and significant life insurers. 15. the proposed provisions require the boards of such companies to establish a continuing development programme for all directors, and a framework to identify relevant skills for such directors. nominating committees should assess at least once a year, whether directors lack any skills to perform their roles. 16. besides getting the right training, directors must set the right tone for the company β s culture. core values like honesty, integrity and fairness which underpin | 1 |
vitas vasiliauskas : the experience of the bank of lithuania in investing in china β s bond markets speech by mr vitas vasiliauskas, chairman of the board of the bank of lithuania, at the global summit on β reserves management : navigating volatilities and the frontiers of innovation β, beijing, 9 december 2019. * * * good afternoon, ladies and gentlemen, it β s my pleasure to join you today. in terms of investing in china β s bond markets, the bank of lithuania has been one of the pioneers among the central banks in europe and beyond. we have also recently become the managers of the ecb β s renminbi portfolio. i suspect this is the main reason why i was invited to this summit. therefore, i do not want to dwell on things that you all are very well aware of. instead, i will focus on something you probably have not heard about β on the β china experience β of the bank of lithuania, describing how and why we β went to china β. later i will provide some remarks on the remaining obstacles for further involvement of institutional investors β such as ourselves. i will conclude by briefly discussing the overall prospects of renminbi internationalisation β the over - arching topic of our panel today. but, before moving on, let me just briefly mention a couple of points on the international role of the renminbi, which will show why the timing of our involvement in the chinese bond markets was not so self - evident. indeed, over the last few years, china has made progress in opening up the country β s financial sector. from lifting the caps on foreign ownership in financial sector institutions, to increasing access to its onshore market β china is making more renminbi - denominated assets available to foreign investors. but these achievements were enabled by one key turning point that came before the most recent developments. the major milestone, of course, was the addition of the renminbi into the imf β s sdr basket in 2016. this was a historic event, signalling to global investors that china was emerging as a significant stakeholder in the global monetary and financial system. subsequently, international investors, particularly sovereign investors, became much more interested in china. in this context, the bank of lithuania was ahead of the curve in 2012. that year, we decided to become one of the first central banks to enter china β s onshore bond market. this decision had come well before the ren | judge by looking at the section which is visible above the surface. this is in my view a useful metaphor, because as the crisis gradually unfolded, a chain of unexpected problems came to the surface and vulnerabilities that were previously underestimated became apparent. let us consider first the tip of the iceberg, namely the liquidity crisis. tensions in money markets erupted in august 2007 when the us mortgage market, which was at the epicentre of a complex network of financial derivative products held globally, started to un - ravel. liquidity in interbank markets worldwide dried up as market participants became paralysed by uncertainty. the key problem was that counterparty risk β which had hitherto remained bis central bankers β speeches limited β suddenly increased in great proportions because the distribution of risk exposures to us subprime mortgage markets was markedly opaque. this led some market segments to partially freeze and others to close completely. this is where the second layer of the iceberg comes onto the stage. the collapse of lehman brothers in the autumn of 2008 triggered an exceptionally abrupt re - pricing of risks globally. it led to a very significant intensification of the financial crisis ; to a temporary freeze in trade financing and a global trade decline ; to a curtailment of credit and domestic demand ; and, ultimately, to a severe decline in global demand and output. the main channels through which the crisis was transmitted internationally are now relatively well understood, although the extent and strength of the interconnectedness was quite surprising in real time. activity corrected most in countries where credit was booming prior to the crisis, with large current account deficits, high external debt and highly leveraged financial sectors, in particular. 1 in the euro area, a channel of particular importance was the fact that some banks had tapped us wholesale funding markets in large amounts to finance their activities. 2 some of these banks were in addition as heavily involved as us banks in the production of allegedly riskfree securities, such as asset - backed commercial paper, that aimed to meet the needs of us money markets funds. 3 they were severely hit when these markets froze. moreover, although the euro area β s current account was broadly balanced, it still had significant gross external assets and liabilities vis - a - vis the us, which acted as a powerful conduit of the crisis. challenges became more intricate still when the third layer of the iceberg β the sovereign debt crisis β surfaced towards the end of 2009. risk re - pricing intensified | 0 |
##400 billion just a year previously. 2 these banks are internationally active and have tier 1 capital in excess of β¬3 billion. these shortfalls include, where relevant, any additional capital surcharge for those banks identified as systemically important on a global basis. as a point of reference, the sum of after - tax profits prior to distributions across the same sample of group 1 banks during 2012 was β¬420 billion. bis central bankers β speeches chart 1 : cet1 capital ratio ( % ), group 1 banks cet1 ratio h1 2011 h2 2011 h1 2012 h2 2012 basel iii fully phased - in chart 2 : cet1 shortfall ( β¬ bn ), group 1 banks eur billion h1 2011 minimum h2 2011 h1 2012 h2 2012 minimum plus buffer plus g - sib surcharge consistency of bank capital regulation an important new mandate for the committee is to be more active in monitoring the implementation of the international minimum standards within individual member jurisdictions. this stems from the g20 leaders β desire that basel iii be implemented in a β full, timely and consistent β manner. consistent implementation is critical if there is to be a level playing field for international banks. implementation is more than issuing new rules and regulations. durable and consistent implementation also requires monitoring, evaluation and analysis of intended prudential outcomes. to this end, the committee last year instituted the regulatory consistency assessment programme ( rcap ). a key feature is the jurisdiction - specific peer assessment in which a small team of experienced supervisors and regulatory policy experts reviews a member country β s basel iii regulations across all its components and sub - elements. the purpose is to find any divergences from the agreed standards and to weigh the current and bis central bankers β speeches potential materiality of any weaknesses. to foster transparency, the resulting assessments are made public, together with an overall review of compliance with the basel standards. some comment that this effort, well intended as it is, will ultimately be fairly limited in its impact because the committee has no enforcement power and cannot override the sovereign regulatory power of national authorities. it is true that the committee does not have this power, and nor should it. but that does not mean that the peer reviews and the rcap process as a whole lack impact. we have thus far published five monitoring reports, and completed assessments on the final basel iii rules in japan, singapore, switzerland and china. in all cases, the implementation of basel iii was deemed compliant with the | / speeches / default. aspx in this spirit, last year at mansion house, i announced that huw van steenis would lead a review of the future of the uk financial system, including recommendations for how the bank should respond. in two months, huw will publish his conclusions and the bank will announce a number of concrete steps to create an environment for a more resilient, effective and efficient financial system. to preview our general approach i want to highlight some recent measures the bank has been taking. the bank β s strategy is to enable innovation and empower competition, while ensuring monetary and financial stability. our levers are the hard and soft infrastructure we control : hard infrastructure, such as the real - time gross settlement ( rtgs ) system, which lies at the heart of the uk payment system. and soft infrastructure, such as our rules, regulations and standards. to illustrate what this means in practice, consider three examples of how the new bank can provide a platform for private innovation to serve the digital economy, to finance major transitions, and to increase the resilience of the financial system. serving the digital economy first, at the heart of the new economy, the very nature of commerce is changing. last year, one fifth of all sales in the uk were online. next year, it will be one quarter. the new economy is more inclusive, offering easier routes to market for firms both large and small, and greater access for consumers both near and far. we are entering an age when anyone can produce anything, anywhere and sell everywhere through platforms such as tmall, amazon, shopify and youtube. this new digital economy is placing new demands on finance. consumers and businesses increasingly expect transactions to be settled in real time, checkout to become an historical anomaly, and payments across borders to be indistinguishable from those across the street. in parallel, big data is opening up new opportunities for more competitive, platform - based finance of smes. search and social media data are supplementing traditional metrics to unlock finance for smaller enterprises whose assets are increasingly intangible. this new finance demands a bank of england that is as open to new providers as it has been to traditional players. all speeches are available online at www. bankofengland. co. uk / publications / pages / speeches / default. aspx here β s one way we are changing our hard infrastructure in response. the bank is in the midst of an ambitious rebuild | 0 |
charles i plosser : simplicity, transparency, and market discipline in regulatory reform remarks by mr charles i plosser, president and chief executive officer of the federal reserve bank of philadelphia, at the conference on β enhancing prudential standards in financial regulations β, cohosted by the federal reserve bank of philadelphia, the wharton financial institutions center, and the journal of financial services research, philadelphia, pennsylvania, 8 april 2014. * * * the views expressed are my own and not necessarily those of the federal reserve system or the fomc. highlights β’ president plosser believes simple regulations are easier for financial firms to follow, increase the likelihood that supervisors will consistently enforce them, and are more likely to foster financial stability. β’ president plosser argues that revealing more information about an individual firm β s risk will reduce the likelihood of contagion and runs because such events are generally a result of a lack of information, rather than too much information. β’ president plosser continues to advocate for a new bankruptcy mechanism suitable for all financial firms, whether systemically important or not, because it would restore the incentives of market participants and creditors, in particular, to monitor risk taking by these institutions. introduction i am delighted to welcome you to the federal reserve bank of philadelphia. we are very pleased to partner with the wharton school and the journal of financial services research in this joint conference on β enhancing prudential standards in financial regulations β. i want to acknowledge and thank the organizers for assembling such a distinguished group of academics and practitioners to discuss the ongoing efforts to improve our financial system. i am going to take advantage of my role as host to offer some of my own thoughts on financial regulations and financial stability. i will present a high - level perspective of the subject. i don β t plan to let the messy details get in the way of lofty thoughts. instead, i believe it is helpful to step back from the complicated details of financial regulation to think more broadly about the goals and objectives of reform and the strategies that might best get us there. of course, these views are my own and should not be interpreted as representing the federal reserve system. i think we all agree that financial markets and intermediaries play an important economic role by pooling funds from savers and investors and allocating these resources to their most productive uses. such allocations require financial intermediaries to assess and price various risky claims. they then can sell some of the risks, either duration or credit | risk, to investors and others who are willing to bear that risk. thus, intermediaries help allocate resources and risks throughout the economy, thereby improving efficiency and productivity. at times, however, financial intermediation can result in risks becoming concentrated in ways that increase rather than reduce the fragility of the financial system more broadly. this is what many people mean when they refer to systemic risk. while today i will use the term in this fashion, i would note that the concept is quite vague. one of the major difficulties we face in managing systemic risk is defining what it is and how to measure it. ideally, one important goal of financial supervision and regulation is to monitor risk in the financial system bis central bankers β speeches and reduce the chances that it inadvertently leads to financial fragility or instability. regulation, however, should seek to do so without impeding the healthy functioning of financial markets and institutions. in response to the financial crisis, congress passed the dodd - frank wall street reform and consumer protection act in 2010, which included enhanced capital and liquidity standards and risk - management requirements for large financial institutions thought to be systemically important. in addition to new regulations, the crisis brought about important changes in supervision. supervisors are taking a macroprudential approach to their responsibilities. rather than focusing on the risk in a single institution, supervisors are spending more time analyzing risks across firms. large financial firms are now required to have stronger data and information systems so they can better monitor and manage their own risks. and these firms are required to report higher quality data to supervisors. the federal reserve now utilizes these data as well as other information it receives to conduct more in - depth and timely assessments of emerging risks. access to better data has also enabled supervisors to conduct the supervisory stress tests required by dodd - frank, which assess the ability of these large institutions to withstand a severe economic downturn. this conference will address the efficacy of many of these individual elements of dodd - frank and of supervisory reforms, which are still evolving nearly four years after the legislation was first enacted. for the remainder of my remarks, i wish to explore three broad principles that i believe we need to consider as we search for ways to improve the stability of our financial system. the first is simplicity. our regulatory framework is becoming increasingly complex, which has led to rising compliance costs as well as enforcement costs. the second principle is transparency. financial markets and instruments have also become increasingly complex and in some cases occasionally opaque. ensuring | 1 |
financial system report released this april shows profit simulation for the next 10 years. the results suggest that more than half of domestic regional banks are expected to run according to teikoku databank. deficits in 10 years if the borrowing demand of the corporate sector continues to decline at the same pace as in the past. of course, it should be noted that these results need to be interpreted with a latitude as they are calculated based on certain assumptions ( chart 13 ). here, it is worth referring to the case of financial institutions in europe, where a negative interest rate policy has been introduced, as in japan. the financial system report compares financial institutions in europe with those in japan. under a negative interest rate policy, the former have made higher profits than the latter. this is partly because funding costs of financial institutions in europe have decreased against the background that the low interest rate environment has lasted for a shorter period than in japan, and therefore there has been room for a further decline in deposit interest rates. also, in europe, the share of deposit funding to overall financial liabilities is low, and the costs of market financing such as issuing corporate bonds have been declining. moreover, financial institutions in europe have secured various sources of revenue that are unsusceptible to changes in interest rates by, for example, diversifying fees on services ( chart 14 ). for higher profitability going forward, it is hoped that regional financial institutions will set lending rates that reflect risks appropriately, ( 2 ) depart from excessive dependence on deposit - taking and lending activities by, for example, increasing fee - based income, and drastically improve their business efficiency. 14 to push forward with these initiatives strongly and effectively, the use of digital technology, integration or partnering among financial institutions, and alliances with firms outside the financial industry can be effective options. the bank will continue to support these efforts by financial institutions. iv. economic developments in aomori prefecture now, i would like to talk about the economy of aomori prefecture. looking at current developments, economic activity in aomori prefecture has been on a moderate recovery for discussions based on the comparison of financial institutions in japan with those overseas, see hiroshi nakaso, " new frontier of macroprudential policy : addressing financial institutions'low profitability and intensified competition, " speech at the kin'yu konwa kai ( financial discussion meeting ) hosted by the jiji press, november 29, 2017, http : / / www. boj. or. jp / en | register below zero percent. there may be cases, however, that the bank will judge it appropriate to continue with quantitative easing even if these two conditions are fulfilled. the bank considers that this clear commitment is contributing greatly to the appropriate formation of interest rates in financial markets. with regard to strengthening the transmission mechanism of monetary easing effects, the bank has devised various measures including methods related to money market operations, partly with a view to contributing to the development of financial markets from a long - term perspective. as part of this effort, in july 2003, the bank started outright purchases of asset - backed securities ( abss ). in january 2004, the bank amended the terms and conditions for the outright purchases of abss, so that its aim would be achieved more effectively, taking into account the opinions of market participants. the total amount of abss purchased to date has reached around 500 billion yen. the bank has also been hosting a workshop on securitization with market participants to encourage a constructive exchange of opinions to support the development of the abs market. iii. purchases of stocks held by commercial banks the bank started to purchase stocks held by commercial banks from november 2002 to reduce the risk that stock price fluctuations might impact negatively upon the business management of individual financial institutions, potentially resulting in instability of the financial system as a whole. the bank increased the maximum total amount of stock holdings it can purchase from banks to 3 trillion yen from 2 trillion yen in march 2003, and in september 2003 extended the period for purchasing stocks from banks by one year to the end of september 2004. the total amount of stocks purchased by the bank as of march 10, 2004 was 1, 928. 8 billion yen. conclusion in contrast to a year ago, positive signs are steadily increasing in japan β s economy. at the same time, however, there remain many tasks in achieving sustainable growth of the economy and overcoming deflation. the bank is also fully aware that there is a disparity in the level of business confidence between large firms and small firms, manufacturers and nonmanufacturers, and metropolitan and other areas. the bank considers it essential that a wide range of economic entities, such as firms, financial institutions, and policymakers, continue to make efforts to revitalize the economy now when a virtuous cycle is starting to work, so that the momentum for recovery spreads throughout japan β s economy. the bank will continue to do its utmost to put the economy back on a sustainable growth path and overcome def | 0.5 |
erkki liikanen : the euro, integration and growth remarks by mr erkki liikanen, governor of the bank of finland, at the brussels economic forum 2008 on economic and monetary union in europe : 10 years on, brussels, 16 may 2008. * * * ladies and gentlemen, ten years of experience have shown that the monetary union has made a tremendous contribution to the underpinnings for stable growth in the euro area. the most important channel has been the maintenance of monetary stability, which reduces distortions and costs caused by price uncertainty. in this respect, the euro has done very well and this has been reiterated many times today. rightly so. i want to discuss other important aspects of growth in the euro area, many of which benefit from the common currency. i will start by saying a few words about the role of financial integration in catalyzing financial development. related to this, i will discuss briefly some recent studies that show how equal access to financial markets is an important determinant of competition in the broader economy. and finally, i will talk about productivity in non - market services ; in particular, how improved productivity in the provision of public services will be indispensable in reconciling sharply rising old - age dependency with acceptable level public services. the last aspect is particularly crucial now in finland, which is the first eu country to face population ageing, but it will soon been a major issue for the others, too. but let me start with financial integration. financial integration and growth it is difficult to think of a less opportune time to preach the virtues of financial integration. things being as they are, one gets the impression that what global financial markets are propagating today is not growth, but risks and instability. the persistent turbulence since last august has demonstrated once again that financial markets suffer from bipolar tendencies. overshooting tends to be followed by undershooting. this time, a period of exuberance and indifference towards risk has been followed by a period of exaggerated nervousness, risk aversion and distrust. once again, there are lots of lessons to be learned for financial institutions, central bankers, regulators, supervisors. our vocabulary has been enriched by great many acronyms that were hardly heard of a year ago, such as abs, cdo β s, siv β s, abcp β s and so on. we are just starting to form a picture of what this debacle means for policies. eventually, | 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. | 0.5 |
the role and uses of credit ratings β’ strengthening the authorities β responsiveness to risks β’ robust arrangements for dealing with stress in the financial system these measures are a first step to a regulatory response which aims at tackling those weaknesses of the global financial system that caused the current and severe financial stress. in our g - 7 meeting last weekend in washington, we endorsed the fsf β s report. it is now essential that these recommendations are implemented effectively. rapid implementation will help to restore confidence in the soundness of markets and financial institutions. the fsf has not yet made recommendations about the forces that contribute to procyclicality, as this is an issue that requires further study. procyclicality is inherent in financial transactions and means that the monitoring, measuring and pricing of financial and credit risks typically tend to be too optimistic in an economic upturn and are often too pessimistic in an economic downturn. it is well understood that the financial and regulatory infrastructure should not add to or exacerbate the procyclicality of credit and financial transactions. we therefore need to study carefully how the resilience of the global financial system with respect to procyclicality can be enhanced further. economic outlook for the euro area and germany after four to five years of buoyant growth, the global economy now faces a new setting : on the one hand, the us subprime crisis and its repercussions in various financial markets have had a dampening effect not only on the us, but also on the global economy. on the other hand, inflationary pressures, which mainly stem from sharply rising energy and food prices, are increasing on a worldwide scale. they pose a particular challenge to some developing countries, but also give rise to concern in industrialised countries. against this backdrop, the us housing market, and with it the us economy as a whole, has deteriorated further over the past few months. consequently, economists and financial market participants alike are β once again β asking themselves if europe will be able to decouple now that the us outlook has substantially deteriorated. arguably, in today β s globalised world where domestic markets for goods and services, as well as labour and capital markets, are becoming increasingly interlinked, europe is unlikely to succeed in isolating itself from the development in one of the world β s major economies. and indeed, in the uk, after a decade or more of a non - inflationary consistently expansionary economy ( a | enhance the analytical instruments needed to recognise risks to financial stability earlier and more accurately. thank you for your attention. | 0.5 |
auditors have advised us that under this new accounting classification, we do not have to take the unrealized losses to the profit and loss statement of the bank. very recently, we therefore decided to liquidate all of our bond holdings. we will then reclassify the new bonds that we are going to buy under the new classification. this example shows some of the issues around reserve management and the allocation of assets. as i have said, we have a benchmark which is anchored on the maintenance of value of our foreign reserves. we have liquidity guidelines. the question that is normally posed is : what about return? this becomes more critical when reserves are falling as what is happening in fiji now. the temptation is perhaps to abandon your benchmark in search for higher return. to me this is a dangerous road to take. you may end up in a win - win situation. but you may also end up in a loose - loose situation too! my risk - averse nature as a central banker compels me to keep to our benchmark and protect values then look for return in the better allocation of assets. this workshop addresses many of these asset allocation issues and i am certain will add value to how we manage our foreign reserves. the contents of your workshop are relevant and interesting. i know that you will have an interesting 5 days. we may have different levels when it comes to reserve management methods and capacities. therefore, please freely share your country experience during the course of the workshop and in the case studies. i find that this sharing is one of the best parts of what we take home after such workshop. and please keep your network intact after the workshop so you may be able to help your colleagues in some way. there is also the related issue of how important is the central bank β s profits. reserve management is the major source of our revenue. while we predominantly spend this revenue on the important role of monetary policy and financial stability, i am of the view that we cannot totally ignore the strength of our balance sheets. not so much from the point of view of funding the government budget, but more so from the confidence that a strong balance sheet gives to the financial system. conclusion i wish you all a fruitful week of discussions and deliberations. please also take some time away from your workshop to enjoy suva. once again, i thank the imf, the resource persons and the organizers for putting together this workshop. official opening i have much pleasure in declaring this workshop | public authorities can contribute to financial integration by developing a common technical infrastructure. it is no coincidence that in the areas where such common infrastructure is missing, then integration is less well developed. the repo market, which is still hampered by a multitude of securities clearing and settlement systems, gives a still unfortunate example of that phenomenon. another example is the adoption of the eonia rate, which underscores how market participants play an important role in fostering financial integration through the adoption of market conventions. the eonia rate, which stands for euro over - night index average, is the effective interest rate in the euro unsecured overnight interbank market. the technical definition and the procedures for calculation of the rate have been defined by market participants through a series of market conventions, which were key for the integration of this market segment. in this respect, i should also mention that ecb has a role in the process because it fixes the eonia rate as a service to the banking sector. this illustrates that public bodies can indirectly foster financial integration by acting as a facilitator in private sector initiatives. the third challenge is the design of public standards for risk management. weaknesses in clearing and settlement arrangements can be a source of systemic risk. it is therefore paramount that effective risk management standards are applied by clearing and settlement systems. however, competition entails the risk that the service providers might try to improve competitiveness by applying more lenient risk management standards. given the potential systemic effects of the failure of a major clearing and settlement system, the operators might assume that central banks will eventually bail it out and they might therefore not have sufficient incentives to address risks effectively. against this background, the ecb takes the view that the establishment of public standards for risk management is essential. in fact, the eurosystem has set such standards that securities settlement systems need to comply with in order to be eligible for the use in our credit operations. all interested parties should be actively involved in the development and implementation of such standards. at the g10 level, standards for securities settlement systems have been developed by a joint task force in which both the committee on payment and settlement systems ( cpss ) and the international organisation of securities commissions ( iosco ) are represented. the fruitful experience gained in this co - operation has encouraged similar work at the eu level. for this purpose, the escb has established a framework for co - operation with the committee of european securities regulators ( cesr ), primarily aimed at assessing how the | 0 |
. today banks have no problems with foreign currency cash in their vaults. the fifth solution is related to payments. the nbu has recommended the public to resort to remote banking as much as possible. the nbu canceled fees for sep services to make cashless payments cheaper. payment cards that expire during the quarantine can be renewed. safe cash payments are also a priority for the nbu. the coronavirus does not spread quickly through cash, but we decided to be cautious here. the banknotes coming from the market are transferred to the nbu β s vaults for a β sanitizing quarantine. β banks are receiving banknotes that were stored in nbu vaults before the pandemic hit ukraine. we have enough cash to support the economy. what β s next? the ukrainian economy entered the covid - 19 crisis in a much better state than in 2008 and 2014 crises, with moderate inflation, an effective floating - rate policy and currency liberalization, a low deficit of the current account, sizeable international reserves, a prudent fiscal policy, and a reformed banking sector, which used to be a catalyst in previous crises. these results were achieved thanks to previous years β reforms, the nbu β s quick and effective actions, and an anti - crisis fiscal policy, and will ensure that the ukrainian economy will contract by no more than 5 % in 2020. in q3, once the quarantine is fully lifted, business activity will start recovering and unemployment will gradually decline. in the coming years, we again expect growth of 4 %. to stimulate the economy, we will probably be able to cut the key policy rate further during the current year. through prudent monetary policy, we have ensured price stability for several years running, in line with our mandate as a central bank. in other words, inflation has been low and stable and will remain within the target range of 5 % + / - 1 pp. ukraine definitely needs large amounts of government spending to curb the coronavirus and to support the economy, like many other countries. however, the medicine should not be more harmful than the disease itself. let me remind you of some facts from ukrainian history. uncontrollable printing of money to finance government spending has always had a catastrophic effect on the economy. we can make everybody a millionaire, but the millions will be of no value. the right way is to complete talks with the imf and receive low - cost financing for the budget from [UNK] | andriy pyshnyy : national bank of ukraine press briefing - monetary policy decisions speech by mr andriy pyshnyy, governor of the national bank of ukraine, at a press briefing on monetary policy decisions, kyiv, 19 september 2024. * * * dear colleagues, the board of the national bank of ukraine has decided to keep its key policy rate at 13 %. this decision will help gradually bring inflation back to the target of 5 % in the coming years and support the sustainability of the fx market. inflation has expectedly accelerated in recent months in august, consumer inflation rose to 7. 5 % in annual terms, which was close to the forecast the nbu made in july. the underlying inflationary pressure, measured by core inflation, also increased to 6. 5 %. the growth in consumer prices was driven by the impact of lower harvests, businesses'larger expenses, and the effects of the weakening of the hryvnia in the previous months. however, inflation expectations remained rather sustainable. the pressure on prices will persist in the near future, but inflation will slow next year inflation will rise moderately in the coming months due to an increase in aggregate demand against the backdrop of budgetary spending, businesses'larger expenses on wages and electricity, and higher excise taxes. however, the nbu's prudent monetary policy and lower external price pressures will contribute to a gradual decline in inflation and its return to the target of 5 % in the coming years. to meet the target, the nbu will, in particular, maintain a manageable situation on the fx market. international reserves are being kept on a level sufficient for ensuring the sustainability of the fx market in august, ukraine received a large amount of international financial assistance. at the same time, the nbu's interventions to sell foreign currency declined substantially on the back of a decrease in net demand from businesses and households. as a result, ukraine's international reserves exceeded usd 42 billion as of the start of september. the staff level agreement on the fifth review of the imf program reached in september was another positive signal that volumes of international assistance will continue to be sufficient and macrofinancial resilience will be maintained. 1 / 3 bis - central bankers'speeches considering the above and the sufficient set of available instruments, the nbu will remain fully capable of supporting the sustainability of the fx market, prevent excessive exchange rate fluctuations, and ensure that the exchange rate moves both ways. | 0.5 |
machines of the participating banks and terminals at retail outlets are being upgraded to facilitate meps cash transactions. with these developments, specific programmes need to be implemented to promote the usage of meps cash among the public and business entities. indeed, this e - payment program is a good start to promote a wider use an acceptance of this means of payment. ladies and gentlemen, while the efficiency of electronic means of doing banking is valued, the basic tenet of banking services that is providing security and safety still remains. the potential benefits from electronic delivery channels need to be exploited without undermining the security and confidence of the banking public. the challenge to providing multi channel services in today β s banking is the ability to integrate and interface the different delivery channels. multi channelling strategies therefore needs to be approached holistically. technological development is not only about creating alternative delivery channels, but it is also redefining the financial landscape. indeed, as a result of significant innovations in technology, the payments industry landscape will be redefined with the entry of non - banks into payment services once thought to be the domain of banks. banks need to be more proactive in their role in the payments mechanism. this includes continually finding new effective ways to provide the payment services in a cost - effective, and efficient manner by taking advantage of technological advances and meeting the changing demands of businesses and consumers. banking institutions need to innovate to reach potentially new markets and consumers. it is not just about web enabling existing products and services but also being able to provide the complete financial services required by consumers and businesses. it is also not just about implementing technology solutions but being able to customise the product offerings to our local requirements and preferences. ladies and gentlemen, the growing evolution and demand for online financial services will lead to greater digitisation of banking services. while the use of cash and cheques will continue to be important, more consumers are realising the convenience and flexibility of electronic banking in meeting their daily payment needs. the change in consumer behaviour is reflected in the increasing use of electronic payment systems in the country. the volume of cheques processed through the cheque clearing centres has shown a declining trend in terms of both volume and value. this has been reinforced by the introduction of the interbank giro and internet banking three years ago. the number of interbank giro payments has more than quadrupled in 2002, while electronic funds transfer and bill payments conducted through internet banking has been on an increasing trend. more customers are likely to be drawn | to internet banking, which is gaining acceptance in malaysia with now over 1 million subscribers. increases have also been recorded in the number and value of atm transactions and card payments. ladies and gentlemen, while the pace of the transition from paper - based payment instruments and systems to electronic instruments is increasing, the adoption of electronic payment solutions needs to be accelerated. consumers and businesses have to become familiar with using the new payment methods and their advantages. the smes, in particular, should take advantage of electronic delivery systems to improve their access to banking services and finance. this would be an initial step toward venturing into e - commerce as a means to penetrate new markets. in this respect, i note that the banking industry has drawn up a communication strategy to raise consumers awareness of its convenience, speed and efficiency and to encourage its use. a smooth functioning payment system is critical to the effective functioning of the economy. as the payment systems continue to evolve, bank negara malaysia, will continue to facilitate and foster the safety and efficiency of the payment systems to safeguard public interest. to enhance the efficiency of the payment systems, bank negara malaysia has recently reviewed the legal and regulatory framework of the payments system. a comprehensive legislation on the payment systems is being put in place to provide the mandate for bank negara malaysia to effectively oversee and facilitate greater development of the payment systems. the legislation would also promote a conducive and liberalised environment for the modernisation of the payment systems in malaysia. several policy decisions have also been made. access to the payments system has been broadened with the relaxation of the policy on the offering of payment gateway services and issuance of credit cards. banks are allowed to operate their own payment gateways and non - banks are permitted to issue credit cards if they have established line of credit mechanism from the banks, or have set up a joint venture company with the banking institutions. the relaxation on the policy on payment gateway would promote greater competition in the payments system while the flexibility accorded on the issuance of credit cards would enable the partnering of licensed institutions with non - banking institutions in offering greater choices to consumers. ladies and gentlemen, in conclusion, i would like to re - emphasise that banks should continuously seek to educate and familiarise consumers in the use of electronic and other technology based banking applications which are more efficient and cost effective. the occasion today is an important step towards maximising banking convenience that technology can offer to the consumers. i am delighted to take part in today β s launch | 1 |
delisle worrell : economic and financial services developments in barbados welcome remarks by dr delisle worrell, governor of the central bank of barbados, at the domestic financial institutions conference 2015, bridgetown, 8 september 2015. * * * welcome everyone to the annual one day conference on banking and other financial services for barbadians and residents, organised by the financial services commission and the central bank, in association with the bankers β association and our other partners in the private sector. as you know the fsc and cbb host two of these conferences every year, the other one with a focus on our international financial services. ( the 2015 international financial services conference took place on april 10 ). today β s conference comes at a time when the economy has overcome the foreign exchange challenge of 2013 by the decisive budgetary adjustment taken in that year. the adjustment policy is a textbook example of how economies like ours should respond to foreign exchange market pressure. the keys to success are early detection of the problem and swift implementation of tax increases and public expenditure cuts, sufficient to reduce the demand for imports. with that episode behind us, the focus returns to measures to grow the economy. tourism is our main source of foreign exchange and we have had an encouraging revival in numbers and spending this year. new investment is underway or in prospect in hotels, tourism related services, public utilities and infrastructure. both in tourism and in international business and financial services, government and private interests are taking initiatives to enhance the quality and range of our offerings, to explore new markets and to build the barbados brand as the basis for our competitiveness. quality, branding and smart marketing are also the key elements of the strategy for exports of food, beverages and manufactured goods. we have begun to recognise that power generation through alternative energy has the power to transform our economy. now that we have made a start with photovoltaics, incentives for investment in green energy must be made effective, so that investment accelerates significantly. the economic benefits of expansion of the foreign exchange sectors are spread through the society largely via small and medium enterprises. these enterprises will be the main source of job creation in the near term. smes are also the wellsprings of innovation and of the development of cultural and ict services barbados aims to sell to an international market. government plays a vital role in supporting these growth promoting activities with incentives, and technical, financial and other support. in addition, government has the responsibility to secure fair access to international markets for barbados β | recovery efforts. much emphasis has been placed on solar energy but bio - based renewables also present a winwin! they have the potential to power the economy while minimising waste and enabling us to make the best use of our resources. they generate energy. they help us to manage our carbon footprint. they boost local agriculture production by supplying organic fertilizers. and they improve our tourism value - added because the oceans and the island are cleaner. we support all efforts to promote and encourage the use of clean energy sources and commend the government for accelerating the shift to 100 percent renewable energy. the move has the potential to create more sustainable jobs. new opportunities will rise for engineers, technicians, technologists, investors and entrepreneurs. the oil rich nation, saudi arabia, is harnessing the sun and expanding its solar capacity to create new jobs. we can and must do the same. our switch to renewables will lead to new industries as well and create the potential for greater investment diversification, as investors look for β green β options for pension funds, etc. so, as we reflect on david suzuki β s 2004 sir winston scott memorial lecture topic, i say : the bottom line is that we must protect our environment, and our economy. let β s all do so by supporting the conversion of waste to energy as a part of our energy mix, by embracing sustainable sources of renewables, and by reducing our carbon footprint. that β s how we will make our environment and our economy more resilient. the ball is in our court. i thank you. 2 / 2 bis central bankers'speeches | 0.5 |
status as an agent of economic growth. ladies and gentlemen. the bsp has been fostering a more liberal regulatory environment, built on strong prudential supervision foundation to promote a more inclusive and accessible financial system. among others, we have liberalized branching to boost the efficient delivery of financial services, including microfinance, to areas with minimal access to banking services. altogether, these regulatory measures should give rural banks scope to participate more fully in economic development. now, more than ever, we shall be relying on the collective support of industry players in working toward a stronger and more efficient rural banking system β one that is fully capable of mobilizing savings for a robust rural economy. to achieve this, let us work together to continue the reforms we have started to create greater confidence in the integrity and dependability of the country β s banking system. let us therefore resolve to strengthen our partnership for a more efficient, competitive and resilient banking system as a service to our people and our country. again, our congratulations to the officers and staff of onb! daghan salamat sa inyong tanan. | australian workers and resource - related firms putting additional capital in place in the resources sector. this has accounted for much of the capital flowing into australia over the past few years ( graph 3 ). 7 importantly, this source of demand for australian dollars will decline as resources investment turns down. absent further increases in commodity prices, the discovery of new mineral deposits, or a reduction in the costs of developing and extracting higher - cost deposits, we cannot expect investment to remain at recent levels. 8 ( iii ) finally, there is a quantity effect during the production phase of the boom. this follows from the additional export revenue generated by the new resource projects. some of this will accrue to australian owners of the new projects and infrastructure, some will go towards paying workers and suppliers supporting the new facilities, and some will go to paying taxes owed in australia. the rest will remain in the hands of foreign owners. the effect of the higher commodity prices on the nominal exchange rate at any point in time will depend on the expected sum of these different flows into the future. also, there may be offsetting reductions in inflows to other sectors of the economy, particularly those adversely affected by the appreciation of the exchange rate. clearly, determining this sum is no easy task and is subject to considerable uncertainties. for a discussion of the impact of the mining boom on cross - border financial flows, see debelle g ( 2013 ), β funding the resources investment boom β, address to the melbourne institute public economic forum, canberra, 16 april. whether the investment is undertaken by australian or foreign residents need not affect the demand for australian dollars. for example, australian residents could choose to borrow offshore to fund the investment in the resources sector ( assuming unchanged saving and investment behaviour elsewhere in the economy ). this would lead to inflows of capital during the investment phase, followed by outflows associated with the servicing of that debt during the production phase. it is worth noting that a decline in the australian dollar will help to reduce these costs. also, gross investment needs to be higher to offset the effects of depreciation on the now higher level of the capital stock. bis central bankers β speeches graph 3 one aspect of the uncertainty is the path of commodity prices themselves. indeed, the full extent of the rise in commodity prices only became clear over a number of years, starting from around the mid 2000s. this gradual updating of the outlook for commodity prices meant that the exchange rate didn β t jump higher | 0 |
β markets for smes in italy and germany could serve as examples to gain insights into best practices for the establishment of sme markets. the development of bond and equity markets for smes and mid - sized companies would also encourage more cross - border investment within the eu and from foreign investors. fourth, measures to develop alternative financial intermediaries for young companies and smes. in this context, efforts should be intensified toward the creation of a risk capital market for non - listed companies such as a market for venture capital funds and markets for infrastructure financing. mifid ii is an important step towards improving the functioning of eu trading venues and setting the stage for the development of sme capital markets. however, further steps are necessary, in particular to correct differences throughout the eu in the tax treatment of these products both at the issuer and investor level. fifth, measures to improve investors β access to business, credit and financial information on smes. it is well - known that most smes are not rated by rating agencies. the lack of adequate and readily available information on the credit quality of smes is a structural problem in the eu as a whole and in the central, eastern and southern european region, in particular. this is one of the major reasons that smes in the eu have historically faced significant difficulties to access funding from capital markets. there is, thus, the need of a harmonised eu approach to credit scoring comparability of sme data. improving the availability of financial information is paramount in allowing investors to gauge the riskiness of securitized products. in this respect, it is important to develop national credit registers for smes, allowing for higher transparency, standardization and comparability of underlying assets. a final word of caution is in order. most of the measures i discussed above will likely have only medium - to long - term effects in reviving credit markets in the eu because most of these measures constitute fundamental changes in the structure of the financial system. such structures naturally change only gradually over time. in the short term, monetary policy will continue to play the major role in determining liquidity provision to banks and the cost of funding for the private sector. non - standard monetary policy measures and progress towards a banking union are, thus, of prime importance, in order to reduce market fragmentation and allow the normal transmission of monetary policy to the most vulnerable areas of the monetary union. bis central bankers β speeches | bond purchase programmes will provide an initial boost, especially for the european abs market which has lain largely dormant since 2008. however, in my view, if we are to move farther towards the development of a market for corporate loans, a concerted effort is needed in several directions. a list of key priorities in order to revive credit markets should include the following : first, further measures to revive the market for securitizations, in particular for sme bank loans. securitization is an important instrument to promote bank credit. allowing banks to securitize and redistribute sme loans to a broader investor base can provide banks with capital relief and allow them to lend to the real economy. this is not an easy task given the stigma attached to securitization following the global financial crisis, when the β originate to distribute β model led to excessive leverage and financial fragility. of course, lessons have been learned since then, and the regulatory framework has been adapted in a way that makes a repeat of past mistakes unlikely. for this securitization to work in a way that does not endanger the resilience of the financial system, we must ensure that only high quality assets that are simple and transparent are used in securitizations. in this respect, it is important to develop a set of rules that allow the definition of a pool of β high quality securitizations β at the eu level. bis central bankers β speeches second, changes to the prudential treatment of securitizations. it is essential, in my view, to adjust the regulatory framework for securitisations in a way that provides banks with incentives to engage in the market. capital relief for banks β holdings of asset backed securities which are simple, transparent and robust could provide an answer. the second aspect of regulation relates to potential investors, such as insurers, pension funds etc. the regulatory framework should allow for a fair treatment of high quality abs relative to abs products with higher risk profiles, in order to provide long - term institutional investors incentives to trade in the market. third, policies to promote better access of smes to capital markets. as is well known, corporate bond markets work well for large corporations while they are not attractive to smes, which remain largely dependent on bank loans for financing. efforts should be undertaken to reverse this trend and promote the access of smes to capital markets. the development of β minibond | 1 |
delisle worrell : challenges and opportunities for barbados β ibfs sector remarks by dr delisle worrell, governor of the central bank of barbados, at the 5th annual international business and financial services sector conference, bridgetown, 10 april 2015. * * * this annual conference is an opportunity to reflect on the challenges and opportunities for barbados β ibfs sector, and to assess how we may improve on our performance and mastery of our circumstances. for all of our history barbadians have made our living as tiny players on a global market. by and large, over time, we have made a success of it, and as a result we now enjoy an enviable quality and style of life. the challenges we face in the ibfs sector are of the same nature as the challenges our economy has always faced in international competition with players much larger than ourselves. the lessons of our past are that you must know your strengths and operate well within them, you must make a game plan based on those strengths, you must arm yourself fully with research and information, you should implement your strategy in a flexible, responsive way, and you should prepare and commit yourself for the long haul. these are the lessons we must apply in facing the new challenges in the ibfs sector. we face new challenges, often referred to by acronyms such as beps, fatca, fapi rules, etc. they are well known and i do not need to repeat them here, but they are serious and they affect our canadian business, which is the bulk of our sector. in responding to the current challenges we are playing to our strengths. our value proposition is that international companies can establish subsidiaries in barbados to perform international transactional services that they would otherwise do in a major metropolis such as toronto or new york. they are able to reduce costs and be more competitive because wages for skilled professionals in barbados are so much lower. they are able to offer the same quality of service because barbados boasts international levels of social and economic infrastructure, and excellent communications with north america, europe and beyond. we have regulatory and legal oversight systems that are constantly being upgraded in light of guidance from the basel committee, the imf, the fsb, the fatf, the global forum and other international bodies. we have a large and expanding network of range dta β s and bit β s. we are constantly expanding our range of products. and we are not a tax haven ; companies operating in barbados, including ibc β s | marion williams : the current turbulence in the us financial markets and its implications for barbados comments by dr marion williams, governor of the central bank of barbados, on the current turbulence in the us financial markets and the implications for barbados, bridgetown, 24 september 2008. * * * while the current turbulence in the us financial markets is unlikely to have a significant impact on barbados immediately, as the us economy slows or goes into recession as it copes with these difficulties, the result could be a slowdown in the growth of the barbados economy going forward. recession in the uk and some european economies would also impact adversely on our tourism prospects and our investment inflows. however, the barbados financial system should remain sound although there may be some loss in value ( realised and unrealised ) on us dollar fixed income securities held by financial institutions, including the central bank, as securities β prices in the us markets tumble. however, such losses in value are not expected to be significant in relation to the overall portfolios of these institutions, particularly over the medium term and especially for those who tend to hold short to medium term securities to maturity. for non - bank institutions with us equity portfolios, long - term investors would have some tolerance to the current volatility in the equity market but may record unrealised losses in the short term. for some institutions in the international financial business ( or offshore ) sector who trade more aggressively in us stocks and in fixed income securities and more especially in derivative instruments, particularly those who may have been doing active business with those us financial institutions involved in the us financial melt down, realised losses may be recorded. this is likely to be mitigated by the actions of the us government to bail out these institutions. details of the bailout are not yet clear, but it is expected that there will be free access to assets placed with these institutions where funds are held in an agency or custodial capacity on behalf of overseas investors. funds held in the capacity of agent by these us institutions should retain their agency status and should not be affected by the financial losses of these institutions. administrative hurdles during the adjustment period may however hamper immediate access. any problems of access to funds held in an agency capacity are expected to be short - lived if the bailout goes through. in any event, the investment activities of the offshore sector are segregated from the local banking system. in the interim, investors in overseas markets should be cautious about the external financial advisers, consultants and cu | 0.5 |
yves mersch : reflections on the eurosystem β s monetary policy strategy after four years speech by mr yves mersch, governor of the central bank of luxembourg, at the 33rd iscsymposium, st. gallen, switzerland, 23 may 2003. introduction the primary objective of the single monetary policy is the maintenance of price stability. however, the eurosystem, like all central banks, cannot control the price level directly but faces a complex transmission process. because the latter is complex, the preparation, discussion and presentation of monetary policy decisions must be placed in a coherent clarifying framework. this is the role of the monetary policy strategy. the strategy fulfils two crucial tasks. first, the strategy imposes a clear structure on the policy - making process itself. it must ensure that the governing council has the information and analysis required by an effective monetary policy that will maintain price stability. second, the monetary policy strategy is a vehicle for communicating with the public. monetary policy is most effective when it is credible. the strategy must therefore facilitate the communication of decisions taken and convince the public that the objective will be achieved. in october 1998 the ecb governing council announced that the eurosystem would adopt a monetary policy strategy consisting of three key elements. the first element was a quantitative definition of price stability. the second and third elements were the " two pillars " of the strategy used to achieve this objective, namely the assignment of a β prominent role to money β and a " broadly based assessment of the outlook for price developments and risks to price stability ". the eurosystem took the position that policymaking should not become dominated by inflation - forecast - targeting type preoccupations. eurosystem monetary policy, thus, does not react mechanically to a forecast at a fixed horizon but rather tailors the policy response depending on the nature of the shock hitting the economy. this is documented by its medium - term orientation and reflects why the medium - term has not been defined quantitatively. as the single monetary policy faces uncertainty about the functioning of the economy, the robustness of information stemming from various sources is checked. furthermore, policy decisions are based on a judgment on the likelihood of certain scenarios occurring. the distinct character of the two - pillar strategy is also stressed by the announcement of a reference value for monetary growthsignalling the prominent role assigned to money. on the contrary, strong focus on a single inflation forecast would not do justice to the complexity of the decision - making process and | produce expected outcomes in a timely way and even in adverse conditions. risk transfer my second observation relates to risk transfer more specifically. alan greenspan made the observation that the successes of the banking system in diversifying risk have increased its ability to withstand significant shocks in recent years, including the asia crisis, russia, ltcm, 9 / 11 to say nothing of enron, the it boom and bust, and the telecom write offs. a lot of people agree with him. so the development of markets for the transfer of credit risk is of real value. it allows institutions that are best placed to originate a loan to do so, without necessarily requiring them to continue to bear the risk. having a market to transfer risk allows institutions to diversify their exposures across different sectors and regions. and of course it generates price information that would not otherwise be available. that means credit exposures can be marked to market in a way that had not previously been possible. but it raises other questions. the transferors may have proper insight into the nature of the risks. but to whom have the risks been transferred? are the transferees actually aware of the risks they have taken on? and are they in the best position to monitor these risks as they evolve? how do they acquire day to day knowledge about the quality of those risks? going further, what might they do when they find out? some of the concerns being expressed by private and public sector commentators in these areas are, in my view, important and worthy of further examination. those concerns i β m talking about include : a lack of aggregate data on derivative positions ; lack of transparency in accounting for them ; and the potential for unexpected concentrations of risk to build up. although in principle this redistribution of risk should be benign we simply do not have the information at present to judge what the actual impact has been. but why is all this relevant to insurance? it β s certainly true that in a lot of cases originating banks have laid risks off to other banks. there are many possible reasons for this : for diversification or to avoid concentration ; opportunities to earn fees ; regulatory arbitrage ; and different views on pricing and spreads. but it is also well known too that risks have been transferred from banks to various areas of the insurance world. that includes reinsurance, where the degree to which such risk has now been concentrated is difficult to assess. moreover, these transfers have taken place, not only through otc contracts, but also through securitised debt instruments | 0 |
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