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now. ultimately, however, the decision on the regulatory framework for fees is primarily a matter for you, as european legislators. the first principle is that, as a public good, the digital euro should serve society. we believe consumers should be able to use it free of charge for basic day - to - day purposes. second, intermediaries should be compensated for the services they provide, just like they are for other digital payments. third, legislative safeguards should prevent merchants from being overcharged by intermediaries if they are obliged to accept digital euro as legal tender. while we believe that the digital euro would allow for more competitive fees, this principle would ensure that fees for merchants cannot exceed the current levels for comparable means of payment. finally, the eurosystem would bear its own costs, for example for settlement [ 21 ] activities and managing the common standards for making and receiving payments in digital euro. this would reflect the public good nature of the digital euro and follow the same logic that currently applies to cash. the savings that arise from the eurosystem covering its own costs would ultimately benefit the end - users. the path ahead let me conclude. the design of the digital euro and its regulatory framework are key to ensuring that it retains its key characteristics as a public good. it will then be european legislators to decide whether the digital euro will be an inclusive, truly european means of payment – widely usable and accessible across the entire euro area, free for basic use, and offering the highest levels of privacy. the success of a digital euro will be in your hands. the ecb stands ready to continue discussing all these issues with you during the legislative process. throughout the next project phase, which is expected to be launched later this year, we will accommodate any necessary adjustments to the design of the digital euro that may emerge from legislative deliberations. in that phase, we will develop and test the possible technical solutions and business arrangements necessary to provide a digital euro. these two processes – legislative and design – should advance in parallel so we can be in a position to promptly begin issuing a digital euro, if and when warranted. the possible decision by the governing council to issue a digital euro would be taken only after the legislative act has been adopted. we will take all the necessary measures to ensure that the digital euro would act as a true public good. but all european institutions have to play their part to achieve our common goal of making the digital euro a success. this is why we are looking | access to digital euro. this would also endanger network effects necessary to the success of a payment solution ( see footnote 9 ). 16. there are lessons to be learned from the delays in achieving pan euro area reach in case of the sepa credit transfers and direct debit schemes and then also the sepa instant credit transfer scheme. if broad access is to be ensured for the digital euro, the required regulatory measures need to be established at an earlier stage in the process. 17. panetta, f. ( 2022 ), “ building on our strengths : the role of the public and private sectors in the digital euro ecosystem ”, introductory statement at the committee on economic and monetary affairs of the european parliament, brussels, 29 september. 18. to avoid placing an additional investment burden on intermediaries, the digital euro scheme rulebook development groupecb hosts first digital euro rulebook development group ( rdg ) meeting is investigating how to leverage existing standards and solutions as much as possible, and how to make the digital euro compatible with existing solutions. it will also reflect on present and future regulatory requirements. see as well as rdg mandate and the related calls for expression of interestscheme compatibility workstream by experts to participate in workstreams ( e. g. ). 19. a compensation model for the digital euro refers to the framework that determines how entities are remunerated for their participation in or use of a digital euro currency. the digital euro compensation model is a four - party scheme with variations concerning three aspects : ( i ) pricing for private individuals, ( ii ) pricing for merchants, and ( iii ) costs for the eurosystem. the model could also cover factors such as transaction fees, interest rates, incentives and other mechanisms for compensating users. see ecb ( 2023 ), “ compensation model for the digital euro ”, presentation at the euro retail payments board, 22 february. 20. ecb ( 2020 ), “ report on a digital euro ”, october. the scope of digital euro basic services is yet to be defined, but it should be similar in nature to the basic services that banks are required to provide under the payment accounts directive. these basic services could therefore include features such as free - to - open digital euro accounts / wallets, payments between individuals, and the funding and defunding of digital euro accounts / wallets. if consumers had to pay for the basic services, it would also put the digital euro at a | 1 |
– more exactly the ( mis ) interpretation of conditional as unconditional statements – in the outside world. but i think it ’ s clear enough that central banks have rarely if ever committed themselves unconditionally to future policy. it ’ s clear too that, on several occasions, the outside world has nonetheless viewed these statements as promises. i ’ ll give some examples before a short concluding section. credible, “ low - for - long ” guidance as a means of easing policy at the lower bound so let ’ s start with the value of commitment when the policy rate is close to the lower bound. as you know, the last thirty years have seen a marked decline, around the world, in the underlying, “ equilibrium ” real rate of interest ( sometimes called “ r * ” ). this a real phenomenon, not a monetary one, caused by some combination of a greater desire to save – across the world as a whole – and weaker investment demand. but central banks have still had to accommodate the decline and the appropriate nominal rate of interest has therefore fallen alongside this “ r * ” [ 7 ]. however, there ’ s a limit to how far the nominal rate can fall. as long as people also have access to physical cash, bearing zero interest, it ’ s not possible to lower the official rate much below that level. and when the “ normal ” policy rate is already close to that lower bound there ’ s very little room for conventional policy to respond to negative, disinflationary shocks. this in turn creates the potential for deflationary traps. because the policy rate can ’ t fall in response, a decline in inflation expectations pushes up real interest rates, depresses demand and inflation, and this justifies the original ( and self - perpetuating ) weakness of expectations. these traps are potentially very costly as they can lead to protracted periods of unnecessarily weak economic activity. it was in a determined effort to avoid them, having already cut interest rates as far as they could, that central banks then turned to alternative, “ unconventional ” monetary policies. for the most part this meant qe. asset purchases are designed to keep a lid on forward rates, thereby supporting demand and activity. in the academic literature, however, many economists argued for an alternative – and potentially more powerful – option, namely a committed form of forward guidance. the economist michael woodford has been one prominent advocate [ 8 ]. remember that the name of the game, | bank rate. monetary policy affects inflation with a long and somewhat variable lag and there is little the mpc can do to offset unanticipated movements in near - term inflation. instead, we have to look at inflation prospects two or three years ahead. but it is in the nature of asset prices, including house prices, that one can say rather little about their likely direction of movement that far ahead. most of the time, the best projection of asset prices at that horizon is for them to be broadly flat. consequently, i suspect that our policy choices would not have been radically different had we been tasked with targeting an inflation measure that included a measure of owneroccupied housing costs. finally, there is something of a logical error in moving from the indubitably correct observation that successful inflation targeting is insufficient to guarantee either macroeconomic stability or financial stability to the conclusion that monetary policy should in addition, or instead, be focussed on some other objective. there is a real danger in overburdening monetary policy if it is expected to achieve both price stability and financial stability simultaneously. with two objectives, one needs two independent means of achieving them. the assignment of instruments to targets then revolves around which instrument is most effective at achieving which objective. though loose monetary policy, particularly in the united states during 2001 – 5, arguably contributed to the build - up of the financial imbalances, it was but one of many causes, including a plethora of failings within financial institutions. these include : inadequate care in the extension of loans to risky individuals, when those loans are then sold on ; the inappropriate use of off - balance - sheet vehicles to circumvent capital requirements ; reward packages that encouraged an undue focus on short - term returns ; excessive complexity and opacity in some asset - backed securities ; and distorted incentives facing ratings agencies. although regulators and supervisors conspicuously failed to address these issues during the run - up to the crisis, prudential regulation and supervision should surely be the first line of defence, as they can be focussed directly on the source of the problem. regulatory policies have a comparative advantage in combating excesses in financial markets. by contrast, inflation is, in the long run, a monetary phenomenon, so it is more naturally suited to the pursuit of price stability. beefing up the regulatory regime so it is better suited to preventing the re - emergence of financial excesses is very much work in progress. there are sound arguments | 0.5 |
ardian fullani : overview of recent economic developments in albania speech by mr ardian fullani, governor of the bank of albania, on the monetary policy decision - making of the bank of albania ’ s supervisory council, tirana, 28 august 2013. * * * today, on 28 august 2013, the supervisory council of the bank of albania reviewed and approved the monthly monetary policy report. based on the latest monetary and economic developments in albania, and following the discussions on their outlook, the supervisory council of the bank of albania decided to keep the key interest rate unchanged, at 3. 5 %. let me now proceed with an overview of the economic developments and key issues discussed at today ’ s meeting. * * * according to instat data, annual inflation in july was 1. 6 %, falling from a month earlier and standing below our 3 % inflation target. inflation ’ s sharp decline in this month is expected to be temporary. it was driven by low seasonal food prices and the downward dynamics of prices for some other cpi basket items. however, the main consumer basket groups and items continue to be characterised by low annual inflation rates. albania ’ s economic and financial developments have generated low inflation rates. aggregate demand and economic growth remain weak, thus falling short of the full utilisation of the country ’ s production capacities. this situation does not support employment and creates low pressures on the increase of wages, production costs, and profit margins. likewise, imported inflationary pressures appear contained, reflecting the moderate performance of global prices and the stability of the exchange rate. finally, the expected inflation from the real and financial sectors appears low, whereas the situation of liquidity is in line with the moderate price rise in the medium term. the bank of albania deems that, in general, these trends will persist in the period ahead and will determine low inflation rates in the medium - term horizon. updated economic analyses suggest that economic activity expanded at low rates during the first half of the year. aggregate demand and economic growth appear to have improved slightly in the second quarter, in response to higher fiscal stimulus and better performance of consumer spending, while private investments remain weak. moreover, foreign demand continued to provide positive contribution to boosting economic activity. the latest data from the external sector point to trade deficit narrowing by 14. 6 %, in july, in annual terms. it narrowed thanks to the increase of exports by 23. 9 % and the slight increase of imports by 1. 2 %. fiscal policy was stimulating during | central bankers ’ speeches | 0.5 |
actual spending of the government entity can exceed the spanish economy ’ s nominal potential growth rate. since government revenues have an elasticity with respect to nominal gdp of approximately one, the spending rule involves linking its growth to that government revenues. spending growth may only exceed this reference rate if there is an increase in revenues that is recurrent in nature ; likewise, legal changes involving permanent losses of revenue should automatically lead to a downward revision in the spending threshold. one of the advantages of this rule is that increases in government revenues above their normal trend must be saved, such as during the upswing prior to the last crisis, when very significant extraordinary revenue increases associated with the real estate boom were recorded. also, by linking spending to the economy ’ s potential rather than its actual growth, and by excluding from its definition nondiscretionary spending on unemployment benefits, public spending should grow more slowly than gdp and revenues during economic upswings ( when actual gdp and, therefore, revenues are growing at above their potential rate ), while in recessions the opposite should occur. thus, the spending rule requires general government to accumulate budgetary savings during economic upswings that may be used during downswings, allowing the behaviour of public finances to be disciplined and automatic stabilisers to function at the same time. obviously, if the starting point is a structural budget deficit, then the return to budget balance will require spending to grow more slowly than nominal growth or else a discretionary increase in revenues, until balance is achieved. evidence suggests that the application of a rule of this type during the upswing prior to the last crisis would have substantially curbed the public spending permitted each year, allowing the generation of significant room for manoeuvre that would have limited the deterioration in public finances during the crisis. finally, pressing ahead with the various pending reforms would raise the economy ’ s growth potential which – through its effects on employment and productivity – is one of the basic determinants of reductions in public debt. these reforms include, in the regulatory area, revision of regulations that hinder the market entry of new firms or that limit their growth ; in the labour market, reforms to reduce the degree of duality and to improve the employment prospects for the long - term unemployed ; and the need to increase the efficiency of the legal system and of the education system and to promote the accumulation of technological capital, among others. accordingly, any delay in their implementation or, worse still, a hypothetical reversal of reforms already introduced since | nestor a espenilla, jr : collective and individual competitive advantages speech by mr nestor a espenilla, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the powwow 2017, cebu city, 17 november 2017. * * * philexport cebu chairman apolinar suarez, jr. ; president mr. nelson bascones ; officers and members of philexport cebu ; special guests ; ladies and gentlemen maayong gabii. i am grateful for the invitation to speak about the bsp ’ s policies and thrusts, my first as bsp governor, before this distinguished group of business leaders and exporters. a major industrial hub, cebu plays a crucial role in philippine economic development. with at least 27 it parks and centers ; 7 manufacturing zones ; 2 tourism economic zones ; and 1 agro industrial economic zone, cebu is a dynamic economic hub. this evening ’ s theme has three action verbs. individually, the words sound like commands. as a unified phrase, it is a battlecry. “ create. innovate. compete. ” cebu is no stranger to the power of creativity and innovation. because of efficiency and raw talent, the level of craftsmanship and creativity of the cebu furniture industry, for example, allows it to produce high quality and unique custom - built pieces that cater to medium - to high - end markets, selling twice or thrice more furniture than competitors from vietnam and china. to outperform others — businesses must be creative and innovative. but creativity and innovation should not be pursued for their own sakes. ( this is a reminder i have relayed to the bsp and the banking and financial sectors many times ). efforts should be focused and strategic. in the context of business, creation and innovation should be concentrated on, and mindful of, competitive advantage. this brings about strategic competitiveness. the philippines ’ competitive sdvantage allow me to relay data on the philippines ’ positive economic position which enables it to compete strategically in the global market. philippine macroeconomic fundamentals are solid and robust. these support local exporters and entrepreneurs. we have had uninterrupted gdp growth for 75 consecutive quarters ( more than 18 ½ years ). gdp expanded 6 percent annually during the past five years. prospects are favorable and growth is predicted to be between 6. 5 to 7. 5 percent this year and 7. 0 to 8. 0 percent over the | 0 |
of experts had the option of interacting amongst themselves on matters of overlapping or common concerns to evolve a consensus approach. the advisory groups also had the option to include officials from regulatory and government organisations as special invitees to discuss and understand the prevailing position in the relevant standards and codes, for bringing improvements in the existing practices. they also had the benefit of deliberations with market participants, members from professional bodies as well academics. the arrangement afforded the advisory groups an independent or impartial status and prompted a critical evaluation of the relevance and compliance with each of the aforesaid standards and codes. the work of the advisory groups in some cases happened to continue alongside similar subjects addressed by groups constituted by the government or other regulatory bodies. in any case, the work of the advisory groups was considered unprejudiced and non - intrusive to any such official or non - official initiatives taken by others. the advisory groups were requested to take cognisance of these parallel efforts and to provide inputs, wherever necessary. all ten advisory groups have already submitted their reports to the standing committee. the standing committee has made efforts to disseminate these reports as widely as possible including their expeditious posting to the reserve bank website. the committee has also requested the advisory groups to organise seminars for creating awareness and concretising views on recommendations. the committee would also take up regular annual review of the status and progress regarding compliance with, and implementation of standards and codes and submit it to the ministry of finance. changes in legal and policy framework the implementation of the recommendations of advisory groups in relevant sectors would require a co - ordinated approach based on elements of consensus, incentives, technical support, resources and encouragement to concerned institutions and regulatory bodies. broadly speaking, the recommendations of advisory groups can be categorised into three levels, viz., requiring ( a ) constitutional, ( b ) legislative and ( c ) procedural and policy changes. quite a number of recommendations require new legislative enactments or amendments to existing laws, while several others could be implemented by making appropriate changes in the existing policy and procedures under the powers vested to relevant bodies under the law. a few recommendations could also require changes in the constitution of india. some of the issues pertaining to the financial system are also being addressed by the national commission to review the constitution. of these changes, amendments to the legal framework of the country assume utmost importance as they institutionalise changes as formal laws with parliamentary endorsement and, therefore, provide clear | laundering will help both expeditious processing and relative clarity of concepts as well as definitions. this approach is of particular significance due to the predominant cross - border nature of money laundering operations. similarly, there can be a special chapter in bankruptcy law only in so far as cross - border insolvency issues are involved. such an approach could be considered, keeping in view the uncitral model law. for example, the report of the advisory group on bankruptcy laws enunciates the scope of the special chapter on cross - border insolvency. the chapter applies where assistance is sought in india by a foreign court or a foreign representative in connection with foreign proceedings ; or assistance is sought in a foreign state in connection with proceedings under the laws of india relating to insolvency ; or foreign proceedings and proceedings under the laws of india relating to insolvency in respect of the same debtor are taking place concurrently ; or creditors or other interested persons in a foreign state have an interest in requesting the commencement of, or participating in, proceedings under the laws of india relating to insolvency. finally, the recent experience of enron and arthur andersen gives a new dimension to the institutional dynamics in financial structures and transactions revolving around'conflicts of interests'among the participants and political or diplomatic forces operating at transnational level on matters which should strictly be commercial. conclusion to conclude, the complexities relating to the global financial system in the context of strong national interests continuing to dominate public policy viewed in the light of indian experience warrant, more than a legal basis, emphasis on three aspects, namely ( i ) the standards may be set domestically with a recognition that they have some international dimension also ; ( ii ) the processes of setting, prioritising, incentivising, monitoring and reorienting should be consultative and participative in both domestic and international dimensions ; and ( iii ) effective implementation is a complex and varied process with domestic legal framework being one enabling factor at this juncture. | 1 |
the issues that are relevant from a global financial stability perspective. on the speaker : mario draghi, governor of the banca d ’ italia, has been chairing the fsf in a personal capacity since april 2006. this position – together with the economic and international expertise he has gained during his career – makes him an excellent speaker in current times, given the backdrop of the financial market turbulence. mario draghi graduated from the university of rome, received his ph. d. in economics from the massachusetts institute of technology, and subsequently served as professor of economics at the university of florence from 1981 to 1991. prior to taking the helm at the banca d ’ italia, he was vice - chairman and managing director of goldman sachs and a member of the firm - wide management committee ( 2002 - 2005 ). he was director general of the italian treasury ( 1991 - 2001 ), chairman of the european economic and financial committee, a member of the g7 deputies, and chairman of oecd working party 3. finally, from 1984 to 1990, he was an executive director of the world bank. a few weeks ago, during the annual central bankers ’ meeting in jackson hole, mario delivered a speech entitled “ the current crisis and beyond ”. in his speech, he pointed out three elements that mark the cornerstones of the work plan of the fsf for the month ahead. more precisely, he talked about the need to look more closely at the incentives for appropriate risk control frameworks, efforts to improve the resilience of the financial system to shocks frameworks for dampening the cyclicality of risk - taking. not only was it a pleasure to listen to him, i also fully endorse the proposals he made. the title of his speech today is “ restoring stability in the financial system ”, a topic that is evidently highly relevant and of interest to all of us. mario, i am looking forward to your insights during the fifth bundesbank lecture. the floor is yours. | have not overreacted and remained cool - headed. this is a positive sign. central banks, including the eurosystem, have reacted decisively to the situation with liquidity provisions and other measures. german banks do not report liquidity problems. the german financial system is stable and over the past years its resilience against adverse shocks has markedly improved. moreover, the universal banking model – a characteristic feature of the german financial system – has proven its robustness and stability. these structural achievements will help to cushion current tensions due to higher perceived counterparty risk and a necessary unwinding of positions on the market for credit risk transfer – both unavoidable outcomes in the face of an insolvency of one of the major market participants. the financial turbulence has created the most challenging situations for financial intermediaries, for central banks, for supervisory agencies, and for regulatory bodies in decades. and since the causes of the crisis are deeply rooted, a comprehensive coordinated response at the international level is evidently warranted. in this context, the financial stability forum – the fsf – in particular is playing a crucial role in the process of mitigating the ongoing difficulties and making the financial system more resilient to future shocks. the fsf was established in 1999, following a report by the then bundesbank president, hans tietmeyer. the fsf brings together senior representatives of national financial authorities ( for example, central banks, supervisory authorities and treasury departments ), international financial institutions ( such as the imf or the bis ), international regulatory and supervisory groupings ( for example, basel committee on banking supervision, international accounting standard board ), committees of central bank experts ( such as the committee on the global financial system ) and the european central bank. the fsf ’ s mandate is to assess vulnerabilities affecting the international financial system, to identify and oversee action needed to address these, and to improve coordination and information exchange among the various authorities responsible for financial stability. in doing so, the fsf aims to promote international financial stability, improve the functioning of financial markets, and reduce the tendency for financial shocks to spread from country to country, thus destabilising the world economy. the fsf seeks to give momentum to a broadbased multilateral agenda for strengthening financial systems and the stability of international financial markets. the necessary changes are enacted by the relevant national and international financial authorities. in a nutshell, the fsf acts as a central hub for all | 1 |
backed commercial paper is a somewhat different story. because this short - term paper must be redeemable at maturity, despite the longer - term assets that back it, it must carry a guarantee from a liquidity provider. so, there is a question of how liquidity providers should take into account the potential for liquidity calls to be made, both in terms of the capital they hold against this potential, and the liquidity of the assets on their balance sheet. this issue, which came to the fore this summer, represents a key challenge for the members of the iif. how do you make provisions for liquidity calls that may come against the guarantees that your institutions provide, and for the support of products that represent a reputational risk should they fail? these are not easy questions to answer, but it is important that you provide your own answers and be prepared to discuss them with your regulator in the context of the implementation of basel ii. and i am pleased to see that the iif has been working hard on these particular issues. finally, this summer's turbulence has raised a number of system - wide issues related to liquidity. in the event of a serious disruption in securities markets that would threaten financial stability, are there policies that would be helpful? the financial stability forum has been looking at this issue. and of course it is not only commercial banks that need to worry about this, it is also a problem for central banks in their role as the ultimate providers of liquidity to the banking system. over the summer, central banks have seen that their standing liquidity facilities have worked quite well with respect to the market for overnight funds. different central banks have different practices and facilities in place to provide liquidity to the banking sector. in canada, we have clear rules for accessing our standing liquidity facility to cover routine overnight liquidity needs. and we have clear rules regarding emergency lending assistance for individual solvent banks with acute liquidity problems. but are there principles that would suggest that some market failures would be best dealt with if we had a readily accessible facility that would provide liquidity to banks at terms longer than overnight, collateralized with a possibly wider range of securities? such a facility would have to allow for suitable term premiums and penalties. the types of market failure that such a facility would be designed to deal with would obviously need to be thoroughly examined and discussed, as would the pros and cons of any specific proposal, including a consideration of all other issues that might be | crunch that has further aggravated the crisis. cyclical factors have thus played an important role in increasing unemployment. the ecb has reacted to the crisis on three fronts. as for “ conventional ” monetary policy, it has cut interest rates from 1. 5 % in november 2011 to 0. 5 % today. it has reduced the interest rate paid by banks on their deposits at the ecb from 0. 75 % in november 2011 to – 0. 20 % today. it also activated at the end of 2011 credit lines for the banking system amounting to €1 trillion and with an unprecedented maturity of three years. subsequently, facing the reemergence of the sovereign debt crisis and a serious crisis of confidence about the survival of the euro, it introduced the now famous outright monetary transaction programme which has helped to rapidly reduce uncertainty in the financial markets in the euro area and to realign spreads with the credit rating. more recently, it has introduced a further three measures of unconventional monetary policy : the tltros, credit lines of up to four years that can be used by banks for loans to households and businesses ; two programmes for the purchase of covered bonds and abs with the aim being to further expand liquidity via operations directed towards the real economy. all these policy actions, accompanied by the expected maintenance of interest rates at their current level for a long period of time and an ongoing expansion of the ecb ’ s balance sheet, together with the commitment by the bis central bankers ’ speeches governing council to take further unconventional policy actions should medium - term inflation expectations worsen or if the measures already decided on prove to be insufficient, has led to an unprecedented degree of monetary accommodation. today, all the current and expected market interest rates over all horizons are lower than they have ever been, and lower than they are today in the united states. but most of the measures taken may have effects on the real economy only through banks, which in the euro area intermediate about 80 % of the credit. only if they pass on to households and businesses the extraordinarily accommodative conditions in terms of interest rate, the maturity, the quantity that the ecb offers them, will monetary policy be fully effective with its stimulus. for that to happen it is not only necessary for there to be demand for credit from customers able to repay it, but that they [ the banks ] themselves are healthy. it is to this end that the ecb, on the eve of becoming the single supervisor for the euro area | 0 |
solution to the “ too big to fail ” problem will be critical in order to protect public budgets from banks ’ distress. what we need is a resolution mechanism which will allow even large banks to be resolved without jeopardising the financial system or requiring the taxpayer to foot the bill. looking towards europe, this is where the second element of the banking union comes into play : a single recovery and resolution mechanism for banks. what will initially be decisive here is to define a clear liability cascade. who is liable when banks founder? shareholders and creditors undoubtedly should be at the very front of the line when it comes to shouldering losses. taxpayers should be the last link in the chain, if they are even in the chain to begin with. a bank recovery and resolution directive, which would cover all these factors and thus represent a great step forward, is currently being discussed at the european level. the draft version currently on the table, however, still leaves discretionary scope in deciding the extent to which creditors shall be held liable. in the interests of market discipline, that should be changed. it is also important that the resolution mechanism be introduced at the same time as the ssm, if at all possible. on the whole, however, the banking union is a key milestone on the way to a stable monetary union, not least because it will help to sever the sovereign - bank doom loop – at least clockwise. 6. conclusion ladies and gentlemen, we have examined the crisis from the perspective of financial stability. a key element is the doom loop of mutual contagion between banks and sovereigns, the vicious circle. we will have to pull levers at several different places in order to sever this loop. we have to improve the framework of monetary union, especially with regard to the rules for sovereign debt. we have to adapt banking regulation. we have to elevate banking supervision to the european level. and we have to establish mechanisms which allow banks to be resolved without impacting on public budgets or taxpayers. we should remain aware, though, that we will not be able to solve all problems through government regulation and government supervision. financial stability starts first and foremost with banks themselves. it is the responsibility of banks to act as carefully and prudently as possible. and, in that respect, the banks squandered much in the way of confidence during the crisis. changes are needed here, ladies and gentlemen. we need a change of culture in the banking world. banks have to return | hermann remsperger : research matters – sdge models and the financial sector speech by professor hermann remsperger, member of the executive board of the deutsche bundesbank, at a workshop entitled “ sdge models and the financial sector ” hosted by the technical university of darmstadt and deutsche bundesbank, eltville, 26 - 27 november 2004. * * * i am often asked what role the deutsche bundesbank will be playing - in five or ten years ’ time - not just in the eurosystem but internationally as well. my answer is always the same. over the longer term the importance of the bundesbank will to a large extent depend on how we position ourselves in the field of research. i am not saying that because so many distinguished researchers are gathered here today. nor am i saying it because i am responsible for our research centre. no, i want to emphasise the role of research because in the field of monetary policy, we are faced time and again with new questions which call for theoretically and empirically founded answers. at the same time there are the familiar old problems such as the stability of the demand for money, which have to be continually re - analysed. this strive for knowledge is gaining importance also because the influence of national central banks within the eurosystem depends predominantly on the weight of their arguments. the meetings of the ecb governing council are not a debating club for doves and hawks where everyone knows in advance what the others are going to say about interest rates. it is precisely at monetary policy meetings that one has to have a very good idea of where the wind is blowing from in terms of research. so it comes as no surprise that two focal points of our research agenda are closely tied to monetary policy considerations. one is dedicated to “ goals and effects of monetary policy ”. in the context of the monetary transmission process, for instance, we examine the influence of corporate heterogeneity on the effects of monetary policy. in addition, we concentrate on the role of output gaps, exchange rates and monetary aggregates in monetary policy. the other focal point is concerned with analysing how monetary policy is influenced by several longterm developments in the real sector of the economy. globalisation of production is one of many examples in this area. research papers on labour and capital supply as well as on potential growth are further important examples. however, i do not want to create the impression that central banks are only concerned with monetary | 0.5 |
. competition for deposits therefore remains strong and rates high. it ’ s not just that higher bank funding costs will now be passed on to new borrowers, adding headwinds to the economic recovery, though that is certainly a factor. indeed, the lower policy interest rates set by the ecb since the crisis began have only been partly transmitted to borrowers in ireland and in the other stressed euro area countries ( figure 6 ). ( as is seen by the results of a recursive regression exercise, the pass - through from policy rate to irish residential mortgage svr rates has halved since the start of the crisis – figure 7. ) some of this can be rationalised as reflecting a higher credit risk - premium being charged by the banks, but some is also due to the higher marginal cost of funds. worse still for the health of the banks, and their ability to contribute to the economic recovery, is the fact that they are still coping with the consequences of their marginal cost of funds having delinked so sizably from the ecb policy rate. these consequences arise because of the long - term mortgage contracts the banks made when they assumed that their marginal cost of funds would always remain close to the ( risk - free ) policy rate. suffice it to say that a large block of residential mortgages was granted at interest rates which track the ecb policy rate plus a very low spread. these tracker mortgages, many of which have an average remaining maturity of 15 – 20 years or more, yield less than the marginal cost of funds ( figure 8 which is drawn on the assumption, not strictly valid, that the average spread of the trackers over policy rate was unchanged over time ). in effect, by assuming that their cost of funds would not deviate much from the ecb policy rate, the banks exposed themselves to a very large “ basis risk ”. in principle, they could escape bis central bankers ’ speeches this trap if there were a willing purchaser ( public or private ) with access to funding at a cost that is not contaminated by the sovereign stress. until such a purchaser comes forward, the banks will have to continue to fund this portfolio at a loss, even on performing mortgages, whose effects will spill over onto their customers and their owners ( not least the state ). conclusion irish sovereign spreads may no longer be bloated by redenomination risk, but at 300 basis points at the long - end, they do seem to reflect a | immune from loss - sharing ) large banking outflows and spreads exceeding five per cent made recourse to official assistance inevitable. ( figure 3 shows the plot with some relevant news stories flagged ). perhaps the most significant take - away from the sequence of spikes and troughs is the fact that some of them clearly relate to news that is country - specific, some of them to euro area general news. the same is doubtless true for all of the stressed sovereigns. default risk vs. devaluation risk vs. redenomination risk it ’ s worth pausing to recall that raw sovereign spreads such as we are seeing today in the euro area are not remotely unprecedented in pre - euro history. on the contrary, they were the norm as is illustrated by figure 1. the difference is that these spreads reflected a combination of default risk and currency risk. during the last fiscal crisis of the 1980s irish sovereign spreads ballooned out also. but that was for local currency denominated debt. eurobond borrowing by the irish government remained at fairly tight spreads despite the high overall debt ratio ( higher than today ), and the fact that almost half of the national debt was denominated in foreign currency. the high spreads reflected devaluation expectations and currency risk generally. and there were devaluations, though less than was baked into the spreads – by between 250 and 300 basis points on average during the last ten years of that ill - fated regime, the narrow - band ems. it is not that default and devaluation are close substitutes ; not at all, and for several reasons. for one thing, default has potential reputational consequences for the issuer qualitatively different to those of devaluation. in addition, though, devaluation affects not only the international value of the government ’ s debt promises, but also that of all other contracts denominated in local currency ; as a result, depending on the speed of price - resetting ( pass - through ) it can affect competitiveness throughout the economy. these differences have not been sufficiently emphasised, i feel, in recent discussion. as an example, i could mention the irish devaluation of august 1986. the main goal of this important action was restoration of wage competitiveness, not a lowering of the real value of the local currency - denominated debt. ( indeed, i recall that some domestic policymakers were confused on this point and thought that the debt burden would actually increase as a | 1 |
in the united states would occur only after ( 1 ) we had reviewed all public comments and incorporated any needed adjustments to address legitimate concerns and ( 2 ) we were satisfied that basel ii was consistent with safe and sound banking in this country. throughout this process we have stressed that, if we become concerned about the level of overall capital in the banking system or the capital results for individual portfolios, we would seek to modify the framework, including - should it come to that - possibly recalibrating the regulatory capital formulas that translate an individual bank's risk parameters into minimum required capital. the agencies'current review and study are consistent with our historical position at basel. complexity in basel ii one often hears that the advanced approaches of basel ii are " too complex " for anyone to understand, and the mathematical formulas in various drafts of the guidance can look like a foreign language to some readers. attendees at this conference clearly understand that large, internationally active financial institutions have become more complex in terms of both sophistication of services and business practices, as well as organizational structure. as a result, effective risk management has been evolving to support these innovative financial structures. indeed, basel ii may not look that complex to many of you here today, given your experience with more - sophisticated risk and internal economic capital models. so you would probably agree with me that even before basel ii is adopted, most banking organizations involved in complex financial instruments should already possess an understanding of advanced risk concepts and should have implemented effective risk - measurement and - management practices. as prudent supervisors, all of the u. s. banking agencies require any organization employing sophisticated financial practices or using complex financial instruments to have a governance and control structure commensurate with those activities. that is, the bank must have knowledgeable staff to set risk limits effectively and clearly communicate them to executive management and their boards of directors, must have acquired and implemented effective mitigating controls, and must have a robust process for monitoring exposures. that is one of the reasons that in the united states we are proposing to require only the largest, most sophisticated financial institutions to adopt basel ii - and only the advanced approaches. these institutions recognize that complex operations require a more - structured and well - defined risk - management framework to monitor the effectiveness of internal control processes and risk exposures. for these organizations, the incremental cost of adopting basel ii advanced approaches, while admittedly significant, should be relatively modest compared with the significant risk - management investments they have | economics that began only after other avenues had been explored. i want to make sure you know that even if you have not specialized in economics as an undergraduate, it is not too late to join. we need economists with diverse experiences and backgrounds, just as we need other sources of diversity. for what it is worth, i did not major in economics as an undergraduate, and i worked for several years in the private sector before i decided to pursue a doctorate in economics. i am glad i did. i enormously value the intellectual framework associated with economics, and my career has provided terrific opportunities both to range far afield and to work within the field. in short, i hope you will think of economics not as shutting doors on other opportunities, but rather as equipping you to pursue a whole new set of opportunities. given the benefits i have described to the profession and society from increasing diversity in the ranks of economists, as well as the opportunity a degree in economics affords to individuals who pursue the field, it makes sense to look closely, as the aea and others continue to do, at the reasons more women and minorities do not concentrate in economics in college or depart from economics as they move toward graduation. to the undergraduates in the audience today who are participating in the summer program, i would be interested to hear what you believe may be discouraging women and minorities from choosing economics in school and careers, so that we can take steps to reduce any barriers. the aea and other groups are rightly focused on what universities and other institutions can do to promote diversity in economics. let me now direct my attention to diversity at my institution, the federal reserve, because it is both one of the largest employers of phd economists in the country and a prominent public institution. the share of women and minorities among economists at the fed is similar to the numbers for the profession at large, and these numbers have likewise improved fairly little since 2009. something that has changed over that time, however, is the elevation in importance of diversity efforts, including recruitment. the board of governors is making considerable effort to recruit and retain economists who are women and minorities. we are working hard at recruitment at the earliest stages of the career - formation process. every year the board hires 50 to 60 research assistants ( ras ) for two - year terms ; the 12 reserve banks together hire roughly an equal number. our research assistant program is to some extent an apprenticeship program for economists and also for financial analysts and those in related fields | 0.5 |
charged with the responsibility of assisting in the promotion of foreign trade especially in capital goods, among member countries ; providing technical assistance to member countries ; and extending training facilities for personnel engaged in development activities in muslim countries to conform to the islamic law. ladies and gentlemen, in the turkish context, the islamic finance practices are embodied in a uniquely defined compartment of the banking system. these banks are called as the “ participation banks ” in turkey and they constitute an integral part of the turkish banking system. there are four islamic banks categorized as participation banks, and 45 conventional banks in turkey as of september 2009. it is crucial to highlight that the participation banks are not considered as an alternative to the conventional banks. while they are functioning similar to deposit banks, their fund collecting and lending processes differ significantly. participation banks are authorized by the turkish banking act to collect funds from the public under the “ profit and loss participation accounts ” and the “ special current accounts ”. the profit and loss participation accounts are essentially a version of the islamic financial instrument, where the bank utilizes the funds deposited by account holders to fund specific business activities. any profits earned are shared between the account holder and the bank, in proportion to an agreed ratio. participation banks in turkey mainly offer two types of lending. the first type of financing is murabaha, which is a transaction consisting of two sales contracts. the first contract involves a bank client requesting the bank to undertake a murabaha transaction and promising to buy the commodity specified by him or her if the bank acquires that commodity. the second contract involves the client purchasing the commodity acquired by the bank on a deferred payment basis and agreeing to a payment schedule. the second type of financing is financial leasing or ijara, with terms similar to those offered by other leasing companies. participation banks currently constitute only a small part of the turkish banking sector, accounting for 3. 7 percent, 4. 2 percent, and 5. 2 percent of total banking sector assets, deposits, and loans, respectively, at the end of 2008. however, they have been expanding rapidly in recent years. the share of participation banks ’ assets in total banking sector rose from 1. 9 percent in end - 2002 to 3. 7 percent in end - 2008. they have provided finance to mainly small and medium size dynamic firms. at present, participation banks are regulated according to the same standards as conventional banks. accordingly, they are regulated and supervised by the banking regulation and supervision agency. distinguished guests, while | , on the other hand, can amplify or spread shocks throughout the system. and just as periods of uncertainty can test price stability, they can also test financial stability. 1 / 6 bis - central bankers'speeches the bank's approach to monitoring financial stability takes a broad view. canada's financial system is made up of a complex network of institutions, including banks and credit unions, pension funds and other asset managers. and many of our largest institutions operate globally. 1 we monitor the financial system for risks and vulnerabilities. vulnerabilities are weaknesses that often build over time and can make the system more susceptible to stress. they exist in almost any system. and, on their own, they may not lead to financial stress or instability. for that to occur you generally need a trigger - an event, or shock - whose impact can be amplified by the presence of vulnerabilities. it's the combination of these two things that can lead to periods of financial instability or, in extreme cases, a financial crisis. we use the information we gather in our monitoring to conduct research, inform policy decisions and communicate with canadians. we publish a report each spring and give an update each fall - both of which talk about global and domestic conditions and the state of the canadian financial system through the lens of the risks and vulnerabilities i just spoke of. and i am pleased to announce that today we launched an interactive dashboard of financial vulnerability indicators on our website. 2 we're sharing information on what we monitor to help people better understand the vulnerabilities we all face. the uncertain world we live in so, let's turn to an update on global financial conditions and the environment we're in today. it's an understatement to say that the past few years have seen major global economic changes and financial system developments. first, we are emerging from two years of a global pandemic and the resulting health and economic impacts. less than a year has passed since canada's economy fully reopened, and parts of the world - china, most notably - are still enduring lockdowns. this has had a dramatic and enduring effect on both supply and demand. as a result, inflation has risen in most countries around the world. in response, central banks have shifted rapidly to tighten monetary policy to bring inflation down. as interest rates rise, financial conditions are tightening, liquidity is scarcer, and risk assets are repricing. second | 0 |
, and a rise in medium - to long - term inflation expectations, thereby raising the rate of price changes. impact on long - term interest rates so far, i have explained the transmission mechanisms of monetary easing with regard to the impact on economic activity and prices. now, i would like to review the impact of qqe from the viewpoint of long - term interest rates. generally, it is widely known that long - term interest rates can be decomposed into two components : ( 1 ) the risk premia ( such as term premium, liquidity premium ) ; and ( 2 ) the expected path of short - term interest rates, as shown in chart 8. based on this understanding, the bank ’ s jgb purchases are expected to generate downward pressure mainly on the risk premia and then on the expected path of short - term interest rates ( this latter effect is called the ‘ ‘ signaling effect ’ ’ ). moreover, the bank ’ s commitment to continue with qqe as long as it is necessary for maintaining the 2 percent bis central bankers ’ speeches price stability target in a stable manner is also likely to enhance the downward pressure. meanwhile, an improvement in the economic outlook and a gradual rise in medium - to longterm inflation expectations may lead to an increase in the expected path of short - term interest rates. this path may also be influenced by a rise in overseas long - term interest rates, which reflects improvement in overseas economies. the downward pressure is also observed in other countries, including the united states, which have purchased financial assets under the nontraditional monetary policy. developments in long - term interest rates since the adoption of qqe reflect those downward and upward pressures. as for the outlook, even in the phase of intensified upward pressure, the continuation of the large - scale asset purchases is likely to maintain that downward pressure, and it may even reinforce that pressure with the cumulative growth of the amount purchased – in addition to the commitment to achieve the 2 percent target in a stable manner. these effects, together with a gradual rise in medium - to long - term inflation expectations, are likely to be reflected in long - term interest rates, which would eventually stabilize at levels consistent with the 2 percent price stability target. moreover, the bank continues to closely monitor market developments within a flexible operational framework and through discussions with market participants, and it expects that both short - and longterm interest rates will move largely on a stable path. e. why are inflation expectations so important? | is no sector though more closely involved in securitisation than the banking sector. in fact, asset securitisation was introduced in the 1970s in the us precisely for the purpose to allow depository institutions to sell their pools of mortgage loans before maturity, thereby acquiring an additional source of funding. banks subsequently extended the securitisation i am very grateful to pontus aberg, valia rentzou and isabel von koppen - mertes for their valuable inputs and contributions, and to david marques for useful comments. see ecb ( 2008 ), “ securitisation in the euro area ”, monthly bulletin, february. model to other forms of credit, such as consumer credit and student loans, that were historically regarded as highly illiquid. in europe, the market for structured finance products has grown rapidly during the last 5 - 10 years, often at double - digit rates ( see chart 1 ). this development was maybe even more pronounced in the euro area compared with other regions due to several factors, including the introduction of the single currency, further financial market integration through the use of credit derivatives and related financial instruments, and an innovative financial industry. growth in structured finance products has also been fuelled by high demand from investors stemming from the search for yield and diversification opportunities. securitisation has also been positively affected by the move towards a more market - based financial system. increasing securitisation of lending - related assets, together with relentless financial innovation in credit markets, have led to the diffusion of a new business organisation – the “ originate to distribute ” model – among banks, particularly those of large size. there is certainly no need to explain to this audience how, under this new business model, the loans originated by banks are transformed into marketable asset - backed securities. however, it may be worth recalling that this is not the way banks have historically done business. under the traditional – perhaps, i should say secular – “ originate to hold ” business model, banks extend loans to firms and households and hold them in their balance sheets until they mature or are paid off. banks finance the provision of loans mainly by collecting deposits or issuing debt that have typically shorter maturities. thus, banks intrinsically face a maturity mismatch in their balance sheets that exposes them to funding liquidity risks, i. e. possible difficulties in funding their business activities. by allowing banks to transform their illiquid assets into marketable securities and providing an additional source of | 0 |
s green and sustainable bond issuances were arranged in hong kong. in 2023, the volumes amounted to us $ 30 billion, equivalent to 37 % of the market. hong kong was also the most preferred listing location for green issuances. the hkma and the government have kept enhancing our platform to support sustainable financing activities. we appreciate that while green is on the agenda for many corporate issuers, some are concerned about the additional cost and effort for issuing in green versus conventional format. we therefore rolled out a subsidy scheme three years ago, what we call the green and sustainable finance grant scheme, to help cover these additional costs and, more importantly, to promote transparency and accountability in the use of sustainable finance. recently, the financial secretary announced to extend the scheme by three more years, and expand its scope to cover transition bonds and loans. we will engage the market on the details, so stay tuned. 2 / 3 bis - central bankers'speeches no discussion about the future of finance these day is complete without covering tech. the icma report highlights that digitalisation has been gaining traction particularly among asian issuers. last year, there were globally more than 30 outstanding bonds that had digital exposure, whether being on a digital ledger, digital exchange or digital clearing house ; and asian issuers accounted for almost half of these issuances by deal counts. in hong kong, we completed two tokenised government green bond issuances in just one year. the issuances have demonstrated clearly the potential of technology in enhancing the efficiency and transparency of the bond market. the most recent issuance that we did just last month was in four major currencies with a combined size of around us $ 750 million, matching the benchmark sizes of many traditional issuances and attracting subscription from a wide range of global institutional investors. in this issuance, investors had the option to follow largely business - as - usual processes through traditional market infrastructure, i. e. the central moneymarkets unit in hong kong and its external linkages with euroclear and clearstream. this has significantly broadened the bond's investor base and enhanced its liquidity. it is fair to say that the issuance brought tokenised bonds further beyond proof - of - concept, towards achieving more common application. the recent issuance also adopted icma's bond data taxonomy, which is a set of machine - readable language for key bond terms and information. when widely adopted across the market, this holds the | the ndrc signed an mou to better support mainland cross - border financing activities and promote the development of hong kong's bond market. these are encouraging developments that reaffirm the 1 / 3 bis - central bankers'speeches authorities'continued support for mainland issuers to tap the international market for cross - border financing. clearly hong kong and many of you here are well positioned to seize the flows that come as the market turns. speaking of cross - border opportunities, hong kong is an important gateway for international investments in the onshore bond market. bond connect, for example, accounted for two - thirds of foreign investors'total turnover in the onshore china interbank bond market in 2023. meanwhile, we are making good progress in helping bond holders to better manage their risks and liquidity. the swap connect launched last year complements the bond connect by facilitating global investors'management of interest rate risks arising from their allocation to mainland bonds. the hkma is also in discussion with mainland authorities in enhancing cross - border connectivity in the repo market. in january this year, the hkma and the people's bank of china jointly announced the further opening up of the onshore repo market to all foreign institutional investors that already have access to the onshore bond market, including bond connect investors. the market consultation ended last month and we will support the pboc's work in taking forward this important initiative. a month ago the hkma started accepting certain onshore rmb bonds as eligible collateral for our rmb liquidity facility. these new measures will facilitate international investors'diverse use of their mainland bond holdings and provide them with more liquidity management tools, thereby enhancing the depth and breadth of their participation in the mainland bond market. the second development, or more accurately, longer term trend, is the continued shift towards green and sustainable finance. indeed the icma report has covered this in length, and for good reasons. asia's transition to a sustainable development is critical to the global climate agenda given the region's share of global carbon emission. yet the transition is challenging given that many asian economies lack the requisite financial resources. encouragingly, the asia bond market is shaping up to meet this challenge. last year, more than 20 % of the region's international bond issuances were in green and sustainable format, considerably higher than the global average of around 10 %. hong kong is playing its part. in recent years, over one - third of asia ' | 1 |
a multivariate and time - varying approach ”, ecb - imf 1st annual macroprudential policy and research conference, 26 april 2016. see black, l. k. and r. j. rosen, “ monetary policy, loan maturity, and credit availability ”, international journal of central banking, volume 12, no. 1, march 2016, pp. 199 – 230 ; borio, c., l. gambacorta and b. hofmann, “ the influence of monetary policy on bank profitability ”, bis working papers, no. 514, october 2015 ; de groot, o., “ the risk channel of monetary policy ”, international journal of central banking, volume 10, no. 2, june 2014, pp. 115 – 159. see for example koepke, r., “ determinants of of emerging market crises : the role of u. s. monetary policy ”, iif working paper. see, for example, blanchard et al. ( 2015 ), “ can foreign exchange intervention stem exchange rate pressures from global capital flow shocks? ”, nber working papers, no. 21427 ; forbes et al. ( 2015 ), “ capital flow management measures : what are they good for?, ” journal of international economics, vol. 96 ( s1 ), pp. s76 - s97 ; afanasieff et al. ( 2015 ), “ implementing loan - to - value ratios : the case of auto loans in brazil ( 2010 – 11 ), ” central bank of brazil working paper series, no. 380 ; wong et al. ( 2015 ), “ using macroprudential tools to address systemic risks in the property sector in singapore ”, seacen financial stability journal, vol 4, pp. 27 – 41 ; ostry et al. ( 2012 ), “ tools for managing financial - stability risks from capital inflows ”, journal of international economics, vol. 88 ( 2 ), pp. 407 – 421 ; habermeier et al. ( 2011 ), “ the effectiveness of capital controls and prudential policies in managing large inflows ”, imf staff discussion note, sdn / 11 / 14 ; lim et al. ( 2011 ), “ macro - prudential policy : what instruments and how to use them? lessons from country experiences ”, imf working paper wp / 11 / 238. see eichengreen | economy and, through portfolio balance effects, in foreign economies. through these channels, monetary policy in large advanced economies can have a significant impact on financial stability elsewhere, especially in emerging markets. 8 importantly, this interaction does not weaken the case for a strong first line of defence. the alternative would be to rely on monetary policy to compensate for failures in other policy domains. but this would overburden monetary policy and lead to sub - optimal outcomes with regard to both – financial stability and broader macroeconomic stabilisation objectives ; and this holds not only at the domestic level but also internationally. in fact, a large body of empirical work in recent years has shown that fiscal, macro - prudential, regulatory and supervisory policies can help mitigate the adverse effects of foreign monetary policy on domestic financial stability. 9 meanwhile, the experience with the taper tantrum in 2013 showed how differences in policy frameworks shaped how severely different economies were affected by financial spillovers. 10 still, even with an improved first line of defence, the question how central banks should incorporate financial stability in their reaction functions would remain relevant. 11 one prominent view in the debate surrounding this issue is that, since price stability typically focuses on a shorter time horizon than is appropriate for interpreting financial cycles, there is see rey, h., “ dilemma not trilemma : the global financial cycle and monetary policy independence ”, nber working paper, no. 21162, may 2015 ; adrian, t., a. estrella and h. s. shin, “ monetary cycles, financial cycles, and the business cycle ”, federal reserve bank of new york staff reports, no. 421, january 2010 ; juselius, m., c. borio, p. disyatat and m. drehmann “ monetary policy, the financial cycle and ultra - low interest rates ”, bis working papers, no. 569, july 2016 ; schularick, m. and a. m. taylor, ” credit booms gone bust : monetary policy, leverage cycles, and financial crises, 1870 – 2008. ”, american economic review, volume 102, no. 2, april 2012, pp. 1029 – 61 ; bruno, v. and h. s. shin, “ capital flows and the risk - taking channel of monetary policy ”, journal of monetary economics, volume 71, 2015, pp. 119 – 132 ; hiebert, p., “ characterising the financial cycle : | 1 |
bank which operates well by any standard may soon find itself boggled with a serious liquidity issue arising from some external shock. if it is unable to raise funds quickly to meet liquidity, it will face a general bank - run forcing it to plead for assistance from other banks, authorities etc. the recent liquidity crunch due to the sub - prime issue is a case in point. it had been reported that one such bank that had faced this liquidity crunch severely had boasted of itself in august that it was indeed a well - run robust bank. to its much embarrassment, just one month later, it had to swallow its pride when it had to plead with authorities for assistance. this points to the fact that the internal auditor has to develop risk assessment and mitigation systems in a bank and take effective measures to give advance warning in the event of an impending risk crisis. the significance of systems and governance principles given the gigantic nature of the risks faced by banks and the inability to foresee the delivery of external shocks, the life of the internal auditor is made miserable today. he has to function as an effective watchdog. but, he does not possess a set of well tested paraphernalia to do this job. he may be an honest, genuine and committed worker. but, the rest in the organization may not be so to the same degree. hence, any mishap can occur without warning or the knowledge of the internal auditor. if it so occurs, the internal auditor himself is driven to a serious quandary. the way to overcome this risk is to develop and place in place suitable and effective systems, processes and methods across the organization at all levels. the internal auditor could just monitor and ensure that the systems are genuinely and effectively followed by all. an important element which also helps him to perform his job effectively is to introduce and follow to the letter the good governance principles in the organization. these governance principles would bind all in the organization by a common code of ethics. the absence of proper governance will lead to misuse of the resources to the detriment of outside stakeholders. the internal auditor cannot keep a watchful eye on everything that happens in a bank. a good deal of discipline that should be inculcated throughout the bank comes from self - discipline and there again, through the strict adherence to governance principles. it is, therefore, in the interest of the internal auditor to promote governance to facilitate his job in a bank. the need for continuous learning these new challenges | that are faced by internal auditors require them to acquire the necessary skills and competencies on a continuous basis. this makes it necessary for them to place them on a learning path so that they could update themselves with new developments. as i mentioned earlier, the internal auditor should be an all - rounder. he should know all aspects of banking in order to perform an effective job as an internal auditor. in this respect, the work done by the institute of internal auditors in developing a wholesome internal auditor is laudable. in addition to providing professional qualifications, it conducts regular seminars, lectures and short - term training programmes to keep its membership continuously updated of the new developments. in the modern world where human knowledge is subject to the fastest depreciation and obsolescence, the cry by any professional should be learning, learning and learning. i hope that this seminar will fulfill that task. conclusion the functions of internal auditors have expanded substantially over the years due to the expansion of business, addition of new risk elements and adoption of advanced technology. yet, the basic character of the auditors remains the same. they should function only as extended ears, eyes and arms of the top management and owners. they may point at irregularities, but would not act as penal authorities. hence, the auditor, including the internal auditor, is still a watchdog and not a bloodhound. | 1 |
achieved anchoring of inflation expectations over the last eight years. 7 this in turn has contributed to low macroeconomic volatility in the euro area. 8 when inflation expectations are well anchored, temporary deviations of inflation from levels consistent with the central bank ’ s inflation objective are not expected to be long - lasting. as a consequence, macroeconomic shocks will have a smaller impact on inflation expectations and the evolution of inflation over time will be less persistent, with the result that inflation and economic activity will be more stable. it is certainly true that other central banks which put less emphasis on monetary analysis have also achieved low and stable inflation expectations and low macroeconomic volatility. however, it is important to bear in mind that the uncertainty faced by the ecb has been much higher than that faced by other more established central banks. our success in maintaining low and stable inflation expectations in a rather adverse macroeconomic environment is also due to the commitment to be continuously alert upon monetary trends built into our strategy by the money pillar. this brings me to the second question, on the criticism that our policy actions have not corresponded to the announced role of money in our strategy. i know that this objection is sometimes put forward by critical observers who argue that there is no direct correlation between our policy rate decisions and monetary developments. this kind of criticism does not discomfort me, because the relevance of the monetary pillar can anyway not be judged based on the simple bivariate correlation of policy rates with the growth rate of headline m3 ( or any other single monetary indicator ). first, such a simplistic approach cannot reflect the crucial role of cross - checking the information derived from the economic and the monetary analyses that is a key feature of our monetary policy strategy. second, it overlooks the broad - based and by no means mechanical character of the ecb ’ s approach to monetary analysis, which jurgen has also stressed yesterday. allow me to elaborate on the second point. monetary data are contaminated by noise at higher frequencies blurring the signal from their low - frequency movements which provide information about medium to longer - run inflation trends. the ecb ’ s monetary analysis aims to extract this low - frequency signal by assessing a large range of monetary indicators based on statistical tools and judgement in real time. since the signal extracted from the monetary analysis refers to the low frequency it will not change much from month to month. as a consequence, it will, by its very nature, normally not be closely correlated with individual policy moves, but will rather | amando m tetangco, jr : sustaining economic growth speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the map gen membership meeting ( gmm ) and first map economic briefing for 2015 with the theme “ innovative leadership for sustained growth? ”, makati city, 24 february 2015. * * * “ innovative leadership for sustained growth ”. strong, simple, spirited. it ’ s a confident statement and direct to the point, quite like what we have come to expect from map president, popoy del rosario. this theme, which map, has chosen for 2015 reminds me of that management principle – innovate or stagnate. “ innovate or stagnate ” is direct and simple to remember, and has a nice ring to it. but when you put “ innovation ” in the context of the broader concept of “ leadership ” ( as map has done here ), the resonance of that ring becomes deeper and applying it within our organizations becomes more challenging. while it is difficult to put into practice, “ innovate or stagnate ” is not impossible to do so. think of a company like google. our local telcos, our local conglomerates, even our banks. they constantly reinvent themselves to gain a bigger share of the pie or create new markets where there previously were none. all these, while taking care of their people. i have spent about two - thirds of my life as a central banker, with the last 10 years of that as the bsp governor. and i can tell you for a fact that, that mantra of innovation has never been more relevant in central banking than it has in the last eight years. why do i say that? simple. the 2007 / 08 global financial crisis ( or the gfc ) happened. the gfc led us to uncharted territory as it was a crisis unlike any in the recent past. let me illustrate. unlike in 1997 / 98, when the financial crisis originated from the emerging markets in asia, the gfc was a crisis that started from the advanced economy world. in 1997 / 98, central banks and economies had to fix exchange rate valuations and develop capital markets. painful. but nothing extraordinary because contagion was localized to the region. during the gfc recession was deep in the advanced economy world. and because of highly interconnected markets, that economic | 0 |
them exposed to economic or financial shocks that cause asset values to fall and / or interest rates to rise. | in september 2018, the coverage of the io scheme was extended to all scheduled commercial banks ( other than regional rural banks ) having 10 or more banking outlets in india. the objective of setting up the mechanism of io was to ensure that there is undivided attention to resolution of customer complaints in banks and the customers of banks get an independent and auto - review of their grievances which are partially or wholly unaddressed before they approach the banking ombudsman ( bo ). the io mechanism is expected to strengthen the consumer protection and grievance redressal processes in banks. in this era of digitalisation, given the increasing use of technology by service providers and their customers, being mindful of occurrence and potential of unauthorised transactions, the reserve bank has issued regulatory instructions keeping the interests of the customer in mind. the ‘ framework on limiting the liability of customers in unauthorised electronic banking transactions ’ issued on july 6, 2017 is a defining development in the wake of risks arising out of rapid digitalisation of payments and money transfer transactions, where there is a judicious balance between ease of use and security of the transactions. the provisions, initially applicable to scheduled commercial banks, have in january 2019, also been extended to cover authorised non - banks that issue ppis. in keeping with the rapid evolution in the financial sector, the reserve bank has progressively reviewed and updated its instructions and guidelines relating to customer service such as, simplification of know your customer ( kyc ) procedures, mandating issue of europay, mastercard and visa ( emv ) chip / pin cards, transparency in pricing of credit, etc., of which, you are all aware. the current strategy of the reserve bank for consumer protection is to create an enabling environment for developing a customer - centric financial system by instituting mechanisms for addressing information asymmetries between the providers and consumers of financial services, enhancing standards of disclosures and ensuring a better alignment of product design vis - a - vis the customer ’ s requirements while providing an efficient and effective grievance redressal mechanism. through all the changes and developments in the financial world, the reserve bank has endeavored to ensure a robust consumer protection mechanism that is visible and credible. the role of the ombudsman before i delve into the role of the ombudsman, let me say that in this journey of 25 years, several milestones have been achieved by the ombudsmen and their | 0 |
. the fintech sector has been a powerful creator of jobs. we estimate there are nearly 10, 000 people employed by fintech firms, many of which are also classified as part of the financial services sector. we have seen many examples of innovative solutions that use technology to meet the daily needs of consumers of financial services. the proof of concept ( or poc ) grant, under fsti, provided funding support for experimentation, development, and dissemination of such solutions. one example of successful commercialisation is socash, who partnered with standard chartered bank to pioneer micro cash distribution in singapore, by turning any retail shop into an atm alternative and allowing users to withdraw cash at the checkout. socash subsequently raised s $ 8. 2m in series b funding to expand its distribution network into overseas markets such as indonesia, malaysia and hong kong. the financial industry has begun to make progress in frontier technologies like ai. the ai and data analytics ( or aida ) grant, under fsti, has helped to promote the adoption and integration of ai and data analytics in financial institutions. mas has funded 23 aida projects and published 5 requests - for - proposals on topics such as quantum computing and explainable ai. to promote the responsible use of ai and data analytics, mas and the industry cocreated the feat principles – for fairness, ethics, accountability, and transparency. perhaps the most visible payoff for the investment in technology is in how well the industry has responded the covid - 19 crisis and been able to continue serving customers. imagine if there was no retail electronic payment system or infrastructure for digital banking or buying insurance online or trading from home …. how would we have coped with circuit breakers and lockdowns? if the financial industry had not built up its digital capabilities, it would not have been able to continue operating without disruption, let alone grow by more than 5 % during the first half of this year when the overall economy contracted by 6. 7 %. but we are still only about half - way along our journey to becoming a smart financial centre. covid - 19 has shown that the world is changing in ways we may have never 3 / 5 bis central bankers'speeches imagined. the pace of digital transformation will only accelerate. our work is not done yet. we will announce at the singapore fintech festival in december more of our plans and initiatives for the next stage of our journey. but let me share with you here what we are willing to commit by way of funding. of | algor bank was successfully resolved with minimal disruption. thanks to efforts by the fsb after the global financial crisis, the major jurisdictions that algor bank operated in had robust resolution regimes. with a clear resolution plan formulated, tested and discussed at the bank ’ s annual resolution college prior to the crisis, home and host regulators were able to resolve algor bank in a smooth and timely manner. but the fact that a cyber attack could bring down the 20th largest bank in the world with a tier 1 capital adequacy ratio of 16 % revealed significant gaps in the global regulatory regime for technology risk. it was ironic that in an industry where there were detailed internationally accepted standards for capital, liquidity, and a range of prudential norms, there were no standards for cyber risk management. the fsb and standard - setting bodies swung into action and in 2025 produced a two - track set of reforms to deal with cyber risk, which is essentially borderless. 7 / 9 bis central bankers'speeches first, the fsb ’ s cyber security standards, building on its cyber lexicon of 2018, established a minimum level of cyber hygiene for internationally active financial institutions. they set out harmonised standards for authentication, implementation of cryptography, intrusion detection, and incident reporting. higher standards were set for g - sifis. g - sifis were required to put in place 24 / 7 cyber surveillance of all internet - facing systems, undergo annual cyber vulnerability assessments by internationally certified cyber specialists, and carry out military - grade penetration tests. second, the basel committee and iosco developed core principles and practice guides for prompt information sharing on cyber incidents and cyber threat intelligence among banks and securities firms respectively. national laws were amended, where necessary, to facilitate information sharing across these financial institutions without incurring legal liability. global platforms were put in place to facilitate information sharing among central banks and regulators to counter cross - border cyber threats of the kind that triggered the global cyber crisis. through these platforms, financial regulators are able to quickly disseminate useful cyber threat information to banks and securities firms so that they can take pre - emptive measures. these platforms built on the success of the earlier central banks, regulators and supervisory entities or ceres platform of 2018 which enabled effective sharing of actionable cyber threat information. but the enemy has not been lying still. hackers are now employing more advanced quantum computing technologies, and a number of weaker encryption solutions used by financial institutions have been compromised. cybersecu | 0.5 |
##erted by international competition. this will have a dampening effect on the domestic price level. all of these factors mean that some of the gains in productivity will be passed on to consumers in the form of price reductions. since there is a considerable lag between the adoption of monetary policy measures and their impact on prices, monetary policy does not affect price developments in the near term. consequently, the national bank is guided by the medium - term inflation outlook rather than the short - term forecast. the inflation forecasts published since 2003 show high rates of inflation at the end of each forecast horizon. this makes it clear that we cannot continue our expansionary monetary policy for an unlimited period of time. the three - month libor was already lifted in june and september 2004, each time by 25 basis points. because the economy weakened in the fourth quarter of 2004, there was an improvement in the inflation outlook at the monetary policy assessments of december 2004, and march and june 2005. consequently, a decision not to undertake further increases in the rate of interest was appropriate. however, the forecast of mid - september 2005 indicated that there would be no further improvement in the inflation outlook. nevertheless, we decided not to increase interest rates at that time. we determined not to take any action because of the fact that oil prices had attained record heights just before our monetary policy assessment. it was not possible at the time to fully assess the impact on the economy and on inflation. if monetary policy had remained the same at this assessment, the medium - term inflation outlook would once again have been unchanged. in the meantime, however, the room for manoeuvre available to monetary policy has declined. our inevitable concerns with respect to the high price of oil in september have been dissipated by the favourable developments in the economy. as a result, we have decided to increase the target range for the three - month libor by 0. 25 percentage points. consequently, this decision is in line with the statements we made at the last monetary policy assessment. inflation forecast graph i now turn to the current inflation forecast, which is based on the assumption of a change in the threemonth libor, to 1. 0 %. the graph depicts the current and the previous forecasts. the dashed red curve represents the new forecast, which covers the period from the fourth quarter of 2005 to the third quarter of 2008. it summarises the inflation outlook, following today ’ s increase in the rate of interest. the dash - dotted green curve shows | philipp hildebrand : the swiss national bank ’ s view of international financial markets against the background of trends in the united states introductory remarks by philipp hildebrand, member of the governing board of the swiss national bank, at the end - of - year media news conference, zurich, 12 december 2003. * * * the past year was a turbulent one for the international financial markets, which were essentially influenced by trends in the us. during the first half of 2003, market developments were shaped by economic and deflation fears as well as by the war in iraq. in this environment, equity markets reached an annual low in march. in june, bond market yields fell to their lowest level. the second half of the year saw an economic recovery in the us, which is now spreading to other economic regions as well. capital markets long - term yields on swiss paper rose by approximately 60 basis points from their low in june to roughly 2. 7 %, approximately tracking yields in the euro area. in both cases, yields followed the us market very closely, albeit with modest fluctuations ( see graph 1 ). under the present economic conditions, the interest rate environment in switzerland is still viewed as attractive by consumers. the high level of new fixed - rate mortgages is an indication of this sentiment. the higher swiss yields reflect the improved economic outlook and not inflation expectations, which are modest given that there is still pronounced underutilisation of capacities. in contrast to capital market yields, money market yields were decidedly stable. the three - month libor remained almost constant at 0. 25 %. the global trend in capital market yields was chiefly determined by long - term yields in the us, which themselves were shaped by the recovery of the us economy. in the early summer, deflation fears had dragged the yield on ten - year us government bonds down to 3. 1 % - a level last reached at the end of the 1950s. in july and august, however, positive economic data pushed the yield right up to 4. 6 %. convexity hedging was one of the factors contributing to the unusual scale of the turnaround. as interest rates fell in the early summer, the refinancing of existing mortgages - which is possible in the us at any time - had triggered extensive buying of government bonds. us investors holding substantial mortgage portfolios had to make these purchases in order to keep the residual maturities of their portfolios constant. when interest rates rose, therefore, the correction was similarly swift | 0.5 |
. norwegian government authorities receive substantial revenues from the extraction of oil in the north sea. norway is the world ’ s second largest exporter of oil, and the budget surplus is currently approximately 11 % of gdp. oil revenues increase consumption possibilities. however, it is a challenge to manage these resources in a way that increases welfare for both current and future generations. a rapid expansion of the sheltered sector based on uncertain and perhaps temporary increases in petroleum revenues may lead to the situation called dutch disease. to manage its resources, norway has created the government petroleum fund, which receives revenues from the petroleum sector, transfers the amount necessary to produce a balanced government budget and invests the surplus abroad. as long as the increase in petroleum income is kept outside the domestic economy, there will be less need for structural change and thus less need for exchange rates to change. a one dollar increase in the oil price gives an increase in gdp of almost 1 % and most of it arrives as increased budget revenues. with large and varying budget revenues, the basis for determining central government expenditure and taxes from one year to the next may easily be impaired. if budget expenditure is allowed to fluctuate in step with oil prices, the result may be abrupt shifts and instability in the norwegian economy. changes in oil prices may then quickly influence wage and price expectations, the exchange rate and long - term rates. in that case it will be very demanding to achieve nominal stability. short - term interest rates would have to be changed frequently and sharply and would generally reflect a high risk premium for the norwegian krone. it is therefore important that the annual budgets are anchored in a long - term strategy that takes into account that oil revenues may fluctuate from one year to the next. in addition, it is advantageous if fiscal policy can be used to counter fluctuations in demand and production. final words by hosting this workshop, we hope to take part in an exchange of new knowledge about the conduct of monetary policy. we hope that the workshop will be a fruitful experience for both researchers and monetary policymakers. | aimed at by the euro countries in 2 to 3 years for a given interest rate path, norges bank will consider adjusting the interest rate. in this narrow sense, one could say that the conduct of monetary policy in norway has some similarities with “ inflation forecast targeting ”, in lars svensson ’ s terminology. in addition to economic forecasts, we aim to develop tools that can supplement the use of our large macroeconometric model. at the moment we are working on the construction of simple calibrated models that will be presented at this workshop. the calibrated models can be employed, for instance, to test the performance of simple indicator rules. how does the norwegian system differ from inflation targeting? the institutional arrangement for monetary policy in norway does differ in some respects from that in countries with an inflation target. some central banks with explicit inflation targets have to give an explanation to the government or other authorities if the inflation target is not being met. our mandate, however, refers to an exchange rate target as opposed to an inflation target. if a situation arises in which norges bank is not able to return the krone to its initial range, as defined in the mandate, without triggering inflation or a deflationary recession, the bank will inform the authorities that measures other than those available to the central bank are required. one possibility could then be to recommend fiscal measures that make it possible to bring the krone exchange rate back to its initial range and stabilise it. some observers have argued that the possibility that such situations can arise creates an uncertainty that may weaken the credibility of norwegian monetary policy. however, norges bank has declared that it cannot with open eyes contribute to higher inflation or a deflationary recession. financial market indicators show no evidence of monetary policy lacking credibility. although the actual conduct of monetary policy is similar to inflation targeting, there are a number of institutional differences between the norwegian system and inflation targeting regimes. 1. norway has a long tradition of cooperation between the political authorities and the social partners. income and wage determination is fairly centralised, and the social partners evaluate the effects of wage outcomes on employment. 2. in a number of countries that have switched to a monetary policy regime based on inflation targeting, fiscal policy is oriented towards reducing government debt and deficits. in norway, fiscal policy has traditionally played an important role in demand management. this task is facilitated by the fact that the norwegian government has greater financial leeway than most other countries, due to its oil revenues | 1 |
zeti akhtar aziz : the changing face of talent speech by dr zeti akhtar aziz, governor of the central bank of malaysia, at the aif ( asian institute of finance ) international symposium 2013 “ changing face of talent ”, kuala lumpur, 28 august 2013. * * * it is with great pleasure that i welcome you to the aif international symposium on the changing face of talent. in preparing for the future, a future that is going to be fundamentally different from the current environment, talent development and its management will need to be accorded with an even greater priority than previously. this is on account of two significant shifts in the landscape that we are operating in that will fundamentally affect the human capital that we need. the first is the rapid and significant transformation of the economic, financial and business landscape which will continue to have far reaching changes on the talent requirements. the second is the changes in the character and nature of the talent that is now coming on stream. these emerging changes have warranted new approaches to human capital development and management. to not recognise these changes and their implications will not only affect business performance but also the overall economic progress of a country. my address this morning will briefly discuss the fundamental changes that are affecting the financial and economic landscape and its implications for talent requirements. my remarks will then proceed with some reflections on the changing nature and character of the talent that is coming on stream. i will then conclude with some thoughts on the implications these developments on talent development and management, in particular, for the financial sector. the challenge for recruiting and retaining the right talent has also become increasingly more acute, particularly for the financial sector. therein lies the urgency for the greater focus of attention on these issues and the need to accord greater priority for this important agenda. the transformation of the economic and financial landscape the economic, financial and business landscape is rapidly being transformed and is continuously evolving. globalisation and internationalisation, accelerated by liberalisation and the rapid advancement in technology are increasing connectivity between economies and between financial markets across borders. this is resulting in greater international economic and financial integration and interdependence. regional integration in asia has for example created immense opportunities for economies of scale while paving the way for new and larger markets. a significant global shift in this environment is also the growing importance of emerging economies. as a result, many of these economies are becoming huge consumer markets. in asia, this is resulting in greater regional trade and cross border investment activity. a further fundamental | financial sector, in terms of the ethical standards and values embraced and demonstrated by the workforce in the financial industry, and the strength and integrity of its leadership. the financial sector has historically been and remains highly productive in relative terms. in malaysia for example, the financial sector has had the highest total - factor productivity growth over the recent decade relative to other sectors of the economy. employment in the financial sector has also been growing annually with a large proportion of the growth being in the higher skilled segment. this accounts for the higher level of wages in the financial sector at about rm36, 000 annually, compared to the national average of rm21, 700 annually for the economy. financial services employees are also generally educated to a higher level, with more institutions requiring post - graduate or professional qualifications, in addition to the relevant work experience, for holding key and senior - level positions within the industry. in light of the more challenging environment going forward, generating the supply pipe line for talent and addressing the short supply of critical talent with new skills need to be given urgent priority. what are these skills? there has been considerable attention to the shortage of new and higher technical competencies – including in the area of risk assessment and management – required by financial institutions in the new operating environment. the growth in islamic finance has also added important new dimensions to the talent requirements. beyond these clear gaps however, the promotion of more sustainable business models in finance will require additional new skills which have not traditionally been areas of focus in financial institutions. this includes skills in change and crisis management, business recovery planning, the ability to develop and sustain long - term customer relationships, and skills to direct and manage operations in international and cross - cultural contexts. also particularly important will be the ability to build, motivate and lead strong teams under significantly more challenging conditions in which institutions may be more constrained by regulation in their ability to recruit and retain talent simply by paying more. perhaps more than in any other sector, the response to the challenges facing the financial industry in managing talent needs to be much broader, forward looking and more strategic given its central role within the economy. even in countries that are not contemplating new compensation regulations, financial institutions need to carefully consider the higher expectations of regulators for compensation and incentive systems to be more closely aligned with prudent risk - taking. talent strategies must reinforce a strong and enduring ethical foundation of the organization, while developing the individual and organisational agility to deal with external forces of change, including changes induced by economic and | 1 |
policy action recent policy developments over the past few years we have “ re - invigorated ” the bank's own financial stability role. this has been reflected in a number of ways. in november 2004, we commenced publishing a twice - yearly financial stability report, as a complement to our quarterly monetary policy statements. we have also introduced a local incorporation and an out - sourcing policy for registered banks. the former requires large banks to be incorporated in new zealand, rather than operate as a branch of a foreign bank ( as has been the case with westpac ). the latter requires banks to manage out - sourcing of core banking functions in a way that does not compromise their ability to maintain a core operational capability should a service provider become unable or unwilling to provide those functions. the local incorporation and outsourcing policies have been introduced mainly to improve the resilience of the new zealand banking system in a bank failure situation. that is a situation that we all hope falls into the " rare event " category, though we know from experience that bank failures can and do happen. and we know that there is a tendency for rare events to slip into the background, and in the case of those that could be very damaging, perhaps more than they should. one of the jobs of the reserve bank is to act as a counter to such tendencies. in parallel with progressing these issues, which affect mainly the large australian - owned banks, steps have been taken to strengthen the harmonisation and co - ordination of trans - tasman banking supervision. last year, the trans - tasman council on banking supervision was established, with a terms of reference which cover supervisory co - operation, preparedness for responding to crises that involve banks that are common to both countries, and whether legislative changes may be required to ensure apra and the rbnz support each other in their regulatory responsibilities, at least regulatory cost. the council recommended some legislative changes, for enactment in both australia and new zealand. dr cullen and the australian treasurer announced following their annual meeting that both governments will be promoting those legislative amendments. currently we are also involved in the government contingency planning for a possible influenza pandemic. besides making contingency plans to maintain our own operations, we have been working with the banks to ensure that business continuity planning is in place, and that key payments systems and cash distribution arrangements could be adequately maintained in the unlikely event that an influenza pandemic would impact on staff availability. we have been consulting with banks | discussed further in chapters 16 and 25, a number of reforms have already been adopted in response to the shortcomings in the design of the euro area, but it is not certain that they will suffice to preserve the currency union in its current form. forecasting near - term developments in the euro area crisis is beyond the scope of this report, however. the results of the reforms made to date have not yet been fully tested. if they prove inadequate, the crisis could be amplified and, in the worst - case scenario, could have severe repercussions for the future of the euro area in its current form. if they are successful, the reforms could strengthen the eurozone. the outcome has yet to be determined. 1. 4 euro area membership : pros and cons for iceland according to the conventional economic theory of optimal currency areas ( oca theory ; see chapter 5 ), a given country is better suited for participation in a larger currency area the more its shocks are symmetric with shocks to the other countries in the currency area, the more open its economy is, the greater the share of trade is with the currency area, and the more flexible its labour market is. these oca criteria centre on the balance between the cost of relinquishing monetary independence and the benefits of reduced transaction costs for trade ( see also chapter 6 ). if economic shocks hitting the candidate country and the currency area are symmetric, joint monetary policy will respond effectively to them, and a flexible exchange rate will not be needed as a shock absorber. the greater the share of external trade, the greater the benefits in lower transaction costs deriving from participation in a monetary union. at the same time, the effects of nominal exchange rate movements on the real economy will be less, particularly in small, open economies that price their exports in foreign currency and face given import prices in foreign currency. in other words, changes in the nominal exchange rate will have a smaller and more short - lived effect on the real bis central bankers ’ speeches exchange rate. finally, if economic shocks extend only to the home country and joint monetary policy is insufficient to absorb the shock, labour market flexibility could take the place of nominal exchange rate adjustment once the domestic currency has been abandoned. consideration of these criteria based on historical data does not produce an unequivocal answer about iceland ’ s suitability as a member of the eurozone. the icelandic business cycle has been rather weakly linked to that of the euro area – and actually | 0 |
and the united states, as " the workshops of the world, " had accomplished innovative developments such as steam engines and the telephone, and had created mass production systems by constructing modern factories based on these developments. they also established a manufacturing trade in which they imported materials from all over the world and exported industrial products. the volume of global trade increased as free trade was promoted by " the workshop of the world. " today, though the term " globalization " is widely used in a variety of fields, economic globalization had its origins in the 19th century. richard baldwin, a professor of economics at the university of geneva, points out that in the period of globalization led by the united kingdom and the united states, people started to trade goods all over the world because the cost of trade had declined due to innovation, and wealth had concentrated in " the workshop of the world. " 2 from the 1970s to the end of the 1980s, japan and germany caught up with them, took over the role of " the workshops of the world, " and accumulated wealth rapidly. gvcs and the economic growth of asia a new era of globalization started at the end of the 1980s as the cold war ended. foreign direct investment increased globally mainly due to the large capital inflows into the former eastern bloc countries such as china and those in the former soviet union and in east europe. also, the establishment of the world trade organization ( wto ) in 1995 strengthened the institutional framework of free trade. over this period, many multinational companies, which already had hubs in various regions, evolved their production systems even more. they segmented the process, from planning and development of products to the production of parts, assembly, and sales. they optimally decentralized locations for the production process and services all over the world by seeking economics of scale and see r. baldwin ( 2016 ), the great convergence : information technology and the new globalization, the belknap press of harvard university press, cambridge, massachusetts. comparative advantage. by the middle of the 2000s they had constructed a network of international specialization in a finely meshed pattern, which is called gvcs. the development of it greatly contributed to the establishment of gvcs. this is because it enables firms to collectively manage and control a large number of geographically dispersed processes. professor baldwin, whom i mentioned earlier, notes that the lower cost of information processing due to the development of it since the 1980s had made it easy to share information between developed and emerging countries | s strong macroeconomic fundamentals as well as the increasing needs of a growing economy. the country ’ s external payments position remains resilient and sustainable as it enjoys support from different fronts. these include remittances from overseas filipinos ( ofs ), revenues from the it - bpo industry, receipts from the robust tourism sector, and sustained inflows of foreign direct investments. for 2019, the bsp sees a bop surplus of $ 3. 7 billion equivalent to 1 percent of gdp. the current account deficit, on the other hand, has been revised upward to usd 10 billion, equivalent to 2. 8 percent of gdp. we continue to see this as financeable given support from structural inflows. the country ’ s gross international reserves ( gir ) now stands at around us $ 85 billion as of endmay 2019. this is roughly equivalent to 7. 5 months ’ worth of imports of goods and payments of services and primary income. in addition, the passage of r. a. no. 11256 or the gold law would allow the bsp to increase its purchases of domestic gold to further build up the level of the philippines ’ gir, which serves as the country ’ s primary buffer against external economic shocks. the law exempts from excise and income tax the sale to the bsp of gold sourced from small - scale mining activities. fourth, the bsp ’ s implementation of capital market reforms facilitates easier funding access. the bsp is a long - standing advocate of reforms to further deepen the country ’ s capital market. capital market development helps finance infrastructure projects and limits concentration risks in the banking system, thereby facilitating investment in long - term government bonds, lowering borrowing costs, and improving monetary policy transmission. at the same time, this allows the private sector to tap into a broader market or avail themselves of alternative financing opportunities for infrastructure projects. the bsp continues to enhance the regulatory environment ( e. g., refinement of benchmarks and trading rules ) by allowing banks to offer instruments that help hedge risks and provide ways of portfolio diversification. on the other hand, the liberalization of the banking system, which allowed the entry of new foreign banks into the country, enhances the quality of competition in the banking system, expands the array of financial products and services at competitive rates, encourages more foreign direct investments ( fdi ), and opens alternative financing opportunities to fund infrastructure projects. before i end my presentation today, i would like | 0 |
fadilj bajrami : ecb regional cooperation programme with central banks in the western balkans address by mr fadilj bajrami, vice governor of the national bank of the republic of macedonia, on the occasion of the third programme steering committee meeting of the ecb regional cooperation programme with central banks in the western balkans, pristina, 27 march 2015. * * * dear governor hamza, dear deputy governor gjoni, dear mr. fehlker, dear mr. chlad, representatives from central banks, ladies and gentlemen, i am glad to be here, in pristina, with you today, on the occasion of the third and final meeting of the steering committee, to officially mark the successful completion of the joint cooperation programme between the ecb and the national central banks of the eurosystem, on the one hand, and the central banks of the western balkans, on the other. the inclusion of the three central banks in this programme, which aims to strengthen their institutional capacity and align their operations with the central banking standards of the eu, is of enormous importance for the region, given the role of central banks in the eu accession process. namely, this regional approach of the ecb allows raising the level of compliance with the eu standards and policies, but also creates an opportunity to advance the cooperation between the central banks in the region and the central banks of the eu. therefore, i believe that the cooperation will continue in the same spirit and will further advance through other forms of cooperation in various central banking areas. concerning the nbrm, it is my pleasure to emphasize that with the ecb colleagues, we have jointly established the current progress of implementation of the recommendations from the needs assessment of the nbrm, and defined the follow - up steps. on this occasion, let me point out that the nbrm will remain committed to the implementation of the recommendations provided in the report, bearing in mind that many of them have already been incorporated in the nbrm strategic plan. hence, the further support of the ecb and the eurosystem in terms of experience and knowledge is of immense importance, as well as the assistance of our strategic partners, with whom we hope to continue working together on the implementation of the recommendations. eventually, allow me to express my gratitude to the ecb and other central banks of the eurosystem involved in the programme, as well as the hosts, hoping to have future opportunities to meet at similar | event. bis central bankersa€™ speeches | 1 |
significant steps forward : they will make supervision swifter, more responsive and more intrusive where needed. to go further, we can and should pursue our efforts towards a more qualitative and riskfocused supervision. the forthcoming new srep methodology is a real opportunity to prioritise our supervisory tasks according to our risk assessment and incentivise further ssm banks to achieve the necessary changes to improve their risk profiles. with regard to our internal functioning, there is still room to fine - tune the articulation between vertical and horizontal supervisory activities to enhance our effectiveness, optimise our resource allocation and thereby reduce the " supervisory burden " both for banks and supervisors. as bottom - line, we need to engage even further into a constructive supervisory dialogue ; and this requires commitment on both sides of the table, we as supervisors, and banks alike. i deeply believe that we can now leverage on ssm expertise and in - depth knowledge of the european banking sector to trust our supervisory judgement, and adopt a more strategic and holistic approach to risk assessment. while benchmarking is an important input into the process, notably to ensure a level playing field, it is clearly not the only one ; the individual assessment of each bank's risk profile, based on constrained expert judgement, should remain the core of our assessment. 2 / 4 bis - central bankers'speeches ii. banking union : why and how to move forward again let me now turn to a far - reaching issue that we still need to tackle, after several years of deadlock : a fully integrated banking market in europe. let us acknowledge it : we have been very successful in building a supervision union – which we celebrate today – less so in a complete banking union. this slowness has hampered the emergence of pan - european banks, and our banks are becoming smaller compared with their global rivals. in 2023, the domestic market share of the top five us banks stood at 42 %, compared with around 28 % for the top five in europe. iii meanwhile, the most active european bank on investment banking activities ranks only ninth worldwide, far behind the top five – which are all american. euro area banks accounted for only 29 % of investment banking fees generated by the top 10 players in europe in 2023, compared with 34 % a year earlier. iv for banks – and we see this in the united states – scale is objectively a major determinant of competitiveness, particularly as it enables banks to amortise | denis beau : financial supervisory and coordination - new issues and challenges regulatory policy contribution to the panel discussion by mr denis beau, first deputy governor of the bank of france, at the salzburg global finance forum, 22 june 2021. * * * regulatory policy and supervisory coordination has always been fraught with challenges. i remember panel discussions with market participants about this very topic at the bis twenty years ago. no surprise for me that it is still a topic today, because there is a deeply rooted reason for it : the inevitable tension between market forces on the one hand, which push for a borderless financial system in many of its layers, despite step backwards, as we have seen since the global financial crisis, and on the other hand the jurisdictions in which regulators and supervisors operate, are accountable and must discharge their obligations, which at best are regional for some and most often are national. this observation does not mean that we have not made progress in addressing this tension over the last decades. nevertheless, i would differentiate between coordination issues to manage large - scale crisis and to prevent those crisis. regarding the former, i think it is fair to say that the covid - 19 pandemic acted as a test of the resilience of our global coordination framework, which has improved with a strong g20 dimension after the gfc. international organizations, among which the financial stability board, and standard setting bodies have played a very important role in gathering and disseminating information, as well as ensuring adequate coordination among major public authorities. i would also point out that monetary policy has not been the only tool we have used to increase resilience and defuse the shock. different authorities have worked hand in hand, under a lot of time pressure, including financial regulators and supervisors, to deliver a very comprehensive and largely consistent set of measures to maintain the core functions of the financial system in these unprecedented events. comprehensiveness and consistency have been key elements in our collective ability to foster resilience. so the test regarding coordination in crisis time has been passed rather well so far. however, it ’ s not over yet and good coordination should be maintained for the exit phase of support measures, generally speaking. in the field of financial regulation and supervision, there were variations in approaches, see for instance the leverage ratio for credit institutions, which was okay for the duration of the crisis, but led to divergence in the implementation of standards that should not last. getting out of the crisis and unwinding support measures will require further coordination | 0.5 |
conditions and craft policy responses? hmda has three purposes. one purpose is to provide the public and government officials with data that will help show whether lenders are serving the housing needs of the neighborhoods and communities in which they are located. a second is to help government officials target public investment to promote private investment where it is needed. a third purpose is to provide data to assist in identifying possible discriminatory lending patterns and facilitate the enforcement of anti - discrimination laws, such as the equal credit opportunity act. today ’ s hearing is intended to serve as a venue to : discuss whether or not the 2002 revisions to regulation c provided useful and accurate information about the mortgage market ; gather information that will help assess the need for additional data elements or improvements ; and identify emerging issues in the mortgage market that may require additional research. as i said earlier, we are also interested in any comments on the implementation of the hmda elements of the regulatory reform legislation. we have gathered this morning an impressive array of panelists representing a spectrum of vantage points. we look forward to the comments of our panelists today and at the upcoming hearings in san francisco, chicago, and washington. this input, together with written comments submitted from the public, will be carefully considered as we consider changes to regulation c. | elizabeth a duke : opening remarks at the public hearing on potential revisions to the home mortgage disclosure act opening remarks by ms elizabeth a duke, member of the board of governors of the federal reserve system, at the public hearing on potential revisions to the home mortgage disclosure act, atlanta, 15 july 2010. * * * on behalf of the board of governors of the federal reserve system, i ’ d like to welcome the participants to today ’ s hearing. i ’ d also like to express my appreciation to president lockhart and our colleagues at the federal reserve bank of atlanta for hosting us today. i am pleased to be here at the first in a series of public hearings regarding changes to the home mortgage disclosure act ( hmda ). the board has scheduled these hearings to assess the adequacy of the current mortgage data requirements and examine the need to collect additional data from lenders. i would point out that since we began planning these hearings, changes to the hmda data requirements have been included in the regulatory reform bill currently being considered by the congress. we look forward to hearing your comments regarding the implementation of the changes specified in that legislation, as well as changes you might recommend based on your experience. the proposed legislation also would transfer authority for hmda rulemaking from the board of governors to the new consumer financial protection bureau ( cfpb ). all information gleaned from these hearings will inform our rulewriting work. when rulemaking authority transfers to the cfpb, be assured that we will hand over the most current thinking about changes to regulation c. over the course of four public hearings, held throughout the country, we will hear from key players in the home mortgage market : lenders and other market participants, academics and researchers, consumer advocacy and community development organizations, data experts, regulators, and other public officials. although they play different roles, all share a common goal : to ensure that the mortgage market is responsible, transparent, efficient, and serves the needs of consumers and market participants alike. clearly, the recent mortgage crisis has highlighted the potential ramifications of a mortgage market that is not functioning well. data do not create the market, but they do help us understand what is happening in the market. hmda data cannot solve all market problems, but the time is ripe for reviewing and revising the data elements, standards, and reporting formats. with the benefit of hindsight, we can now answer the question : do policymakers have adequate and reliable data sufficient to assess market | 1 |
the transition to a new regime as smooth as possible ; they will also, in the long run, try to reduce unnecessary inefficiencies where possible. in december last year, the pra2 published a draft proposal for a post - brexit supervisory approach. i very much appreciate the spirit behind this approach. it reflects a solution - oriented, pragmatic, yet stability - oriented stance. in the same vein, the ssm has developed quite pragmatic, cooperative policy stances on many of the relevant issues. i am confident that this cooperative style can make an important contribution towards a smooth transition. 7 conclusion ladies and gentlemen, greater fragmentation will most likely be an inevitable result of brexit. instead of wishing to do away with what is beyond our control, we should set about finding pragmatic and at times innovative solutions to managing brexit and the ensuing fragmentation constructively. however, such a constructive approach will take time, because it means many complex answers have to be developed – which is why we need a sufficiently long transition phase. and i have to say that i was really facilitated well and truly relieved when i heard the news yesterday that a transition phase had been agreed, because this could make brexit less abrupt and, in the long run, less painful. during that phase, supervisors will have to find solutions that enhance financial stability without undermining economic efficiency. and financial firms will have to find innovative and pragmatic ways to comply with the new demands while maintaining their efficiency and profitability. for all the bullet points on our to - do list, we need an honest dialogue – if unnecessary problems and burdens arise, firms and investors should always come and talk to us. brexit is both too complex and too important to muddle through. thank you for your attention. 1 comprehensive economic and trade agreement between canada and the eu. 2 prudential regulatory authority. 4 / 4 bis central bankers'speeches | eli m remolona : protecting the banking system as a whole speech by mr eli m remolona, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the philippine deposit insurance corporation stakeholders'appreciation night, manila, 20 june 2024. * * * magandang gabi po. president bobby tan, members of the pdic ( philippine deposit insurance corporation ) board of directors, members of the pdic management, pdic's institutional partners, good evening. as the pdic's 60th anniversary celebration draws to a close, we would be remiss if we did not express our gratitude to our stakeholders. the pdic's relationships have been crucial to the organization's success. so, tonight is a stakeholders'appreciation night. as president bobby tan said, when the pdic was established in 1963, it was the first institution in east asia to offer deposit insurance. since then, it has stood as a bulwark against banking crises. yes, the pdic provides depositor insurance. but its most important role, by far, is to protect the banking system as a whole. when a mass of depositors decide to withdraw their money, even when they do not need it, then you have what constitutes a bank run. this bank run can have catastrophic consequences for the financial system, the economy as a whole, and our people. we look to the pdic to stop such a run in its tracks. in the late 1990s, the asian financial crisis shook the region's economies to their core. a decade later, the philippine banking system itself was shaken by the legacy group scandal, which led to the collapse of 48 banks across the archipelago. the pdic plays its most critical role during times like these. it does this by restoring confidence among depositors. today, i am proud to say that the bsp itself is one of the pdic's stakeholders. we work very closely together and try hard to maintain the stability and resilience of the philippine banking system. together, we are stronger in facing the challenges ahead. so, cheers to our enduring partnership. and cheers to our stakeholders. maraming salamat po at mabuhay tayong lahat! 1 / 1 bis - central bankers'speeches | 0 |
likewise improved and remained manageable. the peso remains firm, providing a mitigating effect on inflation, while broadly maintaining its external competitiveness. the banking sector has remained fundamentally sound. the banking system sustained a steady asset expansion for the last seven years supported by continued growth in deposit base. the continued asset clean - up of banks, accomplished through market - oriented schemes and without the use of public funds, boosted the banking system ’ s overall asset quality. the banking system ’ s npl ratio is now closer to the pre - crisis level of around 4. 0 percent. banks also remained capitalized at levels above both the bsp - regulatory requirement and the bis standard. the banking system ’ s capitalization is expected to improve further with banks ’ increased issuance of hybrid financial instruments to strengthen their capital base. as a footnote to banking performance last year, i would like to mention that the banking system was not significantly affected by us subprime mortgage market problems. first, because philippine bank exposure to the cdo market was only 0. 2 percent of total bank assets as of mid 2007, and none of these have subprime mortgages as underlying assets. second, the country has been less dependent on external borrowing and has, therefore, become less vulnerable to external shocks. third, there is ample liquidity in the system and hence, any credit squeeze could be manageable. the fiscal sector likewise performed well, with the national government posting a p9. 4 billion budget deficit in 2007, its lowest in ten years. this was achieved through enhanced revenue collections and privatization efforts. moreover, for the first time in more than a decade, the consolidated public sector financial position registered a surplus in 2006. this continued on in the first nine months of 2007 with the public sector posting a surplus of p52. 7 billion. gains brought about by the government ’ s fiscal consolidation efforts were evident in the material reduction in the public debt burden. all in all, one could say, 2007 has been marked by an auspicious alignment of the stars – what should be going up, went up, what should go down, went down. key challenges ahead while we have implemented in recent years prudent macroeconomic policies and structural reforms, which allowed us to achieve these important milestones in the previous year, the philippine economy continues to face challenges from both the global and domestic fronts. these include : ( 1 ) the us economic slowdown ; ( 2 ) further disruptions in the global | mpr forward mpr jun. 22 mp meeting 12. 0 11. 0 10. 0 9. 0 8. 0 7. 0 6. 0 5. 0 4. 0 3. 0 2. 0 1. 0 0. 0 ( * ) the corridor is constructed following the methodology in boxes v. 1 of march 2020 mp report and v. 3 of march 2022 mp report. it includes the may economic expectations survey ( ees ) and the june financial traders survey ( fts ) previous to the mp meeting, plus the average smoothed forward curve for the quarter ended on 1 june. this is calculated by extracting the implicit mpr considering the forward curve over the overnight swap curve of up to 2 years, discounting the fixed rates of each maturity to the simple accrual of the overnight index swap ( ois ). for the current quarter, the surveys and the forward curve consider the average of daily effective data and are completed with the respective sources source : central bank of chile. table 1 international baseline scenario assumptions 2022 ( f ) mar. 22 jun. 22 report report 2023 ( f ) mar. 22 jun. 22 report report 2024 ( f ) mar. 22 jun. 22 report report ( annual change, percent ) terms of trade trading partners'gdp world gdp at ppp developed economies gdp at ppp emerging economies gdp at ppp 11. 8 6. 3 6. 1 5. 1 7. 0 - 3. 1 3. 3 3. 1 2. 9 3. 2 - 4. 0 2. 7 2. 6 2. 4 2. 6 lme copper price ( us $ cent / lb ) average wti - brent oil price ( us $ / barrel ) ( f ) forecast. source : central bank of chile. - 3. 1 3. 3 3. 4 2. 0 4. 3 ( level ) - 4. 1 2. 9 2. 7 1. 5 3. 5 - 1. 5 3. 1 3. 3 1. 8 4. 3 - 0. 2 3. 1 3. 2 1. 7 4. 2 table 2 domestic scenario gdp demanda interna domestic demand ( w / o inventory change ) gross fixed capital formation ( gfcf ) total consumption private consumption goods and services exports goods and services imports current account ( % of gdp ) gross national savings ( % of gdp ) nominal gfcf ( % of gdp ) 11. 7 21. 6 18. 0 17 | 0 |
r basant roi : indian ocean international bank ltd - opening of the on - going training programme keynote address by mr r basant roi, governor of the bank of mauritius, port louis, 8 march 2003. * * * chairman of the board of directors of the ioib staff members of the ioib ladies and gentlemen i am privileged to address you on the occasion of the opening of the first training programme for the staff of the indian ocean international bank ltd. your training programme is starting at a time when animated talks regarding the latest bank fraud have wrought up to a high pitch of concern. although i have been invited by your bank today to reflect on ethics in banking to mark the opening of your training programme, i shall attempt to highlight some cases of fraud from which we may all draw some lessons. philosophers in ancient as well as modern times have debated lengthily on ethics. aristotle and j. s. mill could not definitively sort out our ethical problems. it is unlikely that the business gurus of today can resolve the problems with a few well - constructed and captivating sentences. a commentator from the european media once stated that he found himself ill at ease to start a television programme ‘ with a lecture by currency manipulator george soros, of all people, on ethics ’. the commentator was quick in qualifying his remark with a statement to the effect that george soros had spent quite some millions of dollars made in speculating against the pound sterling in 1992 on charities. unethical ethics? ethical dilemma or what? i do not intend to dwell lengthily on such an overarching concept as ethics. we all have our own definition of ethics. the oxford english dictionary defines ethics as a set of moral principles. ethic is a singular word but is often used in plural. perhaps that is why its definition tends to be so elastic. it is, as you all must be knowing, not a mathematical concept and i, for one, would not venture here to give you any precise definition of what ethics in banking is all about. let me content myself with ethics in its simplest sense, that is, as one writer has put it, “ choosing the good over the bad, the right over the wrong, the fair over the unfair ”. and what is good, phaedrus, and what is not good need we ask anyone to tell us these things? ethical behaviour stems from within us, not from without. “ nothing external, … no guideline, no regulation | r basant roi : monetary policy objectives in mauritius and its operational framework since 1994 address by mr rameswurlall basant roi, gcsk, governor of the bank of mauritius, at the bank of mauritius ’ annual dinner with major economic stakeholders, flic - en - flac, 3 december 2004. * * * honourable chief justice distinguished guests ladies and gentlemen good evening i am pleased to welcome you all to the bank of mauritius annual dinner. in my last six addresses i dealt mostly with regulatory and supervisory issues that the business community and the public at large need to be aware of. the addresses are purported to enhance transparency in the bank ’ s policy decision - making. the theme for my address this evening is : a perspective of our monetary policy objective and the evolution of its operational framework since 1994 when our exchange control act was suspended. let me start with a remark - a remark that is generally valid. often, commentators make observations that are so framed, either unwittingly or intentionally, as to lend the impression that monetary policy, on its own, should be capable of achieving all economic objectives at the same time and all the time. this is indeed an unrealistic demand on monetary policy. monetary policy, though a very important arm of macro - economic policy, is only one of several elements in the economic panorama. we need to have a realistic appreciation of what monetary policy or any other policy in any other field can be reasonably expected to deliver. it ’ s a fact of life that we cannot have all that we want at the same time, all the time and under all circumstances. whether it ’ s monetary policy, fiscal policy or social policy, choices are made between conflicting or potentially conflicting objectives in the short term. between the choices made in the short term and the choices available in the long run there is what economists call the long run opportunity cost. policy choices made today do often constrain the range of choices available in the longer run. those of us outside the economics profession and even those in the economics profession frequently tend to overlook the long run opportunity cost when it suits them. whenever expectations of a particular sector are not met, there emerges pressing demand to intervene and set right sectoral problems while dismissing the long run adverse implications of the intervention for the economy as a whole. in any dynamic society with ever changing priorities, the relative importance of any single objective varies over time. a switch from one policy to another as demanded by particular economic sectors out of unreal | 0 |
ravi menon : asia – no room for complacency keynote address by mr ravi menon, managing director of the monetary authority of singapore, at the paris europlace financial forum, singapore, 30 november 2011. * * * mr christian noyer, governor of banque de france, distinguished guests, ladies and gentlemen, good morning. for those of you who are coming from abroad, a warm welcome to singapore. deleveraging out of a debt overhang moliere, a french playwright considered to be one of the greatest masters of comedy, once offered this sobering thought : “ debts are like children ; begot with pleasure and brought forth in pain ”. today, the pain he described is palpitating throughout the world and keeping many leaders in government, business, and finance awake at night. the advanced economies are awash in debt. governments, households, and banks must reduce leverage to restore economic and financial sustainability. but history tells us that deleveraging, while necessary, leads to a prolonged period of slower growth punctuated by increased financial market volatility. the gross government debt - to - gdp ratio is 80 % in the uk and in the eurozone, 100 % in the united states, and 230 % in japan. sovereign debt in aggregate is today at levels not seen since the second world war. financial markets, which had hitherto tolerated the build - up in debt, have turned merciless against the eurozone economies, driving up sovereign spreads and dragging down the ratings of those who hold sovereign paper. european governments have begun to take steps towards fiscal consolidation, and must convince markets that these steps are credible. unfortunately, the private sector is not ready to take over the slack in public demand. private sector debt - to - gdp ratios exceed 250 % in the g3 economies. in the united states, where the household debt - to - disposable income ratio reached an unprecedented 135 % in 2008, deleveraging is already underway with the recovery in private consumption well below historical rebounds. while eurozone households are less leveraged than us households, disposable income is likely to grow more slowly in the eurozone and hence be a bigger drag on consumption. a third source of deleveraging is the banking system. banks in the eurozone have to strengthen their capital adequacy position to meet new regulatory requirements as well as buffer against potential losses on their sovereign debt holdings. with uncertain prospects for raising fresh capital in equity markets | the end of this year. our policy consultation will provide further details on how mandatory clearing will be implemented. third, move trading to platforms where appropriate. international discussions on implementation issues are still ongoing. mas is actively participating in these discussions. we will use the findings to help develop our own regulatory framework for organised platforms for trading. fourth, report trades. we are assessing the need for a local repository and the appropriate regulatory regime. our aim is a practical and efficient system that avoids duplication. on the insurance front, singapore was among the first in asia to introduce a risk - based capital framework back in 2005. unlike in banking, there is no common global capital standard for insurance companies. the closest is the eu ’ s new standard known as solvency ii which is expected to be implemented by 1 january 2013. many non - eu countries are looking to modernise their own capital frameworks along similar lines. to ensure that our risk - based capital framework in insurance keeps pace with these developments, mas will embark on a review of our framework. we expect to issue a consultation paper by the end of this year. in the post - crisis landscape, there is a premium placed on well - regulated financial centres that have strong economic fundamentals. singapore is in a good position to benefit from this. we have high prudential standards and rigorous supervision that give market players confidence. and we are at the crossroads of asia, which is growing significantly faster than the western economies. 2010 was a good year for singapore ’ s financial centre. the financial services sector grew by 12 % last year. several specific factors in asia underpin the demand for financial services provided by singapore : increase in trade, demand for infrastructure investments, rise of asian corporates, and growth of individual wealth. as a well regulated and diversified international financial centre, singapore plays a natural role in facilitating trade and bis central bankers ’ speeches investments in the region. high regulatory standards and a conducive business environment will continue to support stable growth in financial services. conclusion before i conclude, i want to highlight one more significant theme. this year marks mas ’ 40th anniversary. mas is where it is today because of the outstanding contributions of its staff – both past and present. the economic and financial stability that singapore has enjoyed is the result of tireless efforts of generations of mas officers. they have helped to secure for singaporeans a low rate of inflation, preserve the purchasing power of our official foreign reserves, keep our financial sector safe and sound amidst crisis | 0.5 |
i share my views on a topic of contextual relevance, that is, “ banking and finance in india : developments, issues and prospects ” in the backdrop of the global financial crisis. a recent bis report has stated that it is useful to think of the financial system as the economy ’ s plumbing. and like the plumbing in a house, the modern economic system depends on a reliable flow of financing through intermediaries. modern life requires the smooth operation of banks, insurance companies, securities firms, mutual funds, finance companies, pension funds and governments. these institutions channel resources from those who save to those who invest, and they are supposed to transfer risk from those who can ’ t afford it to those who are willing and able to bear it ( bis, 2009 ). in india too, we have a well - diversified financial system which is still dominated by bank intermediation, though the size of the capital market has expanded significantly with financial liberalization in the early 1990s. important components of the financial sector in india broadly fall into categories namely ; commercial banks, urban co - operative banks ( ucbs ), rural financial institutions, non - banking financial companies ( nbfcs ), housing finance companies ( hfcs ), financial institutions ( fis ), mutual funds and the insurance sector. commercial banks together with cooperative banks account for nearly 70 per cent of the total assets of indian financial institutions. global banking trends and the crisis before i dwell on the developments in the indian banking and financial arena let me first touch upon briefly the global banking trends in view of the present crisis. the current global crisis, as is well known by now, has its genesis in the imprudent practices of banks and nonbank institutions worldwide, especially in the us. the fact that more than 80 banks have failed in the us alone is a pointer to how deep and widespread the malaise was. looking at the past few years, it may be useful to divide the causes of the current crisis into two broad categories : macroeconomic and microeconomic. the macro - economic causes fall into two groups : problems associated with the build - up of imbalances in international claims and difficulties created by the long period of low real interest rates. the microeconomic causes fall into three areas : incentives, risk measurement and regulation ( bis, 2009 ). the crisis is best regarded as the steep downside of an extraordinary global financial cycle that was amplified by structural weaknesses. the financial imbalances that had built up slowly but inex | australia, singapore and hong kong. world development indicators : financial access, stability and efficiency – world bank report ( 2014 ). bis central bankers ’ speeches 9. with the broadening and deepening of financial sector, a need is felt that banks move from the situation where all banks provide all the services to a situation where banks find their specific realm and mainly provide services in their chosen areas. as the economy grows and becomes more integrated with the global economy, need would be felt for sophisticated financial services and products which will require the presence of different types of banks. accordingly, differentiated banks serving niche interests are also contemplated for india. 10. much of the indian population is still outside the purview of formal financial sector and there is need to spruce up the institutional mechanism in this regard. reserve bank had, accordingly, issued draft guidelines on small banks and payment banks in june 2014. both, payments banks and small banks are “ niche ” or “ differentiated ” banks ; with the common objective of furthering financial inclusion. while small banks will provide a whole suite of basic banking products, such as, deposits and supply of credit, but in limited size, payments banks will provide limited range of products, such as, acceptance of demand deposits and remittances of funds, but will have a widespread network of access points particularly in remote areas, either through their own branch network or through business correspondents or through networks provided by others. the final guidelines on small and payment banks will be released shortly. 11. the presence of foreign banks in india is seen to be one of the drivers to increase competition, promote efficiency of the local banking system and also for bringing in sophisticated financial services and risk management methodologies which can be adopted by the domestic banks. based on cross - country experience, some of the main drivers of foreign banks would be the desire of banks to follow their home customers abroad, opportunities in the host countries, the attractiveness of local profit, the absence or elimination of barriers to foreign bank entry etc. 12. the share of foreign banks in total assets of the banking sector in india is 6. 5 per cent. the operations of foreign banks are skewed and mainly concentrated in urban and metropolitan areas. out of the total of 318 foreign bank branches, 315 are in urban and metropolitan areas. foreign banks account for less than one per cent of total branches of commercial banks in india. 13. currently, foreign banks presence in india is in the form of branches or representative offices. for the | 0.5 |
using our full range of tools to support the economy and to help assure that the recovery from this difficult period will be as robust as possible on behalf of communities, families, and businesses across the country. thank you. i look forward to your questions. summary of section 13 ( 3 ) facilities using cares act funding ( billions of dollars ) current amount of assets2 13. 8 14. 1 6. 2 2. 2 peak amount of assets2 14. 1 16. 6 6. 4 4. 1 treasury equity remaining3 13. 9 16. 5 6. 3 3. 5 maximum facility announced closed capacity1 corporate credit facilities mar. 23, 2020 dec. 31, 2020 main street lending program apr. 9, 2020 jan. 8, 2021 municipal liquidity facility apr. 9, 2020 dec. 31, 2020 talf mar. 23, 2020 dec. 31, 2020 note : the data are current as of march 17, 2021. 1. the maximum authorized amount of facility asset purchases. 2. current and peak outstanding amounts of facility asset purchases : a. for the corporate credit facilities, includes exchange - traded funds at fair value and corporate bonds at book value. b. for the main street lending program, includes loan participations, net of an allowance for loan losses updated as of december 31, 2020, at face value. c. for the municipal liquidity facility, includes municipal notes at book value. d. for the talf ( term asset - backed securities loan facility ), includes loans to holders of eligible asset - backed securities at book value. 3. the amount of the treasury contribution to the credit facilities. source : staff calculations. | mervyn king : globalisation and relative price changes speech by mr mervyn king, governor of the bank of england, at a dinner for kent business contacts in conjunction with the kent messenger group / kent business, kent, 16 january 2006. * * * two weeks ago trafalgar square was packed with revellers celebrating the new year. a century ago it was crowded with hop - growers and pickers. on may 16th 1908 - “ hop saturday ” - around 30, 000 people working in the hop trade travelled to london to demonstrate against unfair foreign competition and to demand the introduction of a tariff on imported hops. it was the largest demonstration in trafalgar square for many years. special trains were laid on to london bridge from where the demonstrators marched to trafalgar square, accompanied by bands playing and banners flying. according to the times, “ one of the most conspicuous banners bore the words : ‘ and shall hops picked by chinamen make england's hop trade die, here's 50, 000 kentish men will know the reason why ’ ". another, appropriately above the plinth of nelson ’ s column, read “ england expects that every hop shall pay a duty ”. a resolution was proposed demanding the imposition of an import duty of 40 shillings per cwt on all foreign hops. having carried the resolution, the assembled gathering sang " rule britannia ", after which the massed bands played the national anthem and a verse of " auld lang syne ". colourful and moving though the occasion was, the decline of the hop industry was inexorable and inevitable. nothing could stem the tide of changes in technology and in tastes for new lighter - foreign beers, and attempts by government through higher excise duties to reduce the consumption of beer. a willingness to adapt and embrace, rather than resist, change is the key to greater prosperity. that road may at times be hard going - as i know many of you will have experienced in your own businesses but it leads ultimately to a more prosperous destination. to follow the right road we need signposts. in a market economy those signposts are movements in prices. if a particular product becomes more abundant or less in demand, its price will fall relative to the prices of other products. that relative price change is the signal which encourages consumers to buy more or producers to supply less. over recent years, three new signposts have appeared. they mark a process that has | 0 |
kyrylo shevchenko : national bank of ukraine press briefing monetary policy statement speech by mr kyrylo shevchenko, governor of the national bank of ukraine, at a press briefing on monetary policy, kyiv, 4 march 2021. * * * dear colleagues, i would like to inform you that the board of the national bank of ukraine has decided to raise its key policy rate to 6, 5 % per annum. the decision is aimed at gradually reducing inflation to the target of 5 %, as the ukrainian and global economies are recovering. how did prices change at the start of 2021? as expected, inflation accelerated in january, and deviated from the 5±1 pp target range. inflation continued to accelerate in february according to preliminary estimates. in particular, consumer inflation exceeded the nbu ’ s forecast, while inflation expectations remained high. at the same time, the underlying inflationary pressure was generally in line with the central bank ’ s forecast trajectory in january – february. the growth in inflation in the first months of 2021 was driven by a number of factors. among them were : higher food and fuel prices stronger inflationary pressures from trading partner countries sustained domestic consumer demand. moreover, prices continue to be influenced by the effects of last year ’ s hryvnia depreciation. how will inflation behave in the future? the growth in consumer prices will peak in mid - 2021. however, inflation will start to decelerate afterwards, returning to its target range in h1 2022. the global and ukrainian economies, which are recovering rather quickly, will produce significant inflationary pressures throughout the whole of 2021. at the same time, the inflation trend will be reversed gradually as new harvest supplies come to the market, the effect of a low comparison base wanes for some products, and the nbu raises its key policy rate. inflation will thus decelerate at the end of the year and will settle within the 5 % ± 1 pp target range in h1 2022. what other factors were taken into account in the decision on the key policy rate? the primary assumption of the nbu board is that ukraine will continue to cooperate with the imf. the nbu expects further progress to be made in negotiations between ukraine and the imf. cooperation with the fund and other international partners is essential for financing budget requirements and providing the economy with an additional impetus for growth. this will enable ukraine to maintain its international reserves at about usd 30 billion. as before, the imposition of | s growth potential and provide a boost to international demand at the same time – thus killing two birds with one stone? in the next 15 minutes, i will briefly sketch out some possible answers to these questions. 2. wages and inflation in germany despite the very favourable economic situation in germany, inflation has not quite kept pace with the expansion. and while i am pretty sure that arthur okun, inventor of the misery index, would marvel at this remarkable combination of low inflation and low unemployment, this is nonetheless something of an economic conundrum. standard economic theory would suggest strong wage growth in the face of increasing labour 1 / 5 bis central bankers'speeches market tightness. and in time, higher wages would translate into higher inflation as well. but wages have been growing at a moderate pace even in the presence of a positive output gap. notwithstanding that wage growth is now slightly above the long - term average, indicators of labour market slack would suggest higher wage settlements. what can explain the modest wage growth in germany? bundesbank research suggests that migration from other eu member states partially accounts for dampened wage pressures in germany. trade unions ’ higher weight on requests for reduced working time or more training probably also plays a part. i ’ m sure the upcoming discussion will delve deeper into this as well. but when it comes to modest wage growth in the face of tight labour market conditions, germany is by no means unique. it seems to be a rather widespread phenomenon, characteristic of the current situation in the us, the uk, japan and sweden, for example. this suggests that the factors responsible for holding back wage growth are not only idiosyncratic, but at least partly international as well. recent research by the bank for international settlements, for example, suggests that the greater contestability of labour markets via the proliferation of global value chains puts a lid on wages. 1 more research is needed here, however, to determine which factors are the most prevalent, and whether they are temporary or secular in nature. 3. fiscal policy what can be said with confidence in my view, however, is that a positive output gap does not signal a need for an expansive fiscal policy stance. rather, to heed kennedy ’ s advice would be to maintain a safety margin to the existing fiscal rules in the face of the looming demographic challenges. yet this does not mean that there is no need for action on fiscal policy. action is warranted to counteract the demographic drag on growth – but action not with regard to | 0 |
financial sector supervisors endeavour to regularly review and amend, where necessary, those provisions of the law that can impede effective access to finance. the immediate regulatory issues are the provisions relating to the sharing of customer creditworthiness information, both positive and negative data, know your customer requirements and the anti - money laundering and combatting of the financing of terrorism protocols. the banking act confidentiality provisions are also being reviewed to allow for the sharing of customer creditworthiness information and to facilitate the establishment of credit bureaux. as regards the anti - money laundering and combatting the financing of terrorism measures, much as both the financial intelligence agency and the bank of botswana subscribe to a risk - based approach and seek to avoid undue regulatory burden, it is equally important to safeguard the integrity and overall stability of the country financial system by implementing and adhering to the international standards on aml - cft matters. moreover, there is need to guard against the impact of de - risking and loss of correspondent banking relationships that could be detrimental to trade, procurement, financing and payments arrangements. distinguished guests, the bank of botswana, as a primary partner in the evolution of the financial landscape, is committed to ensuring that there exists an enabling environment for enhanced financial inclusion of the unbanked members of our society. for the bank, greater financial inclusion enhances the potency of its policies and functions. in particular, given that monetary policy is transmitted by the financial sector, it has a greater and wider effect when a greater part of the population and businesses use financial services and products. for example, an individual or business that use the financial system to save or borrow is affected by a change in interest rates ; therefore, their reactions in that regard, collectively affects the rate of increase in prices and economic activity. it is, therefore, notable that the key mandates of the bank collectively relate to protecting the intrinsic value of the national currency ; and that achievement of the bank ’ s objectives promotes financial inclusion, literacy and capability. in particular, the bank has responsibility for issuance of good quality banknotes and coin, while pursuing stability with respect to domestic prices, the exchange rate and the financial sector. to the extent that these objectives are met, the bank helps to minimise erosion of the purchasing power of the currency, while ensuring that it remains integral to storage of value, monetary valuations, means of payment, and access to foreign currencies as needed, as well as credibility of the domestic financial system. in the horizon | well as policy output dedicated to the economic diversification efforts, the narrow economic base persists, with limited success on economic diversification. this will require development of the non - tradeable sector and address gaps in the quality of the regulatory frameworks, human capital competitiveness. and innovation to boost global the third aspect relates to prospective transition to structural fiscal and balance of payments deficits and the consequent decline of the official foreign exchange reserves. in this regard, and with an eye on slowing the depletion of external and fiscal buffers, there is need to enhance domestic resource mobilisation, by broadening the tax base, increase the progressivity of the personal income tax, streamlining and rationalisation of distortionary subsidies and vat exemptions. furthermore, and with the right governance architecture, there is considerable scope for enhanced and more optimal domestic borrowing programme to tap into resources accumulated by the retirement funds, annuity providers infrastructure and financing other and institutional increasing the funds for productive capacity of the economy. having said the above, i am not inviting you, the media, to discuss with the bank fiscal policy options ; this is the preserve of elected government, and, in this regard, led by the ministry of finance and economic development. however, i can say, without risking any transgression into the fiscal policy space that, subject to the effectiveness of the policy responses and the success of the transformation agenda, the issues i outlined above have the potential to undermine the resilience of the economy to any future economic shocks including the effects of climate change, prolonged droughts and water scarcity, as well as erosion of macroeconomic policy discretion hitherto provided by strong fiscal and external buffers. it is, therefore, important to reinforce the focus on the vision 2036 aspirations to achieve high - income status and inclusive diversified growth. the thrust required is to galvanise efforts towards structural and economic transformation as well as harnessing opportunities enabled by the fourth industrial revolution by upscaling investment on digital infrastructure, adoption of ict and digital skills. global competitiveness reports suggest that botswana lags peer countries in this regard. this speaks to the need for accelerated digital transformation and pace of egovernment agenda to increase efficiency, the result of which should be easing of policy implementation constraints and focusing resources on more impactful programmes. comparative country studies and experiences suggest that deliberate promotion of large - scale industries and dedicated implementation of industrialisation policies would be instrumental to successful escape from the middle - income trap | 0.5 |
, pleasant and not so pleasant, but, paraphrasing a woodrow wilson school adage from the time i was here, “ wherever you go, there you are. ” if you are not happy with yourself, even the loftiest achievements won ’ t bring you much satisfaction. 3. the concept of success leads me to consider so - called meritocracies and their implications. we have been taught that meritocratic institutions and societies are fair. putting aside the reality that no system, including our own, is really entirely meritocratic, meritocracies may be fairer and more efficient than some alternatives. but fair in an absolute sense? think about it. a meritocracy is a system in which the people who are the luckiest in their health and genetic endowment ; luckiest in terms of family support, encouragement, and, probably, income ; luckiest in their educational and career opportunities ; and luckiest in so many other ways difficult to enumerate – these are the folks who reap the largest rewards. the only way for even a putative meritocracy to hope to pass ethical muster, to be considered fair, is if those who are the luckiest in all of those respects also have the greatest responsibility to work hard, to contribute to the betterment of the world, and to share their luck with others. as the gospel of luke says ( and i am sure my rabbi will forgive me for quoting the new testament in a good cause ) : “ from everyone to whom much has been given, much will be required ; and from the one to whom much has been entrusted, even more will be demanded ” ( luke 12 : 48, new revised standard version bible ). kind of grading on the curve, you might say. 4. who is worthy of admiration? the admonition from luke – which is shared by most ethical and philosophical traditions, by the way – helps with this question as well. those most worthy of admiration are those who have made the best use of their advantages or, alternatively, coped most courageously with their adversities. i think most of us would agree that people who have, say, little formal schooling but labor honestly and diligently to help feed, clothe, and educate their families are deserving of greater respect – and help, if necessary – than many people who are superficially more successful. they ’ re more fun to have a beer with, too. that ’ s all | it can, with great assistance bis central bankers ’ speeches from locals and our foreign friends alike. the assistance coming through is unprecedented and the resilience of our people is without question, but we must continue to all work together to quickly rebuild our nation. official launch ladies and gentlemen, i reiterate that it is a pleasure to be with you this evening to celebrate with merchant finance limited. i congratulate the board, management and staff on this evening ’ s event. without further ado, i have much pleasure in officially launching the company ’ s new name “ merchant finance limited ” and its four new trade finance products : • trade finance local ; • trade finance import ; • trade finance export ; and • agri trade finance. i wish merchant finance limited every success for the future. vinaka vakalevu and have an enjoyable evening. bis central bankers ’ speeches | 0 |
with in the global economic arena if we consistently do the right things at the right time. but we have to end the past practice of seeking quick fixes and easy solution. a resilient economy requires hard work, intelligence, consistency and time. we will go through difficulties in the short term. tough decisions have been taken and we will continue to take them. market condition must improve. we have made the point, and will continue to make the point that there are lines in this country that cannot be crossed. and that no one can be so rich or so powerful as to get away with putting an entire system at risk to feed personal greed. 22. as a final thought, there is no uniform effect, neither is there a single remedy to every crisis. each brings its own surprises and risks. clearly, we should not assume that past remedies will fully solve the current and next set of problems or address all future crises. the key is to take lessons from the past and tailor them appropriately to address future situations of potential crisis. thank you for listening. | ##ed know your customer ( kyc ) requirements. the cbn is also leading the efforts of the bankers ’ committee to set up an industry - wide biometric database for all bank customers to address issues of kyc, anti money laundering ( aml ), and access to credit. this will help fast track use of channels such as biometric atms and pos terminals, etc. 7. at this point i would like to dwell more on the competency framework. in order to ensure that the banking industry has professionals with the requisite skills to maintain the stability of the financial system, an industry competency framework was developed and exposed in june 2012 by the cbn. the objective is to guide banking operations and address issues relating to the quality of human capital in leadership positions. the framework identifies 35 key control functions, in which significant influence is exerted on the conduct of a financial institution, to define and standardize the necessary skills and competencies required for both operators and regulators in the industry. a gap analysis on industry competency using the framework, was recently conducted which revealed results competencies ranging from 3 % to 85 %. the results have been exposed to the banks and remedial actions are currently being proposed to focus those with low competency ratios to get them to an acceptable level. the cbn also recently released the national financial literacy framework ( nfis ). the financial literacy steering committee has been set up under my leadership in line with the nfis. one of the most interesting elements of this project is a requirement for the governor and deputy governors of the cbn and all bank ceos to take time and teach financial inclusion to youths in secondary schools. i have already had my own baptism of fire from very intelligent students of regent school, abuja, nigeria. in september 2013, i will also teach a class made up of up to 100 students drawn from 3 ( three ) public schools in abuja. this will continue on designated financial literacy days. the classes and the questions and answers session will be broadcasted on national television and radios nationwide. banks are also required to increase communication in indigenous languages to enhance financial literacy. 8. in 2010 cautionary lending was the order of the day as a result of the global financial crises. with the quantitative easing measures of the cbn and the intervention of amcon, financial institutions began to recover from the effects of the crises. specifically in agriculture, the cbn worked with the federal government to set up the commercial agriculture credit scheme ( cacs ) | 0.5 |
mario draghi : hearing at the committee on economic and monetary affairs of the european parliament introductory statement by mr mario draghi, president of the european central bank, before the hearing at the committee on economic and monetary affairs of the european parliament, brussels, 9 october 2012. * * * madam chair, honourable members of the committee on economic and monetary affairs, it is a pleasure to be back here in parliament and in front of your committee for our regular exchange of views. • as you know, the european central bank ( ecb ) has recently taken important decisions to address severe distortions in government bond markets. the ecb stands ready to undertake, under appropriate conditions, what we have called outright monetary transactions ( omts ). these provide a fully effective backstop to avoid destructive scenarios that might threaten price stability in the euro area. • our omt announcements have helped to support financial market confidence. the ecb ’ s actions can help to build a bridge. but the bridge must have a clear destination. • reaching that destination involves three processes : first, full implementation of fiscal consolidation and structural reforms to enhance competitiveness ; second, full implementation of financial sector reform ; and third, completion of a genuine economic and monetary union. the establishment of a single supervisory mechanism ( ssm ) is a key step in these processes. today, i will review economic and monetary developments since july. i will then explain in some detail the rationale and modalities of the omts. i will end by sharing my views on one of the four building blocks of a genuine economic and monetary union, namely the financial market union. 1. economic and monetary developments let me start with the economy. since our last meeting, the ecb has left its key interest rates unchanged : the main refinancing rate stands at 0. 75 % ; and the deposit rate at 0 % ; the marginal lending facility at 1. 50 % ;. economic activity contracted in the second quarter of 2012. looking ahead, we expect weak economic activity in the near term and only a very gradual recovery after that. the risks to this outlook are on the downside, mainly related to the tensions in several euro area financial markets. average inflation in the euro area stood at 2. 7 % in september, reflecting indirect taxes and high energy prices. it should decline to below 2 % in the course of 2013. underlying price pressures should remain moderate given modest economic growth and well - anchored long - term inflation expectations. risks to the outlook | having to follow the same path you have over the last 30 years? mr. trichet : first let me reassure you : i will execute all my inspiring and heavy responsibilities until the 31 october 2011! my colleagues and i, we have to do the job. to deliver price stability in the medium and long - term and, by doing that, contributing to the financial stability in the long run! i insist on the long run! a central bank is an institution that has to be credible in the long run. some treasuries are issuing treasuries for 50 years. the corresponding very long - term interest rates depend on the independence and the credibility of the central bank. question : a local question in germany : the landesbanken and the crisis they ’ ve gone through ; do you feel that ’ s been taken care of or do you think public sector banks in germany and elsewhere need consolidation as some people are calling for? what needs to happen? mr. trichet : we have always called all over europe, in all countries, for getting rid of anomalies we were seeing in the market in this domain. it is not the case of germany in particular, but we always said that there was an immense stake in having institutions that would not be abnormally behaving for reasons that were due their own structure. i said that publicly before the crisis so i have no hesitation in confirming it. question : what is your reaction to president ’ s obama bank reform plan, which would set new limits on the size of trading activities of the largest banks? do you think it would help to solve the too - big - too - fail problem and curb global systemic risk and whether any aspects of the plan would be suitable for consideration in europe such as limits on proprietary trading operations of banks? mr. trichet : the reform proposals are relevant and interesting. we are examining them with great care. they go in the same direction of our own position, namely ensuring that the banking sector focuses on financing the real economy, which is its key role. there is naturally an international coordination mechanism at the level of the g20 and the financial stability board, where proposals should be coordinated globally to ensure that there are no loopholes in our integrated global financial system. i expect therefore that the international community will work actively on such ideas to improve our collective effort against systemic risks. question : ben bernanke has faced a difficult confirmation process for another term as fed chairman that still hasn ’ t been | 0.5 |
, the ecb is regularly reproached in the media for a lack of transparency. the european parliament, for example, recently called on the ecb, in announcing a decision on interests rates, to make public the minutes of the relevant meeting and the distribution of votes. i am not certain whether this information would actually enhance transparency. minutes can also lead to misunderstandings, because the weight given to different arguments is not always clear. besides, there is a danger that member states would check out the consequences for their own country of their central bank president ’ s stance. that is not the intention, since all members of the ecb council decide for the euro area as a whole. integral publication of the minutes could also change the nature of the discussions. nonetheless, we take the criticism seriously and regularly explore possibilities for improving communication, one result being a clarification of our monetary approach in may of this year. communication not only influences policy, but also the policymakers. central bankers are continuously subject to media attention. they can hence explain decisions and strengthen the confidence of market parties. but they also need to watch their step, because statements are sometimes interpreted like those of the delphi oracle. in other words, people hear what they want to hear. it is completely understandable that journalists enjoy analysing the decision - making in the ecb council. but as a central banker, you must always be aware of how far these interpretations can go. the press likes to divide the members of the ecb council into hawks and doves. and i once mentioned in an interview that structural reforms would lead to lower inflation, theoretically giving scope for interest - rate reductions. the next day ’ s headline in the financieele dagblad was : “ wellink : interest - rate reduction in return for structural reforms ”. that is obviously not what i meant, but it shows that a slight remark can sometimes have major consequences. nederlandsche bank ’ s relationship with the media this brings me to the relationship between dnb and the media. the traditional image of central banks as ivory towers is outdated. the bank has regular contacts with the media, and the days when it only communicated through publications such as annual and quarterly reports are long gone. over the past year, members of the bank ’ s governing board gave more than 50 speeches, and as many as 150 interviews and television appearances. in addition, during the introduction of the euro, a documentary maker from the dutch broadcasting company vpro | shocks to which others are responding are similar to those with which the mpc must contend. to my mind, there are some important differences in this regard : first, cost pressures are stronger in the us. american unit costs have increased by 3 % in the past year and are growing above historical averages, while unit costs in the uk are currently rising by around half that rate or at a speed notably below that consistent with the inflation target. 4 second, the uk economy is twice as open as the us and is therefore more exposed to global weakness, dragging on exports. 5 third, this also means that pass - through of weak global inflation, compounded by exchange rate appreciation, is likely to exert a greater and more persistent drag on uk inflation. partly as a result, after adjusting for one - off factors, core inflation is firmer in the us than the uk. fourth, the stance of fiscal policy differs markedly. the uk is undergoing the largest fiscal consolidation in the oecd, with the structural deficit projected to decline by around 1 percentage point a year on average over the next four years, having fallen only 1 / 3 percentage point on average over the past three. in contrast, us fiscal policy is expected to loosen notably over next three years. finally, the bank of england ’ s control over macroprudential policy reduces the need to use monetary policy to address financial stability considerations. recall that, despite an expansion that started two years before our own, the fed has only raised rates to our lofty level of ½ %. this last point is not facetious. as my mpc colleague jan vlieghe argued in a speech yesterday, a variety of structural factors have likely depressed the so called equilibrium interest rate, or the rate consistent with the economy operating at full employment and inflation at target. 6 bank staff have estimated many of these drivers. in my long - held view, rate rises, when they come, are likely to proceed at a gradual pace and to a limited degree for some time. most economics is at the margin, and the tightening of monetary policy – once warranted – is likely to be marginal for some time. given all of that, what are the prospects for a rate rise in the uk? last summer i said that the decision as to when to start raising bank rate would likely come into sharper relief around the turn of this year. well the year has turned, and, in my view, the decision proved straightforward : now is not yet the | 0 |
and when the adjustment process threatens the fulfilment of our mandate. we should preserve the virtues of constrained discretion : 6 a delicate and fragile blend of opposing attributes of monetary policy - making, which central banks acquired in the form of mandates in the 1990s, and which has served us well since then on our long journey back from the inflation years. let ’ s not forget that – since the early 1990s when the industrial world eradicated inflation – the emphasis in the “ constrained discretion ” oxymoron has always been on constrained. in the early 1990s rules won a long battle over discretion. and rules meant a numerical definition of the inflation objective and a flexible but certain horizon for accomplishing the objective. pushing on a string when the transmission of monetary policy stimulus is impeded by the countervailing forces of deleveraging can be counterproductive. at the same time, accepting low or even negative inflation rates in such a situation may render the balance sheet adjustment more painful and drawn - out. and it may destabilise inflation expectations. a protracted period of too low inflation, which is typical for episodes of balance sheet repair, might lead to a de - anchoring of inflation expectations, magnifying the risks of a self - fulfilling decline in the general level of prices. 7 most of the building blocks monetary policy has put in place in its fruitful interactions between academic theory and central bank practice remain valid. let me highlight three key elements : first, central bank independence ; second, a clear price stability objective supported by a quantitative definition of price stability. we chose 2 percent as the upper limit of our numerical definition of price stability because above that level inflation starts becoming a conditioning factor in economic choices. it introduces distortions. and there is no reason for the term was first used in connection with monetary policy by bernanke and mishkin ( 1997 ). for an account of the historical debates on rules vs. discretion in monetary policy, see bernanke ( 2003 ). see fisher ( 1933 ). bis central bankers ’ speeches the pace at which the nominal scale of a fiat money system drifts over time to be a distorting factor of real economic decisions. should this upper limit be made bigger in steady state because that higher level would insure against major macroeconomic crises? i don ’ t think so. maintaining a high tax almost all the time just for the pleasure of cutting it in a rare occurrence ( and even if that rare event is going to bring | ##oria or disillusion. ” he went on to draw some strategic conclusions, saying that : “ … we were given two eyes : one to watch money and credit aggregates and one to watch everything else. ultimately, these two policy perspectives are to be combined in a single strategy which subsumes them both in a unified – albeit complex – and robust framework for action. ” this was alien language in the homeland of the “ jackson hole consensus ”, which did not envisage a role for monetary analysis or financial disorder in monetary policy - making at all. it has become common parlance since, even there. at the same time, i have questions – many questions – on how best to integrate balance sheet considerations into policy - making in a way that does not undermine the best legacy of the pre - crisis era : our price stability mandate. let me elaborate. bis central bankers ’ speeches balance sheet restructuring previous crises have shown that prompt and decisive balance sheet repair after a period of excessive credit growth is the best way to restore sustainable growth. 1 post - recession growth may not even be significantly weaker than normal if the overleveraged financial sector aggressively cuts back excess credit in the recovery phase. 2 like balance sheet imbalances, structural impediments to growth and to an efficient allocation of resources are generally very relevant for the conduct of monetary policy and need to be tackled decisively. trying to stimulate growth through standard aggregate demand policies may be ineffective and, under certain circumstances, even counterproductive in balance sheet recessions, when structural breaks on potential growth predominate. 3 it is for this reason that the changes to euro area and eu governance introduced in response to the crisis are so important and need to be implemented with determination. the reforms undertaken in many stressed countries, especially those benefiting from official external assistance, should eventually lay the foundations for a robust recovery. most importantly, the steps being taken to create a banking union should help to address existing balance sheet problems. the initial focus is on banks ’ balance sheets. the comprehensive assessment of their balance sheets currently being done by the ecb is a critical element. thousands of supervisors are carefully scrutinising the books of the euro area ’ s largest banks. at the end of this process, the assets in banks ’ books should accurately reflect the economic realities. that means that the value of loans to over - indebted firms and households will be adjusted to reflect the actual debt servicing capacity of these debtors. incentives for | 1 |
also participating in the imf ’ s coordinated portfolio investment survey ( cpis ) and coordinated direct investment survey ( cdis ). we contribute to the bank for international settlements ( bis ) data exchange programme. apart from the standard balance sheet related data for banks, we have a unique database, the basic statistical return ( bsr ), that provides detailed granular unit level data on important parameters of financial intermediation by the banking sector. the balance of payments ( bop ) statistics are generally based on near - complete enumeration of transactions through banking channel, unlike many other countries. we have started disseminating data on trade in services on a monthly basis starting from june 2011. statistics on corporate sector is being collected and analysed by the reserve bank for well over six decades now. the reserve bank has a long tradition in conducting surveys. for example, the direct all - india rural credit survey, later rechristened as the all india debt and investment survey, was initiated by the reserve bank way back in 1951. the reserve bank conducted the first census of india ’ s foreign assets and liabilities in 1948. since then surveys have evolved as per the need for analysis. in the recent years, the reserve bank has introduced several forward - looking quarterly surveys such as the industrial outlook survey, order book and capacity utilisation survey, inflation expectations survey, professional forecasters survey and credit conditions survey. these surveys provide inputs to the reserve bank ’ s quarterly monetary policy assessments. the results of these surveys are released in public domain for further research and analysis. apart from generation and dissemination of statistics, statisticians are also posted across various departments of the bank. they provide support for different operational aspects such as payment system, risk analysis, currency management and portfolio management evaluation. furthermore, statisticians internally generate forecasts for key macroeconomic variables. they do their own research, and publish many of their research findings. let me now turn to some of the emerging challenges. first, we must recognise that timely and accurate representation is the core objective of a good statistical system. it provides foundation for good analysis and effective policy - making. in this context, the bank ’ s it - vision document emphasises the use of uniform reporting standards and automated data flow from the source system of banks to the reserve bank. this will ensure data integration, reduce reporting burden and improve overall efficiency of the statistical system. the department should, therefore, gear up towards on - line reporting of information. second, | earlier data were released periodically through the reserve bank ’ s website and various publications. consolidated time - series data were made available through the annual publication of handbook of statistics on the indian economy ( hbs ). these data are now being made available on - line on almost on a real time basis on the rbi website. it will be desirable to aim at a single point of data storage and dissemination. the department can set an example by taking steps to migrate the entire macro - financial database into rbi ’ s data warehouse ( dbie ). bis central bankers ’ speeches third, in addition to the traditional statistical issues facing emerging economies like india, the global financial crisis has drawn attention to data gaps in the financial sector which needs to be addressed. the g - 20 has particularly emphasised the importance of data for better identification of the build - up of risks in the financial sector and of financial interconnectedness the proposal is to scale up sdds by including financial stability indicators ( fsis ). while the reserve bank has started providing data under this sdds - plus initiative, this process needs to be expanded further. the demands on statisticians is going to increase for which we should be prepared. fourth, macroeconomic models are important tools developed and used by major central banks for understanding the dynamics of growth, inflation, money, interest rates and other related variables in the context of formulating monetary policy. there is no unique way of macro - economic modelling. policy makers, therefore, tend to rely on a suite of modes to make their own judgements about policy action. the department should develop an independent policy model, to help understand the transmission of the policy signals to the real and financial sector. this will facilitate assessment of the medium - term impact of various policy variables and how they are informed by changes in macro - conditions. many countries have core dynamic stochastic general equilibrium ( dsge ) models for this purpose, which takes into account the micro foundations behind the macroeconomic behaviour of different sectors of the economy. the underlying microeconomic considerations could be quite complex for a rapidly growing economy like ours. there is, therefore, a need to make further progress towards development of a dsge model for indian economy. fifth, asset prices have become important to the conduct of monetary policy and maintenance of financial stability. one of the major data gaps on indian economy relates to asset prices, particularly commercial real estate and house prices. though initial efforts have been made to construct house price index ( hpi ) for seven cities | 1 |
##s. while this is an issue which was already discussed before the crisis, some argue it might have been exacerbated as a result of policy responses to the crisis. indeed, some of the policy responses have been sub - optimal from a global vantage point. many countries have continued to accumulate large reserve holdings to limit currency appreciation. for instance, china ’ s reserve holdings now exceed usd 3 trillion ; those of russia usd 400 billion ; those of brazil, korea or taiwan usd 300 billion. others have adopted capital flow management measures, including higher reserve requirements and – sometimes – outright controls on capital inflows. some observers have claimed that “ currency wars ” might break out. this is why the efforts from the international community to better understand global liquidity developments, as well as how to deal with global liquidity shortages, in particular during crises, by the g20, the imf and by the central banking community at the bank for international settlements in basel are valuable undertakings. the agreement by g20 leaders on actions and principles that could help reaffirm the benefits from financial integration and increase resilience against volatile capital flows is commendable. this agreement provides coherent conclusions to guide countries in the management of capital flows. the first line of defence against excessive capital flow volatility should comprise sound domestic macroeconomic policy frameworks and institutions as well as appropriate exchange rate regimes, financial regulation and supervision. capital control measures should be temporary in nature and only used as a last resort, given that they may delay the necessary domestic policy implementation and distort the distribution of capital flows across countries. * ladies and gentlemen, when delegates to the congress of vienna first met in 1814, the new world that was about to emerge and which would last for almost another century was only barely discernible. the outbreak of the global economic and financial crisis is putting us in a similar situation today. throughout the world, citizens call upon policy - makers to act decisively to resolve the crisis and help the global economy turn a corner. all relevant authorities have to take their responsibilities. to ensure that this crisis can be fully addressed will require an ambitious strengthening of economic governance. significant reforms in this direction are taking place in europe. the eu council and european parliament have agreed on a legislative package that significantly limits the discretion of national authorities. this includes a framework for monitoring a wide range of macroeconomic imbalances, also backed by sanctions. countries are expected to anchor fiscal prudence in national rules. all these | of the adjustment in external imbalances since the crisis has been cyclical, not structural according to the imf, the us current account deficit is projected to reach about 3 % of gdp in 2011, against surpluses of roughly 5 % and 9 % of gdp for china and oil exporters respectively. they are a source of tensions that could ultimately lead to protectionist pressures. however, the euro area as a whole has a balanced current account position. global fiscal imbalances remain significant, with a marked degree of heterogeneity between advanced and emerging economies. consolidation efforts required to bring public finances to a sustainable path are a key priority for advanced countries. efforts made to adjust these imbalances remain clearly insufficient. this raises the risk, which i referred to earlier, of a disorderly unwinding down the line, with significant potential fallouts for global financial markets and the global economy. at their cannes summit on 3 – 4 november 2011, g20 leaders agreed on an action plan to lay the foundations for strong, sustainable and balanced global growth in the medium - term. this is welcomed. all g20 members made commitments, but they are sometimes imprecise. it is often unclear as to how these commitments can genuinely contribute to a rebalancing of global demand patterns. for instance, only a few of the g20 members explicitly reaffirmed their support to the solemn pledge by their leaders in toronto last year to halve fiscal deficits by 2013 and stabilise public debt ratios by 2016. large emerging markets have announced that they would enhance the flexibility of their exchange rate regime, but without indicating a specific time - frame when this would occur. europe is doing its share in committing to accelerate and further deepen the single market. more decisive policy measures to rebalance global demand patterns are still required, in particular to raise savings in deficit economies and increase domestic demand in surplus economies. all systemic economies could benefit from effective multilateral surveillance along with their international responsibilities. now is not the time to lose sight of the need to correct imbalances globally although our attention is – for good reasons – more focused on immediate challenges! * the second and related key global policy challenge relates to how best to address global liquidity conditions and volatile capital flow constellations. ample global liquidity conditions bis central bankers ’ speeches have the potential to push volatile capital flows into emerging economies. if they respond by accumulating reserves to cap exchange rate appreciation, this widens global imbalance | 1 |
is the heightened pressure on firms and their workers in industries that compete internationally. domestic deregulation has had similar effects on the intensity of competitive forces in some industries. in addition, the continued decline in the share of the private workforce in labor unions has likely made wages more responsive to market forces - - indeed, the converse is also true in that the new competitive realities have in many instances undermined union strength. in any event, although i do not doubt that all these explanations are relevant, i would be surprised if any were dominant. another potential explanation is that persistently low price inflation is constraining wage increases. historical evidence clearly indicates that price inflation is a factor in wage change. but, if the causation is running mainly from product markets, where prices are set, to labor markets, where wages are set, then we would expect to see some squeeze on profit margins. clearly, this is not the case at present. rather, owing in part to the subdued behavior of wages, profits and rates of return on capital have risen to high levels. the high rates of return, in turn, seem to be inducing competitive pressures that limit the ability of firms to raise prices relative to their underlying cost structures because they fear that competitors anxious to capture a greater share of the market will not follow suit. thus, the evidence seems more consistent with the view that wage restraint is damping price increases than the other way around. if the job insecurity paradigm that i have outlined is the key, then we must recognize that, as i indicated in last february ’ s humphrey - hawkins testimony, “ suppressed wage cost growth as a consequence of job insecurity can be carried only so far. at some point in the future, the trade - off of subdued wage growth for job security has to come to an end. ” in short, this implies that even if the level of real wages remains permanently lower as a result of the experience of the past few years, the relatively modest wage gains we ’ ve seen are a transitional rather than a lasting phenomenon. the unknown is how long the transition will last. indeed, the recent pickup in some measures of wages suggests that the transition may already be running its course. if so, the important question from a monetary policy point of view is whether prospective labor market conditions will be consistent with the maintenance of satisfactory price performance. i would like to conclude with a brief discussion of some issues of measurement and economic data that may be useful as you begin your delibe | rates is consistent with changes in individual circumstances. the denials could also indicate that business difficulties have a significant influence on the ability of business owners to borrow for personal reasons. indeed, business owners have much more difficulty documenting their income than do wage - earners. the combination of weaker earnings, lower net worth, and renewed focus on income verification could have made it particularly difficult for business owners who lost wealth to refinance mortgages or purchase homes. business owners whose wealth rose were also more likely to have applied for business credit, but the rate of denial and for those who feared denial was nearly the same for business owners who gained wealth as for those who lost wealth ( figure 13 ). in this case, the pattern of denial does not match the variations in individual circumstances. unfortunately, we don ’ t have any history for this series so it is impossible to tell how it has changed over time. but the striking similarity in credit approval rates for business loan requests by business owners who gained and those who lost wealth would seem to support anecdotal reports at the time – that business credit was hard to obtain even for good borrowers. conclusion the results i have discussed today are among the first details to emerge from our panel study of changes in family finances over the financial crisis. the data show significant heterogeneity in the wealth changes that families experienced during the period of the financial crisis between 2007 and 2009. any consequent macroeconomic wealth effect depends on the distribution of gains and losses and the propensities of the families that experienced those changes. research remains to be done on how all those factors come together, but the data offer at least a suggestion of what may emerge. among the preretirement age group, those who gained and those who lost wealth during the financial crisis generally appear to act as if they had lost wealth – in that there are signs of delayed retirement and greater desire to save and bis central bankers ’ speeches to avoid risk. in addition, there appears to be an asymmetric reaction to wealth shocks that could be a factor in the slow recovery of spending. business owners had much wider changes in wealth than those reported for the general population and the changes were related to the conditions of the industries in which the businesses operated. business owners who had increases in wealth were more likely to apply for personal and business credit. although business owners who experienced decreases in wealth were more likely to have been denied or to fear denial of personal credit, actual denial rates for business credit | 0.5 |
research and official statistics. some of the data we manage are confidential and / or sensitive. the protection of the integrity and confidentiality of data is therefore a key concern. access to data is suitably restricted within the bank, and data management follows clear rules on procedures and responsibility. central banks must also be ready to cope with the increasing demand by the public for access to granular data. as a data producer, the bank of italy has always strived to make its statistics available to the widest possible audience. we already share some data with researchers and other institutions, with appropriate and adequate protection of confidentiality, of course. within the eurosystem ’ s household finance and consumption survey ( hfcs ), italian data are available on request alongside those of other euro - area countries. for firms ’ data, which are much more difficult to anonymize, the bank has developed a remote access system called bird ( bank of italy remote access to data ), which enables users to perform their analyses online, thereby preserving data confidentiality. particularly confidential data might require on - site access. the bank of italy has started to design a research data centre which will have a suitable taxonomy of confidentiality areas. cfr. comment by l. f. signorini to the paper “ ways to improve the use of banking statistics by policy - makers : what is reasonable, what is feasible and what the ssm and the banking union are calling for ” by fernando restoy. seventh ecb conference on statistics ‘ towards the banking union – opportunities and challenges for statistics ’ ecb ( 2015 ). other european countries have already started to work on this ( the centre d ’ acces securise aux donnees in france, the administrative data research network in the uk and the deutsche bundesbank research data and service centre ). in addition, we need to find solutions to allow us to link microdata belonging to different institutions without compromising individual confidentiality. the explosion of granular data provides many new research opportunities. for all the issues i have highlighted, big data have big potential. in the past two days we have just scratched the surface. more research is surely needed. i wish to thank you all very much for your participation. special thanks to all the speakers, discussants, chairs and participants for making the sessions lively and thoughtprovoking. finally, i would also like to take this opportunity to thank all those involved in preparing this event. designed by the printing and | firm, to the benefit of shareholders. this theory advocates a clear distinction between this narrow mandate of the firm and the broader objectives of society ; the latter, grounded on ethical and social principles, should be pursued by the government. a debate on this theory has emerged in recent years, as the growing concern on esg issues by the public have prompted many leading firms to embrace a broader set of targets than profitability and adopt sustainable policies. for instance, according to c. mayer ( 2018 ), “ prosperity : better business makes the greater good ”, oxford university press, managers should balance a mix of objectives and address the related conflicts of interest by allocating the value created by the firms among shareholders and the other stakeholders, to the benefit of society in the long term. hart and zingales ( 2017 ), “ companies should maximize shareholder welfare not market value ”, journal of law, finance, and accounting no. 2 support the thesis which gives the title to their work, if this is consistent with the firm ’ s shareholder preferences. broccardo, hart, zingales ( 2020 ), “ exit vs voice ”, european corporate governance institute – finance working paper no. 694, argue that if the majority of shareholders is socially responsible, “ voice ” achieves the socially desirable outcome in companies that generate externalities ; whereas in the case they are the minority “ exit ” ( divestment and boycott ) is a more effective strategy. however, the latter policy is not socially optimal. the so - called greenium. see for instance meyer and henide ( 2021 ), “ searching for ‘ greenium ’ ”, ihs markit ; liberati and marinelli ( 2021 ), “ everything you always wanted to know about green bonds ( but were afraid to ask ) ”, banca d ’ italia, occasional papers, n. 654, bank of italy. gfanz ( 2022 ), “ financial institution net - zero transition plans ”, version for public consultation, june, p. 23. this recommendation does not appear in the final version of the report, released last november. this line of reasoning has potentially wide implications for financial intermediaries ’ behavior and for the design of their transition plans. first, it seems doubtful that net zero pledges can be credibly announced without mentioning the potential trade - off with returns. to my knowledge, to date few if any intermediaries have been explicit about this potential trade - off. one possible | 0.5 |
developed countries. therefore, today i am pleased to present a banking sector with steady growth in loans and deposits, with good quality of loan portfolio, high level of capitalization and strong liquidity position. kosovo's banking sector has also made progress in enhancing the efficiency of financial intermediation, prompting loan interest rates to decline significantly in recent years. faqe 4 nga 7 similar progress has been made in other components of the kosovo financial system. the insurance sector has grown steadily and has shown sufficient ability to cover liabilities towards insurance policy holders. the pension sector has also shown satisfactory performance, where the value of contributions continues to increase, while careful asset management has enabled their value to increase overall. another important segment of our financial market continues to be microfinance institutions, which in recent years have accelerated the pace of credit growth, thus increasing their importance as an alternative source of credit financing in the kosovo economy. * * * the cbk has also played an important role in the establishment and development of other institutions important for kosovo's financial stability and economic development such as the deposit insurance fund of kosovo and the kosovo credit guarantee fund. * * * faqe 5 nga 7 i consider that all this that i have presented so far, presents a good basis for concluding that the central bank of the republic of kosovo has passed twenty successful years, during which it managed to transform into a modern institution and to develop a financial system capable of contributing to the prosperity and stability of the country's economy. however, we are aware that we have many more challenges ahead - challenges that other banks in the region are facing and beyond. business models and strategies of financial institutions are already changing with great dynamics, which requires an equally great dynamic for developing regulatory and supervisory capacities for financial institutions. regulatory reforms should enable the renewal or further development of financial intermediation, but at the same time must allow sufficient supervision and control over these institutions and activities they perform. however, i have full confidence that our capacities and excellent cooperation with other international central banks and financial institutions serve as a strong guarantee that the cbk will continue to be successful in the future against the challenges ahead. * * * faqe 6 nga 7 the central bank of the republic of kosovo has also changed its logo on this anniversary. the new cbk logo visually reflects its activities, values and attributes for better representation. the visual elements of the new logo give the cbk a unique identity. within itself, the new symbol has | dear teachers, dear students, dear guests, welcome to the central bank of the republic of kosovo. i am very honored to mark world savings day with you today. this day is a very important day for the financial system and now its marking has become a tradition in the cbk. this day, which was first marked in 1924 at the international savings banks congress in milan, italy, is now celebrated worldwide by organizing various activities aimed at cultivating culture and developing savings habits. we begin to learn the habits and culture of saving from childhood. the most common phrase we hear from an early age is a saved euro is an earned euro. this phrase best demonstrates the importance of savings. savings help us achieve our dreams and goals. on the importance of savings, i would like to quote one of the most successful investors, warren buffet, who said “ do not save what is left after spending ; instead spend what is left after saving ”. cbk, within the framework of its financial education program, organized a competition for kosovo elementary school students in grades 6 - 9 to participate in the competition for the selection of the best essay on savings and finance under the motto “ savings for a better future ”. this competition was very creative, had a lot of good essays and the commission had a lot of hard work in selecting the winner. i can say that there were no losers in this competition. all the essays were very good and i have the honor of today awarding the most distinguished awards. by participating in this competition you have honored the cbk and i promise that we will be with you in the future as well by organizing other activities. i hope this competition has helped you to better understand the importance of finances and savings and i believe that some of you are already dreaming of this profession and you may be part of the cbk or other financial institutions in the future. dear students, i wish you great results in school, which i believe will be very easy with the help of your excellent teachers | 0.5 |
benjamin e diokno : welcome remarks - asia school of business online course for the financial stability coordination council welcome remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), for the asia school of business online course for the financial stability coordination council, 18 july 2021. * * * good morning to everyone and welcome to the first course structured by the asia school of business for the financial stability coordination council. i ’ m very pleased to welcome a dear friend of the bsp, former negara malaysia governor dr. zeti akhtar azis who now co - chairs the asb. let me also extend my warm greetings to mr. charles fine, president and dean of asb, dr. triw it ariyathugun, assistant professor of economics, dr. hans genberg, professor of economics and senior director of banking and finance program, and of course to my old friend who needs no introduction, dr. eli remolona, the director of central banking at asb. the financial stability coordination council has been actively looking at secondary market asset prices for signs about the market and their potential systemic risk concern. we have had active discussions about our yield curve and its incentive structure as market condition evolve, both in the philippines and in established offshore markets. as part of our intent to better survey risk behaviors, we have been exploring various opportunities for learning, to enhance the capacity of our fscc colleagues, and to address our mandate. the bar of accountability on that mandate has been raised, with the president signing executive order no. 144. with the legal authority to now issue guidelines and regulations related to managing systemic risks, it is important more than ever for the fscc to see what market players see, and for us to influence risk behaviors in ways that develop markets and build resilience. this is why this course is important, particularly at this critical time. we hear of the divergent paths of recovery from covid - 19 and how movements in advanced economies are affecting emerging economies and developing economies. no matter how you work on the analysis, this divergence should be evident in market prices, alongside portfolio flows and reflows. the global economy is patently interconnected through the pipeline of bond and credit markets. while economists are comfortable with comparative advantage on the trade side, risk behaviors in financial markets are much more fluid, and respond more quickly to changing incentives. | the philippine banks built in compliance with the bsp regulatory requirements and years of favorable banking conditions, proved to be useful. the banks ’ capital adequacy ratio of 16. 3 percent and 16. 7 percent on solo and consolidated bases, respectively, are well above the bsp ’ s and international standards. meanwhile, the rise in bad debt remains manageable. non - performing loans ( npl ) and nonperforming assets ( npa ) ratios were modest at 3. 1 percent and 2. 1 percent, respectively, as of end - 2020. these numbers compared well with the double - digit levels recorded during the asian financial crisis. given these indicators, the philippine economy has the essential elements to post a strong recovery this year. the robust structural characteristics and sustained policy discipline are the most effective tickets out of this pandemic. rest assured that the bsp stands ready to extend the same set of policy measures implemented in 2020 to support the economy, as needed. as this crisis is unprecedented, the measures we have implemented in 2020 were just as unprecedented. we are one with the government in our commitment to push forward measures to soften the impact of the covid - 19 pandemic on the economy and our fellow filipinos. as of january 12, 2021, the bsp ’ s policy and liquidity easing measures had injected close to 2 trillion pesos in liquidity into the financial system. this amount is equivalent to about 11 percent of the country ’ s 2020 nominal gdp level. moving forward, the bsp ’ s actions and policy thrusts will continue to be anchored on its core mandates of promoting price and financial stability. o n monetary policy : the bsp will remain vigilant over the current inflation dynamics and operating environment with a forward - looking perspective to ensure that the monetary policy stance continues to support economic recovery and address any risks to our price stability mandate. on the financial sector : the bsp will intensify its monitoring and surveillance over its supervised institutions to ensure that they remain responsive to emerging risks and to promote the continued soundness, stability, resilience, and inclusivity of the banking system, particularly through the pursuit of enhanced digitalization. third, on the external sector : the bsp will continue to adopt policies that will help strengthen the economy ’ s resilience to external shocks. these will include maintaining a market - determined exchange rate, sustain a comfortable level of reserves, and keep the country ’ s external debt manageable. | 0.5 |
human capital, which are essential to enhancing competitiveness, eliminating poverty and addressing the rising inequality in developing asia. thirdly, intra - regional trade has been an important source of growth after the global financial crisis as regional economies increased their domestic demand and reduced their reliance on exports to advanced economies. as the global economy continues to rebalance, the prospect of the region to sustain its growth would very much depend on its ability to hold up domestic demand through sustained productivity enhancement as mentioned above, and further trade integration within the region. while intra - regional trade has been growing fast, a further reduction in trade barriers should help promote deeper regional trade integration and facilitate more efficient resources allocation. a wider use of local currencies in trade settlement and financing would also help diversify sources of trade financing and reduce currency risk and transaction costs. lastly, regional economies need to deepen financial market reforms and promote greater financial integration within the region to better channel asia ’ s surplus savings to meet its own investment needs ; to support growing trade integration ; and to enhance the absorptive capacity of our financial markets to capital flows. further liberalisation of the financial sector and improving financial infrastructure such as establishing credit information sharing system and microfinance institutions should also help some regional economies to allocate credits more efficiently. over the years, adb has contributed to financial sector development in the region through its own programmes and through supporting regional initiatives such as the asian bond markets initiative under asean + 3, and we welcome the bank ’ s continued commitment in this regard going forward. it is noted that a number of the above structural reform areas have been identified as strategic priorities in the bank ’ s midterm review of strategy 2020. with its expertise, we believe adb has an important role to play in helping the region to tackle the challenges arising from the highly uncertain global environment, and embark on structural reforms to raise its long - term growth potential. we look forward to adb ’ s continued engagement with its members to provide support that will cater for their changing needs as the region continues to progress and transform. bis central bankers ’ speeches | / multilateral swap lines to mitigate systemic risk in the financial systems when the need arises. a sharp reversal of capital flows could deal a severe blow to low - income countries, as reduced private capital, exports and remittance could have a disproportionally large impact on their less diversified economic structure. adb should draw on the experience in the aftermath of the global financial crisis and stand ready to provide timely and flexible crisisrelated assistance to its needy members. while macroeconomic policies and prudential measures could help smooth cyclical economic fluctuations, in the longer term, credible structural reforms are needed to sustain the growth of the region and preserve investors ’ confidence. the vulnerabilities now faced by some regional economies are in part due to the overheated domestic demand in the past years amid strong capital inflows. however, they also reflect, to a considerable extent, supply - side constraints on potential output and limited capacity of the region ’ s financial markets. while the situation differs across economies in the region, there are a number of structural reform needs that are common to the region and in which the adb can play an active role. bis central bankers ’ speeches first, the supply - side constraints in a number of regional economies are linked to weak investments, in particularly infrastructure investments. many investors have cited that there is no lack of funds or interest in investing in asian infrastructure projects. the problem, however, is a lack of a pipeline of bankable projects, which in turn is due to fundamental issues such as uncertainties relating to the government ’ s commitment in supporting a specific sector ; lack of a credible ppp framework ; political force majeure ; and project governance. in this regard, the involvement of multilateral agencies such as adb would be very useful in that not only will it foster investors ’ confidence if the multilateral agencies put in their own financial resources, but it will also help build the governments ’ capacity in structuring projects, strengthening the ppp framework and improving project governance to make their infrastructure projects commercially viable. secondly, shortfall in educational inputs has been seen as one of the major constraints for some developing economies to enhance productivity and move up the value chain. it has also been a major reason for the remaining pockets of poverty in the region, including in countries where substantial economic progress has been made but a substantial proportion of the population is still living in poverty. we encourage adb to further strengthen its support for the educational sector and developing | 1 |
the recent softness in consumption suggests that this net wealth erosion has continued to weigh on household spending. that said, it is important to recognize that the extraction of equity from homes has been a significant support to consumption during a period when other asset prices were declining sharply. were it not for this phenomenon, economic activity would have been notably weaker in the wake of the decline in the value of household financial assets. in the business sector, there have been few signs of any appreciable vigor. uncertainty about the economic outlook and heightened geopolitical risks have made companies reluctant to expand their operations, hire workers, or buy new equipment. executives consistently report that in today ’ s intensely competitive global marketplace it is no longer feasible to raise prices in order to improve profitability. there are many alternatives for most products, and with technology driving down the cost of acquiring information, buyers today can ( and do ) easily shift to the low - price seller. in such a setting, firms must focus on the cost side of their operations if they are to generate greater returns for their shareholders. negotiations with their suppliers are aimed at reducing the costs of materials and services. some companies have also eschewed the traditional annual pay increment in favor of compensation packages for their rank - and - file workers that are linked to individual performance goals. and, most important, businesses have revamped their operations to achieve substantial reductions in costs. on a consolidated basis for the corporate sector as a whole, lowered costs are generally associated with increased output per hour. much of the recent reported improvements in cost control doubtless have reflected the paring of so - called " fat " in corporate operations - - fat that accumulated during the long expansion of the 1990s, when management focused attention primarily on the perceived profitability of expansion and less on the increments to profitability that derive from cost savings. managers, now refocused, are pressing hard to identify and eliminate those redundant or nonessential activities that accumulated in the boom years. with margins under pressure, businesses have also been reallocating their capital so as to use it more productively. moreover, for equipment with active secondary markets, such as computers and networking gear, productivity may also have been boosted by a reallocation to firms that could use the equipment more efficiently. for example, healthy firms reportedly have been buying equipment from failed dot - coms. businesses may also have managed to eke out increases in output per hour by employing their existing workforce more intensively | - - - ( 2018b ). “ safeguarding financial resilience through the cycle, ” speech delivered at the global finance forum, washington, april 19, https : / / www. federalreserve. gov / newsevents / speech / brainard20180419a. htm. lopez - salido, david, jeremy c. stein, and egon zakrajsek ( 2017 ). “ credit - market sentiment and the business cycle, ” quarterly journal of economics, vol. 132 ( august ), pp. 1373 - 1426. - 16 office of the comptroller of the currency, national risk committee ( 2018 ). semiannual risk perspective. washington : occ, fall, https : / / www. occ. gov / publications / publications - by - type / other - publicationsreports / semiannual - risk - perspective / pub - semiannual - risk - perspective - fall2018. pdf. vermilyea, todd ( 2018 ). “ perspectives on leveraged lending, ” speech delivered at the loan syndications and trading association 23rd annual conference, new york, october 24, https : / / cdn. ymaws. com / www. iib. org / resource / resmgr / weekly _ bulletin / 1024fedspeech _ leveraged _ len. pdf. assessing financial stability over the cycle lael brainard federal reserve board december 7, 2018 | 0.5 |
foster initiative and encourage investment. social dialogue can, and should play a crucial role in promoting acceptance of the policies necessary to bring about this change. the attainment of greater efficiency in the public sector is a key objective because it provides vital support services to the productive sectors of the economy. it must, therefore, become better geared to ensure that the intentions of policy - makers are implemented rapidly and effectively. determined efforts must be made to streamline bureaucratic procedures, eliminate outdated regulations and generally reduce the cost of engaging in any economic activity. the better regulation unit in the office of the prime minister must meet the expectations its creation has raised. failure to do so risks compromising all the efforts being undertaken at both the macro and microeconomic levels to create a modern, dynamic economy. at the national level, moreover, we need to understand that the simultaneous pursuit of economic growth and a high degree of social protection can only be achieved by making our product and labour markets more flexible ; by investing more in people, refining their skills and helping them into work, while introducing an obligation to take up jobs ; and by giving more importance to developing our scientific and technological base. we do not need to look far to see how this can be done. faced with high labour costs in the late 1990s, german companies started restructuring and downsizing. the government meanwhile introduced social security reforms aimed at making the welfare state less expensive, as well as labour market reforms that created incentives for the jobless to work. an awareness developed that the solution to chronic deficits and unemployment could no longer be to cut public investments. as a result, germany ’ s unit labour costs have fallen by 12 per cent since 1999 against those of france. the payoff was significant : the volume of german exports rose by 47 per cent over the same period, compared with 25 per cent in france. the french were not unaware that they, too, had a competitiveness problem. a commission of independent experts led by the former managing director of the imf, michel camdessus, was set up in 2003. reporting earlier this year, the experts concluded that without a change of direction, decline was a real threat for france. they identified two obstacles to growth : first, not enough people worked, and those who did failed to work long enough ; second, the heavy state had become a costly drag on the economy. our own country faces a similar predicament. malta ’ s labour participation rate is among the lowest in the eu at 58 per cent | single market in financial services should contribute to the emergence of a healthier financial system in the accession countries. now it could of course also be argued that the extension of the “ single passport ” to most aspects of the provision of financial services foreseen by the financial services action plan could well expose the accession countries to new risks, particularly those emanating from within the eu itself, with which caviglia, g., krause, g & c., thimann. 2002. key features of the financial sectors in eu accession countries, in financial sectors in eu accession countries. ed., c. thimann c. frankfurt : european central bank. claessens, s., demirguc - kunt, a & h. huizinga. 1998 ( rev 2000 ). how does foreign entry affect the domestic banking market? world bank working paper no. 1918. washington : world bank. these countries are already closely integrated. indeed, the ecb has itself recently stated that the integration of financial markets in the region could increase the chances of systemic disturbances affecting more than one member state. in this regard, dr buch ’ s paper on the implications for financial stability of foreign bank entry should help to place the discussion in an empirical context. another important aspect of financial market integration relates to regulation and supervision. as the process intensifies, the distinction between different types of financial institutions and markets will become increasingly blurred. in such a scenario, it will be even more important for all institutions with financial stability responsibilities - be it the central bank, supervisory authority or other government agency - to co - ordinate their efforts in the area of system oversight and to share any information which could be relevant to the proper fulfilment of their respective functions. indeed, whereas until recently the prevailing concern related to the choice of institutional arrangement for the supervision of the financial sector, it is now sometimes argued that it is not the institutional framework which matters most, but rather the existence of adequate mechanisms guaranteeing the exchange of information and policy co - ordination between the entities responsible for overseeing systemic stability and those that monitor the health of individual financial institutions. beyond that, it is claimed, any institutional set - up can work. likewise, any one can fail. while this conclusion might be valid from a national point of view, it does little to address the question of whether information exchange and policy co - ordination relating to financial sector developments affecting the eu as a whole would be | 0.5 |
mr. meyer examines the role for structural macroeconomic models in the monetary policy process remarks by mr. laurence h. meyer, a member of the board of governors of the us federal reserve system, at the aea panel on monetary and fiscal policy held in new orleans on 5 / 1 / 97. the role for structural macroeconomic models i am in the middle of my third interesting and active encounter with the development and / or use of macroeconometric models for forecasting and policy analysis. my journey began at mit as a research assistant to professors franco modigiliani and albert ando during the period of development of the mps model, continued at laurence h. meyer & associates with the development of the washington university macro model under the direction of my partner, joel prakken, and the use of that model for both forecasting and policy analysis, and now has taken me to the board of governors where macro models have long played an important role in forecasting and policy analysis and the mps model has recently been replaced by the frb - us model. i bring to this panel a perspective shaped by both my earlier experience and my new responsibilities. i will focus my presentation on the role of structural macro models in the monetary policy process, compare the use of models at the board with their use at laurence h. meyer & associates, and discuss how the recently introduced innovations in the federal reserve model might further advance the usefulness of models in the monetary policy process. i. structural models and monetary policy analysis i want to focus on three contributions of models to the monetary policy process : as an input to the forecast process ; as a vehicle for analyzing alternative scenarios ; and a vehicle for developing a strategy for implementing monetary policy that disciplines the juggling of multiple objectives and ensures a bridge from short - run policy to long - run objectives. 1. the forecast context for monetary policy decisions because monetary policy has the ability to adjust quickly to changing economic conditions and because lags in the response to monetary policy make it important that monetary policy be forward - looking, monetary policy is very much influenced both by incoming data and by forecasts of spending and price developments. forecasts are central to monetary policy setting. models make a valuable contribution to forecasting. therefore, models can make an important contribution to the setting of monetary policy. models capture historical regularities, identify key assumptions that must be made to condition the forecast, embody estimates of the effects of past and future policy actions on the economy, and provide a | and why we maintained a historically low federal funds rate so long after the trough. just how aggressive was this response, relative to history? in general, comparing monetary policy responses across cyclical episodes is difficult. the natural indicator to look at, the federal funds rate, is measured in nominal terms, so that large movements in the rate of inflation can mask the underlying stance of policy. moreover, an easing of a certain size might be considered relatively more or less aggressive depending on the magnitude and nature of the shocks hitting the economy. still, in the current cycle, the fed began lowering the federal funds rate two months before the official cyclical peak ( as identified by the national bureau of economic research ) and lowered rates 450 basis points over the first year of the easing and 100 basis points over the second year. although this total decline of 550 basis points was not the largest on record, it was large and quite early. and given the relatively small decline in output in 2001, one can easily argue that this monetary policy response was unusually aggressive. similarities with the recovery in the early 1990s in the period since world war ii, several of the earlier recoveries had one or two of these features in common with the most recent period. for example, the rebound in residential investment fell short of the typical burst in 1961, the unemployment rate remained stubbornly high in 1971, and inventory investment remained low in 1975. but no previous recovery looked quite like this one. however, the recovery following the 1990 recession stands out as similar to the current episode in several important respects. first, employment rose at a glacial pace for a year and a half after the trough in early 1991, and the unemployment rate continued to rise. second, the business sector continued for a full year to reduce spending on fixed investment and to refrain from accumulating significant amounts of inventories. third, household spending did not accelerate rapidly after the 1990 recession. instead, both consumption expenditures and residential investment posted among the most - subdued recoveries in the past fifty years. one should note, however, that household expenditures did fall markedly during the 1990 recession, unlike the most recent episode. figuring out why these two recoveries were atypically hesitant and jobless is not an easy task. let me consider several possible explanations. one explanation for the similarity of the two most recent recoveries may be that both of these lukewarm recoveries followed shallow recessions. the shallowness of the downturns is consistent with the general moderation of the vol | 0.5 |
app. by directly lowering the marketbased financing costs of non - financial corporations, it boosts the pass - through of our monetary policy. under the cspp, the eurosystem has since june 2016 purchased bonds issued by a wide range of non - bank corporations established in the euro area, which include large, as well as some smaller, companies. so far, close to €110 billion of corporate bonds from around 200 issuers, in 20 countries, across all sectors, have been purchased. this information is available on our website and in our publications, and is updated regularly. we continue to analyse possibilities for sharing more information, to the extent that it can enhance transparency without undermining the effectiveness of monetary policy. thanks to our corporate bond purchases, firms in the euro area have witnessed significant improvements in their financing conditions when issuing bonds. but these improvements in financing conditions stemming from the cspp are not confined to the companies whose bonds are purchased or to the corporate bond market : they are evident across firms and other market segments. 2 / 4 bis central bankers'speeches for example, the yield spreads of high - rated corporate bonds that are not eligible for purchase – namely those issued by financial corporations – have fallen by as much as those of eligible bonds issued by non - financial corporations ( almost 70 basis points, from 1. 25 % in march 2016 to 0. 57 % ) since the cspp announcement. spreads of non - investment grade corporate bonds, which are not eligible for the cspp, have also declined by 262 basis points, from 5. 59 % in march 2016 to 2. 97 %. 1 for asset purchases to boost activity and inflation, however, these improvements in financial markets need to be passed through into credit conditions for the real economy. in this regard, we have seen very favourable spillovers into credit conditions for small and medium - sized enterprises. as more corporations seek market - based financing, given the attractive funding conditions prevailing in the capital markets, banks are left with greater capacity to provide loans to smaller companies, which are more constrained in terms of access to funding sources. hence, bank lending rates on very small loans to non - financial corporations have declined by around 50 basis points since the cspp announcement. looking at our latest survey on the access to finance of enterprises, smaller companies are indeed reporting improved financing conditions and better access to finance. the cspp, therefore, has strengthened the pass - through of our asset purchases to the financing conditions of the real | - standard policy measures have been very effective in supporting the financing conditions of companies and households throughout the euro area should not make us forget the situation we witnessed at the peak of the crisis. for example, institutional weaknesses, structural fragilities and excessive risk - taking contributed to a negative feedback loop between sovereigns and banks in some countries, which significantly impaired monetary policy transmission. the resultant contraction in the euro area economy threatened price stability, our primary objective. overcoming this vicious circle required considerable effort. the pattern is now running in reverse, with positive spillovers from all countries. they all have benefited from our measures supporting growth across all of the euro area and thus laying the ground for a sustained return of inflation to levels in line with our aim. but while a cyclical adjustment has been taking place, there are still structural issues which impede sustainable economic convergence. in the years to come, a higher degree of sustained convergence and strengthened resilience will be necessary in order to achieve a better - functioning economic and monetary union. this requires, on the one hand, policy actions by national governments aimed at unlocking the productive potential of our economies. on the other hand, further decisive steps are needed to make economic and monetary union ’ s economic governance truly fit for purpose. thank you for your attention. i am now at your disposal for questions. 1 spreads over the corresponding aaa - rated euro area average yield curve. 2 article 12. 1 of the statute of the european system of central banks and of the european central bank. 3 article 14. 3 of the statute. 4 / 4 bis central bankers'speeches | 1 |
into 2007. 2. if one means by monetary policy the instrument of short - term interest rates, then i agree that monetary policy is not well - suited to deal with asset bubbles. but this suggests that it might be better for central bankers to examine the efficacy of other instruments in their toolbox, rather than simply ignoring the development of asset bubbles. 3. if existing tools are judged inadequate, then central banks should work on developing additional policy instruments. let ’ s take the housing bubble as an example. housing prices rose far faster than income. as a result, underwriting standards deteriorated. if regulators had forced mortgage originators to tighten up their standards or had forced the originators and securities issuers to keep “ skin in the game ”, i think the housing bubble might not have been so big. i think that this crisis has demonstrated that the cost of waiting to clean up asset bubbles after they burst can be very high. that suggests we should explore how to respond earlier. harkening back to my earlier themes, i think we can respond in a number of ways : • first, we can do a better job understanding interconnectedness. this means changing how we oversee and supervise financial intermediaries. • second, we can change the system so that it is more self - dampening. • third, we can improve incentives. • fourth, we can increase transparency. • fifth, we can develop additional policy instruments. for example, we might give a systemic risk regulator the authority to establish overall leverage limits or collateral and collateral haircut requirements across the system. this would give the financial authorities the ability to limit leverage and more directly influence risk premia and this might prove useful in limiting the size of future asset bubbles. | complete. the news at the end of the day is good : it turns out that the alert was a false positive. but, the organization lost half a day of productive activity. in a simple world, controls detect problems immediately, diagnose with perfect accuracy, and result in corrective actions that are instantly and fully effective. in the real world, detection takes time, diagnosis is not always accurate, solutions take time to implement, and they don ’ t always work. that said, we must make decisions — including ones about whether and how to execute controls — based on the information available at the time. control design and execution take place in a world in which there is uncertainty about whether 3 / 5 bis central bankers'speeches there is a problem, what the problem is, what to do about it, when to do something, and what the effects of what we do will be. we can make better decisions when we understand and manage that uncertainty. there is also uncertainty about threats. we will never be able to envision the characteristics of all future causes of disruption. even when we plan effectively, we will be surprised again. and, like any other system, the control system will exhibit performance variability. for these reasons, we can ’ t rely solely on prevention. resilience requires the ability to withstand and recover when threats make it through preventive barriers, so a strong control system must incorporate preventive, detective, and corrective controls. perhaps because we are overoptimistic about prevention, detective and corrective controls sometimes get second - class billing. for many threats, time is not on our side ; the impact grows as the detection time increases. that ’ s the case with “ dwell time ” for cyber breaches, which is the amount of time attackers are on your network before you detect them. 9 it ’ s important to decide how long you are willing to wait to find out that you have a problem, and then use that as a requirement to design detective controls. underinvesting in corrective controls is problematic too. for example, how would you feel after a ransomware attack, if you find out that your backed - up data is intact but it will take months and millions of dollars to restore? or, if your first corrective action is the wrong solution and makes the problem worse? it takes time and resources to develop the tools, procedures, and skills to accurately diagnose causes, contain the immediate threat, and implement a long - term | 0.5 |
banking and financial system. a strong and healthy financial system is critical for the growth and development of any country. throughout the long history of financial markets, there have been a number of banking and financial crises that have severely disrupted economies. there is no reason for us to believe that there will be an end to these disruptions in an era of continuing technological change and innovation. what is therefore important is that we continually seek to prevent and mitigate future crises. this we can do with a blend of sharp analysis, keen judgment, practical experience and a rigorous understanding of the workings of financial markets in both normal and abnormal times. i believe that this is what defines effective banking supervision. it is also this rigorous understanding of the operations of financial markets that is of critical importance to the development of macroeconomic policy inclusive of monetary policy. mr. chairman, over two and a half centuries ago, in the 18th century to be exact, adam smith wrote of the free - market system as the “ invisible ” hand that guides the market to achieve the public good. while that concept has today still not lost its resonance, the increase in the complexity of economic and financial affairs and the potential for instability that this has fostered, has placed us in a new arena. an arena, whose sphere of influence is constantly changing and one that therefore requires close and integrated monitoring in order for us to understand and manage the risks that abound. the banking crises of the last quarter of a century and particularly those of the last ten years have had a damaging impact on economic activity and the repercussions have been devastating for a number of economies. there is therefore no room for countries in our region to be less than aggressive in ensuring a more careful, integrated and direct oversight of the financial system to complement at least, that “ invisible hand ” of which adam smith wrote. this is of course, what asba is trying to achieve. i use the word integrated because in some of our jurisdictions, jamaica for example, supervision is divided among institutions. in the jamaican case we have over the years reduced the number of supervisory authorities in the financial sector to two. this has achieved positive results in terms of the efficiency of supervision. it is my view that we could achieve an even greater level of effectiveness by going one step further with the establishment of a single supervisory authority for the financial system as a whole. i also believe that there are significant advantages to be derived from the integrated interplay between the roles of supervision and the effort to achieve financial | for release on delivery 12 : 15 p. m. edt september 10, 2024 the future of stress testing and the stress capital buffer framework remarks by michelle w. bowman member board of governors of the federal reserve system at executive council of the banking law section of the federal bar association washington, d. c. september 10, 2024 thank you for the invitation to join you. 1 given the recent conclusion of the board ’ s stress test, it seems timely to share my thoughts on the stress testing program. in the past, i have noted reservations about the stress testing process, so today i ’ d like to discuss in greater detail the benefits, challenges, and issues i would like to see resolved as the stress testing program evolves in the future. 2 earlier this summer, the board announced the results of the supervisory stress tests. at a high level, all 31 banks subject to the test remained above their minimum common equity tier one ( cet1 ) capital requirements from the hypothetical recession scenario. 3 under this scenario, banks would have absorbed projected hypothetical losses of nearly $ 685 billion, and would have experienced an aggregate cet1 capital decline of 2. 8 percent. 4 the hypothetical scenario included a 40 percent decline in commercial real estate prices, a substantial increase in office vacancies, a 36 percent decline in house prices, a spike in unemployment to a peak of 10 percent, and related declines in economic output. 5 this year also saw the introduction of “ exploratory ” stress scenarios, which included two different funding stress scenarios, and for a subset of banks, these remarks represent my own views and are not necessarily those of my colleagues on the federal reserve board or the federal open market committee. michelle w. bowman, “ large bank supervision and regulation ” ( remarks at the institute of international finance, washington, d. c., september 30, 2022 ), https : / / www. federalreserve. gov / newsevents / speech / files / bowman20220930a. pdf ; and statement by governor michelle w. bowman on the basel iii endgame proposal ( july 27, 2023 ) https : / / www. federalreserve. gov / newsevents / pressreleases / bowman - statement - 20230727. htm, ( “ today ’ s proposal is intended to improve risk capture, but in some circumstances, leaves in place and even introduces new regulatory redundancies, as with changes | 0 |
speeches euro area financial markets, this effect cannot just be assumed. to achieve a homogenous reduction of term premia across relevant interest rates, segmentation would have to be taken into consideration in our strategy. overall, the yardstick for the success of any targeted asset purchases would not be the size of our balance sheet, but the observable effect of our operations on term premia across markets and jurisdictions. or put differently, asset purchases in the euro area would not be about quantity, but about price. this is why i said that quantitative easing is a misnomer. however, whether reducing term premia would in turn be effective in reducing real interest rates for firms and households depends on complementary policies, in particular the continued repair of the banking sector. for example, the sizeable reduction of spreads we have witnessed since july 2012 has not in itself translated into higher credit volumes and lower bank lending rates. this is largely because the restructuring of the euro area banking sector remains ongoing. thus, an essential complement to any monetary policy strategy is a strict implementation of the ongoing comprehensive assessment of euro area banks and swift corrective action to bridge identified capital shortfalls. let me conclude. unconventional monetary policy tools are less unconventional than the word implies. they are unusual, because they respond to highly unusual circumstances. they imply risks that have to be carefully weighed and mitigated. but fundamentally, unconventional tools are only a means for central banks to continue doing what they have always done : managing aggregate demand, by influencing the level of real interest rates and other monetary transmission channels, to maintain price stability. to borrow from giuseppe tomasi di lampedusa, in these unusual times “ everything must change, so that everything stays the same ”. it is this that will determine both the appropriateness of using targeted asset purchases in our monetary policy operations, and the design of any such purchases. bis central bankers ’ speeches | that the levels of medium - and long - term real interest rates across jurisdictions and markets will always be relevant to the formulation of monetary policy. the difference between normal and abnormal times is therefore not what we are trying to achieve – it is how we strive to achieve it. in normal times, central banks affect this array of interest rates by steering the overnight interest rate and influencing expectations. we do the former through setting policy rates and the latter by communicating transparently our reaction function. this allows market participants to form reasonable assumptions about future short - term rates, which in turn allows our monetary impulses to be transmitted along the yield curve to longer - term interest rates. monetary policy - making becomes more complicated, however, when short - term nominal rates reach the effective lower bound. here, our ability to alter the monetary policy stance relies comparatively less on the level of the overnight rate, and comparatively more on influencing expectations, i. e. on the shape of the yield curve. this is why central banks have introduced forward guidance, which is enhanced communication on the expectations and bis central bankers ’ speeches reaction function of the central bank. it is essentially a natural extension of “ normal ” monetary policy. forward guidance influences the long - term interest rate by acting on both its determinants. it helps steer expectations about the level of future rates. and it lowers uncertainty about this level – that is, reduces the time - value of money or the term premium. yet, as an instrument it also has natural limitations. a monetary policy committee cannot credibly commit to keep interest rates low beyond its horizon of visibility. this is reflected in the specific wording of our forward guidance, in particular the fact that it is outcome - contingent. hence, should further monetary accommodation be needed, it is reasonable to consider other operations aimed at lowering the term premium. this is where targeted asset purchases enter the toolset of monetary policy. targeted asset purchases mean operations aimed primarily at impacting the level of the term premium across maturities and market segments. consistent with public statements made by members of the ecb governing council recently – in particular our president, mario draghi, and my colleague on the board of the ecb, peter praet – i would like to make a few qualifying remarks about the possible use of such purchases by the ecb. first, at its meeting last week the governing council confirmed our baseline scenario – that is, a prolonged period of low inflation followed by a gradual rise in inflation rates towards 2 % | 1 |
the notion of additionalities is not new, their link to how the development institutions are managed and governed remains generally weak. as a result, their important contributions are often not translated into tangible outcomes that are seen and felt by the stakeholders and the public at large. this leads me to my second point. traditionally the achievements of development institutions have always been measured predominantly by the volume of financing provided to the targeted sectors. there are several reasons for this. non - financial development additionalities are harder to quantify the cause and effects are also not always clear. as such, more effort and investments are required to collect the data for measuring socio - economic and development outcomes that are associated with such programmes. however, this must not hold back efforts for us to do better. they are a major channel for directing development, both at an international and domestic level. it is therefore, imperative that there is confidence in the effective and efficient use of funding aid to achieve the intended development goals. providing this confidence can be enhanced by creating a broader and robust mechanism to measure performance. performance measurement systems that accord greater quantification of development impacts will strengthen accountability frameworks, with many attendant benefits. it will further reinforce the government ’ s developmental agenda. it will provide a mechanism to address market failures. it will ensure that funds are allocated to the right sectors within the economy. effectively done, it 2 / 4 bis central bankers'speeches will increase the development financial institution ’ s credibility, reputation and potential as key players in advancing socio - economic development. in malaysia, we are encouraging these institutions to improve performance measurement frameworks to better capture the development impact of business activities. a number of them are already implementing frameworks to provide broader performance measures for value - based intermediation activities ( vbi ) which focus on the impact on the economy, community and environment. of particular importance, they need to measure granular outcomes such as creation of good paying jobs and expansion of capacity and capability. another commendable example is the performance measures published by the industrial development corporation of south africa ( idc ), which linked its activities to the creation of more than 340, 000 jobs in the economy between 2013 to 2017. out of this, 10 % were based in rural areas. approximately usd3. 3 billion of idc ’ s financing - related activities could also be traced to the specific economic empowerment of targeted groups such as youth and women. cultivate a strong culture of innovation within to increase value - add and catalyse | the non - lending roles more than ever, development financial institutions need to step up to promote new growth areas. they should perform a broader role to stimulate economic activity that would not otherwise take place. they could also improve the quality and scale of such activities. they can provide unique value propositions in terms of advisory and nurturing new growth sectors to become profitable and thus, attractive for private investors. i will highlight two successful examples. firstly, in the korean wave example, they were the first to spearhead investments in the film and music industry. at that time, commercial banks did not have the capability to assess the viability of the industry, nor accept the intangible assets offered as collateral. it was only much later, 1 / 4 bis central bankers'speeches when the industry recorded healthy profits that private investments followed. the success speaks for itself. between 2008 and 2011, private domestic and foreign investments in the culture content industry had quadrupled to more than usd 157 million. the second example is uganda ’ s first ever private bond issuance by a multinational mobile telecommunications company. the provision of a financial guarantee by a development financial institution helped to connect uganda ’ s poor and low income population in more than 20 rural communities by enabling access to telecommunication services. this culminated in the telecom industry that now provides 135, 000 jobs for ugandans and contributes 1. 4 % of its gdp. taking lessons from these examples, i believe that development financial institutions need to possess three key traits to promote and champion the new growth areas : a. first, they must have specific mandates to develop and prioritise niche segments identified to be of strategic and economic importance. these will give them legitimacy with funders and partners ; b. second, affiliations with government, ministries and agencies to facilitate the design of appropriate government support. this will enable them to take higher risks ; and c. third, a broader focus on socio - developmental goals allows risk - return trade - offs to take into account positive externalities for the economy. the lessons we learnt imply that leaders must recognise and align their priorities to steer their respective institutions to contribute more broadly and strategically to economic development. this will include playing a more active role in technical assistance, and serving as key repositories of specialist knowledge, resource aggregators for strategic development projects and credible advisers to the government. these ‘ additionalities ’ are important ingredients in ensuring the effectiveness of development financial institutions. strengthen accountability frameworks through performance standards that emphasise development additionalities while | 1 |
central banks. the new zahav system has interfaces with other payment systems in the economy, which enables it to create synergy in the world of payments. in addition, by replacing it, we can upgrade the system's protocol to the new iso 20022 global standard, which will bring additional advantages to the entire economy, mainly by increasing the supply and variety of financial services available to the public. 1 / 2 bis - central bankers'speeches the zahav upgrade is consistent with one of the bank of israel's main strategic principles : positioning israel at the technological forefront with regard to the world of payments. obviously, there remains a long road ahead of us, but together with the implementation of the emv standard, the implementation of faster payments, the development of an infrastructure for digital checks, the removal of barriers to fintech firms, and other actions, we are definitely on the right track. as i noted, the upgrade of the system's protocol to iso20022 provides an opportunity with immense potential - for advancing it, improving the consumer's user experience for both business and private customers, adding an immense amount of tremendously valuable - and no less important, structured - information with every financial transaction. we believe that with the cooperation of the entire financial ecosystem in israel, we will properly implement the standard in a way that the changes and business advantages will be significant. 2 / 2 bis - central bankers'speeches | andrew abir : remarks - bank of israel's payment systems conference remarks by mr andrew abir, deputy governor of the bank of israel, at the bank of israel's payment systems conference, tel aviv, 16 november 2022. * * * good morning. i am pleased to be here with you at a conference that will deal with the planning of the new world of payments. it is also important to me to emphasize the extent to which we see the development of an innovative payments system in israel as a strategic goal of the bank of israel. the central bank's money stands at the center of each country's payments system, and that is what forms the foundation of the public's trust in the system. there are currently two types of central bank currency. the first is one you are all familiar with cash. historically, trust in the banking system was based on the public's understanding that it could always withdraw money from its accounts at a commercial bank and ask for central bank currency. normally, no one even thinks about this. but it becomes relevant for many people during emergencies. we make sure to routinely maintain an efficient cash distribution system, embed advanced security features so that it will be very difficult to impossible to counterfeit banknotes, and maintain the public's trust in cash. but technology is changing, and in view of the decline in the use of cash, we are considering the launch of a central bank digital currency so that even in the digital era, central bank currency will remain at the center of the retail payments system. the second type of central bank money is in the wholesale system - the banking system's accounts with the bank of israel. these accounts also increase the public's trust in the banking system. we have seen during crises that banks may prefer increasing their balances at the central bank to enable them to pay each other with central bank currency. what essentially connects wholesale money with the retail payments system is the local rtgs system, called zahav. and just like it is important to use to increase the efficiency and dependability of the cash supply system, it is also important to use to ensure the efficiency, dependability, innovation, and readiness for the future of this system. zahav is a national network for all financial transactions in the economy. its stability and availability is a precondition for management of an advanced economy, and the basis for conducting monetary policy. therefore, rtgs systems around the world are managed by the | 1 |
jean - claude trichet : interview with le monde interview by mr jean - claude trichet, president of the european central bank, conducted by mr pierre - antoine delhommais and mr arnaud leparmentier, 17 november 2009. * * * the euro area economy grew by 0. 4 % in the third quarter. is the crisis over? after the second quarter figures, which were still slightly negative, this positive growth confirms that we have indeed come out of the period of free fall which characterised the six months following the collapse of lehman brothers. the figures confirm our baseline scenario, that of a progressive and gradual revival of the economy. what we are now observing is more favourable than we projected some months ago. that said, we must remain cautious. there is still a lot of uncertainty, as much at the global level as at the level of the euro area, particularly concerning next year ’ s growth. we cannot yet claim victory. is there a risk of a relapse, like in 1937 after roosevelt ’ s first stimulus plan? uncertainty, as i said, is an important characteristic of the period that we find ourselves in. we have observed, in recent past, the eruption of events which were unforeseen in terms of their severity. we observed also during the six - month period of global economic free fall that the decisionmakers could not rely on reliable analytical instruments. in particular the central bankers noted during this period that economic reality was rendering obsolete, week after week, the analyses and projections of the most tried and tested models. throughout this period we had to rely mainly on the wisdom and experience of our collegiate decision - making authorities. today we have regained a reasonable level of confidence in our analytical tools. but a great deal of uncertainty remains. we are seeing differences in growth between the different countries of the euro area, for example between france and germany, which is recovering more quickly. is this not worrying? for the governing council of the ecb, what matters is the euro area as a whole. it is for this area that the governing council has responsibility for issuing the single currency ; an area made up of sixteen countries inhabited by 330 million european citizens. what matters is the interest of an entire continent, in the same way as the us federal reserve disregards the differences between massachusetts, california or missouri, which are nonetheless significant. the quantitative divergences in the euro area are no different in nature from those observed among the different states in the us. furthermore, | just of the united states, but of the entire international community. i noted with great interest yesterday the comments of my colleague ben bernanke at the economic club of new york. i quote : “ the federal reserve will continue to monitor these developments closely. we are attentive to the implications of changes in the value of the dollar and will continue to formulate policy to guard against risks to our dual mandate to foster both maximum employment and price stability. our commitment to our dual objectives, together with the underlying strengths of the us economy, will help ensure that the dollar is strong and a source of global financial stability ”. this is a very important statement from my colleague, with whom i have a very good relationship. is the euro set to replace the dollar as a reserve currency? the euro was not created to compete with the us dollar or to replace the dollar as international reserve currency. it was created in order to complete the single european market and to bring stability and prosperity to europe. the success of the euro in deepening the single market for the past 11 years has been remarkable. imagine what the single market of the united states would be like if there were different currencies in california, florida and new york state. the ecb does not campaign for the international use of the euro. we let economic agents and investors make their own decisions. were the root causes of the crisis economic or financial? the trigger was clearly financial. the financial sphere had generally underestimated the risks. more than six months before the crisis erupted in august 2007, i myself, speaking on behalf of my colleagues, the central bank governors, warned of the probability of a major market correction owing to the fact that risk was being underestimated, in terms of both quantity and price. given the extremely close links between the financial sphere and the real economy, the entire system was potentially unstable, as we have seen. the decision - makers at the global level have a fundamental responsibility : we must make the financial economy and the real economy at the global level much more resilient and much less vulnerable. is the g20 the starting point for the response? in historical terms, the current period is marked by a very profound change in global governance. the fact that the g20 has become the leading authority for governance at the international level is fundamental. do not forget that the structure of the g20 was set up following the asian financial crisis. at that time the industrialised countries considered that if a medium - sized | 1 |
##md will facilitate the growth of government securities by broadening significantly the investor base to retail investors. the second product is m - akiba. this is a critical government initiative, which seeks to increase the public ’ s participation in government securities through the existing mobile - phone bis central bankers ’ speeches money transfer services, and with a low minimum investment amount of us $ 30. the first m - akiba infrastructure bond will be launched shortly as the necessary arrangements are in the final stages, and is expected to mobilize ksh. 5 billion ( about us $ 50 million ). retail investors will be able to register, bid and pay for government securities through the existing mobile platforms. this will provide alternative investment options to retail investors who have long been poorly remunerated especially for their deposits held by banks. these products will be transformational – in addition to promoting financial inclusion, they will facilitate a change in the population ’ s savings culture, and ultimately lead to an increase in national savings. however, as the digital platforms continue to evolve, there are challenges and risks that need to be addressed. it is therefore important that countries continue to share experiences and strengthen partnerships based on best practices to address these challenges. the state of the banking sector in kenya finally, i would be remiss if i did not say a few words about the recent developments in our banking sector. in the main, concerns have been raised following the placing of three banks in receivership, since august 2015. we have underscored that the central bank ’ s actions were necessitated by unique circumstances in each of these banks, and that these were carried out in the interest of the depositors, creditors, and the wider public interest. we have also indicated that the weaknesses revealed by these cases are not systemic and the banking sector remains strong and stable. the capital - adequacy ratio stood at 18. 8 percent in march 2016, well above the statutory minimum of 14. 5 percent. the average liquidity ratio rose to 39. 8 percent in march 2016, above the statutory minimum of 20 percent and higher than 38. 1 percent in december 2015. nevertheless, some challenges remain. for instance, interest rates spread remain very high : the spread between the average commercial banks ’ lending rate and deposit rate stood at 10. 3 percent in march 2016. poor liquidity management and distribution remains a key concern, for which remedial actions are being taken. bank supervision is also being strengthened urgently. the central bank remains committed to | fostering banking system stability and will continue to exercise its supervisory mandate in a fair and even - handed manner. importantly, we have seized the opportunity occasioned by these events and ushered in “ the new normal ” in the banking sector, underpinned by the following : • greater transparency, which is supported by accurate data. • stronger governance, with clear demarcation of responsibilities, greater accountability, fair market conduct, and stronger supervision. • effective business models, aimed at strengthening the resilience of banks, reducing costs, and supporting innovation. in closing, i wish to express our gratitude to the various institutions that have assisted kenya achieve the significant growth and deepening of financial markets. specifically, i wish to recognize ; the world bank, which has supported us through a range of projects, the ifc, the imf, and local stakeholders who have contributed useful ideas for developing the domestic debt market. i look forward to hearing of the experiences from other countries, and learning from your insights on how to resolve the issues raised. thank you. bis central bankers ’ speeches | 1 |
toshihiko fukui : towards a new path of growth for the japanese economy summary of a speech given by mr toshihiko fukui, governor of the bank of japan, at the kisaragi - kai meeting, tokyo, 11 november 2005. * * * introduction semiannually in april and october, the policy board of the bank of japan decides the text of the outlook for economic activity and prices, or the outlook report as we call it, and releases it. this report describes the bank's outlook for economic activity and prices which provides the basis for conducting monetary policy, and also explains the bank's thinking behind its conduct of monetary policy. today i would like to focus on the october 2005 outlook report, which was published two weeks ago. i. recent economic developments and the outlook for economic activity japan's economy continues to recover, having emerged from the temporary pause that began in the summer of 2004. the adjustments in production and inventory in it - related sectors, which triggered the temporary pause, appear to have run their course, and domestic private demand, such as business fixed investment and private consumption, has been stronger than expected. according to the cabinet office's reference dates of business cycles, the economy has been expanding since the beginning of 2002, that is to say, for almost four years now. although a v - shaped recovery is unlikely to ensue after the economy's recent emergence from its temporary pause, it is expected to achieve solid growth at a moderate and sustainable pace. the bank's projection for a period of one and a half years ahead, that is, through the end of fiscal 2006, is that the economy is likely to experience a sustained period of expansion at a pace slightly above its potential. the bank's main purpose in releasing the outlook report is to explain its thinking on the underlying mechanisms of economic activity and prices, and the policy board members'forecasts are also provided as reference figures. in the october outlook report, the policy board members forecast a real gdp growth rate for fiscal 2005 of slightly above 2. 0 percent and for fiscal 2006 of around 1. 52. 0 percent. if the economy performs as projected in the october outlook report, it will have been expanding at a pace above its potential for a very long period of time, since the actual growth rates for fiscal 2003 and 2004 have been around 2. 0 percent, exceeding the bank's estimate of a potential growth rate of around 1. 0 percent. | activity and prices as well as the state of the financial system since its introduction. with regard to the effects of ample liquidity provision by the bank, an effect of reducing very short - term interest rates to practically zero percent remains unchanged. however, as described earlier, with the progress in the disposal of npls, precautionary demand for liquidity has declined substantially, reflecting diminishing concerns over financial system stability. the effects of the policy commitment by the bank have also been changing. in principle, the expected duration of the quantitative easing policy based on the bank's commitment can either lengthen or shorten depending on market participants'expectations for prices. with more market participants recently expecting that the year - on - year rate of change in the cpi will be a positive figure in the near future, the duration of the policy as expected by market participants is shortening. as a result, the policy commitment is gradually losing its influence on the formation of longer - term interest rates. this is a natural consequence considering the characteristics of the commitment. as a result of the above changes, the stimulative effects of the quantitative easing policy on economic activity and prices are at present increasingly coinciding with the effects of short - term interest rates being at practically zero percent. as for a change of policy framework, the bank will judge whether the policy commitment has effectively been fulfilled, in other words, whether the year - on - year rate of change in the cpi is registering zero percent or higher on a sustainable basis, by monitoring economic activity and price developments. assuming that economic activity and price developments follow the projection described in the october outlook report, the possibility of a departure from the present monetary policy framework is likely to increase over the course of fiscal 2006. we cannot tell exactly when the bank will actually change the framework, since it depends on future economic and financial developments. in any case, the bank will appropriately determine the timing in view of these developments. such a change of framework would mean a reduction in the outstanding balance of current accounts at the bank toward a level in line with required reserves, and a shift in the main operating target for money market operations from the outstanding balance of current accounts to short - term interest rates. at present, the effects of the quantitative easing policy are increasingly coinciding with the effects of short - term interest rates being at practically zero percent. thus, a change of policy framework itself does not imply an abrupt change in terms of effects of policy. there will then | 1 |
chapter 12, pp. 601 – 650. see beck, r., p. jakubik and a. piloiu, “ non - performing loans : what matters in addition to the economic cycle? ” ecb working paper, no. 1515, february 2013. see borio, c. and h. zhu, “ capital regulation, risk - taking and monetary policy : a missing link in the transmission mechanism? ”, journal of financial stability, vol. 8, 2012, pp. 238 – 251, and caballero r., hoshi t. and a. kashyap, “ zombie lending and depressed restructuring in japan, ” american economic review, vol. 98, 2008, pp. 1943 – 77. see rajan r., “ has financial development made the world riskier? ”, european financial management, 12 ( 4 ), 2006, pp. 499 – 533. bis central bankers ’ speeches lower bank lending standards and with a shift of credit towards borrowers with a lower credit quality. 21 additionally, the latest ecb survey on the access to finance of enterprises in the euro area ( safe ) shows an improvement in the availability of bank loans for smes between october 2014 ( shortly after negative rates were introduced ) and march 2016. 22 this could indicate that one way that banks are taking on more risk is by lending more to smaller, and typically riskier, firms. of course, promoting lending, including to risky borrowers, is one of the goals of accommodative monetary policy. but the main question, however, is whether negative rates can also lead to excessive risktaking by banks. if accommodative monetary policy works as intended, then more investment projects will gain a positive net present value and will be financed – including some riskier ones. that ’ s the “ good ” risk - taking. however, banks may be tempted to finance risky but negative net present value loans – that is excessive or “ bad ” risk - taking. the theory suggests that this possibility is more likely when interest rates are low, if banks are highly leveraged or if they can easily adjust their capital structure. 23 empirical evidence while theoretically appealing, a precise estimate of the point where accommodative monetary policy becomes contractionary and / or an issue for financial stability is extremely challenging. what i can offer you today is an overview of the situation of financial intermediaries in the euro area, in order | have become increasingly important. although currently profitable and well capitalised, many banks will experience income and credit losses, which may trigger a re - assessment by some of them of the suitability of this socalled “ originate - and - distribute ” business model. with regard to hedge funds, they have not been at the centre of the turmoil. an important lesson in this regard is that many funds with solid financing structures and / or strategies geared towards distressed asset management are likely to have prospered from recent events, thereby smoothening volatility and mitigating the effects of a financial de - leveraging process. finally, certain supervisory and regulatory issues can already be identified as warranting further attention or action. initiatives are already underway at the european and international level to draw lessons and consider further policy actions. whilst it is still too early to draw definitive conclusions, there is a common understanding on the need for finding solutions that can be applied consistently at the global level. in this respect, international coordination is of the utmost importance, as any policy action should be applied consistently, thus ensuring a level playing field globally. turning to possible lessons from a regulatory and supervisory viewpoint, i would stress first of all the importance of effective implementation of basel ii which, despite the possible need for some revisions in light of the recent financial market developments, provides a sound basis for banking supervision and incentives for improvements in banks ’ risk management. second, i would mention three key areas that warrant further attention on the part of the international community. first, banks need to further improve their risk management, in particular liquidity risk management. the complexity of structured finance products calls for banks to have in place commensurately sophisticated risk management systems, including liquidity risk stress - testing. second, the role rating agencies played in the recent events needs to be assessed. in particular, a better insight is needed into the incentive structures, including possible conflicts of interest, to perform proper due diligence. at the same time, the possible lack of incentives for investors to carry out their own credit analysis and due diligence should also be taken into account. third, certain areas of the regulatory framework may need to be reviewed, such as the treatment of liquidity risk and the securitisation framework, in particular the treatment of liquidity exposures to special purpose vehicles and the assessment of risk transfer, given their significance in the recent financial turbulences. let me conclude by stressing that i am confident that from this process, | 0.5 |
speech of the governor on the occasion of the 20th anniversary of the cbk honourable... it is my great honour and pleasure to welcome you today for marking the 20th anniversary of the establishment of the central bank of the republic of kosovo. it is my great pleasure to have representatives of local and international institutions among us today, without whom it would not be possible to achieve the successes we have achieved to date. therefore, on behalf of all cbk staff and on my behalf, i would like to express my heartfelt gratitude for all that you have done for us over the years and for the honour you have done to us by joining us in marking this very important anniversary for us. to better understand the situation we are in, and the way we are heading, it is a good idea to go back a little retrospectively to remember how we got here, and to use the past as a driving force to move towards a more successful future. the central bank of the republic of kosovo was established in 1999, at a time when kosovo was beginning to build all institutions from scratch. along with the establishment of institutions, the foundation of the market economy in our country was also beginning. faqe 1 nga 7 cbk as a new institution, in spite of the great efforts to organize the institution itself, where everything was starting from scratch, began to commit itself towards building the financial infrastructure necessary to create the conditions for the financial system to start functioning in kosovo. this way, the cbk soon began the activity of building the payment system, formulating the regulatory framework for the financial sector, and developing other functions necessary to serve the country's economy. the beginning of the cbk's operation coincided with the time when most of the countries in the region were about to complete the transition process, where the omissions made at the beginning of this process, made the transition lengthy and difficult. cbk showed high diligence and learned from the difficulties that other central banks of transition countries went through, and chose the model that proved successful in developing an efficient and sustainable financial sector. in this way, cbk laid the foundations of a financial system based on private ownership and from the beginning opened the doors for the entry of foreign financial institutions. in fact, it was foreign financial institutions, especially banks, which first started operating in kosovo, bringing contemporary financial industry experiences and restoring the trust of the local people in the financial system. also, the cbk has consistently followed a sound licensing policy | developed countries. therefore, today i am pleased to present a banking sector with steady growth in loans and deposits, with good quality of loan portfolio, high level of capitalization and strong liquidity position. kosovo's banking sector has also made progress in enhancing the efficiency of financial intermediation, prompting loan interest rates to decline significantly in recent years. faqe 4 nga 7 similar progress has been made in other components of the kosovo financial system. the insurance sector has grown steadily and has shown sufficient ability to cover liabilities towards insurance policy holders. the pension sector has also shown satisfactory performance, where the value of contributions continues to increase, while careful asset management has enabled their value to increase overall. another important segment of our financial market continues to be microfinance institutions, which in recent years have accelerated the pace of credit growth, thus increasing their importance as an alternative source of credit financing in the kosovo economy. * * * the cbk has also played an important role in the establishment and development of other institutions important for kosovo's financial stability and economic development such as the deposit insurance fund of kosovo and the kosovo credit guarantee fund. * * * faqe 5 nga 7 i consider that all this that i have presented so far, presents a good basis for concluding that the central bank of the republic of kosovo has passed twenty successful years, during which it managed to transform into a modern institution and to develop a financial system capable of contributing to the prosperity and stability of the country's economy. however, we are aware that we have many more challenges ahead - challenges that other banks in the region are facing and beyond. business models and strategies of financial institutions are already changing with great dynamics, which requires an equally great dynamic for developing regulatory and supervisory capacities for financial institutions. regulatory reforms should enable the renewal or further development of financial intermediation, but at the same time must allow sufficient supervision and control over these institutions and activities they perform. however, i have full confidence that our capacities and excellent cooperation with other international central banks and financial institutions serve as a strong guarantee that the cbk will continue to be successful in the future against the challenges ahead. * * * faqe 6 nga 7 the central bank of the republic of kosovo has also changed its logo on this anniversary. the new cbk logo visually reflects its activities, values and attributes for better representation. the visual elements of the new logo give the cbk a unique identity. within itself, the new symbol has | 1 |
, agriculture and law and order. however, with revenue forecasted to be lower than expected, this would put pressure on the government to access these funds to maintain recurrent expenditure levels. this concern was raised at the recent png economic update forum series in port moresby. the majority of our people still live in their villages, relying on subsistence farming and fishing and using the cash economy whenever the need arises. they also benefit from their extended family ties through the “ wantok ” ( care for extended family ) system. fortunately, they are least affected by the workings of the government and its agencies, much less by the global financial crisis. our own challenges in the central bank in relation to poverty alleviation involve the issues of financial inclusions and financial literacy. how do we get the vast majority of our people outside our financial system to participate fully within the system and benefit from the economic growth? over the years, we have revitalized the savings and loan society movement, closing down dormant societies, improving on training for their staff and increasing supervision on their activities. we have also licensed two microfinance institutions to complement the activities of the commercial banks and other financial institutions. the savings and loan societies and microfinance companies are aimed at assisting low income earners and entrepreneurs to do businesses, improve their lifestyles and should assist in alleviating poverty. how can we ensure our people are financially literate so that they can make informed financial decisions as well as notice unscrupulous deals when they see one? financial education and literacy programmes by the government sector, private sector and non - government organizations are important. financial literacy programmes lead to financial inclusion which improves the lifestyles or economic conditions of those engaged in it and help reduce poverty. however, to work effectively, both these two activities would have to be undertaken together, that is, microfinance development together with financial literacy. the on - going financial global crisis shows the importance of dealing with these issues, even in the industrialized countries. the current global financial crisis is a concern. some say it is the worse economic crisis since the great depression of the 1930s. if so, it presents a challenge to all of us here today. to those of us involved in the economic management of the country, as well as the technocrats, the politicians, the business community and civil society. we all have a part to play in ensuring that any adverse impact of the crisis is eliminated or minimize, especially on the most vulnerable members of our | everyone is talking about financial inclusion at the international level. it is a major agenda of development right across the globe with financial illiteracy as a serious hindrance to positive development. as far as the bank is concerned, we have another reason to pursue financial inclusion. this is to address and improve the transmission process of our monetary policy to the real economy. this relates to the process where any change we make to monetary policy through a signalling interest rate or other means, its effects should translate down to the real economy, through business houses, consumers, institutions etc. one of the major reasons bis central bankers ’ speeches for the transmission not working is because of the lack of financial services, due to fewer financial intermediaries and products. it is important for png as a developing nation to have this transmission mechanism working right down to the rural communities to eradicate financial exclusion. png is a member of apec and financial inclusion & financial literacy is one of apec ’ s key priorities, as demonstrated by the launch of the apec financial inclusion initiative in 2010. at the 2012 apec finance ministerial meeting, finance ministers of the apec economies recognized financial literacy to be an essential skill for everyone in the 21st century and an important component of any economy ’ s efforts that will effectively support economic and financial stability, inclusive development to improve individual and families wellbeing. the bank of png is in the forefront of promoting the financial inclusion agenda and is committed to several international initiatives such as the maya declaration and the money pacific advisory group goals. the money pacific goals emphasises the importance of financial education where all central banks in the pacific, including png signed up to ensure all children receive financial education through the core curriculum by 2020. the bank also made a commitment under the maya declaration in malaysia in 2013 to achieve several goals by 2015, one of which is to increase financial services access to one ( 1 ) million more of the currently unbanked population in png, of which 50 % of them will be women. i am pleased to announce that png is reaching around ½ million clients as i speak. at this juncture, i would like to reiterate governor bakani ’ s comments of wmbl spearheading the goal of reaching the 500, 000 unbanked women in png before end 2015. we only have 16 months to be able to achieve that target and we are confident that wmbl will provide further initiatives and services to achieve this goal. 3. | 0.5 |
management transactions for new bond issues is nearly final, and an earlier draft standard on fx stop - loss orders has been absorbed into the fx global code. in each case, potential conflicts of interest are mapped to high - level principles designed to mitigate them. for reference price transactions, emphasis is placed on transparency with clients on mechanics and potential conflicts, and on mitigating the risk that the wider transactions of dealers could be market moving. the draft standard on risk management for new bond issuances sets out principles to mitigate risks around selection and formation of reference rates. the fmsb ’ s statements of good practice, such as for surveillance of fx markets, provide more detailed guidance and worked examples to help set expectations. the fmsb is also scanning the horizon for future misconduct risks, including through its innovative behavioural cluster analysis. rightly, given rapid changes in underlying market structure, this process has prioritised work on vulnerabilities arising from fast automated markets. will these standards and codes make a difference? we know from history that codes are of little use if nobody reads, follows or enforces them. why should the fmsb ’ s efforts be expected to help reverse the tide of ethical drift? indeed, given the long history of misconduct, aren ’ t such efforts akin to king canute rebuking the waves? i ’ m more optimistic that the tide will turn because the fmsb is part of a much broader effort by uk authorities and market participants. together, we have created a comprehensive and mutually reinforcing set of measures that strengthen the hard and soft market infrastructure. the resulting incentives give fmsb standards moral force and practical consequence. first, in the fmsb ’ s core work, the best in the market are taking responsibility for identifying and codifying best practice, in a way that complements and reinforces existing regulation. the fmsb now convenes senior participants from fifty global issuers, underwriters, asset managers, exchanges, custodians and investment banks. the breadth and engagement of the membership gives its standards credibility and creates peer pressure within the industry to promote adherence. canute, king of denmark, england and norway, 995 - 1035, reputedly set his throne by the sea shore and commanded the incoming tide to halt and not wet his feet and robes. yet " continuing to rise as usual [ the tide ] dashed over his feet and legs without respect to his royal person. then the king leapt backwards, saying : ' | is distinct from, but related to, the capital position of banks that i mentioned at the start. there are now three planks to the capital framework : a risk - based assessment which may be based either around firms ’ internal models or a standardised approach ; a measurement of leverage ; and stress tests. together these approaches provide firms and us with the tools to do two things : to add up overall capital requirements ; and as diagnostic tools to allow the probing and analysis of strengths and weaknesses of firms ’ positions. i cannot emphasise enough that good judgemental supervision which is forward - looking employs diagnostic tools. none of these tools will provide the “ right ” answer, they are not tablets of stone. they enable assessment and challenge, by managements, boards and supervisors. the idea that we could rely on one of these tools alone, which you can read in some books, is, let me be blunt, naive. good supervision looks at things from different angles in order to build up pictures. in the same vein, i do not agree with those who say that we should disallow firms ’ internal models. that amounts to saying we are not interested in how firms ’ manage their own risks and that somehow we have better models to use. but, we don ’ t rely exclusively on firms ’ models, and we challenge them hard ; and we throw them out when we don ’ t like them, and we have done that. good prudential supervisors are bold enough to do that. the lesson is look at models, but do it properly, and to do that is not a simple job. toward the end of the year, we will publish the results of our first round of simultaneous across major uk banks stress tests, which will follow the publication by the european banking authority of its stress tests in just over a week from now. our stress tests are a real step in the direction towards the full use of such tests as one of the three pillars of the capital framework. this is a major development compared to the cumbersome and slow process of stress testing one bank after another that we developed during and after the height of the crisis. we will be using these tests to assess whether firms have capital positions and capital plans looking forwards which will provide re - assurance that they will be safe and sound under stressed conditions, as the name suggests. if they don ’ t – and you should take no inference on the results from what i say here – we will ask them to look again at their plans | 0.5 |
mary c nkosi : mzuzu branch project site handover and pre - contract meeting speech by mrs mary c nkosi, deputy governor of the reserve bank of malawi, at the mzuzu branch project site handover and pre - contract meeting, mzuzu, 2 august 2010. * * * the team leader of the consortium ( represented by mr. davie chidyaonga ) and other members of the consortium director of administration, and members from rbm the project coordinator, mr morrison sulumba the management of sr nicholas limited led by mr g bizzarro all present i am greatly honoured to be here this morning to deliver the expectations of the governor, myself and the entire bank. my presence here is proof of the importance the bank places on this project which goes beyond the building. the bank ’ s presence in mzuzu will complement development in the city of mzuzu and the northern region as a whole. let me start by first of all congratulating the contractor, sr nicholas limited, for successfully going through the evaluation process and being awarded this prestigious contract. the competition was tough and therefore this is no mean achievement. at this juncture, let me place on record my gratitude the chairperson and the entire internal procurement committee of the bank for a job well done during the tendering process. we know that the award criteria for this contract went beyond the usual price consideration. it mainly considered the capacity to deliver a quality product within the specified period of 24 months. therefore, issues of experience in projects of a similar nature and magnitude, current commitments and track record of good performance played a bigger role. it is with this in mind that i want to appeal to the successful contractor, sr nicholas limited, and all other sub contractors involved in the construction of phase ii that the bank expects nothing less than a quality building that will be an icon and a centre of public attraction in the city of mzuzu and will stand the test of time. in this regard, you will be expected to adhere fully to all building standards and specifications. this entails applying world class working methods and use of certified materials throughout the project life. to the team leader and indeed the nddc consortium, i would like to say the journey continues. you did a good job in phase i. however, the small problems that surfaced here and there should be considered lessons for phase ii. the consortium is expected to provide optimum supervision throughout the project life and ensure that all individual consultants in the team | yen to date. as a result, the real trade surplus turned to an increase in the second half of 1996. the nominal current - account surplus, however, is increasing at a much slower pace compared to the real trade surplus owing to the fluctuations in the income account and the hike in crude oil prices. industrial production showed a significant increase in january 1997 after it increased by a seasonally - adjusted annual rate of over 10 per cent in the fourth quarter 1996. this increase was caused by the rise in final demand, particularly in those items conducive to production, such as passenger car sales, machinery investment, and net exports, under the circumstance in which inventories has been at appropriate levels. although industrial production is expected to decline in february and march, the figure for the first quarter 1997 on average is also expected to show a steady increase. labor market conditions have continued to improve moderately on the whole. although the unemployment rate remains at a high level and employment growth has been moderate, growth in nominal wages has accelerated, reflecting the increase in production and corporate profits. the ratio of job offers to job applications has continued to improve. with respect to price developments, domestic wholesale prices ( adjusted for seasonal electricity rates ) have stopped declining, although downward pressures such as from competition with imports and technological innovation in, e. g., electrical machinery, remain strong. this development has been supported by the yen ’ s depreciation to date, the hike in crude oil prices and the moderate improvement in domestic supply and demand conditions. corporate service prices have declined, particularly in rents and leasing charges, but the year - to - year decrease has become smaller. consumer prices ( nationwide, excluding perishables ) have somewhat exceeded the level of the previous year, as the decline in commodity prices has slowed against the background of the yen ’ s depreciation and the halt in the decline in domestic wholesale prices. growth in monetary aggregates, measured in terms of the year - to - year growth rate of m2 + cds average outstanding, has continued at 3. 0 - 4. 0 per cent, as corporate demand for funds has been increasing at a moderate pace. regarding money market rates, the overnight call rate ( uncollateralized ), together with the 3 - month cd rate, has moved at a low level albeit with small fluctuations. meanwhile, 3 - month euro - yen futures have shown relatively minor movements at around 0. 7 - 0. 8 per cent after market ’ s expectations for higher | 0 |
##economic policies. we cannot forget that inefficiencies in the regulatory framework were at the heart of the buildup of risks in the run - up to the crisis. the fact that fragilities in the financial system, namely inadequate levels of capitalization and liquidity, were not properly and timely identified, may primarily reflect inadequacies in regulation and supervision. our best response is to continue strengthening regulation and supervision regimes aimed at avoiding future crises. and central banks have a crucial role to play because there are clear complementarities between financial and monetary stability, which, as is the case of chile, are often formally recognized in central banks ’ official mandates. before referring to what we have done on this matter in chile, let me briefly describe our experience with the global financial crisis and our macroeconomic policy response to it. while we were still enjoying the commodity boom of the 2000s, we were hit by the spillover effects of the crisis and its aftermath, namely the tightening of domestic lending conditions, capital outflows, a reduction of the external demand for our exports and a decrease in the price of copper, which is still the main source of external income for the chilean economy, and in particular an important source of revenues for the treasury. the price of this critical commodity fell more than 60 percent in just five months. exports fell almost 20 percent in two years, a strong shock for an economy where exports accounted for more than 40 percent of gdp. a similar drop experienced public revenues, with those coming from copper production falling 23 percent in 2008 and 50 percent the following year. despite the severity of the shocks, economic performance and the resilience of the financial system have been better than in comparable situations in the past. behind this favorable response of the chilean economy lies a macroeconomic policy framework able to pursue an effective reaction, and a regulatory scheme supporting the high resilience of the domestic financial system. in chile the monetary policy framework consists of a flexible inflation - targeting regime with a floating exchange rate. this framework has allowed us to respond efficiently to external shocks keeping inflation expectations anchored. before the asian crisis of 1998, we had a managed exchange rate and we had capital controls in place to allow monetary policy independence to manage inflation in a context of abundant capital inflows. indeed, we experienced a costly adjustment to that episode, and this was fueled in part by financial stability concerns that called against an exchange rate adjustment. but once the harder times had passed, the exchange rate was allowed | world growth? do all the emerging economies have fiscal room to back a weak scenario, or it has been shrinking after the strong stimulus packages of 2008 – 2009? and there are the local tensions, too. certainly, the climate of political and social unrest is not the most appropriate to confront a further deterioration of the world economy. for the same reason, this scenario imposes more than ever the challenge of building an effective solution for these specific problems, but always safeguarding macroeconomic stability and strengthening our capacity to grow. this is not only about the specific policies we apply, but also about how we resolve our problems. as much as some have trouble admitting – it seems that the trendy thing is to complain about everything – our country is exemplary. in the past few decades, all of us chileans have enjoyed progress like never before in our history. and, granted, there are many tasks ahead, we are a role model for many countries. in this conjuncture we must also set an example resolving urgent and critical problems and continuing building an ever more prosperous country for all. thank you. bis central bankers ’ speeches figure 1 world activity ( * ) ( index, iv. 07 = 100, quarterly series ) iv. 07 iv. 08 iv. 09 emerging iv. 10 developed ( * ) regions weighted at ppp. developed economies include : australia, canada, denmark, the eurozone, japan, new zealand, sweden, switzerland, the u. k. and the u. s. emerging economies include argentina, brazil, bulgaria, chile, china, colombia, the czech republic, hong kong, india, indonesia, israel, latvia, malaysia, mexico, peru, the philippines, south korea, russia, singapore, south africa, taiwan, thailand, turkey and venezuela. source : central bank of chile based on bloomberg, the imf and statistics bureaus of respective countries. figure 2 cpi inflation around the world commodity prices ( annual change, percent ) - 2 - 2 - 4 - 4 u. s. eurozone latin america emerging asia ( monthly index, jan. 00 - sep. 11 = 100 ) emerging europe fao foodstuffs wti oil ( 1 ) regions weighted at ppp. data through august 2011. ( 2 ) cpi includes argentina, brazil, chile, colombia, mexico and peru. ( 3 ) cpi includes china, india, indonesia, malaysia, south korea, thailand and taiwan. ( 4 ) cpi includes the czech republic, hungary, poland, russia | 0.5 |
christine lagarde : welcome address - tenth anniversary of the single supervisory mechanism welcome address by ms christine lagarde, president of the european central bank, at the event celebrating the tenth anniversary of the single supervisory mechanism, frankfurt am main, 6 november 2024. * * * it is a pleasure to welcome you to this event celebrating the tenth anniversary of the single supervisory mechanism ( ssm ). the ssm became operational ten years ago, almost to the day, on 4 november 2014. it was the most significant step forward in european integration since the introduction of the euro. if we think back to how the banking sector was faring a decade ago, we can see just how much has changed. the euro crisis had exposed significant weaknesses : low equity buffers, high levels of non - performing loans and deep exposures to domestic sovereigns. our challenge, as daniele nouy said at the time, was to " help rebuild confidence in the balance sheets of ssm area banks " amid a fragmented supervisory landscape. 1 today, however, the situation is vastly different. despite the major shocks that have hit the euro area in recent years, our banking sector is resilient. the aggregate common equity tier 1 ( cet1 ) ratio rose from 12. 7 % in 2015 to 15. 8 % in mid - 2024, while the liquidity coverage ratio increased from 138 % to 159 % over the same period. the main risks we face today no longer stem from the banks themselves, but from an increasingly volatile external environment. and single supervision allows us to address these risks through a common, forward - looking approach. so, have we achieved the initial aims of this single supervision? the achievements of single supervision if we consider the tumultuous events of the past few years, it is clear that european supervision has exceeded expectations. european banks have become considerably more resilient, providing critical stabilisation during the recent periods of disruption. in essence, european supervision has successfully addressed what herman van rompuy identified in 2012 as the need to " correct the weakness of the policy infrastructure of the common currency ". 2 1 / 4 bis - central bankers'speeches first, more rigorous and more uniform supervision has bolstered public confidence, ensuring that bank deposits are seen as equally safe across the euro area, thereby preserving the integrity of our monetary union. since the start of single supervision, household's cross - border deposits have more than doubled to €151 billion today. | ), blinder and morgan ( 2000 ) and lombardelli, proudman and talbot ( 2005 ). reveal its new £20 note. and the figure celebrated on the new note will, of course, be adam smith the first economist and the first scotsman to appear on a bank of england note. from next spring, when visitors to our country look carefully at their new £20 notes, they will be able to see an engraving showing the division of labour in pin manufacturing with the words “ and the great increase in the quantity of work that results ”. i hope they will absorb the lesson that specialisation in production and trade across the world are the way to improve living standards in all countries – rich and poor alike. and perhaps when they return home they will press their own politicians to support the opening up of trade which has been at the heart of the british government ’ s efforts to reform the world economy. so you should be proud of your famous son who, despite being “ an absent - minded professor ” who led a “ quiet, uneventful life ”, influenced the way the whole world thinks about the route to economic prosperity. 20 let me conclude by returning to the words of jacob viner : “ in these days of contending schools, each of them with the deep, if momentary, conviction that it, and it alone, knows the one and only path to economic truth, how refreshing it is to return to the wealth of nations with its eclecticism, its good temper, its common sense, and its willingness to grant that those who saw things differently from itself were only partly wrong ”. 21 truly, adam smith was a man of the scottish enlightenment, and i am delighted that from next year his face will look out at us from our banknotes. references blinder, a and morgan, r ( 2000 ),'are two heads better than one? an experimental analysis of group vs individual decision making ', nber working paper no 7909, september. buchan, j ( 2006 ) adam smith and the pursuit of perfect liberty, london : profile books. coase, r ( 1991 ), ‘ the institutional structure of production ’, nobel lecture. hayek, f ( 1976 ) denationalization of money, london : institute of economic affairs. king, m ( 2002 ), ‘ the monetary policy committee : five years on ’, speech delivered to the society of business economists. king, m ( 2004 ), ‘ the institutions of monetary policy | 0 |
in competition with other currencies only if it can be kept stable over the long term. the relevant institutional requirements have been met : the ecb is an independent central bank which is primarily committed to the objective of price stability. the euro ’ s greatest success to date has been as an issue currency on the international financial markets. between january 1999, the start of emu, and march 2000, 47 % of the net issuance in international debt securities was denominated in euro, compared with a dollar ratio of 45 %. it seems that the large issuers took advantage of the low euro interest rates in order to raise large amounts of funds in euro. however, it is also apparent that the euro ’ s success in terms of new issues increased its share of all international debt securities outstanding only slightly compared with its predecessor currencies, namely from 25 % at the end of 1997 to 30 % at the end of march 2000. at this reference date, the share of the dollar stood at 47 %. the euro ’ s share of international banking business is somewhat smaller than on international securities markets, amounting to 28 % in the case of bank assets and 24 % in the case of bank liabilities, compared with a dollar market share of 40 % and 42 %, respectively. relative to the share that the euro ’ s predecessor currencies had previously, the euro comes off much better in international banking business. 4 from the perspective of a central bank, it would be especially interesting to know the euro ’ s share of the official foreign exchange reserves. it is precisely as a reserve currency that the dollar has traditionally had the largest lead over all other currencies, with a recent share of more than 60 %. unfortunately, the corresponding share of the euro cannot currently be quantified reliably, since the underlying database is decidedly incomplete. the euro has developed very quickly into an - at least numerically - important international anchor currency. the ecb has recently listed some 50 countries in whose currency regime the euro is playing a role. the arrangements stretch from d - mark or euro - based currency boards ( bosnia - herzegovina, bulgaria, estonia ) and mutual agreements as part of erm ii ( denmark, greece ) to rather informal exchange rate links, which are geared to baskets that, in addition to the euro, include other currencies, too. two results of my empirical analysis merit particular attention. firstly, the dollar continues to be the leading international currency in virtually all functions | randal quarles : getting it right - factors for tailoring supervision and regulation of large financial institutions speech by mr randal k quarles, vice chairman for supervision of the board of governors of the federal reserve system, at the american bankers association summer leadership meeting, salt lake city, utah, 18 july 2018. * * * i want to thank the american bankers association for inviting me to speak. 1 this is an era of relatively rapid evolution in banking regulation, an area of human endeavor that is not commonly known for its speedy metamorphoses. but in the time since i became the vice chairman for supervision at the federal reserve, we have seen agreement on the final pieces of the international framework for post - crisis regulation — the so - called basel iii endgame. the federal reserve has issued a number of proposed rule changes that would improve our capital and stress testing regime. and in late may, the congress enacted the economic growth, regulatory relief, and consumer protection act ( egrrcpa ), which, among other things, directs us to further tailor our supervision and regulation of large banks with more than $ 100 billion in assets. in other words, the congress wants to see action and has, to a certain degree, specified some of the steps we need to take. how we respond to that task, especially as it applies to large banks, will be the focus of my remarks today. but before i delve into those details, i want to provide an overview of what i hope you ’ ll take away. first, i want to underscore that i believe tailoring of financial regulation is good public policy. the federal reserve board is a firm adherent of the recent legislation ’ s underlying principle that regulation should be tailored to risk. to an extent, as i will later describe, this principle is already embedded in several aspects of our supervisory framework. second, the federal reserve will need to revise its framework to allow for a greater differentiation in the supervision and regulation of large firms. to date, our tailoring of regulations has been based largely but not exclusively on asset size, which reflects an unduly onedimensional approach. we have been evaluating additional criteria that may provide for greater regulatory differentiation across large banks, and the recent legislation is consistent with the goals of that initiative. specifically, the legislation recognizes that large banks have a variety of business models and risk profiles ; supervision should be flexible enough to incorporate this heterogeneity. third, | 0 |
dilemma, as well as the related training sessions, are thus extremely relevant in light of current challenges. we at the bank of lithuania are eager to hear and discuss different perspectives. our approach to regulation aims to strike a delicate balance. we set out an objective to be not merely a watchdog but also a partner to the financial sector, actively facilitating the provision of financial products and services. however, this does not mean that we have somehow relaxed our focus on risk prevention and mitigation. on the contrary, we have substantially boosted human resources devoted to aml issues, establishing a dedicated unit. we have also enhanced cross - institutional cooperation in this area. 1 / 2 bis central bankers'speeches and we are looking to make a step forward. it is not a coincidence that our first session today concerns public - private sector partnerships. the eu is moving forward on this topic, as there are plans for introducing eu - level guidelines on public - private partnerships as part of the upcoming reform of the eu aml / ctf framework. recent money laundering cases clearly show that we are all sitting in the same boat and that strengthened public - private coordination is in everybody ’ s interest. therefore, over the past year public institutions and private entities in lithuania have been working towards establishing the centre of excellence in anti - money laundering. this platform will bring major private financial institutions into close dialogue with law enforcement and supervision entities to detect, disrupt and prevent financial crime. the centre constitutes our collective attempt to enhance the current aml / ctf system and base it on trust and confidence across the public - private sector divide. as international experience suggests, such public - private partnership arrangements can help in numerous tasks, both at tactical and strategic levels – from supporting the ongoing law enforcement investigations to developing financial crime typologies. i will now pass the floor to finance minister mr. vilius sapoka, who will elaborate further on the topic of public - private partnership in the aml domain. for now, let me just say that i am very happy to see active cooperation between public and private actors already in effect today. our aml conference is, i believe, a great example of how we can all join forces to make progress in preventing financial crime. thank you, and i wish all of us a fruitful and engaging conference. m o r e : www. lb. lt / en / speeches - interviews - presentations / speech - of - v - vasiliauskas - on - anti - moneylau | the question, raised by the economist - why banking industry appears to be taking a back seat and just observing the new entrants come in droves? is this just a clever distraction? i have been told once by a ceo of a major bank, half joking, that once they grow, we will buy them. there is some truth to this statement. a great number of non - bank payment initiatives ended up being provided either in collaboration with banks, via banks directly, or outright owned by banks. therefore when we talk about increased competition that non - banks can bring into the field of payments we have to ask ourselves if that is just a wishful thinking or these new institutions really have a chance? i hope we will go deeper into this topic during the conference. introduction of these disruptive technologies, like internet, smartphones, etc. are bound to lead to major innovations in payments. but technology is not the only ingredient for successful payment business. network and trust are also of key importance. moreover, often the main breakthroughs are made when market participants join forces together leading to standardization. be it the promotion of a new and efficient payment scheme or setting up an underlying infrastructure. at the same time competition authorities become very uneasy, once they see market participants sitting around the table discussing future market arrangements. this is the reason why we need to find a healthy and comfortable format for these discussions to take place. bis central bankers ’ speeches progress in technology is a powerful wind of change. but regulation can also lead to positive change if it is implemented with good timing and with an appropriate scope. i strongly believe that the right regulatory framework, that provides incentives and embraces new technology could modernize payment services and change the status - quo. i will stop here by saying that here at the central bank we have high expectations built on nonbanks both for channeling innovations and for refreshing competition. currently lietuvos bankas is working on a comprehensive national payments transformation strategy and nonbanks, i expect, will be one of the key players there. the main objective of this conference from our side is to hear the views of a wider audience and to learn what the near future is about to bring. i would like to thank sveriges riksbank for organising this event jointly with lietuvos bankas and for close cooperation during preparations and would like to invite ms cecilia skingsley, deputy governor of sveriges riksbank, for the introductory presentation. bis central bankers ’ speeches | 0.5 |
technology - related risks, including aml / cft and other concerns with respect to fintech. this includes enhanced regulations to ensure that non - banks such as pawnshops and money service businesses are properly supervised as they compete in delivering bank - like services. this also extends to entities that use virtual currency as underlying instruments for remittance. we expect financial access to further expand with our recent issuance allowing technology - enabled third party retail outlets to function as bank cash agents. complementing these are regulations that allow reduced know - your - customer ( kyc ) processes for certain low - risk accounts and the use of technology for kyc. these amendments aim to facilitate frictionless customer on - boarding and convenient customer access. in keeping with our mandate to maintain financial stability, soon we shall be issuing enhanced information security framework to strengthen cybersecurity controls in line with a rapidly evolving cyberthreat landscape surrounding financial institutions. it is vital that we preserve the balance between innovation and risk management. game - changing financial sector reforms given the country ’ s potential as a promising investment destination, our domestic capital market is being positioned to serve as an important source of long - term funding and as a complement to bank lending to support economic growth. in this regard, we are closely collaborating with other government agencies, namely the department of finance ( dof ), securities and exchange commission ( sec ) and bureau of the treasury ( btr ), and industry stakeholders to deepen the local currency debt market. complementing this local currency debt market development initiatives, we are also further liberalizing foreign exchange ( fx ) rules in order to enhance the ease of doing business. this 4 / 5 bis central bankers'speeches forms part of a broader agenda for an organized fx market to enhance depth and transparency, improve price discovery, and increase availability of fx products, especially hedging instruments. mutuality in relationships indeed, the economic circumstances today demand fresh and bold approaches. but to succeed, collaboration and cooperation is key — with other government agencies and with you, our stakeholders in the private sector and the filipino public. any great innovation effort begins with understanding “ the who, what, and whys ” of those we serve... in other words, who are our customers? what needs do they have? and why do they have these needs?... this is the true essence of customer - centricity, empathising with the experiences of our stakeholders. we in the bsp cannot answer these | looking at now is a single year following a period of very rapid expansion and during which the swedish economy has been exposed to a sudden global slowdown that has largely been concentrated on a sector of great importance for sweden, namely the it sector. all in all, it would seem reasonable to assume that the conditions for the near future look relatively good for a cautious economic recovery, combined with an inflation rate in line with the riksbank's target. however, it is important to follow developments closely in order to detect whether the course of events will strengthen or weaken. | 0 |
the policy rate is high for a sustained period of time. inflationary pressure has been greater than forecasts indicated – and more than was easily dealt with – and as a result, it has proven difficult to contain inflation. it took a while before the impact of the central bank ’ s restraining measures was sufficiently felt, but considerable changes took place over the past year, when policy rate decisions made themselves felt more strongly in all areas of the credit market. in the fall and in early winter, the market also felt the weight of rapidly deteriorating global lending terms, which will undeniably support the central bank ’ s tightening measures and will reduce domestic demand and inflationary pressure, as was mentioned in the board of governors ’ announcement of 14 february. it is possible that there will be a rapid drop in domestic demand as a result of high interest rates and a tightening credit supply. at this point, however, it is impossible to assert that this will be the case. exactly when it will be possible to lower the policy rate will be determined by economic developments and outlook. precipitate interest rate reductions would push inflation upward and standards of living downward. the suggestion that it is necessary to lower interest rates in order to control inflation is absurd. indeed, it is astounding how carelessly many people seem to view inflation. furthermore, it is appropriate to stress that the central bank believes it is impossible to choose between price stability and financial stability. if we were to relax our stance on price stability, it would surely undermine the credibility of monetary policy. inflation – and no less important – inflation expectations would increase drastically, which could lead, in short order, to an upward spiral of prices and wages and falling exchange rate. even though domestic financial institutions might seem to profit, for the short term, by a depreciation in the krona and a rise in inflation, a trend in this direction would quickly take its toll on indebted households and businesses and would eventually result in loan losses. from the standpoint of financial stability, it is critical that inflation be reined in. it is also appropriate to emphasise the obvious fact that icelandic banks ’ access to foreign credit will not change if the central bank lowers the policy rate. it has been maintained that, because central banks in other countries have lowered their interest rates, the wider interest rate differential with abroad that resulted should have given the central bank of iceland the margin to reduce its policy rate this february. this is not entirely correct. as is well | the marked to market ( mtm ) losses of corporates. the mtm is dynamic in nature and changes in line with market movements and represents the replacement cost of the derivative contracts. these accounting losses should therefore be looked at in totality along with the economic rationale of the hedges undertaken wherein the corporate had decided to lock in to a definite price and to forego the inherent forex risk. conclusion 24. let me now conclude. i have attempted to explain what is new normal in the currency market, how risk management needs to be reviewed and adjusted in the new scenario and responsibility of the boards in putting in place appropriate policies to manage risks. i have also flagged the rbi moves to bring orderliness in the market and shared with you the thinking process that went behind these measures. in concluding, i want to leave the thought that we expect greater responsibility on the part of corporates in managing their risks which calls for greater understanding of their actions from a macro perspective. in other words, in these extraordinary times it is essential for the central bank to think like the corporates and for the corporates to attempt to think like the central bank or at least understand their actions. 25. thank you for your attention. bis central bankers ’ speeches | 0 |
access alternate sources of capital like equity finance, angel funds / risk capital is extremely limited. at present, there is almost negligible flow of equity capital into this sector, which poses serious challenge to development of knowledge - based industries, particularly those that are promoted by first - generation entrepreneurs with the requisite expertise and knowledge. venture / risk capital is, therefore, often a more appropriate financing instrument for high - growth - potential and start - up smes. however, access to this type of financing is often not available to them. in the absence of alternate sources of finance, the smes ’ reliance on debt finance is very high. the availability of debt finance, however, is not adequate as viability of these small units is a major issue. besides, the high reliance on debt, combined with high cost of credit adversely impacts the financial viability of start - ups, particularly in the initial years, thereby threatening their long - term survival and sustainability. c. constraints of banks in lending to the sector 6. one of the major challenges faced by the msmes and more particularly, the micro and small enterprises ( mses ), is access to timely and adequate credit from the banking sector. the lenders are reluctant to service the mses for a number of reasons, the foremost of which emanates from a general perception amongst banks that the credit risk in lending to small and medium borrowers is very high. this, in itself, is a wrong notion that i have been trying to dispel through my presentations supported by hard data. while the headline numbers of non - performing assets ( gross and net npas ) are higher in this segment, if one reckons the extent of restructuring and write - offs that are resorted to in the medium and large borrower segments, the credit risk would appear to be much lower in the mse sector. a comparative table indicating the extent of npas, restructuring and cumulative write - offs in micro and small vis - a - vis medium and large segments during the last five years is given below : the data clearly highlights the fact that in the recent scenario of rising impairment of assets in the banking sector, it is the mses that have demonstrated better credit discipline resulting in lower impairment. 7. the other reasons why mses are regarded as high - risk is on account of insufficient assets and low capitalization, vulnerability to market fluctuations and high mortality rates. information opacity arising from mses ’ lack of accounting records, inadequate financial | statements or business plans also makes it difficult for potential creditors to assess the creditworthiness of mse applicants. besides, high administrative / transaction cost of lending small amounts also queers the pitch for banks insofar as mse financing is concerned. notwithstanding the merits of the reasons mentioned above, i would say that a major constraint in the banks ’ lending stems from the fact that the existing system of banks ’ credit appraisal and related processes are not geared to appraise the financial requirements of mse sector. 8. nonetheless, over the years, there has been a significant increase in credit extended to this sector by the banks. as at the end of march 2013, the total outstanding bis central bankers ’ speeches credit provided by all scheduled commercial banks ( scbs ) to the mse sector stood at rs. 6847 billion as against rs. 5276 billion in march 2012, registering an increase of 29. 77 %. despite the increase in financing to the sector there is still a considerable credit gap which needs to be bridged. in terms of the report of the private sector investment for msme sub group under working group for the 12th five year plan ( 2012 – 2017 ) the credit gap as a percentage to total demand is estimated at 56 % in 2013 – 14 for the msme sector as may be seen from the table. 9. in the absence of alternate source of funding for the sector, the role of banks is very crucial in bridging this funding gap. in this context, it is important for the banks to look beyond their existing customer base and the large corporates and to reach out to the vast number of micro and small enterprises which are presently deprived of bank credit. alongside extending the reach of their banking services, there would be a need to improve and customize the products offered, fine tune the pricing aspects and enhance the quality and efficiency of services. for this, banks need to have a proper business plan and delivery model that would harness the benefits of technology. this would help in planning product delivery and building lasting customer relationships which will translate into higher revenues. the costs of banking transactions need to be dramatically reduced just as in so many other fields such as telecom, after the advent of technology. d. need for alternate appraisal techniques 10. having appreciated the criticality of the sector in terms of its contribution to employment generation, manufacturing and exports, it is important for us to ensure that lending to the sector is appropriately stepped up. here, we need | 1 |
sufficient number of qualified and well - trained staff to carry out its responsibilities effectively. policies and procedures policies and procedures essentially define and communicate the key goals and processes of an organization's compliance program. examiners will look to see whether policies and procedures provide for adequate risk identification, assessment, measurement, and control. as i mentioned a few moments ago, clearly communicated roles and responsibilities are a characteristic of an effective compliance program. toward that end, examiners will also look to determine whether policies clearly delineate accountability and lines of authority across the organization's activities. examiners also expect to see a well - defined process for ensuring that when compliance risks or potential breaches are identified they are elevated to the appropriate level, in keeping with the risk to the organization. procedures for doing so should be well - communicated to staff throughout the organization. overall, policies and procedures must be kept current, and, as with the risk assessment, examiners will look to see whether information gleaned from the compliance program operations is used to further tailor compliance policies, procedures, and controls to specifically address the inherent environment as it evolves. internal controls internal controls are a particularly crucial element of a compliance - risk management program. examiners will verify whether the organization has established and implemented an effective system of internal controls, including appropriate reporting lines and separation of duties, as well as positive and negative incentives. an essential part of the internal control framework is periodic testing to determine how well the framework is operating, so that any required remedial actions can be taken. the frequency of testing should be risk - based and should involve, as appropriate, sample transaction testing, the sample size being determined by volume and the degree of risk of the activity. examiners will carefully assess the scope and quality of the testing of the compliance program. part of this assessment will include determining whether the testing was performed with appropriate independence. examiners will also look to understand the specific delineations of responsibilities between the internal audit, compliance, and other independent functions or third parties. these delineations will vary by organization, but all roles should be clearly defined and communicated. examiners will also look at how well compliance - testing exceptions are reported to senior management and resolved by business - line management. they will assess methods for tracking exceptions until the exceptions are resolved ; this assessment will include examining the organization's provisions for escalating unresolved exceptions to higher levels in the organization, including the board of directors. independence and separation of duties | mark w olson : what are examiners looking for when they examine banks for compliance? remarks by mr mark w olson, member of the board of governors of the us federal reserve system, at the american bankers association's regulatory compliance conference, orlando, 12 june 2006. * * * thank you for the invitation to speak today on an issue of great interest to many of us, that is, compliance - risk management and supervisory expectations. over the last few years, legal and regulatory compliance breakdowns have attracted increased attention across the financial industry. fortunately, most of you have responded to your evolving compliance risks by investing in effective compliance - risk management programs. however, now and then, headline - grabbing incidents of noncompliance continue to capture public attention, especially when they involve such sensitive areas as fair lending and the bank secrecy act ( bsa ). conferences such as this are valuable opportunities for you, as compliance experts, to share experiences and successful approaches to controlling compliance risk. to assist you in your efforts to fine - tune your compliance - risk management programs, i'd like to give you a sense of what federal reserve examiners look for when they conduct examinations. i will also take a few minutes to address our more focused work in two particularly important areas of regulatory compliance : compliance with bsa requirements and home mortgage disclosure act ( hmda ) data reporting requirements. otherwise, i will not focus on examinations that look solely at the level of compliance with specific laws and regulations but will focus on how examiners assess the adequacy of a compliance - risk management program and its ability to manage the organization's compliance risk. compliance - risk management overall, a banking organization's compliance - risk management program should enable it to adequately identify, measure, monitor, and control the compliance risks involved in its various products and lines of business. these are fundamental principles not only for compliance - risk management, but also for sound management of credit, market, liquidity, and operational risk. it's worth taking a moment to define compliance risk. it is the risk of legal or regulatory sanctions, financial loss, or damage to reputation and franchise value that may arise when an organization fails to comply with laws, regulations, or standards or codes of conduct of self - regulatory organizations applicable to the business activities and functions of the banking organization. while all banking organizations should have a program in place to effectively manage compliance risk, these programs can vary considerably, depending on the size, complexity, and geographic reach | 1 |
as we have learned the hard way, easy monetary and credit conditions are also the stuff out of which credit excesses and bubbles can form so the question many central banks face is whether the benefits of further easing are worth the potential costs : in essence, will we get enough risk - taking on the real side of the economy, before we get too much on the financial side? of course, this is not a static calculation. sound structural policy can improve the odds that monetary stimulus feeds through to the real economy. after all, firms ’ decisions to invest, hire more workers and expand their operations depend not just on the cost and availability of funds, but also on the opportunities and the uncertainties in the business environment. is enough being done on this score? from my vantage point, it is far easier to see areas in need of improvement on the structural side than to detect any clear momentum toward addressing them. in the u. s., greater clarity around policies in areas such as trade, tax reform, energy, environmental regulation, and the strategy for fiscal adjustment would help extend investment horizons, increasing the prospect that accommodative financial conditions will have their intended effect. in japan, the new government is talking about structural reform, and policymakers have identified many areas where the business climate could be improved. in fact, i suspect that japan ’ s success in durably boosting growth will hinge as much or more on progress on the structural front, as on developments in monetary or fiscal policy. robust regulation and oversight can also improve the cost - benefit calculus. here, let me say a few words about the ongoing global regulatory reform process. as you know, the scope and scale of the regulatory response to the crisis of 2008 has been quite ambitious – some would say too ambitious. nonetheless, the scale should be understandable against the backdrop of the weaknesses revealed in the crisis, and the economic and financial fallout that resulted. bis central bankers ’ speeches and the reality is that a great deal has been accomplished, both in establishing goals, and in progress toward those goals. that is not to suggest that i am equally enamored with everything that has been done, or the way in which it has been done. the reform effort has many moving parts, and further efforts are clearly needed to ensure that those parts fit together, and that the various parties work together. and these reforms are yet to be fully implemented, let alone tested over a full credit cycle. of course, building a stronger | system is not just about regulatory reform. changes in institutional governance and culture are also needed. many of the problems that surfaced during the crisis and more recently reflect a culture that emphasizes short - term gain over institutional sustainability – a culture in which regulation is viewed as an obstacle to be arbitraged or circumvented, rather than as an additional check on broadly shared objectives. that needs to change if progress is to take root. making sure that happens will require a realignment of incentives, and strong leadership from the top. all of this will take time. the question is, how much time do we have? while risk - taking has been somewhat constrained in the aftermath of the crisis and the resulting uncertainties in the macro environment, we are beginning to see signs of things heating up in some areas of the markets : e. g., record issuance of junk bonds and emerging market debt, including enthusiastic take - up for issuers from “ frontier markets ” with little to no prior presence in the capital markets ; increased leveraged buyouts ; weakening covenants ; and a rebirth of the collateralized loan obligation market. complacency at this point would not be a good thing. when i think of the risks ahead, my concern goes less to countries, institutions or particular markets, and more to the broad set of challenges associated with the eventual normalization of the policy measures which are being taken now, especially in the context of markets that may be frothier than what we see today, and in ways that may not be fully apparent given all the new incentives being created for “ innovation ” in intermediation and in the nature and location of risk taking. tightening cycles tend to bring surprises. and in the upcoming cycle, both central banks and markets will be operating in unfamiliar territory. minimizing potential fallout for markets and for the economy will require deft management, and skillful and disciplined communication on the part of policymakers. that said, at least for now, inflation risks appear contained. notwithstanding the additional liquidity, inflation in the advanced economies is running toward the low side of desired ranges – and in japan, well below. financial markets show little evidence of longer - term inflation expectations becoming less firmly tethered. and when the time comes for normalization, there are a number of powerful tools available to keep them in check. finally, on the issue of currency spillovers : this is a topic where, at least so far, the rhetoric appears to have | 1 |
$ 4. 2 trillion with container throughput up to 190 million teus. the throughput at hong kong ’ s container terminals increased more than 20 times from around 1 million teus in 1979 to 22 million teus in 2013. however, if the majority of the mainland ’ s imports and exports continue to be routed through hong kong, how many additional container terminals would need to be built? could our road system cope with trucks hauling containers all over the territory? and is this what we want for hong kong? 5. in fact, hong kong ’ s position as an intermediate trading hub for mainland china ’ s external trade has become more prominent over the past decades. in 1979, our trade intermediation activities ( including logistics industry ) accounted for about 15 % of gdp and rose to 20 % in 1990. since china ’ s accession to the world trade organisation in 2001, direct competition from the mainland has increased, but the pie has also grown much bigger. the total trade volume of the mainland surged from us $ 510 billion in 2001 to us $ 4. 2 trillion in 2013. and, while the percentage of trade being directly processed in hong kong has been trending downwards ( from 30 % to 10 % ) during the same period, the value of goods has risen bis central bankers ’ speeches sharply from us $ 150 billion to more than us $ 400 billion. taking into account the fastgrowing offshore trade, the total value of trade in goods handled by hong kong would jump from some us $ 300 billion to us $ 900 billion during the same period. this shows that the trade creation effect is much greater than the diversion effect. hong kong ’ s trade intermediation activities ( including logistics industry ) amounted to us $ 64 billion in 2012, accounting for 25 % of our gdp and employing 770, 000 workers ( 21 % of the total workforce ). these figures demonstrate that we should be able to seize the abundant business opportunities arising from the mainland ’ s expansion in external trade if we continue to fortify our trade relations with the mainland and the rest of the world, just like our trade intermediation activities growing from 15 % of gdp in 1979 to 20 % in the early 1990s, and then to 25 % now. 6. let me illustrate with another example why hong kong will not be marginalised as the mainland continues to open up to the world. let ’ s look at the opening of the cross - strait “ three direct links ”. prior to 2008, there were no direct | ten and twelve - year dinar bonds of the republic of serbia in the secondary market declined during july by around 30 bp. on this account, going forward we can expect an additional decline of the costs of public debt servicing and, in turn, lower costs of private sector borrowing. lastly, i would like to stress that in the past period we also remained successful in the achievement of our second objective – financial stability. by ensuring dinar and fx liquidity in a timely manner, trimming the key policy rate and introducing a moratorium, we simultaneously contributed to the preservation of favourable financial conditions for corporates and households and their higher disposable income, as well as to the preservation of all financial stability indicators. not only that the share of npls in total loans did not increase during the pandemic, it went down further and currently stands at 3. 6 %. at the same time, thanks to price and financial stability, the basis of which is also made up of the relative stability of the exchange rate, we have maintained confidence in the domestic financial system, as attested by dinar savings of households, which have been posting new records month after month, and have exceeded rsd 100 bn, whereby we provide an additional contribution to the dinarisation process in serbia. chart 17 npl share in total loans, gross principle ( in rsd bn ) ( in % ) 21. 4 21. 5 21. 6 15. 7 16. 9 19. 0 18. 6 17. 0 9. 9 5. 7 4. 1 3. 7 3. 6 chart 18 dinar savings ( in rsd bn ) 93. 1 79. 6 61. 1 34. 0 household sector other sectors source : nbs. june corporate sector npl share in total loans ( rhs ) 100. 5 12. 5 13. 8 38. 6 46. 0 51. 1 50. 2 19. 7 17. 9 july source : nbs. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ladies and gentlemen from the press, dear colleagues, allow me to conclude today ’ s speech with the following words – everything in terms of serbia ’ s economy that we have achieved in the years leading up to the pandemic – price, financial and fiscal stability, | 0 |
regard, i am pleased to inform you that the fsdp has prioritised financial education so as to increase the level of financial literacy and awareness of alternative payment methods. i would like to urge all financial service providers to not only take advantage of this initiative but also to design their own programmes to sensitise their customers of the innovative products they offer or plan to offer which promote financial inclusion. furthermore, as bank of zambia we welcome the innovations by the banking sector and other financial service providers aimed at enhancing financial inclusion. however, it is our responsibility to ensure that these services are provided in a safe and efficient manner. in this regard, the bank of zambia reviews these banking products before their introduction to ensure that they comply with the existing prudential and statutory financial sector requirements. in particular, the central bank ’ s review process focuses on adherence to risk management guidelines and the anti - money laundering regulations as well as prudential guidelines that detail minimum, “ know your customer ” requirements that financial institutions should adhere to. the overarching objective of all this is to ensure that our financial system is safe sound and stable. in a nutshell, there is an existing supervisory framework to ensure the safety of mobile banking solutions. this framework will continue to be reviewed in line with the changes in the mobile banking space. as you may be aware, some of these innovations may require collaboration with the regulators in the telecommunication sector. as such it is our intention to work closely with the zambia information and communication technology authority in promoting safe and sound mobile banking services. mr chairman, it is also worth noting that since the last mobile banking conference in 2009, a number of positive developments have occurred in the telecommunication sector. for instance the partial privatization of the zambia telecommunications company ( zamtel ) will result in intensified competition in the sector. this will no doubt lead to better quality service for the consumer. further, following the liberalization of the international gateway, we have already seen mobile service companies reducing their rates significantly. this, coupled with the now affordable cell phone handsets, will enhance access to mobile phone services and an opportunity for many of our people to be financially served. finally, ladies and gentlemen, given the innovations around mobile banking and its attendant challenges, it is our expectation that this workshop will encourage dialogue between different market players in zambia and within the region. this conference provides an opportunity for such dialogue and i am glad that it takes cognizance of a dynamic market environment, paying special attention to | caleb m fundanga : launch of info - zambia bank student loan scheme remarks by dr caleb m fundanga, governor of the bank of zambia, at the launch of the indo - zambia bank student loan scheme, mulungushi university, kabwe, 21 april 2009. * * * hon. minister of education, professor geoffrey lungwangwa, mp the chairman of mulungushi university council, mr costain chilala the vice chancellor of mulungushi university, professor vernon chinene the chairperson of indo - zambia bank limited, mrs o moyo the managing director of indo - zambia bank limited, mr s r shukla members of staff of mulungushi university and indo - zambia bank limited members of the press invited guests ladies and gentlemen i am grateful to the vice chancellor of mulungushi university, professor chinene, for extending an invitation to me to witness the launch of the student loan scheme by our minister of education hon. professor lungwangwa. chairperson, i am reliably informed that the student loan scheme being launched today is the latest among the many product initiatives that indo zambia bank limited will be launching in the near future. the student loan scheme represents a major shift from the traditional loan schemes that have for a long time characterised traditional banking models in zambia. chairperson, the bank of zambia supports the introduction of innovative products such as the student loan scheme, a service that will allow parents and guardians who bank with indo zambia bank limited to access loans to meet university fees for their children at concessionary rates. hon. minister, this loan scheme being launched today provides a real opportunity for human capital development, which is necessary for national development. it enables children who would otherwise be excluded from the educational system have decent opportunities to receive education, as their parents can now access loans specifically targeted at meeting their educational expenses. ladies and gentlemen, a nation ’ s development depends on the levels of skills among its people and it is our expectation that the launch of this scheme will contribute towards this noble cause. to this end, i would like to encourage parents and guardians to use the student loan scheme in order to realise the vision of educating their children. chairperson, what we are witnessing today represents an initiative by banks to respond to the needs of the community. as the central bank, we commend your bank for this initiative, which was borne out of the identified need to develop financial products that address problems in our society. chairperson, ladies and gentlemen, let me end | 0.5 |
the reputations of both the companies engaging in the transactions and their financial advisers - and, in turn, impaired public confidence in those institutions. these potential risks and the resulting damage are particularly severe when markets react through adverse changes in pricing for similarly structured transactions that are designed appropriately. assessments of the appropriateness of a transaction for a client traditionally have required financial firms and advisers to determine if the transaction is consistent with the market sophistication, financial condition, and investment policies of the customer. given recent events, it is appropriate to raise the bar for appropriateness assessments by taking into account the business purpose and economic substance of the transaction. when banking organizations provide advice on, arrange, or actively participate in complex structured finance transactions, they may assume legal and reputational risks if the end user enters into the transaction for improper purposes. legal counsel to financial firms can help manage legal and reputational risk by taking an active role in the review of the customer ’ s governance process for approving the transaction, of financial disclosures relating to the transaction, and of the customer ’ s objectives for entering into the transaction. on the regulatory side, the federal reserve has been working with the other federal banking agencies and the securities and exchange commission to develop interagency guidance on complex structured finance transactions. we believe it is important for all participants in complex structured finance transactions to understand the agencies ’ concerns and supervisory direction. our goal is to highlight the “ lessons learned ” from recent events as well as what we believe on the basis of supervisory reviews and experience, to be sound practices in this area. as in other operational areas, strong internal controls and risk - management procedures can help institutions effectively manage the risks associated with complex structured finance transactions. here are some of the steps that financial institutions, with the assistance of counsel and other advisers, should take to establish such controls and procedures : • ensure that the institution ’ s board of directors establishes the institution ’ s overall appetite for risk ( especially reputational and legal ) and effectively communicates the board ’ s risk tolerances throughout the organization. • implement firm - wide policies and procedures that provide for the consistent identification, evaluation, documentation, and management of all risks associated with complex structured finance transactions - in particular, the credit, reputational, and legal risks. • implement firm - wide policies and procedures that ensure that the financial institution obtains a thorough understanding of the business purposes and economic substance of those transactions identified as involving heightened legal or reputational risk and that those transactions are approved | susan schmidt bies : financial innovation and effective risk management remarks by ms susan schmidt bies, member of the board of governors of the us federal reserve system, to the financial services institute 2004, washington, dc, 6 may 2004. * * * introduction thank you for inviting me to speak at this very timely seminar on the evolution of the financial services industry. the industry has indeed evolved over the four - and - one - half years since passage of the gramm - leach - bliley act - and perhaps in many respects, it has evolved in directions different than some envisioned when the act was under consideration in the congress. today i would like to discuss the evolution of the industry and the development of innovative products, services, and activities, especially in the areas of complex structured finance transactions and credit risk transfer. i will then discuss the role of counsel in ensuring the effective risk management of these innovations through a robust enterprise - wide risk - management framework. industry evolution and innovation the gramm - leach - bliley act recognized the market reality that the limitations imposed by the glass - steagall act in the 1930s and other statutory restrictions had been rendered nearly irrelevant by financial innovation, much of it outside the banking industry. gramm - leach - bliley realigned the law to reflect the existing realities of the marketplace and to permit banks to do more efficiently what they were already doing in costly ways. the statute relaxed long - standing restrictions on affiliations among commercial banks, securities firms, and insurance companies ; authorized the federal reserve board and the treasury to designate additional financial holding company activities as “ financial in nature ” or “ incidental to a financial activity ; ” and authorized the federal reserve board to determine whether activities are “ complementary to a financial activity. ” to avoid extending to these new activities the subsidy implicit in deposit insurance and in access to the federal reserve ’ s discount window and payment system guarantees, the act requires that many of these activities be conducted through a legally separate bank holding company affiliate, provided also that the holding company meets the “ well - managed ” and “ well - capitalized ” criteria for designation as a financial holding company. when gramm - leach - bliley became law in 1999, many predicted the rise of the financial conglomerate - an entity that would provide a full range of banking, securities, and insurance products and services to institutional and retail customers. however, this prediction has not been realized, and the pace of change has been relatively slow since 1999. the | 1 |
by the european central bank ’ s governing council. as regards the first condition, the impairments to the monetary policy transmission mechanism have noticeably declined, not least thanks to the monetary policy measures carried out by the european central bank, in particular the development of omts. the euro area is confronting a slow but steady recovery. certain member states that in 2011 and 2012 were subject to market overreactions are now seeing signs of positive growth. irrespective of the fact that yields for government bonds have reacted in varying degrees to new economic developments, there has been a clear reduction in the yield spreads compared to the situation in 2012. it is not the aim of omts to harmonise interest rates regardless of the differences between member states ’ macroeconomic or budgetary situation. concerning the second condition, two euro area member states are currently undergoing esm macroeconomic adjustment programmes. however, none of these programmes allow primary market purchases through the esm to the government bonds market. in conclusion, i can state that omts are in principle available as monetary policy instruments. the conditions for their crisis and location - related activation are, however, not currently met. possible volumes and potential risks for the federal budget with regard to the possible volume of omts it remains the case that no ex ante quantitative limits are set on the size of omts in order to prevent market participants from adjusting to this situation and using these instruments for their own purposes to the detriment of the effectivity of the monetary policy instruments put in place. notwithstanding this, the possible volume of omts is in fact quantitatively limited to one to three - year government bonds, which are suitable for omts. government bonds with a maturity of on to three years form only a small part of the entire volume of government bonds. the court of justice of the european union has confirmed that it follows from this that the commitments that the european central bank enters into are, in fact, circumscribed and limited. in order to ensure that maturities are not significantly shortened, it is foreseen that the european central bank ’ s governing council will closely monitor the maturity structure and the termination of new issues of government bonds in the concerned member states. thus the volume of omts is limited in a variety of ways. in assessing the potential risks of omts it should be taken into account that, in principle, the use of monetary policy instruments to maintain price stability entails financial risks for the eurosystem. this applies not | . what happens in this scenario if the central bank has an inflation target? when inflationary pressure in the economy increases, the central bank will tighten monetary policy so as to prevent the inflation target from being exceeded. such a course of events would result in an unfavourable policy mix. the stimulation provided by fiscal policy would be counteracted by the monetary policy, which would mean that even the positive short - term effects of the stimulation would decrease or even become negative. moreover, if the stimulation provided by fiscal policy is very powerful, this could lead to expectations of an increased risk that the inflation target cannot be upheld, which would then lead to rising inflation expectations and higher risk premiums on swedish interest - bearing papers. households and companies may feel growing uncertainty both about developments in public revenues and expenditure, and about the formulation of monetary policy. this can be costly for the economy if it leads to a failure to carry out investments and to unnecessarily cautious decisions about the allocation of resources. to sum up, then, it becomes more costly to pursue an excessively expansive fiscal policy when monetary policy is guided by an explicit inflation target. a good policy mix makes for better conditions a better policy mix arises if the orientation of fiscal policy does not make for higher inflation risk premiums. it can avoid this if the orientation of fiscal policy appears to be sustainable in the long run. the surplus - target in the public finances is a good example of this. one means by which the confidence felt by the general public in economic policy can be monitored consists of inflation expectations, which should not diverge substantially from the riksbank ’ s inflation target. when expectations of inflation diverge from this target in the longer term - whether upwards or downwards - it implies that monetary policy should be adjusted so as to steer expectations back towards the target. in this connection it is important to observe that a central bank whose inflation target commands high credibility often has more scope for acting than one that has little credibility. assume, for example, that an economy where the credibility of the inflation target is high experiences a positive disturbance to the business cycle, leading to higher demand. since the inflation risk premiums are low, employees will not need to demand extra high nominal wages to insure themselves against unexpectedly high inflation. this is because it can be anticipated that the central bank will tighten monetary policy. this in turn will mean that less stringent measures will probably be required than would be needed by a central bank that had not yet | 0 |
benjamin e diokno : internal audit at the forefront of digital innovation welcome remarks by mr benjamin e diokno, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), for the 6th asean central bank heads of internal audit network meeting “ internal audit at the forefront of digital innovation ”, 16 november 2021. * * * distinguished heads of internal audit ( ia ) and delegates of central banks in the asean region and the asian development bank, esteemed guest speakers, colleagues from the bangko sentral ng pilipinas, ladies and gentlemen, a pleasant day to all. on behalf of the monetary board and the bangko sentral ng pilipinas, i welcome you all to the 6th asean central bank heads of internal audit network meeting, which the bsp is hosting for the first time. it is unfortunate that we could not have hosted this meeting in manila where we can personally meet and welcome you, but i am sure that this virtual conference will be just as engaging and productive. behind the theme of this year ’ s meeting, which is aptly entitled “ internal audit at the forefront of digital innovation ”, is a similar novel concept : digital darwinism. it revolves around a simple rule : evolve or risk being irrelevant. in the last decade, we have witnessed how technology has dramatically advanced our day - to - day lives. we have also seen how the financial services industry has evolved to offer more customer - centric financial products, leveraging on emerging technologies, such as artificial intelligence, machine learning, and robotics, among others. the pandemic has further quickened this evolution. if anything, the pandemic has taught us that digitalization is no longer desirable to have, but a must - have. like other asean nations, the philippines aims to regain and surpass opportunities lost to the covid crisis. we want an economy that is stronger and more technologically advanced than ever before. one way of achieving this is through financial digitalization. going digital, building on it, tailoring it, securing it, and pushing it to new frontiers is imperative if central banks are to be successful in navigating the post - covid - 19 economy. in 2020, the bsp has launched the digital payments transformation roadmap where we aim to achieve two major goals by 2023 : first, that at least half of all financial transactions in the country are done digitally ; and second, at least 70 percent of filipino | ##lity in the markets in general, and on your own p / l in particular. therefore, as we prepare for the eventual fed “ lift - off ”, you may wish to also consider making only gradual, non - chunky adjustments in your own portfolios. let me now spend just a few more minutes to speak about our current stance of monetary policy. the bsp has done a number of things over the past few months. we have raised reserve requirements, hiked the sda rate, the rrp rate and then, recently, both the sda and the rrp rates together. these we did in response to various factors to achieve the following results : 1. to rein in domestic liquidity growth. m3 growth is now down from above 30 percent to just above 18 percent in july this year. we expect m3 growth to continue on its deceleration path and reach more normal levels later this year. ; 2. to help manage the financial stability risks of the over - all low interest rate environment. while we have not seen broad - based asset mis - valuations, the bsp remains cognizant that keeping rates low for too long could result in mis - appreciation of risks in certain segments of the market, including the real estate sector and the stock market as markets search for yield. so far, coupled with changes in reportorial requirements and macroprudential measures, the monetary policy actions appear to have achieved some success in moderating the buildup of “ irrational exuberance ” in certain market segments. ; 3. to help steer inflation expectations. bis central bankers ’ speeches our most recent business expectations survey showed that the number of those who expected inflation to go up in the current and next quarters has increased. in addition, our survey of private sector economists shows inflation forecasts that are precariously close to the upper end of our target range. this is particularly true of forecasts for 2015, for which the ng target is lower at 2 – 4 percent. further, our own forecasts are also now higher. we now see 2014 inflation to average 4. 48 pct, up from previous 4. 33 pct, and 2015 inflation to average 3. 79 pct, up from previous 3. 72 pct. while most of the reasons cited for the heightened inflation expectations are due to supply side pressures, elevated expectations need to be addressed sooner rather than later. these could fuel second - round effects, which may be more difficult to arrest once they | 0.5 |
allows an individual to make informed and effective decisions with all of their financial resources ” is an important life - skill in our diverse capacities as students, employees, consumers, savers and investors etc. in short, it is important for all responsible economic citizens to have. – so why not start now and start young? start young on financial fitness... it will be fun and worth it! if we plant the financial literacy seed now, we will watch as our children and students grow and bloom into responsible economic citizens. as parents, teachers and educators, we can do this by sharing and talking directly with our children about money matters, teaching them of the things to improve their money management skills, and be role models for them. to the winners of the 2014 be money wi $ e poster competition, i offer my heartfelt congratulations! you have done a magnificent job with these posters – your entries were chosen out of 550 entries submitted to us! i only pray that you will exercise some financial literacy with your cash prizes received today!! i would also like to acknowledge the principals and teachers for encouraging your students to participate in the competition and for incorporating financial literacy in your lessons. with the bis central bankers ’ speeches rewards that your individual schools will receive today i hope you are now ever more convinced that financial literacy is worth it and that it pay $ off! at this point i would like to acknowledge meilan meredith and her team at business system limited for the wonderful partnership in the poster competition and kindly donating prizes and trophies for our winners today. your partnership is greatly appreciated and we look forward to another opportunity to work with you in the future. and lastly, a big faamalo to the financial system development team for coordinating this year ’ s poster competition. i wish you all, a very blessed weekend. soifua ma ia manuia. bis central bankers ’ speeches | maiava atalina ainuu enari : educating children about money matters opening remarks by ms maiava atalina ainuu enari, governor of the central bank of samoa, at the awards ceremony of the “ be money wi $ e ” financial literacy poster competition 2014, apia, 14 march 2014. * * * greetings and welcome to you all, dear parents, school principals and most importantly the winning students of the 2014 be money wi $ e poster competition. as i look across the room to the students, parents and principals / school reps,... without a doubt this is a happy friday for you all. it gives me great pleasure to say that, this is also a happy friday for us at the central bank – we are as much excited to reveal the winning poster entries as you are to be here today to receive your awards!! talofa! talofa lava ; i am delighted to be here today, at the conclusion of an important initiative for the central bank, to address this gathering and most especially the winners of – our first be money wise financial literacy poster competition. this competition is one of many programs undertaken by the central bank to perform one of its mandates of promoting financial literacy under the “ financial fitness ” or “ fit for finance ” campaign. the “ be money wi $ e poster competition 2014 ” was also conducted in collaboration with the global money week which is coordinated by child & youth finance international. global money week takes place on the 10 – 17 march and is a worldwide celebration through events and activities to help empower children and youth to be confident and responsible economic citizens. during this week, children are encouraged to engage in learning on how money works, including saving, creating livelihoods, gaining employment and entrepreneurship as well as living financially smart lives. and so for samoa ’ s contribution to the event, the central bank decided to conduct a financial literacy poster competition to encourage kids to use their imaginations and knowledge about money choices, and help provide a creative outlet to demonstrate their knowledge. for this year ’ s poster competition theme “ i can grow my money by... ” myself and mrs vicseta meredith of business system limited had the pleasure and the hard task of judging the entries. we were very impressed with the quality of entries that were presented to us – so it pains us that there are only a limited number of awards we can give out for the competition. “ financial literacy ” or “ the set of skills and knowledge that | 1 |
public sector by countries that participate, or aspire to participate, in international capital markets. the focus of this work was the authorities foreign currency liquidity position, which consists of foreign exchange resources that can be easily mobilised, adjusted for potential drains on those resources. while greater disclosure is not a panacea for international financial crises, adherence to the standards developed in the wake of the 1997 crisis would go a long way toward preventing future stresses and facilitating responses to those that do occur. some have argued that an equally important issue is a disclosure standard for private participants in international capital markets, especially highly leveraged entities. such disclosure could be useful, and work on this topic is proceeding. but progress on official disclosure should not be delayed pending the outcome of these efforts. the asian financial crises have reinforced the basic lesson that emerging market economies should pay particular attention to how they manage their foreign exchange reserves. but managing reserves alone is not enough. in particular, reserves should be managed along with liabilities - - and other assets - to minimise the vulnerability of emerging market economies to a variety of shocks. in this context some simple principles can be outlined that are likely to be useful guidelines for policymakers. it may also be useful to consider somewhat more nuanced approaches to this problem. considerable progress has been made in recent years in developing sophisticated financial instruments. these developments create added complexity that all financial market participants, including policymakers from emerging market economies, must manage. however, they also create opportunities that emerging market economies should seek to exploit. in doing so there are lessons they can learn from advances in risk management strategies developed by major financial institutions. in his remarks at the recent g - 33 seminar in bonn, pablo guidotti, the deputy finance minister of argentina, proposed a simple guideline for policymakers in emerging market economies that a number of my colleagues at the federal reserve believe is worth considering. guidotti suggested that countries should manage their external assets and liabilities in such a way that they are always able to live without new foreign borrowing for up to one year. that is, usable foreign exchange reserves should exceed scheduled amortisation ’ s of foreign currency debts ( assuming no rollovers ) during the following year. this rule could be readily augmented to meet the additional test that the average maturity of a country s external liabilities should exceed a certain threshold, such as three years. the constraint on the average maturity ensures a degree of private sector “ burden sharing ” in times of crisis, since in the | mr greenspan discusses recent trends in the management of foreign exchange reserves speech by the chairman of the board of governors of the federal reserve system, alan greenspan, at the world bank ’ s conference on recent trends in reserves management, washington, d. c., on 29 april 1999. one way to address the issue of the management of foreign exchange reserves is to start with an economic system in which no reserves are required. there are two. the first is the obvious case of a single world currency. the second is a more useful starting point : a fully functioning fully adhered to, floating rate world. all requirements for foreign exchange in this idealised, i should say, hypothetical ; system could be met in real time in the marketplace at whatever exchange rate prevails. no foreign exchange reserves would be needed. if markets are functioning effectively, exchange rates are merely another prices to which decision makers - - both public and private - - need respond. risk - adjusted competitive rates of return on capital in all currencies would converge, and an optimised distribution of goods and services enhancing all nations standard of living would evolve. public and private market participants would require only liquid reserves denominated in domestic currency. and in the case of a central bank of a fiat currency regime, such reserves can be created without limit. but, clearly, the real world is not perceived to work that way. even if it did, it is apparent from our post world war i history, that national governments are disinclined to grant currency markets unlimited rein. the distributions of income that arise in unregulated markets have been presumed unacceptable by most modern societies, and they have endeavoured, through fiscal policies and regulation, to alter the outcomes. in such environments it has been the rare government that has chosen to leave its international trade and finance to what it deems the whims of the marketplace. such attitudes very often are associated with a mercantilist view of trade that perceives trade surplus as somehow good, deficits bad. since in the short run, if not in the long run, trade balances are affected by exchange rates, rates that are allowed to float freely are few and far between. in a crisis, of course, monetary authorities are often overwhelmed, and lose any control of the foreign exchange value of their domestic currency. most nations, for good or ill, have not been indifferent to the foreign exchange value of their currency. i say most, but not all | 1 |
measures, is reflected in the fact that several individual jurisdictions have already subjected themselves to mutual evaluation examinations. for jamaica, this workshop is extremely timely. we will, within the next few months, undergo the full range of evaluations related to this subject area. the advantages that we expect to gain from this week ’ s training are therefore of significance to jamaica. however, our interests are not purely selfish, for jamaica is not only committed to the promotion of sound anti - money laundering measures within our borders, but we are also dedicated to ensuring that these measures are entrenched in the wider region. indeed, we have participating from within the public sector, six senior officers who are being trained as evaluators to take part in the peer assessment exercises of our caribbean neighbours. the support of cfatf members as indicated by the large representation of jurisdictions registered here today, further underlines the region ’ s commitment to adopting and applying new international standards and methodologies. with regard to jamaica, the government has made significant strides in amending and enacting appropriate legislation to prevent and detect money laundering and financial terrorism. from as far back as 1994, the drug offences ( forfeiture of proceeds ) act was passed. in 1996, we had the passage of the money laundering act ( mla ) and in 1997, the money laundering regulations. the mla was subsequently amended in 2002 to widen its scope to include money transfer and remittance agencies. further strengthening of the legislative framework continues. in december 2004, the senate approved amendments to the financial legislation, geared towards increasing the powers of disclosure of information to the financial investigations division of the ministry of finance, and to the sharing of information with overseas regulatory authorities. further amendments to the money laundering act and the financial investigations act are currently before a joint select committee of parliament. these amendments are aimed at fully aligning the country ’ s money laundering legislation with existing international guidelines. the developments in the legislative framework are being complemented by operational initiatives in various public sector organizations that are involved in different aspects of the measures to counter money laundering activities. as supervisor for the deposit - taking financial sector, the bank of jamaica first issued money laundering guidelines to its supervisees in 1988. since then, these guidelines have undergone substantial updates, the most recent being in 2004 when they were upgraded to take account of the ‘ eight special recommendations ’ on terrorist financing which were issued by the financial action task force ( fatf ) during 2003. these guidelines also give recognition to the best practice standards for | customer due diligence procedures issued by the basel committee on banking supervision. the financial services commission, which has responsibility for non - deposit - taking financial institutions such as insurance companies, securities dealers, unit trusts and mutual funds, has also recently issued similar guidelines. the bank of jamaica actively participates in national efforts to ensure that jamaican financial intermediaries are not being used as conduits for the funding of terrorist groups. the central bank chairs a financial crimes task force that has been charged with the responsibility of making proposals for relevant amendments and / or enactment of legislation covering all facets of financial crime, inclusive of money laundering, terrorism financing, and related issues. these efforts have culminated in the legislative amendments that were referred to earlier. in closing, let me stress the importance of the collaborative efforts of the relevant authorities within jurisdictions, regionally and internationally, in ensuring the effectiveness and success of the aml / cft measures. the effectiveness and success of these measures depend critically on this collaboration. i therefore trust that the combined efforts of all our caribbean colleagues will restrict those who seek to exploit our financial systems and corrupt our economies and societies for their own selfish gains. i believe that over the next five days the sessions will serve to strengthen the capacity of our examiners and facilitate the application of the new 2004 imf / world bank assessment methodology as the basis for future anti - money laundering / combating of financing terrorism ( aml / cft ) assessment exercises. in the meantime, i wish to thank the caribbean financial action task force, the international monetary fund and the world bank, for the timely scheduling of this workshop. i hope that you will all have a very productive week, as you learn how to implement the imf 2004 assessment methodology and draw on the wealth of knowledge of the presenters and the experience of your fellow participants. to all our overseas visitors, i hope that you will find some time to make it jamaica again in the near future, when you can relax and explore our beautiful island. thank you. | 1 |
now, onto familiar ground - to discuss the new international financial architecture. but i want to key off from the generalities discussed so far : that successful globalisation will require a set of rules no less complex than the rules which govern domestic economies. these rules will have to address the strong monopolistic dynamic of the new economy and the self - interested motivation of individual countries. these rules have to be hammered out under the most difficult of circumstances, where there is no while some of the rules will be directed at these new economy characteristics, other rules should be aimed at enhancing competition and all the elements which go with a well - functioning market system. so the general thrust of the wto towards greater opening - up of international trade and the policies embodied in the “ washington consensus ” ( deregulation and opening - up of markets ) is, of course, still very important. some fine distinctions are needed here : deregulation does not mean “ no rules ” : as detailed, intrusive, prescriptive regulations are relaxed, they should be replaced by general rules - of - the - game. this distinction may seem subtle, but it is the one which applied to the process of domestic financial deregulation in australia : as the old prescriptive rules were dismantled, they had to be replaced by the broad framework of prudential supervision. well - established political process to adjudicate between rival claims and achieve some kind of consensus. nevertheless, we have to try to do this, because if we do not, the rules will be hammered out by others, and not necessarily in our best interests. again, i would refer back to the thomas friedman idea that a golden straitjacket has been developed ( and will be further developed ) and that countries will, to a greater or lesser degree, have to adjust to it, like it or not. the need is to find some kind of decision - making process ( because, after all, the golden straitjacket is not the product of some impersonal adam smith free market process ) to write ( and right ) the rules governing the financial relationships between countries. the post - war period produced the bretton - woods rules a great improvement on the gold standard. the motivation which produced the bretton - woods institutions ( the imf and the world bank ) has been lost, but needs to be regained if we are to achieve an appropriate new financial architecture. rules and the asian crisis the asian crisis revealed significant weaknesses in the rules governing | . rba. gov. au / speeches / 2019 / sp - gov - 2019 - 05 - 21. html 16 / 16 | 0 |
is progressing with the implementation of its own voluntary code of corporate governance. i ’ m pleased that ifia showed such leadership in developing this code and i think it will soon be time to assess the extent of take up and compliance in the sector. more generally, this will be a good opportunity to take stock about what has worked well – and what has not – with the corporate governance code and regulatory framework in this area. strong corporate governance is such a crucially important foundation for a prudently run and compliant financial services sector that it ’ s essential we get the regulatory framework right and be prepared to update it periodically. there will be a lot of interest in this exercise and i ’ m sure that the institute of directors will again be a sensible voice in the consultation process and a source of useful input. in the meantime, however, the current code remains in force as is and those of you in this room who are directors at financial services companies continue to have the challenging task of overseeing your firms in a period of seemingly never - ending financial uncertainty and regulatory change. there are a huge range of issues you will need to stay on top of, but i ’ m sure you know that already. as i mentioned earlier, where we provide a risk assessment under prism, this will hopefully assist you with your work. but taking a step back, let me suggest a few areas that all directors in all financial services firms might reasonably take a strong interest in during the year ahead. there are obviously some sector - specific issues that should be worrying some of you. i hope the boards of the domestic banks are pressing their management teams to make real progress in the workout of those troubled mortgage and small business portfolios i mentioned, for example. however, let me draw out three areas of broad applicability across all sectors. firstly, i would suggest that boards of directors should take a close interest in ensuring that their financial services firm has in place a high quality risk appetite statement that is well understood and implemented throughout the firm in practice. a clear articulation of the acceptable level of risk undertaken by a firm, for example in terms of potential lending, investment portfolio or insurance underwriting losses expressed in terms of p & l or balance sheet events at different confidence intervals, is an important discipline and an essential complement to a well - articulated business strategy. indeed, our corporate governance code requires that such a statement be in place. however, the quality of what we see, in a range of sectors, is uneven and | generating roles. this is not to suggest that diversity is all about gender. there are no studies that i have seen for the eu or ireland on racial and ethnic or sexual orientation diversity in business, but i have no reason to believe that it is any better than the uk – where 78 % of uk companies have seniorleadership teams that fail to reflect the demographic composition of the country ’ s labour force and population – or indeed the us, where the figure is 91 %. so the current situation, in ireland at least, is concerning. last year, we reviewed a sample of diversity policies in regulated firms, which many financial services firms are now required to have ( under the crd, solvency ii and the central bank ’ s corporate governance codes ). these are not going to turn the dial. in the main, they were striking for their lack of ambition. in many cases internal targets that are already being met have been set, many lack accountability, and there is little evidence that progress against them is being monitored. remarkably, for two large financial services firms, their diversity policies were exactly the same, word for word, with the exception of the names of the firms and some of the targets they had. notwithstanding these issues, there are financial services firms that have a healthy gender balance, with nominations among certain banks and insurance companies at 44 % and 45 % female applicants over the past five years. there are financial services firms that have diversity policies and programmes that demonstrate that diversity is a priority. there are also sector wide initiatives, such as the 30 % club, and the work of fusion itself, which are focusing on addressing these issues, which the central bank is actively participating in. but more needs to be done. what actions are we taking as stated by governor lane during his address to the european financial forum, “ the financial services industry can certainly expect to see a continued increase in the intensity and intrusiveness of our engagement on diversity. ” 24 diversity is supervisable. we can legitimately expect regulated firms to meaningfully address diversity and inclusion in the boardroom, at the executive level and the pipeline of talent needed to run the organisation in the long - term. our supervisory work is, therefore, being enhanced as follows : we can assess whether boards and the executive are taking responsibility for actively promoting diversity and inclusion at all levels of the firm, to improve decision - making and how this, in turn is impacting on behaviour and culture. we will review the policies that are | 0.5 |
: “ measure twice, cut once. ” by continuing our site, agree yet to our of ause and privacy statement. but youas canwe learn more about we use cookies by fast forward to touse today, andyou i have to terms pursue career in carpentry. prepare for ahow post - libor world, the same adage runs through my mind. we must take great care, because the decisions made today will determine reviewing our privacy statement. if the libor transition is ultimately successful. the past decade has shown us that the problem with using libor as a benchmark interest rate has been an extremely risky one to have — and to solve. 3 it's important that we focus not only on making the transition, but also on getting the transition right. we've learned how challenging and costly it is to move away from a widely used unsound reference rate. it's essential that we move forward in a way that ensures that we do not have to go through such a transition again in our lifetimes. i know i wouldn't wish that on anyone. a foundation for the future this adage has many applications, but it's especially important to keep in mind when laying a foundation — because the foundation is everything. back when i lived in california, we bought a victorian house built in the 1890s. the attraction of the house was that it had lots of rooms and spaces for the family to live. but, the existing foundation was crumbling and not even attached to the house. in a major earthquake, the house would have quickly toppled over. we had a new foundation installed, and my mother asked to see before and after pictures. i responded that one picture would do since all the work was done underground and out of sight. the difference was that this house would last another 100 years, while the old house would have lasted only until the next earthquake. i see the current juncture in the transition away from libor to a new reference rate regime in much the same way. we have seen the development of several reference rates that may meet various needs, including creditsensitive rates. 4 separately, the arrc just announced the indicators that it will consider in recommending a forward - looking secured overnight financing rate ( sofr ) term rate, which with continued market progress, it believes can be achieved relatively soon. 5 these are valuable steps in the transition to the new post - libor world — but in my house metaphor, these represent the | william c dudley : how goes the recovery? challenges for the nation, the region and the fed remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at cornell university, ithaca, new york, 25 october 2010. * * * good morning. i am pleased to have this opportunity to speak to you as i travel through upstate new york to meet with various communities in the region. this afternoon i will focus on national and regional economic conditions and what the fed is doing about them – with particular attention to the housing sector and to conditions in upstate new york. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee ( fomc ) or the federal reserve system. introduction to the new york fed as many of you know, this is my first chance to speak at cornell university since i became president of the new york fed. so, by way of introduction, let me start with a synopsis of what the new york fed is, what we do and what makes my job so interesting. the new york fed is part of the federal reserve system, america ’ s central bank, and was created by congress in 1913. with this act, congress delegated to the fed system its constitutional authority to manage the money supply – and designed it be decentralized, representative of all of america and independent of the political process. the fed system is comprised of the board of governors in washington, d. c. – a federal agency led by chairman ben bernanke – plus 12 autonomous reserve banks that span the country. for example, the district overseen by the new york fed includes all of new york, the 12 northern counties of new jersey ; fairfield county, connecticut ; puerto rico and the u. s. virgin islands. each reserve bank is autonomous, with its own charter and a board of directors drawn from its district, but overseen by the board of governors. the law that created the federal reserve made us independent so we can make decisions in the national interest free from political pressure. however, the fed is accountable to congress. congress has set an explicit objective for monetary policy : to pursue the highest level of employment consistent with price stability. this objective is often referred to as our “ dual mandate, ” because it combines two goals : high employment, and low and stable inflation. in order to promote these objectives, we also pay close attention to financial stability, because without financial stability, it is very | 0.5 |
central bank. the 2003 legislation did create the risk of ambiguity with regard to which entities were responsible for what. certainly, communication between the macroeconomic specialists assessing systemic risks and the micro prudential supervisors dealing with individual banks was not fully effective : each side felt they would have acted more vigorously had they been more aware of what the other knew. but that probably reflected a lack of mutual understanding of the methodology and professional language as between economists and supervisors more than the institutional separation, which was by no means rigid. in the end, senior officials in both institutions, as well as many elsewhere at home and abroad, were too optimistic about the strength of the economy and the irish banks. one should recall that several other central banks and financial regulatory authorities suffered similar failures in the run - up to the crisis. but ( with the exception of iceland ) they had not allowed the scale of their banking systems to get so completely out of control as happened in ireland. bis central bankers ’ speeches the report ’ s section on crisis containment includes an assessment of the 29 september 2008 decision to guarantee substantially all of the liabilities of the banks. while several other countries followed suit in subsequent days with more limited guarantees, the guaranteeing of subordinated debt of the banks was clearly a mistake ; the formal guarantee, backed by legislation, of all long - dated debt was also unnecessary and bound to constrain the authorities ’ ability to restructure or wind - down failed banks before the expiry of the initial guarantee. with the benefit of hindsight – had the regulatory authorities had any notion that heavy losses could be involved – an alternative strategy ( mentioned in a footnote on page 132 of the may 2010 report ) of putting anglo ( and inbs ) into liquidation on september 29, while standing behind the rest of the system, should have been more favourably considered. given how resistant external authorities subsequently proved to be to the imposition of losses on unguaranteed senior bank debt of failed banks, external partners might have responded to such an idea with compromise proposals that might have alleviated the subsequent pressures on the irish exchequer. more generally, greater consultation with eu partners would have been highly desirable and could have helped ireland to be less on the back foot in subsequent negotiations. despite the passage of time, i see no reason to alter the assessments i made in may 2010. 1 accordingly, extensive changes have taken place within the central bank to ensure that the identified shortcomings have been removed as far as possible. while | measures that impose ( flexible ) ceilings on loan - to - value ( ltv ) and loan - to - income ( lti ) ratios are designed to limit the risks of over - borrowing by households and over - lending by banks. more generally, the financial system will be more resilient, the more diversified are sources of funding ( across banks, non - banks and markets ), the greater the share of equity and other loss - absorbing instruments in liability structures and the more tightly controlled are maturity mismatches. turning to fiscal buffers, the running of budget surpluses that fund some combination of reducing the stock of public debt and building up a rainy day fund of liquid assets would allow the government to implement a stabilising, counter - cyclical fiscal expansion in the event of a future downturn. if fiscal buffers are not built up in good times, there is a risk of repeating the costly experience of past episodes by which economic downturns were amplified by pro - cyclical fiscal austerity. the latest data show that the unemployment rate in june 2018 stood at 5. 1 percent ( see figure 1 ). this is substantially below the 5. 8 percent average rate for 2018 projected in the government ’ s stability programme update 2018 ( spu2018 ) that was published in april. it is also substantially below the ( 5. 3, 5. 4 ) range for the unemployment rate during 2019 - 2021 in the government ’ s macroeconomic projections. just two years ago, spu2016 projected that the average unemployment rate in 2018 would be 7. 0 percent and the range for 2019 - 2021 would be ( 6. 0, 6. 6 ) percent. the improvement in the labour market is very welcome but does suggest that the economy may be more cyclically - advanced than is assumed in spu2018. central bank of ireland - unrestricted figure 1. unemployment rate 18 % 16 % 14 % 12 % 10 % 8 % 6 % 4 % 2 % 0 % note : data from central statistics office. figure 2. external balance current account balance - before and after adjustment € billions - 10 - 20 current account balance ( ca ) note : data from central statistics office. modified current account balance ( ca * ) central bank of ireland - unrestricted in terms of cyclical indicators, it is also helpful to keep an eye on the current account balance, which captures the gap between national income and national expenditure. figure 2 shows that the suitably - adjusted measure | 0.5 |
is small. [ lx ] the central bank does not prudentially regulate clos but that does not mean that they are without risk. clos may amplify the spread of risk throughout the financial system due to uncertainty over who is exposed to them. the key point is that the resilience of market - based finance at the current scale – both in ireland and internationally – remains untested in times of stress. i am particularly interested in understanding and assessing the risks in the non - bank sector as are many of my colleagues around the world. ireland is – and has to be – at the forefront of these policy discussions. i will give a much wider assessment of both the macrofinancial environment and the resilience of the financial system when we publish our financial stability review next month. in summary, changes are taking place in our financial system. given our international interconnectedness, building resilience through this transition is essential. how do we meet these challenges? so, how do we meet the challenges posed by these transitions? for me it ’ s about continuing to focus on the fundamentals, about managing the short term while planning for the medium term, ensuring our frameworks are fit - for - purpose and learning the lessons of the past while preparing for the future. it ’ s also about being prepared to challenge ourselves. first, we must continue to focus on fundamentals. successful economies need stable and sustainable macroeconomic frameworks and sound monetary policy that delivers predictable prices. they also need stable and well - regulated financial systems and wellfunctioning markets. the central bank will continue to focus on its core mandates of price stability, a stable financial system and the protection of consumers. second, we need to focus on the medium term while managing the short term. focussing excessively on short - term issues risks losing sight of both the fundamentals and our overarching objectives. third, regular reviews of frameworks are good practice and we need to ensure our frameworks are fit - for - purpose. macroprudential policy one such area where this applies is macroprudential policy. one of the key lessons from the crisis was that focusing on monetary stability and the safety and soundness of individual institutions was not enough. a key missing plank of the macroeconomic framework were policies designed to strengthen the resilience of the system as a whole. since the crisis, one of the main innovations has been the introduction of a macroprudential framework | graduates, exceptional students interested in our work, motivated by public service. they give me immense optimism about our capacity – as a country, as a global community – to tackle the challenges we face. they understand the value of working together, and they bring critical new thinking to complex issues. they throw themselves into the tumult. and that is the best way to deal with the challenges ahead of us. go raibh maith agat. [ i ] i would like to thank all the colleagues in the central bank of ireland who contributed to the preparation of my remarks. [ ii ] keane, j. 2008. vaclav havel : a political tragedy in six acts. hachette uk, pp. 333. [ iii ] see remarks from my colleague, sharon donnery, risks and resilience in uncertain times. [ iv ] see waterford county museum, ‘ waterford geology and prehistoric dungarvan. ’ [ v ] see waterford county museum, ‘ early waterford history. ’ [ vi ] brophy, a. j. 2004. port of waterford : extracts from the records of the waterford harbour commissioners from their establishment in 1816 to the report of the ports and harbours tribunal. journal of the waterford archaeological and historical society, no. 60, pp 151 - 169. available here. [ vii ] see waterford medieval museum, ‘ king henry viii ’ s cap of maintenance. ’ [ viii ] lough, s. m., 1916. trade and industry in ireland in the sixteenth century. journal of political economy, 24 ( 7 ), pp. 713 - 730. [ ix ] ibid, pp. 718. [ x ] brophy, a. j. 2004. port of waterford : extracts from the records of the waterford harbour commissioners from their establishment in 1816 to the report of the ports and harbours tribunal. journal of the waterford archaeological and historical society, no. 60, pp 151 - 169. available here. [ xi ] see remarks from my colleague, sharon donnery, small open economies – vulnerabilities in a changing world. [ xii ] ibid. [ xiii ] see foreign direct investment in ireland 2017, central statistics office. [ xiv ] ibid. [ xv ] barry, f. and van egeraat, c., 2008. the decline of the computer hardware sector : how ireland adjusted. quarterly economic commentary, pp. 38 - 57. [ xvi ] see corporation tax 2018 payments and 2017 returns, revenue | 1 |
economy. your excellencies, distinguished ladies and gentlemen, permit me at this juncture to mention other intervention programmes and schemes of the central bank of nigeria targeted at catalysing production and productivity in the real sector of our economy. these interventions include the n1. 0 trillion real sector facility ( rsf ), real sector support facility ( rssf ), anchor borrowers'programme ( abp ), commercial agriculture credit scheme ( cacs ), non - oil export stimulation facility ( nesf ), and textile sector intervention facility ( tsif ). specifically, these programmes and schemes have continued to receive resounding commendations, as they have proven to be effective in expanding credit and stimulating investments in the real sector. for instance, under the n1. 0 trillion real sector facility, the bank has released a total of n1. 40 trillion to 331 real sector projects in agriculture, manufacturing, mining, and services sectors. under its real sector support facility ( rssf ), the cbn has disbursed n166. 21 billion to 25 projects. in the agricultural sector, the bank's anchor borrowers'programme ( abp ) has disbursed n927. 94 billion to over 4. 5 million smallholder farmers for the cultivation of 21 commodities across the country. also, the bank has financed 666 large - scale agricultural projects with the potential of creating an estimated 70, 070 direct and indirect jobs under its commercial agriculture credit scheme ( cacs ). 2 / 4 bis - central bankers'speeches your excellencies, distinguished ladies and gentlemen, with the significant opportunities in the real sector, there remains sufficient room for additional investments in the various sub - sectors and i would like to urge potential investors to take advantage of the various cbn intervention programmes and schemes, as well as other financing options out there, to invest in key sectors of our economy given the potential gains that could be generated from them. let me assure all current and prospective operators in the industrial sector that the central bank of nigeria stands ready to continue to provide the needed support, financial and otherwise, to fast - track the development of our industrial sector. for those seeking to invest in new greenfield or existing brownfield projects, the bank will continue to provide all the needed support, both in naira and dollars specifically for the importation of plants and equipment to actualize these investments. it is pertinent to point out that the foreign exchange support will be solely for the | godwin i emefiele : official launching of the 100 for 100 policy for production and productivity opening remarks by mr godwin i emefiele, governor of the central bank of nigeria, at the official launching of the 100 for 100 policy for production and productivity ( ppp ), lagos, 31 january 2022. * * * good afternoon, distinguished ladies and gentlemen. i am pleased to welcome you to the official launch of the 100 for 100 policy for production and productivity ( ppp ), an intervention of the central bank of nigeria designed to stimulate investments in nigeria's priority sectors with the core objective of boosting production and productivity, which will aid our efforts to stimulate greater growth of our economy and create employment opportunities. under this initiative, every hundred days, manufacturers in critical sectors that seek to engage in greenfield projects or in expanding their existing facilities will have access to cheaper forms of credit at single digit rates, as well as foreign exchange to procure plants and machineries. this programme has the potential to significantly accelerate manufacturing output, promote further diversification of our economy and enable faster growth of our non - oil exports. more specifically, the ppp will help to reduce our overreliance on imports, and stimulate productivity in agriculture, healthcare, manufacturing, extractive industries, logistics services, trade - related infrastructure, and renewable energy. this launch also fulfills the commitment we made during the unveiling of the first central bank digital currency ( cbdc ), the enaira, by his excellency, president muhammadu buhari gcfr, on the 25th of october, 2021, when we announced that the cbn will introduce a 100 for 100 – policy on production and productivity ( ppp ), under which eligible companies in priority sectors will be screened and 100 companies will be selected to receive funding from the cbn every 100 days, beginning from 1st november 2021. the selection of subsequent beneficiaries will be rolled over every 100 days with new sets of 100 companies and details of these companies will be published in the major national dailies. today's launch of the 100 for 100 policy for production and productivity ( ppp ) initiative and cheque presentation to selected companies, is a culmination of our engagements with critical stakeholders in the manufacturing sector and financial institutions, as we have here today pioneer beneficiaries of the initiative and the participating financial institutions. your excellencies, distinguished ladies and gentlemen, over the past seven ( 7 ) years, | 1 |
to assess whether monetary policy has contributed to changes in inequality and, if so, through which channels. the researchers find that contractionary monetary policy shocks have significant long - run effects on inequality. in particular, they note the sensitivity of inequality measures to monetary policy actions at the zero - bound. they conclude that nominal interest rates hitting the zero - bound in times when the central bank ’ s systematic response to economic conditions calls for negative rates is conceptually similar to the economy being subject to a prolonged period of contractionary monetary policy. a report last year by the mckinsey global institute looks specifically at the period of what it calls ultra - low interest rates. 5 it suggests that as a result of low rates in the us, the uk and the euro area, households have lost a combined $ 630 billion as lower interest earned on deposits and other fixed income investments has outweighed lower interest payments on debt. younger households, which tend to be net borrowers, have gained while older households, which tend to be net savers, have lost at a time when many countries have introduced pension reforms affecting the benefits of pensioners rising asset prices prompted by monetary easing could potentially offset this effect. but while bond prices have clearly risen, the mckinsey report finds little evidence that nonstandard monetary policy has boosted equity markets. james bullard, president of the federal reserve bank of st louis, has also examined the post - 2008 experience and whether quantitative easing has exacerbated us inequality. 6 it has been suggested that the fed ’ s policy of buying us government bonds and mortgage - backed securities has depressed real yields on relatively safe assets and thus encouraged savers to move into riskier assets, such as equities, raising their prices. since only half of us households hold equities and they tend to be the wealthiest households, this policy could be making the wealth distribution more unequal. the analysis suggests that quantitative easing has influenced equity prices, but he does not think that this has made the us income or wealth distribution worse. it is, he says, only as good or bad as it was before the crisis. bullard also examines whether current us monetary policy hurts savers. he argues that fed policy generally and quantitative easing in particular have influenced the real yield earned by savers. the question is then whether the fed has helped or hurt the situation by pushing real see dobbs, r., lund, s., koller, t. and shwayder, a. | to ensure a sustained recovery. in this respect, an appropriate restructuring and consolidation of the banking sector plays an important role. sound balance sheets, solid risk management, and transparent and robust business models are key to strengthening the financial soundness of banks and their resilience to shocks, thereby laying the foundations for sustainable economic growth and financial stability. we are now at your disposal for questions. | 0.5 |
5 0, 0 0, 0 1, 0 1, 0 - 0, 5 - 0, 5 0, 5 0, 5 - 1, 0 - 1, 0 0, 0 0, 0 4 - quarter inflation 1, 5 gdp 0. 5 0. 5 0. 4 0. 0 0. 0 0. 2 0. 2 - 0. 5 - 0. 5 0. 0 0. 0 hours worked 0. 4 0. 4 0. 4 anticipated 0. 2 unanticipated 0. 2 note. all x - axes refer to quarters. 0. 0 0. 0 0. 35 per cent of an estimated potential employment rate of, conservatively, 93 per cent of a labour force of approximately five million is equivalent to over 16 000 jobs. calculating on the basis of 93 per cent thus entails assuming a rather high figure for long - term unemployment of 7 percent. an increase of over 16 000 jobs is thus not very far from the middle of the preliminary range of 10 000 to 25 000 jobs saved that i mentioned at the monetary policy meeting in october. to sum up, a reduction of the repo rate path by 0. 25 percentage points over four quarters will thus give, all else being equal, an increase in inflation of just over 0. 4 percentage points and, if employment varies one - to - one with hours worked, an increase in employment of approximately 0. 35 per cent, which is equivalent to an estimated figure of over 16 000 jobs. we see in figure 3 that the consequences of an unanticipated reduction of the repo rate are less than those of an anticipated reduction. in such a case, hours worked increase by 0. 23 per cent, equivalent to just under 11 000 jobs, when calculated on the same basis. these estimates are unbiased estimates and forecasts of the effects of a lower repo rate path. the actual effect may be larger or smaller. it is possible that the effects of the repo rate on the economy are smaller than normal when the repo rate is close to zero. it is also possible that a reduction of the repo rate path, in a situation in which the market ’ s repo rate expectations remain higher than the repo rate path, can have a larger than normal downwards effect on repo rate expectations, thus increasing the effects on the economy. in the absence of more detailed information on the effect that may be dominant, it does not seem unreasonable to assume | underdevelopment of regional bond markets. it is also often mentioned that the immature local derivatives market makes appropriate risk - taking transactions difficult, as risk - hedging instruments are limited. moreover, owing to less - developed securitization markets in the region, asian economies do not sufficiently enjoy the merits of the securitization schemes that attract a variety of investors depending on their risk - taking capacities ( charts 4 and 5 ). fourth, meanwhile, there are some jurisdictions in asia that rely significantly on so - called micro - finance. micro - finance is indispensable particularly for the sustainable growth of emerging markets and developing economies, and as such has been a main agenda item of the g - 20. however, there is one caveat. the main agents of micro - finance are nonbank financial institutions that, unlike banks, are not tightly supervised by the authorities, but which, like banks, take deposits and provide credit to customers. this means that it could become a risk factor in the financial system, if the market share of loans and deposits by micro - finance agents becomes non - negligible. 2. policy responses by the asian authorities current regional initiatives how have the asian authorities responded to these vulnerabilities? among many, i would like to introduce the following two projects that have been particularly effective in the past ten years. the first is a project aimed at developing liquid bond markets to bridge abundant local savings and local investments. the executives ’ meeting of east asia and pacific central banks, emeap, consisting of eleven central banks and monetary authorities in the region, established the asian bond fund investment trust, and became the initial buyers by investing in sovereign and quasi - sovereign bonds in the eight member jurisdictions. 1 also, as part of when it was launched in 2003, the asian bond fund was limited to investment only in u. s. dollardenominated bonds. however, since 2005, the fund has begun to include those denominated in the local currencies of the eight members, with the aim of raising awareness among private investors. each listed fund bis central bankers ’ speeches the process of asean + 3, the authorities have launched the asian bond markets initiative ( abmi ). under the current initiative, there are four main issues that were raised and have been implemented since 2008, namely i ) the facilitation of demand for local currencydenominated bonds, ii ) the promotion of their issuance, iii ) the improvement of the | 0 |
. the question of creating digital central bank money has become a topical issue nowadays. we have several answers to this. first, today, commercial bank money is used in most cases. we believe that, in the area of retail, digital commercial bank money could also be used in dlt - based systems. second, many stable coins are digital commercial bank money. third, we could imagine what is referred to as a trigger solution. that means that a dlt - based settlement of any transaction of goods or securities would trigger a payment via conventional payment systems. perhaps it could even trigger a payment in central bank money, e. g. ( for example ) via target2 in the eurosystem. that trigger solution would make use of the stable and [UNK] existing payment systems. and in the case of central bank money, the current access to central bank money would remain unaltered. fourth, digital central bank money in the form of a wholesale token may be considered if a dlt - based settlement system proves superior to conventional systems. in that case, a token could be issued by the central bank to a closed group and for a limited purpose. neither access to central bank money nor the supply of central bank money has to change for that. it is again more of a technical question. repercussions for monetary policy implementation and financial stability could be ruled out. fifth, digital central bank money for the general public, i. e. ( that is ) non - banks, as a sort of “ digital banknote ”, would bring with it a number of knock - on effects that are not very well understood as things stand. if a central bank were to issue digital central bank money for everyone, a potential far - reaching substitution between sight deposits with commercial banks and digital central bank money would result. in addition, further repercussions for financial stability and monetary policy implementation are to be expected. to sum up, we have quite a number of ways to bring cash to the ledger. issuing digital central bank money for everyone is not the only solution. what ’ s more, it is the solution with potentially the furthest - reaching implications for stability, and the highest risk. therefore, it should not be our first choice. these reservations should not be pushed aside lightly. closing remarks ladies and gentlemen, times are changing. however, some requirements stay the same. this is also true with regard to changing structures. concerns have been voiced that the financial industry, and notably the payments landscape, | sheet of the bundesbank. and the basis for its value is the stability of the bundesbank and the eurosystem as a whole, as well as the integrity of all the central bankers working to guarantee price stability and safe and [UNK] payments within the euro area. and although monetary policy in europe is currently the subject of heavy debate, overall, the eurosystem has done a good job in the past two decades. in addition, the basis for the stability of the euro is also the constitutional backing of the eurosystem by its member states and the fiscally sound behaviour of its respective governments. the euro is underpinned by the entire eurosystem and all participating countries and their economies. crypto - tokens like bitcoin and others, however, do not have an intrinsic value and do not constitute a claim on anyone ; nor do they have a public authority responsible for issuing them in line with a mandate for price stability. they are lacking any fundamental basis. this renders their value arbitrary. as a result, i do not share the view that crypto - tokens like bitcoin can be considered “ gold 2. 0 ”. attempts to imitate some of the features of the provision of gold, notably a fixed quantity and growing marginal costs for provision, does not mean that you have created something like “ digital gold ”. and that brings me to the next principle. principle 3 : the most important feature of money is stability the third principle is : the most important feature of money is stability. the purpose of money is to be used in payments, to be used as a store of value and as a unit of account. all three functions require money to be stable. therefore, the 2, 000 or more crypto - tokens invented thus far are not primarily used as money. most of them display such extreme volatility in terms of value that people refrain from using them for payments or as a store of value. in response to the sharp price volatility of many existing crypto - tokens, there have been attempts for some time now to develop crypto - tokens that are stable in value. these are referred to as “ stable coins ”. stable coins are crypto tokens whose value is often pegged to an existing currency ( or basket of currencies ) and backed by matching collateral. so stable coins benefit from a sort of derived stability. this could be interpreted as a compliment to the successful, stability - oriented monetary | 1 |
the relevant bank. the most important challenges confronting islamic banks are risks arising from financing formulas and shari'a compliant banking, especially investment risks, method of applying " basel ii " proposals, capital market and financial derivatives risks. in addition, islamic banks may bear a wide range of risks that differ, in nature, from those borne by commercial banks. in this connection, it is necessary to emphasize that the role entrusted to the supervisory authorities is to pursue a comprehensive control method based on risk assessment process and not to make any discrimination in a way that may suggest that shari'a compliant banks are being rated differently or confronting larger risks. corporate governance, risk management, transparency, disclosure, and internal control requirements in islamic financial services industry should always be developed, and adjusted to meet the needs specified for islamic banks, especially that an important part of the work of these banks is based on impression and reputation of the nature of their work. therefore, these banks should be aware of the role entrusted to them, especially the ethical one. the nature of risks faced by islamic banks may raise specific issues in terms of assets and inventory assessment, investment costs, regular income and recognition of losses, adequacy of guarantees and others. we must emphasize here the importance of continued development of mechanisms to cover such risks. this underlines the importance of integration into global financial markets, encouragement of competition, and provision of a proper climate for on - going innovation so that islamic banks can consolidate their positions in all markets and boost their ability to provide products for all segments of customers. on the other hand, a controversy is sometimes raised and comparisons are made between islamic and conventional banks in terms of risk degree, exposure to insolvency, and the argument ensuing concerning capital adequacy. however, the important point is the awareness and understanding the nature of risks, development of mechanisms to cover such risks, and the ability to compete in markets and meet the needs of customers. perhaps it is imperative here to emphasize that it is important for islamic banks to provide all information about their activities and financial statements with full transparency, especially that they bear moral responsibility. this would enhance their credibility, contribute to their good reputation to be accepted on a broader range, and remove any false beliefs concerning their activities. dear brothers, a number of central banks and supervisory authorities have recognized the nature of risks confronted by islamic banks and pursued a supervisory approach based on measurement of risks. thus, they have developed appropriate mechanisms for banking supervision depending on the type | money laundering and the large scale of this activity, which is estimated by the international monetary fund ( imf ) at 2 to 5 percent of global gdp, there have been international and regional concerted efforts to combat it. the financial action task force ( fatf ) was established by the end of the eighties of the last century and the financial action task force for the middle east and north africa ( menafatf ) was founded in the middle of this decade. the kingdom is an active member in these two groups. in 2003, the anti - money laundering law, which provided for criminalizing offenses related to money laundering was issued, followed by its executive regulations. the issuing of this law and its executive regulations has helped government organs and their subordinate entities concerned with combating money laundering to develop necessary mechanisms and procedures to implement the anti - money laundering law and related rules and ensure that they are fully complied with. these organs have established specialized departments responsible for implementing these rules ( compliance function ), appointed qualified human resources ( compliance officers ), and allocated human and financial resources necessary to enable them to perform their functions properly. at the same time, each supervisory government authority has enacted rules and regulations derived from the provisions of the anti - money laundering law and its executive regulations and included them in its by - laws in a way commensurate with the work of those organs. within the framework of the kingdom ’ s efforts to combat money laundering, i would like to highlight the following : 1. the permanent committee for combating money laundering, which consists of representatives from seven ministries and government departments, has been established at sama to deal with issues related to money laundering. 2. the kingdom has hosted numerous domestic and international conferences and symposiums, and offered training courses on anti - money - laundering issues. the first meeting of the fatf outside paris was held in the institute of banking ( iob ) in 1994. in addition, there has been effective participation of the kingdom in the membership of the financial action task force ( fatf ) and permanent participation in the fatf ’ s meetings. 3. the anti - money laundering unit was established at sama and is provided with highly qualified and trained staff. since 1995, commercial banks have been obliged to set up similar units to cooperate with each other, with sama ’ s unit and with the concerned security authorities. 4. in 1995, sama issued guidelines to all banks operating in the kingdom on preventing and combating money - laundering operations. these | 0.5 |
of supervision ( dos ) was created bringing all ses, namely, scheduled commercial banks, nbfcs and ucbs under one umbrella. unifying the supervisory functions shall reduce the supervisory arbitrage and information asymmetries across ses and address the complexities arising from their interconnectedness. this will also help in the holistic understanding of systemic risks. steps have been taken to improve the supervisory function through better capacity building and skilling of supervisors and for this purpose a separate college of supervisors ( cos ) has been set - up which is conducting extensive training programs in different areas. supervisory specialisation is also being reinforced by way of creating specialised divisions for risk - based supervision of kyc / aml risk, data analytics, cyber security and it examinations, among others. a supervisory action framework has also been put in place which provides for graded early supervisory action depending on the frequency and severity of breaches identified. ( b ) strengthening sound governance and internal controls 1. emphasis on risk culture 9. as banks are in the business of taking risks, sound risk culture lies at the heart of every decision that they take. in alignment with global developments, reserve bank too has made risk culture and business model analysis as part of its supervisory assessment. the focus has been to ensure that entities put in place a well - defined risk appetite framework, and business decision making is broadly in alignment with their risk appetite and risk bearing capacity. 2. strengthening the assurance function 10. reserve bank attaches a lot of importance to the effective functioning of internal assurance functions in its financial entities and has issued revised guidance for concurrent, internal, as well as external audits in banks. the guidelines are expected to ensure that these audits act as an 2 / 4 bis central bankers'speeches effective early warning, give greater clarity on supervisory expectations, avoid conflict of interest, provide sufficient authority / resources / independence to these functions, among others. 3. compliance function 11. the compliance function in a bank is an integral part of corporate governance, as it can affect the bank ’ s reputation with its shareholders, customers, employees and the markets ( bis, 2005 ). the recent guidance by the reserve bank on compliance function casts responsibility of the compliance culture and management of compliance risk explicitly upon the board. the guidance advises banks on laying down a board - approved compliance policy, well - defined selection process for chief compliance officer ( cco ), a fixed tenure to ccos, and requisite authority. reserve bank would expect | for moving forward, would be the reforms in governance, that are critical to strengthen state capacity to perform its core functions more effectively and equitably. the business community has a vital stake in the improvement of the quality of governance by empowering the public institutions, since good governance can prevail only when public institutions function fairly and efficiently. let me conclude by thanking the institute, in particular dr. arvind subramanian, for giving me the privilege of making the presentation. i now eagerly look forward to the interactive session that follows. thank you. | 0.5 |
ii. outlook for and risks to economic activity and prices a. outlook next, i would like to turn to the outlook for japan's economic activity and prices. the economy is likely to continue recovering moderately for the time being, supported by factors such as the materialization of pent - up demand, although it is expected to be under downward pressure stemming from a slowdown in the pace of recovery in overseas economies. thereafter, the economy is projected to continue growing at a pace above its potential growth rate as a virtuous cycle from income to spending gradually intensifies in the overall economy. as presented in the outlook for economic activity and prices ( outlook report ) decided by the bank at the july 2023 monetary policy meeting ( mpm ), the medians of the policy board members'forecasts for the real gdp growth rate are 1. 3 percent for fiscal 2023, 1. 2 percent for fiscal 2024, and 1. 0 percent for fiscal 2025 ( chart 10 ). the year - on - year rate of increase in the cpi is likely to decelerate, with a waning of the effects of a pass - through to consumer prices of cost increases led by the past rise in import prices. thereafter, the bank's baseline scenario is that the cpi will rise moderately as the output gap improves along with economic recovery and the rates of increase in inflation expectations and wages become higher. given this context, the medians of the policy board members'forecasts for the year - on - year rate of change in the cpi ( all items excluding fresh food ) are 2. 5 percent for fiscal 2023, 1. 9 percent for fiscal 2024, and 1. 6 percent for fiscal 2025 ( chart 10 ). b. risks the outlook for economic activity and prices that i mentioned entails a range of uncertainties. in what follows, i describe three risk factors for economic activity and one for prices. 1. risks to economic activity the first risk factor for economic activity is developments in overseas economic activity and prices, and in global financial and capital markets. although inflation rates abroad have become lower, inflationary pressure has remained on a global basis. central banks have made rapid policy interest rate hikes since 2022 in order to combat strong inflationary pressure. owing to the effects of these rate hikes, global inflationary pressure has been on an easing trend. the bank's baseline scenario is that overseas economies will gradually shift to stable growth as policy rate | fig. 1. 1 ). the economically troubled countries of the eurozone have a similar pattern to japan and the united states. the ratios for greece, portugal and spain have almost the same time profile, and all of them peaked around 2000 – 2005. the peak of the spanish property boom was just after the ratio ’ s peak, and the financial problems of greece also started at the same time. a particularly interesting case is ireland, which showed a sharp rise in the ratio until around 2005. the bust of the country ’ s property market bubble was just a few years around the corner ( fig. 1. 2 ). incidentally, for the sake of completeness, i have included the figures for china ( fig. 1. 3 ), whose ratio seems still to be rising rapidly, but will peak a bit later than in euro - american countries. the peak will be around 2010 – 15, after which it will go down as rapidly as it is now going up. the inverse dependency ratios of many other asian countries have a quite similar time profile to that of china. i am not suggesting any causality here, but simply pointing out the balance sheet adjustments after the bubble burst in japan, united states and the eurozone, whether private bis central bankers ’ speeches or public, must be carried out as the population is ageing. i believe this fact has an important bearing on the future of monetary policy, especially unconventional monetary policy. in section 2, i first examine the process of balance sheet adjustment after the bursting of a bubble and when the population is ageing, juxtaposing japan in the 1990s and the united states in the 2000s. then, in section 3, i summarize the consequences of severe, prolonged balance sheet adjustment, as seen in japan in the 2000s. finally in section 4, i identify the multi - faceted challenges central banks may face as a consequence of carrying out balance sheet adjustments under population ageing, and i explain the bank of japan ’ s policies to tackle these problems. 2. balance sheet adjustment and the breakdown of the transmission mechanism who leveraged during the bubble period? japan and the united sates in order to find out the effect of balance sheet adjustments after the bursting of a bubble, let me first clarify who leveraged during the bubble periods. in japan, it was the corporate sector, especially small to medium - sized firms, which for the first time gained access to large banks after the so - called financial liberalization ( fig. 2 | 0.5 |
% over the medium term for the euro area as a whole. in my contribution today, i will emphasise that the ecb conducts monetary policy “ as usual ”. in particular, after briefly recalling the motives for our april interest rate increase, i shall elaborate on how the ecb deals with the particular challenges prevailing, namely • inflation pressures stemming from commodity prices • costs of keeping interest rates low for too long • the adjustment to the monetary policy stance with some non - standard measures still in place, and • divergent macroeconomic and financial developments in the countries of the euro area. further elaborations on this theme can be found in my intervention “ the new normal ” at the 13th euro finance week, frankfurt, 16 november 2010. bis central bankers ’ speeches 2. commodity prices and the outlook for price stability on 7 april we increased our key interest rates by 25 basis points. this decision was the first policy move since may 2009. it was mainly driven by upside risks to price stability, in particular relating to further increases in energy and commodity prices. continued upward pressure on overall inflation is discernible in the early stages of the production process. it has the potential to translate into inflation expectations, broad based second - round effects in price and wage - setting and inflationary pressures over the medium term. as mentioned, we continue to see upside risks to price stability. signals from the monetary analysis indicate that the underlying pace of monetary expansion is gradually recovering. at the same time monetary liquidity remains ample. it could accommodate upward price pressures. bis central bankers ’ speeches in addition, strong economic growth in emerging markets likely contributes further to commodity price rises. ample liquidity at the global level could support this development. the monetary policy stance of many central banks around the world also remains very accommodative. this creates an environment which is raising inflationary challenges, in particular for emerging economies that shadow us monetary policy. bis central bankers ’ speeches is the fact that inflation is being driven mainly by commodity prices not a reason to be less concerned about inflation in the medium term, as these such developments are usually temporary only? theoretically, it is possible to look beyond the volatility in inflation triggered by first - round effects of commodity price changes if these are of a purely temporary nature. however, the central bank also needs to consider policy action in case sustained upward trends in commodity prices are seen as a risk to price stability over the medium term. we have already observed in the past that commodity prices | the national central banks of the euro area, the bank of england and the centre for economic policy research. its purpose is to achieve a better understanding of the euro area business cycle by fostering empirical analyses on this issue. the ecb is also a contributor to the centre for economic policy research and a number of other research activities carried outside the bank. to conclude, i strongly believe that central banks need top - quality research on monetary and financial economics. although general research of an academic nature might be better - suited for universities and research institutes, there is still scope for central bank economists to conduct research that is relevant for the conduct of monetary policy and for the other functions and tasks of a central bank. i thank you for your attention. | 0.5 |
luis de guindos : monetary policy, financial stability and mediumterm growth in the euro area speech by mr luis de guindos, vice - president of the european central bank, at the 8th annual conference of mediterranean central banks, organised by the croatian national bank, the bank of spain, the oecd, the iemed, and the ufm, split, 14 february 2024. * * * over the past few years the euro area economy has experienced unprecedented shocks that created exceptional uncertainty and drove inflation to record highs. in response to these inflationary pressures, we embarked on the most forceful rate hiking cycle in the history of the euro. credibility – very much the focus of today's conference – is a key central bank asset that becomes even more important in times of high uncertainty. our policy measures are making a substantial contribution to reducing inflation, demonstrating our commitment to ensuring that inflation returns to our two per cent medium - term target in a timely manner. in my remarks today, i will first review the state of the euro area economy and our latest monetary policy decisions. i will then turn to financial stability considerations, before concluding with some thoughts on why action to support the euro area economy is also needed from other policy actors. economic outlook and monetary policy our interest rate decisions are guided by three considerations : first, the inflation outlook in light of incoming economic and financial data ; second, the dynamics of underlying inflation ; and third, the transmission of our monetary policy to financing conditions and the real economy. starting with our first criterion, incoming information has broadly confirmed the mediumterm outlook from our december macroeconomic projections. economic activity is likely to have stagnated in the fourth quarter of 2023 and incoming data continue to signal weakness in the near term. at the same time, some forward - looking survey indicators point to a pick - up in growth further ahead. although headline inflation increased in december to just below 3 %, on account of energy base effects reflecting impacts from the fiscal measures a year ago, the rebound was somewhat weaker than expected. aside from energy, all the main components of inflation fell or remained unchanged. meanwhile, headline inflation declined again in january. this means that the disinflationary process is continuing. we also expect inflation to ease further over the course of this year amid the fading impact of past energy shocks, supply bottlenecks and the post - pandemic reopening of the economy, and as tight financing conditions continue to weigh on demand. | about the ranking of creditors and the procedures that would be followed in the case of a bank resolution. if we are successful in establishing an effective banking union – as i am convinced we will be – the benefits will be large, not only for euro area countries but for all eu members. a more stable union will be one where financial contagion will have disappeared, where business for the financial centres will vastly increase, where financial market integration will resume. a stable union, however, is not only about building new rules and procedures but also about applying existing ones. in the past, credibility of european procedures has at times been weakened because they were not followed with sufficient rigour. it is now important that existing and new rules be applied in a steadfast manner. conclusion let me draw to a close. bis central bankers ’ speeches today we need to focus on securing economic stability and prosperity for the people of europe. with so many young europeans feeling deprived of the opportunities and the prospects enjoyed by previous generations, the urgency of advancing this vision has never been greater. after a deep financial and economic crisis, we now see the restart of the european process, building on the agreement of the june 2012 summit. this process ultimately entails some transfer of national sovereignty in the areas of budget and structural policies. and the efforts made by germany and france in this regard are particularly encouraging. last summer, speaking here in london, i said that “ [ w ] hen people talk about the fragility of the euro, [ they ] underestimate the amount of political capital that is being invested in [ it ] ”. since then, even more political capital has been mobilised. the answer to the crisis has not been less europe but more europe. the ecb, as an institution at the frontier of european integration, has played an active role in addressing the crisis. the credibility of the ecb ’ s steadfast commitment to its primary objective is unshaken in the eyes of both the markets and the people of europe. and this is because our credentials in preserving price stability have been tested both when risks were on the upside and when markets driven by panic were threatening to send the economy in a downward spiral. this is a time when the strength of all our institutions is being tested ; first, by the financial crisis, then by the recession. the european union and the european monetary union are no exceptions. the choice is between adapting them to the new conditions or do nothing and risk their dissolution. these | 0 |
board to avoid conflicts between pillar 3 and the broader accounting standards. in fact, the committee views pillar 3 as a further refinement of the accounting standards that apply to banks ’ specific exposures. because we recognise that we have much to do in this area, we will continue to monitor accounting and market developments in the light of pillar 3. our dialogue with accounting standards - setting bodies and the accounting profession will continue to grow in the years to come. v. conclusion this morning, i have shared some of my views on the need for risk management and supervision to evolve together and to reinforce each other. all of us recognise that both areas must keep pace with changes in accounting practices, and i think you would agree that the work we have to undertake in all three areas - risk management, supervision, and accounting - is quite demanding. to develop new ways of thinking about risk and about the techniques for measuring it, we will require hard research and significant resources. we must gather and pour over large amounts of data to sharpen our understanding of various risks and their relationships to each other. we must dedicate our talent, staff, and indeed funds to undertake this work. i would argue that is equally demanding to develop a supervisory structure that capitalises on and further encourages those advances, especially when we are trying to implement a shared framework across many jurisdictions. but the benefits are many. on a microeconomic level, the virtuous circle i have described should help individual firms to improve the quality of their controls in the short run and strengthen their competitiveness in the long run. yet supervisors are especially motivated by the benefits we expect at the macro level. we believe that, when all financial institutions have the right incentives to pursue profits responsibly, the financial services sector becomes better managed, more resilient, and better able to serve as a source for sustainable growth for the economy. attaining that promise of greater financial stability is a challenge that is worthy of all of our talent, of our time, and of our hard work. with that, i would like to thank you for welcoming me to your conference. i offer my best wishes for fruitful and thought - provoking discussions. | environment and to trigger productive investment, which continues to show signs of weakness in the euro area as a whole. in the more medium term, the combination of negative demographics, low productivity growth and high levels of public and private debt constrains the euro area ’ s ability to regain precrisis growth rates, creating a breeding ground for disillusionment with and distrust of the european project. it is, therefore, essential that governments revive the reform momentum, to optimise the working of production factors and product markets, improve the business environment and complete the euro area governance framework. important labour market reforms have been undertaken in recent years, especially in the countries hardest hit by the crisis. empirical evidence shows the positive impact that those reforms have had on growth and employment. but preventing high unemployment rates from becoming entrenched and long - term unemployment from growing remain a priority. where least progress is perceived is perhaps in reform of the product and service markets. recent experience shows that it is important to implement the reform agenda in the right order, since early reforms, tending to enhance competition, may be vital to ensure that labour market reforms have the desired positive effects. bis central bankers ’ speeches in various euro area countries, product market reforms should aim to improve the business environment, remove administrative barriers and increase competition. revamped insolvency proceedings would help to improve management of the loan write - offs that currently place such a heavy burden on banks ’ balance sheets. insolvency proceedings, if well designed, can be an efficient way to reallocate resources to sectors and firms that offer higher growth potential. in the case of services, european commission studies suggest that full implementation of the services directive would deliver significant productivity gains and growth potential. efficiency gains may also be achieved through the creation of a single energy market. regarding the free movement of persons, we should be aware of the risk of the spread of an uncoordinated response that may ultimately fragment the schengen area. the introduction of reforms and deepening of the single market are clearly crucial to achieve the structural convergence needed to improve the functioning of the euro area and make further progress towards a more robust monetary union. our aim is to achieve sustainable activity and a recovery in employment, while maintaining the essential bases of the welfare state which is naturally one of the pillars of the construction of europe. clearly the result of the referendum held on 23 june in the united kingdom is a major setback along that road, with consequences for the | 0.5 |
years, issuances out of the emerging economies, in particular asia, will also likely assume greater importance as an asset class. the greater variety of asset classes would contribute to the stability of the international financial system. it will also provide a wider range of options for investors and borrowers and thus, contribute to a more efficient allocation of financial resources across borders. it should be emphasised that the impact of asia ’ s economic and financial integration, would extend beyond its own region to other parts of the world. today, the economic and financial linkages between the emerging economies have gained significant traction and are likely to continue. all the issues that i had mentioned earlier would only be significantly realized if we have a seamless payment system that links markets as one. as part of our continuing journey in deepening and strengthening our financial markets in asia and malaysia in particular, bank negara malaysia is pleased to be a party to the launching of the pilot platform for cross - border investment and settlement of debt securities, jointly with the hong kong monetary authority and euroclear bank. this initiative marks an important milestone in our vision towards deeper financial integration. the rollout of bis central bankers ’ speeches this platform will provide investors and market intermediaries with more efficient and cost - effective cross - border access to the bond markets in hong kong and malaysia. over the years, the bond market in asia has expanded significantly. to date, asia ’ s share of the global bond market has increased by almost four - fold since the pre - asian financial crisis. in tandem with the growth of the bond markets, the sukuk market in the region has also evolved as an important avenue for international fund raising and investment activities, generating significant cross - border flows. malaysia has been an important part of this development with well developed bond and sukuk markets. as at 9 march 2012, the outstanding amount in the malaysian bond market was rm899 billion compared to rm301 billion at the end of 2001. this represents a 300 per cent increase over the last decade. within the region, both hong kong and malaysia have participated actively within the emeap group in promoting regional bond market development initiatives such as the asian bond markets initiative and the asian bond fund. i am confident that this pilot platform will bring benefits, not only to hong kong and malaysia, but the region as a whole. we envisaged that this pilot platform will increase the efficiency of issuance, investment and settlement of bonds through the increased harmonisation | level of financial literacy among the consumers and businesses. towards achieving this objective, consumer education programs have been conducted, providing information among others, on the unique characteristics of islamic banking and finance, islamic financial products and services and the underlying shariah principles and concepts. enhanced consumer awareness is expected to strengthen the role of market discipline in driving the islamic financial institutions towards strict shariah compliance, enhanced operational efficiency, and strengthened risk management infrastructures and practices. in malaysia, islamic banks and conventional banks with islamic banking windows observe similar prudential standards as imposed on conventional banks such as the minimum risk weighted capital ratio ( rwcr ), standards for corporate governance and risk management, financial disclosures and know your customer policy. the principles of prudent management and enhanced operational efficiency are inculcated through the minimum risk weighted capital adequacy requirement. corporate governance standards have been enforced through specific guidelines on the code of conduct for directors, officers and employees of the banking institutions and guidelines on the directorship and prohibition of loans to directors, staff and their selected corporations. in addition, strict compliance with the tenets of shariah would also ensure that the islamic financial institutions are managed on the basis of a high degree of prudence, ethics and integrity. the basel committee on banking supervision has enhanced its capital regulation to include operational risk in the computation of capital adequacy, in addition to credit and market risks. the task of formulating a framework that addresses the peculiar risks associated with islamic banking is being undertaken by the islamic financial services board ( ifsb ), which serves as an international standardsetting body for regulatory and supervisory agencies. its mandate is to develop prudential, regulatory and disclosure standards for islamic finance, and promote uniformity in the best practices on the governance of islamic financial institutions worldwide. in this respect, the ifsb has recently issued two prudential standards on risk management and capital adequacy for institutions offering islamic financial services, which are recommended for implementation in 2007. the ifsb has also made progress in developing three other standards on corporate governance, transparency and market discipline, and the supervisory review process to be released in due course. a key challenge in managing operational risk in islamic banking is ensuring shariah compliance. bank supervisors in their assessment would need to give due attention to the adequacy of the financial institutions'board and management oversight, policies, procedures and limits, risk measurement, monitoring and management information systems, and internal controls. the | 0.5 |
state runs into difficulties. it ’ s not about us favouring one country over another. it is simply about making the best of a difficult situation. what we have done is right. it ’ s the best we could do, and it has been working. bis central bankers ’ speeches | lucas papademos : the international role of the euro – trends, determinants and prospects speech by mr lucas papademos, vice - president of the european central bank, at the brussels economic forum 2008, at the panel on “ the euro in a rapidly changing international environment ”, organised by the european commission, brussels, 15 may 2008. * i. * * introduction ladies and gentlemen, i would first like to thank the european commission and the organisers of the brussels economic forum for inviting me to this important celebration of the 10th anniversary of the launch of the euro. it is indeed a privilege and a pleasure for me to participate in this very special event. many of us here remember vividly the famous words – spoken almost 40 years ago – that “ one small step for ( a ) man ” can be “ one giant leap for mankind ” ( neil armstrong, apollo 11 mission, 20 july 1969 ). the same event can have a varying degree of significance for different people, depending on their viewpoint. anniversaries are occasions to take a step back and assess matters from a broader perspective and over an extended time horizon. they are occasions for celebrating the accomplishments of the past, as well as for reflecting on perspectives and objectives for the future. allow me to make an analogy with the words of neil armstrong and say that the ten years since the introduction of the euro may seem like a small step in the long history of the global economy to some people, but they certainly represent a significant leap of progress for europe. over the past ten years, the euro has become an important pole of stability in the world economy. the significance of the introduction of the euro has to be assessed first and foremost in terms of its contribution to the stability and growth of the euro area economy. and the euro ’ s performance as a currency must be fundamentally judged by its internal stability and credibility. at the same time, the single currency of a large economic area inevitably has a significant global role. our task today is to assess the euro ’ s international role in a rapidly changing and integrating global economy. my remarks will address a number of pertinent issues : • the evolution of the international use of the euro over the past ten years ; • and the euro ’ s current status as an international currency ; • the key determinants of a currency ’ s international role and the prospects for the further internationalisation of the euro ; and ; • the ecb ’ s position and the effects of macroeconomic and | 0.5 |
luis de guindos : the euro area economy and our monetary policy stance remarks by mr luis de guindos, vice - president of the european central bank, during the instituto de empresa ( ie ) business leadership forum at the ie business school, madrid, 10 june 2019. * * * recent economic developments despite the somewhat better than expected data for the first quarter, in part due to temporary factors, the most recent information indicates that global headwinds continue to weigh on the euro area outlook. in particular, world trade remains subdued due to rising trade tensions and the global growth momentum has slowed somewhat, mainly on account of the weakness in manufacturing. moreover, downside risks have increased on account of the re - escalated trade dispute between the us and china. also, uncertainty surrounding brexit is prolonged and fragilities in emerging market economies remain. while inflation is expected to rise gradually due to tightening labour markets and rising wages, current dynamics of underlying inflation remain muted. it is against this background, that the governing council decided a number of policy measures at its last meeting, including an extension of its forward guidance on policy interest rates, a confirmation of the reinvestment policy and favourable pricing conditions for our new series of targeted longer term refinancing operations ( tltro iii ). euro area real gdp growth came in at 0. 4 % quarter - on - quarter in the first quarter of 2019, surprising somewhat on the upside. the better than expected outcome was in part driven by temporary factors, such as the mild weather supporting a pick - up in construction and some sector specific developments. economic indicators suggest that domestic demand remains resilient, as signalled by the growth of consumption, which grew 0. 5 % quarter - on - quarter in the first quarter of the year, and investment, which grew by 1. 1 % during the same period. while first quarter growth was somewhat stronger than previously anticipated, incoming data and survey information point to somewhat more moderate growth over the next few quarters. this reflects the ongoing weakness in international trade in an environment of prolonged global uncertainties, which are weighing, in particular, on the euro area manufacturing sector. in fact, some leading indicators such as manufacturing pmi and the ecb indicator on euro area new orders have declined recently, confirming weakening dynamics in the euro area manufacturing sector. at the same time, the euro area services and construction sectors are showing resilience and the labour market is continuing to improve. looking forward, | restriction. in particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. we are not pre - committing to a particular rate path. the decisions taken today are set out in a press release available on our website. as announced on 13 march 2024, some changes to the operational framework for implementing monetary policy will take effect from 18 september. in particular, the spread between the interest rate on the main refinancing operations and the deposit facility rate will be set at 15 basis points. the spread between the rate on the marginal 1 / 4 bis - central bankers'speeches lending facility and the rate on the main refinancing operations will remain unchanged at 25 basis points. i will now outline in more detail how we see the economy and inflation developing and will then explain our assessment of financial and monetary conditions. economic activity the economy grew by 0. 2 per cent in the second quarter, after 0. 3 per cent in the first quarter, falling short of the latest staff projections. growth stemmed mainly from net exports and government spending. private domestic demand weakened, as households consumed less, firms cut down business investment and housing investment dropped. while services supported growth, industry and construction contributed negatively. according to survey indicators, the recovery is continuing to face some headwinds. we expect the recovery to strengthen over time, as rising real incomes allow households to consume more. the gradually fading effects of restrictive monetary policy should support consumption and investment. exports should also continue contributing to the recovery as global demand rises. the labour market remains resilient. the unemployment rate was broadly unchanged in july, at 6. 4 per cent. at the same time, employment growth slowed to 0. 2 per cent in the second quarter, from 0. 3 per cent in the first. recent survey indicators point to a further moderation in demand for labour, and the job vacancy rate has fallen closer to prepandemic levels. fiscal and structural policies should be aimed at making the economy more productive and competitive, which would help to raise potential growth and reduce price pressures in the medium term. mario draghi's report on the future of european competitiveness and enrico letta's report on empowering the single market stress the urgent need for reform and provide concrete proposals to make this happen. implementing the eu's revised economic governance framework fully, transparently and without delay will | 0.5 |
this is a window of opportunity for islamic finance to offer new solutions, and to prove itself as a viable channel to complement conventional financing solutions. shariah - compliant trade finance solutions can also provide the much needed support for the multi - billion dollar halal export industry that has increasing participation of smes. this can assist businesses to meet the strong demand for halal products and services globally. islamic finance already has a good head - start in the trade finance scene, with a wide range of islamic financial products that are now available to importers and exporters. more can be explored to widen the spectrum of shariah - compliant trade finance offerings and enhance trade finance facilitation by islamic finance players to spur greater cross - border trade, particularly by smes. to cite an example, enhancing the availability of trade credit takaful as a risk mitigant can help spur greater cross - border trade. i also believe that more can be done to deploy technology to untap the large business opportunities in trade, which includes the integration and digitalisation of trade finance as well as e - commerce. let me now conclude. the issue of sustainability is a matter of grave concern for the global community. if sustainable development takes a backseat, the global landscape in the future will look very different. we might see the gains that we have built and enjoyed over the decades erased. the clock is ticking, and the world has to act now. on its part, islamic finance must contribute towards generating solutions to this challenge. in this endeavour, steadfast commitment from the islamic finance industry to innovate ; to embrace fintech ; to invest in talent ; and to play a greater role in international trade is crucial. islamic finance must be a force for global good, proving that the sustainability agenda isn ’ t just good for the world, but is good for 4 / 5 bis central bankers'speeches business. it must prove the dictum “ doing well by doing good ”. this is what shariah calls us to do – to benefit the people and planet ; and bringing greater prosperity to the ummah. 5 / 5 bis central bankers'speeches | management responses to misconduct or non - compliance. the rightcontextual setting can exert a powerful influence on individual behaviour. we believe this begins with setting and clearly communicating expectations of desired behaviour. without clarity on what is acceptable in the first place, it would not be possible to encourage, much less enforce, these expectations. the fspb serves an important role in this regard through its work in defining and developing codes of behaviour for financial institutions. given the stronger focus of financial regulators on conduct and culture, such professional codes will matter greatly going forward as an important complement to regulatory standards. the fspb is well placed to lead and support initiatives to establish standards of conduct for the financial industry. its standards not only serve as useful frameworks for financial institutions and professional bodies to develop specific guidance for their own employees and members ; they also serve to embody the industry ’ s collective commitment to socially responsible values and 1 / 3 bis central bankers'speeches ethics. for example, i noted with interest that the professional code being launched today commits to dealing with counterparties, including suppliers and agents that “ subscribe to sound ethical principles ”. matters such as the environmental footprint or human rights record of third party providers are not typical obligations currently found in regulatory standards, yet, these are matters of great importance. they are a reflection of the values of the industry, and they matter to many conscientious consumers in this age of increasingly accessible information. given the central role of financial services in any economy, these are issues likely to move from the periphery to increasingly important business considerations. at the global level, we are already seeing greater attention given to sustainable and responsible finance. in many cases, it will require the industry to draw on experience beyond the traditional core competencies of most financial services providers. the industry, through fsbp, can demonstrate much needed business leadership in addressing broader ethical questions that will increasingly confront us as a society and as global citizens. apart from what ends up in written codes, there is also important value in simply having frank conversations about shared ethical challenges. in the united kingdom, senior bankers got together to discuss ways to reform organisational culture following the widespread ppi misselling scandals, but some would consider this “ too little too late ”. we need to bring such discussions forward and actively encourage a process that would allow the industry to get in front of emerging issues around professional conduct and ethics. these include examining issues like how institutions might go about gaining a pulse on culture at various | 0.5 |
the treasury department. we took the opportunity to meet with the newly established toronto chapter of biba, and our high commission in ottawa arranged a reception for potential investors in barbados. as we all know, the largest of our financial institutions operate at a regional level, and therefore as supervisors we need to be concerned about risks that arise from regional linkages. a project for the publication of a regional financial stability report got underway last month. the target for publication of the first regional financial stability report is december 2012. in the meanwhile preparation work on barbados ’ own financial stability report is advanced, and publication is slated for end - december this year. together with our regional partners, barbados has sought to have a voice in the ongoing efforts for reform of the international financial system. we have been invited to join the regional consultative group for the americas, set up by the financial stability board, the body established by the group of 20 countries to oversee the process of international financial reform. shane lowe and i are preparing a paper on caribbean perspectives on international financial reform for presentation at the inaugural meeting of the regional bis central bankers ’ speeches consultative group, on december 2 in mexico city. this year at the time of the annual meetings of the world bank and imf, the caribbean countries were invited to a breakfast meeting with the managing director of the imf to offer our perspective on the fund ’ s work and to share our concerns. this is the second year that we had such a meeting. on the clico matter, we have had very encouraging cooperation with oecs countries through the advisory group which has been established by the judicial managers, and which i co - chair with my friend and colleague timothy antoine, the permanent secretary of finance of grenada. the judicial managers have done an outstanding job in providing a comprehensive menu of options for the resolution of the clico insolvency, from which the option which is in the best interests of policy holders may be chosen. the topics we will cover today are : the impact of the global crisis the role of the fsc financial institutions and the financing of government things that affect credit quality changes in the operation of the fx market ; and considerations for interest rate policy today ’ s sessions are not for decision making ; their value is in the discussion of the issues. if we are to make good policy, we must be fully informed and the issues must be fully ventilated. today we will share information, and there is an opportunity for everyone to contribute their views on the issues presented | delisle worrell : general financial sector issues and policies opening remarks by dr delisle worrell, governor of the central bank of barbados, at the financial institutions conference “ general financial sector issues and policies ”, bridgetown, 3 november 2011. * * * this is our second annual conference for all financial institutions. we have a full day of discussion, which allows us to study current issues of the financial sector in depth. with the participation of all financial institutions, and with the collaboration of the financial services commission, we are able to take a comprehensive view of the financial system, including banks, finance companies, insurance, pensions, mutual funds, credit unions and securities. this conference deals with financial institutions that do domestic business ; in march this year we held a conference for financial institutions in our international financial centre, and that is also intended to be an annual event. since last year we have taken important steps to further strengthen financial oversight, and to increase the efficiency of the delivery of financial services. the most important of these was the establishment of the fsc, with responsibility for the supervision of non deposit takers. the fsc is in the process of recruiting staff and setting up systems, and central bank is lending its expertise wherever we can be helpful. this morning you will hear more about its activities from the fsc themselves. we have also been strengthening cooperation with banks which have domestic retail operations, through regular quarterly meetings, as well as ad hoc meetings when we need to make policy changes, such as the change in our foreign exchange margins. we are constantly strengthening cooperation with canadian and other overseas regulators, with the bank of canada and with the head offices of banks operating in barbados. we do consolidated supervision of all the operations of multinational banks, together with the regulators of all the countries in which these banks operate, through a variety of channels and mechanisms, including collective overview by the regulators and discussion with the banks in meetings which have come to be known as “ colleges ”. regulators also arrange conference calls and have informal contact, as well as more formal arrangements such as information - sharing memoranda of understanding. two weeks ago i led a team of my colleagues on a most successful visit to toronto and ottawa, where we had discussions with the major canadian banks, including those active in our international financial centre, with the office of supervisor of financial institutions ( osfi ), the bank of canada and the financial institutions supervisory committee, which also includes their deposit insurance corporation, their consumer protection agency and | 1 |
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